SYMBIOSIS LAW SCHOOL JUDGMENT WRITING COMPETITION2020

TEAM CODE_________

NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

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IN THE SUPREME COURT OF MINDHYA Reportable

ORIGINAL JURISDICTION

Special leave petition (CIVIL) No. of 2019

(Under Article 136 of the Constitution of Mindhya)

(Arising out of the order of the Competition Commission dated xx/xx/xx)

Plus Condor Private ltd. & Ors. ...Petitioners

Versus

Mindhya Grande ltd.& Ors. …Respondent

Date of Judgment: 26/1/2020

JUDGMENT

Legolas J.

1) The present matter is a special leave petition filed by a domestic company named Plus
Condor who have approached this court as a consequence of orders passed by the
Competition Commission denying any of anti-competitive agreements1 indulged into
by the respondents Mindhya Grande as part of its business, regarding consumer
welfare as an exception for the same.

1
chapter II section 3(1) of The Competition Act

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2) The parties appearing before the court as petitioners are Plus Condor private limited,
Condorfresh private limited and the respondents are Grande Electronic Commerce
Corporation, Mindhya Grande limited., FAMGA (Federation of All Mindhya Grocery
Shop Associations), MIKUS (Mindhya Kapas Utpadak Sangh), TEMU (Textiles
Manufacturers Union.) and TESU (Textile sellers Union of Mindhya).

3) Pursuant to the powers granted under Article 136 of the constitution of

Mindhya(hereinafter referred to as the constitution), the petitioners have
approached the court claiming relief for an order passed by the Competition
Commission, vide report dated 1st October 2018, by the (DG)Director-General.
The petitioners also are in possession of locus standi (para. 10) 2,3 since they fall
under the category of aggrieved persons (para. 12)4 before this court. For the
purpose of the existing matter of contention as per article 136(1) of the
constitution,

“the Supreme Court may, in its discretion, grant special leave to appeal from any
judgment, decree, determination, sentence or order in any cause or matter passed
or made by any court or tribunal in the territory of Mindhya”
since Competition Commission in itself falls under the ambit and scope of a
tribunal, to this point, we would refer to a judgment passed;

“Competition Commission is not merely a tribunal but also a body exercising

several quasi-judicial and administrative-expertise functions. It was held that the
Competition Commission is in part administrative” (para. 86) 5 expertise and

2
“Locus standi” is commonly understood as the right or the capacity to bring an action or to appear in a Court.

3
Prisoners Right Forum v. State of T.N., 2019 SCC Online Madras. 2476

4
J.M. Desai v. Roshan Kumar (1976) 3 S.C.R. 58 (India).

5
2019 SCC Online Del 8032 TATA Motors Ltd. And Ors. V. CCI

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quasi-judicial (while issuing final orders, directions and penalties) and cannot be
characterized as a tribunal solely discharging judicial powers,”
thus indicative of the multiple functions it performs and not solely the functions of
dispensing the duties and obligations of a quasi-judicial body which implies
adjudicatory functions in matters of dispensing justice when the definition of a
tribunal is referred to.6 Thus, this court is of the opinion the parties have enough
capacity under article 136(1) of the constitution to be heard.

4) Prior to analyzing the main issue, it is pertinent according to this honorable court,
to go to the yore of the act brought into question. The Competition Act, 2002 has
removed the flaws by the MRTP Act,1969 (Monopolies and Restrictive Trade
Practices Act) to shift the focus from curbing monopolies to promoting
competition. Prior to the initiation of this law “healthy competition” has been under
the ambit of focus of courts,
“it is no duty of the State and the authorities to avoid healthy competition.”
(para.8)7.
The Competition Act, 2002, is designed to ensure the business-activity related
legal objectives, keeping in view of the economic development of the country, for
the establishment of a Commission.

