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AT RIVERDALE
APPEAL FILED UNDER SECTION 53B OF THE BOHEMIAN COMPETITION ACT, 2002
V.
TOGETHER WITH
ISSUE 1: WHETHER THE FOUR CATTLE FEED MANUFACTURERS HAVE FORMED A CARTEL AND
ISSUE 2: WHETHER DYLON HAS ABUSED ITS DOMINANT POSITION IN THE RELEVANT
ISSUE 3: WHETHER THE IMPOSITION AND QUANTUM OF PENALTY BY THE CCB ON DYLON
1.1 That the available evidence is sufficient to prove cartelization and the existence of an
1.2 That Adiva, Brick, Cautious & Detro are not a part of a ‘single economic entity’. .... 5
CONTENTION 2: THAT THERE HAS BEEN NO ABUSE OF DOMINANCE BY
DYLON. ............................................................................................................................... 10
2.1 That the relevant market is ‘processing and sale of milk in Bohemia’. ..................... 10
2.2 That Dylon is not dominant in the relevant market so defined. ................................. 14
2.3 That arguendo Dylon is found to be dominant, its conduct was not abusive. ........... 17
3.1 That penalty must be imposed with respect to the relevant turnover. ....................... 19
4.2 That RAM has no locus standi to file the application. .............................................. 26
PRAYER ............................................................................................................................... XV
LIST OF ABBREVIATIONS
§ : Section
¶ : Paragraph
AC : Appeals Cases
DG : Director General
EU : European Union
European Union
I
INDEX OF AUTHORITIES
ABIR ROY & JAYANT KUMAR, COMPETITION LAW IN INDIA (2nd ed. Eastern Law House
2014)…………………………………………………………………………..…….…4, 12
ALISON JONES & BRENDA SUFRIN, EC COMPETITION LAW (3rd ed. Oxford University Press
2008)…………………………………………………………………………………...…17
G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION (8th ed. Wadhwa and Company
Nagpur 2001)……………………………………………………………………………..25
MARTIN SMITH, COMPETITION LAW: ENFORCEMENT & PROCEDURE (1st ed. Butterworths
2001)…………………………………………………………………………………..….22
RICHARD WHISH & DAVID BAILEY, COMPETITION LAW (8th ed. Oxford University Press
2015)………………………………………………………………………………….......14
S.M. DUGAR, GUIDE TO COMPETITION LAW: VOLUME 1 (U.P. Mathur ed., 5th ed.
LexisNexis 2010)………………………………………………………………………...29
COMPETITION LAW TODAY: CONCEPTS, ISSUES, AND THE LAW IN PRACTICE 41 (Vinod
II
DIRECTIVES & GUIDELINES
EU Directive on certain rules governing actions for damages under national law for
infringements of the competition law provisions of the Member States and of the
(2011)………………………………………………………………………..…………...17
http://www.hhp.co.id/files/Uploads/Documents/Global%20Antitrust%20&%20Competiti
on/Guide%20to%20Competition%20Litigation/India.pdf ...............................................24
Dean Williamson, Organization, Control and the Single Entity Defence in Antitrust, 5 J.
Earl E. Pollock, Standing To Sue, Remoteness Of Injury, And The Passing-On Doctrine,
32 ANTITRUST L. J. 5 (1966)……………………………………………………………...28
European Commission Notice on the Definition of Relevant Market for the Purposes of
(2007).…..………………………………………………………………………………..11
http://www.ciaonet.org/attachments/11327/uploads............................................................1
Pieter Van Cleynenbreugel, Single Entity Tests in U.S. Antitrust And EU Competition
hours)………………………………………………………………………………………6
Report of High Level Committee on Competition Policy and Law (SVS Raghavan
http://www.internationalcompetitionnetwork.org/uploads/library/doc752.pdf.................16
Tjarda Desiderius Oscar van der Vijver, Objective Justification and Prima Facie
Bihta Co-operative Development and Cane Marketing Union Ltd v Bank of Bihar, AIR
1967 SC 389……………………………………………………………………………...25
Borosil Glass Works Ltd. Employees Union v. D.D. Bambode, AIR 2001 SC 378….…25
Builders Association of India v. Cement Manufacturers’ Association & Ors., Case No. 29
DLF Ltd. v. Competition Commission of India and Ors., (2014) 2 CompLR 1…………16
IV
Excel Crop Care Ltd. v. Competition Commission of India and Ors., (2013) Comp AT
146……………………………………………………………………………………19, 22
Film and TV Producers Guild of India v. Multiplex Association of India, Mumbai and
Global Tax Free Traders v. William Grant & Sons Ltd. & Ors., 2015 (2) CompLR
503………………………………………………………………………………………..13
Hyderabad Cylinders Pvt. Ltd. v. Competition Commission of India, 2016 (2) CompLR
886……………………………………….……………………………………………….21
International Cylinder (P) Ltd v. Competition of India & Ors., (2013) Comp AT 166…21
MDD Medical Systems India Pvt. Ltd v. Foundation for Common Cause & People
National Insurance Co. v. CCI, Appeal No. 94/2015 (9th December 2016)……………....9
Re: National Insurance Co. Ltd., Case No. 02/2014 decided on 10th July 2015………......8
Shamsher Kataria v. Honda Siel Cars & Ors., Case NO. 03/2011 (CCI)…………………9
Sri Rama Agency v. Mondelez India Foods Pvt. Ltd., Case No. 58 of 2015…………….11
Toyota Kirloskar Motor Pvt. Ltd. v. Shamsher Kataria & Ors., Appeal No. 60/2014 (9th
December 2016)………………………………………………….……………………9, 20
Vimal Singh Rajput v. CCI, Appeal No. 27/2016 (25th May 2016)……..……………….20
V
Ajinomoto Eurolysine v. SNC Doux Aliments Bretagne and others, No. 09-15816 (15th
June 2010)………………………………………………………………………………..27
Comateb and Ors v. Directeur General des Douanes et Droits Indirects, (1997) ECR I-
165………………………………………………………………………………………..27
Coopérative Le Gouessant and Sofral v Ajinomoto Eurolysine, No. 11-18495 (15th May
2012)……………………………………………………………………………………...27
ECR 619……………………………………………………………………………….…..5
Napp Pharmaceutical Holdings Ltd. & Subsidiaries v. Director General of Fair Trading,
Registrar of Restrictive Trade Agreements v. WH Smith & Sons Ltd., (1969) 3 All ER
1065………………………………………………………………………………………..2
Sainsbury’s Supermarket Ltd. v. Mastercard Incorporated & Ors., (2016) CAT 11……26
VI
SNC Doux Aliments Bretagne and others v Société Ajinomoto Eurolysine, No. 10/18285
05951…………………………………………………………………………………11, 15
Elite Logistics Corp. v. MOL American, Inc., Case No. CV 11-02952 DDP (2nd February,
2016)……………………………………………………………………………………...28
Image Technical Services Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997)….10
United States v. E.I. du Pont de Nemours & Co., 351 US 377 (1956)…………………..11
C6………………...………………………………………………………………………20
VII
STATEMENT OF JURISDICTION
APPELLATE TRIBUNAL UNDER SECTION 53B OF THE BOHEMIAN COMPETITION ACT, 2002 TO
APPEAL AGAINST THE ORDER PASSED BY THE COMPETITION COMMISSION OF BOHEMIA UNDER
TRIBUNAL UNDER SECTION 53N OF THE BOHEMIAN COMPETITION ACT, 2002 TO APPLY FOR
COMPENSATION.
