CLC – CCI National Moot Court Competition, 2019 [URN-1914]

TEAM CODE-[URN 1914]

Campus Law Centre, Faculty of Law, University of Delhi

The CLC-CCI Moot Court on Competition Law, 2019

BEFORE THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Competition Appeal (AT) No.___/2019

PG Pacedena Private Limited,

Qui Pacedena Private Limited,
Tam Pacedena Private Limited and
Trade Association

APPELLANTS
V.

Competition Commission of Pacadena and

Pacedena National Railways
RESPONDENTS

ON BEHALF OF THE APPELLANT

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Contents
INDEX OF AUTHORITIES 2
STATUTES 3
BOOKS 3
CASES 3
WEBSITES REFFERED 5
ARTICLES, REPORTS & RESEARCH PAPERS 5
ABBREVIATIONS 5
STATEMENT OF JURISDICTION 6
STATEMENT OF FACTS 7
STATEMENT OF ISSUES 12
SUMMARY OF ARGUMENTS 13
ARGUMENTS ADVANCED 14
PRAYER OF RELIEF 29

INDEX OF AUTHORITIES

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STATUTES

The Constitution of India

Competition Act of India, 2002

BOOKS

1. Richard Whish & David Bailey, Competition Law (8th Edition, 2015)
2. Dr. V.K. Agarwal, Competition Act, 2002, 2011

CASES
M/s ECP Industries v. CCI; Suo Motu Case No. 03 of 2017;

India Glycols Limited vs Indian Sugar Mills Association & ... on 18 September,
2018; Case No. 30 of 2013;

Aluminium Phosphide Tablets Manufacturers, In Re, [2012] CCI 24 ; 21/2013)

Jyoti Swaroop Arora vs. Tulip Infratech Ltd. and Ors. MANU/CO/0006/2015;

In Re: Alleged Cartelisation in Flashlights Market in India, Suo Motu Case No.
01 of 2017

MDD Medical Systems India Private Limited v. Foundation for Common Cause
& People Awareness, [2013] Comp AT 79. ¶28

In Re:Matrimony.com Limited Informant v Google India Private Limited, Case

No. 07 of 2012

Shri Surinder Bhakoo v The HDFC Bank Ltd and Ors,2011 SCC OnLine CCI 8 :
[2011] CCI 10
Union of India and Another 2018 SCC OnLine SC 1718.

Dilip N. Shrof v. Joint CIT, (2007) 6 SCC 329;

Commissioner of Income Tax, Bombay City I, Bombay vs. Jubilee Mills Ltd.,

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Bombay1963 48 ITR 9 SC.

CCI v. Steel Authority of India Ltd. and Anr, (2010) 10SCC 744.

Dyestuffs, Imperial Chemical Industries v. Commission of the European

Communities 48/69, (1972) ECR 619, ILEC 036 (CJEU 1972).

Theatre Enterprises v. Paramount Films346 U.S. 537 (1954)

Monsanto Co. v. Spray-Rite Service Corp, 465 U.S. 752 (1984);

Matsushita v. Zenith Radio Corp, 475 U.S. 574(1986); Bell Atlantic Corp v.
Twombly, 550 U.S. 544(2007)

CCI v. Coordination Committee of Artists and Technicians of WB Film and

Television Industry, AIR 2017 SC 1449.

Delhi Jal Board v Grasim Industries 2017 SCC OnLine CCI 48;
Builders Association of India v Cement Manufacturers Association and Ors,2016
SCC OnLine CCI 46.
OECD Policy Brief, June 2017, Page 1.

Excel Crop Care Limited v Competition Commission of India and Another (2017)
8 SCC 47

Arvind Mohan Sinha v. Amulya Kumar Biswas & Ors. AIR 1974 1818
Bhagat Ram v. State of Himachal Pradesh & Ors. AIR 1983 SC 454

M/s International Cylinder (P) Ltd v. Competition of India & Ors., [2013]
Comp AT 166, ¶57

Ronny v. State of Maharashtra, (1998) 3 SCC 625: AIR 1998 SC 1251, ¶40.

M/s. Gulf Oil Corporation Ltd. v. Competition Commission of India & Ors.,
[2013] Comp AT 122, ¶64.

Excel Crop Care Limited v Competition Commission of India and Another(2017)

8 SCC 47
London and North Eastern Railway Co. v. Berriman [1946] AC 278

WEBSITES REFFERED

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www.manupatra.com
www.scconline.com
www.cyrilamarchandblogs.com
www.justice.gov
www.oecd.org

ARTICLES, REPORTS & RESEARCH PAPERS

Potential Pro-Competitive And Anti-Competitive Aspects Of Trade/Business

Associations, OECD Policy Roundtables : Trade Associations,
DAF/COMP(2007)45, 4 November 2008
‘British & World English Dictionary, Oxford University Press, Oxford
https://en.oxforddictionaries.com/definition/oligopsony (last visited 13:59 on 21-
02-19).

‘Glossary Of Statistical Terms, OECD

https://stats.oecd.org/glossary/detail.asp?ID=3265 (last visited on 17:35, 21-02-
2019).

