i

SMCC-13

THE SECOND ANAND SWAROOP GUPTA MEMORIAL VIRTUAL MOOT

COURT COMPETITION, 2021

SHARDA UNIVERSITY SCHOOL OF LAW, NOIDA

BEFORE

THE HON’BLE COMPETITION COMMISSION OF BREAM

Case No.___/2021
Under § 26(1) of the Fair Competition Act, 1999

In Re: Anti-Competitive Conduct in the Dairy Market

Pure Moo Diary Union Limited…………………………………………. Opposite Party

MEMORIAL for OPPOSITE PARTY

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS ……………………………………...……………………….iii

INDEX OF AUTHORITIES ………………………………………...……………………....v
STATEMENT OF JURISDICTION ………………………………...…………………….vii
STATEMENT OF FACTS ……………………………………………...…………………viii
STATEMENT OF ISSUES ………………………………………………..………………...x
SUMMARY OF ARGUMENTS ……………………………………………………………xi
WRITTEN SUBMISSIONS ………………………………………………...……………….1

ISSUE 1: WHETHER THE DG IS CORRECT IN CONCLUDING THAT THE

RELEVANT MARKET IS THE DAIRY SECTOR ………………………………………1

ISSUE 2: WHETHER THE DG IS CORRECT IN CONCLUDING THAT THE PMDUL

IS DOMINANT IN THE RELEVANT MARKET ………………………...........................3

ISSUE 3: WHETHER PMDUL HAS ABUSED ITS DOMINANT POSITION IN THE

RELEVANT MARKET ……………………………………………………………………..5

ISSUE 4: WHETHER AGREEMENTS ENTERED INTO BY PMDUL WITH OTHER

MARKET PLAYERS ARE ANTI-COMPETITIVE …………………..…………………..7

THE PRAYER ……………………………………………………………………………...10

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LIST OF ABBREVIATIONS

S. No ABBREVIATION FULL FORM

1. PMDUL Pure Moo Diary Union Limited

2. FBS Faith Business Solutions

3. CCB Competition Commission of Bream

4. CAT Competition Appellate Tribunal

5. SCC Supreme Court Case

6. EEA European Economic Area

7. Hon’ble Honourable

8. Cr. Crores

9. Rs. Rupees

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10. & And

11. Para Paragraph

12. Pvt Private

13. Ltd. Limited

14. Co. Company

15. AAEC Appreciable Adverse Effect on Competition

16. ICN International Competition Network

17. OP Opposite Party

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INDEX OF AUTHORITIES

STATUTES REFERRED:

1. Fair Competition Act, 1999

2. Article 1(1)(a) of the Block Exemption Regulation, EU

CASES REFERRED:

1. Queen City Pizza, Inc. v. Domino’s Pizza, Inc, 922 F. Supp. 1055 (1996).

2. CCI v. Artistes & Technicians of W.B. Film & Television, AIR 2017 SC 1449.

3. Meru Travel Solutions Private Limited, In re v. Uber India Systems Pvt. Ltd., 2015
SCC OnLine CCI 191.

4. Hoffmann-La Roche & Co. AG v Commission of the European Communities, Case

85/76.

5. VE Commercial Vehicles Limited v Uttar Pradesh State Road Transport Corporation,

Case No. 21 of 2017.
6. Vijay Gupta v. Paper Merchants Association, 2011 SCC OnLine CCI 6.
7. British Airways v Commission, Case C-95/04.
8. Post Danmark A/S v Konkurrencerådet, Judgment of the Court (Grand Chamber), Case
C-209/10.
9. XYZ v. REC Power Distribution Company Ltd., Case No. 33 of 2014.
10. Manappuram Jewellers Pvt. Ltd v Kerala Gold & Silver Dealers, Case No. 13 of 2011.
11. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, 2014 SCC OnLine CCI 15.
12. Jindal Steel & Power Ltd. v Steel Authority of India Ltd, [2012] 107 CLA278.
13. Excel Crop Care Limited v. CCI, AIR 2017 SC 2734.
14. Belaire Owner’s Association v. DLF Limited, Case No. 19 of 2010.
15. M/s Cine Prekshakula Viniyoga Darula Sangh vs Hindustan Coca Cola Beverages Pvt.
Ltd, 2011 SCC OnLine CCI 25.