The Honourable Competition Appellate Tribunal has decided to hear the appeal and the
application together.
VIII
STATEMENT OF FACTS
I. BACKGROUND
Bohemia is a republic in South Asia, with laws pari materia to India, including the Bohemian
Competition Act, 2002. In Bohemia, 25 per cent of the milk and dairy industry consists of the
local, unorganised sector and the remaining 75 per cent is jointly held by Anmol, Dairy Fresh
Ltd. (Dairy Fresh), Farm Everyday and Dylon Nutricia (Dylon). While the other three milk
manufacturers have been functioning from Bohemia, Dylon is a world nutrition chain that has
In October-November 2012, Acme Group Plc (Acme), a global giant in the animal husbandry
business, looking to capitalize the potential for growth in the Bohemian economy, set up four
joint ventures in the business of cattle feed – Adiva Regina Cattle Feed Ltd. (Adiva), Brick
Cattle Feed Ltd. (Brick), Cautious Cattle Feed Ltd. (Cautious), and Detro Cattle Feed Ltd.
(Detro). The joint ventures have a common Research & Development (R&D) Agreement to
meet the standards of the Cattle Feed Regulations, 2012 that were implemented after an
incident where poisoned cattle feed was fed to the cattle, resulting in the death of 50,000
There was a global recession in 2014, the effects of which were felt particularly across the
In May 2016, Mother Care and Child Care (MCC) and Retailers’ Association of Milk (RAM)
filed information against Dylon, alleging abuse of its dominant position for charging an
increased price for its packaged milk, following the global recession. Accordingly, the CCB
IX
instructed the DG to carry out an investigation and submit a report regarding the same. It was
found that there was an increase in the price of milk by all milk suppliers. The DG sought
information regarding a breakdown of their exact costs, when Dylon cited its extensive R&D
expenses in respect of superior technology and packaging. Dylon also brought to the DG’s
notice the increased prices of cattle feed, a vital factor behind the increase in the price of
milk.
During the pendency of the investigation, Dylon filed information before the CCB against
Adiva, Brick, Cautious and Detro for cartelization and their role in limiting and controlling
the production and supply of cattle feed between the months of January and March 2015,
leading to an increase in the price of cattle feed between April to July 2015. This was also
The DG in his final report found Dylon liable for abusing its dominant position by charging
excessive prices. The DG rejected Dylon’s suggested relevant market definition and instead
chose to define the relevant market as ‘processing and sale of packaged milk’. The DG found
Dylon to be dominant in this market. The DG did not take into account the argument that the
increased price was due to excessively high cattle feed prices was rejected.
However, the DG found Adiva, Brick, Cautious and Detro to have formed a cartel and
colluded to have curtailed the supply of cattle feed, leading to a subsequent rise in prices.
This was based on several pieces of evidence uncovered during the course of the DG’s
investigation.
X
V. IMPUGNED ORDER
The CCB upheld the findings of the DG with respect to Dylon Nutricia and found it in
contravention of Section 4(2)(a)(ii), on the ground that Dylon had benefited from the
significant increase in price even if there was an increase in the cost of cattle feed.
With respect to the four cattle manufacturers, the CCB accepted their contention that there
could be no collusive agreement or cartelization between them since they were a part of a
In light of these findings, the CCB ordered Dylon to cease and desist charging excessive
prices as well as the imposition of a penalty amounting to 10 per cent of their average
Dylon preferred an appeal under Section 53B of the Competition Act to the Competition
Appellate Tribunal against both the findings of the CCB. It also challenged the imposition
and quantum of the penalty ordered by the CCB. Along with this, RAM filed an application
for compensation for recovery of damages and loss from Dylon under Section 53N of the
Act.
The COMPAT has decided to hear the appeal and the application together.
XI
STATEMENT OF ISSUES
ISSUE 1: WHETHER THE FOUR CATTLE FEED MANUFACTURERS HAVE FORMED A CARTEL
ISSUE 2: WHETHER DYLON HAS ABUSED ITS DOMINANT POSITION IN THE RELEVANT
ISSUE 3: WHETHER THE IMPOSITION AND QUANTUM OF PENALTY BY THE CCB ON DYLON
JUSTIFIED?
MAINTAINABLE?
XII
SUMMARY OF ARGUMENTS
CONTENTION 1: That Adiva, Brick, Cautious and Detro have formed a cartel and
The Respondent cattle feed manufacturers have contravened Section 3(3) of the Competition
Act, 2002 by forming a cartel in view of the following arguments – firstly, the evidence
communication and economic circumstantial evidence are available, that are considered
adequate to adjudge competition law cases. Secondly, these Respondents are not a part of a
single economic entity, as they competing with each other in the same market, and their
parent entity does not exercise decisive control over their functions and policies.
market.
The Appellant has not infringed Section 4(2)(a)(ii) of the Competition Act, 2002, in light of
the following arguments – firstly, the relevant market in the present case is ‘processing and
sale of milk in Bohemia’, based on the factors of end-use and consumer preferences that must
be taken as a whole. Secondly, there is intense competition in the relevant market and no milk
supplier enjoys dominant share of this market. The other factors of durability, size and
distribution networks also point away from the Appellant holding a dominant position.
Thirdly, even if, arguendo, the Appellant is found to be dominant in the relevant market, it
has not abused its dominance. The increase in the price of milk was not done with a view to
maximise profits but to recover the costs that had surged due the increase in the price of cattle
feed.
XIII
CONTENTION 3: That the imposition and quantum of penalty by CCB on Dylon is
unjustified.
The imposition of penalty on the Appellant is unjustified, since there has been no abuse of
dominance on the Appellant’s part. Further, even if infringement is found, the quantum of
penalty is unwarranted. Firstly, the penalty has to be imposed on the relevant turnover, as has
been held by COMPAT in various cases, whereas the CCB has imposed on the total turnover.
Secondly, the CCB has failed to take into account several mitigating factors including the
high prices of cattle feed and the absence of any mala fide intention on the Appellant’s part in
CONTENTION 4: That the application for compensation filed by RAM under Section
The application for compensation filed by RAM cannot be maintained before the COMPAT
in view of the following – firstly, the application is premature. Compensation can be applied
for only after the dispute has been determined, while in the present case it remains to be
adjudicated before the COMPAT. Secondly, RAM and the dairy retailers it represents have
suffered no loss or damage due to the increase in price of milk, as this cost has been passed
on to the consumers. The RAM does not represent the consumers and even if RAM has filed
a class action suit, it does not adhere to the preconditions of such a suit.
