002

IN THE SUPREME COURT OF BOHEMIA

at Riverdale

[Appeal filed under Section 53T of the Bohemian Competition Act, 2002]

Appeal No. 1/2012

Concord Inc. and Quality Blodgets Ltd. …Appellants

v.

Widget Manufacturers Association …Respondent No. 1

Competition Commission of Bohemia …Respondent No. 2

Truly Blodget Limited …Respondent No. 3 (pro forma)

Perfect Blodget Private Limited …Respondent No. 4 (pro forma)

Great Blodget Limited …Respondent No. 5 (pro forma)

Clubbed With

Appeal No. 2/2012

Concord Inc. and Quality Blodgets Ltd. …Appellants

v.

Widget Manufacturers Association …Respondent No. 1

Competition Commission of Bohemia …Respondent No. 2

Memorial Submitted to the Hon’ble Chief Justice of Bohemia and His Companion Justices of

the Supreme Court of Bohemia

MEMORIAL FILED ON BEHALF OF THE APPELLANTS

Counsel Appearing on Behalf of the Appellants

 TABLE OF CONTENTS

INDEX OF AUTHORITIES......................................................................................................v

STATEMENT OF JURISDICTION.........................................................................................xi

STATEMENT OF FACTS......................................................................................................xii

ISSUES FOR CONSIDERATION..........................................................................................xv

SUMMARY OF ARGUMENTS............................................................................................xvi

WRITTEN SUBMISSIONS......................................................................................................1

I. THAT THE PRESENT APPEALS ARE NOT BARRED BY LIMITATION. . .1

A. THERE WAS NO “COMMUNICATION” OF THE ORDER OF THE COMPAT........................1

B. ARGUENDO, THERE WAS SUFFICIENT CAUSE FOR DELAY...........................................4

II. THAT THE COMPAT DID NOT HAVE THE JURISDICTION TO HEAR

THE APPEALS............................................................................6

A. SECTION 3 AND SECTION 4(1) DO NOT HAVE RETROSPECTIVE OPERATION................6

B. ARGUENDO, THE ANTI-COMPETITIVE ACTS AND ABUSE OF COLLECTIVE DOMINANCE

WERE NOT CONTINUING AFTER SECTION 3, AND SECTION 4(1) CAME INTO EFFECT...........7

III. THAT THE APPEALS BY WMA TO THE COMPAT WERE NOT

MAINTAINABLE.........................................................................8

IV. THAT QBL IS NOT GUILTY OF ENTERING INTO ANTI-COMPETITIVE

AGREEMENTS WITH TBL, PBPL AND GBPL.....................................10

A. THAT THERE ARE NO STRUCTURAL FACTORS CONDUCIVE FOR CARTELIZATION......10

B. MERE PARALLELISM IN PRICES, PRODUCTION AND DISPATCH DO NOT INDICATE A

CONCERTED ACTION.........................................................................................................11

1. The Blodget manufacturing industry is an oligopolistic market..........................11

2. Parallelism in prices, production and dispatch is due to the competitive market

forces in the said oligopolistic market.........................................................................12

ii
 C. THERE ARE NO PLUS FACTORS..................................................................................13

1. Exchange of Information or communication or contact through BWF...............14

2. There are no high profits......................................................................................16

3. Low capacity utilization is not a viable plus factor.............................................17

V. THAT QBL, TBL, PBPL AND GBPL ARE NOT GUILTY OF ABUSING

THEIR COLLECTIVE DOMINANT POSITION....................................17

A. THE RELEVANT MARKET IS THE BOHEMIAN BLODGET INDUSTRY.............................18

1. The relevant geographic market is Bohemia........................................................18

2. The relevant product market is the market for blodgets......................................18

B. THAT QBL, TBL, PBPL AND GBPL ARE NOT A COLLECTIVE ENTITY IN THE RELEVANT

MARKET............................................................................................................................18

1. There are no structural links.................................................................................20

2. There are no economic links................................................................................20

C. QBL, TBL, PBPL AND GBPL ARE NOT IN A DOMINANT POSITION................................22

1. That market share is not indicative of market power...........................................22

2. There are no other factors that establish that QBL, TBL, PBPL and GBPL are in

a dominant position......................................................................................................23

D. QBL, TBL, PBPL AND GBPL DID NOT ABUSE THEIR COLLECTIVE DOMINANT POSITION

23

VI. THAT QBL AND CONCORD WERE NOT REQUIRED TO FILE A

NOTIFICATION FOR THE COMBINATION.......................................26

A. CONCORD, QBL AND CSLL ARE A PART OF A "GROUP".............................................26

B. THE TRANSACTION AMOUNTED TO AN ACQUISITION OF BUSINESS ASSETS WITHIN

THE GROUP........................................................................................................................29

iii
 VII. THAT THE COMBINATION OF QBL AND CSLL DID NOT HAVE ANY

SIGNIFICANT EFFECT ON COMPETITION.......................................30

A. THE TRANSACTION IS PRESUMED TO NOT HAVE AN ADVERSE IMPACT ON

COMPETITION....................................................................................................................30

B. ARGUENDO, THE ACQUISITION HAS NO ADVERSE IMPACT ON COMPETITION IN THE

BLODGET MARKET OF BOHEMIA.......................................................................................31

PRAYER FOR RELIEF...........................................................................................................35

iv
 INDEX OF AUTHORITIES

CCI ORDERS

Builders Association of India v. Cement Manufacturers Association, Case No.29/2010, Order

dated 20.6.2012, available at

http://www.cci.gov.in/May2011/OrderOfCommission/292011.pdf....................................13

Combination Registration No. C-2011/10/06, CCI Order dated 19 October 2011..................30

Combination Registration No. C-2011/12/12, CCI Order dated 28 December 2011..............31

DDRS (G)-II, Railway Board, Ministry of Railways v. RMG Polyvinyl India Ltd. & Ors.,

2012 Comp LR 99 (CCI).......................................................................................................6

In re: All India Tyre Dealers’ Federation v. Tyre Manufacturers, MRTP Case: RTPE No. 20

of 2008, Order dated 30.10.2012, available at:

http://www.cci.gov.in/May2011/OrderOfCommission/202008.pdf....................7, 12, 13, 15

In re: Glass Manufacturers of India, MRTP Case No. 161/2008, Order dated 24 January 2012,

available at: http://www.cci.gov.in/May2011/OrderOfCommission/Glass

%20mfd24jan2012.pdf.........................................................................................................16

COMPAT ORDERS

Order dated 10 May 2012, available at:

http://compat.nic.in/upload/PDFs/mayordersApp2012/10_05_12.pdf..............................2, 5

MRTPC ORDERS

Alkali and Chemical Corporation of India Ltd., Calcutta v. Bayer (India) Ltd., Bombay,

(1984) 3 Comp LJ 268 (MRTPC)........................................................................................13

INDIAN CASE LAWS

General Electric Company of India Ltd. v. Corporation of Calcutta, AIR 1959 Cal 413.........5

Hemalata Devi v. S. K. Loman, AIR 1974 Ori 24.....................................................................4

v
Kingfisher Airlines Ltd v. CCI, Writ Petition No. 1785 of 2009, available at:

http://bombayhighcourt.nic.in/data/original/2010/WP180609310310.pdf............................6

M. N. Sharma v. State of Bihar, AIR 1960 Pat 212...................................................................5

Mahadeo Kanodia v. Administrator General of W.B., AIR 1960 SC 936.................................6

National Insurance Company v. Anjana Shyam & Ors., AIR 2007 SC 2870...........................1

Ram Asri Hari Chand v. Tara Chand, AIR 1983 HP 65............................................................8

Shahjahan Begum v. Zahirul Hassan, AIR 1972 All 511..........................................................5

Union of India vs. Hindustan Development Corporation, AIR 1989 SC 988.........................13

Zile Singh v. State of Haryana - (2004) 8 SCC 1......................................................................6

EUROPEAN CASE LAWS

Ahlstrom & Ors. v. Commission, [1993] ECR I-1307 168.....................................................14

Case 15/74, Centrafarm BV and Adnaan De Peijper v. Sterling Drug Inc., [1974] 2 CMLR

480........................................................................................................................................28

Case 170/83, Hydrotherm Geratebau GmbH v. Compact de Dott Ing Mario Adredi & CSAS,

[1985] 3 CMLR 224.............................................................................................................28

Case 22/71, Beguelin Import v. GL Import-Export, [1972] CMLR 81...................................27

Case 27/76 United Brands Co. & United Brands Continental BV v. Commission, [1978] ECR

207........................................................................................................................................17

Case 6/72 Europemballage Corp and Continental Can Co. Inc. v. Commission, [1973] ECR

215........................................................................................................................................17

Case 85/76 Hoffmann-La Roche & Co. AG v. Commission, [1979] ECR 461......................17

Case C-393/92 Municipality of Almelo & Ors. v. EnergiebedrijfIjsselmij, [1994] ECR I-1477

..............................................................................................................................................19

Case T-102/92, Viho Europe BV v. Commission, [1997] 4 CMLR 469.................................28

Case T-102/96 Gencor v. Commission, [1999] ECR II-753....................................................20

vi
Case T-11/89, Shell v. Commission, [1992] ER II-884...........................................................28

Case T-325/01, Daimler Chrysler AG v. Commission, [2005] ECR II-3319..........................28

Case T-342/99, Airtours v. Commission, [2004] ECR II-1785...............................................21

Case T-464/04 Independent Music Publishers and Labels Association (Impala) v.

