TaxTMI 
TaxTMI 
2024 (10) TMI 836
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....Srashti Parashar & Ms. Mini S. for CCI/ R-1. Dr. Navdeep Singh Suhag, Deputy Director for CCI/ R-1. Ms. Manika Brar, Mr. Aman Singh Sethi, Mr. Ramchandra Madan, Mr. Shivek Endlaw, for R-2 JUDGMENT INDEVAR PANDEY , MEMBER ( TECHNICAL ) This appeal has been filed under Section 53 (b) of the Competition Act, 2002 (hereinafter called the Act) challenging the final order and judgment passed by the Competition Commission of India (hereinafter called the CCI) under Section 27 of the Act. The Appeal challenges the order passed by the Commssion in Suo Moto Case No. 02 of 2020 dated 03.02.2020, wherein the Commission held that the appellants had contravened Sections 3(3)(c) and 3(3)(d) r/w Section 3 (1) of the Act. M/s Amreesh Neon Pvt. Ltd. (Appellant No.1) and Manish Thakkar (Appellant No.2) along with other parties were found guilty of bid rigging and cartelisation in a Tender process initiated by SBI Infra Managemnt Solutions Pvt. Ltd. (SBIIMS). Brief facts of the case 2. The present case relates to a tender issued by SBIIMS, a wholly owned subsidiary of the State Bank of India (SBI). The tender, floated on February 8, 2018, called for the procurement and installation of s....
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....alleging that the vendors had engaged in bid-rigging and cartelization. The complaint asserted that the vendors, including Amreesh Neon Pvt. Ltd., had colluded to manipulate the tender process, fix prices, and allocate market territories. (vii) Based on the aforesaid complaint The CCI initiated a suo motu investigation under Section 19(1) of the Competition Act, 2002, based on the complaint and other internal reviews. The CCI directed the Director General (DG) to conduct an investigation into the allegations of anti-competitive behavior. (viii) The DG submitted his final Investigation Report on 22.06.2021, concluding that Amreesh Neon Pvt. Ltd. and several other vendors had contravened Sections 3(3)(c) and 3(3)(d) of the Competition Act. The report cited the June 2 and June 4 emails as clear evidence of price-fixing and market allocation. (ix) The CCI passed its order on 03.02.2022, after reviewing the DG's report, and hearing all the opposite parties (OPs) and found that the OPs in violation of Sections 3(3)(c) and 3(3)(d) of the Competition Act. Accordingly, the CCI under Section 27 of the Act imposed penalties on the OPs involved, including Amreesh Neo....
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...., only for reduction in the penalty imposed on Appellant No.1 on the argument that the penalties imposed are disproportionate to their involvement and role. 5. The CCI has imposed the following penalties on appellants: a. Amreesh Neon Private Limited/ Appellant No. 1: Rs. 32,15,795/- b. Mr. Manish Thakkar/ Appellant No.2 (MD of Amreesh Neon): Rs. 31,200/- The appellants contend that these penalties are disproportionate, particularly considering that their role in the alleged bid-rigging was minor. The appellants argue that the CCI erred by considering the total turnover of Amreesh Neon Private Limited, instead of focusing on the relevant turnover linked to the tender in question. The counsel submitted that the relevant turnover pertains only to illuminated products, which averaged Rs.19,77,73,440 over three years (FY 2015-16 to FY 2017-18). The CCI, however, included unrelated product lines, such as unilluminated products, furniture, and trading activities, inflating the turnover to Rs.32,15,79,533. The details of the relevant turnover as submitted by their CA are given below:- Particulars FY 2015-16 FY 2016-17 FY 2017-18 Total Turnover Ave....
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....posed in respect of the infringing product, the 'maximum penalty' imposed in all cases be prescribed on the basis of 'all the products' and the 'total turnover' of the enterprise. It would be more so when total turnover of an enterprise may involve activities besides production and sale of products, like rendering of services etc. It, therefore, leads to the conclusion that the turnover has to be of the infringing products and when that is the proper yardstick, it brings home the concept of 'relevant turnover. , (vi) Even the doctrine of 'proportionality' would suggest that the Court should lean in favour of 'relevant turnover'. No doubt the objective contained in the Act, viz., to discourage and stop anti-competitive practices has to be achieved and those who are perpetrators of such practices need to be indicted and suitably punished. It is for this reason that the Act contains penal provisions for penalising such offenders. At the same time, the penalty cannot be disproportionate and it should not lead to shocking results. That is the implication of the doctrine of proportionality which is based on equity and rationality. It is, in fact, a constitutionally protected rig....
