PSDA

INVESTMENT AND COMPETITION LAW

Submitted to:
Dr. Neelam

MEMO FOR THE OPPOSING PARTY

In the Case of:

Danish Khan & Santosh Kumar………………………………COMPLAINANT

VERSUS

Delaware Limited Liability Company & Anr. ……………...OPPOSITE PARTY

Submitted by:
Issue
S. No. Name Enrollment No.
Allotted

1. Bhavesh Arora 10817703821 Issue 1

2. Yash Parashar 10917703821 Issue 2

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 Table of Contents

1.) Statement of Facts…………………………………………………………..........3

2.) Statement of Issues………………………………………………………………..4

3.) Summary of Arguments……………………………………………………...........5

4.) Advanced Arguments………………………………………………………...........6

5.) Prayer…………………………………………………………………………….15

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 Statement of Facts

Delaware Limited Liability Company (DLLC) is a Chennai-based company. It was incorporated in

2010. It has developed an operating system called Endroid. It also provides services like Delaware
Mail, Delaware Map, Delaware Search, and Delaware U-Tube. Endroid is an operating system, that
is required by smartphone and Tablet manufacturers to run the applications & programs on the
smartphone and tablets.
Another company named Rameshwaram India Pvt Ltd (RIPL) is based in Delhi. It was
incorporated in 2010. The company has also developed another operating system named Ndroid. It
also provides services such as Rameshwaram Mail, Rameshwaram Search, Rameshwaram Map,
etc. The operating system developed by these two companies is used by smartphones and tablet
manufacturers to run applications and programs.
The owners of these two companies are IITians. They did their B.Tech from IIT Madras and were
very good friends. These companies jointly conduct capacity-building programs and training for
their employees either in Delhi or Chennai. They conduct such programs generally once in two
years.
Moreover, the top executives of the companies meet twice a year to discuss their business strategies
and expansion programs. DLLC’s operating system and services are not available in North and
North East India. Similarly, RIPL’s operating system and services are not available in South India.
They provide the products and services at the same price all over India.
These companies do not allow their purchasers to deal with the operating systems & services of
other companies. The seller can give only the maximum permissible discount as directed and there
will be no dealing with sellers in the future if the discount scheme is not complied with. Two
persons named Danish Khan and Santosh Kumar filed a complaint against these two companies
and alleged anti-competitive behaviour of these two companies.

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 Issues Raised

1.) Whether there is a violation of Sec. 3(3)(a) of The Competition Act,

2002?

2.) Whether there is a violation of Sec. 3(3)(c) of The Competition Act,

2002?

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 Summary of Arguments

(a) Issue 1: Whether there is a violation of Sec. 3(3)(a) of The

Competition Act, 2002?
It is humbly contended that both Delaware Limited Liability Company (DLLC)
and Rameshwaram India Pvt Ltd (RIPL) companies did not engage in price
fixing agreements. Neither of the companies restricted or limited the customers
with their operating system.

(b) Issue 2: Whether there is a violation of Sec. 3(3) (c) of The

Competition Act, 2002?
It is humbly contended that both Delaware Limited Liability Company (DLLC)
and Rameshwaram India Pvt Ltd (RIPL) companies did not engage in sharing
the market or source of production or provision of services by way of
allocation of geographical area of market or number of customers in the market or
any other similar way. Neither of the companies restricted or limited the
customers with their operating system.

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 Arguments Advanced

Issue 1: Whether there is a violation of Sec. 3(3)(a) of The Competition Act,

2002?

1. Mere Price Parallelism isn’t sufficient.

Case 1: Cp Cell, Directorate General Ordnance ... vs M/S AVR Enterprises & Other on 21
February, 20201
In this case, the Informant alleged 3 firms of contravening Sec.3 of The Competition Act, 2002, but
provided evidence only for 2 firms.
The Commission noted that though in the tenders for both the items, SE and AVRE quoted identical
basic rates, yet, in the absence of any material having been brought on record by the Informant in
the Information or in the additional information/documents suggesting or indicating concert among
these parties to submit such bids, the Commission was unable to find such conduct to be in
contravention of the Act. The Commission observed, "Price parallelism, in the absence of other
evidence, in itself, may not be sufficient to launch a full-fledged investigation."
In view of the foregoing, the Commission was of the opinion that there exists no prima facie case
and the information filed was closed herewith under Section 26(2) of the Act.
Case 2: Re: Alleged Cartelisation in the Airlines Industry (Suo Moto Case No. 3 of 2015)2
The Director General in their investigation found out that many airlines other than the one in
question use different software and algorithms to determine ticket prices. Further, it noted that
revenue management teams of airlines behind these programs base ticket revenue on other factors
such as historical data and demand forecast as well.
"Alleging price parallelism or price similarity or price fixing without any evidence for information
exchange among the airlines, mere parallel conduct isn't sufficient to establish collusion."