XIV
WRITTEN SUBMISSIONS
1. According to Section 3(3) of the Bohemian Competition Act, 2002, any agreement between
provision of services that directly or indirectly determines sale or purchase prices, or limits
competition. Cartels, which are associations that control or attempt to control these factors 1,
are also presumed to have such effect. Such are agreements are void2 and prohibited3.
2. It is humbly contended that the concerned respondents – Adiva, Brick, Cautious and Detro,
have contravened Section 3 of the Act by entering into an anti-competitive agreement and
1.1 That the available evidence is sufficient to prove cartelization and the existence of
an anti-competitive agreement.
operators and economic evidence concerning the market and the conduct of those
participating in it that suggests concerted action. 4 Under the Competition Act, 2002,
1
§ 2(c), Competition Act, 2002.
2
§ 3(2), Competition Act, 2002.
3
§ 3(1), Competition Act, 2002.
4
Organisation for Economic Cooperation & Development, Prosecuting Cartels Without Direct
Evidence of Agreement, POLICY BRIEF, 1 (June 2007)
http://www.ciaonet.org/attachments/11327/uploads.
1
concerted action to achieve an unlawful objective.5 The nature of the Act being economic
and strict standards of proof beyond reasonable doubt are not necessary. The recognized
standard of proof in European and Indian competition law jurisprudence to prove the
4. The importance of circumstantial evidence to prove the existence of a cartel and an anti-
competitive agreement arises due to the inherent secrecy involved in the operation of a
cartel. Lord Denning has famously commented upon this covertness- “People who combine
together, to keep up prices, do not shout it from the housetops. They keep it quiet. They
make their own arrangements in the cellar where no one can see. They will not put
anything into writing nor even into words. A nod or a wink will do.” 7
5. In the present case, the circumstantial evidence available is of two types – communication
COMMUNICATION EVIDENCE
6. Communication evidence suggests that the concerned persons communicated or met, but
does not include the contents of their communications. 8 Even so, it is considered
5
Monsanto Co. v. Spray-Rite Service Corp., 465 US 752 (1984), at 768.
6
Tesco Stores Ltd. v. Office of Fair Trading, (2012) CAT 31, at ¶ 88; Napp Pharmaceutical
Holdings Ltd. & Subsidiaries v. Director General of Fair Trading, (2002) CAT 1, at ¶ 105.
7
Registrar of Restrictive Trade Agreements v. WH Smith & Sons Ltd., (1969) 3 All ER 1065,
at 1069.
8
Organisation for Economic Cooperation & Development, Prosecuting Cartels Without Direct
Evidence of Agreement, PUB. NO. DAF/COMP/GF (2006) 7, 10 (September 2006),
https://www.oecd.org/daf/competition/prosecutionandlawenforcement/37391162.pdf.
2
compelling evidence,9 as it shows communication between people who have no reason to
do so. Making a similar observation in 1776, Adam Smith in his book The Wealth of
Nations, remarked- “People of the same trade seldom meet together…such conversation
7. In the present case, there are several pieces of communication evidence that point towards
the existence of a cartel and an agreement to control the supply, and hence the price of
8. Firstly, on 20th December 2014, the concerned Respondents attended a seminar conducted
by the Department of Animal Husbandry, Dairying and Fisheries. Following this, between
December 2014 and March 2015, when the supply of cattle-feed by these manufacturers
was reduced, several call and SMSs were exchanged amongst the CEOs of the Respondent
these companies during the period corresponds with their parallel reduction of supply of
9. Secondly, when Mr. Kurian (CEO of Davenport Cooperative) requested the cattle-feed
manufacturers to reduce their prices in order to guard against the sudden increase in milk
prices, the four Respondents not only replied on the same date, but also used identical
3
determine the supply and price of cattle-feed in the market and forms an important piece of
ECONOMIC EVIDENCE
10. Out of the two types of economic evidence – conduct and structural14 – in the instant case,
there exists economic conduct evidence. Between December 2014 and January 2015, there
It is submitted that the simultaneous decrease in the supply, which consequently led to an
11. Such pieces of economic evidence have been relied upon in various cases involving
infringement of competition law. In American Tobacco Co. v. United States16, the three
largest tobacco manufacturers of the US simultaneously increased their prices. The Court
found that the record of this price change was admissible as circumstantial evidence of the
existence of a conspiracy.
12. The validity of this evidence has also been upheld in Indian competition law jurisprudence.
while determining the existence of a cement cartel, the CCI imposed a penalty of Rs. 6700
crore on the basis of economic circumstantial evidence. The CCI observed that concerted
action may be established by placing reliance upon parallel behaviour in prices, dispatch
14
ABIR ROY & JAYANT KUMAR, COMPETITION LAW IN INDIA 68 (2nd ed. 2014).
15
Moot Proposition, at ¶ 11.
16
328 US 781 (1946), at 790, 804.
17
Case No. 29 of 2010 (31st August 2016), at ¶ 184.
4
13. While parallel conduct may not always mean that a concerted action has taken place, it may
competition which do not correspond to the normal conditions of the market. 18 In the
instant case, the sudden and simultaneous decrease in supply of cattle feed is unusual. If
this alone does not point towards the existence of an anti-competitive agreement, there also
exist certain ‘plus factors’ mentioned above, that include the communication evidence.
14. It is therefore humbly submitted before the Honourable Tribunal that the evidence available
in the present case is sufficient to prove the existence of collusion and an anti-competitive
agreement.
1.2 That Adiva, Brick, Cautious & Detro are not a part of a ‘single economic entity’.
15. The Appellant contends before the Honourable Tribunal that the four Respondents are
separate units and function independently of each other and therefore, the defence of a
them.
16. The definition of an ‘enterprise’ under Section 2(h) of the Competition Act, 2002
Cautious and Detro are subsidiaries of Acme within the meaning of Section 2(87) of the
Companies Act, 2013. However, when a subsidiary is not under the strict guidance of the
holding company for economic activities and compete in the market against another
subsidiary, there may be scope for ‘rule of reason’19 and treating them as distinct entities
18
Imperial Chemical Industries Ltd. v. Commission of the European Communities, (1972)
ECR 619, at ¶ 66.
19
Order of the Competition Commission of India regarding combination notice filed by Grasim
Industries Limited and Aditya Birla Chemicals (India) Ltd., Registration no. C-2015/03/256, at
¶ 39.
5
where the judges take economic and substantive factors into consideration while deciding
17. Therefore, the existence of a common parent company does not directly lead to the
inference that the subsidiaries, together with the parent, form a single economic entity. This
is even more relevant in cases where the subsidiary is not 100 per cent owned by the parent.