Commission, [2006] ECR II-2289.......................................................................................21

Cases C-68/94 and C-30/95 France & Ors. v. Commission (Kali & Salz) [1998] ECR I1375

..............................................................................................................................................22

Cases T-68, 77 and 78/69 Società Italiana Vetro SpA & Ors. v. Commission, [1992] ECR II-

1403......................................................................................................................................20

Decision 99/624/EC, IV/35.134 - Transatlantic Conference Agreement, OJ 1999 L 95/93...22

Joined cases C-395/96P and C-296/96P, Compagnie maritime belge transports SA (C-

395/96P), Compagnie maritime belge transports SA (C-396P) and Dafra-Lines A/S (C-

396/96P) v. Commission of the European Communities, [2000] ECR I-1365.............19, 20

Viho Europe BV v. Commission, [1997] 4 CMLR 419..........................................................28

US CASE LAWS

American Column & Lumber Co. v. United States, 257 US 377 (1921)................................25

Bell Atlantic Corp. v. Twombly, 550 US 544 (2007)..............................................................14

Ford Motor Co. v. United States et al, 405 US 562 (1972).....................................................33

Maple Flooring Manufacturers Association et al v. United States, 269 US 563 (1925).........16

United States v. Griffith, 334 US 100 (1948)..........................................................................31

United States v. Paramount Pictures, 334 US 131 (1948).......................................................31

UK CASE LAWS

Queen v. Eduljee Byramjee, (1846) 3 MIA 468 (PC)...............................................................1

R v. Andover, (1886) 16 QBD 711 DC.....................................................................................9

vii
CANADIAN CASE LAWS

MNR v. Dworkin Furs (Pembroke) Ltd. et al., [1967] S.C.R. 223..........................................28

BOOKS & TREATISES

ALISON JONES & B. E. SUFRIN, EC COMPETITION LAW: TEXT, CASES, AND MATERIALS

(Oxford University Press 2008)...........................................................................................28

B. B. MITRA, THE LIMITATION ACT (22nd ed., M. R. Mallick ed., Eastern Law House 2011) 4

D. P. MITTAL, COMPETITION LAW & PRACTICE (3d ed., Taxmann Publications 2011).............

................................................................................................2, 10, 14, 24, 26, 27, 29, 31, 33

G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION (9th ed., Wadhwa and Company

Law Publisher 2004)..............................................................................................................6

J. FAULL J. & A. NIKPAY, THE EC LAW OF COMPETITION (2d ed., Oxford University Press

1999)..............................................................................................................................11, 19

MAHER M. DABBAH, EC AND UK COMPETITION LAW – COMMENTARY, CASE AND

MATERIALS (Cambridge University Press 2004).................................................................24

R. A. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE (University of Chicago Press

1976)....................................................................................................................................15

RENATO NAZZINI, THE FOUNDATION OF EUROPEAN UNION COMPETITION LAW: THE

OBJECTIVE AND PRINCIPLES OF ARTICLE 102 (Oxford University Press 2011)..................20

T. RAMAPPA, COMPETITION LAW IN INDIA – POLICY, ISSUES, AND DEVELOPMENTS (2d ed.,

Oxford University Press 2011)......................................................................................23, 24

ARTICLES & ESSAYS

David Flint, Abuse of a Collective Dominant Position, 5 Legal Issues of Eur. Integration 21

(1978).............................................................................................................................21, 22

Donald F. Turner, The definition of Agreement under the Sherman act: Conscious

Parallelism and Refusals to deal, 75 Harv. L. Rev. 655 (1961-1962)................................12

viii
Emma Norler, Collective Dominance under Article 82 EC Treaty – an Effective Tool to

Control Oligopolies?, available at: http://lup.lub.lu.se/luur/download?

func=downloadFile&recordOId=1560850&fileOId=1565445......................................18, 23

Giorgio Monti, The Scope of Collective Dominance under Articles 82 EC, 38 Common

Market Law Review 131 (2001)..........................................................................................19

Joseph J. Spengler, Vertical Integration and Antitrust Policy, 8 Journal of Pol. Econ. 347

(1950)...................................................................................................................................32

Louise du Plessis and Lizél Blignaut, Staying safe – dominant firms’ pricing decisions in

industries where high prices do not attract entry................................................................25

Massimo Motta, Cartels in European Union: Economics, Law, Practice, available at:

http://www.barcelonagse.eu/tmp/pdf/motta_cartelseulaw.pdf............................................15

Matthew M. Bunda, Monsanto, Matsushita, and “Conscious Parallelism”: Towards a

Judicial Resolution of the “Oligopoly Problem”, 84 Wash U. L. Rev. 179 (2006)......12, 14

Michael D. Blechman, Conscious Parallelism, Signalling and Facilitating Devices: The

Problem of Tacit Collusion under the Antitrust Laws, 24 N. Y. L. Sch. L. Rev. 881 (1978-

1979)....................................................................................................................................16

Rafael Allendesalazar, Oligopolies, Conscious Parallelism and Concertation, available at:

http://www.eui.eu/RSCAS/Research/Competition/2006(pdf)/200610-COMPed-

Allendesalazar.pdf...............................................................................................................12

Shatakshi Johri, Attribution of Price Parallelism as Cartels under the Competition Act, 2002,

available at: http://cci.gov.in/images/media/ResearchReports/Attribution.pdf...................13

W. P. J. Wils, The Undertakings as Subject of E.C. Competition Law and the Imputation of

Infringements to Natural to Legal Persons, 25 Eur. L. Rev. 99 (2000)..............................28

William E. Kovacic et al, Plus Factors and Agreement in Antitrust Law, 110 Mich. L. Rev.

393 (2011-2012)...................................................................................................................14

ix
OTHER DOCUMENTS

Competition Commission of India, Abuse of Dominance, available at:

http://www.cci.gov.in/images/media/Advocacy/AOD2012.pdf..........................................24

NASDAQ Rules, Rule 7027 – Aggregation of Activity of affiliated members, 17................27

Office of Fair Trade, Office for Fair Trading (2004), Assessment of conduct – Draft

competition law guideline for consultation, April 2004, OFT414, available at:

http://www.oft.gov.uk/shared_oft/business_leaflets/competition_law/oft414a.pdf............24

x
 STATEMENT OF JURISDICTION

The Appellants have approached the Hon’ble Supreme Court of Bohemia under Section 53T

of the Bohemian Competition Act.

“Section 53T. Appeal to Supreme Court.- The Central Government or any

State Government or the Commission or any statutory authority or any local

authority or any enterprise or any person aggrieved by any decision or order

of the Appellate Tribunal may file an appeal to the Supreme Court within sixty

days from the date of communication of the decision or order of the Appellate

Tribunal to them:

Provided that the Supreme Court may, if it is satisfied that the applicant was

prevented by sufficient cause from filing the appeal within the said period,

allow it to be filed after the expiry of the said period of sixty days.”

xi
 STATEMENT OF FACTS

1. The Appellants, Quality Blodget Limited (QBL) and Concord Inc. (Concord) are two

reputed manufacturers of blodgets. QBL, which is a public listed company, is controlled

by Concord Inc.

2. The Respondent No. 1 (Respondent), Widget Manufacturers Association (WMA) is an

association of the widget manufacturers of Bohemia.

Appeal No. 1/2012

3. On 14 October 2009, an investigation pending before the office of the Director General of

BMRTPC – RTPE No. 12 of 2006 was transferred to the Competition Commission of

Bohemia (CCB). The said enquiry was on the basis of a complaint filed by WMA, inter

alia complaining of the unfair trade practices resorted to by the blodget industry in

Bohemia.

4. On 1 June 2010, the CCB passed a prima facie order directing the DG’s office to

investigate QBL, and three other blodget manufacturers, along with the Blodget Welfare

Federation (BWF), inter alia noting that “the similarity of the prices of various blodget

manufacturers creates a suspicion that they have an anti-competitive agreement to follow

a similar pattern in fixing of prices. Further, BWF seems to be playing the role of a

facilitator for such cartel like behavior.”

5. On 15 January 2012, the DG completed his investigation report (DG’s Report)

concluding that “on account of parallelism in prices, production and dispatches together

with high profits and low capacity utilization, QBL, TBL, PBPL and GBPL had entered

into anti-competitive agreements and abused their collective dominant position.” The DG

also found that the BWF had violated the Competition Act by acting as a platform for

information exchange and cartelization.

xii
6. On 1 March 2012, the CCB, after hearing the detailed submissions of the blodget

manufacturers, passed a decision rejecting the DG’s findings. The CCB found that there

was price parallelism in the industry, but that wasn’t sufficient to find an anti-competitive

agreement or an abuse of collective dominance.

7. On 15 April 2012, WMA filed an appeal to the COMPAT against the said decision of the

CCB.

8. On 18 September 2012, the COMPAT set aside the order of the CCB and found that the

blodget manufacturers (Appellant No. 1, Respondent Nos. 3-5), were guilty of entering

into anti-competitive agreements and an abuse of collective dominance.

Appeal No. 2/2012

9. On 20 January 2012, the board of directors of QBL and Century Silica and Limestone

Limited (CSLL) approved the demerger of the silica business assets of CSLL into QBL.

In this regard a court scheme of amalgamation was filed under the Bohemian Companies

Act in the High Court of Simbia in Bohemia. This scheme of amalgamation was approved

by the High Court of Simbia with effect from the 1 April 2012.

10. On 2 April 2012, the CCB issued a show cause notice to Concord, QBL and CSLL as to

why it should not be penalized for failing to notify the demerger.

11. On 1 May 2012, the CCB, after hearing the arguments made by Concord, passed an order

directing Concord to file a notification for the demerger and imposed a penalty for failing

to notify the transaction.

12. On 10 May 2012, Concord filed the notification (Combination No. 52/2012), without

prejudice to its right to appeal the order.

13. On 30 May 2012, the CCB agreed that the demerger had insignificant anti-competitive

effects.

xiii
14. On 1 May 2012, the Appellants filed an appeal before the COMPAT against the said

order of the CCB stating that they did not have to file a notification as the CCB did not

have jurisdiction over the matter. Simultaneously, WMA filed an appeal against CCB’s

order on the ground that the amalgamation had an anti-competitive effect.

15. On 18 September 2012, the COMPAT passed an order upholding the decision of the CCB

regarding the requirement to file the notification, and also ordered the CCB to do a further

inquiry on the anti-competitive effect of the amalgamation/demerger.

16. On 21 September 2012, both the orders passed by the COMPAT were published on its

website. On 24 September 2012, the lawyers for the Appellants saw the orders on the

COMPAT’s website. On 1 October 2012, a request was made for certified copy of the

orders of the COMPAT. On 4 October 2012, the Appellants received the certified copies.

17. On 26 November 2012, the Appellants filed their appeals against the said orders of the

COMPAT to this Hon’ble Court. This Hon’ble Court was pleased to club both the appeals

filed by the Appellants.

xiv
 ISSUES FOR CONSIDERATION

I. WHETHER THE PRESENT APPEALS ARE BARRED BY LIMITATION?

II. WHETHER THE COMPAT HAD JURISDICTION TO HEAR THE APPEALS?

III. WHETHER THE APPEALS BY WMA TO THE COMPAT WERE

MAINTAINABLE?

IV. WHETHER QBL IS GUILTY OF ENTERING INTO ANTI-COMPETITIVE

AGREEMENTS WITH TBL, PBPL AND GBPL?

V. WHETHER QBL, TBL, PBPL AND GBPL ARE GUILTY OF ABUSING THEIR

COLLECTIVE DOMINANT POSITION?

