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Competition law update (january-september 2011)
 
AUSTRALIA
  • Qantas & american airlines authorised to do joint business:

    The Australian Competition and Consumer Commission (ACCC) has permitted a Joint Business Agreement (JBA) to be executed between Qantas and American Airlines. The airlines will be coordinating operations on services between Australia/New Zealand and the United States and on their respective services which support these trans-Pacific routes. The JBA is likely to result in new and improved products and services which will benefit passengers, including improved schedules and connectivity.

  • Accc allows collective bargaining for telstra shops:

    In furtherance of its plea to collectively bargain with suppliers of telecommunications products and providers of general small business services, the ACCC has granted an authorization to TLS Association Pty Ltd (TLSA) for a period of five years. TLSA represents approximately 90% of Telstra licensed shops around Australia. The ACCC is of the opinion that collective bargaining arrangements are likely to bring cost savings for TLSA members. ACCC also believes that there is little or no risk of the arrangements resulting in anti-competitive detriment because it involves a less proportion of participants in the relevant markets. The participation in the collective negotiations is voluntary and does not impose any restrictions on the ability of TLSA members to deal directly with any supplier.

  • Japan airlines penalized $5.5 million for price fixing:

    The Federal Court in Melbourne has ordered Japan Airlines International Co. Ltd. (JAL) to pay a penalty for breaching the price fixing provisions of the Trade Practices Act 1974, thus making the combined pecuniary penalties ordered in Australia against illegal cartel of international airlines, an amount totaling to $46.5 million.

    Proceedings were instituted against JAL for its alleged understandings with other international airlines. JAL admitted that it made and gave effect to price fixing understandings with other international airlines to impose a fuel surcharge and an insurance and security surcharge on cargo carried internationally by air across their networks. While imposing a discounted penalty due to JAL’s cooperation the Court restrained it from engaging in similar conduct for five years and also directed it to pay $200,000 as contribution towards the ACCC's costs.

  • Accc exposes bid rigging in the construction sector:

    The Federal Court in Brisbane has found three Queensland based construction companies engaged in price fixing and misleading or deceptive conduct in tendering for Government public works projects in Queensland. The decision of the court has followed ACCC’s decision to pursue cover pricing as a form of cartel behaviour. The court found that between 2004 and 2007, T.F. Woollam & Son Pty Ltd, J.M. Kelly (Project Builders) Pty Ltd and Carmichael Builders Pty Ltd companies had engaged in ‘cover pricing’ in relation to the tenders for four construction projects. This practice, has been developed within the industry over many years, and is allegedly used in situations where a construction company may not have the time, resources or inclination to prepare an accurate tender, but still wants to be seen as tendering for the project.
CANADA
  • Guilty plea and $425,000 fine for bid-rigging in montreal:

    Les Entreprises Promécanic Ltée has pleaded guilty to three charges of bid-rigging and has been fined $425,000 for its role in an agreement to rig bids for private sector ventilation contracts for residential high-rise buildings in the Montreal area. Promécanic admitted that it had secretly participated in the coordination of its bids with competitors to pre-determine the winners of the contracts. The illegal agreements also included compensation between the participants to ensure that the contract was awarded to the designated company. As part of the guilty plea, Promécanic and its estimator, Joël Perreault, are subject to a court order for a period of ten years.

  • Competition bureau approves divestitures in novartis acquisition of alcon:

    The Competition Bureau announced that to address competition concerns resulting from Novartis’ acquisition of control of Alcon Inc. in August 2010, it has approved divestiture of certain assets and associated licences related to sale of Novartis’ ophthalmic products in Canada. Novartis and Alcon were required, under the terms of a consent agreement of August 2010, to divest assets and associated licences related to sale of ophthalmic products in Canada to preserve competition in the supply of multi-purpose solution contact lens cleaners/disinfectants; injectable miotics; and ocular conjunctivitis drugs. The divestiture, scheduled to close by March 31, 2011, resolves the competition concerns raised by the proposed transaction.

  • Competition bureau seeks to block joint venture between air canada and united continental:

    The Commissioner of Competition filed an application with the Competition Tribunal for prohibiting the proposed joint venture between Air Canada and United Continental Holdings Inc. The proposed joint venture would allow Air Canada and United Continental to operate and set prices as one airline which would allow consumers already facing high prices with lesser choices on high demand air passenger routes. The proposed JV is in effect a merger between Air Canada and United Continental on all of their Canadian and US operations. It would allow the parties to jointly set prices, capacity and schedules. If allowed to proceed, it will result in:

    • a monopoly on ten trans-border routes;

    • substantially reduced competition on an additional nine trans-border routes; and

    • significantly higher prices.

    Therefore, the Competition Bureau is of the view that if allowed, such a merger would adversely impact the market.

  • Bell canada to pay a penalty of $10 million for misleading advertisement:

    Bell Canada agreed to stop making misleading representations about the prices offered for its services. Under the terms of a consent agreement filed with the Competition Tribunal, Bell is also required to pay an administrative monetary penalty of $10 million, the maximum amount allowed under the Competition Act. Bell has charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless. The advertised prices were not in fact available, as additional mandatory fees, such as those related to Touch Tone, modem rental and digital television services, were hidden from consumers in fine-print disclaimers.