In such cases it is imperative to prove not only the parent company’s ability to exercise
decisive influence over its subsidiary, but also actual exercise of this ability. 21 What has to
18. In the present case, Acme has a shareholding of more than 50 per cent in each the
subsidiaries, who are the Respondents in this case. However, its substantial ownership in
these concerns does not imply control.22 There is nothing to suggest that Acme had any
control over the operations of these concerns; rather the requirement of an R&D Agreement
amongst these concerns implies that for any cooperation among the Respondents, a contract
was needed. No such need would have arisen had Acme exercised any substantial control
over them.
19. The ‘rule of reason’ test has been evolved by US Supreme Court in American Needle, Inc.
v. National Football League23. In this case, while holding that the teams comprising the
National Football League (NFL) and the NFL were not a single economic enterprise by
virtue of them being independently managed businesses, it laid down the conditions of
control, diversity of interests, and competitive links under this rule. Following this decision,
20
Pieter Van Cleynenbreugel, Single Entity Tests In U.S. Antitrust And EU Competition Law,
SSRN, http://ssrn.com/abstract=1889232 (accessed on 2nd February 2017, at 1600 hours).
21
General Quimicia & Ors v. Commission, (2011) ECR I-1, at ¶ 85.
22
Dean Williamson, Organization, Control and the Single Entity Defense in Antitrust, 5 J.
COMP. L. & ECO. 724, 737 (2009).
23
560 US 183 (2010), at 194.
6
to prove the existence of a single economic entity, it is essential to establish not only that
there is one control centre, but also to establish control and lack of competition of the
20. In the present case, the Respondents fail to meet the additional requirements of these
conditions as well. The parent entity, Acme, exercises no actual control over the
Respondent cattle-feed manufacturers and there exists actual competition amongst them.
21. All four concerned Respondents are cattle-feed manufacturers and are active throughout
Bohemia. 24 They are, therefore, selling a variant of the same product making them all
participants and competitors in the cattle-feed market. The presence of this element further
cements the conclusion that they are, in fact, separate and independent.
22. The tests that a ‘single economic entity’ needs to pass in order to be declared so are similar
in the European Union. The assessment of a group of entities as such depends upon control
and conduct factors.25 Article 101(1) of the TFEU prohibits anti-competitive agreements
common control-centric. They have been defined as economic units which consist of a
unitary organization of personal, tangible and intangible elements, which pursue a specific
infringement.26
23. In Viho Europe BV v Commission of the European Communities27, while holding that the
wholly owned subsidiaries of Parker Pen, over which it exercised complete control, were a
24
Moot Proposition, at ¶ 10.
25
AEG-Telefunken AG v. Commission of the European Communities (1983) ECR 3151, at ¶¶
50-52; Stora Kopparbergs Berlgslags AB v. Commission (2000) ECR I-9925, at ¶¶ 21-30.
26
Mannesman AG v. High Authority of the ECSC, (1962) ECR 357, at ¶ 371.
27
(1996) ECR I-5457, at ¶¶ 50-51.
7
‘single economic entity’, the Court distinguished elements of control and market conduct as
24. Control has similar implications as under the American law. Only if the subsidiary has no
control over its operations internally or in the market will it form a part of a single entity.
Market conduct assesses whether a subsidiary is able to determine its own policies and
function as an independent player in the market. The French competition law has
formulated an additional condition – to the extent that related entities act as separate
competitors, their conduct is not integrated and they do not present a single economic
entity.28 Even when the economic entity is composed of several natural and corporate legal
used to determine which separate legal entities are to be treated as a single economic
entity.29
25. The operations and functions – both internal and external – of the Respondents in the
immediate case fail to meet any of these conditions formulated in the various global
competition law principles. Not only are they competing in the same market, they act as
independent players that pursue separate economic interests; there is nothing to suggest a
26. These tests have also been applied in the Indian competition law jurisprudence. The test of
control was applied in Re: National Insurance Co. Ltd.30, when the public sector insurance
allegations of cartelization and bid-rigging. The CCI held that despite the government being
28
Mélanie Thill-Tayara, Holding On To The “Holding Out Doctrine”: The French Approach
Towards Intra-Group Conspiracy, 24 EUR. COMP. L. REV. 553, 556 (2003).
29
Okeoghene Odudu & David Bailey, The Single Economic Entity Doctrine In EU Competition
Law, 51 COM. MAR. L. REV. 1721, 1726 (2014).
30
Case No. 02/2014 (CCI), at ¶¶ 25-26.
8
a 100% shareholder in each of these companies, they acted independently and on their own
volition. This was further upheld by the COMPAT in its appeal. 31 This lack of control
27. The test of conduct and existence of competition was used in Shamsher Kataria v. Honda
Siel Cars & Ors.32. In this case, Hyundai claimed the defence of a ‘single economic entity’
with respect to an agreement with its overseas supplier that would otherwise have been
prohibited under Section 3 of the Competition Act, 2002. The CCI observed that the
concept of single economic entity would be applicable only if there existed inseparability in
the economic interest of the parties to the agreement. When this decision was appealed33,
this Honourable Tribunal inter alia reiterated this test and also applied the control test
observing that they could only be a single economic entity if the decision making of the
28. As is clear in the present case, the Respondent concerns have independent economic
interests. They are different entities, selling an identical product, all over Bohemia, that is,
they are functioning in the same product and geographic market. It can thus be inferred that
not only are they competing with each other, their economic interests are also separate and
independent.
29. Therefore, in the light of the above arguments, it is humbly submitted by the Appellant that
the four cattle-feed manufacturers are not a part of a ‘single economic entity’ and in view of
the available evidence, have colluded to form a cartel and entered into an anti-competitive
agreement.
31
National Insurance Co. v. CCI, Appeal No. 94/2015 (9th December 2016), at ¶ 13.3.
32
Case No. 03/2011 (CCI) at ¶ 9.1.4.
33
Toyota Kirloskar Motor Pvt. Ltd. v. Shamsher Kataria & Ors., Appeal No. 60/2014 (9th
December 2016), at ¶ 95.
9
CONTENTION 2: THAT THERE HAS BEEN NO ABUSE OF DOMINANCE BY
DYLON.
30. The Appellant humbly contends before the Honourable Tribunal that there has been no
market, establish the existence of a dominant position in such market and finally prove that
this position of dominance has been abused in some manner.34 The arguments in this regard
2.1 That the relevant market is ‘processing and sale of milk in Bohemia’.
31. In order to determine the position in the market and prove abuse, the CCB is required to
determine the relevant market.35 The relevant market must have a product and geographical
aspect that are clearly defined. 36 These aspects in the instant case have been discussed
hence.
32. It is humbly contended that the relevant product market in the immediate case is the
‘processing and sale of milk’, and not ‘processing and sale of packaged milk’, as
determined by the DG 37 and accepted by the CCB while erroneously establishing the
34
Image Technical Services Inc. v Eastman Kodak Co, 125 F.3d 1195 (9th Cir. 1997), at ¶ 19.
35
§ 2(r), Competition Act, 2002.
36
European Commission Notice on the Definition of Relevant Market for the Purposes of
Community Competition Law (97/C 372/03), at ¶ 2.
37
Moot Proposition, at ¶ 17.
