TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1164
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....on of India (CCI) under Section 26(2) of the Competition Act, 2002, ('Act'), in Case No. 24 of 2022. The Appellant seeks to set aside the impugned order and seeks direction for investigation to be caused by Director General into the matter. 2. We have heard the counsels of both sides and also perused the material placed on record. 3. The Appellant - M/s Apaar Infratech Private Limited had provided information filed against three entities for bid rigging and abuse of dominant position against the Respondent No. 4 - Penetron India Private Limited, Respondent No.5 - Penetron International Limited Inc. and Respondent No. 6 - Crystal Deep Seal Corporation Limited. The synopsis of information under Section 19(1)(a) of the Act provided by the Appellant to the Commission is at pages 84 to 190 of the APB, which is noted as below: "1. This information is about violation of Section 4 of the Competition Act, 2002 ('the Act') leading to another violation of Section 3 of the Act. 2. Prolonging the productive life of Heavy Infrastructure Projects ('HIPs') is a constant concern of engineers in all HIPs. One of the important factors, which affect the life of ....
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....l of MSRDC. 8. After being presented with this opportunity, the Apaar went through the different guidelines, as contained in communications from the MSRDC to different contractors, to check the eligibility criteria for being selected as a vendor for the MSM project. However, to its dismay, Apaar found that, because of not fulfilling one of the parameters contained in guidelines viz. accreditation with Indian Road Congress ('IRC'), it was not eligible to even being considered for the MSM project. Purely driven by curiosity, the Apaar enquired and found that the Identified Vendors List for CDA has three names in the list, as under: I. CD Seal Waterproofing, USA II. Penetron India Private Limited III. Slurry Inc., USA 9. The IRC accreditation is applicable only for new products and not applicable for established proven products, having a successful track record, as was the case of Xypex product being supplied by the Apaar. Further, the IRC accreditation process itself would have its own timelines for clearance, and due to all this the Apaar merely blamed his luck for the lost opportunity. 10. Very soon, to its shock, the Ap....
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....ole procurer of this material and having a dominant position in the relevant market had unfairly and discriminatorily included this condition of IRC accreditation in its requirements which, by itself, were not adhered to while making the final Identified Vendors List. 16. Apparently, this abuse of dominant position by MSRDC facilitated a collusive conduct of Penetron India Private Limited ('OP-3'). This resulted in OP-3 and its associate companies to manage entry of ineligible parties in the Identified Vendors List without fulfilling the basic eligibility condition and either not existing or not having the capacity to do any supplies of CDA. 17. Because of the aforesaid violations of the Act, many vendors, including the Informant were denied market access on a huge scale of projects, the type of which are not available to vendors every day and hence this Information." 4. Basis information provided under Section 19(1)(a) of the Competition Act, 2002, the Appellant had sought the following reliefs from the Commission: "12.1. The OP-1 [MSRDC] had indulged in abuse of dominant position, violative of Section 4 of the Act, through the insertion of &#....
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.... of this material, the Authority shall provide the cost variation at the rate of INR 285/ KG, to the respective EPC Contractor, considering supply, transport, storage, wastage, and all other expenditures, GST at 18% shall be paid extra." Per this guidelines, MSRDC allowed cost variation for the use of Crystalline Durability Admixture (CDA) for Construction Packages 3 to 7 for NMSCEW project work upto the rate of Rs. 285 per KG to the respective EPC contractor. It is claimed by the Appellant that the identified vendor list for CDA, prepared by MSRDC, had only three names in the list given as under: (i) Penetron India Private Limited (OP-3) (ii) CD Seal Waterproofing, USA (OP-6) (iii) Slurry Inc., USA (OP-7) Only these suppliers could have supplied the CDA to the EPC Contractor. Appellant claims that apart from Penetron India Private Limited, the other two are dummy business entities and do not really exist. The other two entities also didn't have Indian Road Congress (IRC) accreditation and still they were in the identified vendor list. It is brought to our notice that MSRDC is the sole authority to identify the vendor list. They put an arbitrary condit....