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BOOKS AND JOURNALS REFERRED:

1. Official Journal of the European Union, Information from European Union Institutions,
Bodies, Offices and Agencies, European Commission.
2. Ritu Batra, Economics (Arihant Prakashan, New Delhi, 2019).

3. Vijver, Tjarda Desiderius Oscar van der, “Objective justification and Prima Facie anti-
competitive unilateral conduct: an exploration of EU Law and beyond” 35 World
Competition Law and Economics Review (2014).
4. Rajat Sethi and Simran Dhir, Anti-Competitive Agreements Under the Competition
Act, 2002, NLSIUR, 32-49 (2013).
5. International Competition Network- Economic Growth and Productivity.

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STATEMENT OF JURISDICTION

The counsel on behalf of the Commission, has submitted the memorandum of the Commission
under Section 26(1) of the Fair Competition Act, 1999 to the Hon’ble Competition Commission
of Bream. The Opposite Party humbly submits to this jurisdiction.

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STATEMENT OF FACTS

BACKGROUND

In March 2019, the Global Health Organisation (GHO) declared “White Fever” as a pandemic.
The nation of Bream, just like many other nations around the world, was affected by the
pandemic. This forced the President of the Nation of Bream to enforce a strict lockdown
starting from the 24th of March 2020. When we look at the Economic situation of Bream, the
Bream government gives credit to its entrepreneurs for its economic prosperity and in turn the
entrepreneurs give credit to their government who based their governance on policies
enhancing free competition in the market. The lockdown affected multiple sectors of
businesses, from labourers to million-dollar companies, including the Dairy Sector of Bream.

PMDUL

The OP, Pure Moo Dairy Union Limited (PMDUL) is a Dairy Company in the nation of Bream.
Due to the lockdown, most of the dairy companies reduced milk procurement while PMDUL
increased its procurement. PMDUL foreseeing the paradigm shift of consumer behaviour to
home-made food trend, operated in full capacity. The demand surged and PMDUL hired other
plants and increased their supply chain in huge numbers. They also introduced 33 new
products. They also made use of railways to transport their products due to the shortage and
restrictions in labour and movement of trucks. The Supply chain of PMDUL consisted of
18,700 societies, 5,000 milk tankers, 10,000 distributors, 1 million retailers, and 3.6 million
farmers. It managed to coordinate a huge supply chain and resources accurately. This was
possible because of an agreement they entered into with the IT Company “Faith Business
Solution” (FBS) in the year 2009. The FBS had patented a digital system “trakk” to be used
for tracing the details of operation executed within the supply chain, which was utilised by
PMDUL to optimize their supply chain. It also helped them to follow the precautions
concerning White fever. It also entered into agreements with fa1rmers to provide cattle fodder,
as it was insufficient. Additionally, PMDUL entered into agreements with e-commerce sites
like Groceries Now, Frudiary and Health Basket, etc. to increase their distribution.

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DISPUTE AND THE SUIT

The Competition Commission of Bream (CCB) is the statutory body that regulates
Competition in the nation of Bream. The CCB had passed a suo moto order on the 13 th of
January 2021, under Section 27 of Fair Competition Act, 1999 (herewith referred to as the Act)
of Bream. The order stated that Pure Moo dairy Union Limited (PMDUL) used its dominant
position and contravened Section 4 of the Act. It also stated that PMDUL indulged in anti-
competitive agreements with other market players, thus violating Section 3(4)(e) of the Act.
CCB also found a clause (clause 10.1.3.) in the agreement between Faith Business Solution
and PMDUL as contravening Sections 4(2)(c) and 3(4)(e) of the Act. The clause 10.1.3. states
“The Faith Business Solution shall not organize, sanction, recognize or support any other
domestic dairy company, which is competitive to PMDUL, for 15 years”. PMDUL found itself
aggrieved by the impugned order and preferred an appeal to the Competition Appellate
Tribunal (CAT) of Bream, who ordered the Commission to hear the matter again.

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ISSUES RAISED

ISSUE 1: Whether the DG is correct in concluding that the relevant market is the dairy
sector?

ISSUE 2: Whether the DG is correct in concluding that the PMDUL is dominant in the
relevant market?