ABBREVIATIONS

Abbreviated use Expansion

AAEC Appreciable Adverse Effect on Competition
Art Article
CCZ Competition Commission of Zion
CCI Competition Commission of India
CIAZ Consumer Interest Association of Zion
Co Company
COMPAT Competition Appellate Tribunal
DG Director General
EC European Commission
ECJ European Court of Justice

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ECR European Court report

Edn Edition
EU European Union
Ltd Limited
MRTPC Monopolies and Restrictive Trade Practices Commission
OECD Organisation for Economic Co-operation and Development
OJ Official Journal
Ors Others
Pvt Private
r/w read with
S Section
SC Supreme Court of India
TFEU Treaty on the Functioning of the European Union
USSC Supreme Court of the United States
& And
¶ Paragraph

STATEMENT OF JURISDICTION

THE APPELLANTS ARE BEFORE THE HON’BLE NATIONAL COMPANY LAW

APPELLATE TRIBUNAL IN APPEAL TO THE ORDER PROVIDED BY THE
COMPETITION COMISSION OF PACEDENA UNDER SECTION 53B OF THE
COMPETITION ACT OF PACEDENA, 2002, PURSUANT TO THE REPORT SUBMITTED
BY THE LD. DIRECTOR GENERAL (DG) UNDER SECTION 26(3) OF THE ACT
AGAINST THE APELLANTS, UNDER SECTION 19(1)(a) WHEREIN THE APPELLANTS
WERE FOUND TO BE IN CONTRAVENTION OF VARIOUS PROVISIONS OF THE ACT.

Section 53B.- Appeal to Appellate Tribunal

(1) The Central Government or the State Government or a local authority
or enterprise or any person, aggrieved by any direction, decision or order

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referred to in clause (a) of section 53A may prefer an appeal to the Appellate
Tribunal

BEFORE THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

THE APPELLANTS HUMBLY AND RESPECTFULLY

STATEMENT OF FACTS
1. The Republic of Pacedena is a developing country having its capital at Melhi. The laws of
Pacedena are parimateria with the laws of India. As such, the date when the provisions of the
Competition Act were notified in India, the very same day, those parimateria provisions were
also notified in Pacedena.

2. PNR is the single largest buyer of goods and services in Pacadena; attracting established-
foreign-companies to participate in tenders floated by PNR. PNR issues specifications for
each good and service that it procures by means of issuing tenders. PNR procures only one
kind of recycled-wood tables. Goods and services are sourced from the specific and approved
suppliers only.

3. There are three leading recycled-wood table companies in Pacedena: (i) PG Pacedena Private
Limited (“PG”), (ii) Qui Pacedena Private Limited (“Qui”) and (iii) Tam Pacedena Private
Limited (“Tam”). The market share of each of them in the recycled-wood table market
(pertaining to PNR) is 25%, 45% and 30% respectively. PG and Qui are multi-product
companies and substantial part of their turnover is from export sales.

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4. PG and Qui have their holding companies in UTA and became an approved supplier of
recycled-wood tables to PNR in 2000 and 2003 respectively. Tam is a Pacadena based
company and became approved supplier of recycled-wood tables to PNR in 2006. The three
companies have been participating in tenders floated by PNR. The sealed-bids are submitted
individually by PG, Qui and Tam. The key elements of the procurement process:
a) These are tenders for annual procurement
b) Floats tenders and invites sealed bids/quotations by a fixed date.
c) PNR opens the sealed-bids.
d) The winning bidder is chosen as a result of competitive bidding and price, after commercial
negotiations.

5. There was a UTA newspaper report in 2016 that five manufacturers and suppliers of
recycled-wood tables may have engaged in cartel and big-rigging since 2000 in UTA. Based
on the report, PNR conducted an internal investigation and found that two of the companies
named in the report participate in tenders floated by PNR for recycled-wood tables. Based on
the same; PNR decided to conduct a study of price-bids quoted by PG, Qui and Tam since
2003 and reached a conclusion that aside from similar (sometimes same) prices there was
substantial increase in bid-prices of recycled-wood tables submitted by PG, Qui and Tam.
PNR filed a Reference against the suppliers of recycled-wood tables to PNR in Pacedena
under Section 19 of the Competition Act.

6. The CCP took cognizance of the Reference, passed an order under Section 26(1) of the
Competition Act and directed DG to initiate investigation into the matter in 2017.

7. On investigation of suppliers of recycled-wood tables in 2018 and rigorous analysis for more
than 9 months (which included depositions of senior management personnel of the recycled-
wood table companies); the DG report found that the suppliers of recycled-wood tables have
engaged in bid-rigging in by PNR between 2000 to 2018. The key findings of the report are
as under:
a) The two recycled-wood table companies from UTA were found in violation of competition
laws in UTA and penalties were imposed in 2018;

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b) The tenders were floated on an annual basis. While the prices were decided every year, the
supply of the recycled-wood tables used to be once in every three months.
c) The price-bids submitted by all the three companies. The tables have been attached here with
as ANNEXURE I.
d) Cost of recycled-wood tables for each of the companies was marginally different based on
place of factory for each.
e) The average annual procurement of recycled-wood tables by PNR is around PR 78 crores.
f) Ledger accounts of these three suppliers of recycled-wood tables evidenced commercial
dealings with each other.
g) There was also a trade association which existed since 2005 wherein all the recycled-wood
table manufacturers (including the three suppliers to PNR) were members. PG, Qui and Tam
used to meet at the trade association meetings. The said trade association is still operational.
h) The prices of certain kind of recycled-wood tables by other companies of Pacadena (i.e.
ANA and KDS – not eligible for PNR tenders) were also collected and their prices were in
the range of PR 120/ table (from the years 2013-2016).
i) The prices of certain kind of recycled-wood tables PG, Qui and Tam to enterprises other than
PNR was also in the range of PR 112/ table to PR 130/ table (from the year 2009 to 2017
respectively).
j) Based on the above, the DG concluded that there was an agreement between PG, Qui and
Tam, engaged in big rigging, in violation of Section 3(3)(d) of the Competition Act.