VI. WHETHER QBL AND CONCORD WERE REQUIRED TO FILE A

NOTIFICATION FOR THE DEMERGER?

VII. WHETHER THE DEMERGER OF QBL AND CSLL HAD A SIGNIFICANT

EFFECT ON COMPETITION?

xv
 SUMMARY OF ARGUMENTS

I. THAT THE PRESENT APPEALS ARE NOT BARRED BY LIMITATION

Under Section 53T of the Act, the period of limitation commences from “the date of

communication of the order of the COMPAT” to the parties. Section 53T read with Section

53B and the other regulations relating to competition law require the COMPAT to send a

copy of the orders through the Registrar to the Appellants. Communication of the orders is

complete only when the parties receive the said copies. In the instant case, the

communication of the orders was complete only on 4 October 2012 after the Appellants

received the certified copies of the orders. Consequently the period of limitation commenced

only on the said date, and was set to expire on 28 November 2012. Since the appeals were

filed by 26 November 2012, the present appeals are not time barred. Arguendo, the date of

pronouncement of the orders and time spent in obtaining the copies of the orders qualify as

“sufficient cause” under the proviso to Section 53T.

II. THAT THE COMPAT DID NOT HAVE THE JURISDICTION TO HEAR

THE APPEALS

Section 3 and Section 4(1) of the Competition Act were not in force when the alleged anti-

competitive agreements and abuse of collective dominance occurred. Consequently, the

COMPAT did not have jurisdiction over the appeals filed by WMA. Arguendo,

III. THAT THE APPEALS BY WMA TO THE COMPAT WERE

MAINTAINABLE

WMA filed two appeals, one on 15 April 2012, and another on 1 May 2012 against the

CCB’s orders dated 1 March 2012 and 1 May 2012, respectively. Section 53B(1) provides an

appeal to the COMPAT can be filed by a “person aggrieved” by the decision or order of the

CCB. Since no prejudice or damage or injury has been caused to WMA by the orders of the

CCB in both the appeals, WMA is not a “person aggrieved”. Moreover, Regulation 29 of the

xvi
Competition Commission of India (Procedure in Regard to the Transaction of Business

Relating to Combinations) Regulations, 2011 provides that only a person, who is party to

proceedings on matters relating to a combination and is aggrieved may go in appeal to the

COMPAT. WMA was not a party to the proceedings before the CCB and it was only

Concord who presented arguments. Therefore, both the appeals filed by WMA were not

maintainable.

IV. THAT QBL IS NOT GUILTY OF ENTERING INTO ANTI-COMPETITIVE

AGREEMENTS WITH TBL, PBPL AND GBPL

QBL, TBL, PBPL and GBPL are not guilty of entering into an anti-competitive agreement in

the nature of a cartel because, firstly, there are no structural factors in the Bohemian blodget

industry which is conducive for cartelization. Secondly, mere parallelism in prices,

production and dispatch do not indicate a concerted action. The parallelism in prices,

production and dispatch is due to the competitive market forces in the oligopolistic blodget

manufacturing industry. Thirdly, there are no plus factors to establish that the parallelism

constitutes a concerted action. QBL’s membership in the BWF and the periodical collation of

price, production and sales information are not illegal. Moreover, the profits earned by QBL

cannot conclusively be said to be high. Lastly, the low capacity utilization by QBL was due to

the market demand and the seasonal nature of the blodget industry.

V. THAT QBL, TBL, PBPL AND GBPL ARE NOT GUILTY OF ABUSING

THEIR COLLECTIVE DOMINANT POSITION

QBL, TBL, PBPL and GBPL do not present themselves as a collective entity in the

Bohemian blodget industry. Their membership in the BWF and the parallelism in their prices,

production and dispatches are not concrete connecting factors to establish collectiveness.

Moreover, their collective market share does not establish that they are in dominant position

due to the oligopolistic structure of the Bohemian blodget industry. Also, the prices charged

xvii
by the four manufacturers are not unfair as they are not above the competition level. Prices

and profits of a dominant undertaking, which, at first sight, might appear to be excessive,

does not always amount to an abuse. The high prices charged are attributable not only to the

rise in cost of production of Rs. 25 per unit, but also towards the innovation techniques,

goodwill and margin of profit considered by these manufacturers. Furthermore, the low

capacity utilization by the four manufacturers is due to the market demand and the low shelf

life of blodgets. Therefore, QBL and the three other blodget manufacturers are not guilty of

abusing their collective dominant position.

VI. THAT QBL AND CONCORD WERE NOT REQUIRED TO FILE A

NOTIFICATION FOR THE COMBINATION

Item 8 of Schedule I of the Combination Regulations 2011 provides exemption from filing of

notice under Section 6 in cases of acquisition of control, shares, voting rights or assets within

the Group. In the instant case, Concord, an international producer of blodgets, has effective

control over the management of both QBL, a Bohemian blodget manufacturer, and CSLL, a

producer of silica and limestone, by way of 49% shareholding and 100% parent-subsidiary

relationship respectively. The three enterprises therefore constitute a Group under Section 5

Explanation (b). Further, QBL has acquired the silica business assets of CSLL to streamline

its business. Under Item 8 of Schedule I, transactions involving intra-group acquisition of

assets are exempt from filing of notification. Therefore, Concord, QBL and CSLL are not

liable to pay the penalty imposed by CCB under Section 43A for not filing notification of the

said acquisition.

VII. THAT THE COMBINATION OF QBL AND CSLL HAD NO SIGNIFICANT

EFFECT ON COMPETITION

Transactions falling within the ambit of Schedule I of Combination Regulations, 2011are

ordinarily presumed to have no adverse effect on competition. Since the intra-group

xviii
acquisition of assets of CSLL by QBL fulfils the criterion of Item 8 of Schedule I, it is

inferable that the combination had no adverse effect on competition. Alternatively, the

vertical arrangement between QBL and silica business assets of CSLL do not adversely affect

any of the factors laid down under Section 20(4) of the Act. Further, the combination does

not cause any foreclosing, barriers to entry or price squeezing in the blodget market of

Bohemia. Thus, the combination has no significant effect on competition and cannot be held

anticompetitive.

xix
 WRITTEN SUBMISSIONS

I. THAT THE PRESENT APPEALS ARE NOT BARRED BY LIMITATION

Section 53T of the Act reads:

“…any person aggrieved by any decision or order of the Appellate Tribunal

may file an appeal to the Supreme Court within sixty days from the date of

communication of the decision or order of the Appellate Tribunal to them…”

This time period of sixty days provided under Section 53T constitutes the period of limitation

under the Act for filing an appeal to the Supreme Court. If an appeal is filed after the expiry

of these sixty days, it will be time barred. For establishing that an appeal is time barred two

essential elements need to be established:

(1) There was a communication of an order;

(2) The appeal against the order was not filed within sixty days from the date of

communication of the order

A. THERE WAS NO “COMMUNICATION” OF THE ORDER OF THE COMPAT

Under Section 53T of the Act, the period of limitation commences from “the date of

communication of the order of the COMPAT” to the parties. The Act does not define or

explain what constitutes “communication” of the order. In Queen v. Eduljee Byramjee it was

posited that to ascertain the true meaning of a clause in a statute the court must look at the

whole statute, at what precedes and at what succeeds and not merely at the clause itself. 1 The

Supreme Court of India has accepted this approach in innumerable cases. 2 In this regard,

reliance may be placed on the following provisions:

Section 53B(4) of the Act provides:

“(4) The Appellate Tribunal shall send a copy of every order made by it to the

Commission and the parties to the appeal.”

1
Queen v. Eduljee Byramjee, (1846) 3 MIA 468 (PC).
2
National Insurance Company v. Anjana Shyam & Ors., AIR 2007 SC 2870.

1
“Send” means to “dispatch”, cause something to go elsewhere, from one place to another,

especially by post.3 The parties are not required to apply for a copy thereof.4

Regulation 19(xiii) of the Competition Appellate Tribunal (Procedure for Appeals &

Applications) Regulations, 2010 (2010 Regulations) provides:

“The Registrar shall send a copy of the final order/judgment to the parties

concerned and to the commission.”

On 10 May 2012, the COMPAT passed the following order:

“It is hereby ordered that the Registrar shall ensure that certified copies of

every order passed by the Tribunal are sent to the Commission and the parties

to the appeal thereof within seven days.5”

Regulation 12 of the 2010 Regulations, and Regulation 9 of the Competition Appellate

Tribunal (Procedure) Regulations, 2011 (2011 Regulations) provide:

“Every notice or other document, required to be served on or delivered to any

person, may be sent by the Registrar by speed post or by courier or by e-mail

to the person or his agent empowered to accept service.”

It is submitted that the word “other document” includes an order of the COMPAT. This is

because, Section 53B(4) of the Act, and Regulation 19(xiii) of the 2010 Regulations create an

obligation on the part of the COMPAT to send a copy of its order through its Registrar to the

parties to the appeal. This mandatory requirement qualifies as a “document, required to be

served on or delivered to any person”.

Thus, Section 53T, when harmoniously construed with Section 53B(4) of the Act, and the

above-quoted regulations on competition law establishes that the words “communication” of

3
D. P. MITTAL, COMPETITION LAW & PRACTICE 626 (3d ed., Taxmann Publications 2011)
[hereinafter MITTAL].
4
MITTAL, supra note 3, at 627.
5
Order dated 10 May 2012, available at:
http://compat.nic.in/upload/PDFs/mayordersApp2012/10_05_12.pdf.

2
the order means delivering a copy of the order to the parties either by speed post or by courier

or by email.

It is submitted that a communication of the order is complete on the date of receipt of the

copy of the order by the Appellants. This construction of Section 53T is supported by

Regulation 19(ii) of the 2010 Regulations which reads:

“(ii) The appeal [to the COMPAT from the order of the CCB] shall be filed

within a period of sixty days from the date of the receipt of the certified copy

of the direction, decision or order appealed against.”

Though, the above regulation deals with an appeal from the order of the CCB to the

COMPAT, it is submitted that, the intent behind Section 53T and Regulation 19(ii) of the

2010 Regulations are identical, i.e. to provide or confer a right of appeal upon the parties to

the proceeding from the date of communication.

On 18 September 2012, the COMPAT pronounced the orders. On 21 September 2012 it

published a copy of the orders on its website. Also, the Appellant’s lawyers had seen the said

orders on the said website on 24 September 2012 6. However, none of the above actions

establish that there was a “communication” of the order. It is submitted the Appellants

received the copies of the orders only on 4 October 2012 after they had applied to the

COMPAT for the certified copies of the orders. Therefore, the period of limitation

commenced only from the said date. The last date for filing the appeal would then be 3

December 2012. Since the instant appeals were filed on 26 November 2012, they are not

barred by limitation.

