TaxTMI 
TaxTMI 
2023 (1) TMI 196
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....ng for the said articles in India. The relevant portion of said order at paragraph 43 reads as under: "43. Based on the above analysis of the facts and materials presented by the Informant and Intel, the Commission is of the prima facie opinion that the new differentiated India specific warranty policy of Intel in regard to its Boxed Micro-Processor is in contravention of Section 4(2)(a)(i) of the Act. The same also prima facie results in limiting or restricting the market for Boxed MicroProcessors for Desktop and Laptop PCs in the territory of India in contravention of Section 4(2)(b)(i) of the Act as well as results in denial of market access to parallel importers in contravention of Section 4(2)(c)(i) of the Act. Consequently, under the provision of Section 26(1) of the Act, the Commission directs the Director General ('DG') to cause an investigation into the matter and submit an investigation report within a period of 150 days of this order." 2. A Co-ordinate Bench of this Court vide ad interim order dated 14.11.2019 had stayed the impugned order and that the same has been continued from time to time. After service of notice, the Commission has entered appearance through it....
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.... security hardware (CCTV cameras), computers (desktops & laptops) & display solutions (TFT, computer monitors). Between March 2017 and January 2018, it imported about 4000 'boxed' microprocessors of Intel claiming warranty in five instances for as many as 34 units of microprocessors. In three of the five instances, claims for warranty were stated to have been 'raised in Dubai, UAE and the same were honored'. However, in so far as the claim for warranty in India is concerned, the 1st petitioner informed the respondent to contact the point of purchase, in view of its revised 'warranty policy' of April 2016. (ii) The 2nd Respondent lodged the information with the Commission on 11.02.2019 u/s 19(1)(a) of the 2002 Act alleging that petitioner's 'warranty policy' is in contravention of Section 3 & 4 of the 2002 Act in as much as they were refusing to provide the warranty in India for boxed microprocessors which are imported from authorized sources abroad but not those sourced from the Intel authorized dealers in India. This came to be registered by the Commission as Case No.5/2019 between MATRIX INFO SYSTEMS PVT. LTD vs. INTEL CORPORATION. On preliminary inquiry done u/s 26(1) of 2002 A....
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.... earlier decisions of the Commission and Hon'ble Delhi High Court, is not sustainable. It violates the principles of 'precedent and legal certainty' and defeats their legitimate expectation inasmuch as they had reframed their warranty policy in the light of observations made in the said decisions involving comparable factual & legal matrix. Modification of warranty policy consistent with observations made in similar cases is part of normal business practice and therefore, cannot be termed as abuse of dominance. The impugned order apart from being violative of principles of natural justice is arbitrary & discriminatory. Investigation of the kind has serious consequences & implications on the business reputation and therefore, could not have been casually directed by invoking draconian provisions of the 2002 Act. Petitioners pressed into service several Rulings in support of their case. 5. CONTENTIONS PUT FORTH ON BEHALF OF RESPONDENTS: (a) The Respondent-Commission represented by the learned ASG contended that: case of the petitioners as sought to be made out is only a figment of imagination. The decision of Commission in ASHISH AHUJA and Delhi High Court in KAPIL WADHWA, supra di....
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....ng evidence of concentration in Indian industry, manifested in the absolute size and dominance of family-owned business groups. It drew its inspiration directly from the Directive Principles of State Policy in Articles 38 and 39 of the Constitution...Its core chapter on concentration of economic power singled out "large" undertakings (those whose assets, together with those of their 'interconnected undertakings' exceeded a certain size) and 'dominant' undertakings (those whose market share exceeded onethird). After the adoption of economic reforms in 1991, several official committees in the late 1990s suggested that India needed a new competition law to replace the MRTP Act. Although, a draft Bill was drawn up in 1999, the Competition Act was passed only at the end of 2002" (ii) Given the central place of competition in the market economy, the Raghavan Committee Report (Report of the High Level Committee on Competition Policy and Law, Government of India, 2000 ) laid emphasis on the need to harmonize competition policy with other governmental policies. Pursuant to same, the 2002 Act came to be enacted. Its preamble reads as under: "An act to provide, keeping in view....
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.... is ordinarily initiated on receiving information from any person whether aggrieved or not, or suo motu as well. The Apex Court in COMPETITION COMMISSION OF INDIA vs. STEEL AUTHORITY OF INDIA LIMITED ((2010) 10 SCC 744 ) (hereinafter 'SAIL') at paragraph 21, said as under: "...When such information is received, the Commission is expected to satisfy itself and express its opinion that a prima facie case exists, from the record produced before it and then to pass a direction to the Director General to cause an investigation to be made into the matter. This direction, normally, could be issued by the Commission with or without assistance from other quarters including experts of eminence. The provisions of Section 19 do not suggest that any notice is required to be given to the informant, affected party or any other person at that stage. Such parties cannot claim the right to notice or hearing but it is always open to the Commission to call any `such person', for rendering assistance or produce such records, as the Commission may consider appropriate..." (v) What is observed in SAIL supra, at paragraph 37, as to the scheme of section 26, is also relevant: "As already noticed,....