8. Post the DG report, an opportunity was given to appellants to provide their oral and written
objections on the DG report. Post the objections, CCP, principally upon close examination of
DG Report held that the case is made out under Section 3(1) read with sections 3(3)(a), 3(3)
(c) and (3(3)(d) against the appellants.

9. CCP notes that the infringing anti-competitive conduct of the parties pertain to cartel and bid
rigging in respect of the tenders floated by PNR and as such, for the purposes of determining
the relevant turnover for this infringement, revenue from tables has to be taken into account.

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10. CCP decided to impose penalty on Qui, PG and Tam at the rate of 10% of their average
relevant turnover of the preceding three financial years from sale of tables. The tables have
been attached here with as ANNEXURE II.

11. CCP also decided to impose penalty on trade association at the rate of 10% of their average
income based (on their Income and Expenditure account) for the three preceding financial
years as filed by them. While, calculation is on the basis of Turnover from tables. The tables
have been attached here with as APPENDIX III

12. Aggrieved by the said order of the CCP, PG, Qui, Tam and trade association filed appeals
before the National Company Law Appellate Tribunal in Melhi.
ANNEXURE I ANNEXURE II

ANNEXURE III

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STATEMENT OF ISSUES

ISSUE I

That PG, Qui and Tam have not violated the provisions of Section 3.

ISSUE II

That factors mentioned under Section 19 do not come into play.

ISSUE III

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That penalty imposed by CCP on the Appellants is not correct

SUMMARY OF ARGUMENTS

I. That PG, Qui and Tam have not violated the provisions of Section 3.

At the outset, it is humbly submitted that the Appellants have not violated the provisions
of the provisions of Section 3 of The Competition Act, 2002. The CCP concluded that
PG, Qui and Tam were in violation of Sections 3(1), 3(3)(a), 3(3)(c) and 3(3)(d),
primarily based on the report submitted by the DG.
It is humbly submitted by the counsel for the Appellants herein that the facts and
evidence provided in the DG’s report are vague, inconsistent and not sufficient to prove
that there exists an anti-competitive agreement between the appellant-companies.

II. That factors mentioned under Section 19 do not come into play.
Without prejudice to the previous arguments, it is alternatively submitted that even if
there is an agreement between the Appellants, it does not have an anti-competitive effect
in light of the provisions of Section 19 of the Act. Section 19(3) deals with the factors
which the Commission shall have due regard to while determining whether an agreement
has appreciable adverse effect on competition. There are 3 positive factors and 3 negative
factors under Section 19(3) and it is our humble submission that the agreement, if any,
between the Appellants does not consist of any of those factors

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III. That penalty imposed by CCP on the Appellants is not correct

It is humbly submitted that PG and Qui are multi-product companies; products other than the
kind of tables PNR procures i.e. only one kind of recycled-wood tables for all its railway coaches
in Pacadena, have also been included in the turnover from tables for the purpose of imposing the
penalty. Adopting the criteria of relevant turnover of the company arising out of sale of table
includes within its sweep the other products manufactured by the company, which were in no
way connected with anti-competitive activity, would bring about shocking results not
comprehended in a country governed by Rule of Law.

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ARGUMENTS ADVANCED

I. That PG, Qui and Tam have not violated the provisions of Section 3.

At the outset, it is humbly submitted that the Appellants have not violated the provisions
of the provisions of Section 3 of The Competition Act, 2002(hereinafter, called “the
Act”). The CCP concluded that PG, Qui and Tam (hereinafter, collectively called the
“appellant-companies”) were in violation of Sections 3(1), 3(3)(a), 3(3)(c) and 3(3)(d),
primarily based on the report submitted by the DG. These violations primarily deal with
cartelisation, price fixing and bid rigging.

It is humbly submitted by the counsel for the Appellants herein that the facts and
evidence provided in the DG’s report are vague, inconsistent and not sufficient to prove
that there exists an anti-competitive agreement between the appellant-companies for the
following reasons:

i) The market structure causes price parallelismwhich, in itself, would not amount
to an anti-competitive agreement.
(1) The appellant-companies are three leading recycled-wood table companies in
Pacedena1. PNR procures goods and services only from specific and approved
suppliers2. These companies are approved suppliers of recycled-wood tables to
PNR. PNR is the largest buyer of goods and services in Pacedena 3, and as per the
report submitted by the DG to the CCP, the average annual procurement of
recycled-wood tables by PNR is PR 78 crores 4. PNR procures only one kind of
recycled-wood tables5, meaning a specific product. Given these conditions, the
market structure for this kind of recycled wood tables is “oligopsonistic” or

1
Para 4, Moot Proposition.
2
Para 3, Moot Proposition.
3
Para 2, Moot Proposition.
4
Para 10(e), Moot Proposition.
5
Para 3, Moot Proposition.