ISSUE 3: If the answer to Issue No. 2 is affirmative, whether PMDUL has abused its
dominant position in the relevant market?

ISSUE 4: Whether the agreements entered into by PMDUL with other market players
are anti -competitive?

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SUMMARY OF ARGUMENTS

Issue 1: The DG is correct in concluding that the relevant market is the dairy sector

The OP’s first argument is in line with the verdict of the DG, we agree that the relevant market
for PMDUL is the Dairy Sector of Bream. The product market is the dairy sector as the products
are interchangeable and substitutable. The relevant geographical market is Bream as the
agreements are limited to it

Issue 2: The DG is incorrect in concluding that the PMDUL is dominant in the relevant
market.

The OP strongly argues that they are not dominant in the relevant market as their market share
has not been high for a stable period and neither they have a strong market strength. They do
not act independent of competitive forces as their pricing depends on market forces and it does
not affect the relevant market in its favour as they do not create any artificial scarcity.

Issue 3: PMDUL has not abused its dominance.

As the OP is not dominant in the relevant market, the question of abuse of dominance does not
sustain. However, assuming but not accepting that the OP is dominant in the market, it is argued
that there is no abuse of dominance as the conditions imposed on the agreements are to meet
competition and they do not reduce the market share of other competitors. Moreover, they do
not limit technical and scientific development, but instead encourage the competitors to
innovate.

Issue 4: Agreements entered into by PMDUL with other market players are not anti -
competitive.

The agreements entered into by PMDUL with other entities are not anti-competitive. This is
because the agreement with the other entities does not create an appreciable adverse effect on
competition. The OP has improved their process and promoted technical and scientific
development which encourages innovation which would benefit the company and the
consumers.

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WRITTEN SUBMISSIONS

ISSUE 1: The DG is correct in concluding that the relevant market is the dairy sector

The OP humbly submits to this Hon’ble commission that the DG was correct in concluding
that the relevant market is of the traditional dairy sector. The arguments advanced are:

A. Section 2(r) of the Act provides that the relevant market for a product or service can be
determined by the CCB, with reference to the ‘appropriate product market’ or the
‘geographic market’ or both. A product is said to be relevant to a particular market if
it can be regarded as interchangeable or substitutable1 by the consumers who use it, by
virtue of the characteristics of the product or service, the intention in which it is used
and the prices at which they are offered. 2
B. Dairy farming is a type of agriculture that involves production of milk and milk
products. PMDUL is a company in the dairy sector as it produces the same. Therefore,
its competitors would also be from the dairy sector. Products of the competitors would
be substitutes to the products of PMDUL. Thus, being the relevant product market as
per Section 2(t). The relevant geographic market is Bream as the agreements are limited
to Bream.3 Furthermore, when we read clause 10.1.3 of the Agreement between
PMDUL and FBS, it is clear that the clause gives utmost importance to the term
“domestic dairy company”, which conveys that the relevant market is the Dairy sector
in Bream.
C. The primary objective of identifying the relevant market is to identify the actual
competitors and whether the alleged activity has actually caused an adverse effect on
competition with enterprises carrying a business of similar nature and prevent
undertakings from performing independently. 4 PMDUL and its competitors in the dairy
sector exercise competitive constraints on each other, because they are substitutable and
are part of the same product market.
D. The Commission may argue that the relevant market includes IT or digital services,
however, that is an incorrect categorization. However, the OP submits that the relevant
market cannot be related to the IT or digital services as the agreements of PMDUL is

1
The Fair Competition Act, 1999, sec. 2(t).
2
Queen City Pizza, Inc. v. Domino’s Pizza, Inc, 922 F. Supp. 1055 (1996).
3
The Fair Competition Act, 1999, sec. 2(s).
4
CCI v. Artistes & Technicians of W.B. Film & Television, AIR 2017 SC 1449.

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not limited to FBS. This can be gleaned from the fact that the OP has entered into
agreements with cattle fodders and additionally it has entered into agreements with E-
commerce sites.

E. Hence, the relevant market for this case is “Dairy sector in Bream” according to
Sections 2(r), 2(s) and 2(t) of the Act.

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ISSUE 2: The DG is incorrect in concluding that the PMDUL is dominant in the

relevant market.

