Silarpuri Colonizers v. Emaar MGF

In what prima facie looks like a consumer complaint, the Competition Commission of India (CCI) in an order dated May 16, 2012, has held there has been no abuse of dominance by Emaar MGF.


The order can be accessed here.


A detailed analysis of the orders will come up in the round-up shortly.

GKB Hi Tech Lenses v. Transitions Optical

In an order dated May 16, 2012, the Competition Commission of India (CCI) has held that there has been no contravention of Sections 3 and 4 of the Competition Act, 2002 by  Transitions Optical India Private Limited (Transitions)


GKB Hi Tech Lenses Private Limited (GKB) filed information with the CCI stating that Transitions was a dominant player in the plastic photochromic lenses and was abusing its dominant position by indulging in a number of anti-competitive practices.


The main order is available here. The dissenting orders of Mr. R. Prasad and Mr. M.L. Tayal are available here and here respectively.


A detailed analysis of the orders will come up in the round-up shortly.

Combinations Update

In a first, the Competition Commission of India (CCI) has stated in an order dated November 28, 2011 that a notice is not a valid notice in terms of Section 6 of the Competition Act, 2002.


Fomento (Karnataka) Mining Company Private Limited's notice for acquisition of the Redi Business of Tata Metaliks was held not be a valid notice as the thresholds mentioned under Section 5 of the Competition Act, 2002 were not met.


The order can be accessed here.

Combinations Update

The Competition Commission of India (CCI) has approved the purchase of Zero Coupon Optionally Convertible Debentures of RB Mediasoft Private Limited, RRB Mediasoft Private Limited, RB Media Holdings Private Limited, Adventure Marketing Private Limited, Watermark Infratech Private Limited and Colorful Media Private Limited by the Independent Media Trust.


The order is available here.

National Competition Policy in final stages of implementation

Greetings folks! I apologise for my absence from the blog in the past few weeks. I've been too busy juggling exams, searching for a house for the summer and resisting the temptations of the wonderful english summer!

I have only been able to have a 'quick look' at the draft  National Competition Policy (NCP) which the government has announced is in the final stages of adoption (click here for the press release). So I strongly suggest that readers also have a look at the actual draft NCP which can be accessed here.

First a few of the salient features of the draft NCP:

1) Purpose :According to the foreword the NCP is aimed at "laying down an overarching policy framework for infusing competition principles in various statutes, regulations and policies of the Government and promoting a competitive market structure in the economy..." The NCP is meant to be an overall policy aimed at infusing 'competition culture' into state regulations.

2) Relationship with competition law: As the draft succinctly puts it competition law is a sub-set of competition policy. Thus while competition policy includes all government measures aimed at promoting competitive markets, competition law is specifically aimed at checking anticompetitive behavior of enterprises.

3) Need for competition policy: The draft goes on to identify the link between a healthy competition culture and accelerated economic development particularly because of the links between competition policy and other policies like fiscal policy, trade policy etc.

4) Premise: The draft NCP notes in particular that very often state policies and laws are themselves responsible for distorting the market. The NCP aims to correct this situation and further aims to bring about transparency and accountability in governance (perhaps a much needed thing given the recent record of the government ;) ). Interestingly the NCP stresses here that the it is not meant about to bring about complete deregulation and laissez faire markets and recognizes the need for a balance between competition and other policy considerations like prudential supervision, social service commitments etc 

5) Principles: The NCP then goes on identify the main principles of the NCP the most important ones being effective enforcement of the Competition Act, institutional separation between policy making and operations, fair behavior by public utilities (including access to essential facilities), competition friendly public policies and coordination between the CCI and sectoral regulators

6) Implementation: The policy is to be implemented through the following methods

a) Defined deviation: Any deviation from the competition principles must only be to meet other desirable national objectives and must be clearly spelt out.

b) Competition Impact Assessment (CIA): Existing government policies are to be subject to review from a competition perspective and any proposed policies will have to go through a competition impact assessment. Sectoral regulation must also take into account competition principles and must be diluted as and when the sector becomes more competitive. In-house cells will be set up within ministries/departments at the Central, State and local level to conduct the CIA. The in-house cells will be assisted in this task by the National Competition Policy Council (NCPC).

c)NCPC: The NCPC will also be the main body overseeing the implementation of the NCP and will encourage adoption of the competition principles and undertake sectoral reviews and studies.

d) Coordination between CCI and sectoral regulators: This has been an issue of much controversy in the past and the NCP seeks to address it by envisaging a framework which seeks to identify and address areas of concern while ensuring that all bodies stick to their area of expertise. The exact details of the framework are still unknown. A forum for exchange of ideas between the CCI and the sectoral regulators through mutual cooperation is also proposed.

