Introduction

In 2023, the Competition Commission of India (“CCI”) reached a key turning point, characterised by new enforcement strategies, merger reviews and major amendments to the Competition Act, 2002. Amid a sweeping institutional overhaul, CCI adeptly navigated through changing market conditions and regulatory challenges, while keeping up with emerging trends and setting clearer regulatory expectations.

This chapter provides an overview of the key enforcement/litigation trends, including legislative reforms, witnessed between January 2023 and August 2024 (the “relevant period”), highlighting the agency’s commitment to fostering fair competition, enhancing market contestability, and protecting consumer interests in the Indian marketplace.

Key Enforcement Provisions

The Competition Act, 2002 (as amended) (the “Competition Act”) regulates anti-competitive practices in India. The key provisions regulating competition law enforcement in India are Section 3 (anti-competitive agreements) and Section 4 (abuse of dominant position). 

Section 3 prohibits agreements which cause or are likely to cause an appreciable adverse effect on competition (“AAEC”) in India. It covers three types of agreements, that is, horizontal agreements, vertical agreements and any other agreement that does not fall within the first two categories of agreements.

Section 3(3) prohibits certain types of horizontal agreements, also known as “cartel” agreements, that is: (i) price-fixing agreements; (ii) agreements to limit or control production, supply or markets; (iii) market-sharing agreements; and (iv) bid-rigging agreements. It also covers hub and spoke arrangements. Such agreements are presumed to have an AAEC in India, although the presumption is rebuttable. The presumption does not apply to joint venture agreements if they increase efficiency.

Section 3(4) deals with vertical agreements, that is, agreements between enterprises that are at different levels of the production chain and other agreements. Section 3(4) provides a non-exhaustive list of vertical agreements including: (i) tie-in arrangements; (ii) exclusive dealing agreements; (iii) exclusive distribution agreements; (iv) refusal to deal; and (v) resale price maintenance.

Such agreements are not per se anti-competitive, and an effects-based approach is followed by CCI to assess their impact on competition.

Section 3(5) provides for an intellectual property protection carve-out, by allowing the IP holder to impose reasonable conditions for the protection of IP.

Section 4 prohibits abuse of dominant position by an enterprise or its group, including practices such as the imposition of unfair or discriminatory conditions or prices, including predatory and excessive pricing, denial of market access, tying, and leveraging a dominant position in one market to enter and protect another market, etc.

Authorities

CCI is the statutory authority responsible for enforcing this law and is assisted by the Office of the Director General (“DG”), its investigative arm. Together, they work to achieve the objectives of the Competition Act, which include preventing practices that have an AAEC, fostering and maintaining market competition, protecting consumer interests, and ensuring freedom of trade.

CCI has the power to inquire into any alleged anti-competitive conduct upon receipt of information from any person or association, or a reference from the government, or a statutory authority, or on its own initiative (suo moto), or upon receiving a leniency application. If anti-competitive conduct is discovered, CCI has the power to, among other things, impose a significant penalty on the contravening enterprise as well as its office bearers, which can be up to 10% of the global turnover/income. Although CCI has imposed monetary penalties of about INR180 billion since 2009, it has only managed to collect INR4.25 billion, or just over 2% of the total penalties imposed. CCI continues to face challenges in enforcing monetary penalties.

Shift in the Regulatory Framework – Amendments to the Competition Act, 2002

The relevant period has been rather eventful for competition law, and has been characterised by significant amendments to the Competition Act, some of which have come into force, and some of which are yet to be enforced by the government. The key enforcement-related amendments that have come into effect are as follows.

• Cartel facilitator roped in: Previously, only anti-competitive horizontal agreements were presumed to have an AAEC in India. Now, this presumption has been extended to enterprises that facilitate a cartel (including a trade association or consultant) or engage in hub and spoke cartels, if they participate or intend to participate in such anti-competitive agreements, irrespective of the fact that they are engaged in similar trade to other participants.
• Leniency plus: An enterprise which is a leniency applicant in one cartel and helps in discovering a new or separate cartel can now receive an additional reduction in monetary penalty for both the existing and the newly disclosed cartel.
• Settlement and commitment: An enterprise facing an investigation before CCI in relation to abuse of dominant position and anti-competitive agreements (except cartels) can now apply to CCI to settle its case or to offer commitments in respect of the alleged contravention. While commitments can be offered at any time before the investigation report is submitted by the DG to CCI, settlements can only be offered after the investigation report is submitted, but before the issuance of the final order by CCI. CCI’s order affirming settlements/commitments is not appealable.
• Penalty on global turnover: Under the existing framework, when computing monetary penalty, CCI takes into consideration the turnover of the enterprise accruing from infringing products or services (ie, the relevant turnover). The amendment now empowers CCI to impose a monetary penalty on an enterprise’s global turnover (ie, accounting for all its products or services rather than the relevant turnover). On 6 March 2024, CCI published the much-awaited penalty guidelines that provide for comprehensive methodology to be adopted by CCI while imposing penalties. 