B. ARGUENDO, THERE WAS SUFFICIENT CAUSE FOR DELAY

The proviso to Section 53T reads:

6
Moot Proposition, ¶25.

3
 “Provided that the Supreme Court may, if it is satisfied that the applicant was

prevented by sufficient cause from filing the appeal within the said period,

allow it to be filed after the expiry of the said sixty days.”

Assuming that the orders were communicated to the Appellants on 24 September 2012, it is

submitted that there was sufficient cause for the delay. Sufficient cause means some cause

beyond the control of the party and for successfully invoking the aid of the Court the

claimant, must have acted with due care and attention. 7 Section 12 of the Limitation Act,

which deals with exclusion of time in legal proceedings while computing the period of

limitation for a particular suit, can be relied upon to establish sufficient cause in the instant

case. The true effect of Section 12 is that the periods referred to in the various sub-sections

have to be added to the period of limitation for ascertaining the last date for filing the appeal. 8

Section 12(1) of the Limitation Act, 1963 provides that the date on which the order is

pronounced shall be excluded from the computation of limitation. Therefore, one extra day

needs to be added to the statutorily prescribed limitation period of sixty days. Section 12(2)

of the Limitation Act provides that in computing the period of limitation for an appeal, the

time requisite for obtaining a copy of the order appealed from shall be excluded. The time

requisite for obtaining a copy is the time taken in preparing the copy after the application

therefore has been made,9 including the date on which the application was made. In the

instant case, the Appellants had applied for certified copies of the orders on 1 October 2012.

The COMPAT furnished the said certified copies on 4 October 2012 10. Pursuant to Section

12(2), these four days need to be added to the limitation period.

7
Hemalata Devi v. S. K. Loman, AIR 1974 Ori 24, at 26.
8
B. B. MITRA, THE LIMITATION ACT 323 (22nd ed., M. R. Mallick ed., Eastern Law House
2011).
9
Shahjahan Begum v. Zahirul Hassan, AIR 1972 All 511.
10
Moot Proposition, ¶25.

4
In General Electric Company of India Ltd v. Corporation of Calcutta,11 it was observed,

“We are not prepared to hold that the words “the time requisite for obtaining

a copy” are inapplicable in those cases where the appellant is not required to

obtain a copy at his own expense by applying for it but is entitled by statute to

get a copy from the authority or authorities concerned within a certain time

and, in our opinion, in a case of this type, the time, taken by the authorities

concerned to supply the copy, would legitimately be “time required for

obtaining the copy”…”

As per the order dated 10 May 2012, the Registrar was to mandatorily ensure that within

seven days of passing of the order, certified copies of the same were sent to the parties. 12

Accordingly, the failure by the Registrar to furnish copies to the QBL within seven days

permits seven extra days to be added to the limitation period. In totality, a period of twelve

days needs to be added to the statutorily prescribed limitation period of sixty days. Therefore,

the limitation period for appealing to the Supreme Court in the instant case is seventy two

days from the date of communication of the order. In this regard, the period of limitation

commenced from was set to expire on 28 November 2012. Therefore, the present appeals are

not barred by limitation.

II. THAT THE COMPAT DID NOT HAVE THE JURISDICTION TO HEAR

THE APPEALS

The COMPAT did not have the jurisdiction to hear the appeals for the following reasons:

11
General Electric Company of India Ltd. v. Corporation of Calcutta, AIR 1959 Cal 413; M.
N. Sharma v. State of Bihar, AIR 1960 Pat 212.
12
Supra note 5.

5
 A. SECTION 3 AND SECTION 4(1) DO NOT HAVE RETROSPECTIVE OPERATION

Section 3, which deals with anti-competitive agreements, and Section 4, which deals with

abuse of a dominant position, was brought into force with effect only from 20 May 2009. 13

Moreover, Section 4(1), was amended vide the Competition (Amendment) Act, 2012 on 1

January 2012 to include the concept of collective dominance. 14 It is a cardinal principle of

construction that every statute is prima facie prospective unless it is expressly or by necessary

implication made to have a retrospective operation. 15 The wording of Section 3, and Section

4(1) clearly establish that the Act is prospective in nature, i.e. it is not retrospective. If the

said provisions were intended to have retrospective operation, the legislature would have

used words such as “Any anti-competitive agreement entered into or abuse of collective

dominance committed either before or after the entry into force of this section shall be void”.

The maxim Nova constitutio futuris forman imponere debet non praeteritis - a new law ought

to regulate what is to follow, not the past also supports the above conclusion. It is also settled

law that the competition law cannot have retrospective effect.16

The DG in his investigation pertaining to the alleged anti-competitive agreements and abuse

of collective dominance took into consideration the period commencing from 1 April 2006 to

31 October 2011.17 It is submitted that the DG made a manifest error in his investigation

13
Moot Proposition, ¶3.
14
Moot Proposition, ¶18.
15
Zile Singh v. State of Haryana - (2004) 8 SCC 1, ¶13; Mahadeo Kanodia v. Administrator
General of W.B., AIR 1960 SC 936; G.P. SINGH, PRINCIPLES OF STATUTORY
INTERPRETATION 438 (9th ed., Wadhwa and Company Law Publisher 2004).
16
Kingfisher Airlines Ltd v. CCI, Writ Petition No. 1785 of 2009, available at:
http://bombayhighcourt.nic.in/data/original/2010/WP180609310310.pdf, at 23; DDRS (G)-II,
Railway Board, Ministry of Railways v. RMG Polyvinyl India Ltd. & Ors., 2012 Comp LR
99 (CCI); In re: All India Tyre Dealers’ Federation v. Tyre Manufacturers, MRTP Case:
RTPE No. 20 of 2008, Order dated 30.10.2012, available at:
http://www.cci.gov.in/May2011/OrderOfCommission/202008.pdf [hereinafter the Tyre
Cartel Case].
17
Moot Proposition, ¶19.

6
when he included the period commencing from 1 April 2006 to 19 May 2009 for the purpose

of inquiring into the Appellant’s alleged anti-competitive agreements; and the period

commencing from 1 April 2006 to 31 October 2011 for the purpose of inquiring into the

Appellant’s alleged abuse of collective dominance. This is because during the said periods,

neither the provision relating to anti-competitive agreements, nor the provision relating to

abuse of a collective dominant position, was in force. Consequently, there was no legally

recognized concept of an enterprise entering into anti-competitive agreements or abusing a

collective dominant position prior to 20 May 2009, and 1 January 2012, respectively. Lastly,

the fact that the Competition Act was brought into effect in a phased manner in Bohemia also

suggests that the legislature did not intend Section 3, and Section 4(1) to have a retrospective

operation.18

B. ARGUENDO, THE ANTI-COMPETITIVE ACTS AND ABUSE OF COLLECTIVE

DOMINANCE WERE NOT CONTINUING AFTER SECTION 3, AND SECTION 4(1)

CAME INTO EFFECT

In Kingfisher Airlines Ltd. v. CCI, the Bombay High Court held that,

“the Act … would cover all agreements covered by the Act though entered into

prior to the commencement of the Act but sought to be acted upon now i.e. if

the effect of the agreement continues even after 20.5.2009.”

However, in the instant case, the DG has neither explained the rationale for considering the

period commencing from 1 April 2006 to 31 October 2011, nor established for that matter

that the anti-competitive agreement, or the abuse of collective dominance is continuing, in

that, it is affecting competition in the market after the entry into force of Section 3 and

Section 4(1).

18
Moot Proposition, ¶2.

7
III. THAT THE APPEALS BY WMA TO THE COMPAT WERE NOT

MAINTAINABLE

WMA filed two appeals, one on 15 April 2012, and another on 1 May 2012 against the

CCB’s orders dated 1 March 2012 and 1 May 2012, respectively. In both these appeals,

WMA’s locus standi to file the appeals were challenged by the Appellants.

Appeal against order dated 1 March 2012

Section 53B(1) reads:

“The Central Government or the State Government or a local authority or

enterprise or any person, aggrieved by any direction, decision or order

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

Tribunal.”

In Ram Asri Hari Chand v. Tara Chand, it was held,

“a ‘person aggrieved’ means a person who has suffered a legal grievance,

i.e., a person against whom a decision has been pronounced which has

lawfully deprived him of something or wrongfully refused him something.”19

The person aggrieved must show that the order tends to cause injury or damage to him in the

legal sense of that word, indicating inter alia:

(i) the order confers a right on a person to which he is not entitled; or

(ii) the order is not in accordance with law; or

(iii) the order affects his own right.

In the instant case, no prejudice or damage or injury has been caused by the order of the CCB

in both the appeals. Moreover, the order neither confers a right on the Appellants, nor affects

the right of WMA. Therefore, WMA is not a “person aggrieved”.

19
Ram Asri Hari Chand v. Tara Chand, AIR 1983 HP 65, at 67, 68.

8
In R. v. Andover,20 it was held that where a particular section of a statute provided that any

person who felt aggrieved by any order of a Court of summary jurisdiction had a right of

appeal, it was held that the person aggrieved must be a person who has a locus standi in the

proceedings when they were first taken before the Justices. WMA was also not a part of the

proceedings before the CCB that led to the order of dated 1 March 2012. It was only an

informant under the repealed MRTP Act. When the investigation of the DG of MRTPC in

RTPE No. 12 of 2006 was transferred to the CCB, the CCB passed a prima facie order

directing the DG’s Office of the CCB to commence investigation. When the DG submitted its

report to the CCB, QBL, and the other blodget manufacturers were afforded the opportunity

to make detailed written and oral submissions. All these facts taken together indicate that

WMA was not a party to the proceedings before the CCB in relation to the order dated 1

March 2012.

Appeal against order dated 1 May 2012

Regulation 29 of the Competition Commission of India (Procedure in Regard to the

Transaction of Business Relating to Combinations) Regulations, 2011 provides:

“Subject to the provisions contained in Section 53B of the Act, the Central

Government or the State Government or a local authority or enterprise or any

person, who is party to proceedings on matters relating to a combination and

is aggrieved by any direction or decision or order referred to in clause (a) of

Section 53A of the Act may prefer an appeal to the Competition Appellate

Tribunal.”

WMA was not a party to the proceedings before the CCB in Combination No. 52/2012. In the

said proceedings, only Concord presented legal arguments on behalf of itself and CSLL. 21

Therefore, WMA did not have the requisite locus standi to file the appeals.
20
R. v. Andover, (1886) 16 QBD 711 DC.
21
Moot Proposition, ¶23.