The OP humbly submits to this Hon’ble commission that they are not dominant in the relevant
market of “Dairy sector in Bream”. It argues the same in two folds, firstly that the market share
of PMDUL has not been high for a durable period and secondly it does not have market strength
to act independent of competitive forces.

2.1 Market Share

A. One of the factors to be considered to ascertain whether an enterprise is dominant or

not, is its market share.5 High market share denotes dominance. Durability of high
market share over a period is an indicator of dominance. 6 The OP has increased their
production and have had a greater revenue than the other companies in the Dairy Sector.
However, it is to be noted that this was only during the lockdown.
B. The high market share has to be held for a sufficient period of time. 7 Having high
market share only for the lockdown of a few months does not suffice this condition.
Therefore, it cannot be considered to ascertain dominance.
C. It is reasonable for PMDUL to increase production capacity to meet the necessities of
the people during the course of the pandemic and it leading to a high market share is
not wrong. The justification being majority of the competitors of PMDUL have stopped
their production. All forms of discrimination are not affected by the Act, only those
with no justification or it bears no reasonable nexus with the objective is scrutinized.8

2.2 Market Strength

A. Dominance is a position of strength, where the enterprises operate independent of

competitive forces and affect the relevant market or consumers or competitors in their
favour.9 Though PMDUL has increased its production, to the contrary of its
competitors, it does not mean it is acting independently of competitive forces. 10 It is
still bound to these forces to determine the market price of their products. Just because

5
The Fair Competition Act, 1999, sec. 19(4)(a).
6
Meru Travel Solutions Private Limited, In re v. Uber India Systems Pvt. Ltd., 2015 SCC OnLine CCI 191.
7
Hoffmann-La Roche & Co. AG v Commission of the European Communities, Case 85/76.
8
VE Commercial Vehicles Limited v Uttar Pradesh State Road Transport Corporation, Case No. 21 of 2017.
9
The Fair Competition Act, 1999, sec. 4 Explanation (a).
10
Ritu Batra, Economics (Arihant Prakashan, New Delhi, 2019).

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their supply is high it does not mean that they are charging higher prices. Law of supply
does not apply to perishable goods like milk and are sold at market prices and
sometimes even lesser. 11
B. PMDUL also does not affect the market or the consumers or competitors in their favour.
They do not indulge in any unfair pricing strategy12 or try to create artificial scarcity13
to affect the stakeholders in its favour.14
C. Furthermore, there are many IT companies. PMDUL has confined only FBS to deal
with their competitors in the dairy sector. The competitors can contract with other IT
companies. Though the digital system would not be “Trakk”, the other IT companies
would have similar systems. The agreements with cattle fodder providers and E-
commerce websites are also not against competition. Therefore, there is no dominance
as per se the agreements of the OP.15

Therefore, the DG is incorrect in concluding that PMDUL is dominant in the market as

per Sections 4 and 19 of the Act.

11
Ibid.
12
The Fair Competition Act, 1999, sec. 4(2)(a)(ii).
13
The Fair Competition Act, 1999, sec. 4(2)(b)(i).
14
The Fair Competition Act, 1999, sec. 4 Explanation (a)(ii).
15
Vijay Gupta v. Paper Merchants Association, 2011 SCC OnLine CCI 6.

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ISSUE 3: PMDUL has not abused its dominance

Assuming but not accepting that PMDUL is dominant in the Relevant Market the OP submits
that it has not abused dominance, in light of the facts and evidence. The OP argues this in three-
folds. Firstly, that it does not impose unfair conditions in the market, secondly it does not limit
or hinder technical and scientific development and lastly it does not deny market access to
competitors.

3.1 PMDUL does not impose unfair or discriminatory conditions directly or indirectly
in the market

A. PMDUL restricting FBS from dealing with their competitors may seem like an unfair
condition which is abuse of dominance, 16 but this rule does not include unfair
conditions imposed to meet competition. 17 In a second-developed country like Bream,
there can be many IT companies that would provide services similar to that of FBS.
The other competitors in the dairy sector can contract with other IT companies for their
services and can develop their own technology to attain profits. 18 Therefore, the OP’s
restrictive condition is justified and valid as it is for meeting the competition.