10
33. In order to determine the relevant product market, its substitutability with similar products
has to be determined. Products that are substitutable form a part of the same market. For
this purpose, the factors considered foremost are – the end use of products, price of
34. ‘End or intended use of products’ relates to the functionality and ultimate purpose for which
the product is intended to be used. It allows the courts, as a first step, to limit the field of
investigation of substitutes.39 In case the product was intended to be used as other similar
products, they all form a part of the same market. No different product market comes into
existence if the concerned product is used by the consumers to achieve the same purpose.
While determining substitutability, it is not necessary that the products are perfectly
substitutable; even if they are functionally interchangeable they form a part of the same
relevant market. 40 Reasonable interchangeability of the products for the same purpose
35. The CCI has followed a similar reasoning in Sri Rama Agency v. Mondelez India Foods
Pvt. Ltd.42. In this case, the CCI accepted the product market definition to be of ‘chocolate’
as opposed to ‘non-premium chocolate’ contended by the informant. The CCI observed that
the cravings and taste of chocolates constitutes it into a separate market, but refused to
accept that it could be further divided into premium and non-premium, as the effect
38
§§ 2(t) and 19(7), Competition Act, 2002; Supra note 36, at ¶ 7. Commission notice
39
Supra note 36, at ¶ 36. 97/c
40
Tetra Pak International SA v. Commission of the European Communities, (1996) ECR I-
05951, at ¶ 67-69.
41
United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377 (1956), at 395; Jonathan
Baker, Market Definition: An Analytical Overview, 74 ANTITRUST L. J. 129, 132 (2007).
42
Case No. 58 of 2015, at ¶ 18.
11
36. The requirement thus, is for the products of a common market to be similar and not
identical, so as to fulfil the same purpose. In the present case, the Appellant’s packaged
milk serves the same purpose as the milk supplied by other manufacturers, whether loose or
packaged. The inherent quality of milk remains unaffected notwithstanding how it is sold;
37. ‘Price of product’ is another factor that determines the extent to which the product can be
substituted with others. As long as the prices are similar and do not vary drastically with
those of similar products, it forms a part of a single market. In the present case, the
Appellant has been selling its milk products at low, competitive prices globally, 43 a practice
that has also been followed in Bohemia.44 It is thus evident that the prices charged by the
Appellant are similar to those charged by its competitors; thus making the milk it sells
38. Another factor that establishes substitutability is the ‘consumers’ preferences and
perceptions’. It is for the consumers that all products are manufactured and their
perceptions with regards to product form an important aspect in determining the relevant
market. If the consumer is likely to switch to another product if the deal becomes less
attractive for him, for example in the event of an increase in price, it may be concluded that
both these products are part of the same market. 45 Consumers’ preferences cannot be
computed with empirical accuracy; they vary and are not uniform enough to demonstrate a
strong preference towards any particular product. While in the present case, the Appellant
has seen a rise in its sales and consumers favouring it,46 this is just a reflection of the favour
43
Moot Proposition, at ¶ 5.
44
Clarification No. 9.
45
Supra note 14, at 163. abir
46
Moot Proposition, at ¶ 13.
12
it experiences from certain consumers, as do other manufacturers. For example, Dairy Fresh
is popular among persons between the ages of 15-25 years and persons between the ages of
50-70 years prefer Farm Everyday.47 This shows that consumer preferences and perceptions
are not uniform. While certain persons may not switch to another product and have
preferences, this cannot be assumed of the group as a whole. Thus, in the instant case,
where a portion of consumers is inclined to purchase the Appellant’s milk due to its
packaging, this should not be taken as a reflection of the entire consumer group.
39. This has also been reiterated by this Tribunal in the case of Global Tax Free Traders v.
William Grant & Sons Ltd. & Ors.,48 where the issue, inter alia, was the determination of
the relevant product market as ‘single malt scotch whiskey’ or as ‘scotch whiskey’. The
Tribunal observed that even though the manufacturing procedure of both these products
was different and, as argued by the Appellant, some consumers would never shift to the
latter market from the former, the market had to be broadly defined as ‘scotch whiskey’. It
was held that the relevant product market had to be defined keeping in mind the overall
consumer behaviour, and not that of the group that had a strong preference towards single
40. It is therefore concluded that in the determination of the relevant market in the present case,
the substitutability of the Appellant’s product is found in the milk market on the basis of the
aforementioned factors. It is thus humbly submitted that the relevant product market is
47
Moot Proposition, at ¶ 4.
48
2015 (2) CompLR 503, at ¶ 23.
13
RELEVANT GEOGRAPHIC MARKET
41. It is humbly submitted before the Tribunal that the Appellant’s products are available and
sold throughout the territory of the country. The relevant geographic market in the instant
42. The Appellant thus concludes that in the present case the relevant market is ‘the processing
43. It is humbly contended that the Appellant does not hold a dominant position in the market
of ‘processing and sale of milk’, the relevant market in the present case.
44. To constitute an offence under Section 4, it is essential for the firm to hold a position of
dominance in the relevant market. The expression ‘dominant position’ is a binary term;
either a firm is dominant or it is not.49 It is submitted that no single firm holds a position of
45. In establishing dominance, market shares play an important role in determining the market
structure and relative importance of the enterprise.50 It is brought to the Tribunal’s notice
that the market for processing and sale of milk in Bohemia is extremely competitive, with
no single firm holding a clear and considerable majority of the market shares. The division
49
RICHARD WHISH AND DAVID BAILEY, COMPETITION LAW, 190 (8th ed. 2015).
50
Guidance on the Commission's Enforcement Priorities in Applying Article 82 of the EC
Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, Information from
European Union Institutions and Bodies (2009/C 45/02), at ¶ 13.
14
Farm Everyday – 12 per cent51
46. Clearly no firm holds market shares sizeable enough to give rise to a presumption of
dominance.52 Further, numerous jurisdictions have recognised that a firm with less than 50
per cent market share may only be dominant if its market share is substantial in comparison
with that of its competitors, that is, if the remaining market share is scattered or dispersed
amongst a number of competitors and not one single competitor.53 It is submitted that none
of the participants in the relevant market meet the requirements for dominance, with
identically low market shares being held by all. Enterprises with less than 25 per cent
market shares are not likely to enjoy a dominant position in the market.54
47. In TN Consumer Products Distributors Association v. Britannia Industries Ltd.,55 the CCI
has also acknowledged that in a market of intense competition, even if the Respondent is
prominent, no single firm may be dominant due to lack of substantial market power being
held by one single enterprise. It is thus submitted that no enterprise holds a position of
dominance in the relevant market and the CCB’s findings against the Appellant are without
any substance.
48. Regardless, if the existence of intense competition and the distribution of market shares
relevant market may be found to be held by Anmol and not by the Appellant. While the
51
Clarification No. 21.
52
Hoffmann-La Roche & Co. AG v. Commission, (1979) ECR 461, at ¶ 53-56; Eurofix-Bauco
v. Hilti, (1988) OJ L65/19, at ¶ 91- 94; Tetra Pak International SA v. EC Commission, (1997) 4
CMLR 662, at ¶ 109-110.