Now for my thoughts. Lets start with the positives first

1) The NCP, if implemented well has the potential to completely transform the economic regulatory regime of the country and could possibly be the most important reforms since the 1991 liberalization process. The NCP has great potential to bring in competition principles into regulation of the economy thereby bringing in transparency and accountability in governance.

2) The NCP seeks to address in a coherent way of number of competition issues that arise with respect to state authorities which many other advanced competition jurisdictions still have trouble dealing with.

That being said there are some areas of concern which may need further clarification

1) Competition Policy and Competition law: While it may be simple enough to state in theory that while competition law applies to 'enterprises' the competition policy is aimed at state measures, distinguishing in practice between the two is bound to be a daunting task. Expect cases and controversies galore on the meaning of 'enterprise' under the Act. E.g The Railways Ministry is certainly a government department but the Indian Railways has been held to be an 'enterprise' subject to competition law. Can the Indian Railways claim that a certain measure has already been subject to CIA and hence not amenable to competition law?

2)NCPC and CCI: The draft NCP seeks to establish the NCPC consisting of representatives from the CCI , Planning Commission, Finance Ministry and other ministries. A lot of the tasks assigned to the NCPC like advocacy and undertaking sectoral reviews are at present also carried out by the CCI. More clarity will be needed on the exact demarcation of tasks between these two bodies so as to avoid duplication.

3) 'Essential Facilities': The draft NCP places special emphasis on the need for dominant infrastructure owners to grant access to open up competition. It must be kept in mind that the essential facilities doctrine is highly controversial in other jurisdictions as granting such access may actually be bad for competition in the long term as it discourages other firms to invest in building new infrastructure. While it is acceptable to mandate access to facilities  owned by state entities (which have traditionally held a monopoly through state protection) to open up the sector to  competition caution must be adopted in applying the principle to purely private enterprises. Although most of the examples mentioned by the policy do relate to state owned infrastructure like railways, electricity etc the NCP just mentions 'dominant firms' which could include private firms as well. Another point to be noted here is that there is a growing recognition in other jurisdictions that sectoral regulators are more suited to the task of mandating access to essential facilities than competition authorities because of the difficulties of monitoring and setting access prices. The draft NCP certainly seems to imply that it is the regulators who will take care of such access but a clarification would be desirable.

Phew that was a long post! Hope you guys find it useful though!

Combinations Update

The Competition Commission of India (CCI) has approved the purchase of Fidelity Mutual Fund's assets in India by L&T Finance Limited. This is the second recent transaction in the mutual fund sector which was examined by the CCI after the order approving the combination between Nippon Life Insurance Company Limited and Reliance Capital Asset Management Limited.


The latest order is available here.

Combinations Update

The Competition Commission of India (CCI) has passed an order dated May 17, 2012 by which it has acknowledged the withdrawal of the notice filed by Nirma Limited and Nirma Industries Private Limited.


The order can be accessed here.

Weekly Combinations Round-up #1

{Nippon Life Insurance Company} {Reliance Capital Limited} {Reliance Capital Asset Management Limited}

In the first order in the asset management / mutual fund sector, the Competition Commission of India (CCI) approved a combination between Nippon Life Insurance Company, Japan (Nippon), Reliance Capital Limited (RCap) and Reliance Capital Asset Management Limited (RCAML).

The notice was filed pursuant to a share purchase agreement and shareholders' agreement between Nippon, RCap and RCAML by which Nippon agreed to purchase 26% of RCAML from RCAP or other existing shareholders of RCAML.

