GLOBAL TAX FREE TRADERS (INFORMANT) VS. WILLIAM GRANT & SONS (DEFENDANT)

Applicable Act: The Competition Act, 2002 (The Act)

ALLEGATIONS

A complaint filed by the Informant alleged that the firms had imposed exorbitant, unfair and discriminatory prices which were possible only due to the dominant position enjoyed by them in the liquor market in the country.

BRIEF OF FACTS

The Defendant, headquartered in the United Kingdom is engaged in the production, sale, marketing and distribution of spirit. It offers scotch whisky, single malts, handcrafted single malts, gin and other spirit. The Informant is an exclusive distributor of the Defendant.

It was alleged that the Defendant permitted import of their products into India through a number of entities such as Delhi Duty Free Services and other private companies, at prices much lower than those charged from the Informant. 

CCI noted that the firms which were the third largest producer of  'scotch whiskey' had around 10 percent market share after Diageo and Pernod Richard in the world. For the Indian market, CCI noted that United Spirits Ltd. (USL) held more than 50 percent of the market share in whiskeys followed by various other alcoholic beverages manufacturing companies. The percentage of imported liquor in India is very minimal, around 3 percent. 

CONCLUSION

Therefore, considering the above scenario, the CCI concluded that the Defendant were not dominant in any of the alternative relevant market definitions and therefore the issue of abuse would not arise.

DECISION

The fair trade regulator Competition Commission of India (CCI) dismissed charges of abuse of dominant position under Section 4 of the Act against the Defendant's three group firms with respect to purchase and sale of liquor in India.

CCI RULES OUT ABUSE OF DOMINANT POSITION BY OMAXE

Applicable Act: Competition Act, 2002

Present information was filed by Mr. Naresh Bansal & Mr. Gagan Deep Goel (Informants) against M/s Omaxe Limited (OP, Opposite Party). The Informants have alleged that OP has violated the provisions of the Act with regard to development of a Real Estate Project.

BRIEF FACTS OF THE CASE

OP is the Real Estate Developer and was asked by the Informants to specify the location and sought allotment of plot or refund of amount paid by the Informants to get registered for plots with Interest. For the same, Informants paid certain sums to the OP. The OP confirmed the allotment of the plot bearing no. 1343 in Omaxe city project at Sonepat, Haryana. However, Informants came to know that OP cancelled its earlier allotment and re-alloted a plot bearing no. 1886 in the same project.

Later,  OP issued cancellation letter to the Informants citing default in payment as the reason. The Informants alleged that this willful cancellation is arbitrary in nature and damaged and restricted the rights of the Informant which is abuse of dominance by the OP under section 4 of the Act.

It is evident that the market for service for development of residential plots in Sonepat district of Haryana is very broad and highly competitive. The presence of other Real Estate players in Haryana made it a competitive market.

There is no information on record and available in the public domain which shows a position of strength of OP enabling it to operate independent of competitive forces prevailing in the relevant market.

ALLEGATIONS

1. Informants, who had registered for plots with OP, had alleged that the firm made a representation to the public at large regarding a real estate project without specifying the details and identity of the property.
2. Informants alleged that OP had abused its dominant market position by imposing one-sided and anti-competitive agreements on buyers of plots, among others.
3. Among others, it was also alleged that under the agreement, there was no exit route to buyers of plots in case of violation of terms on part of OP and the company would not have to face any consequences for same.

CONCLUSION

For the reasons mentioned above, there arises no competition concern under sections 3 or 4 of the Act.

DECISION

CCI has rejected the complaint that alleged OP of indulging in anti-competitive practices with respect to development of residential plots in Sonepat district of Haryana.

FABER-CASTELL AKTIENGESELLSCHAFT (INFORMANT) VS. M/S A. W. FABER CASTELL (INDIA) PVT. LTD. & ORS (DEFENDANT)

Applicable Act: The Companies Act, 1956 (The Act)

ALLEGATIONS

The Informant filed a complaint to the Company Law Board (CLB) under Section 397 and 398 of the Companies Act, 1956 accusing Defendants of misappropriation and diversion of funds and mismanagement, Defendant 1 being the Indian arm of the Informant and Defendant 2 being the Managing Director of Defendant 1 company.