    Under the terms of a consent agreement filed with the Tribunal, Bell has agreed to:
    • modify all of its non-compliant advertisements within 60 days; and;

    • pay an administrative monetary penalty of $10 million.

  • Competition bureau requires maker of nivea to reimburse customers for misleading claims:

    TThe Competition Bureau reached a settlement with Beiersdorf Canada Inc., Nivea's Canadian distributor, for making false or misleading claims about one of its Nivea products. The claims suggested, among other things, that regular use of the product slims and reshapes the body, causing a reduction of up to three centimetres on targeted areas. Under the terms of the consent agreement, Beiersdorf is required to immediately remove the products from Canadian shelves. Beiersdorf has agreed to pay an administrative monetary penalty of $300,000, and to refund the purchase price and shipping costs to Canadian customers. The misleading representations were displayed on the package and on Nivea's website. The representations stated that:

    • Use of the product could lead to a "reduction of up to 3 centimetres on targeted body parts, such as thighs, hips, waist and stomach";

    • My Silhouette "contains a highly effective natural Bio-Slim Complex for a slimmer looking and more defined silhouette"; and

    • My Silhouette "combines high performance active ingredients for a dual effect of slimming & reshaping."
EUROPEAN UNION
  • Commission imposes € 8.9 million fine in banana cartel:

    The European Commission concluded that the Chiquita and Pacific Fruit groups had operated a price fixing cartel in Southern Europe from July 2004 to April 2005, in violation of the EU antitrust rules' ban on cartels and restrictive business practices. Because of this cartel, European consumers did not enjoy the benefits of undistorted competition for nearly a year. The Commission imposed a fine of € 8 919 000 on Pacific Fruit. Chiquita received immunity from fines for providing the Commission with information about the cartel. The cartel was operated by Pacific Fruit and Chiquita, two of the main importers and sellers of bananas in the EU. During the period July 2004-April 2005 they fixed weekly sales prices and exchanged price information in relation to their respective brands. By doing so, they directly harmed consumers in the countries concerned.

  • Microsoft filed a complaint with eu against google on search:

    Microsoft Corp. filed a formal complaint with European antitrust regulators about the dominance of the Internet search market in the region. Google had bared competitors from accessing its YouTube video site for search results and has kept phones running resulting in Microsoft’s operating system from working properly with YouTube. A Microsoft unit and two other rivals had already lodged a complaint with the European Union in relation to Google violating antitrust laws in the region. While Microsoft and partner Yahoo! Inc. have about a quarter of the U.S. search market and Google the rest, Google has almost 95 percent of the market in Europe. According to Microsoft, Google is also seeking to block access to content owned by book publishers and restricting its own advertisers from accessing the data they put in Google servers as part of ad campaigns besides blocking YouTube.

  • Commission confirms unannounced inspections in the natural gas sector:

    The European Commission undertook unannounced inspections at the premises of companies active in the supply, transmission and storage of natural gas in several Member States. The Commission had information that the companies concerned may have engaged in anticompetitive practices in breach of EU antitrust rules. The Commission is investigating potential anticompetitive practices in the supply of natural gas in Central and Eastern European Member States. The Commission will focus its investigation in the upstream supply level, where, unilaterally or through agreements, competition may be hampered or delayed. The Commission suspects exclusionary behaviour, such as market partitioning, obstacles to network access, barriers to supply diversification, as well as possible exploitative behaviour, such as excessive pricing.
SOUTH AFRICA
  • Commission allows oil firms to share data on supply:

    South Africa's Competition Commission has granted the South African Petroleum Industry Association (SAPIA) members permission to share data on logistics and supply agreements to ensure stable availability of fuel in the country. The commission is of the view that the exemption does not apply to sharing information relating to setting margins, imposition of levies and the approval of tariffs, unless required to do so by the Department of Energy and the national energy regulator. The exemption would commence in October and will run to December 2015. The members of SAPIA are BP Southern Africa, Chevron South Africa, Engen, Petro SA, Sasol, Shell SA and Total South Africa.

  • Fast track settlement for cartels in south africa:

    Targeting construction companies that admit to anti-competitive practices, the South African competition authority has introduced a fast track settlement mechanism for cartels. Presently, the Commission is investigating at least 65 bid rigging cases in the construction sector involving 70 projects with an estimated value of ZAR 29 billion (US$ 4 billion). Under the scheme the Construction companies are invited to apply for fast track settlement with complete and truthful disclosure of information regarding collusion. Also, the applicant must undertake to cooperate and cease any anti-competitive conduct. Companies providing information under the scheme would get the benefit of a lesser penalty in comparison to the fine involved if each transgression were to be prosecuted separately. This scheme will run concurrently with the Commission's corporate leniency policy and companies applying for settlements could also apply for leniency.