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.... on coming into contact with water, resulting in near-100% waterproofing of these structures, therefore leading to the higher life of the projects. OP-1 identified and prepared an 'Identified Vendors List' for different materials, including CDA, which is being used as a waterproofing chemical in the MSM Project. The contractors executing different packages of the project are duty-bound to source CDA from one of the vendors included in the Identified Vendors List." 8. We note that that Commission had initially considered the information in its meeting held on 13.07.2022 and decided to forward a copy thereof to OP-1 i.e. MSDRC and decided with a direction to file its reply by 30.07.2022 with an advance copy to the Informant. OP-1 did not file any reply by the due date. In these circumstances, the Commission considered the matter in its ordinary meeting held on 10.07.2022 and decided to pass an appropriate order in due course. 9. The Commission has noted that informant is primarily aggrieved of alleged cartelisation of OP-3, OP-4 and OP-5 in supply of CDA goods to OP-1 and also of alleged abuse of dominant position of OP-1 i.e. MSRDC by insertion of Indian Road Congress ....
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.... discriminatory condition of IRC accreditation in the purchase of CDA by the contractors. "11.2. SECTION 4(2)(a)(i): The OP-1 had directly imposed an unfair and discriminatory condition of IRC Accreditation, in purchase of CDA by the contractors. The OP-1 had indulged into an exclusionary conduct of discriminating between the vendors on the basis of IRC Accreditation. As already mentioned, the IRC is not mandatory in nature but rather recommendatory. Further, only new materials can avail IRC accreditation, but the Informant being in the market for several decades and the Xypex product being in the market for over 50 years, shall not be compelled to avail IRC Accreditation. 11.3. Therefore, inclusion of IRC accreditation led to exclusion of several other suppliers/vendors like the Informant. The impact of insertion of IRC led to creation of an environment where cartelisation was bound to occur. Further, in absence of any equal alternative sales opportunity for other market players, they suffered huge losses as they missed out on supplying Xypex in the MSM project. In addition to this, the contractors lacked any option apart from OP-3 in the Identified Vendors List,....
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....). CDA is one of the most effective chemical combinations which is used to ensure that water is blocked from entering into the inner structure of any reinforced cement concrete ("RCC") highways or expressways or similar structures. On 19 November 2019, Respondent No. 2 published Guidelines, Specifications and Variation ("GS&V") for the use of CDA for package nos. 3 to 7 of the MSM Project. In accordance with the GS&V established by Respondent No. 2, and the qualifying criteria identified for CDA used in the MSM Project, the IVL included three entities namely: (a) Respondent No. 4 / OP-3-Penetron India; (b) CD Seal Waterproofing ("Respondent No. 7 / OP-6"); and (c) Slurry Inc. ("Respondent No. 8 / OP-7"). 14. The Appellant during hearing placed the following graphic to canvass his arguments: Schematic representation of allegations 15. Appellant argues that if any query arises before arriving at a decision to form a prima facie opinion, it is a clear case of investigation, which was not done by the Commission. Further it argues that R4 has entered into an agreement with R5 and R6 regarding provision of the product called CDA to R2 and limiting its supply, thereby violating S....
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....Section 4(2)(a)(i) and 4(2)(c) of the Act and that R4, R5 and R6 had entered into an agreement regarding provision of Crystalline Durability Admixture to R2 with the objective of determining the sale price of Crystalline Durability Admixture, increasing the production and supply of Crystalline Durability Admixture and getting the entire market share for R4 which had appreciable adverse effect on competition and was in violation of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act. 17. The Commission held that the agreements envisaged under Section 3(3) of the Competition Act, 2002 were agreements between the entities at the same stage of production chain, generally between two rivals for either fixing prices or limiting production whereas in the present case the R4 was an importer of Penetron products, importing them from R5 and therefore the relationship between R4 and R5 was vertical in nature and the only relation between R4 and R6 was having a common registered address and CEO. The Commission therefore held that the allegation made by the Informant was bald and not supported by any evidence to show any arrangement/collusion between R4, R5 and R6 which could be ex....