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“monopsonistic”, meaning thereby that the number of buyers are very few (or just
a single buyer), and there are multiple sellers fighting for few buyers.

(2) A “monopsony”or “oligopsony” is defined as a state of the market in which only a

small number of buyers exists for a product. 6 This gives the buyer a certain kind
of authority viz. his buying power. In the present case PNR’s average annual
procurement is PR 78 crores which makes it not only one of the few buyers of this
kind of recycled-wood tables but also the largest buyer of the same, adding on to
its buying power.There was a pre-existing barrier in the market as PNR only
procured goods and services from specific and approved suppliers, giving PNR a
regulatory authority over the market as well. Economic market conditions like
monopsony/oligopsony imply a lack of competition in the market7. In general,
when buyers have some influence over the price of their inputs, they are said to
have monopsony power8.

(3) On perusal of the price-bids submitted by all the three companies 9 between 2000-
18, it is evident that PNR holds influence over the price of their inputs as they
hold a huge amount of bargaining power as they were able to bring down the
prices of the tables on seven occasions, namely in the years 2000, 2001, 2002,
2004, 2011, 2012, 2013 and 2018. Out of those incidentsin 2000 and 2001, the
prices were reduced by PR 11/table and by a staggering PR 32/table in 2002.
Again, in the years 2011 and 2012 there was reduction of PR 9/table wherein
PNR was able to bring both PG and TAM down to PR 128/table to PR 119/table
in 2012. This emphasises the bargaining power held by PNR. This is due to the
existing monopsony in the market. This also disproves the allegation of increase
in bid prices as on most occasions, the final prices were brought down by PNR to
suit its interest even if there was an attempt to increase the bid prices.

6
‘oligopsony’, British & World English Dictionary, Oxford University Press, Oxford
https://en.oxforddictionaries.com/definition/oligopsony (last visited 13:59 on 21-02-19).
7
‘Monopsony’, Glossary Of Statistical Terms, OECD
https://stats.oecd.org/glossary/detail.asp?ID=3265 (last visited on 17:35, 21-02-2019).
8
Ibid.
9
Para 10(c), Moot Proposition.

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(4) After having established the monopsonistic features of the market, attention must
be drawn to the existingjurisprudence on monopsony/oligopsony and its relation
to Competition Law. In Rajasthan Cylinders and Containers Ltd. v. Union of
India and Another10(hereinafter, referred to as “Rajasthan Cylinders”), the
Hon’ble Supreme Court of India discussed the concept monopsony/oligopsony
and the effect of these conditions of competition. In that case,the Court had to
decide, as in the present case, whether there had been a violation of Section 3(3)
(d) and Section 3(3)(d), which deals with agreements which directly or indirectly
result bid rigging or collusive bidding. “Bid rigging” is defined as any agreement,
between enterprises or persons referred toin sub-section (3) engaged in identical
or similar production or trading of goods or provision of services, which has the
effect ofeliminating or reducing competition for bids or adversely affecting
ormanipulating the process for bidding.Factors such as the existence of a trade
association, identical bids despite varying cost, identical products, small number
of supplierswith few new entrants became the supporting factors whichpersuaded
the CCI to concludethat there was ofcollusive bidding.

(5) In the present case as well, there are similar factors which persuaded the CCP to
impose penalties on the Appellants for violation of, inter alia, the provisions of
Section 3(3)(1) read with 3(3)(a) and 3(3)(d).But in Rajasthan Cylinders case the
Hon’ble Supreme Court looked at “the other side of the coin” and held that in a
monopsonistic market, each player will try to match the other’s bid in order to
maximise their profit and to not lose out on the tender. It is our humble
submission that there exists a similar scenario in the present case and therefore it
must be decided in light ofthe judgement pronounced in Rajasthan Cylinders.In
such a competitive scenario, the bid which the different bidder wouldbe
submitting becomes obvious.

10
2018 SCC OnLine SC 1718.

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(6) Each case must be considered on itsown facts 11 and there cannot be any jacket
formula which can be applied universally to all cases without variation12, and
under the present circumstances, parallel pricing shall not serve assufficient
evidence to prove violation of the provisions of section 3. The entire purpose of
DG’s investigation is to cover all necessary facts and evidence in order to seeas to
whether there are any anti-competitive practices adopted by thepersons
complained against13. But in the present case, neither the DG nor the CCP has not
considered the market structure and the prevailing economic conditions. The
explanation for parallel pricing is that the market conditions leading to the
situation of oligopsony because of limited buyers and influence of buyers in the
fixation of prices14.

(7) The European Court of Justice, in Dyestuffs, Imperial Chemical Industries v.