  • Competition body faces challenge to 'leniency in return for evidence' policy:

    Wire manufacturer Agriwire has challenged the Commission’s corporate leniency policy as being ultra vires the Competition Act. Agriwire, an accused of cartel-like behavior, has argued that the Competition Act does not give any leniency powers to the Commission but only to the Competition Tribunal. Under the leniency policy presently the Commission is empowered to grant immunity from hefty penalties to those who reveal a cartel activity. A case of price-fixing, allocation of markets and collusive tendering against Agriwire and 11 other wire manufacturers is pending before the Competition Tribunal. Evidence was obtained through Consolidated Wire Industries acting as a whistle-blower. The Commission gave Consolidated Wire Industries conditional immunity and promised full immunity in exchange for the evidence. Agriwire argues that these are false promises of immunity are not authorised by the Competition Act.

  • Grain storage firms fined over 'fixed' tariffs:

    The Competition Commission has fined five players in the grain storage industry a total of R21,2m for fixing the daily grain storage tariff meant for the South African Futures Market (Safex). The commission reached settlement agreements which are subject to approval by the Competition Tribunal after which the five companies admitted to anticompetitive behaviour in fixing the daily Safex grain storage tariffs along with the rate for the physical grain storage market. Such fixation of tariffs denied farmers the opportunity to find cheaper storage facilities. All respondents have admitted to contravene the Competition Act. In terms of the agreements, all have committed to cease and desist from engaging in anticompetitive conduct and to develop and implement competition compliance programmes. They would also pay cumulative administrative penalties amounting to R21175892.
UNITED STATES OF AMERICA
  • Delta/us air slot swap plan hits us antitrust snag:

    More than two years after US Airways Group Inc. and Delta Air Lines Inc. first proposed to exchange slots at two busy East Coast airports, federal regulators gave the two carriers final approval to do so. The Transportation Department and the Federal Aviation Administration cleared an amended swap deal they tentatively approved in July. However, the Justice Department's antitrust division would continue its investigation into part of the deal. The planned swap would help Delta build up its presence at New York's LaGuardia Airport, where space is in short supply, and allow US Airways to grow at Ronald Reagan Washington National Airport. The antitrust authorities would examine whether US Airways' receipt of additional slots at Reagan National would hurt competition there. In a statement, the department said it had concluded its investigation of the proposed transfer of slots at LaGuardia without finding any harm.

  • Takata u.s. affiliate raided by the fbi in antitrust probe:

    The FBI raided the Detroit offices of TK Holdings Inc., the North American subsidiary of supplier Takata Corp., for the likely violations of antitrust laws – illegal market sharing in which one competitor had allegedly stopped selling in another’s primary geographic market. The FBI issued a subpoena and warrant to seize any communications between Takata and other seat belt suppliers dating back to Jan. 1, 2005. The agency specifically wanted communications regarding Japan-based Tokai Rika Co. Ltd., which operates subsidiaries units TRAM in Plymouth, Mich., and TRMI in Battle Creek, Mich. The FBI investigated Tokai Rika and two other Toyota Motor Corp. suppliers last February for allegations of illegally trying to prevent competition.

  • News corp. Unit settles antitrust suit for $125m:

    A News Corp. subsidiary has agreed to pay $125 million to settle a suit brought by Insignia Systems Inc. alleging the in-store marketer has been enticing retailers to sign exclusive long-term contracts that shut out competitors. Under the terms of the settlement, announced by the companies Insignia will also enter into a 10-year exclusive agreement with News America Marketing In-Store Inc. to sell signs with prices on them for in-store use. The two marketing companies have been litigating the issue since September 2004, when Insignia first filed suit in the U.S. District Court for the District of Minnesota against News America, News Corp. and grocery chain Albertsons Inc. Insignia in the complaint has alleged that News America had enticed retailers to enter into long-term exclusive contracts for in-store advertising and promotion products by making large economically unjustified upfront payments. They also alleged the marketer spearheaded a boycott of Insignia by Albertsons and other retailers, who conspired to deal only with News America.


  • Dean foods settles us antitrust complaint:

    Dean Foods Co (DFN), the biggest U.S. milk processor and distributor, has agreed to settle the antitrust complaint filed by the Justice Department by agreeing to divest its Waukesha milk processing plant. The Justice Department filed a lawsuit in January 2010 seeking to undo Dean's 2009 purchase from Foremost Farms of processing plants in Waukesha and DePere, Wisconsin, for about $35 million. The proposed settlements restore competition so that school children and consumers in Illinois, Wisconsin and Michigan, will pay lower prices for their milk. The settlement also barred Dean from any acquisition worth $3 million or more without first notifying the Justice Department and relevant states. Normally, transactions valued at around $60 million or more are subject to this reporting requirement.