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....as follows: "13. It is abundantly clear from the provisions of Section 3(3) of the Act that horizontal agreements are arrangements between entities at the same stage of the production chain, generally between two rivals, for either fixing prices or limiting production or sharing markets, etc. In the present case, as per the Information, OP-3 is an importer of 'Penetron Products', importing these products from OP-4. Therefore, the relationship between OP-3 and OP-4 is vertical in nature. As regards OP-5, it has been alleged that OP-4 and OP-5 are related by way of a common registered address and CEO." 21. Thus, we don't find any infirmity in such observations and they are just, legally tenable and does not warrant any interference from our side. 22. We also find from the perusal of the Appeal that the Appellant is aware that R4 imports CDA from R5 and supplies the same in the market in India under the brand name 'Penetron'. Further, R5 does not operate directly in the same business as R4, i.e., the sale of CDA in India. Therefore, R4 and R5 operate at different level of production chain and hence there exists a vertical relationship between R4 and R5. ....
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....ught to be examined, ought to be taken as Crystalline Durability Admixture in Heavy Infrastructure Projects. The Commission found that the Crystalline Durability Admixture as a water proofing material was used in various civil structure involving cement/concrete in Heavy Infrastructure Projects such as expressway, dams, thermal power projects etc., and therefore such projects could not be said to be limited to State of Maharashtra as such works are being carried out throughout the country and therefore, the relevant market was market for procurement of Crystalline Durability Admixture in Heavy Infrastructure Projects in India and further held that R2 was not a dominant player in the aforesaid market as it had operations only in Maharashtra and therefore, there was no case for contravention of provisions of Section 4 of the Competition Act, 2002 and accordingly the matter was closed under Section 26(2) holding that there exists no prime facie case. It has concluded as follows: "16. The Commission now proceeds to analyse the case on the touchstone of the provisions of Section 4 of the Act. For analysing the allegations brought out in the Information under provisions of Secti....
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....delineated the whole of India as the relevant geographic market. Appellant in the Information filed has not even alleged, let alone support the contention that CDA is used only in Maharashtra. Therefore, the delineation of the relevant geographic market as Maharashtra is without any basis and has, hence, we find that it has been correctly rejected by the Commission. 28. Furthermore, it was the case of the Informant itself that CDA as a waterproofing material is used in any civil structure involving cement/concrete in HIPs such as expressways, dams, hydro and thermal power projects and such projects are being built all over the country and consequently, Commission has held the relevant geographic market to be the whole of India. The Information supplied has no basis to conclude that MSRDC was a dominant procurer of CDA in whole of India. 29. We also note that in the present Appeal, the Appellant has not challenged the delineation of the relevant geographic market as the whole of India, rather it has submitted that the MSRDC is dominant in the whole of India. The Appellant has relied upon a list of road projects named as expressways and has stated that the requirement of CDA wa....
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....f Respondent No.2 - MSRDC which is found to be a non-dominant enterprise and therefore, there is no requirement for a reference by the Commission to another statutory authority. We do not find any infirmity in such a conclusion and the Commission could not have recommended to other such statutory authorities under Section 21A as it had not found any anti-competitive conduct by MSRDC as was found to be not a dominant enterprise under Competition Act, 2002. We therefore don't find any infirmity in the order of the Commission that the Commission has no jurisdiction over the unfair and discriminatory conduct of a non-dominant enterprise. The Appellant is always free to approach other statutory authorities for appropriate relief as per the applicable laws. 33. Furthermore, reliance by the Appellant on Section 2 (h), Competition Act, 2002 to say that a government department is included in the definition of enterprise is wholly misleading since the effect of the section is to bring them within the ambit of competition law, but the pre-condition of dominance is not done away with. 34. Furthermore, it is the case of the Appellant that having forwarded a copy of Information to Maharash....
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....an opportunity to respond. From the facts and circumstances of the case we find that the CCI had forwarded a copy of the Information to Respondent 2 (OP1 MSRDC) giving it time till 30.07.2022 to file its reply. However, no reply was filed by OP1 and consequently the CCI, on 10.08.2022 noted that OP1 had neither filed a reply nor sought an extension of time to file the same and consequently, the CCI decided to pass an order in due course. The application for extension belatedly filed by Respondent 2 (OP1) was never considered by the CCI and therefore, no prejudice has been caused to the Appellant. 37. We observe that Section 26(1) requires that a prima facie case must exist and only then, an investigation may be ordered by the CCI against the opposite parties. The Hon'ble Supreme Court in Competition Commission of India (supra) has observed that: "[...] in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter." 38. From the perusal of records and the submissions we note that....