3.2 PMDUL does not limit or restrict production of goods and services nor does it
hinder technical and scientific development

A. As per Section 4(2)(b) of the Act, we can see that PMDUL in the course of its business
does not restrict production or scientific development, rather it only encourages it. It
has invested 80 crores for the improvement of the technological landscape of the
company. A Dominant undertaking has a degree of commercial freedom and during
instances of objective necessity, in this case the White Fever pandemic, it cannot be
expected to act differently. 19
B. The OP justifies the exclusivity of “Trakk” as it can be seen that disadvantages (if any)
in the market are counterbalanced and even outweighed from the advantages the public
receives from it.20 This benefits the company with an efficient supply chain, the partners

16
The Fair Competition Act, 1999, sec. 4(a)(i).
17
The Fair Competition Act, 1999, sec. 4 Explanation a.
18
Supra Note 10 at 3.
19
Vijver, Tjarda Desiderius Oscar van der, “Objective justification and Prima Facie anti-competitive unilateral
conduct: an exploration of EU Law and beyond” 35 World Competition Law and Economics Review (2014).
20
British Airways v Commission, Case C-95/04.

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with a constant source of income and the consumers with an essential good, duly given
at the times of need.
C. At a time when various companies underestimated the demand and decreased their
supply, PMDUL prepared for a surge in demand. PMDUL gave farmers and milk
producers the required protection and livelihood who were dependent on the dairy
industry. This conduct was an absolute necessity and by neither removing existing
competitors nor the resources from the market, PMDUL still maintained actual and
potential competition in the market.21

3.3 PMDUL has not undertaken actions which results in denial of market access

A. The OP has in no way denied market access to its competitors. The other dairy
companies do participate in the market and consumers are not denied their products.
During the lockdown it was the decision of the competitors to reduce procurement and
PMDUL played no part in this. PMDUL’s various agreements with other market
players did not hinder the competitors from accessing the market or the consumers.
B. To prove denial of access, it is important to show that the market share of other
competitors reduced due to the dominant enterprise. 22 In this case, there is no concrete
evidence that the OP reduced the market share of the other competitors and it was the
decision of competitors that reduced their share.
C. Having unfair or discriminatory conditions or prices in sale or purchase of goods is
denying market access.23 The OP has not indulged in any of these as argued above.
Therefore, the OP does not deny market access to their competitors.

Hence, there is no abuse of dominance according to section 4(a), 4(b) and 4(c) of the Act.

21
Post Danmark A/S v Konkurrencerådet, Judgment of the Court (Grand Chamber), Case C-209/10.
22
XYZ v. REC Power Distribution Company Ltd., Case No. 33 of 2014.
23
Manappuram Jewellers Pvt. Ltd v Kerala Gold & Silver Dealers, Case No. 13 of 2011.

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ISSUE 4: Agreements entered into by PMDUL with other market players are not anti -
competitive.

The OP submits to this Hon’ble commission that the OP's accusations do not hold water.
PMDUL has not entered into any anti-competitive agreement with other enterprises. The OP
pleads the same through the following argument that the agreement does not create an
appreciable adverse effect on competition.

4.1 The Agreement does not cause Appreciable Adverse Effect on Competition

A. PMDUL has entered into supply agreements with cattle fodder providers and an
agreement for availment of services from FBS. These agreements are to protect the
interests of the parties and to ensure their rights. “The omnibus clause of Section 3(1)
of the act only prohibits agreements that cause AAEC”. 24 The agreement’s positive
effects and negative repercussions on the market are analysed and then decided whether
it creates AAEC or not.25 They are analysed with the “rule of reason” 26 to assess
whether they are anti-competitive or not.
B. The agreement with the cattle fodder providers does not harm free and fair competition
in the market. It protects the interests of both the parties. It helps PMDUL get a “steady
supply” 27 of fodder so that there are no deficiencies, especially for the production of
essential items like milk. This is a reasonable cause to enter into exclusive agreements.
This also benefits the local farmers, as they have a steady buyer and a constant source
of income during the pandemic.
C. The agreement with FBS will also not harm the free and fair competition in the market.
The clause is not restricting FBS from dealing with enterprises that are from other
markets. This clause is only to protect the interests of PMDUL. Every enterprise tries
to innovate their products and function for higher profits. One of the methods to
innovate is to invest in technology for better functioning in production, distribution and
supply. PMDUL invested 80 crores for technological development. Therefore, it was
reasonable from their side to restrict the usage of “Trakk” from their competitors.