  • Denso bids for leniency over cartel violation in usa:

    Automotive parts maker Denso Corp. has voluntarily reported its involvement in price-fixing to the US antitrust agency for seeking remission of a potentially huge fine. The first company to come forward before an investigation opens is fully exempted. Denso informed the Fair Trade Commission (FTC) about a cartel formed by auto parts makers and prompted other firms to follow suit, leading to FTC conducting searches of seven Japanese companies. Under the revised antimonopoly law, which took effect in 2006, the FTC can exempt from or reduces fines for up to five companies for self-reporting an antitrust violation.
ASIA (EXCLUDING INDIA)
JAPAN
 
  • Cease and desist order and surcharge payment orders against manufacturers and distributors of air separation gases:

    The Japan Fair Trade Commission (JFTC), under the provisions of the Antimonopoly Act (AMA), has investigated companies of manufacturing and distributing air separation gases and found that they had engaged in activities that violate Article 3 (prohibition of unreasonable restraint of trade) of the AMA. Accordingly, the JFTC issued a cease and desist order under Article 7 of the AMA and surcharge payment orders pursuant to under Article 7-2 of the AMA. The Four companies are Taiyo Nippon Sanso Corporation, Air Liquide Japan Ltd., Air Water Inc. and Iwatani Corporation made the agreement, at latest by January 2008, to raise the selling price of specified air separation gases by approximately 10% than at present price from April 2008 and thereby substantially restrained competition in the field of sales of specified air separation gases in Japan, contrary to the public interest.

  • Cease & desist order to dena:

    The JFTC has issued a cease and desist order to Japanese mobile gaming giant DeNA after an investigation. The alleged offense is that DeNA pressurized social game developers to only release games on its platform exclusively. The order states that the company violated article 19 of the AMA which simply dictates that ‘no entrepreneur shall employ unfair trade practices.’ It goes on to dictate that DeNA shall stop such actions, and never force social game developers not to provide the games through other mobile SNS, by disconnecting the website links of the games the developers provide through Mobage-Town if the developers have provided the games through other mobile SNS. DeNA’s official response to the C & D is interesting, saying that the allegation pertains to “a transaction with a certain social game application provider,” language which sounds like an isolated (alleged) incident.


  • Jftc raids 7 auto parts makers over alleged price-fixing cartel:

    The JFTC raided seven Japanese auto parts makers on Wednesday, including Denso Corp. and Mitsubishi Electric Corp., over their alleged involvement in a price-fixing cartel. The JFTC suspects that the parts manufacturers had meetings from 2002 or earlier to set parts prices and decided which companies would win contracts before bidding for orders from automakers. Other companies investigated by the commission are Hitachi Automotive Systems Ltd., Calsonic Kansei Corp., Mitsuba Corp., T.RAD Co. and Denso subsidiary Asmo Co. The parts makers allegedly formed a cartel to fix prices of windshield wipers, radiators, engine starters and alternators supplied to automakers. JFTC had raided the offices of Denso and Mitsubishi Electric. Over price-fixing cartel practices for auto parts, the Japanese watchdog and U.S. law enforcement authorities launched investigations in their respective countries in February last year, and three Japan affiliated companies, including a U.S. subsidiary of Denso, were targeted by the Federal Bureau of Investigation.
SINGAPORE
 
  • 16 maid agencies fined for price fixing:

    The Competition Commission of Singapore (CCS) imposed fines amounting to more than $150,000 to 16 employment agencies for collectively fixing the pay of new Indonesian maids. The group, includes big names in the industry such as Nation Employment and Comfort Employment, were fined between $5,000 and $42,317. They were found to have infringed the Competition Act by discussing a collective pay rise for the maids, from about $380 to $450. The Act prohibits business competitors from meeting to discuss price rises, among other things. This is the first time the CCS, which was set up in 2005, has taken action against maid agencies. Previous cases involved companies such as ticketing agency Sistic, which was slapped with a $989,000 fine for abusing its dominant market position.

  • Antitrust fines hit singapore airlines profit:

    United States, European Union and South Korea imposed antitrust fines on Singapore Airlines' third-quarter net profit, which fell to 29%. The net profit in October-December quarter was Sg$288.3 million went down from Sg$403.7 million a year earlier. Revenues rose 12 percent to Sg$3.84 billion dollars. The airline had set aside Sg$199 million during the quarter for the hefty antitrust fines imposed by the United States, the European Union and South Korea on its subsidiary SIA Cargo. SIA Cargo was punished for its part in a cartel involving several international carriers which reportedly engaged in price-fixing. SIA Cargo was fined $48 million by the United States, 74.8 million euros by the European Commission and 3.l billion won ($2.78 million) by the South Korean Fair Trade Commission. The airline had accepted the US fine under a plea offer made by the US Department of Justice, it had filed appeals against the fines imposed by the European Commission and the South Korean Fair Trade Commission.

  • Ccs infringement decision against 11 modelling agencies:

    The Competition Commission of Singapore (CCS) has issued a Proposed Infringement Decision (PID) against 11 modelling agencies for contravening Section 34 of the Competition Act (Cap.50B), which prohibits, inter-alia, price-fixing activities. The 11 modelling agencies have been found to be engaging in anti-competitive conduct by coordinating and collectively raising rates for a wide range of modelling services in Singapore. This object to price-fix to prevent, restrict or distort competition is a breach of the Competition Act. Modelling agencies should set their rates independently without discussion or agreement with any other modelling agency.