BRIEF OF FACTS 

The Informant is a German company holding 90% stake in the Defendant 1 company and the balance 10% rests with Defendant 2 being the Managing Director. The Informant was keen to buy the balance stake from Defendant 2.
A shareholder or board member can file a lawsuit under the above sections of the Act for "mismanagement" and "oppression" by the other board members.
Earlier, in August 2011, the Registrar of Companies, Mumbai pulled up against the Defendants for violation of Section 297 which pertains to contracts in which the Director is interested. The defendant entered into such contracts without the prior approval of the Board of Directors and the Central Government required for entering into such contracts.

CONCLUSION

Keeping in view the above facts, the interim prayers were disposed of in the following manner:

1. Defendant 2 has decided to exit out from Defendant 1 company upon receiving a fair valuation of his shares held in the company.
2. Defendant 1 may take such steps as required to hold meeting for approving the Accounts of the company after due notice to Defendant 2 who is directed to remain present and participate in such meeting. He may put on record in writing his protest with the remark "without prejudice to his rights and contentions."
3. The presence of Defendant 2 is must to constitute the quorum for the meeting as required in the AOA and in his absence, the resolution(s) if any, passed may amount as invalid resolution. If he still chooses to remain absent, the meeting may be held and concluded in his absence by the other directors of the Defendant 1 company.
4. The right of Defendant 2 to challenge the truthfulness and accuracy of the accounts and make appropriate submission before the Valuer or such other Forum as he deems fit is kept reserved.
5. Defendant 2 is given the right to express his apprehensions and file objections in the course of the deliberations to be held in the meeting(s).
6. The minutes of meeting(s) shall be circulated not later than 3 days from the date of holding of such meeting(s) and Defendant 2 will be at liberty to file an appropriate application seeking relief(s) in the instant petition if he feels aggrieved.
7. Defendant 2, in the capacity of MD will not take any decisions relating to appointment and termination, transfer, promotion etc. of any employee.
8. The application of the Informant to change the signatories for various bank accounts of Defendant 1 company and determining the mode of operation of such bank accounts, is hereby rejected.

DECISION

With regards to Section 397 and 398 of the Act, the CLB gave its verdict prohibiting Defendant 2 to participate in the competing business.

HB STOCKHOLDING LTD. (INFORMANT) VS. DCM SHRIRAM INDUSTRIES LTD. & ORS (DEFENDANT)

Applicable Act: The Companies Act, 1956 (The Act)

ALLEGATIONS

The informant alleged the defendant of an act of oppression under Section 397 and 398 of the Act with respect to the issue of preferential allotment of convertible warrants at Rs. 90 to other person against its offer of Rs. 120.

BRIEF OF FACTS

The securities market regulator, SEBI and the Securities Appellate Tribunal (SAT) refused to intervene in the above matter since the said allotment was made with the voting of majority shareholders. SEBI held that it would intervene only when the interests of the shareholders, in any manner are adversely affected because of the act of the company and since the shareholders had voted in majority, SEBI would have no adverse remarks on the mode adopted by the company for mobilising capital for the working needs. Both the authorities were of the view that an action could lie before the Company Law Board (CLB) on the grounds of oppression.
The informant preferred an appeal to the Supreme Court against the order of (SAT).

CONCLUSION

Even though SEBI and SAT had approved the allotment and declined to interfere with the matter, the same lacked honesty and integrity and amounted to an act of oppression. The jurisdictions under which SEBI / SAT and CLB operate are distinct and not overlapping.

DECISION

The application was dismissed and it was held that a petition lied before the CLB for an act of oppression under Section 397 and 398 of the Act. 