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....uld loathe to interfere, subject to all just exceptions. B. AS TO CONTENTION OF PRECEDENT & LEGAL CERTAINTY IN VIEW OF DECISION IN ASHISH AHUJA CASE AND KAPIL WADHWA CASE: Learned Sr. Advocates appearing for the petitioners submitted that the impugned order made under section 26(1) of 2002 Act directing investigation runs counter to what the Commission had said & done in Case No.17/2014 between ASHISH AHUJA vs. SNAPDEAL.COM decided on 19.05.2014 and the Delhi High Court decision in KAPIL WADHWA, supra. They argued that the petitioners had reframed their 'warranty service policy' as a part of their normal business practice consistent with the observations made in the said cases, which have since attained finality and therefore, the impugned order being repugnant to principles of precedent & legal certainty, is liable to be voided. This is controverted by the learned ASG appearing for the Commission. Let me examine the said cases: IN RE ASHISH AHUJA CASE: (i) The 'informant' Ashish Ahuja had purchased certain products from the SanDisk in the open market and not from its authorized distributors and sold them on Snapdeal which had stopped sale of informant's products through its po....
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....eading 'How to obtain warranty service'. It specifically reads "...only Intel products sold by Intel Authorized Distributors in India and purchased in India are eligible for warranty sale within India. The list of Intel Authorized Distributors in India is located at https:/wwssl.intel.com/content/ww/xa/en/resellers/where to buy/overview.html..." IN RE KAPIL WADHWA CASE: (iii) Petitioners' heavy reliance on the decision of Hon'ble Delhi High Court in KAPIL WADHWA, supra would not come to their aid and reasons are not far to seek: the said case involved issues arising out of the Trademarks Act, 1999 and they were outside the penumbra of the 2002 Act. At paragraph 73, the Court said as under: "What is pleaded is that the physical features of the printers sold abroad are different from the features of the printers sold in India. But this is irrelevant as long as the goods placed in the International market are not impaired or condition changed. It is pleaded that the respondents have no control pertaining to the sale, distribution and after sales services of its goods which are imported by the appellants and sold in India... With respect to after sales services, since the responde....
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....INGSTON'S CASE ((1776) 1 Leach 146 ) had said about true meaning & scope of the doctrine. It is as under: "...From the variety of cases relative to judgment being given in evidence in civil suits, these two deduction seem to follow generally true; first, that judgment of a court of concurrent jurisdiction, directly upon the point, is, as a plea, a bar, or as evidence conclusive, between the same parties, upon the same matter, directly in question in another court; secondly that the judgment of a court of exclusive jurisdiction, directly on the point, is, in like manner, conclusive upon the same matter, between the same parties, coming incidentally in question in another court, for a different purpose. But neither the judgment of a court of concurrent or exclusive jurisdiction is evidence of any matter which came collaterally in question, though within their jurisdiction, nor of any matter incidentally cognizable, nor of any matter to be inferred by argument of the judgment..." (ii) The above decisions which the petitioners heavily banked upon had different fact matrices and years have rolled since they were decided. They are not justified in contending for the progressive....
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....arties specific but address the alleged 'anti - competitive practices' in the industry in general, the punitive or corrective action being confined only to the parties, notwithstanding. Added, the Commission too having satisfactorily treated this 'differential aspect' of the matter at paragraph 38 of the impugned order observed as under: "...The Commission however, observes that the facts of the said case are entirely different from the present case. In that case, it was not the situation that SanDisk would not produce warranty services on products purchased from authorized distributors of SanDisk merely because the purchases are made from outside India. Further, in that case, SanDisk did not limit its warranty policy in any particular country/ies ..." D. AS TO PROCEEDINGS UNDER 2002 ACT BEING 'IN REM': (i) The submission of learned Senior Advocate, Mr.Sajan Poovayya appearing for the petitioners that pursuant to the observations of the Apex Court at paragraph 15 of SAMIR AGRAWAL vs. COMPETITION COMMISSION OF INDIA((2021) 3 SCC 136 ), 'the proceedings under the Act are proceedings in rem which affect the public interest...' and therefore, his clients are entitled to take the b....