Commission of the European Communities 15laid down the principle that
evidence on which the contested case is based should be considered, not in
isolation, but as a whole. This has also been followed by the Hon’ble Supreme
Court of India while deciding competition law matters 16. In Dyestuffs, the
European Court held that parallel behaviour does not, by itself, amount to a
concerted practice, though it may provide a strong evidence of such a practice.
However, before such an inference is drawn it must be seen that this parallel
behaviour has led to conditions of competition which do not correspond to the
normal conditions of the market, having regard to the nature of the products, size
and volume of the undertaking of the said market. Similarly, in Theatre
Enterprises v. Paramount Films17, the US Supreme Court held “But this Court
has never held that proof of parallel business behaviour conclusively establishes
agreement or, phrased differently, that such behaviour itself constitutes a Sherman
Act offence. Circumstantial evidence of consciously parallel behaviour may have
11
Dilip N. Shrof v. Joint CIT, (2007) 6 SCC 329; Commissioner of Income Tax, Bombay City I, Bombay vs. Jubilee
Mills Ltd., Bombay1963 48 ITR 9 SC.
12
CCI v. Steel Authority of India Ltd. and Anr, (2010) 10SCC 744.
13
Excel Crop Care Limited v Competition Commission of India &Anr, 2017 (6) SCALE 241.
14
Rajasthan Cylinders(Supra.).
15
48/69, (1972) ECR 619, ILEC 036 (CJEU 1972).
16
Rajasthan Cylinders (Supra.).
17
346 U.S. 537 (1954).

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made heavy inroads into the traditional judicial attitude toward conspiracy; but
“conscious parallelism” has not yet read conspiracy out of the Sherman Act
entirely.” Ergo, this rule of evidence is well established in foreign jurisdictions as
well as in India viz. Rajasthan Cylinders case. The court also referred to US
Supreme Court cases which held that parallel pricing, in and of itself, is not an
offence18 and that the evidence in such cases should rule out the possibility that
the parties were acting independently.

(8) Another relevant fact which justifies similar pricing is that the cost of
manufacture of the recycled-wood tables for each of the companies was
marginally different.19 It goes without saying that this would further facilitate
parallel pricing, sans any concerted action on part of the Appellants, as each
manufacturer would try to submit a bid price which is an balances out their desire
to maximise their profits and their need to secure the tender. In Rajasthan
Cylinders case, the Court ruled in favour of the Appellants despite there being
varying costs of manufacturing, given the oligopsonistic market conditions.
Therefore, in the present case, where the market conditions are similar, the fact
that the cost of manufacturing is similar serves as an additional factor to highlight
the fact there was no “agreement” or meeting of minds between the Appellants.

(9) “In the first instance, it is to be found out that there existed an “agreement”
which was entered into by an enterprise or association of enterprises or person
or association of persons. Thereafter, it needs to be determined as to whether
such an agreement is anti-competitive agreement within the meaning of the
Act.”20Thereby it is humbly submitted, that the evidence showing price
parallelism simpliciter is not sufficient to prove that there existed an anti-
competitive agreement.

18
Monsanto Co. v. Spray-Rite Service Corp, 465 U.S. 752 (1984); Matsushita v. Zenith Radio Corp, 475 U.S.
574(1986); Bell Atlantic Corp v. Twombly, 550 U.S. 544(2007)
19
Para 10(d), Moot Proposition.
20
CCI v. Coordination Committee of Artists and Technicians of WB Film and Television Industry, AIR 2017 SC
1449.

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ii) The vague nature of DG’s report and increase in bid prices.

(1) It is submitted that the DG report does not, considering the facts of the case in
totality, directly or indirectly prove that there exists an anti-competitive
agreement between the Appellants. One of the reasons for this is that the findings
mentioned in the DG report21 are vague and inconsistent. The counsel for the
Appellants shall now attempt to prove the aforementioned claim by looking at the
different findings mentioned in the DG report.

(2) The first point for consideration here is the table of bid pricing history provided
by the DG22. In that regard, there two major issues that arise which, prima facie,
may appear to be signs of cartelisation- i) price parallelism, and ii) increase in bid
prices. These were also the two issues that caused PNR to file a Reference against
the Appellants under Section 19 of the Act in the first place. The latter has already
been dealt with previously, hence, we shall now discuss the issue of increase in
bid prices.

(3) It is submitted to this Hon’ble Tribunal that the simultaneous increase in bid
prices can be due to multiple reasons, one of them being similar cost of
manufacturing. This means that if the cost of production increases for one
manufacturer, it will increase for the others as well. This is evident from a perusal
of the table of bid prices as well.The price increase has been a gradual process
which may also be down to price inflation and had there been an agreement or a
cartel, there would have been a sudden increase in prices and a higher rate of
increase in bid prices. The bid prices were in the range of PR 88-90/table for
seven years between 2000-06. The first substantial increase was made in the year
2009 where the prices rose to 119, but this was only done after 10 years of
consistent pricing. Even after that, the bid prices were consistent for the next 4
years and only increased in 2013 after which they were stable again for 6 years.

21
Para 10, Moot Proposition.
22
Para 10(c), Moot Proposition.

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Hence, we can see that there were no sudden or constant changes in the prices of
the tables.

(4) Another factor which the CCP has overlooked while deciding the matter is the
negotiation power which PNR holds. Had there been a cartel in existence, PNR
would not have been able negotiate on so many occasions, as mentioned in the
submissions earlier23.

(5) The next point of consideration is the existence of a trade association. Trade
associations have historically been used as a platform for communication between
members of cartels24. But there is no such presumption that every trade
association facilitatescartelisation. Therefore, there has to be evidence, be it direct
or circumstantial, to establish the role of a trade association in cartelisation, if any.
This evidence includes, inter alia, minutes of the meetings, discussions of price,
information exchange, sharing of data, etc25.In Re: Cartelization in respect of
tenders floated by Indian Railways for supply of Brushless DC Fans and other
electrical items,26the CCI conducted a qualitative analysis of documentary (bid
documents), oral (recorded statements) and forensic (call data records and e-
mails) evidence. For instance, it compared prices shared through e-mail and prices
quoted in the bid documents and corroborated the recorded statements with the
call data records. No evidence of this sort was provided by the DG in its
investigation report and despite no such evidence, the CCP has imposed penalties
on the trade association.