9
IV. THAT QBL IS NOT GUILTY OF ENTERING INTO ANTI-COMPETITIVE

AGREEMENTS WITH TBL, PBPL AND GBPL

Section 3(3)(a) and Section 3(3)(b) presume an action in concert, which is a form of an

agreement, by a cartel, engaged in identical or similar trade of goods, which directly or

indirectly, (a) determines purchase or sale prices; (b) limits or controls production, supply; to

have an appreciable adverse effect on competition. QBL, TBL, PBPL and GBPL are not

guilty of entering into an anti-competitive agreement in the nature of a cartel for the

following reasons:

A. THAT THERE ARE NO STRUCTURAL FACTORS CONDUCIVE FOR CARTELIZATION

Though cartelization can occur in any industry, there are some industries in which it is more

likely, due to particular features of the industry or of the products involved. The factors,

which are conducive for cartelization, are (1) demand for the product is relatively inelastic;

(2) market shares are stable; (3) homogenous products (4) there are barriers to entry to the

market.22

Unstable market shares: The report of the Excel Useful Metrics economic database reveal

that the market shares of QBL, TBL, PBPL and GBPL vary from year to year 23. For instance,

while QBL, TBPL, PBPL and GBPL had a market share of 20%, 18%, 20% and 16%

respectively in 2009, their market share in 2010 was 25%, 22%, 17% and 13% respectively.

Moreover, in 2011, they had a market share of 27%, 20%, 19% and 10% respectively 24. This

kind of market behavior clearly evidences that the market shares are not stable. Further, what

is clearly evident from this is that the blodget industry is highly competitive.25

22
MITTAL, supra note 3, at 178-179, ¶3.4-2.
23
Moot Proposition, ¶13.
24
Moot Proposition, ¶11(a)
25
Moot Proposition, ¶11.

10
No barriers to entry: Since the decontrol of blodget prices by the Government of Bohemia,

there have been a fairly significant number of new entrants in the market. Several global

blodget manufacturers have been investing in Bohemian blodget companies. 26 This kind of

behavior clearly evidences that there are no barriers to entry in the blodget market/industry.

B. MERE PARALLELISM IN PRICES, PRODUCTION AND DISPATCH DO NOT INDICATE

A CONCERTED ACTION

Mere parallelism in prices, production and dispatch do not indicate a concerted action

because: (1) the blodget manufacturing industry is an oligopolistic market; (2) parallelism in

prices, production and dispatches is due to the competitive market forces in the said

oligopolistic market.

1. The blodget manufacturing industry is an oligopolistic market

Oligopoly has been traditionally defined as a market structure in which there are only a few

suppliers,27 there is homogeneity of products, and where an undertaking can, either

individually or collectively, reduce output or raise prices to the detriment of consumers. The

four-firm concentration ratio, a quantitative description of oligopoly, is used to indicate the

degree to which an industry/market is oligopolistic. In the instant case, the blodget

manufacturing industry in Bohemia is characterized by four large players viz., QBL, TBL,

PBPL and GBPL, who control approximately seventy five per cent of the Bohemian market,

with the rest being evenly distributed among 15-20 small local manufacturers.28 Also,

blodgets being the product produced by all manufacturers in the blodget industry there is

homogeneity of products. Consequently, the blodget manufacturing industry is an oligopoly.

26
Moot Proposition, ¶13.
27
J. FAULL J. & A. NIKPAY, THE EC LAW OF COMPETITION 24 (2d ed., Oxford University
Press 1999) [hereinafter FAULL & NIKPAY].
28
Moot Proposition, ¶11(a)

11
 2. Parallelism in prices, production and dispatch is due to the competitive

market forces in the said oligopolistic market

Economic theory has demonstrated convincingly that “conscious parallelism” (parallel

behavior), is not uncommon in homogeneous oligopolistic markets. 29 The structural

conditions of the market in which oligopolists operate can be such that they have little or no

incentive to compete. In these circumstances, parallel conduct would be not the result of the

will or intention of market players but a natural consequence of the market structure, or the

“natural operation” of the market and not any concerted effort.30

Price Parallelism in the blodget industry arises on account of the fact that the products sold

are homogenous, which makes it difficult for the blodget manufacturers, including QBL, to

charge different prices. Further, as the raw materials/inputs of all the blodget manufacturers

are similar,31 it makes them subject to similar cost fluctuations in setting their product prices.

If QBL or any other blodget manufacturer decides to increase or decrease the prices of

blodgets, all other blodget manufacturers would follow the same. This form of parallel

conduct/behavior is not because QBL and other blodget manufacturers are acting in concert,

“but because their individual appreciation of market conditions tells them that a failure to

match a rival’s strategy could be damaging or even disastrous”32.

29
Tyre Cartel Case, supra note 16, at 93, ¶279.
30
Rafael Allendesalazar, Oligopolies, Conscious Parallelism and Concertation, available at:
http://www.eui.eu/RSCAS/Research/Competition/2006(pdf)/200610-COMPed-
Allendesalazar.pdf, 3/17; see also Matthew M. Bunda, Monsanto, Matsushita, and
“Conscious Parallelism”: Towards a Judicial Resolution of the “Oligopoly Problem”, 84
Wash U. L. Rev. 179 (2006), at 180 [hereinafter Bunda]; Donald F. Turner, The definition of
Agreement under the Sherman act: Conscious Parallelism and Refusals to deal, 75 Harv. L.
Rev. 655 (1961-1962).
31
Moot proposition, ¶7.
32
Shatakshi Johri, Attribution of Price Parallelism as Cartels under the Competition Act,
2002, available at: http://cci.gov.in/images/media/ResearchReports/Attribution.pdf, at 15.

12
Production and dispatch parallelism in the blodget industry arises on account of the seasonal

or cyclical nature of the Bohemian blodget industry. During the period of Summerization, and

Candles Bay, there is always a decline in demand for blodgets 33. As a result of the decrease in

demand, and difficulty in production, almost all blodget manufacturers, reduce their

production during these months. Thus, it is clearly evident that the parallelism in production

and dispatch is due to the market forces of demand and supply coupled with the oligopolistic

nature of the blodget industry.

C. THERE ARE NO PLUS FACTORS

The MRTPC of India in the Alkali case34 held that,

“price parallelism by itself does not amount to a restrictive trade practice and

… without … any plus factor to bolster the circumstances … it is unsafe prima

facie to conclude that the respondents indulged in any cartel for raising

prices.”

This position has subsequently been upheld by the Supreme Court of India 35 and followed in

a number of cases before the CCI36. In Bell Atlantic Corp. v. Twombly37 the Court reiterated

the principle that proof of conscious parallelism alone is inadequate to establish conspiracy.

In the Wood Pulp Case, the ECJ pointed out,

33
Moot Proposition, ¶10
34
Alkali and Chemical Corporation of India Ltd., Calcutta v. Bayer (India) Ltd., Bombay,
(1984) 3 Comp LJ 268 (MRTPC).
35
Union of India vs. Hindustan Development Corporation, AIR 1989 SC 988.
36
Builders Association of India v. Cement Manufacturers Association, Case No.29/2010,
Order dated 20.6.2012, available at
http://www.cci.gov.in/May2011/OrderOfCommission/292011.pdf; Tyre Cartel Case, supra
note 16.
37
Bell Atlantic Corp. v. Twombly, 550 US 544 (2007).

13
 “…parallel conduct cannot be regarded as furnishing proof of concertation

unless concertation constitutes the only plausible explanation for such

conduct…”38.

In antitrust cases, the additional economic circumstantial evidence is collectively referred to

as “plus factors”. Plus factors are economic actions and outcomes, above and beyond parallel

conduct by oligopolistic firms that are largely inconsistent with unilateral conduct but largely

consistent with coordinated action.39 A “plus factor” refers to “facts or factors” that tend to

show that “parallel action amounts to a conspiracy.40

1. Exchange of Information or communication or contact

through BWF

Though a trade association, like that of BWF, may be used as a convenient medium to

administer a cartel,41 it can also be used as a legitimate forum for members of a business to

promote standards, innovation and competition. Article 19(1)(c) of the Constitution of

Bohemia gives the right to form an association. The activities of the BWF include promoting

the welfare of all stake-holders in the blodget industry and holding quarterly meetings where

representatives from all blodget manufacturers discuss issues relating to the blodget

industries such as the rising cost of raw materials, and newly technology that have been

introduced to increase production and reduces production costs.

The Commission in the Tyre Cartel Case concluded that lobbying for welfare of tyre industry

is the prime objective of ATMA (Automotive Tyres Manufacturers’ Association) and the

38
Ahlstrom & Ors. v. Commission, [1993] ECR I-1307 168, at ¶71.
39
William E. Kovacic et al, Plus Factors and Agreement in Antitrust Law, 110 Mich. L. Rev.
393 (2011-2012), at 393.
40
Bunda, supra note 30, at 187.
41
MITTAL, supra note 3, at 205, ¶3.12.

14
same cannot be viewed as anti-competitive. 42 In the instant case, the BWF undertakes

lobbying for its members and makes several representations to the Government on matters

concerning the blodget industry as a whole43.

Under EC law and in some US cases, exchange of information has been held to be a chief

plus factor indicating a concerted practice. However, exchange of information is not always

anti-competitive. Exchange of information about past (and current) prices and quantities

helps firms sustain collusion, yet it is possible that there might be efficiency effects behind

exchange of such data.44 As Posner posits,

“information is … a two-edged sword: it is necessary if the competitive

process is to work properly, but it can also facilitate collusion.”45

In Maple Flooring Manufacturers Association et al v. United States it was held that,

“Trade associations or combinations of individuals or corporations which

openly and fairly gather and disseminate information as to cost of their

product, the actual prices it has brought in past transactions, stocks on hand

and approximate cost of transportation from the principal point of production

to point of consumption, and meet and discuss such statistics without reaching

or attempting to reach any agreement or concerted action respecting prices,

production or restraining competition, do not thereby engage in an unlawful

restraint of commerce”.46

42
Tyre Cartel Case, supra note 16, at 119, ¶347.
43
Moot Proposition, ¶15
44
Massimo Motta, Cartels in European Union: Economics, Law, Practice, available at:
http://www.barcelonagse.eu/tmp/pdf/motta_cartelseulaw.pdf, at 8.(hereinafter Motta)
45
R. A. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE 136 (University of Chicago
Press 1976).
46
Maple Flooring Manufacturers Association et al v. United States, 269 US 563 (1925).