MICROMAX INFORMATICS LTD. (INFORMANT) VS. TELEFONAKTIEBOLAGET LM ERICSSON (DEFENDANT)

Applicable Act: The Competition Act, 2002 (The Act)

ALLEGATIONS

• The defendant had sued the informant for patent infringement and the informant in turn responded by filing a complaint to the Competition Commission of India (CCI) for contravention of the provisions of Section 3 and 4 of the Act which pertain to anti-competitive agreements and abuse of dominant position.
• The informant alleged the defendant of abusing its dominant position by imposing exorbitant royalty rates for Software Engineering Professionals (SEPs).
• The informant further argued that the royalty for the defendant's patents related to mobile phones should be based on the value of the technology used, not on the sale price of a phone. 
• The informant also submitted that the defendant had subjected all its present as well as prospective licensees to Non-Disclosure Agreements, refusing the disclosure of commercial terms between similarly placed licensees.

BRIEF OF FACTS

The defendant owned SEPs in respect of 2G, 3G and 4G patents used for smart phones, tablets, etc., which fall under "GSM" technology. The informant has contended the dominance of the defendant in the Indian markets and the relevant geographic market would be the territory of India. From the information and documents provided by the informant, it was prima facie evident that the defendant held a dominant position in the relevant market of GSM and CDMA in India and held a large number of patents. The defendant has 400 patents granted in India. There is no other alternate technology in the market and the defendant enjoys complete dominance over its present and prospective licensees in the relevant product market.

The defendant charged royalty on the basis of the cost of product of user for its patent and was alleged of acting contrary to the FRAND (Fair Reasonable And Non-Discriminatory) terms. Charging of two different license fees per unit phone for use of the same technology prima facie was held discriminatory and also reflected excessive pricing vis-a-vis high cost phones. The royalty charged for the use of same chipset in a smartphone was ten times the royalty for ordinary phone. 

CONCLUSION

The defendant had raised issues regarding infringement of Intellectual Property Rights in the High Court. Section 62 bestows the right to move to the CCI as it makes clear that the provisions of the Competition Act are in addition and not in derogation of the existing laws. Pendency of a civil suit in the High Court does not take away the jurisdiction of the Commission to proceed under the Act.

DECISION

The Commission was of the opinion that it was a fit case for investigation by the Director General into the allegations made by the Informant and violations, if any, of the Act.

GRASIM INDUSTRIES LTD. (INFORMANT) VS. COMPETITION COMMISSION OF INDIA (DEFENDANT)

Applicable Act: The Competition Act, 2002 (The Act)

ALLEGATIONS

The informant submitted an application before the defendant seeking inter alia quashing and setting aside of the Director General's report to the extent it pertains to the alleged violation of Section 4 of the Act and the orders passed by the defendant considering the said report, primarily on the ground that investigation into the alleged violation of Section 4 of the Act was beyond the scope of the powers of the Director General (DG).
The said application was dismissed by the defendant and the informant moved the High Court.

BRIEF OF FACTS

The defendant on consideration of information and after forming a prima facie opinion that there existed a case to direct the DG to cause an investigation into the matter regarding the manufacturers of Man Made Fibres (MMF) that imposed several restrictions on Indian Textile Industry, which were their customers for purchase of MMF, and such restrictions constituted anti-competitive actions, ordered the DG to investigate and file a report for the same pertaining to contravention of provisions of Section 3(3)(a)(b)(c) of the Act.

During the investigation, the DG was informed about the informant, who was the only manufacturer of VSF in the country on account of its dominant position in the market of Viscose Staple Fibre (VSF), of indulging into various anti-competitive practices. The DG on his own decided to investigate into these issues as well and submitted the report to the defendant accordingly.

As per the report, there was no violation of the said provisions either by MMF or the informant. But the informant being a dominant enterprise was found to have abused its dominant position in the VSF market, thereby contravening Sections 4(2)(a) and 4(2)(b) of the Act.

CONCLUSION

The formation of opinion by the defendant and direction to cause an investigation to be made by the DG is a pre-requisite condition for initiation of investigation, the DG would have no power to undertake investigation in respect of the complaint the defendant did not consider while forming an opinion and directing investigation by the DG. Such an act on part of the DG shall be ultra vires his power under the Act and therefore, clearly illegal.
The report of the DG is to be confined to the allegations made in the information or the reference received by the defendant and he is not competent to travel outside the said information or reference.

