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2013 Supreme(Del) 1653
IN THE HIGH COURT OF DELHI AT NEW DELHI
V.K. JAIN, J.
GRASIM INDUSTRIES LTD. – Petitioner
Versus
COMPETITION COMMISSION OF INDIA – Respondent
WP(C) No. 4159 of 2013
Decided On : 17.12.2013
Advocate Appeared:
Mr. Gopal Surbramaniam, Mr. Rajiv Nayar, Sr. Advs. with Mr. Ajit Warrier,
Mr. Harman Sandhu, Mr. Ashish Gupta & Mr. Aditya Nayar, Advs.
Mr. Balbir Singh, Mr.Abhishek Singh Baghel, Mr. Avinash Sharma, and Ms. Monica, Advs. for CCI and Mr. S.P. Khatana, Director (Law)
The Director General's power to investigate is limited to the information considered by the Commission while forming its opinion. The report of the Director General does not bind the Commission, and the Commission is entitled to reject or treat the report as information under Section 19 of the Act.
Headnote:
Competition Act - Anti-competitive Practices - Section 3(3)(a)(b)(c) - Section 4(2)(a) & 4(2)(b)
Fact of the Case:
The Competition Commission of India received information about anti-competitive actions by manufacturers of Man Made Fibres (MMF) against the Indian Textile Industry. The Director General investigated the allegations against Grasim Industries Limited (GIL) for anti-competitive practices in the Viscose Staple Fibre (VSF) market.
Finding of the Court:
The Court held that the Director General's investigation into alleged violations of Section 4 of the Competition Act, 2002, was beyond the scope of the powers granted by the Commission. The report of the Director General, to the extent it pertained to the alleged contravention of Section 4, was not binding on the Commission.
Issues: The key issue was whether the Director General's investigation into alleged violations of Section 4 of the Act was within the scope of the powers granted by the Commission.
Ratio Decidendi: The Director General's power to investigate is limited to the information considered by the Commission while forming its opinion. The report of the Director General does not bind the Commission, and the Commission is entitled to reject or treat the report as information under Section 19 of the Act.
Final Decision: The Court directed that the report of the Director General, to the extent it reported contravention of Section 4 of the Act, shall not be subjected to the procedure prescribed in sub-section (8) of Section 26 nor shall the Commission be entitled to pass an order on the said report in terms of the provisions of Section 27 of the Act. The Commission, however, shall be entitled to treat the aforesaid part of the report of the Director General as an information in terms of Section 19 of the Act and proceed accordingly.
V.K. JAIN, J.
An Information was received by the Competition Commission of India (hereinafter referred to as the ‘Commission’) that the manufacturers of Man Made Fibres (for short ‘MMF’) i.e. Polyester Staple Fibre (PSF), Acrylic Staple Fibre (ASF), Viscose Staple Fibre (VSF) & Nylon Staple Fibre (NSF) had imposed several restrictions on Indian Textile Industry, which are their customers for purchase of MMF, and such restrictions constitute anti-competitive actions. The Commission, vide order dated 22.6.2011, on consideration of the information submitted by the informant, formed a prima facie opinion that there existed a case to direct the Director General to cause an investigation into the matter. The Director General was accordingly instructed to conduct an investigation into the matter. The allegations against MMF manufacturers, who were alleged to be contravening the provisions of Section 3(3)(a)(b)(c) of the Competition Act, 2002 (hereinafter referred to as the ‘Act’) in a nutshell were as follows:
(a) Price fixation of MMF products in the domestic markets;
(b) The domestic manufacturer of MMF basing their price on import landed cost;
(c) Selling cheaper in overseas market than domestic market;
(d) Allocation of customers for specific suppliers and other suppliers not supplying to these customers/regions.
(e) Consumer based division on the basis of region, quantity, quality and supplier preference.
(f) Cutting down production jointly to avoid competition.
(g) Due to the imposition of ADD the prices becoming higher in the domestic market.
(h) Export incentives provided to the exporters of MMF manufacturers giving them the extra benefit.
2. During the course of investigation by the Director General, the informant alleged that Grasim Industries Limited (GIL), which is the petitioner before this Court and is the only manufacturer of Viscose Staple Fibre (VSF) in the country on account of its dominant position in the market of VSF, was indulging into various anti-competitive practices. The anti-competitive practices attributed to GIL were as follows:
1. Unfair, ambiguous, monopolistic and dominating policies on pricing, discounts and dispatches;
2. Refusal to disclose sales and discount policies in writing. The same was communicated orally and on some occasions the committed discounts were not provided;
3. After imposition of ADD in May, 2010, GIL had been able to increase it price and improved its margins;
4. Discount policies of GIL were oriented completely to their benefit without taking into consideration of the natural market fluctuation. GIL was giving discount on lifting or consumption whichever was lower whereas as a fair practice they should provide discounts on all lifted quantities, irrespective of the consumption;
5. Discounts against export of yarn made of VSF were not given out rightly to the spinners. Spinners were supposed to furnish an evidence of exports and then GRASIM credits equivalent quantity of VSF eligible for discounts during subsequent lifting of VSF for manufacturing yarn for exports. In this way there is always an outstanding discounts quantity pending with GRASIM. In case spinner wanted to exit from viscose spinning, he had to forgo the outstanding discounts. Therefore spinner was always in the loop and kept buying from them.
6. Policies with respect to loyalty discount, continuity discount, quantity discount and special discount of the GIL were discriminatory from buyer to buyer;
7. Limiting supplies to the domestic buyers by way of exporting more quantities and at times by cutting down the production;
8. Limiting quantity of specific quality of fibre (Kharach fibre), when there is a requirement of yarn made out of that fibre;
9. Not entertaining any complaint with respect to quality related issues emanating out of their products. If there was any loss of productivity or quality during spinning due to the poor or inferior quality of fibres supplied by GIL, they will not provide any financial compensati