  • Alliance agreement notified to the competition commission of singapore:

    Singapore Airlines Limited ('SIA') and Virgin Australia Airlines Pty Ltd ('Virgin Australia') had applied to the Competition Commission of Singapore (CCS) for a decision to clear their Proposed Alliance ('Alliance'). Under the Alliance, SIA and Virgin Australia will code share international and domestic flights, also provide frequent-flyer programs, lounge benefits to each other’s customers, conduct joint sales, marketing and distribution and co-ordinate flight schedules between Singapore and Australia. SIA and Virgin Australia have stated that the Alliance does not breach the Competition Act as it will increase competition for air passenger services from Singapore and various Australian, Pacific and trans-Tasman destinations. The proposed alliance is intended to be implemented in 2011, and its purpose is to ensure mutual benefit to the parties involved, as well as to benefit passengers. The application for this Proposed Alliance Agreement has also been filed in Australia and is awaiting decision from both regulators.
INDONESIA
  • Airlines ask for exemption to surcharge rules:

    The Indonesian Air Carrier Association appealed the government to allow domestic airlines to add fuel surcharges to airfares to reflect rising oil prices that may affect their operating costs. The Transport Ministry regulations allow airlines to impose surcharges if jet fuel prices exceed Rp 10,000 per liter and carriers experience a 20 percent rise in operational costs for three successive months. Fuel typically makes up 30 percent to 40 percent of an airline’s operational costs. In 2007, when oil prices reached $140 per barrel, the airlines began adding high rates of fuel surcharges. The airlines also increased the number of seats in the executive class to compensate for rising fuel prices.

  • Bank indonesia denies cartel practices in banking system:

    Bank Indonesia has denied allegations that Indonesian commercial banks have been involved in cartel practices to determine lending rates. The allegation was that the lending rates charged by the country’s banks were different from one another. The commission is currently studying the indications of cartel and price fixing practices in determining lending rates in the commercial banks. Lending rates in Indonesia have been hovering between 14 to 16%, which are considerably higher than those in neighboring countries. In addition to using interest tools, the central bank has used its persuasive a approach to encourage banks to reduce their lending rates, but to no avail. The KPPU chairman has summoned all banking players in the country, especially those who dominate the market, and summoned data for analysis to monitor business practices. Fourteen banks, including the four state lenders, have dominated the country’s banking industry, accounting for about 70 percent of total assets, credits and third party funds.

SOUTH KOREA
  • Cable firms fined for collusion:

    The Fair Trade Commission (KFTC) fined 13 local electric wire manufacturers a total of 56.5 billion won for price collusion. These wire manufacturers were found to have worked together in price fixing schemes for their electric wire products from 2003 to 2006. The affected firms were also suspected of covertly conspiring to fix bidding prices for major supply contracts from 2003 to 2008. The KFTC issued fines for price fixing by local wire makers since November last year.

  • Kftc fines drug companies for kickback and pricing schemes

    The KFTC fined 10 pharmaceutical companies a total of US$22.2 million for unlawful kickbacks and pricing schemes to physicians, hospitals and wholesalers that sold their drugs. The fine is the result of an investigation initiated by the KFTC in October 2006 to respond to growing concern over improper incentives in the pharmaceuticals industry. These concerns culminated in a 2005 report by the Korean Independent Commission against Corruption and Kickbacks, which estimated that between 10 and 15 percent of the cost of drugs used in Korea’s hospitals is attributable to unlawful kickbacks. The 10 companies fined include Korea-based firms Dong-A Pharmaceutical, Hanmi Pharmaceutical and Yuhan Corp. These companies were found to have given physicians and hospitals incentives including cash, dinners, golf outings and overseas travel to give priority to their products. Certain companies investigated were found to have set wholesaler prices to artificially inflate drug costs. The KFTC estimated that the companies’ acts have cost Korean consumers approximately US$2.4 billion in damages and that incentive worth approximately US$576 million were distributed between January 2003 and September 2006. The KFTC indicated that it shared its findings with the National Insurance Corp., the Ministry of Health and Welfare and the National Tax Service.
CHINA
  • Anti-monopoly watchdog gives nestle nod:

    Nestle, the world’s largest food manufacturer bid for a 60% stake in China’s Yinlu Food Group has been approved by the Ministry of Commerce. The deal will be completed after both companies complete the requisite ownership transaction procedures, a move that will help Nestle deepen its penetration into the Chinese market. The deal was submitted to the Ministry of Commerce for anti-monopoly review. The ministry approved the deal after the three-month review period. Nestle announced its intention to purchase 60 percent of Yinlu Food Group on April 18, the first time this year that Nestle had moved to invest in a Chinese company. Approximately three months later, on July 11, Nestle entered another partnership agreement with Chinese candy and pastry producer Hsu Fu Chi International Ltd. Yinlu Food Group, a family-owned food maker based in Xiamen City, capital of Fujian Province, posted sales of 5.46 billion yuan (US$854 million) in 2010. Nestle’s revenue in China reached 20.4 billion yuan (US$3.19 million) last year.