DECISION

Considering the above facts, the High Court is of the opinion that the writ petition be disposed of with the direction that the report of the DG, to the extent that it included the findings specifying the contravention of the provisions of Section 4 of the Act by the informant by misuse of its dominant position as a VSF manufacturer. The defendant, if on consideration of the said part is of the opinion that there exists a prima facie case of contravention of the procedure of Section 4 of the Act by the informant shall proceed accordingly.

MICROSOFT CORPORATION & ANR (INFORMANT) VS. NOKIA CORPORATION (DEFENDA

Applicable Act: The Competition Act, 2002 (The Act)

BRIEF OF FACTS

• A notice was given pursuant to the Purchase Agreement dated 2nd September, 2013 entered into between the informant and defendant in relation to the proposed combination.
• The informant is a multinational software corporation headquartered in USA, and is primarily involved in the design, development and supply of computer software, hardware devices and related devices.
• The defendant is a multinational communications and information technology corporation, headquartered in Finland. It is active in the development and supply of mobile devices (smarphones as well as basic/feature phones) through its business division like Device and Services (D&S).
• The informant will acquire substantially the entire D&S business of the defendant. The defendant will grant the informant a ten year non-exclusive license to its patents, as at the time of closing, with an option to extend the same to perpetuity.
• The informant will grant the defendant reciprocal rights to use the patents of the informant in the services offered by HERE North America LLC, a subsidiary of the defendant. The informant will also become a strategic licensee of Nokia's HERE platform, as the defendant will grant the informant a four-year non-exclusive license to the HERE geospatial data and services.
• The informant would have a ten year license arrangement with the defendant to use the defendant brand on current and subsequently developed produces based on the Series 30 and Series 40 Operating System and that the defendant will continue to own and maintain the defendant brand. 

REASON

In India, the proposed combination relates to the mobile phone handsets (including the smartphones and tablets) business and the business related to the operating systems used in these devices. The notice filed by the informant stated that the proposed combination aimed to enhance the informant’s device business and strengthen opportunities for the informant and its developers across the defendant’s phone eco-system. It is the eco-system in this business which drives the demand between the users, application developers and designers/manufacturers.

As regards the proposed combination, it is noticed that in India, while the defendant is active in the D&S business of mobile handsets, the informant is not active in that business. As on the date of filing of the notice, both informant and defendant were also not active in the business of manufacturing and sale of tablets in India. As regards the operating software used in the mobile smartphones and tablets, it is noted that, in India, the defendant is not active in the said business.

There exists a vertical relationship between the two parties but the same is insignificant, taking into consideration the minimal share of the informant as well as the presence of major players in India and also given the minimal share of the defendant in the business of mobile phones and the presence of numerous other global and local players.

DECISION

Considering the above facts and the details provided in the notice, the Commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination under sub – section (1) of section 31 of the Act.

CITIZEN GRIEVANCES REDRESSAL FOUNDATION (INFORMANT) VS. MUMBAI INTERNATIONAL AIRPORT PVT. LTD. (DEFENDANT)

Applicable Act: The Competition Act, 2002 (The Act)

ALLEGATIONS

The informant alleged the Mumbai and Delhi Airport of abuse of dominance under section 4 of the Act for charging high parking rates from the customers in comparison to other airports in India.

BRIEF OF FACTS

• The two airports were owned and operated by consortiums which had bid for the entire airport project and the contract went to the bidder offering the highest share of revenue to Airport Authority of India (AAI).
• The agreement included providence of aeronautical and non-aeronautical services. The joint ventures were free to fix charges for non-aeronautical services and vehicle parking was included in the same.
• The parking charges at Mumbai and Delhi airports were excessively high while the parking rates charged at Kolkata and Chennai airports were relatively low. At Chennai and Kolkata, the rates offered for both aeronautical and non-aeronautical services are regulated and approved in advance by AAI.