53
Report of High Level Committee on Competition Policy and Law (Raghavan Committee
Report) 2000, at ¶ 4.4.5.
54
Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations
between undertakings (the EC Merger Regulation), OJ L 24, at ¶ 32.
55
Case No. 106/2015 (29th March 2016), at ¶ 10.
15
market share of an enterprise plays an important role in indicating its market power, other
49. The Act lists out a number of such factors that may be examined to determine whether or
not an enterprise is dominant in a given relevant market. 57 These include the size and
50. The ECJ as well has treated commercial stability58 and the existence of well-established
Dylon was a fairly new entrant to the market in Bohemia, having been established only in
2010, Anmol was established as early as 1970. Further Anmol has a remarkably strong
network of dealers and retailers in Bohemia, with seventy sales offices spread across thirty
states; in contrast to this, Dylon has factories located in only four Bohemian states.
market with less than 40 per cent market share, the Court noted that British Airways’
dominance was reinforced by its popularity amongst consumers and the fact that its market
share was declining did not mean it was not dominant. To be dominant, an enterprise must
hold durable and sustainable market power61. Dylon is a fairly new entrant to the market
56
DLF Ltd. v. Competition Commission of India and Ors., (2014) 2 CompLR 1, at ¶ 86.
57
§ 19(4), Competition Act, 2002.
58
United Brands v. Commission, (1978) ECR 207, at ¶ 81.
59
Hoffmann-La Roche & Co. AG v. Commission, (1979) ECR 461, at ¶ 48; Eurofix-Bauco v.
Hilti, (1988) OJ L65/19, at ¶ 69; Napier Brown v. British Sugar, 1988 OJ (L 284) 41, at ¶ 56;
PO- Michelin OJ (2002) L 143/1, at ¶ 182-183.
60
(2003) ECR II-5917, at ¶ 223.
61
The Unilateral Conduct Working Group, Assessment of Dominance, INTERNATIONAL
COMPETITION NETWORK, 25 (May 2011),
http://www.internationalcompetitionnetwork.org/uploads/library/doc752.pdf.
16
and while it may have gained a certain amount of popularity among consumers in the past
year, Anmol has been synonymous with milk and dairy processing for the past forty-seven
years and continues to dominate the market by being the most trusted brand.
52. Dominance requires power over time and so it is important for market shares to be held ‘for
some time’.62 It is therefore evident that Anmol, and not the Appellant, may be found to
enjoy a position of dominance in the relevant market and the same is submitted before this
Honourable Tribunal.
2.3 That arguendo Dylon is found to be dominant, its conduct was not abusive.
53. It is contended that assuming but not admitting that the Appellant is found to hold a
position of dominance, the increase in price does not amount to an abuse of this dominant
54. In order to establish that the Appellant has abused its dominant position in the present case,
the Commission is required to show two things – firstly that the price was excessive and
secondly that the excessive price was unfair. 63 Merely charging excessive prices is not
55. The defence of objective necessity is well recognised in Europe 65 and requires the
undertaking or enterprise to show that its actions were objectively necessary. 66 The
Appellant submits that the increase in price was a direct result of the high prices being
62
Hoffmann-La Roche & Co. AG v. Commission, (1979) ECR 461, at ¶ 41; ALISON JONES &
BRENDA SUFRIN, EC COMPETITION LAW 397 (3rd ed. 2007).
63
United Brands v. Commission, (1978) ECR 207, at ¶ 266.
64
Amitabh Kumar, Excessive Pricing – An Abuse of Dominance, 1 COMP. L. REP. 88, 88-90
(2011).
British Airways v. Commission, (2003) ECR II-5917, at ¶ 291; Centre Belge d’Etudes de
65
17
charged for cattle feed by Respondent cattle feed manufacturers, by engaging in a cartel and
entering into an anti-competitive agreement. Since the Appellant owns its own dairy
farms67, cattle feed is an essential raw material in the production process and the Appellant
was unable to recover its own costs without increasing the prices of its milk.
56. The United Brands68 judgment highlighted that enterprises have every right to take steps
they deem necessary to protect their commercial interests. The Telemarketing69 judgment
also acknowledged that commercial constraints serve as objective justifications for what
may prima facie appear to be abusive conduct. The Appellant already bears significant
costs due to its extensive R&D expenses and has, inspite of this, managed to price its
products competitively globally and in Bohemia before the effects of the high price of cattle
feed was felt. Therefore it is submitted that the sudden and substantial increase in the price
of cattle feed as a result of the cartelisation of the Respondent cattle feed manufacturers
could not be reasonably absorbed by the Appellant and had to be passed on to consumers in
57. In light of this, it is submitted before the Honourable Tribunal that even if found to be
dominant in the relevant market, the conduct of the Appellant does not amount to abuse of
this position.
67
Moot Proposition, at ¶ 5.
68
Tjarda Desiderius Oscar van der Vijver, Objective Justification and Prima Facie
Anticompetitive Unilateral Conduct: An Exploration of EU Law and Beyond (Europa Institute,
Faculty of Law, Leiden University 2014).
69
Centre Belge d’Etudes de Marche Telemarketing v. CLT, (1985) ECR 3261, at ¶ 26.
18
CONTENTION 3: THAT THE IMPOSITION AND QUANTUM OF PENALTY BY
59. It is humbly contended that the imposition as well as quantum of penalty imposed on the
60. The Competition Act, 2002 empowers the Commission to pass ‘cease and desist’ orders as
well as impose a penalty of not more than 10 per cent of the average annual turnover of the
However the Appellant prays that in light of the preceding arguments, there does not exist
any liability on the part of the Appellant and it must not be subjected to the penalty.
61. Arguendo such liability is found to exist, it is further contended before this Honourable
Tribunal that the quantum of penalty imposed by the Commission is not appropriate. The
Appellant contends so based on two factors that the Commission failed to take into account
3.1 That penalty must be imposed with respect to the relevant turnover.
62. Under the Competition Act, 2002, the Commission is empowered to impose penalties with
constructive reading of the entire Act and after giving due regard to similar European Union
and OFT guidelines on the determination of penalty, has interpreted this provision to permit
70
§ 27, Competition Act, 2002.
71
Excel Crop Care Ltd. v. Competition Commission of India and Ors., (2013) COMPAT 146,
at ¶ 62.
19
63. This interpretation has subsequently been followed by this Honourable Tribunal without
exception 72 and is applicable to all enterprises that are found to have contravened the
provisions of the Act with respect to a particular product while being engaged in the
64. The Appellant is a multi-product enterprise, engaged in the production and supply of milk
as well as other independent products like baby food and products related to the nutrition of
mothers and infants.74 The relevant market for the determination of the Appellant’s alleged
abuse has been defined as ‘processing and supply of milk’. Even if the Honourable Tribunal
were to reject this argument and adopt the definition of ‘processing and supply of packaged
milk’, as proposed by the Commission, it is submitted that the penalty determined by the
Commission must be imposed only with respect to the income from this particular product
and not from the entire turnover of the enterprise that includes several other products.