5) Pertaining to the necessity of learning the backdrop of the case to resolve the
dispute, it has been observed before this court that the republic of Mindhya is a
country based on agriculture and outsourced sectors. With the enhancement of
internet-networking the government initiated supportive assistance opportunities
to business-booming activities thereby intending benefit to general public from the
same domestic start-ups, this opportunity was taken up by one, Mr. Charles
Coronation and one business family; Condor, consequently providing two major

6
Black law dictionary 7th Edition

7
Hari Krishan Sharma vs. The Sub-divisional Officer (1967) ILR 2 Punjab and Haryana 82

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e-market websites named Co-shop(hereinafter referred to as website C) by Mr.

Charles and other one e-market website Plus Condor(hereinafter referred to as
website P) by the Condor business family; as can be recognized from the facts
presented before this court both C and P initially earned major profit margins.

6) Later as soon as the government allowed 100% Foreign Direct Investment, a foreign
firm named Grande Electronic Commerce Corporation, acted thereupon to initiate
business activity in the state of Mindhya and released an e-commerce website by the
name MAGECC (hereinafter referred to as M), post its domestic incorporation of
Mindhya Grande Ltd. Since its inception, faced major issue of direct purchase as a
consequence of the subsidiary companies of C and P, the M initiated a project titled
Project Amoeba(hereinafter referred to as, the project) as a consequence of which it
collaborated with several local small businesses namely FAMGA and TESU and also
sold the products locally. The project’s implementation brought about a significant
loss in share of market profits for P and C.

7) The subsidiary companies of P and C as a consequence of uncontrollable situation

were handicapped to import the products, thus they efforted to switch to local
suppliers, when the subsidiary company of company C approached the local supplier
FAMGA, they denied assistance, citing contractual obligations with Mindhya Grande.
When sister company of P approached MIKUS, it refused to provide supportive
supplies as a result of contract between MIKUS and TEMU, the bone of contention
here is that, the agreements between Mindhya Grande and FAMGA and that of
MIKUS and TEMU speak the same contractual obligation, which prohibits any of
the entities falling in the below-mentioned criteria to enter into contract with the local
companies “any electronic commerce entity, or an entity that is owned by another
entity, that owns an electronic commerce entity .”The Condor News Group initiated
a news story indicating that entity Mindhya Grande was initiating a cartel with
FAMGA, MIKUS and TEMU since, the contractual obligations undertaken by both
the FAMGA and Mindhya Grande and MIKUS AND TEMU were similar. The
official information was provided for the same to the DG (Director General) and upon

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the reliance of the Competition Commission on the report of the DG, held that
Mindhya grande did not indulge in any such practice, considering the advantage to
consumers as an exception under the Competition Act.

8) Procedurally, the C company appealed to appellate tribunal under the competition

commission, while the P company appeals before this honorable court, to determine
the question as to whether the exception of consumer welfare elucidated in the report
of DG relied upon thereafter by the Competition Commission is to be considered as a
relevant exception under the Competition Act. Or in other words, the issue before
this court is limited to determining whether consumer welfare be an exception to
competition act?
9) The learned counsel for the petitioners Mr. X contends that there has been a misuse
of the government policies aimed to improve the economic state of Mindhya via
exercising dominant position, further there has been a violation of adoption of healthy
trading practices as those of cartel8 formation in the present case leading to loss of
profit to company C and company P, thus causing adverse effect on the business of
the same.

10) Evidently, the terms and conditions of the contract so formed between the local
companies for the purpose of supply are same in the sense of restricting the electronic
commerce entities to trade with them.

11) The arguments as contended by the counsel for respondents Mr. Y, that is to allow the
business of M website to be uninterruptedly continued as there has been not any anti-
competitive practices adopted by the company; in furtherance the company M is
providing a large benefit to the consumers and that there has been no misuse of the
investment policies.

8
Section 3 The Competition Act

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12) Further, the report of the DG in itself states that even if the agreements are prima
facie anti-competitive the same cannot be held so, citing consumer benefit as a
relevant reason.