CONCLUSION

The violation of Section 4(2)(a)(i) of the Act is to be seen in view of the allegation of fixing of charges of non-aeronautical services, which are not regulated in Mumbai and Delhi.

The earnings from non-aeronautical services form an important part of income for an Airport project owned by a consortium and hence it is given the liberty to fix prices on its own. But each such service cannot be bifurcated from the point of view of cost audit or pricing to decide if the price charged is fair / unfair. Concluding that the vehicle parking rates are higher for the defendant would mean that a consortium prices its services individually based on individual costs (and hence price is excessive in relation to cost of provisioning).

The defendant had 2-3 times more passengers than Kolkata and Chennai airports. The principle of demand and supply would come into play to discourage passengers from using parking space at airport and to promote the use of public transport, fixing the parking rate as per the market demand is helpful.

DECISION

From the above facts, there does not appear to be any competition issues involved. The Commission is prima facie of the opinion that merely because the parking rates of the defendant are higher than other airports, it is not a fit case for issuing directions for causing an investigation to be made by the DG and the case deserves to be closed under section 26(2) of the Act.

SWATCH GROUP LTD. (INFORMANT) VS. TIFFANY & CO. (DEFENDANT)

VERDICT:

In the case of New York jeweler, Tiffany & Co. versus Swiss watch company, Swatch, a Dutch arbitration court has ruled in favour of the Swiss, ordering Tiffany to pay $449 million in damages to Swatch on December 21, 2013.

BRIEF OF FACTS:

Swatch and Tiffany entered into a joint venture to develop Tiffany-branded watches. The joint venture, which was supposed to last for 20 years and give Tiffany a better foothold in the watch world, began to fall apart in 2011 when Swatch cancelled its co-operation with the jeweler. Swatch alleged Tiffany of breaching terms of contract by delaying introduction of their joint products. Tiffany countersued the Swiss watch company for not getting watches onto the shelves of other retailers and in 2012 the case went into arbitration in the Netherlands, where the joint venture had been established.

Trouble began brewing in the year 2009. Tiffany wanted a company with watch expertise to take over its still-new luxury-watch business that made up a small percentage of its annual overall take and Swatch wanted to have a high-end jewellery-watch brand as part of its large portfolio of timepieces. 

CONCLUSION:

The $449 million that Swatch was awarded is ‘only a fraction of the total amount they wanted in damages.’ The informant had originally asked for $4.2 billion.

Tiffany is to pay the amount awarded as penalty plus a statutory compound interest from June 30, 2012 up to the period of payment. The amount awarded reflects approximately 8.8% amount claimed by the informant. The defendant is required to pay two-thirds of the costs of arbitration. Also, it is required to pay two-thirds of the reasonable legal-fees, expenses and other costs incurred by Swatch for arbitration purpose aggregating to approximately $8.8 million.

The award will help offset the $1 billion Swatch paid to acquire Harry Winston earlier this year when it decided that instead of partnering with a luxury jewellery maker, it might be better to just have one in the brand stable.

RELIANCE BIG ENTERTAINMENT PVT. LTD. (INFORMANT) VS. TAMIL NADU FILM EXHIBITORS ASSOCIATION (DEFENDANT)

Applicable Act: The Competition Act, 2002 (The Act)

ALLEGATIONS

The informant approached CCI for contravention of the provisions of Section 3 and 4 of the Competition Act, 2002 which pertained to anti-competitive agreements and abuse of dominant position.

BRIEF OF FACTS

·   The informant obtained distribution rights from Balaji Real Media Private Limited for Tamil film ‘Osthi’, remake of Hindi film Dabbang. It granted the distribution rights for Tamil Nadu, Karnataka and Kerala to M/s Kural TV Creations Pvt. Ltd and assigned the Satellite Rights to Sun TV Network Ltd. for the said film.

·    The defendant ordered its member theatre owners not to screen the film since Sun TV owed certain amount to it.

·   On a report prepared and submitted by the DG to CCI, it was concluded that the defendant was the biggest and most influential association of cinema theatre owners in Tamil Nadu with about 80-90% exhibitors as its members.