65. In adopting this interpretation, the due regard has been given to the principle of
Further this Tribunal has taken note of the fact that by virtue of the provisions of the Act,
the scope of the Commission’s powers is limited only to products, goods or services qua
which the allegation of abuse of dominant position is levelled.76 The imposition of penalty
72
Toyota Kirloskar Motor Pvt. Ltd. v. Shamsher Kataria & Ors., Appeal No. 60/2014 (9th
December 2016), at ¶ 168.
73
ECP Industries Ltd. v. CCI, (2016) COMPAT 85, at ¶ 30.
74
Moot Proposition, at ¶ 5.
75
Southern Pipeline Contractors and Anr. v. Competition Commission, (2011) ZACAC 6, at
27.
76
Vimal Singh Rajput v. Competition Commission of India, Appeal No. 27/2016 (25th May
2016), at ¶ 11.
20
on the entire turnover has been found to be legally unsustainable by the Tribunal and the
66. Recently, in deciding the appeal in the case of ECP Industries Ltd. v. Competition
Commission of India78, where the appellant challenged the imposition of penalty by the CCI
on its turnover from all its products, this Tribunal after considering a body of precedents,
held that the CCI must consider all relevant factors before imposing penalty, and the
67. In light of this it is humbly submitted that even if the Honourable Tribunal determines that
the Appellant is liable to be penalised, such penalty must only be imposed with respect to
the Appellant’s average annual turnover for the preceding three years from the relevant
68. The Competition Act, 2002 confers on the Commission the discretion to impose penalties
as it deems fit, upon finding persons or enterprises liable for contravening the provisions of
Section 479, as is evident from the use of the words ‘may’ and ‘as it may deem fit’ in the
empowering provision. This discretion, as per the COMPAT, must be exercised judicially
and the Commission is bound to take into account aggravating or mitigating factors while
doing so.80 The Supreme Court has concurred with this view81, while also time and again
77
GlaxoSmithKline Pharmaceuticals Ltd. v. Competition Commission of India and Ors.,
Appeal No. 85/2015 (8th November 2016), at ¶ 58; Hyderabad Cylinders Pvt. Ltd. v.
Competition Commission of India, 2016 (2) CompLR 886, at ¶¶ 15-18.
78
2016 (1) CompLR 393, at ¶¶ 30-35.
79
§ 27, Competition Act, 2002.
80
International Cylinder (P) Ltd v. CCI & Ors., (2013) COMPAT 166, at ¶ 57.
81
Hindustan Steel Ltd. vs. State of Orissa, AIR 1970 SC 253, at ¶ 7.
21
69. While the maximum penalty that can be imposed by the Commission is 10 per cent of the
relevant turnover, the Commission is also duty-bound to take into consideration various
mitigating factors and pay heed to the same in determining the quantum of penalty. Even if
the Appellant is found to have abused a dominant position by this Tribunal, it would be the
factor.83 The Appellant has a good reputation and immense goodwill in the global market
due to its consistently competitive prices and thus must be shown leniency.84
70. It is further submitted that a singularly important mitigating factor that must be considered
by the Honourable Tribunal is the reason behind the increase in price by the Appellants. As
stated in the Appellant’s statements to the DG, the inflated price was the result of a
combination of external factors like the global recession, reduced supply and the inflated
price of cattle feed.85 The rise in price was, under no circumstances, for the profit of the
Appellant. The absence of profits due the increase in price must also be taken as a material
71. Furthermore, the Supreme Court has opined that in the imposition of penalties, due regard
must be given to whether or not the party obliged acted deliberately in defiance of law87. In
the immediate case, the Appellant lacked any mala fide intention and only acted in response
82
Excel Crop Care Limited v. Competition Commission of India, (2013) COMPAT 146, at ¶
63.
83
Solvay v. Commission, (1996) 5 CMLR 57, at ¶ 70.
84
MDD Medical Systems India Pvt. Ltd v. Foundation for Common Cause & People
Awareness, (2013) COMPAT 56, at ¶ 29.
85
Moot Proposition, at ¶ 13.
86
MARTIN SMITH, COMPETITION LAW: ENFORCEMENT & PROCEDURE 187 (1st ed. 2001).
87
Hindustan Steel Ltd. v. State of Orissa, AIR 1970 SC 253, at ¶ 7.
22
72. Therefore, it is submitted before the Honourable Tribunal that even if the Appellant is
amounting to 10 per cent of the total average turnover of the past three years is excessive
and is not sustainable after taking into account the prevalent mitigating factors.
23
CONTENTION 4: THAT THE APPLICATION FOR COMPENSATION UNDER
73. As is evident from the Appellant’s previous contentions, the application for compensation
cannot be filed before contravention of the Act and liability is established. However it is
humbly contended that arguendo such contravention is established, the application will still
remain unmaintainable.
74. The Appellants humbly contend before the Honourable Tribunal that the application filed
by RAM cannot be maintained under Section 53N of the Competition Act, 2002. The
75. It is contended that the application for compensation filed by RAM during the pendency of
the present proceedings is not maintainable due to the fact that it is premature, as the matter
remains to be decided.
76. The Competition Act, 2002 permits any person or class of persons affected by conduct in
contravention of the Act to make an application to the COMPAT for compensation arising
out of the findings of the Commission or Tribunal.88 However it is contended that such
application must only be entertained after the final adjudication of the matter 89 and an
application made during pendency of the appeal at the Tribunal is premature and cannot be
granted.
77. The Explanation to Section 53N states that an application for compensation may be made
only after either the Commission or the Tribunal on appeal has determined that a violation
88
§ 53N, Competition Act, 2002.
89
Baker and McKenzie, Global Guide to Competition Litigation: India, 4 (2012),
http://www.hhp.co.id/files/Uploads/Documents/Global%20Antitrust%20&%20Competition/Gu
ide%20to%20Competition%20Litigation/India.pdf.
24
has taken place. In accordance with the fundamental rule of interpreting statutes, provisions
must prima facie be given their ordinary meaning.90 The Legislature is deemed not to waste
its words or not say anything in vain and a construction attributing redundancy should be
avoided.91 Further, Explanations are often appended to provisions; such Explanations must
be read to clarify ambiguities92. Similarly, in the present case, the Explanation to Section
53N must be read to clear any obscurity that may arise while interpreting the stage at which
78. A plain reading of the language of Section 53N along with the Explanation meant to clarify
ambiguities makes it evident that an application for compensation would only lie after the
Tribunal has determined the appeal and not during its pendency. The use of the word ‘only’
compensation at this stage will amount to disregard of the exact language of the statute.
79. The EU Directives on actions for damages follows the same principle, requiring that an
national competition authority or review court before an action for damages is brought. 93
80. In light of this it is submitted before the Tribunal that the application for compensation filed
by RAM be dismissed until the appeal against Dylon’s liability for infringing the Act be
finally determined.