• Minimum deposit of penalty amount: Appeals before the National Company Law Appellate Tribunal (“NCLAT”) against CCI final orders will now require a 25% deposit of the monetary penalty amount as a condition precedent for the appeal being entertained by NCLAT.

• Limitation period: CCI now has the power to only entertain information (a complaint) that has been filed within three years from the date on which the cause of action first arose. However, CCI has the power to condone the delay.

All Eyes on Digital

The government constituted a Committee on Digital Competition Law to examine the need for a separate law on competition in digital markets. On 27 February 2024, the government published the report of the committee for public consultation, which recommended enacting a separate Digital Competition Act to regulate Systemically Significant Digital Enterprises (“SSDEs”) in certain pre-identified core digital services (“CDS”) based on their financial strength and market spread. Based on self-assessment, if an enterprise meets the prescribed criteria for such CDS, it will have to mandatorily report to CCI within 90 days, after which, CCI can designate it as an SSDE. CDS include online search engines, social networking, video sharing, intermediation, cloud and interpersonal communication services, etc. Any non-reporting or misreporting to CCI will attract a monetary penalty.

Once designated as an SSDE, an enterprise will have the following obligations: to deal with users on fair, reasonable and non-discriminatory terms; not indulge in self-preferencing of its own product/services; not leverage the non-public data of its business users to gain an unfair competitive advantage or “cross use” the personal data of users, without their consent; restrict users from using third-party applications; and not indulge in anti-steering and tying and bundling of products/services. Any non-compliance will attract a monetary penalty, which can be up to 10% of global turnover.

This development comes as CCI intensifies its scrutiny of digital markets, having already penalised Google for abuse of dominance, and while currently investigating other major players such as Apple, Amazon, Flipkart and WhatsApp.

Litigation Trends – the Year in Review

During the relevant period, CCI and the appellate courts passed several important orders, evolving competition law jurisprudence in India. As per the information available in the public domain, CCI initiated investigation in one case, passed final orders in two cases, and dismissed 49 complaints at the prima facie stage. No dawn raids were conducted by CCI during the relevant period.

Turf wars over jurisdictional authority endure

The jurisdictional conflict between CCI and other regulators continued to be a focal point, with two notable rulings issued by the constitutional courts in 2023.

• In June 2023, in a landmark decision, the Supreme Court (“SC”) held that the Competition Act applies to public sector undertakings (“PSUs”) and that the activities of Coal India, a dominant coal producer in India, fall within the ambit of the Competition Act as it does not perform any sovereign functions, so it cannot claim the benefit of the PSU-related carve-out provided in the definition of “enterprise” under the Competition Act. The decision upholds the principle of competitive neutrality, affirming that the Competition Act applies equally to both private and public sector undertakings.
• In July 2023, in a setback to CCI, the Delhi High Court (“DHC”) held that the Patents Act, 1970 (“Patents Act”) must prevail over the Competition Act on the issue of exercise of rights by a patent holder, and that licensing of patents is within the exclusive jurisdiction of the Controller of Patents, which ousts CCI’s jurisdiction. The case relates to the investigation initiated by CCI against Ericsson and Monsanto for abusing their dominant positions in licensing their respective patents. Both primarily argued that CCI does not have jurisdiction in matters related to the exercise of rights by a patent holder, as this falls within the exclusive domain of the Controller of Patents under the Patents Act. 

NCLAT continues to lower penalties

From April to June 2024, NCLAT issued a series of decisions reducing penalties imposed by CCI in cartel cases. In the first case, it reduced the monetary penalty imposed by CCI on Godrej & Boyce (“Godrej”) for indulging in cartelisation in the dry cell battery market. While CCI granted 100% immunity from monetary penalty to Panasonic and its office bearers for disclosing the existence of the cartel under the leniency regulations, it imposed a monetary penalty at the rate of 4% of Godrej’s turnover; and 10% of the average income of its office bearers. 