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..... At the same time, competition law eliminates obstacles to innovation, expansion and promotes competition as a value. Competition law tries to ensure that the interest of an individual or a group of individuals should not subvert the broader community interest..." (iii) The principal intent and policy content of 2002 Act, i.e., 'consumer well being' & 'public interest' have to be borne in mind while construing the observations at paragraph 15 of SAMIR AGRAWAL which employ the term in rem. Further, it is profitable to see what Justice Oliver Wendell Holmes had said in TOWNE vs. EISNER (245 U.S. 418 (1918)): "A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and time in which it is used...". It would also be pertinent to peruse the observations at paragraph 17 of EXCEL CORPORATION CARE LTD. vs. COMPETITION COMMISSION OF INDIA((2017) 8 SCC 47 ) which have been profitably reproduced as under: "...the ultimate goal of competition policy (or for that matter, even the consumer policies) is to enhance consumer well-being. These policies are directed at ensuring that markets f....
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....th the expression "receipt of any information in such manner and" by the 2007 Amendment. This substitution is not without significance. Whereas, a complaint could be filed only from a person who was aggrieved by a particular action, information may be received from any person, obviously whether such person is or is not personally affected. This is for the reason that the proceedings under the Act are proceedings in rem which affect the public interest. That the CCI may inquire into any alleged contravention of the provisions of the Act on its own motion is also laid down in section 19(1) of the Act. Further, even while exercising suo motu powers, the CCI may receive information from any person and not merely from a person who is aggrieved by the conduct that is alleged to have occurred. This also follows from a reading of section 35 of the Act, in which the earlier expression "complainant or defendant" has been substituted by the expression, "person or an enterprise," setting out that the informant may appear either in person, or through one or more agents, before the CCI to present the information that he has gathered." (vi) There is yet another aspect of the matter, namely, the....
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....iscusses the doctrine of precedent and a bit of res judicata, their scope & application, would not much come to the aid of his clients. E. AS TO SECTION 26 BEING 'DRACONIAN' AND DAMAGE TO PETITIONERS' REPUATTION: (i) As already mentioned above, the scheme under section 26 of the 2002 Act envisages layered proceedings: What Professor Sudhanshu Kumar(S.M.Dugar, 'GUIDE TO COMPETITION ACT, 2002', 8th Edition, Lexis Nexis, pp 856 - 860, (2021) ) writes about the scheme of section 26 is worth reproducing: "...Commission for forming an opinion whether or not there exists a prima facie case which requires investigation...is required to take cognizance of the averments contained in the reference or information and the documents supplied...In an appropriate case, the Commission may also hold preliminary conference and ask the informant or the person against whom allegation of anticompetitive conduct has been leveled to produce the relevant documents. In a given case, the Commission might, after examining the contents of the reference or information...opine that there existed a prima facie case for investigation. In that event, the Commission may pass an order under section 26(1) of the ....
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....(iii) It would once again be fruitful to advert to the foundational philosophy of competition law. The central concern...is that firm or firms can harm competition and inflict harm on customers and ultimately end consumers where they possess some degree of market power (Richard Whish, David Bailey, 'Competition Law', Tenth Edition, Oxford University Press, pg. 1 - 24, (2021) _. This central concern arises from 'market power' a particular firm holds; the concept of market power being "...the ability to reduce output or capacity, to raise prices, to reduce the quality of products, to limit the choice available to customers and/or to suppress innovation without fear of a damaging competitive response by other firms..." Id. The aim of 2002 enactment is: preventing practices which have an 'adverse effect' on the competition; promoting & sustaining competition in the markets, in order to protect the interest of the consumers; and ensuring that freedom of trade is maintained in the given 'relevant market'. By extension, this freedom of trade also holds within it the freedom of choice, i.e., lower switching costs and proper information systems for the consumers to make the right choice. (....
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....tion of certain provisions of the Competition Act and then passes a direction for the DG to cause an investigation into the matter. Post the report of the DG it can proceed further or close the proceedings. (Competition Commission of India v. Steel Authority of India & Anr.7 confirmed in CCI v. Bharti Airtel case.) That stage had not even arisen. The final report of the CCI was yet to mature and the CCI was not even bound by the report of the DG... 37. The aforesaid gave an opportunity to respondent Nos. 5 & 6 also to approach the Court and interdict the proceedings which ought to have been concluded a long time ago. It would, in our view, have been beneficial even to the State to have come to a conclusion one way or the other. The interdict post the investigation report by the DG and prohibiting the CCI from carrying out its mandate under the Competition Act is unsustainable." (vi) It is not that in no case in which Commission directs investigation under section 26(1) of the Act arbitrarily and unreasonably, the aggrieved cannot invoke writ jurisdiction. Such cases warranting indulgence of Court ordinarily involve 'manifest arbitrariness' as discussed in SHAYARA BANO vs. UNIO....