15
QBL, TBL, PBPL and GBPL collected the information relating to prices, production and

sales only due to the direction of the BDIP. The blodget manufacturers would not have

otherwise collected the price, production, and sales information if not for the said direction.

Moreover, they submitted the information collected periodically as per the directions of the

BDIP.

2. There are no high profits

Blechman notes that “high profits” is a plus factor that indicates a concerted practice. 47 The

Commission in the Glass Manufacturers case noted that,

“cartel formation usually takes place to enable the companies to earn

abnormal profits.48 However, in the present case DG has indicated that not

only the new players have been incurring losses, but the established players

had also either been incurring losses in some of the segments of the float glass

or their profits had been declining over the period between 2008 and 2011.

The Commission is of the view that one would not expect such a trend in a

cartel since there would be no incentive for the loss making firms to be part of

cartels”.49

It is clearly provided that the average industry margin of all the blodget manufacturers

increased only by 2 per cent. Moreover, some companies had also reported net losses.

Consequently, there is no proof that QBL has made high profits.

47
Michael D. Blechman, Conscious Parallelism, Signalling and Facilitating Devices: The
Problem of Tacit Collusion under the Antitrust Laws, 24 N. Y. L. Sch. L. Rev. 881 (1978-
1979), at 887.
48
In re: Glass Manufacturers of India, MRTP Case No. 161/2008, Order dated 24 January
2012, available at: http://www.cci.gov.in/May2011/OrderOfCommission/Glass
%20mfd24jan2012.pdf, ¶7.4.
49
Id., at ¶7.5.

16
 3. Low capacity utilization is not a viable plus factor

There are a number of factors that affect capacity utilization of a blodget manufacturer. It is

widely understood that in any industry, 100% of the installed capacity is not available for

production from the first year a plant is commissioned and even thereafter. This is primarily

because of various issues such as lead time (ramp-up) that is required by a plant to stabilize

production, maintenance (both scheduled and un-scheduled), labor unrests, availability of

electricity etc. Neither the DG’s report nor the COMPAT’s decision indicates that the above-

mentioned factors were considered. Moreover, the production of blodgets is based on market

demand.50 Also, blodgets have a low shelf life of 30 days. 51 In these circumstances, the

capacity has to be utilized in an optimum manner as over-production would result in losses

and wastage.

V. THAT QBL, TBL, PBPL AND GBPL ARE NOT GUILTY OF ABUSING

THEIR COLLECTIVE DOMINANT POSITION

Section 4(1) provides, “No enterprise jointly or singly shall abuse its dominant position.”

Explanation (a) to Section 4 of the Act defines dominant position as a position of strength

enjoyed by an enterprise in the “relevant market”. Therefore, it becomes crucial to determine

the relevant market in which the enterprises are enjoying a dominant position.52

A. THE RELEVANT MARKET IS THE BOHEMIAN BLODGET INDUSTRY

Relevant market means the market determined by the Commission with reference to relevant

product market or the relevant geographic market or with reference to both.

50
Moot Proposition, ¶14.
51
Id.
52
Case 6/72 Europemballage Corp and Continental Can Co. Inc. v. Commission, [1973] ECR
215, ¶32; Case 27/76 United Brands Co. & United Brands Continental BV v. Commission,
[1978] ECR 207, ¶10; Case 85/76 Hoffmann-La Roche & Co. AG v. Commission, [1979]
ECR 461, ¶ 21.

17
 1. The relevant geographic market is Bohemia

A geographical market consists of the area within which the product is marketed and where

the conditions of competition are principally the same for all the traders. 53 There exists a

condition of competition for the supply and demand of blodgets throughout Bohemia. Also,

the demand is for a homogeneous commodity in the market viz., blodgets. Therefore, in the

present case, the geographical market would be the entire territory of Bohemia with the

widget manufacturers as the consumers.

2. The relevant product market is the market for blodgets

A relevant product market consists of products that are similar, for example in price, physical

characteristics and intended use.54 The tests are the interchangeability of goods and cross

elasticity of demand. In the instant case, the relevant product market will comprise of the

blodgets manufactured by the various companies in the blodget market, which are

interchangeable or substitutable by the consumer. Therefore the relevant market is the

Bohemian blodget industry.

B. THAT QBL, TBL, PBPL AND GBPL ARE NOT A COLLECTIVE ENTITY IN THE

RELEVANT MARKET

In Compagnie Maritime Belge Transports v. Commission,55 the Court observed,

“it is necessary to consider whether the undertakings concerned, together

constitute a collective entity vis-à-vis their competitors, their trading partners

and consumers on a particular market. It is only where that question is

53
Emma Norler, Collective Dominance under Article 82 EC Treaty – an Effective Tool to
Control Oligopolies?, available at: http://lup.lub.lu.se/luur/download?
func=downloadFile&recordOId=1560850&fileOId=1565445, at 2 [hereinafter Norler].
54
Id.
55
Joined cases C-395/96P and C-296/96P, Compagnie maritime belge transports SA (C-
395/96P), Compagnie maritime belge transports SA (C-396P) and Dafra-Lines A/S (C-
396/96P) v. Commission of the European Communities, [2000] ECR I-1365 [hereinafter
CMB].

18
 answered in the affirmative that it is appropriate to consider whether that

collective entity actually holds a dominant position and whether its conduct

constitutes abuse.56 …In order to establish the existence of a collective

entity…it is necessary to examine the economic links or factors which give

rise to a connection between the undertakings concerned…”57

A collective position is established by:58

(a) a connecting factor;

(b) which causes the undertakings (enterprises) to either

(i) present themselves on the market as a collective entity,59 or

(ii) behave on the market as a collective entity.60

A connecting factor, irrespective of its form, gives the undertakings the ability to adapt

common strategies on the market and to act to a considerable extent independently of the

other competitors, customers and consumers.61 The EU jurisprudence has recognised that

several factors work as links between undertakings to establish a collective entity amongst

them. These links range from structural links62, economic links63, contractual links or even the

market structure by itself.

56
Id., at ¶36.
57
Id., at ¶34, 36, 41-42; FAULL & NIKPAY, supra note 27, at 340, ¶4.112.
58
Giorgio Monti, The Scope of Collective Dominance under Articles 82 EC, 38 Common
Market Law Review 131 (2001), at 133 [hereinafter Monti].
59
CMB, supra note 55, at ¶44.
60
Case C-393/92 Municipality of Almelo & Ors. v. EnergiebedrijfIjsselmij, [1994] ECR I-
1477, ¶¶42-43.
61
Monti, supra note 58, at 138.
62
Cases T-68, 77 and 78/69 Società Italiana Vetro SpA & Ors. v. Commission, [1992] ECR
II-1403.
63
CMB, supra note 55.

19
 1. There are no structural links

Structural links may include interlocking directorships, cross-shareholdings, participation in

joint ventures, or participation in trade associations. 64 In the instant case, QBL, TBL, PBPL

and GBPL are a part of the BWF 65. The BWF was constituted as a welfare federation to

promote the welfare of all stakeholders in the blodget industry 66. The BWF is a platform for

the communication of grievances and suggestions of the blodget manufacturers and for

making representations to the Bohemian Government on issues concerning the blodget

industry as a whole. These activities of the BWF do not present QBL, TBL, PBPL and GBPL

as a collective entity in the Bohemian blodget market.

2. There are no economic links

In the Gencor case67, the court pronounced on ‘economic links’ to include the concept of

market structure, i.e. the relationship of interdependence between members of a tight

oligopoly. However, in order for oligopolistic interdependence to constitute an “economic

link” it is well established that each member of the oligopolistic group must be proved to

have taken part in the exercise of the monopoly power possessed by the group collectively. It

must be shown that there is such a close interdependence of interest and action between the

members of the group that they should be considered as a single collective entity. Such an

evidencing can only be made by establishing that the oligopolists consciously behave as a

group.68 QBL’s conduct in the Bohemian blodget industry does not reflect any sort of

conscious behavior to act as a collective entity.

64
RENATO NAZZINI, THE FOUNDATION OF EUROPEAN UNION COMPETITION LAW: THE
OBJECTIVE AND PRINCIPLES OF ARTICLE 102 366-367 (Oxford University Press 2011).
65
Moot Proposition, ¶15.
66
Moot Proposition, ¶15.
67
Case T-102/96 Gencor v. Commission, [1999] ECR II-753.
68
David Flint, Abuse of a Collective Dominant Position, 5 Legal Issues of Eur. Integration 21
(1978), at 55-56 [hereinafter Flint].

20
In Impala69 and Airtours70, the test of oligopolistic behavior was developed in line with

economic theories of tacit coordination wherein the Court of Justice held that for two or more

undertakings to be collectively dominant based on oligopolistic interaction, (1) they must

have the ability to reach terms of coordination that negatively affect the parameters of

competition; (2) they must have the incentive to do so, and (3) they must have no incentive to

deviate from the tacit coordination. In the instant case, firstly, the firms lack ability to

coordinate amongst each other. BDIP, a governmental agency, has deputed BWF to submit

periodical reports of the firms’ prices, production and sales. As a result of this, the pricing

pattern of the blodget industry is under the constant scrutiny of the BDIP. Therefore, in such

circumstances, there is no ability or circumstance that enables QBL to reach terms of

coordination that negatively affect the parameters of competition. Secondly, in the instant

case, QBL, TBL, PBPL and GBPL are a part of a high concentration tight oligopolistic

market with limited number of entities competing for increased market shares. 71 There is year

on year fluctuations in market shares of the four manufacturers. 72 QBL has been the only

entity that has been consistently gaining market share. In such circumstances, it would be

detrimental to the interests of QBL to coordinate and follow a common policy with the other

three players. In other words, there is no incentive to co-ordinate. Lastly the constant scrutiny

and competitive market structure are the incentives for the manufacturers to deviate from any

form of coordination.

69
Case T-464/04 Independent Music Publishers and Labels Association (Impala) v.
Commission, [2006] ECR II-2289, ¶¶120–124.
70
Case T-342/99, Airtours v. Commission, [2004] ECR II-1785.
71
Moot Proposition, ¶11(a).
72
Moot Proposition, ¶13.

21
 C. QBL, TBL, PBPL AND GBPL ARE NOT IN A DOMINANT POSITION

Under the Act, an enterprise is said to be in a dominant position if it is in a position of

strength which enables it to (i) operate independently of competitive forces prevailing in the

relevant market; or (ii) affect its competitors or consumers or the relevant market in its

favour”. Further, Section 19(4) provides that the commission, shall while inquiring whether

an enterprise enjoys a dominant position or not under Section 4, have due regard to all or any

of the factors mentioned therein.