13) This court would refer to section 189 and section 1910 of the Competition Act, section
18 specifies;
“subject to the provisions of this Act, it shall be the duty of the Commission to
eliminate practices having adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade11,carried
on by other participants, in markets12,”further section 19(3)(d) elucidates,
“the Commission shall, while determining whether an agreement has an appreciable
adverse effect on competition under section 3 needs to understand its accrual of
benefit to consumers.”
Therefore, it would be highly unreasonable to consider consumer welfare as being
outside the scope and ambit of trading practices.

14) Further, we would like to refer to the explanation of consumer welfare as given by J.
Robert Bork; all things that are good for consumers, such as low prices, innovation,
and choice among different products. Under this definition, the consumer includes
owners of firms and producers apart from the household consumers.13 Thus, only for
the sake of business or contractual obligations the benefit to consumers cannot be
periled.

9
Section 18 The Competition Act

10
Section 19 The Competition Act

11
Article 19(I)g of the Indian Constitution

12
Article 301 of the Indian Constitution

13
Robert H Bork, The Antitrust Paradox, 61 (1978).

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15) Subsequently, the situation is such that it cannot be expected to specifically isolate
the other considerations and read the pronouncement solely on the basis of harm
caused as a trail of business strategies entered into by the parties, isolating its perks
and negatives to the other segments, here the consumer welfare being brought into
question, in other words we think that,

“the nature of the suit and its purpose have to be determined by reading the plaintas
whole.”(para. 10)14,15

16) In Ashoka Smokeless case16 this honorable court reflected on consumers’ interest as
follows
(para. 52) “in a market governed by free economy where competition is the buzzword,
producers may fix their own price. It is, however, difficult to give effect to the
constitutional obligations of a State and the principles leading to a free economy at
the same time. A level playing field is the key factor for invoking the new economy.
Such a level playing field can be achieved when there are a number of suppliers and
when there are competitors in the market enabling the consumer to exercise choices
for the purpose of procurement of goods. If the policy of the open market as to be
achieved the benefit of the consumer must be kept uppermost in mind by the State.”
In the present case the supply has been, however, interrupted of the subsidiary
companies of company C and company P due to unforeseeable situations and shall be
resumed as the conditions normalize of the respective countries they trade in
importing with.

14
CCI vs. Bharti Airtel Limited& Ors. AIR2019SC113.
15
M.J. and Co. vs. The Khandesh Mills Ltd AIR 1950 FC83

16
(2007) 2 SCC 640

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17) Later, in Steel Authority of India Limited. case17as contended rightly by Mr. Y
“the main objective of competition law is to promote economic efficiency for creation
of market responsiveness to consumer preferences. (para. 5)”

18) Thereafter, this court would like to address the Consumer protection guidelines
issued by United Nations;
“Government policies should seek to enable consumers to obtain optimum benefit
from their economic resources”(B)15)).18

19) Additionally, if the business activity provides low-cost goods, keeping the public
purpose; as per reliance on the DG’s report it is a good practice to be carried forward.
“It is urged that public purpose is a purpose in which interest of the general public
as opposed to the interest of individuals is concerned.” (Para. 51)19

20) Subsequently, we would also like to point-out the ultimacy of the anti-competitive
agreements in the light of consumer welfare in Excel Crop Care Limited case

(para. 17) 20 “In the instant case, we are concerned with the first type of practices,
namely, anti-competitive agreements the Act, which prohibits anti-competitive
agreements, has a laudable purpose behind it. It is to ensure that there is a healthy
competition in the market as it brings about various benefits for the public at large as
well as economy of the nation. In fact, the ultimate goal of competition policy (or for
that matter, even the consumer policies) is to enhance consumer well-being.”

17
(2010) 10 SCC 744.

18
United Nations Guidelines on Consumer Protection

19
Elgin Properties vs. State of West Bengal AIR1983Cal61

20
AIR 2017 SC 2734

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21) The business strategies so adopted instantly offer a level playing field contributing to
the consumer welfare, even though the agreements appear to be prima facie anti-
competitive the benefit to consumers cannot be neglected.