2. No Order of Investigation based on sole allegations without preliminary

evidence
Case: XYZ vs Hindalco Industries Limited and Anr. on 8 October, 20203

1 Competition Commission of India, Case No. 05 of 2019

2 Competition Commission of India, Suo Motu Case No. 03 of 2015
3 Competition Commission of India, Case No. 18 of 2020

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The Informant had alleged customer allocation and price fixing behind informal meetings between
the high-ranking officials of the two OPs and also declared that they had the excel sheets recording
price circulars and communications between the two.
However, the CCI observed that the Informant has not been able to substantiate the allegations
made in the Information by providing the relevant details. There is nothing on record to infer that
prices disclosed in the price circulars were a result of concerted action or as a result of meeting of
minds by and between the parties.
The Informant has not been able to place or show on record any evidence in terms of
communication or excel sheets to support such assertions. In fact, the Informant has not even
revealed the names of the purported sources to the Commission.
"In such circumstances, the Commission is not inclined to order an investigation based on such
wild allegations of the Informant which are stated to be based on 'credible' and 'informed' sources,
the identities whereof have not been even disclosed in the Information or otherwise to the
Commission."
"With respect to allocation of customers by and between the OPs, it is observed that the Informant
has not placed on record any document to support the allegation that the OPs have their own
exclusive buyers. Neither the Informant has placed any document suggesting that the OPs do not
supply or have refused to supply the products to each other's customers, who themselves are
significant players in the downstream markets and nothing has been brought on record suggesting
that such customers have any grievance in this regard either. Lastly, the Commission observes that
there can be multiple business factors for a buyer to continue to purchase the product from a
particular supplier and in the absence of any material indicating allocation, it is futile to dilate any
further on this aspect."
Mere price parallelism is insufficient to order a probe in the absence of any other material on
record from which collusion or concert between the parties can be inferred.

3. Mere Business Linkages insufficient

Case: Arrdy Engineering Innovations Pvt. Ltd vs Heraeus Technologies Pvt. Ltd. And Anr. on
11 December, 2020 4
Relating to contravention of Sec. 3(3), The Commission observed that, the Informant had made
allegations based on OPs being part of Heraeus Group, acquisitions made by Heraeus Group and as
also on the basis of some alleged indirect control exerted on some of the OPs.
"In this connection, it is observed that mere business linkages and common directorships
simpliciter in themselves are not sufficient to base a finding of prima facie violation of Section
3(3) of the Act in the absence of any material indicating concerted action."

4. Mere Meetings insufficient and the role of Plus Factors

4 Competition Commission of India, Case No. 47 of 2020

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Case: Indian Laminate Manufacturers ... vs Sachin Chemicals & Others on 8 October, 20205
Indian Laminate Manufacturer's Association (ILMA) alleged formation of a cartel among 19
importers of phenol, a major raw material for making sunmica. The informant is an association
whose members are involved in the manufacture of decorative laminate sheets, popularly known as
sunmica.
According to the investigation by The Director General, while there was evidence of meetings
between the OPs, procurement of any evidence relating to collusion was insufficient and
uncogent. In fact, the investigation observed "The erratic domestic price movement of phenol
was stated to be internationally dependent on prices of crude, benzene, exchange rate,
production, supply, demand and stock position of phenol, in addition to the inherent nature of
petrochemicals being a risky commodity".
"The Commission is cognisant of the fact that high phenol prices during February-March 2016,
coupled with the fact that the importers, trader and brokers of phenol used to meet, though
purportedly infrequently, do tend to raise some suspicion".
However, in the absence of any corroborative evidence and considering the facts and
circumstances of this case, these OPs weren't condemned of having indulged in an anti-
competitive conduct of forming a cartel.

5 Competition Commission of India, Case No. 16 of 2016

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 Issue 2: Whether there is a violation of Sec. 3(3)(c) of The Competition Act,
2002?