RCAML has been authorised by the Securities and Exchange Board of India (SEBI) to act as an Asset Management Company (AMC) to Reliance Mutual Fund and is also a SEBI registered portfolio manager.

Nippon operates globally in relation to providing asset management services and portfolio management services but has no direct presence or operations in India except an existing 26% stake in Reliance Life Insurance Company Limited.

The CCI in its order stated, "Further, it is observed from the information available on the website of the SEBI that there are 40 other AMCs registered with SEBI providing services similar to the asset management services provided by RCAML in India and there are more than 250 portfolio managers registered with SEBI providing services similar to the services provided by RCAML in India."

Copy of the order is here.


Notice filed on: April 20, 2012
Date of Order: May 8, 2012

{Reckitt Benckiser Investments India Private Limited} {Paras Pharmaceuticals Limited} {Halite Personal Care India Private Limited}

The CCI approved a combination between Reckitt Benckiser Investments India Private Limited (Reckitt), Paras Pharmaceuticals Limited (Paras) and Halite Personal Care India Private Limited (Halite).


The notice was filed pursuant to approval by the boards of directors of Reckitt, Paras and Halite to a scheme of amalgamation and arrangement under sections 391-394 of the Companies Act, 1956. The scheme consisted of two steps. Firstly, Reckitt would be merged with Paras. Upon completion of the first step, the personal care division of Paras would be demerged into Halite. The parties also filed for condonation for delay in filing of the notice.


Reckitt is a wholly owned subsidiary of Reckitt Benckiser (Singapore) Pte Ltd. Paras is a wholly owned subsidiary of Reckitt. Halite is also a wholly owned subsidiary of Reckitt Benckiser (Singapore) Pte Ltd.


While Reckitt only held shares in Paras and had no separate business of its own, Paras was engaged in the business of manufacture of pharmaceuticals, personal care products and other products. Halite had not commenced business till the date of the notice.


Considering the fact that the ultimate control of the activities of the parties would remain with the same group, the CCI observed that the proposed combination is not likely to give rise to any adverse effect on competition in India.


Copy of the order is here. Copy of the order on condonation of delay is here.


Notice filed on: February 23, 2012
Date of Order: May 8, 2012

Competition laws will apply to all....

At the Workshop on Competition Law Enforcement and Stated Owned Enterprises organised by the Competition Commission of India (CCI) and United Nations Conference on Trade & Development (UNCTAD), which concluded today, Mr. Verappa Moily, the Minister for Corporate Affairs, has stated that competition laws will apply to all sectors without exception. Mr. Moily has been quoted as saying, "Nobody will be an exception, particularly on enforcement of competition law. I think one has to conform to the rules, whether it is civil aviation or any sector".


Though this is a welcome statement from the Minister, there is a slight flip-flop from the Government on this front as the Banking Laws (Amendment) Bill, introduced by Mr. Pranab Mukherjee, the Minister of Finance, is pending in the Lok Sabha. The Bill proposes a clear exemption to the banking sector from application of the merger control regime in India. Incidentally, the Bill was also up for consideration today but was not passed by the Lok Sabha on the last day of the Budget session.


The workshop was organised by CCI and UNCTAD on the occasion of three years of enforcement of competition law in India (only the market practice regulation, the market structure regulation / merger control regime came into force on June 1, 2011). The press release from the Ministry of Corporate Affairs is here and the one from UNCTAD is here.

Justice VS Sirpurkar takes over as new chairman of COMPAT

According to a report, Justice VS Sirpurkar has taken over from Justice Arijit Pasayat as the new chairman of the Competition Appellate Tribunal (COMPAT). His appointment was earlier reported here.


As of now, this change is not reflecting on the COMPAT website and the post of Chairman is shown as "vacant".

Competition Awareness in Delhi Schools and Proposed Amendment to the Competition Act

As per a press release from the Press Information Bureau, the Competition Commission of India (CCI) has held workshops in around 15 schools in Delhi in a bid to create awareness on the importance of healthy and fair competition in markets. The Competition Commission of India has designed a small booklet called "Understanding Competition Law" in simplified language which is distributed amongst students during these workshops. Definitely a novel and a praise-worthy move from the CCI.