(6) The next two points of the DG report are a comparative analysis of prices of
“certain kind of recycled-wood tables” which- a) were manufactured by recycled-
wood table manufacturers other than the Appellants, and b) were sold by the
Appellants to buyers other than PNR. It is submitted that this comparison is
thoroughly vague and irrelevant as the DG has compared the tables which are
23
Para (3), Argument I(i)
24
Delhi Jal Board v Grasim Industries 2017 SCC OnLine CCI 48; Builders Association of India v Cement
Manufacturers Association and Ors,2016 SCC OnLine CCI 46.
25
Ibid.
26
2017 SCC OnLine CCI 56

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manufactured by the Appellants to “certain kind of recycled-wood tables”. This,

in fact, justifies the difference in prices of the Appellants and the other
manufacturers as the other manufacturers were not even eligible for PNR tenders,
are not manufacturing the same kind of recycled-wood tables. Even if they were,
the DG has failed to identify the product with which the matter at hand deals with
and has made irrelevant comparisons in its report, all of this despite the fact that
the DG had taken well over the 60-day time period allotted to the DG to submit its
report to the CCP27.

(7) There can be two forms of evidence, direct and circumstantial. The most common
forms of direct evidence are documents (in printed or electronic form) that
identify an agreement and the parties to it, and oral or written statements by co-
operative cartel participants describing the operation of the cartel. But in the
present case, there is no direct evidence which establishes the existence of a cartel
or an anti-competitive agreement. Hence, the only other form of evidence that the
CCP could have based its decision was circumstantial evidence in form of
economic analysis. But Economic evidence especially can be ambiguous,
consistent with either concerted or independent action. The better practice is to
consider circumstantial evidence as a whole, giving it cumulative effect, rather
than on an item-by-item basis, and to subject economic evidence to careful
economic analysis28. It is submitted that the CCP has cherry picked facts and
evidence while reaching to its conclusion as there is no proof of communication
or exchange of information between the Appellants and the economic evidence
considered by the CCP is vague and incomplete, and ignorant of the prevalent
nature of market.

27
The Competition Commission of India (General) Regulations, Regulation 20(2).
28
OECD Policy Brief, June 2017, Page 1.

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II. Factors mentioned under Section 19 do not come into play.

(1) Without prejudice to the previous arguments, it is alternatively submitted that even if
there is an agreement between the Appellants, it does not have an anti-competitive effect
in light of the provisions of Section 19 of the Act. Section 19(3) deals with the factors
which the Commission shall have due regard to while determining whether an agreement
has appreciable adverse effect on competition. There are 3 positive factors and 3 negative
factors under Section 19(3) and it is our humble submission that the agreement, if any,
between the Appellants does not consist of any of those negative factors.

(2) The first three factors mentioned under section 19 are the negative factors, none of which
exist in the present case. The first one is creation of barriers to new entrants in the
market29. It is submitted that this factor does not exist as there has been no information
regarding any new entrant into the market for whom a barrier may be created. This is
evident from the DG’s investigation itself that there are only 3 players in the market who
are eligible to sell recycled-wood tables to PNR.

(3) The next factor is “driving existing competitors out of the market” 30. Again, from a close
perusal of the factual matrix and the DG’s report, it is evident that there are only 3
players in the market, none of whom have been driven out of the market. The next factor
is “foreclosure of competition by hindering entry into the market” 31. Entry into the market
is inherently hindered as PNR only procures goods from approved supplier. So in order
for a player to enter the market, it has to get approval from the concerned authority. But
the Appellants have not acted in any manner which may hinder the entry of a new player
into the market. This is evident from the fact that the TAM, which is based in Pacedena
itself, was able to enter the market despite PG’s and Qui’s presence. In fact, if there is an

29
The Competition Act, 2002, S. 19(3)(a).
30
The Competition Act, 2002, S. 19(3)(b).
31
The Competition Act, 2002, S. 19(3)(c).

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agreement between the parties to fix prices, etc., it shall be much easier for a new entrant
to enter into the market, offer lower prices and secure the tender, as long as it manages to
get approval by the concerned authority. This would, in turn, increase the competition in
the market instead of foreclosing it.
(4) Section 19(3) is a mandatory provision and the Commission is bound to apply these
factors for arriving at a conclusion regarding AAEC. The parameters given in Section
19(3) are not the cause' of AAEC but a result thereof. For example, if an "agreement"
results into the creation of barrier: or driving existing competitors or forecloses the
competition and so on, there has to be AAEC.32 But in the present case, none of the
negative factors come into effect and therefore it is humbly submitted, in conclusion, that
there does not exist an anti-competitive agreement between the Appellants under Section
3 or Section 19 of the Act.