24
Ramakant Kini v. Dr. L.H. Hiranandani Hospital, 2014 SCC OnLine CCI 15.
25
Rajat Sethi and Simran Dhir, “Anti-Competitive Agreements Under the Competition Act, 2002” 24 National
Law School of India Review 32-49 (2013).
26
Ibid.
27
Jindal Steel & Power Ltd. v Steel Authority of India Ltd, [2012] 107 CLA278.

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Moreover, it is promoting technical and scientific development 28 and therefore,

PMDUL does not create an AAEC in the relevant market.29
D. To analyse an agreement, the reasons for requirement of competition has to be
considered.30 One of the reasons includes the encouragement of innovation. The
development of new technologies and services in processing, decreases the costs and
increases the efficiency and is beneficial to the consumers. 31 By utilising “Trakk”,
PMDUL has improved its processes of supply and increased its efficiency. This would
make the other competitors indulge in innovation of their processes, thus ensuring a
healthy competitive market. As the factor of 19(4)(e) is present it does not create
AAEC. 32
E. Without this agreement between them, there will be improper competition which would
affect both demand and supply in the market. When the consumers are less engaged in
the buying process, it brings down the morale of the sellers and they are not motivated
to innovate as well. 33 As a result of this, overall competition in the market will be
reduced and the benefits to the consumers will decrease. In our case, the demand is
more and gives the companies incentive to innovate. By having this agreement with
FBS, PMDUL is innovating and instigates innovation in the market, which benefits the
consumers.34
F. The CCI centres on the principle of complete contract to analyse agreements. Long term
agreements that are based on price and quantity are not exclusionary in nature as the
competitors are aware of its existence as common knowledge. 35 The agreement between
PMDUL and FBS is for 15 years and has been in existence since 2009 and by now it is
common knowledge, thereby satisfying both the conditions and not creating an AAEC.
G. Bream is a country which prides itself for having an open and free market. This makes
it possible for having multiple competitors in a singular market. Under these economic
circumstances, there exists a large number of companies which are competing in the
same market as FBS. Thus, it is inconclusive to say that FBS is the only IT company in
the market who can provide technological support to different companies in different

28
The Fair Competition Act, 1999, sec. 19(3)(f).
29
Supra Note 27 at 7.
30
Excel Crop Care Limited v. CCI, AIR 2017 SC 2734.
31
International Competition Network- Economic Growth and Productivity.
32
Supra Note 27 at 7.
33
Belaire Owner’s Association v. DLF Limited, Case No. 19 of 2010.
34
The Fair Competition Act, 1999, sec. 19(3)(d).
35
Supra Note 27 at 7.

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sectors. The competitors of PMDUL can form agreements with other IT companies to
improve their technology.
H. A similar situation arose in the beverage industry, which is also highly competitive.
Certain outlets entered into exclusive supply agreements with suppliers, but as there
was heavy competition for obtaining such an agreement as well, the court held that the
agreements did not create AAEC.36 Hence, in this case each competitor has the
opportunity to negotiate and obtain such contracts and thus, it does not have an AAEC
in the market.
These facts effectively show that the exclusive agreement with FBS is to survive in this
competition and does not create AAEC in the market. Thus, the agreement is not anti-
competitive.

36
M/s Cine Prekshakula Viniyoga Darula Sangh vs Hindustan Coca Cola Beverages Pvt. Ltd, 2011 SCC
OnLine CCI 25.

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PRAYER

Wherefore, in the light of the facts stated, issues raised, arguments advanced, and authorities
cited, the counsel for the OP prays before the hon’ble commission that it may be graciously
pleased to adjudge and declare that:

1. The OP is not dominant in the relevant market as per section 4 and 19 of the Act.

2. PMDUL has not entered into an anti-competitive agreement with any other market
players.

Also, pass any such order or directions that the court may deem fit in the favour of the OP to
meet the ends of equity, justice and good conscience.

Place: Bream Respectfully submitted,

Counsel for OP

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