Also, speculation is rife on how the thresholds under Section 5 would be dealt with in long-awaited amendment to the Competition Act, 2002. Though to be taken with a pinch of salt, according to government sources, the amendment will not bring in exemptions to any particular sectors such as insurance and telecom. What is being suggested instead is that there would be sector-specific thresholds in the Competition Act. We have already discussed yesterday the proposed amendment through the Banking Laws (Amendment) Bill which creates an exemption from Section 5 and 6 of the Competition Act for the banking sector. If true, it would be a welcome move.

The Eminent Persons Advisory Group

The Competition Commission of India has recently constituted an Eminent Person Advisory Group ("EPAG") which will "give broad inputs and advice on larger issues impacting markets and competition, good international practices, improved advocacy etc. to the Commission". 


The members of the EPAG are as follows:

1. Mr. N.R. Narayana Murthy - Former Chairman, Infosys
2. Mr. V.N. Kaul - Former Comptroller and Auditor General
3. Dr. Rakesh Mohan - Former Deputy Governor, Reserve Bank of India
4. Ms. Kiran Mazumdar Shaw - Chairman and Managing Director, Biocon
5. Dr. Bakul Dholakia - Former Director, Indian Institute of Management, Ahmedabad
6. Dr. S.L. Rao - Former Chairman, Central Electricity Regulatory Commission and Former Director General, National Council for Applied Economic Research
7. Prof. N.L. Mitra, Former Vice-Chancellor, National Law School of India University, Bangalore; and
8. Ms. Rohini Nilekani - Chairperson, Arghyam

The press release from the Press Information Bureau is here. Also, news reports from the Hindustan Times and the Hindu Business Line.

The Banking Laws (Amendment) Bill

Thumbs up?

The Banking Laws (Amendment) Bill was recently cleared by the Central Cabinet. The Bill seeks to amend the Banking Regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.


What is interesting from a competition law perspective is that the Bill seeks to exempt the banking sector from the applicability of Section 5 and 6 of the Competition Act, 2002. The proposed Section 2A of the Act states that Competition Act will not be applicable “to any banking company, the SBI, any subsidiary bank, any corresponding new bank or any regional rural bank or cooperative bank in respect of matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition…”


The proposed Section 2A reads as follows:


2A. Notwithstanding anything to the contrary contained in section 2, nothing contained in the Competition Act, 2002 shall apply to any banking company, the State Bank of India, any subsidiary bank, any corresponding new bank or any regional rural bank or co-operative bank or multi-state co-operative bank in respect of the matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition under—
(i) this Act;
(ii) the State Bank of India Act, 1955;
(iii) the State Bank of India (Subsidiary Banks) Act, 1959;
(iv) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970;
(v) the Regional Rural Banks Act, 1976;
(vi) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980;
(vii) the Multi-State Co-operative Societies Act, 2002; and
(viii) any State law relating to co-operative societies.


This issue was discussed by the Standing Committee on Finance (2011-12) of the Lok Sabha before the Cabinet cleared the Bill for introduction in the Lok Sabha. The rationale given by the Department of Financial Services, Ministry of Finance, is as follows:


Banking is some kind of an entity and the trust of people on the banking system is paramount. There are times when decisions have to be taken very quickly. Competition Commission‘s procedures gives sometime for scrutiny and for decision to be taken. Our financial sector in some sense is getting strengthened and it would take sometime to find them as quick to be US or EU kind of a system. So after great deliberations the Government took the view that we will keep the mergers and acquisitions of banks with the RBI. Obviously, when time demands, we will revisit. For the time being, the Government‘s careful consideration is that it remains with the RBI so that we are in a position to ensure the safety, security, trust and confidence of people in the banking system are maintained. Today, until the financial system becomes very strong we need to ensure that the depositors, the customers and stakeholders in the system retain their faith in the financial system of the Government. So, the best way is to keep it within the confines of the Reserve Bank of India. Otherwise, all issues would be published, everything would come into public domain, people would think this is unsafe, and the confidence in the system would be shaken and it would become a run on the bank, not only on one but on other banks also. So, a kind of stability should be provided.