32
Shri Surinder Bhakoo v The HDFC Bank Ltd and Ors,2011 SCC OnLine CCI 8 : [2011] CCI 10.

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III. That penalty

The CCI has chosen to impose 10% of the average relevant turnover of the preceding three financial
years arising out of sale of tables, keeping in view the serious nature of the infringement and in
pursuance of deterrent on the part of the appellants.“It, therefore, leads to the conclusion that the
turnover has to be of the infringing products and when that is the proper yardstick, it brings home the
concept of ‘relevant turnover”’.33

PG and Qui are multi-product companies; products other than the kind of tables PNR procures i.e. only
one kind of recycled-wood tables for all its railway coaches in Pacadena, have also been included in the
turnover from tables for the purpose of imposing the penalty. Penalty should be limited to the
product/service in question – in this case, the one kind of recycled-wood tables procured by PNR –
which was the relevant product for the enquiry. In so far as TAM is concerned which is not a multi
product, the ‘relevant turnover’ and ‘total turnover’ is the same.

Adopting the criteria of relevant turnover of the company arising out of sale of table includes within its
sweep the other products manufactured by the company, which were in no way connected with anti-
competitive activity, would bring about shocking results not comprehended in a country governed by
Rule of Law.

The calculation of penalty on the basis of sales from tables leads to an interpretation which brings out
inequitable or absurd results, which has to be eschewed. To bring out equitable results the turnover
from only one kind of recycled-wood tables for all its railway coaches in Pacadena should have been
used. Infringing product is the suitable and affected area.

i) Proportionality

33
Excel Crop Care Limited v Competition Commission of India and Another (2017) 8 SCC 47

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‘The broad principles that the punishment must be proportioned to the offence is or ought to be of
universal application’34The CCP is arbitrarily exercising its discretionary power as it is not following the
principals of natural justice under the General principle of law that have been explicitly laid out, since
their reasoning for imposing such hefty penalty, that too on the basis of irrelevant products.

(1) Likewise, application of this doctrine of proportionality applied emphasised by referring to the
following passage therein:“16...It is equally true that the penalty imposed must be commensurate
with the gravity of the misconduct and that any penalty disproportionate to the gravity of the
misconduct would be violative of Article 14 of the Constitution...”35

(2) The alleged seriousness of the infringement has not been validly highlighted and the proportionality
of the effect on the society and the consumers is not as incriminating and a valid justification for
imposing the said penalty.

(3) It has been left to the discretion of the CCI to impose penalty/fine within the prescribed ceiling
limit. However, the COMPAT has also observed that the CCI is bound to take into account
aggravating or mitigating circumstances and exercise its discretion judicially.36 The Supreme Court
has observed that the punishment should have regard “to the aggravating and mitigating
circumstances”37

(4) The COMPAT has incorporated this principle in competition jurisprudence and observed that the
CCI must consider the mitigating circumstances and then only come to the final conclusion
regarding the quantum of punishment.38

(5) No doubt, the aim of the penal provision is also to ensure that it acts as deterrent for others. At the
same time, such a position cannot be countenanced which would deviate from ‘teaching a lesson’ to
the violators and lead to the ‘death of the entity’ itself.

34
ArvindMohan Sinha v. Amulya Kumar Biswas &Ors. AIR 1974 1818

35
Bhagat Ram v. State of Himachal Pradesh &Ors.AIR 1983 SC 454
36
M/s International Cylinder (P) Ltd v. Competition of India & Ors., [2013] Comp AT 166, ¶57
37
Ronny v. State of Maharashtra, (1998) 3 SCC 625: AIR 1998 SC 1251, ¶40.
38
M/s. Gulf Oil Corporation Ltd. v. Competition Commission of India & Ors., [2013] Comp AT 122, ¶64.

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(6) The CCP lacks a standard for evaluating the seriousness anddue regard has not been given to the
mitigating factors as the market being of the nature of oligopsonistic / monopsonistic which itself
doesn’t
ii) Relevancy
(1) It is also emphasized that penalty under Section 27(b) is to be levied for contravention of Section 3
in respect of any ‘agreement’ resulting in appreciable adverse effect on competition. Therefore, as
such, when penalty is being imposed in respect of any infringing product, the turnover of that
product would be relevant, i.e. only one kind of recycled-wood tables for all its railway coaches in
Pacadena, not the sales out of tables. Neither the CCP nor the DG has not given due regard to
elaborate the instances which highlight the seriousness of the offence.

(2) In light of the principle of strict interpretation (relying on a Constitution Bench decision in Abhiram
Singh and Ors v C.D. Commachen (Dead) by L.Rs and Ors) the Supreme Court held that, “even if
two interpretations are possible, the one that leans in favour of infringer has to be adopted” and
that there was “no justification for including other products of an enterprise for the purpose of
imposing penalty” when the agreement leading to contravention involves one product.39

(3) Hence, the standard of imposing penalty on the appellants should have been only one specific kind
of recycled wood tables. CCP taking in account the sales from tables leans towards an interpretation
against the appellants. Here a bigger amount is being inappropriately forced by including the
products, which not relevant, to be a part of the calculation amounting to misconstruction.

(4) As pointed out by Lord Macmillan, "where penalties for infringement are imposed it is not
legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and
ordinary meaning of its language.”40

(5) When the agreement leading to contravention of Section 3 involves one product, there seems to be
no justification for including other products of an enterprise for the purpose of imposing penalty.

39
Excel Crop Care Limited v Competition Commission of India and Another(2017) 8 SCC 47
40
London and North Eastern Railway Co. v. Berriman[1946] AC 278

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The practice undertaken by CCP is logically fallacious, whereby it takes artificially products that
are not the subject of contravention with respect to tenders floated by PNR.