·   The defendant held a dominant position in the market which enabled it to control the market and restrict services for producers and distributors and also decided about settlement issues of its members.

·   The defendant decided to impose ban on the films which had dealings with M/s Sun TV and directed members to not screen the films unless payments were made.

CONCLUSION

The report of the DG depicted the impugned conduct of the defendant. The decision to not screen the film affected adversely the distributors and producers as they were not able to book the theatres on account of the ban.

Based on the above facts, it was held that the defendant acted in contravention of the provisions of Section 3(3)(b).

As per Section 3(1), no enterprise or association of enterprises or person or association of persons can enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverseeffect on competition within India. 

According to Section 3(3)(b),  any agreement which limits or controls production, supply, markets, technical development, investment or provision of services shall be presumed to have an appreciable adverse effect on competition. The onus to rebut this presumption would lie upon the defendant.

In the present case, the defendant could not show how the impugned conduct resulted into accrual of benefits to consumers or made improvements in production or distribution of goods in question or how the said conduct did not foreclose competition.

DECISION

The Commission decided to impose a penalty on the opposite party at the rate of 10% of its average turnover for contravention of the provisions of Competition Act.

AMIT AUTO AGENCIES (INFORMANT) VS. KING KAVERI TRADING COMPANY (DEFENDANT)

Act Applicable: Competition Act,2002

BRIEF OF FACTS

• The above two parties entered in a Sole Selling Agent agreement on 23.07.2007 where the Informant was appointed as the agent for selling its products in the State of Rajasthan. 
• The Informant contended that the clauses of the agreement were one sided and heavily loaded in favour of the Defendant.

ALLEGATIONS

• The Defendant abused its 'dominant position' by imposing unfair and discriminatory conditions violating Section 4(2)(a).
• The Defendant had absolute discretion to fix prices of products, contravening Section 3(3)(a).
• The Defendant ceased supply of products after 21.05.2011 unreasonably, hampering business and spoiling reputation of the Informant.
• It appointed four more dealers without written permission of the Informant.

CONCLUSION

     As per Section 4 'dominant position' means a position of strength, enjoyed by an enterprise, in the relevant market, in India, 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.

     The relevant market was believed to be "the market of Truck and Trailer Components/ parts and accessories in the State of Rajasthan". The Competition Commission stated that the Defendant did not appear to be a dominant player in the relevant market as there were other players in the market and therefore it did not contravene the provisions of Section 4 regarding abuse of dominance. To constitute contravention of Section 3 which conforms to anti-competitive agreements, the agreement should cause AAEC (appreciable adverse effect on Competition). Considering AAEC as per Section 19(3), the Commission held that there was no appreciable adverse effect on competition in the relevant market.

DECISION

The case was closed as no violation of Section 3 and 4 was proved.

ITC LTD. (INFORMANT) VS. CADBURY SCHWEPPES OVERSEAS (DEFENDANT)

    BRIEF OF FACTS

• The Defendant registered 'Cadbury's Chocolate Eclairs' in 1974 in India. The City Civil Court made an order restraining the Informant from using the trademark 'Eclairs' or any other deceptively similar trademark on an application made by the Defendant.
• The informant started the business of confectionary products in 2002 under the brand names 'Mint O' and 'Candyman'. Since then it continuously used 'Eclairs' as a conjunction with its famous trademark 'Candyman'. It made an appeal to the Gujarat High Court against the order passed by the City Civil Court, Ahmedabad in favour of the Defendant.

   CONCLUSION

    The Gujarat High Court allowed the Informant to manufacture and sell their 'Eclairs' products as 'Candyman Choco Eclairs' since the Defendant has not used the generic word since 1994. The Informant then filed an application with IPAB (Intellectual Property Appellate Tribunal) to remove trademark of the Defendant. The reason for removal was non use of trademarks even after obtaining registrations several years ago. Just the registration alone would not use help to prove its use.

  

   DECISION

    The IPAB ordered removal of three 'Cadbury's Chocolate Eclairs' trademarks registered in India with IPAB.