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....t has also repeatedly used same principle of interpretation. It needs to be repeated that there is a legislative link between the damage caused and the profits which accrue from the cartel activity. There has to be a relationship between the nature of offence and the benefit derived therefrom and once this co-relation is kept in mind, while imposing the penalty, it is the affected turnover, i.e., 'relevant turnover' that becomes the yardstick for imposing such a penalty. In this hue, doctrine of 'purposive interpretation' as well as that of 'proportionality' overlaps." 7. The counsel for appellants argue that their role in the alleged contravention was peripheral. They were only marked as "CC" in emails dated 02.06.2018 and 04.06.2018 and did not participate actively in any bid-rigging discussions or meetings. The key participants were OP-6 and OP-7, yet the penalty imposed on the appellants was uniform, without considering their lesser involvement. 8. Accordingly, the counsel for Appellant No.1 prayed for reduction in the penalty from Rs.32,15,795/- to a figure based on the relevant turnover. Submissions by the respondents: 9. The counsel for main Respondent CCI submit....
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....may be tried for the original violation and face full penalty. 13. He further stated that the relevant regulations governing this are the CCI (Lesser Penalty) Regulations, 2009 ("Regulations"). Regulation 3 outlines the conditions for obtaining a lesser penalty under Section 46. To qualify, the applicant must: "... a) cease to have further participation in the cartel from the time of its disclosure unless otherwise directed by the Commission; b) provide vital disclosure in respect of contravention of the provisions of section 3 of the Act; c) provide all relevant information, documents and evidence as may be required by the Commission; d) co-operate genuinely, fully, continuously and expeditiously throughout the investigation and other proceedings before the Commission; and e) not conceal, destroy, manipulate or remove the relevant documents in any manner that may contribute to the establishment of a cartel." 14. The counsel for respondent argued that the Appellants in the given case, failed to meet any of the given qualifying criteria. OP-5 was fully involved in the cartel, as evidenced by their bids mirroring the prices stated in the concerned emails, as well as the many co....
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....ts of this Tribunal wherein the aforesaid order of CCI in the present case, was challenged by other OPs in Competition Appeal (AT) No. 24 & 26 of 2022 passed on 27.07.2022 and further in Competition Appeal (AT) No. 21 & 65 of 2022 dated 23.05.2023. These appeals were heard and dismissed on merit and this Tribunal did not find any fault with the order of CCI. No appeal was filed before the Hon'ble SC in the first set of appeals decided in this Tribunal. In the second set of appeal decided by this Tribunal upholding the order of CCI, an appeal was filed in Hon'ble Supreme Court and the same has already been dismissed. 20. The only issue under consideration here is whether the penalty imposed on Appellant No.1 is proportionate to the offence and whether it meets the criteria laid down in Excel Crop Care Ltd. vs CCI (supra). In this regard, we have looked into the relavant paras 113-117 of the impugned order, which is reproduced below : 113. The twin objectives behind imposition of penalties are: (a) to reflect the seriousness of the infringement; and (b) to ensure that the threat of penalties will deter the infringing undertakings from committing contraventions. Therefore,....
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....run contrary to the underlying spirit of the judgment of the Hon'ble Supreme Court of India in Excel Crop Care judgment. Taking such a pedantic interpretation would provide a virtual free run to the infringing parties and an effective immunity against any antitrust action for their anti-competitive behaviour. This cannot be the purport or intent either of the Parliament or the Hon'ble Supreme Court of India in laying down the parameters and perimeter for imposition of monetary penalty upon the contravening parties. Therefore, such contentions by the OPs need to be rejected. 116. In this backdrop, the Commission proceeds to examine the plea raised by OP-6 that it has no income/ revenue from the signage business. As previously detailed in this order, after the award of work to OP-1, OP-6 executed the work in Andhra Pradesh and Telangana in respect of the Impugned Tender on behalf of OP-1. Further, as per the contention of OP-6 itself, MMDD manufactured a small volume of the works allotted to OP-1 in the Impugned Tender and billed the same to OP-6 who, in turn, billed the same at the same price to OP-1. Moreover, as already noted, Mr. Naresh Kumar Dasari of OP-6 has a....
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....CCI noted that in the present matter the OPs are engaged in the business of supply of printed advertising/ marketing material which includes signages. It is not possible to classify different types of signages in multiple products in terms of Hon'ble SC's Judgmemnt in Excel Crop (supra) rather the signages constitute different varieties of the same product. The CCI also differentiated that the contention of the OPs that turn over derived from impugned tender alone should be considered is in the teeth of Excel Crop Care Judgment supra. 22. In this context, we have looked into the aforesaid Judgment of Excel Corp Care (supra) closely, regarding the facts of the case and whether the aforesaid ratio applies squarely to the present appeal. 23. In the Excel Crop Care matter (supra) the matter related to procurement by FCI for Aluminium Phosphide tablets (for short APT) of 3 gm each between the year 2007-2009. The relevant para of the judgement are extracted below: 3.2. There were only four manufacturers of APT, namely, M/s Excel Crop Care Ltd.. M/s UPL, M/s Sandhya Organics Chemicals (P) Ltd. (which are the three appellants herein) and Agrosynth Chemicals Ltd. 3.3....