There is a procedure under the existing Competition Act for a certain period of time when application is given should be in the public domain, some investigation has to be made, after investigation, the same has to be proposed to the Commission Members; they have to scrutinize -it can take a good amount of time.


Hon‘ble Members are aware, I know, that certain mergers have been done with an overnight kind of a focus and it has stood the test of time because the confidence of the people in the financial system got restored as a result of such actions were taken. So, that is the reason. Let me look at the NPAs, the financial stability, those kinds of things-unless we come to that mature level, it will take some more time to get into that.


The Standing Committee agreed with the view of the Department and stated that this exemption should be considered as a special case and should be revisited in the future in light of the experience gained by both, the Competition Commission of India (CCI) as well as the Reserve Bank of India.


The explanation of the Department of Finance should be revisited in light of the order in the HSBC-RBS combination. This is till date the only combination in the banking sector which has been decided upon by the CCI. In this case, the CCI received notice of the combination on the March 27, 2012 and the order of the CCI was released on the April 19, 2012.

Further, the Department of Finance states that this exemption "would be revisited... when time demands". This gives a overarching jurisdictional power to RBI on the matter and there is no definitive time frame when this would be revisited. 

Further, it is also pertinent to note that the telecom sector is also lobbying for an exemption from the applicability of the Competition Act in the sector.

An excellent article by Mr. Pradeep Mehta in the Business Standard on this issue is here.


Update (May 18, 2012) - An article by Dr. S.L. Rao in the Financial Express on this issue is here. Incidentally Dr. Rao is also a member of the Eminent Persons Advisory Group of the CCI.


While the two articles linked above are both for allowing the CCI to regulate mergers and acquisitions in the banking sector, a number of experts have made a counter-argument as well. You can visit the Fun Comp Forum moderated by the CUTS Centre for Competition, Investment and Economic Regulation.

Combinations Update

Two more combinations have been approved by the Competition Commission of India on May 8, 2012.


The first order is in the case of acquisition of 26% share capital of Reliance Capital Asset Management Limited by Nippon Life Insurance Company. This is the first approval given by the CCI in a combination involving an  asset management company. The order is available here.


The second order is in the case of scheme of amalgamation and arrangement between Reckitt Benckiser Investments India Private Limited, Paras Pharmaceuticals Limited and Halite Personal Care India Private Limited. The order is available here. The order under section 43A condoning the delay in filing of the notice is available here.


Update (May 16, 2012) - A report in the Business Standard on the Nippon - Reliance order is here and one from Moneylife is here.


Update (May 17, 2012) - A report in the Hindu Business Line on the Reckitt Benckiser combination is here. 

State run giants take the lead in exposing collusive bidding

Hello everyone I’m Anshuman’s latest (and first J) recruit to contribute to this blog along with him.

The first thing that struck me when he asked me to write about new developments in Indian competition law was the spate of bid rigging cases done by the Competition Commission of India (CCI) recently (Aluminum Phosphide Tablets, Coal blasters and LPG cylinder manufacturers). One common thread running through all 3 cases was that the complainant was a public sector giant (Food Corporation of India, Coal India and Indian Oil respectively). Thus garnering evidence about the bidding practices of the parties should not have been too much of a problem for the CCI . That however does not take away from that fact that these cartel cases and the substantial fines imposed therein have certainly gone a long way in silencing critics who claimed that the CCI hadn’t done enough to punish the most serious infringements of competition law i.e cartels.

But it is important to bear in mind here that competition law is a double edged sword for these state run entities many of which hold very strong positions on their respective markets due to state support.  It may well be the case that these state run entities are using their substantial market power (an economist’s way of saying ‘dominance’) to indulge in exploitative/exclusionary practices. In fact the very same explosive manufacturers who have been fined for cartelization filed a case against Coal India last year for abuse of dominance but the case failed due to lack of evidence. Of course as all good lawyers would say, it all comes to evidence in the end, but as a general thought, the CCI may be well advised in future to look at practices of state run entities with more suspicion particularly since such markets are already distorted due to state intervention.