Aggrieved, Godrej and its office bearers challenged the CCI order before NCLAT. NCLAT, among other things, relied on its earlier decision involving the co-accused in the cartel, that is, Geep Industries, where it reduced the monetary penalty imposed on it from 4% to 1% of the turnover and held that Godrej, like Geep Industries, was a small player in the market with no ability to influence competition. Further, its turnover from dry cell batteries was very low, and it had suffered losses. Hence, NCLAT reduced the monetary penalty imposed on Godrej from 4% to 2% of its turnover.

In another case, NCLAT reduced the monetary penalty imposed by CCI on two soil sample testing enterprises, Delicasy and Toyfort, for indulging in a bid-rigging cartel. CCI imposed a monetary penalty at 5% of their average turnover. Aggrieved, both enterprises challenged the CCI order before NCLAT. While upholding the CCI order, NCLAT did note that both enterprises only played supporting roles by submitting cover bids for another bidder, Austere System, and hence, the monetary penalty imposed on them should be lower than the amount imposed on the enterprise orchestrating the cartel. Therefore, NCLAT reduced their monetary penalty from 5% to 3% of their average turnover.

One-way information flow is anti-competitive

In an important development concerning cartel cases, NCLAT held that mere receipt of commercially sensitive information (“CSI”) from a competitor is sufficient to establish a violation of the Competition Act. The case relates to a bid-rigging cartel formed by several composite brake block manufacturers (“CBBMs”) in a tender issued by the Indian Railways. In July 2020, CCI found CBBMs, including Sundaram Brake Lining (“SBL”), guilty of indulging in a bid-rigging cartel. Aggrieved, SBL challenged the CCI order before NCLAT arguing, among other things, that it had been wrongly implicated in the cartel by CCI as: (i) admissions made by its employee were unauthorised and lacked corroboration; (ii) witness testimony cleared SBL of wrongdoing; and (iii) it was merely a recipient of CSI, which does not constitute a competition law violation.

NCLAT noted that the evidence, including confessions by SBL’s employees and email exchanges, substantiated its participation in the cartel. Further, the continuous receipt of details on bid prices and quantities from competitors without objection for over five years, indicated a “meeting of minds”, which is sufficient to establish competition law violations. The decision reinforced the strict stance of CCI that passive receipt of CSI can constitute a violation of the Competition Act.

CCI at play

In August 2023, CCI issued final orders in three cases addressing vertical restraint, anti-competitive agreements, and market abuse.

In the first order, CCI found two chemist and druggist associations guilty of indulging in anti-competitive practices by boycotting the products of Solar Life Sciences Medicare Private Limited (the pharmaceutical company that filed the complaint), as it refused to accept their demand to pay exorbitant margins to the associations’ members. In the event of failure to offer such margins and incentive schemes to the chemists, the products of Solar were boycotted. CCI refrained from imposing any monetary penalty as it considered mitigating factors such as the associations being first-time offenders and not having any funds or receiving any fees from their members.

In the second order, it closed a case against Tata Motors for alleged anti-competitive practices after a detailed investigation. Dealers of Tata Motors filed a complaint with CCI alleging, among other things, that Tata Motors: forced them to order vehicles as per its own preference rather than actual market demand; and restricted them from venturing into any new line of business and selling vehicles outside their allocated territories. CCI noted there was no evidence of Tata Motors coercing dealers to order vehicles according to its preference; instead, it merely recommended orders based on local demand to help dealers manage inventory. Further, it did not restrict dealers from entering into new business lines but required a no-objection certificate, which was never unreasonably withheld. On territorial restrictions, Tata Motors restricted dealers in active sales of vehicles but not in passive sales, that is, sales made in response to unsolicited requests from customers. Dealership agreements post-2016 permitted dealers to actively sell outside their territories with Tata Motors’ prior consent.

In the third order, it found Chandigarh Housing Board (“CHB”) guilty of abusing its dominant position by imposing unfair conditions in the allotment-cum-demand letter in relation to the allotment of flats in Chandigarh. CCI found that CHB abused its dominant position by not disclosing flat possession dates and charging penal interest for a full month, instead of the actual period of delay, with no provision in the allotment letter. CCI instructed CHB to cease such practices but avoided a monetary penalty, noting CHB’s corrective actions and the registration of projects with the Real Estate Regulatory Authority.

Apart from the above cases, it also ordered a fresh investigation into Google for abusing its dominant position by charging an excessive service fee/commission from app developers for in-app purchases and paid applications, on the Google Play Store platform. In its prima facie order, CCI noted that Google is dominant in the market for a licensable operating system for smart mobile devices in India; and in the application store for an Android smart mobile OS in India. In relation to Google’s conduct, CCI noted, among other things, that Google charges an excessive service fee which application developers are forced to accept; Google applies service fees on digital delivery applications and not on physical delivery applications, which is discriminatory in nature; and that the unfair service fee could force application dealers out of the market.