INDIA
  • Cci releases regulations of combinations for the corporate sector:

    The Competition Commission of India (CCI) issued the Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulations, 2011 (the Regulations). The CCI had on March 01, 2011 placed a draft of the Regulations on its website inviting public comments. During March – April 2011, the CCI undertook comprehensive nation-wide consultations with all key stakeholders. On receipt of several critical inputs, the CCI carried out some key modifications in the draft prior to its release on May 11, 2011. The Regulations essentially set out the procedure governing inquiries into notifiable transactions. The key highlights of the Regulations are as follows:

    Under the Regulations, the CCI has classified certain transactions as ‘combinations’ not likely to cause an appreciable adverse effect on competition in India and has indicated that under normal circumstances no notice needs to be filed with the CCI in respect of such transactions for prior approval.

    The Regulations provide that an enterprise which proposes to enter into a ‘Combination’ shall give Notice to the CCI in either Form – I (Short Form) or Form - II (Long Form) along with applicable fee. Acquisitions by public financial institutions, foreign institutional investors, bank or venture capital funds are to be filed without any fee in Form III. Such transactions do not require prior approval from the CCI and only need to be intimated. Parties to a ‘Combination’ will need to file the requisite Notice with the CCI within 30 days of –

    • approval of the proposal relating to merger or amalgamation, by the Board of Directors of the concerned enterprises; or

    • execution of any agreement or other document for acquisition.

    The Regulations envisage that the CCI shall form a prima facie opinion as to whether a Combination has or is likely to have appreciable adverse effect on competition within the relevant market in India within 30 days of receipt of a valid notice (excluding any additional time taken by the parties to file any additional information); The Regulation states that the CCI will endeavor to pass an order or issue directions within 180 days of a valid notification (though the law contemplates a maximum 210 day period). This 180 days period excludes any additional time (over the time stipulated) taken by the parties to file any additional information.

  • 9 foreign airlines cleared of cartelization charge by the dg, cci:

    The Director General, CCI, (DG) i.e., the investigative arm of the CCI has cleared nine foreign airlines as regards the charges of cartelization and abuse of dominant position which were alleged by the Travel Agents Association of India (TAAI). TAAI had filed a complaint against Lufthansa German Airlines, Continental Airlines, KLM Royal Dutch Airlines, Swiss International Airlines, Singapore Airlines, Air Canada, Air France and North West Airlines who had decided not to give commission to the travel agents for their ticketing services. In the petition TAAI had alleged the decision of reducing the commission as an anti-competitive move. The DG has concluded that the airlines had 17-20% combined market share, which cleared the airlines of being dominant players in the flying market. The investigator also did not find any evidence in support of alleged cartelisation amongst the airlines.

  • Cil moves cci against explosive producers:

    State owned Coal India Ltd. (CIL) has filed information with the CCI against explosive manufacturers, alleging formation of a cartel in floating bids to the coal PSU, and thereby, taking away its right to procure products at fair price. The complaint came within a month of a similar complaint filed by the Explosives Manufacturers Association of India (EMAI). EMAI alleged that CIL is procuring 20-22% of its requirement from a single explosives manufacturer without inviting bids. CIL had filed a complaint under section 3 and 4 of the Competition Act, 2002 alleging a cartel.

  • Cci holds dth operators not guilty of unfair trade practices:

    DTH operators like Tata Sky, Reliance Big TV, ZEE’s DishTV and Bharti’s Airtel, were not held guilty by the CCI as they did not indulge in any unfair trade practices by denying nearly 20 millions users an option to change operator. The CCI had closed the case against the DTH operators, holding that they have not violated Sections 3 and 4 of the Competition Act 2002, which pertain to anti competitive agreement and abuse of dominance respectively. There are techno-economic issues involved in making set-top boxes inter-operable. The price of a CAM card is much higher than the price of a set-top box which is also scarce in the market. Therefore, CCI was of the view that let the DTH operators continue with the practice until a technological solution is found to make these boxes inter-operable.

    In 2009, a Consumer Online, an association of consumers had filed a complaint with the CCI alleging that DTH operators were limiting competition by not offering interoperability of their set-top boxes. The Association also alleged that DTH service providers had agreements with manufacturers of set-top boxes, which further restricted interoperability. Besides, Consumer Online had also complained that subscribers get discouraged to change the operator, as their set-top boxes do not provide the option of using another player’s card, as that would mean changing the entire set, which was expensive.

  • Honda, hyundai, volkswagen come under cci scanner:

    International car makers, Honda, Hyundai and Volkswagen, have come under the scan of the CCI for abusing their dominant market position by selling auto parts to customers at high prices. CCI has directed its DG to probe a consumer's complaint against the car makers, who allegedly abuse their dominant position by making available spare parts only through their authorised dealers, who in turn sell them on high rates. The DG has been asked to submit his report on the findings within 45 days. The auto spare parts from Indian car makers are available with any retailer, not necessarily authorised, but the case is not the same with international car makers. Consumers are stuck after having bought a car from the international car makers, according to the complainant, who filed the case under section 4 of the Competition Act, 2002.

  • Cci fined 55 crores for abusing its dominance in stock exchange market – penalty stayed by compat

    The CCI in its order dated May 26, 2011, has come to the conclusion that the National Stock Exchange (NSE) has abused its dominant position on information filed by MCX-SX. The CCI found NSE to have abused its dominance and position of strength in the currency derivatives segment because:

    • NSE supplied certain trading software products to customers for free, in contravention of Section 4(2)(a)(ii) of the Competition Act, 2002 (the Act);

    • NSE disabled inter-operability between its trading software system ODIN and MCX’s parent-company’s competing NOW system, in contravention of Section 4(2)(b)(i) and (ii) and Section 4(2)(c) and (d) of the Act; and

    • NSE used its position of strength in the non currency derivatives segment to protect its position in the currency derivatives segment, contravening 4(2)(e).