1. That market share is not indicative of market power

Market share size, per se, is but a single element in the evidencing of dominant position: it is

not, as is commonly believed, conclusive evidence thereof. 73 The Commission stated in the

Transatlantic Conference Agreement Case74 decision that if a collective position exists by

virtue of an oligopolistic market structure and not because of other links, the significance of

high market shares is not the same. Similarly, in Kali & Salz75, the ECJ held that a market

share of approximately sixty per cent cannot itself point conclusively to the existence of a

collective dominance. In these circumstances, even though QBL, TBL, PBPL and GBPL

collectively hold 75% of the market share 76, they cannot conclusively be said to be in a

“dominant position”.

2. There are no other factors that establish that QBL, TBL, PBPL and

GBPL are in a dominant position

Other factors may confirm or contradict a presumption of dominance based on a large market

share. Such factors usually considered in single dominance cases are inter alia the stability of
73
Flint, supra note 68, at 22.
74
Decision 99/624/EC, IV/35.134 - Transatlantic Conference Agreement, OJ 1999 L 95/93,
¶¶533-549.
75
Cases C-68/94 and C-30/95 France & Ors. v. Commission (Kali & Salz) [1998] ECR
I1375.
76
Moot Proposition, ¶11(a)

22
market shares over time, relative market shares, possession of technical resources, barriers to

entry, existence of vertical integration, degree of competition and the ability of customers to

switch to alternative suppliers given the size of those. The same factors are relevant as

regards collective dominance, which is evident from, for example, the CMB Case.77

Unstable market shares: In the instant case, the market shares of QBL, TBL, PBPL and

GBPL have been fluctuating on a year or year basis 78. Therefore, there is no stability of

market shares over time.

No barriers to entry: There have been a fairly significant number of new entrants in the

bohemian blodget market. Several global blodget manufacturers have been investing in

Bohemian blodget companies.79 This kind of behavior clearly evidences that there are no

barriers to entry in the blodget market/industry.

D. QBL, TBL, PBPL AND GBPL DID NOT ABUSE THEIR COLLECTIVE DOMINANT

POSITION

Section 4(2) defines when there is abuse of a dominant position within the meaning of

Section 4(1).80 “Abuse” means “to put to bad or wrong use”. It means an enterprise or group

enjoying a dominant position on a market cannot make use of that position for bad or wrong

purposes.81 Thus, abuse is stated to occur when an enterprise or a group of enterprises uses its

dominant position in the relevant market in an exclusionary and/or exploitative manner. 82

A. That QBL, TBL, PBPL and GBPL did not impose any unfair prices

77
Norler, supra note 53, at 46.
78
Moot Proposition, ¶13
79
Moot Proposition, ¶13.
80
T. RAMAPPA, COMPETITION LAW IN INDIA – POLICY, ISSUES, AND DEVELOPMENTS 140,
(2d ed., Oxford University Press 2011) [hereinafter RAMAPPA].
81
MITTAL, supra note 3, at 284, ¶4.2-1.
82
Competition Commission of India, Abuse of Dominance, available at:
http://www.cci.gov.in/images/media/Advocacy/AOD2012.pdf, at 5.

23
Section 4(2)(a)(ii) provides that there shall be an abuse of dominant position under sub-

section (1), if an enterprise directly or indirectly, imposes unfair price in purchase or sale

(including predatory price) of goods. Unfair prices are excessively high prices, above

competition level.83 It also means that which is not fair, which is more than expected or

usual.84 It is important, however, to distinguish excessive prices from seemingly high profits

that are an integral part of the competitive process.85

Prices and profits of a dominant undertaking, which, at first sight, might appear to be

excessive, will not always amount to an abuse. Persistently high prices and profits are

unlikely to be of concern if they result from a series of successful innovations, as distinct

from exclusionary or collusive behavior.86 In the EU, for example, a 100% difference

between the calculated economic value (based on production costs) and the price charged has

been found, in specific instances, to not amount to excessive pricing. 87 The quarterly

meetings of the BWF of all blodget manufacturers facilitate innovation and advancement in

production of blodgets and efficient manufacturers such as QBL, TBL, PBPL and GBPL

adopt such measures to improve the quality of their products. The high prices charged are

attributable not only to the rise in cost of production of Rs. 25 per unit, but also towards the

innovation techniques, goodwill and margin of profit considered by these manufacturers. It is

83
RAMAPPA, supra note 80, at 150.
84
MITTAL, supra note 3, at 302, ¶4.12.
85
MAHER M. DABBAH, EC AND UK COMPETITION LAW – COMMENTARY, CASE AND
MATERIALS 390 (Cambridge University Press 2004); Office of Fair Trade, Office for Fair
Trading (2004), Assessment of conduct – Draft competition law guideline for consultation,
April 2004, OFT414, available at:
http://www.oft.gov.uk/shared_oft/business_leaflets/competition_law/oft414a.pdf, ¶2.5
[hereinafter OFT414].
86
OFT414, supra note 85, at ¶¶2.16-2.20.
87
Louise du Plessis and Lizél Blignaut, Staying safe – dominant firms’ pricing decisions in
industries where high prices do not attract entry, ¶5.2.6.

24
therefore submitted that the price charged by the manufacturers is not excessive and does not

amount to abuse of dominant position.

B. That QBL, TBL, PBPL and GBPL did not limit or restrict production

Section 4(2)(b)(i) provides that there shall be an abuse of dominant position under sub-

section (1), if an enterprise limits or restricts production of goods. The DG’s report concluded

abuse of a collective dominant position by QBL, TBL, PBPL and GBPL on account of low

capacity utilization and creation of artificial scarcity. 88 The production of blodgets is

predominantly based on the estimation of demand in the market. Blodgets also have a shelf

life of approximately 30 days and the produce needs to be immediately supplied to the widget

manufacturers to prevent any deterioration. In the American Column & Lumber Case89, the

Court recognized that

“overproduction would spell disaster, as it should always be borne in mind

that the maximum productive capacity of the saw-mills of the country is much

in excess of any demand the country has ever known.”

Since the low capacity utilization by the four manufacturers is due to the market demand and

the low shelf life of blodgets, it cannot be said that they have abused their collective

dominance by limiting the production of blodgets.

VI. THAT QBL AND CONCORD WERE NOT REQUIRED TO FILE A

NOTIFICATION FOR THE COMBINATION

Section 5 of the Act defines a combination as the acquisition of one or more enterprises by

one or more persons or merger or amalgamation of enterprises, with reference to threshold

criteria of the value of assets and turnover of the enterprises involved. 90 Section 6 of the Act

contains a prohibition against a combination which causes or is likely to cause an appreciable

88
Moot Proposition, ¶6.
89
American Column & Lumber Co. v. United States, 257 US 377 (1921).
90
MITTAL, supra note 3, at 336., ¶5.2.

25
adverse effect on competition; and also provisions requiring pre-notification of

combinations.91 The purpose of merger control is to enable competition authorities to regulate

changes in market structure by deciding whether two or more commercial companies may

merge, combine or consolidate their businesses into one. Item 8 of Schedule I of the

Competition Commission of India (Procedure in regard to the transaction of Business relating

to Combinations) Regulation, 2011 (Combination Regulations 2011) exempts an acquisition

of control or shares or voting rights or assets by one person or enterprise of another person or

enterprise within the same group. Since Concord, QBL and CSLL together are a part of a

“group” as defined under the Act, and the acquiring of assets of CSLL by QBL is an intra-

group acquisition, Concord was not required to file a notification under the Combination

Regulations, 2011.

A. CONCORD, QBL AND CSLL ARE A PART OF A "GROUP"

Explanation (b) to Section 5 of the Act defines group as two or more enterprise which,

directly or indirectly, are in a position to:

i. exercise twenty-six per cent or more of the voting rights in the other enterprise; or

ii. appoint more than fifty per cent of the members of the board of directors in the

other enterprise; or

iii. control the management or affairs of the other enterprise.

In the instant case, the parties to the proposed group are Concord, QBL and CSLL. Concord

holds 49% of the shareholding in QBL and controls all its management decisions. CSLL,

which is engaged in manufacturing of silica and extraction of limestone, is a wholly owned

subsidiary of Concord.

Concord fully ‘controls’ the management decisions of QBL. Therefore, both Concord and

QBL fall under the same family of business. If an enterprise is in a position to participate,

directly or indirectly, in the management or control or capital of the other enterprise, both the
91
Id., at 368, ¶6.1.

26
enterprises could constitute a group.92 Thus, satisfying the criterion laid down in clause (iii) to

the above Explanation, it can be inferred that Concord and QBL are a part of a group.

A “wholly owned subsidiary” shall mean a subsidiary of a member, 100% of whose voting

stock or comparable ownership interest is owned by the member, either directly or indirectly

through other wholly owned subsidiaries.93 Therefore, the voting rights of CSLL, a wholly

owned subsidiary of Concord, are exercised by Concord, the parent company. Also, the

domain in which CSLL functions is directly related to the industry of Concord and QBL.

Silica and limestone are the raw materials used in the manufacture of blodgets. It has been

held that if a subsidiary ‘enjoys no economic independence’ 94 or if the undertakings ‘belong

to the same concern’ or have ‘the status of parent company and subsidiary’ and ‘form an

economic unit within which the subsidiary has no real freedom to determine its course of

action on the market’95 they are treated, for the purpose of Article 81, as a single economic

entity. Therefore, it can be concluded that Concord and CSLL also belong to the same group.

Even though companies belonging to the same group and having the status of parent and

subsidiary may have distinct legal personalities 96, the unified conduct on the market of the

parent company and its subsidiaries takes precedence over the formal separation between

those companies as a result of their separate legal personalities 97. The relevant question is not

92
Id., 365, at ¶5.15-1.
93
NASDAQ Rules, Rule 7027 – Aggregation of Activity of affiliated members, 17.
94
Case 22/71, Beguelin Import v. GL Import-Export, [1972] CMLR 81, ¶8.
95
Case 15/74, Centrafarm BV and Adnaan De Peijper v. Sterling Drug Inc., [1974] 2 CMLR
480, ¶41; Case 170/83, Hydrotherm Geratebau GmbH v. Compact de Dott Ing Mario Adredi
& CSAS, [1985] 3 CMLR 224, ¶11; Case T-11/89, Shell v. Commission, [1992] ER II-884,
¶311; W. P. J. Wils, The Undertakings as Subject of E.C. Competition Law and the
Imputation of Infringements to Natural to Legal Persons, 25 Eur. L. Rev. 99 (2000).
96
ALISON JONES & B. E. SUFRIN, EC COMPETITION LAW: TEXT, CASES, AND MATERIALS
141 (Oxford University Press 2008).
97
Case T-102/92, Viho Europe BV v. Commission, [1997] 4 CMLR 469, ¶50.