It is humbly contended that the section 3 (3)(c) of the competition act states that:

“Shares the market or sources of production or provision of services by way of allocation of

geographical area of market, or type of goods or services, or number of customers in the or
any other similar way”. When we analyze the section, we can see a few key points:

a. Text of Section 3(3)(c): It prohibits agreements between enterprises in similar trades that
shareor divide the market by allocating geographical areas, types of goods or services, or
number of customers. These agreements are presumed to have a negative impact on
competition.

b. Objective: The purpose of this section is to prevent market divisions that can lead to
monopolistic behaviour, reducing competition, limiting innovation, and enabling price
controls.

Some of the key components of the section are “Agreement between enterprises”, “Engaged in
identical or similar trade”, “Sharing the market.”

1) Agreement Between Enterprises: This includes formal or informal agreements among

businesses engaged in similar activities.

2). Engaged in Identical or Similar Trade: The enterprises involved are in similar
lines ofbusiness, whether trading goods or providing services.

3). Sharing the Market: This occurs when businesses allocate or divide the market by
geography,product type, or customer base, leading to reduced competition.

Case: Counfreedise v. Timex Group India Ltd. 6

In this case, The CCI observed that OP discriminated the informant against other e-commerce
players by limiting the market for distribution of the OP and in violation of the section.

6
Counfreedise v. Timex Group India Ltd., 2018 SCC Online CCI 67

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 When we analyze the facts of the case, we can breakdown the arguments of DLLC and RIPL
against the allegation of anti-competitive agreement between them: Business Efficiency and
Specialization can be powerful arguments when addressing anti-competitive allegations. DLLC
and RIPL, by focusing on different geographical regions, can optimize their operations in a way
that benefits both the companies and harms.

Resource Optimization

Operating in different geographical regions allows DLLC and RIPL to allocate their resources
more effectively. This leads to reduced operational costs, fewer logistical challenges, and overall
business efficiency. By reducing travel distances and centralizing operations within their
respective regions, these companies can minimize expenses and pass on the benefits to
customers. It shortens delivery time, lowers cost, and improves customer service. This
specialization can contribute to increased efficiency, which is a positive outcome for consumers.

Additionally, this resource optimization can lead to enhanced employee productivity and job
satisfaction. With a clear focus on specific regions, employees can work within a consistent
framework, leading to better training, specialized skills, and stronger community ties. This can
result in a more competent workforce that can deliver higher-quality products and services

Regional Specialization:

Regional specialization can be seen as a business strategy where companies focus on specific
geographical areas to gain a competitive edge. In the case of DLLC and RIPL, specialization
allows each company to develop a deeper understanding of the local culture, customer
preferences, and regional market dynamics. By tailoring their products and services to meet the
unique needs of each region, they can offer better customer experiences.
This specialization might lead to improved products and services, as companies can customize
their offerings to cater to regional nuances. It can also lead to better marketing strategies

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companies understand the cultural and linguistic context of their target market. This regional
specialization can foster stronger customer loyalty, as consumers appreciate the localized touch
and personalized service.

No Direct Agreement to Restrict Competition:

One of the key elements in anti-competitive behavior is the presence of explicit agreements that
restrict competition. If DLLC and RIPL do not have any documented agreement to divide
markets or restrict competition, this can be a strong argument against allegations of anti-
competitive behavior.

Lack of Explicit Agreement:

Without concrete evidence of explicit agreements between DLLC and RIPL to allocate markets
or restrict competition, it challenging to establish a case for anti-competitive behavior. A direct
agreement typically involves clear and unambiguous terms that define how the market will be
divided or competition will be limited.

In the absence of such evidence, DLLC and RIPL can argue that their business decisions were
made independently. This lack of explicit agreement can be further supported by showing that
the companies operate with a level of autonomy. If DLLC and RIPL have separate corporate
structures, management teams, and operational strategies, it can reinforce the notion that their
business activities are not part of a coordinated effort to limit competition.

Independent Business Strategies:

Independent business strategies can also serve as a strong argument against allegations of anti-
competitive behavior. If DLLC and RIPL demonstrate that their market segmentation is a resultof
individual business decisions, they can refute claims of collusion or market division.

Independent strategies could be influenced by factors such as regional demand, competition with
other operating systems (like Android and iOS), and supply chain considerations. Furthermore,
each company can show that their focus on specific regions is driven by unique business factors.
For example, DLLC might have identified stronger demand for their products in the southern

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regions, while RIPL saw a similar opportunity in the northern regions. These independent
business strategies can demonstrate that there was no deliberate attempt to collude or divide the
market.

