TaxTMI 
TaxTMI 
2024 (10) TMI 835
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....CIAL) These two appeals are against the impugned judgement dated 15.01.2019 passed by the Ld. CCI. 2. The learned senior counsel for the appellant fairly conceded that the appellant is not interested to contest on merits, and is inclined to deposit the monetary penalty within three weeks provided the interest amount payable on monetary penalty is waived, lest the Ld. Tribunal may reduce the penalty. It is submitted since the instant Appeal is pending consideration since 2019, the interest is mounting, hence the appellant thought it appropriate it should pay the penalty and get a waiver of interest. Qua power to waive interest the appellant relies upon Regulation 5 of CCI (Manner of Recovery of Monetary Penalty) Regulations, 2011 as under: "5. If the amount specified in any demand notice is not paid within the period specified by the Commission, the enterprise concerned shall be liable to pay simple interest at one and one half per cent, for every month or part of a month comprised in the period commencing from the day immediately after the expiry of the period mentioned in demand notice and ending with the day on which the penalty is paid: Provided that the Commission may red....
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....ving fore-knowledge about the time of price increase to be effected by this primary cartel, used the same as leverage to negotiate and increase the basic price of the batteries being sold by it to OP-3. OP-2 would lead OP3 to believe that the Market Operating Price (hereinafter "MOP") and Maximum Retail Price (hereinafter "MRP") of all the major manufacturers of DCB would increase in the near future and OP-3 would be in a position to pass on the increase in the basic price of DCB to the consumers in the market because of such increased MOP/ MRP. 14. Clarifying such position, the Commission now proceeds to examine the matter on merits. From the report, it is noted that OP-2 was the contract manufacturer of zinc carbon DCB for OP-3. A PSA dated 13.01.2012 was entered into between them whereby it was decided that OP-3 would procure DCB 'R-6 UM-3-UM 'AA' Size (Economy)' and 'R-6 UM-3-UM 'AA' Size (Premium)' from OP-2 to sell in the market. OP-2 and OP-3 also agreed on other specific details by way of Supplementary PSAs dated 13.01.2012 and 23.03.2013. Clause 8.2 of the PSA, which is reproduced below, has been found by the DG to be anti-competitive: "Either party herein agrees and und....
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....enefits to the consumers or promotion of any technical, scientific or economic development. Therefore, such contention raised by OP-3 is not acceptable. 33. Another contention raised by OP-3 is that it consistently suffered losses in the Economy DCB market during the period of investigation which can be seen from its financial statements. However, the Commission notes from the DG Report that Godrej is a multi-product company. It has 14 business units, one of which is Godrej Prima. Godrej Prima has 4 business units - Godrej AV Solutions, Godrej Vending Machines, Godrej Vending Services and Godrej Batteries (OP-3). OP-3 itself is in the business of sale of multiple products i.e. consumer batteries and allied products such as chargers, torches (flashlights) and portable power banks. In view of the Commission, even if OP-3 did consistently sustain losses in the Economy DCB market, it could have offset the same against the high profits earned by it in any other product segment. Further, though usually the motive behind cartelisation is earning of supra normal or high profits; however, in view of the clear evidences on record of cartelisation in the present case, mere absence of profit....
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....itially, it was mentioned on the batteries that they were manufactured by PECIN; but after receiving feedback from the market that Godrej was undercutting our prices in some markets claiming that their product is identical to PECIN's product, we had an agreement with Godrej that their batteries would only indicate that they are being marketed by Godrej without mentioning the manufacturer. Q8. You are being shown a copy of the Product Supply Agreement (PSA) dated 13/01/2012 entered into between Godrej & Boyce Manufacturing Company Ltd. and PECIN which has been furnished by PECIN along with its reply dated 15/06/2017 to this office. Para 8.2 of the PSA reads as under: "Either party herein agrees and undertakes that it will not take any steps which are detrimental to the other party's market interests." Pl. elaborate. Ans. The prime intention of Panasonic in inserting this clause was that in case Godrej starts undercutting and taking away our market, as a manufacturer we wanted to have some control. In case they disturbed our market after buying from us, we had the option to stop supplies to them after giving them one month's notice. This clause was inserted by us ....
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....e dry cell battery market has not brought any improvement in production or distribution of dry cell batteries, nor has it resulted in promotion of technical, scientific or economic development by means of production or distribution of dry cell batteries in the market. In other words, no positive outcome in terms of collective benefits to the community as a whole, could be demonstrated in the present case. 9. Admittedly a co-accused Geep was also convicted by the Ld. Commission. However, but in appeal viz. Ms Pushpa M Vs CCI, Competition Appeal (AT) No.87 of 2018 decided on 31.03.2023 in similar circumstances it was held:- 19. In the present case, the PSA entered into between Geep Industries and PECIN, while being about the manufacture and supply of dry cell batteries by PECIN to Geep Industries, it is Clause 4.3 that has been found to be offensive by the CCI, clause 4.3 of PSA is as follows: "4.3- Since price to GBIPL is very special price and that PECIN too is in the business of selling dry cell batteries of the same category in the same market, it is advised and agreed that GBIPL will not take steps which are detrimental to PECIN's market interest particularly with respect t....
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....s and circumstances of the present cases, we are, persuaded to hold the view that in the present case Geep Industries which holds a miniscule share of the total market, which is less than 1%, was not in a position to influence competition in the market by resorting to price fixation by participating in the 'bilateral ancillary cartel' and, therefore, this would be a mitigating factor while imposing penalty on Geep Industries. 33. We also take note of the fact that Geep Industries has turned in losses for the years 2010-11, 2011-12 & 2012-13 and given small profits in later years, and therefore it has barely managed to hold on to its meagre market share to survive in the said market. Thus, Geep Industries is only a minor player in the dry cell batteries market which, in order to run its business, was buying unbranded batteries from PECIN. PECIN, being the complainant of the Lesser Penalty Application, has received benefit and no penalty has been imposed on it by the CCI, though it is a significant player in the market. It was, through the clause 4.3 of the PSA, attempting to save its interest in the said market and also imposing an anticompetitive condition in the PSA, but Geep wa....
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....y's market interests. 11. Admittedly Godrej was a small player in the field of dry cell market and had an insignificant market share like Geep. Godrej, admittedly, was not in a bargaining/negotiating position as compared to Panasonic. Further, Godrej suffered losses in the market for dry cell batteries and though Geep had also suffered losses for the years 2010-13 but made small profits in later years. Both the present appellant and M/s Geep were found in contravention of the Act by the Ld. CCI on the basis of the Product Supply Agreement(s) and e- mail correspondences between them and Panasonic. The appellant's Product Supply Agreement was, however, discontinued in November, 2014 though it exited the dry cell battery market in July, 2019 in India. The impugned order notes that Godrej had also filed a complaint dated 25.11.2015 before the Director General of Anti-Dumping and Allied Duties on the possibility of cartelisation in the dry cell batteries' market. 12. In Excel Crop Care Ltd V CCI & Anr (2017) 8 SCC 47, the Hon'ble Supreme Court of India held that the penalty imposed by the CCI must (a) relate to the relevant turnover of the relevant business in the relevant market alon....