90
Nokes v. Doncaster Amalgamated Collieries Ltd., (1940) AC 1014, at ¶ 22.
91
G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION 63 (8th ed. 2003); Borosil Glass
Works Ltd. Employees Union v. D.D. Bambode, AIR 2001 SC 378, at 380.
92
Bihta Co-operative Development and Cane Marketing Union Ltd v Bank of Bihar, AIR 1967
SC 389, at 393.
93
Article 9, EU Directive On Certain Rules Governing Actions For Damages Under National
Law For Infringements Of The Competition Law Provisions Of The Member States And Of
The European Union (2014/104/EU1).
25
4.2 That RAM has no locus standi to file the application.
81. For the application for compensation under Section 53N to be maintainable, it is necessary
that the applicant has locus standi to file it, which RAM does not possess. The submission
82. An application for compensation succeeds when the applicant is able to show that he has
suffered loss or damage.94 The aim of awarding compensation is to put the applicant into
the same position as he would have been had the alleged practice or abuse not taken place.95
RAM is a body representative of the dairy retailers of Bohemia, who have suffered no loss
83. Retailers are the intermediaries between the manufacturers and the final consumers. They
determine the selling price to the ultimate consumers in accordance with the price at which
they are able to procure the goods. As is the general practice, they increase their prices in
response to a general price increase, and do not absorb the whole effect for the benefit of
the consumers. An efficient firm must – in order to turn a profit – pass its costs on to its
84. There is no suggestion that the dairy retailers in the present case did not follow this
established practice. This becomes clearer by taking into account the fact that in the public
announcement97 made by RAM, it admitted that the consumers paid a high price. Had the
retailers suffered loss due to the increase in prices, the consumers would not have; the price
26
85. When it is an established commercial practice to pass on price increases down the supply
chain, it is the consumers or undertakings to whom the burden has thus been ‘passed on’
who have suffered harm. Thus when a party has reduced its actual loss by passing it on,
entirely or in part, to its own purchasers, the loss which has been passed on no longer
constitutes harm for which the party that passed it on needs to be compensated.98
86. While the ‘passing on’ rule remains to be widely applied by the EU in the antitrust arena, it
has been recognized and applied in cases pertaining to illegal fee and administrative
charges99. However, efforts are being made to recognize this rule legislatively. 100
87. Nonetheless, some European jurisdictions, such as France, have been proactive in the
and Sofral v. Ajinomoto Eurolysine,102 where compensation for cartel activities was claimed
by the direct purchasers who were the retailers, the French Supreme Court expressly held
the additional costs that result from increased prices to their own customers and found that
the burden of proof is on the person seeking damages to rebut this presumption.
88. This defence has been widely applied by the US courts in competition law cases, where, as
98
Supra note 93, at ¶¶ 39, 41. directive
99
Just v. Danish Ministry for Fiscal Affairs, (1980) ECR 501, at ¶¶ 24-27; Express Dairy v.
IBAP, (1980) ECR 1887; Ireks-Arkady v. Council and Commission, (1979) ECR 2955, at ¶¶
14, 16; Comateb and Ors v. Directeur Général des Douanes et Droits Indirects, (1997) ECR I-
165, at ¶¶ 15-18.
100
Supra note 93, generally. Directive.
101
Ajinomoto Eurolysine v SNC Doux Aliments Bretagne and others, No. 09-15816 (15th June
2010); SNC Doux Aliments Bretagne and others v Société Ajinomoto Eurolysine, No.
10/18285 (27th February 2014).
102
No. 11-18495 (15th May 2012).
27
in Bohemia, the law103 requires “injury in business or property” for entertaining a claim of
compensation. Even though its application has been limited, it has recently been recognized
in a class action suit in the case of Elite Logistics Corp. v. MOL American, Inc.104 In this
case, the Plaintiff’s application for a class action suit was denied, where it was alleged that
the Defendant was charging an illegal fee. The Court did not allow the application as it
noted that the Plaintiffs had passed the effect of the increased price to the ultimate
consumers. It was also observed that the defence has not been barred by other case law, but
only limited its operation. Its applicability was expressly recognized in class action suits.
89. Similar is the present case, where RAM seeks to claim compensation on behalf of the
retailers. The retailers, having passed on the effect to the consumers, have not been
impacted by the increase in prices of milk. Absence of impact of increase in prices on the
90. Therefore, it is humbly concluded that the application filed by RAM, is not maintainable
since the organization and retailers it represents have suffered no loss or damage.
4.2.2 That the application has not been filed on behalf of consumers.
91. It is humbly contended that the application for compensation filed by RAM is not on behalf
92. As has been contended above, the retailers RAM represents have suffered no loss or
damage, as it has been passed on to the consumers. While RAM announced its intention to
claim compensation on behalf of both retailers and consumers106, it cannot be presumed that
103
§ 7, Sherman Antitrust Act, 1890.
104
Case No. CV 11-02952 DDP (2nd February 2016).
105
Earl E. Pollock, Standing To Sue, Remoteness Of Injury, And The Passing-On Doctrine, 32
ANTITRUST L. J. 5, 6 (1966).
106
Moot Proposition, at ¶ 12.
28
the actual application was made on behalf of the consumers.107 Since it is the consumers
who have paid the increased prices, only they have locus standi for filing the application.
93. Class actions under Section 53N(4) of the Competition Act, 2002 can only be filed by one
of the numerous persons having the same interest. Not only is RAM inherently a retailers’
association that has suffered no loss, it is also not acting on behalf of the consumers given
that it fails to meet the requirements of a class action under the Act. RAM has not taken
permission of the court before filing the application for compensation on behalf of the
consumers.108 For a class action, general notice is also required to be given for the benefit
of all those persons on whose behalf the action is sought.109 It is also required that in such a
case, all parties must have same interest, and that other persons are invited to join the
application before it is converted to a class action.110 In the present case, RAM does not
share an interest same as that of the consumers, and has failed to apprise them of its class
action.
94. Not having met any of the requirements of a class action, it is clear that the application has
not been made on behalf of the consumers. Therefore, it is humbly submitted that the
such an action.
107
Clarification No. 28.
108
Rule 8, Order I, Code of Civil Procedure, 1908.
109
S.M. DUGAR, GUIDE TO COMPETITION LAW: VOLUME 1 1097 (5th ed. 2010).
110
Ibid., at 1123.
29
PRAYER
Wherefore, in the light of the issues raised, arguments advanced and authorities cited, it is
humbly requested that the Honourable Competition Appellate Tribunal may be pleased to
1. That Adiva, Brick, Cautious and Detro have engaged in cartelization and have infringed
2. That Dylon has not contravened Section 4(2)(a)(ii) of the Competition Act, 2002, relating
And pass any such order that the Honourable Tribunal deems fit and proper
For this act of kindness the Counsel for the Appellant, as in duty bound, shall forever pray.
_________________________
Sd/-
XV