Landmark ruling by the constitutional courts reaffirming the principle of procedural fairness and mediation and settlement

In April 2024, Madras High Court (“MHC”) quashed CCI’s investigation against MRF Limited (“MRF”) for lack of transparency. In November 2019, CCI passed a prima facie order directing an investigation against JK Tyres for indulging in cartelisation. During the investigation, the DG issued notices to various tyre companies including MRF, seeking information from it as a “third party”, that is, a party not under investigation. MRF sought a copy of the prima facie order from the DG, which was refused on the ground that MRF was only a “third party” in the proceedings. In August 2020, the DG submitted a note to CCI seeking to include other tyre companies including MRF in the investigation, which CCI allowed. Based on this, the status of MRF was changed from “third party” to “opposite party”. MRF came to know about this change in status only in March 2024 when it received a copy of the order passed by CCI expanding the scope of the investigation to include MRF. Aggrieved, MRF challenged the CCI order on the ground that the change in its status without giving prior notice is bad in law. MHC held that CCI ought to have given notice to MRF prior to changing its status from “third party” to “opposite party” and must issue a speaking order to justify such a change, given the need for procedural fairness and compliance with legal principles.

In August 2024, in a rare decision, DHC noted that CCI must respect mediation outcomes and settlements, and quashed the investigation against JCB India Limited (“JCB”). The case began when JCB filed a suit in November 2011 against Bull Machines, seeking an injunction for design infringement. Concurrently, the parties negotiated modifications to the design. In December 2013, while negotiations were ongoing, Bull Machines complained to CCI, accusing JCB of abusing its dominant position through vexatious litigation. CCI ordered an investigation, which JCB contested in a writ petition before DHC. During the pending petition, Bull Machines’ attempt to dismiss the suit was rejected, leading to an appeal and subsequent referral to mediation by the SC. On 26 August 2021, DHC recorded the settlement between the parties. Following this, JCB and Bull Machines jointly sought to quash the CCI investigation against JCB. Despite CCI’s opposition, DHC allowed the said application and terminated the proceedings before CCI on the ground that mediation, as a part of dispute resolution, brings finality to disputes, and allowing an investigation before CCI to continue would undermine the significance of the same. It further discouraged CCI against pursuing investigations relating to sham or vexatious litigation, particularly when the underlying IP dispute is pending before DHC. It clarified that CCI intervention would be appropriate only if the underlying dispute were proven to be frivolous.

In the same month, the Gauhati High Court (“GHC”) quashed an investigation initiated by CCI against three cement companies, Star Cement Ltd, Calcom Cement, and Topcem India, for allegedly indulging in cartelisation. In 2016, CCI ordered an investigation into the cement companies, which was challenged by Star Cement by filing a review and recall with CCI, which it dismissed. In a parallel move, CCI imposed a penalty of INR500,000 on Star Cement for not co-operating with the DG’s investigation.

Aggrieved, Star Cement filed separate writ petitions challenging the aforesaid orders and contended that CCI passed the investigation order in the absence of a prima facie case.

GHC observed that no prima facie evidence indicated cartelisation among the cement companies. The absence of a uniform price increase, coupled with variations in price hikes and sale prices, suggested that competition existed between the cement firms. Accordingly, GHC quashed CCI’s investigation and the order imposing a penalty on Star Cement for non-cooperation.

The decision will compel CCI to reassess the statutory criteria for initiating investigations, particularly in cases alleging cartelisation, which could have far-reaching implications.

Conclusion

Last year was a pivotal year for the competition law regime in India with the introduction of key changes including settlement and commitment, deal value thresholds, penalty guidelines and leniency plus mechanism. Recent trends reveal an increased enforcement focus by CCI. Nonetheless, CCI has shown discernment in its penalty assessments, especially regarding small and medium-sized enterprises and member-serving associations.

CCI has also vigorously championed a culture of compliance, bolstering its advocacy efforts against cartels and market abuse. Concurrently, it has unveiled insightful market studies on the pharmaceutical sector, cab aggregator industry, and film distribution chain, offering strategic recommendations to tackle issues like collusion, information asymmetry, differential pricing, and anti-competitive practices within trade associations.

With over a decade of regulatory expertise, a substantial corpus of jurisprudence, and significant regulatory reforms, CCI is progressively shifting from the national to the global stage, garnering international recognition and making an indelible impact on the global competition law arena.