Customer Choice and Market Opportunities:

In a competitive market, customer choice and market opportunities play a crucial role in
maintaining a healthy business environment. Even if DLLC and RIPL operate in separate
regions, they can argue that customers still have access to various products and services,
providing them with many choices.

Competition in Other Markets:

Even though DLLC and RIPL focus on specific geographical regions, customers still have access
to other operating systems and services, such as Android and iOS. This broader market
competition provides consumers with a range of choices, reducing the likelihood of market abuse
by DLLC or RIPL. The presence of strong competitors can act as a safeguard against anti-
competitive practices, ensuring that customers have alternatives if they are dissatisfied with
DLLC or RIPL.

Moreover, DLLC and RIPL can highlight the fact that their market segmentation does not limit
consumer choice. The broader technology industry has multiple competitors, allowing customers
to choose from a wide range of products and services. This broader competition can lead to
innovation and improved product quality, benefiting consumers.

Potential for Expansion:

Another argument in favor of DLLC and RIPL is that their geographical focus does not imply
permanent market division. The companies could argue that they are not restricted from
expanding into each other regions in the future. This potential for expansion indicates that there is
no rigid market division or intent to limit customer choice. If DLLC and RIPL have the
flexibility to enter new markets, it reduces concerns about anti-competitive behavior.

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DLLC and RIPL can point to their expansion plans, demonstrating that they have the intention to
grow beyond their current geographical focus. By showing their openness to market expansion,
they can argue that they do not intend to limit competition or engage in market-sharing
agreements.

Common Industry Practice:

Industry norms and collaborative activities often play a role in shaping business practices. DLLC
and RIPL might argue that their joint programs and meetings are consistent with common industry
practices, rather than collusion or market division.

Joint Programs and Meetings for Collaboration, Not Collusion

In the tech industry, collaborative events are commonplace to share knowledge, foster innovation,
and improve technical skills. DLLC and RIPL can argue that their joint capacity- building
programs and executive meetings aim to achieve these goals, not orchestrate market division, or
restrict competition.

Companies in similar industries often conduct joint programs and meetings to network, share best
practices, and stay updated with industry trends. These events can promote innovation and enhance
technical development, ultimately benefiting customers. DLLC and RIPL can emphasize that their
collaborative activities are intended to foster industry-wide improvements, not restrict
competition.

Networking and Industry Development:

Networking and industry development can lead to advancements that benefit the entire sector. By
sharing knowledge and collaborating, companies can stay competitive in a global market. DLLC
and RIPL might argue that their interactions and collaborative events are intended to foster
innovation and improve technical skills, not engage in collusion or anti-competitive practices.

This collaborative approach can be common in the technology sector, where rapid advancements
require companies to stay updated with the latest trends and technologies. DLLC and RIPL can
highlight that their joint activities contribute to industry growth and innovation, promoting a
healthy competitive environment.

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Customer Welfare and Quality:

Customer welfare and product quality are critical considerations when assessing anti-competitive
behavior. DLLC and RIPL can argue that their business practices ultimately lead to improved
services and innovation, benefiting consumers.

Improved Services and Innovation:

By focusing on specific regions, DLLC and RIPL can concentrate on innovation and product
development, leading to improved products and services for customers. This focus on innovation
can create a competitive edge in their respective regions, ultimately benefiting consumers.

DLLC and RIPL might also argue that their specialization allows them to develop products that
meet the unique needs of their customers. This customer-oriented approach can lead to increased
customer satisfaction and loyalty, contributing to customer welfare.

Price Uniformity and Control:

If the companies offer uniform pricing across all regions, it can protect consumers from price
discrimination and ensure that everyone has access to technology at the same cost. This approach
can be seen as a consumer-friendly policy, ensuring fair access to technology regardless of
geographical location.

Uniform pricing can also promote a level playing field, preventing unfair advantages or
discriminatory practices. By offering consistent prices, DLLC and RIPL can ensure that customers
have equal access to their products and services, contributing to customer welfare and fair market
practices.

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 PRAYER

In the light of the facts of the case, issues raised, arguments advances, statutes referred, and
authorities cited, the opposite party most humbly pray and implore before The Competition
Commission of India that it may be pleased to dismiss the present complaint under Sec.
26(2) of The Competition Act, 2002.

The opposite parties additionally pray that the CCI may pass any other order as it deems fit
in the interest of justice, equity and good conscience.

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