    NSE’s practice of waiving various fees for brokers in the currency derivatives market was termed as annihilatory pricing by CCI. NSE was also found denying access codes to users of a software platform sold by Financial Technologies India Ltd (FTIL), a promoter of MCX-SX amounting to unfair trade practice and a contravention of India’s competition laws. CCI sent NSE a show-cause notice on May 05, 2011, asking why it should not levy a penalty on the stock exchange for abusing its position. The Delhi High Court allowed a writ petition filed by NSE and directed CCI to provide information used to arrive at its view that NSE may be abusing its dominant position, and closed the petition. Accordingly, the CCI has imposed a penalty of Rs 55.5 crore, which is 5% of the bourse's three-year average turnover, the order said. In addition, the NSE has been directed to "cease and desist from unfair pricing, exclusionary conduct and unfairly using its dominant position in other markets to protect the relevant CD (currency derivative) market with immediate effect".

    The Competition Appellate Tribunal (COMPAT) has now granted a conditional stay on payment of the penalty, but on the condition that the NSE, if found guilty, will have to pay interest at the rate of 9% on the amount from the date of the CCI order till the date of payment. The tribunal has directed NSE to file an affidavit within six weeks regarding compliance with the order of the CCI.

  • Cci fines 27 film producers for cartel like conduct - luthra & luthra represents multiplex owners

    The CCI on May 25, 2011 imposed a penalty of Rs 1 lakh each on 27 film producers on charges of colluding through a cartel to exploit theatre owners. The issue pertained to the strike in 2009 by film producers who decided not to screen their movies in multiplexes over payment matters. Some of the producers include Yash Chopra of Yash Raj Group, Aamir Khan, Shahrukh Khan, Karan Johar, Ramesh Sippy, Ronnie Screwvala, Ramesh Taurani of Tips Industries, Ramesh.G. Sippy, Ashutosh Gowariker of AG Pvt. Ltd., Vidhu Vinod Chopra, Rakesh Roshan of Film Craft Private Ltd. etc. They have been found to be in violation of Sections 3 and 4 of the Act, which pertains to anti-competitive agreement and abuse of dominant position respectively. On 25 May, 2009, the FICCI – Multiplex Association of India through its advocates, Luthra & Luthra Law Offices had filed the first ever case before the CCI against the United Producers and Distributors Forum, the Association of Motion Pictures, the TV Programme Producers and Film and TV Producers Guild of India, among others. The Director General, Competition Commission of India who probed the case filed by the Multiplexes Association of India, had reportedly found film and TV producers entering into anti- competitive agreements to collectively stop distribution of some films. During the face-off between film producers and multiplexes during April and May 2009, consumers faced paucity of choice for viewing as new films were not released. The CCI, two years to the date of filing of the information has imposed the fine on filmmakers after having found them guilty of entering into anti-competitive agreement.

  • Cci probes carmakers on parts, servicing:

    Top carmakers Fiat, Honda and Volkswagen are under investigation by the CCI for restricting the supply of spare parts and technical know-how for servicing cars in the open market. The DG is directed to carry out investigation in the said matter and the aforementioned companies have received notices in this regard. The said probe is the result of a consumer complaint on car companies and dealerships controlling the spare parts and servicing business through their dealerships. The information is filed in relation to car brands which have a limited distribution network and customers face inconvenience if their city does not have a workshop or dealership outlet. As a result, the consumer is held hostage to the OEM dealerships and by controlling the supply of spares and technical knowhow, car companies and their dealers also control the price of spares and services.

  • Apple india charged of anti-competitive practices:

    The CCI has started inquiring into allegation of abuse of dominant position by Apple India. In the information filed before the CCI, Apple has been accused of oppressing user choice, by offering iPhone 4 with only two service providers, namely Aircel and Airtel. The information also alleges that a user can only download the Apple software from the iStore (Apple Store) and application of other developers are not recognized by Apple products. Furthermore, the fact that smartphones from Apple can be serviced only in Apple centers enhances Apples’ dominant position and leads to increased cost to the consumer.

  • Cci finds m/s bigflix pvt. Ltd., mumbai not contravening section 3 or section 4 of the competition act, 2002:

    As per the Information filed before the CCI, M/s BigFlix Pvt. Ltd. allegedly enjoys a dominant position in the relevant market of DVD rentals and has a tremendous market share being a part of Reliance Big Entertainment. The CCI observed that looking at the market structure, it could not be said that M/s BigFlix was enjoying a position of dominance in terms of Explanation (a) to Section 4 of the Competition Act, as there were other players also like Seventymm, Clikflix, Catchflix, CineSprite etc. which were having considerable presence in the relevant market. It was observed that there was no issue in this case which raised a competition concern. The CCI was of the view that the allegations made did not violate either Section 3 or Section 4 of the Competition Act and the information filed by the informants did not provide a basis for forming a prima facie opinion for referring the matter to the DG for further investigation.