(6) It is argued that the Hon’ble Supreme Court has confirmed that only the revenues generated from
the allegedly infringing product should be taken into account when determining the amount of the
fine. It is pointed out that the DG has not identified any such affected markets.41

(7) On the quantum of punishment, the COMPAT observed that the CCI should also take into
consideration the fact that competition jurisdiction is in its nascent stage in India 42, similarly in
CCP’s allegations and the DG report should be closely scrutinised, for not to punish the innocent.
iii) Trade Association

(1) CCP also decided to impose penalty on trade association at the rate of 10% of their average income
based (on their Income and Expenditure account) for the three preceding financial years as filed by
them. The total amount of penalty is actually worked out was by taking the base as turnover from
tables. Highlighting prominently the inaccuracy of CCP in considering turnover from tables, while
specifying in the same breath the decision to impose penalty on income.

(2) “g. There was also a trade association which existed since 2005 wherein all the recycled-wood table
manufacturers (including the three suppliers to PNR) were members. PG, Qui and Tam used to meet
at the trade association meetings. The said trade association is still operational. “43
(3) As described in the DG report, the CCP without any further concrete evidences assumes the
participation of the trade association and penalises. The CCP does not take any pain to present further
facts or establish the necessary involvement, neither in respect of the nature or the main activities 44, of
the Trade Association in the alleged infringement.
(4) The penalty imposed is not only wrong in respect of the basic structure of it but there have been no
sufficient ground established or justifications given to, in the very first instance impose any such
penalty.

41
Case No. 07 of 2012 In Re:Matrimony.com Limited Informant v Google India Private Limited
42
MDD Medical Systems India Private Limited v. Foundation for Common Cause & People Awareness, [2013]
Comp AT 79. ¶28
43
Moot Proposition pg 5 para 10(g)
44
In Re: Alleged Cartelisation in Flashlights Market in India,Suo Motu Case No. 01 of 2017

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(5) There has been no analysis by the DG in matter of the conduct of the OPs 45 and the association
through any solid link in the form of either minutes of the meeting, evidence of sharing relevant
data or evidence of exchange of commercially sensitive information. Thereby, the CCP and the
DG have failed to establish the trade association as an active link in formation of a cartel or
fulfilling any of the ingredients of sections 3(3)(a), 3(3)(c) and (3(3)(d) of the competition act
(emphasis applied)

(6) “Furthermore, pure information exchange alone does not constitute a violation of Section 3 of the
Act.”46The DG could not manifest that the Trade Association facilitated cartel activities amongst its
members by providing a convenient platform for sharing /discussing prices and other commercially
sensitive issues on the pretext of discussing the market conditions. Further, could not establish that by
collating and providing regular information on production/sales data of the member companies, it
provided information that assisted the Suppliers in monitoring the cartel implementation.

(7) “Any meetings taking place on the sidelines of association meetings between the functionaries of
individual members cannot be taken to mean that the association was involved in the same.” 47In view
of the foregoing submissions, the Commission to closethe proceedings in light of the fact that it did
not act as a platform forcartelisation and in any event take a lenient view on the matter.

(8) “In any case, the exchange of data relating to production and sales of a product only indicates
possibility of collusion and can be considered as a ‘plus factor’. The mere fact that certain
information was exchanged amongst the Ops does not constitute enough evidence for the Commission
to conclude that the Ops were acting in a coordinated manner contrary to the provisions of the Act.
Such evidence has to be considered in conjunction with other evidence in the matter to establish
contravention of the provisions of the Act.”48Thus, in the absence of sufficient cogent evidence, it
cannot be concluded that formed a cartel and acted in a concerted manner to directly or indirectly
violate of the alleged provisions of the Act.49

45
Ibid
46
Ibid p. 25
47
Ibidpg 26
48
Ibidpg 33
49
Jyoti Swaroop Arora vs. Tulip Infratech Ltd. and Ors. MANU/CO/0006/2015; Aluminium
Phosphide Tablets Manufacturers, In Re, [2012] CCI 24 ;21/2013) India Glycols Limited vs
Indian Sugar Mills Association & ... on 18 September, 2018; Case No. 30 of 2013; In Re:Express
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PRAYER OF RELIEF

It is humbly submitted before the Hon’ble National Company Law Appellate Tribunal, Melhi
that in the light of the facts stated, issues raised, arguments advanced and authorities cited, the
counsel of the respondent most humbly and respectfully prays that this Hon’ble Tribunal may
graciously be pleased to adjudge and declare that:
1. Reverse the order pronounced by the CCP;
2. Reduce the quantum of punishment;
 
Or pass any other order and make directions as the Hon’ble Tribunal may deem fit to meet
the interest of justice, equity and good conscience in the instant case.
And this for this act of kindness, appellant shall duty bound forever pray.
 
 
Respectfully submitted by:
Place: Melhi, Pacedena COUNSEL ON BEHALF OF THE APPELLANTS
Date: 23rd February, 2019

Industry Council of India; M/s ECP Industries v. CCI; Suo Motu Case No. 03 of 2017; In Re:
Anticompetitive conduct in the Dry-Cell Batteries Market in India;

MEMORANDUM for APPELLANT Page 29