27
therefore whether two given companies are separate legal persons but, rather, whether they

behave together as a single unit on the market. 98 In Viho Europe BV v. Commission99, the

Court established that truly unilateral behaviour of an undertaking, even if within a group of

connected companies, will escape the ambit of the competition rules unless that undertaking

holds a dominant position and commits and infringement of Article 82. In the instant case,

Concord, QBL and CSLL belong to the same concern, i.e. the manufacturing of blodgets and

its raw materials. Being in different levels of production in the blodget industry and having

significant control, de jure100 or de facto amongst each other, the three enterprises constitute a

group under Section 5 Explanation (b) of the Act.

B. THE TRANSACTION AMOUNTED TO AN ACQUISITION OF BUSINESS ASSETS

WITHIN THE GROUP

Item 8 of Schedule I of the Combination Regulations 2011 provides exemption from filing of

notice under Section 6 in cases of acquisition of control, shares, voting rights or assets within

the Group. It is submitted that the combination in the instant case constitutes an acquisition of

assets within the same group.

Section 2(a) of the Act defines acquisition as ‘directly or indirectly, acquiring or agreeing to

acquire:

i. Shares, voting rights or assets of an enterprise; or

ii. Control over management or control over assets of any enterprise.

Therefore, acquisition of one enterprise by another involves acquiring shares, voting rights or

assets of another enterprise to enable to exercise control. This section covers the entire range

of acquisition from pure stock acquisitions to pure acquisition of assets. The acquisition is

assets should be to such an extent that the acquirer is in a position to exercise control over the
98
Case T-325/01, Daimler Chrysler AG v. Commission, [2005] ECR II-3319, ¶85.
99
Viho Europe BV v. Commission, [1997] 4 CMLR 419.
100
MNR v. Dworkin Furs (Pembroke) Ltd. et al., [1967] S.C.R. 223.

28
acquired, i.e., both the parties are under the same management and control. The result of

acquisition is therefore, that the two parties become “interconnected or associated

enterprises”, being controlled by the same interest.101 CSLL’s field of activities is broadly

divided into two segments, i.e. manufacture of silica and extraction of limestone. On 20

January 2012, the Board of Directors of QBL and CSLL approved the ‘acquisition of silica

business assets of CSLL by QBL’. The scheme of arrangement provided for the demerger of

the silica business assets of CSLL to that of QBL. It was approved by the Board, keeping in

mind the economies of scale, improvement in production, reduction in cost of production,

diversifying the risks of the company other operating, administrative and management costs.

Thus, there was an acquisition of assets of CSLL.

Both QBL and CSLL are under the same management and control i.e., of Concord. QBL’s

full management decisions are controlled by Concord’s and CSLL is a wholly owned

subsidiary of Concord. The CCI in its order102 dated 19 October 2011 approved an

amalgamation of companies on the ground that they would continue to be under the same

management subsequent to the amalgamation. In the instant case, after the acquisition of

assets, the companies, QBL and CSLL, still remain under their proportionate control of

Concord, by way of management control and parent-subsidiary relationship respectively.

Moreover, in lieu of the acquisition of assets of CSLL, Concord’s shareholding in QBL has

increased to 51%.

Therefore, the scheme of combination maintains the same structure of management amongst

the companies within a group. Thus the combination falls well within clause 8 of Schedule I

of Combination Regulations, 2011, exempting Concord, QBL or CSLL from furnishing a

notification to CCB.

101
MITTAL, supra note 3, at 337, ¶5.3.
102
Combination Registration No. C-2011/10/06, CCI Order dated 19 October 2011.

29
VII. THAT THE COMBINATION OF QBL AND CSLL DID NOT HAVE ANY

SIGNIFICANT EFFECT ON COMPETITION

Section 6 of the Competition Act inter alia provides that no person or enterprise shall enter

into a Combination which causes or is likely to cause an appreciable adverse effect on

competition within the relevant market in India and such a combination shall be void.

A. THE TRANSACTION IS PRESUMED TO NOT HAVE AN ADVERSE IMPACT ON

COMPETITION

Regulation 4 of the Combination Regulations, 2011 provides that a transaction exempt under

Item 8 of Schedule I of the Combination Regulations 2011 is ordinarily not likely to cause an

appreciable adverse effect on competition. This exemption was discussed by the Commission

in the Tata Chemicals Limited103 Scheme of Amalgamation. It can thus be presumed that the

combination did not have any adverse impact on competition in the blodget market of

Bohemia.

B. ARGUENDO, THE ACQUISITION HAS NO ADVERSE IMPACT ON COMPETITION IN

THE BLODGET MARKET OF BOHEMIA.

Assuming that such a transaction does not fall within the ambit of Schedule I of Competition

Regulations, 2011, it is submitted that a vertical acquisition as in the instant case, does not

have any adverse effect on competition within the blodget market of Bohemia. Therefore,

there is no requirement for an inquiry to be effected by the CCB.

A vertical acquisition is a merger of firms at different levels of production in the economy. 104

A vertically integrated firm operates simultaneously at different levels of the supply chain for

a particular product or service. QBL, a manufacturer of blodgets in Bohemia, has acquired

silica business assets of CSLL. Silica is one of the main components in the production of

103
Combination Registration No. C-2011/12/12, CCI Order dated 28 December 2011.
104
MITTAL, supra note 3, at 339, ¶5.5.

30
blodgets. Therefore, the acquisition of silica assets by QBL involves a vertical

acquisition/integration for the purpose of definition the said combination.

D.P. Mittal in his Competition Law & Practice has states that vertical integration is not illegal

per se.105 Its illegality has to be determined by, inter alia, characterising the nature of the

market to be served and the leverage on the market which the particular vertical integration

creates and the purpose or the intent with which combination was conceived.106

Section 20(4) of the Act lays down various factors that the Commission would give regard to

in order to determine whether a combination would have an appreciable adverse effect on

competition, such as (1) the likelihood that the combination would result in the parties in the

combination to significantly and sustainable increase process or profit margins; (2) market

share, in the relevant market, of the persons or enterprise in a combination, individually and

as a combination; (3) nature and extent of vertical integration in the market; and (4) relative

advantage, by way of the contribution to the economic development, by any combination

having or likely to have appreciable adverse effect on competition.

No significant and sustainable increase in prices and profits: Spengler opines that vertical

integration may be welfare enhancing and such cases should not be subject to the competition

law.107 The integration of QBL with an undertaking involved in the production of its required

raw material was carried on to streamline QBL’s business. QBL, prior to such integration was

the predominant consumer of raw materials from CSLL. Therefore, this integration is likely

to have insignificant changes with regard to availability of silica in the market. On the

contrary, such integration would help the enterprise cut down its cost of production by a

105
Id., at 340, ¶5.5.
106
United States v. Paramount Pictures, 334 US 131 (1948); United States v. Griffith, 334 US
100 (1948).
107
Joseph J. Spengler, Vertical Integration and Antitrust Policy, 8 Journal of Pol. Econ. 347
(1950), at 351-352.

31
significant margin. This would, in turn, help QBL bring down the prices of the blodgets sold

and facilitate increase and constant supply of blodgets in the market.

Market share: QBL, the acquirer of silica assets, holds 27% of blodget market shareholding

in Bohemia. The blodget market being an oligopolistic structure involves strong competitors

having similar share-holdings of blodgets. Thus, QBL is in no dominant position in the

market to abuse its position by way of integration.

Relative advantage towards economic development: Vertical integrations are generally

measures for improving production and distribution efficiencies. The process internalises the

benefits of supply chain arrangements, and as such cannot be perceived injurious to

competition.108 The blodget market of Bohemia involves inelastic demand for the commodity

but faces scarcity in production and increase in selling price. The acquisition of silica assets

by QBL is likely to favourably impact not only the production but also help bring down the

selling price of the blodgets. Blodgets are essential not only for the industrial development

but also with respect to the real estate sector of Bohemia. Therefore, the said combination

would help the Bohemian economy by providing lower cost blodgets and increase in

production.

Further, it is considered that a vertical acquisition can effect competition by (a) foreclosing;

(b) entry blocking; and (c) price squeezing.109

It is considered that vertical mergers and integration internalise the process of production and

enable a firm to perhaps reduce costs. This will result in reduction in output prices which is

usually interpreted as a price squeeze.110 However, in the instant case, the intra-group

acquisition of silica business assets of CSLL by QBL would not amount to any of the

108
MITTAL, supra note 3, at 339, ¶5.5.
109
Id.
110
MITTAL, supra note 3, at 341, ¶5.5-1; Ford Motor Co. v. United States et al, 405 US 562
(1972).

32
aforementioned anticompetitive effects. QBL, before such integration, was the primary

purchaser of silica and limestone from CSLL. The acquisition of the assets is unlikely to have

any significant impact on the supply of silica in the market as the chain of production and

supply remains identical. Thus, the market would suffer no foreclosing or price squeezing as

a result of the said combination.

Thus, the acquisition of assets by QBL does not amount to a transaction having an

appreciable adverse effect on competition not only because of the combination being within

the ambit of Schedule I but also on the basis of merits. Hence, there is no requirement of an

inquiry to be conducted by CCB under Section 20 to check the competitive nature of the

transaction.

33
 PRAYER FOR RELIEF

Wherefore, for the foregoing reasons, it is humbly pleaded before this Hon’ble Court to

adjudge and declare that:

1. The present appeals are not barred by limitation.

2. The COMPAT did not have the jurisdiction to hear the appeals.

3. The appeals by WMA to the COMPAT were not maintainable.

4. QBL is not guilty of entering into anti-competitive agreements with TBL, PBPL and

GBPL and therefore the penalty imposed by the COMPAT should be set aside.

5. QBL, TBL, PBPL and GBPL are not guilty of abusing their collective dominant

position and therefore the penalty imposed by the COMPAT should be set aside.

6. QBL and Concord were not required to file a notification for the demerger and

therefore the penalty imposed by the CCB should be set aside.

7. The demerger of QBL and CSLL had no significant effect on competition and

therefore the COMPAT’s order to CCB for further enquiry should be set aside.

And any other relief that this Hon’ble Court may be pleased to grant in the interests of justice,

equity and good conscience.

All of which is respectfully submitted,

X ______________________________

Counsel Appearing on Behalf of the Appellants

34