  • Dlf fined rs 630 crore by cci for abuse of dominance – penalty stayed by compat

    The CCI imposed a penalty of Rs 630 crore on India’s largest real estate developer, DLF Ltd, for abuse of market dominance and unfair trade practices. The penalty amounting to seven per cent of Rs 9,006.27 crore, the company’s average annual turnover in the last three years is the result of the company indulging in “discriminatory and abusive clauses” in the apartment agreements. The two projects are expected to have a total of 2,200 flats, priced between Rs 1.5 crore and Rs 3 crore each, making the total worth of the apartments Rs 4,500-5,000 crore. The projects, which started in August 2006, were expected to be completed in three years. In addition to the delay, DLF increased the number of floors in the apartment complex from the original figure given to customers. This led to the number of apartments in one project, Belaire, increasing to 564 from 384, which irked the customers as it meant more flat owners must share the same common facilities. DLF then approached the COMPAT seeking a stay against the CCI’s order which was granted on the 9th November and the matter is now be listed for arguments in February 2012. Further, DLF has been asked to suggest the necessary changes that ought to be made to its apartment buyer’s agreements to the COMPAT.

  • Cci approves proposed combination of reliance industries' buyout of sunil mittal-headed bharti's stake in insurance jv:

    The CCI issued its first order under Section 31 (1) of the Competition Act, relating to combination provisions. CCI received a notice from RIL and RIIL (jointly referred to as “Acquirers”) relating to a proposed combination under sub-section (2) of Section 6 of the Competition Act. CCI approved the proposed combination in which the Acquirers will directly and indirectly hold seventy four percent of the share capital in each of the Acquired Enterprise(s), i.e., Bharti AXA Life Insurance Company Limited (BAL) and Bharti AXA General Insurance Company Limited (BAG), as it was not likely to have an appreciable adverse effect on competition.

    The Acquirers and the Acquired Enterprise(s) did not operate in interchangeable or substitutable products. Thus, neither was there any horizontal overlap in the proposed combination nor was there any significant vertical relationship found in the proposed combination which could pose any competitive constraints in the life and general insurance business. Taking into account the presence of many players in both the life and general insurance sectors and insignificant market share of each of the Acquired Enterprises(s) and having due regard to the factors listed under sub-section (4) of Section 20 of the Competition Act, 2002, the CCI was of the opinion that the proposed combination was not likely to have an appreciable adverse effect on competition. However, this order shall stand revoked if, at any stage, the information given in the notice is found to be incorrect.

  • Lafarge, holcim say indian units involved in antitrust probe:

    Lafarge SA (LG) and Holcim Ltd., the world’s largest cement makers, have reported that their Indian subsidiaries have been accused by local competition regulators (CCI) of breaking India’s antitrust rules. Lafarge is amongst several cement manufacturers in India accused of violations under the Competition Act dating from 2005. Lafarge and Holcim are also facing probe from the European regulator into possible price fixing and import limits. Lafarge last year lost a challenge at the EU’s highest court, against a 249.6 million-euro ($357 million) antitrust fine in 2002 for its role in a cement cartel.

  • Cci finds no competition issue in jet-kingfisher alliance:

    The CCI held no violation of either Section 3 or Section 4 is found to have been established against Jet Airways and Kingfisher Airlines. CCI had ordered the probe on the basis of a complaint from a frequent flier that if such an agreement was inked then the two airlines would dominate the market leading to cartel formation which could result in an abuse of dominance as the two would control nearly 60% market share. However, CCI's final order said that none of these agreements can be said to have either determining the airfares or limiting the supply or allocating the market. It further stated that such kind of agreements have not only been entered between Jet and Kingfisher but they also have similar separate arrangements with a large number of other domestic as well as international airlines and most of them have been entered with NACIL (Air India) and the market share of both the parties has remained constant even after passing of almost two years of the public announcement.

  • Cci gives nod to the merger of utv with walt disney:

    IThe CCI has given clearance to the proposed merger of media and entertainment firm UTV Software Communications with Walt Disney (South East Asia) at about Rs 2,000 crore. Following to the buy-out of public shareholders by Walt Disney Company, UTV Software Communications Ltd will be delisted from both the Bombay Stock Exchange and National Stock Exchange. At present, Walt Disney is the majority shareholder in UTV Software Communications, with 20,497,994 equity shares, accounting for a 50.44 per cent stake. After the delisting process, it will also acquire 80,53,480 equity shares representing 19.82 per cent of the current paid-up equity share capital of UTV Software Communications from the other promoters of the company at the same price as discovered pursuant to the delisting offer. The company's board of directors has approved the delisting proposal and the acquisition of shares from the public at a price not exceeding Rs 1,000 per equity share. At Rs 1,000 per share, the deal could be valued at around Rs 2,000 crore.
G.R. BHATIA is a Partner & KANIKA CHOUDHARY and NIDHI SINGH are Associates with the Competition Law Group of Luthra & Luthra Law Offices.
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