22) However, the indulgence in competitive practices must be exercised in a manner such
that it provides benefit to the consumers, they are the ultimate bearers of the
undertaken activities for the purpose of production. In the present case the errors of
trade agreements, are outweighed by the consumer welfare.

23) “Exclusive supply agreement21” includes any agreement restricting in any manner the
purchaser in the course of his trade from acquiring or otherwise dealing in any goods
other than those of the seller or any other person.

24) However, in the present situation there has been no restriction in any manner which
is prohibiting the companies to trade in goods other than the goods dealt in by the
respondent companies.

25) The contention of the petitioners stands rightly disapproved of the exercise of a
dominant position by the respondents for the reason being that as per The Contract
Act Section 19 22, provides that,

“when the necessary consent to an agreement is caused by coercion, fraud or mis-

representation, the agreement is voidable at the option of the party whose consent
was so obtained.”
However, in the present case it cannot be observed that any sort of such an act was
performed by the respondents, rather it can evidently be derived from the facts of the

21
Chapter II Section 4 explanation (b) Competition Act

22
Sec 19 The Indian Contract Act

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case that the respondents initially faced major difficulties in order to set up the
business, which is an undisputed fact.

26) In the opinion of this honorable court, review of the prices set by the companies by
the Competition Commission is evident from the report submitted by the DG,
therefore, till it is within the knowledge and approval of the commission it cannot be
regarded as being faulty in nature, thus it (price) cannot be taken as a valid point to
consider that any exploitation of consumers as evidentially has so occurred. In
Transport Corporation of Andhra Pradesh Limited vs. Rain Calcining Limited23

(para. 59) “it has no adverse effect so long in substance as the Commission has
decided to proceed to determine the issue relating to transfer DISCOMS and
representative units and has determined tariffs which are fair to the consumers
availing the wheeling services. The approach of the Commission, thus, could not be
faulted by the High Court.”

27) This honorable court has also taken into consideration the fact that there has been
business loss to the petitioners as a result of a higher degree of unforeseeable
situations which implies that the business strategies of respondents cannot be the sole
ground for the purpose of establishing that the other companies (including subsidiary
companies or company) are involved in the loss so effectuated as a consequence of
unforeseeable events.

28) After reasonably analyzing the given facts and the relevant legal citations; this court
believes that the highest priority of any business activity lies towards its end-users or
the final consumers, further, those business strategies once adopted shall, if in the
end, benefit the consumers or the public at large, as per the findings, of the DG in the
present case, then they shall be appreciated. As far as, the present case is concerned
even if the Commission permits the domestic companies to obtain the products from

23
SC 1653 2019

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local ones, it will in turn hike the panic of price among consumers who are in turn
purchasing from the foreign company i.e. M company, through the e-commerce
website at a much lower price locally. Therefore, we are of the opinion that consumer
welfare must be considered as an exception under the Competition Act.

29) Further, it is pertinent to lay down the broader guidelines to be considered wherein
the court must consider any agreement as an exception to provide room for consumer
welfare:
1. When the price of goods is such, that if the prima-facie anti-
competitive agreement is not considered, then there would be price
rise leading to loss to consumers.
2. When the goods are of such a kind, say, life-saving drugs; that if the
prima-facie anti-competitive agreement is not considered, then it
might lead to loss of lives of people.
3. When the country is in a tight financial or war-like situation wherein,
if the prima-facie anti-competitive agreement is not considered, then
it would lead to a problem in existential issues, under this situation if
the supply is interrupted it might lead to further harm.
4. When the goods involved are in the nature of driving the economy,
i.e. fuels like oil, petroleum or any other energy resources, then if the
prima-facie anti-competitive agreement is not considered, that would
lead to do more harm to the economy than good.
Thus, this court upholds the order of the Competition Commission and therefore, order
the parties to bear the individual costs.
-------------------------------------------------------------------------------------------------------- Legolas J.
(NEW TERRY)
(26Th January 29, 2020)

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