DINESH SAINI (INFORMANT) VS. UOI & ORS (RESPONDENT)

W.P. (C)                     : 9003/2011
Date of Decision   : 23/07/2013
Act Applicable       : The Companies Act, 1956

BRIEF OF FACTS

• According to the informant the decision to extend the accounting year for a period upto three months can be taken by the company before the end of the financial year or at the best before the period by which the financial year is to be extended, expires and not thereafter. 
• On the other hand the Respondent submits that the decision to extend the financial year could be taken by the company even after expiry of the period by which the financial year is sought to be extended and there is no requirement of law that such a decision has to be taken before the expiry of the financial year.

CONCLUSION

It was held that as per the Provisions of Section 210 of the Companies Act, 1956 it would be unrealistic to take a view that, the company must take the decision to extend the financial year, before the financial year or period by which the financial year is sought to be extended. 

DECISION

Writ Petition was dismissed.

CCI ORDERS INVESTIGATION AGAINST ACI FOR ALLEGED VIOLATION OF COMPETITION ACT

COMPETITION COMMISSION OF INDIA (CCI) has ordered Investigation on a complaint filed by M/s Financial Software and System Private Limited (FSS, Informant) against M/s ACI Worldwide Solutions Private Limited, India, M/s ACI Worldwide Incorporated, USA and M/s ACI Worldwide (Asia) Pte. Limited, Singapore (ACI, Respondents) on the Allegations of contravention of Provisions of section 3 and 4(1) of the Competition Act, 2002.

BRIEF FACTS OF THE CASE

1. The Informant is a Private Limited Company incorporated in India. It is stated to act as a system integrator to bank and other Financial Institution. ACI is stated to be engaged in the business of developing software (BASE24) for electronic payment solutions which enables card-based payment transactions for banks.
2. FSS and ACI are stated to have a long standing relationship, starting from acting as a re-seller for ACI for BASE24 India in 1991, then FSS becoming a distributor and service provider for BASE24 in India in 1998 through various agreements.
3. The FSS has alleged that ACI took the position that it would not allow FSS to continue to provide system integration in respect of the BASE24 software.

ALLEGATIONS

The Informant has alleged that ACI has contravened provisions of section 3 and 4(1) of the Competition Act, 2002 abusing their dominance by -

• Not allowing ACI banks to choose a service provider of their choice.
• Imposing unfair condition in the purchase or sale of goods or services through exclusive supply arrangements with ACI Banks.
• Restricting  the ACI Banks, not to avail the integration services of FSS.
• Limiting technical or scientific development in the market.

CONCLUSION

After initial examination CCI has observed that prima facie the conduct of the respondents amount to 'tie in arrangement' and 'refusal to deal'. Such Agreement are also likely to have appreciable adverse effect on competition looking at the market share and market size of the enterprise in question.

CCI will complete the Investigation within 60 days.

ZENITH INFOTECH FUND DIVERSION CASE, SEBI'S ORDER SET ASIDE

THE SECURITIES APPELLATE TRIBUNAL, on July 23, 2013 set aside SEBI's ad-interim ex-parte order dated March 25, 2013 against Zenith Infotech Limited (ZIL) & Ors. for fresh consideration.

SEBI in its order dated March 25, 2013 restrained the promoters of ZIL from accessing the Securities Market and directed the Board of Directors to furnish a Bank Guarantee in favor of SEBI within 30 days for an amount of $33.93 million allegedly diverted for uses other than repayment of FCCBs.

BRIEF FACTS OF THE CASE:

• ZIL FLOATED FCCBs of USD 33 million in September 2006 and additional USD 50 million in August, 2007. The amount so collected was due for redemption in August 2011 and August 2012 respectively. However, due to inadequate funds for redemption, the company decided to raise money upto Rs. 1500 crore by sale of one of its businesses 'MSD Business' by obtaining shareholders approval  which was completed in October 2011.
• LAPSE OF CUT-OFF DATE September 21, 2011 led the Trustees of the FCCBs to issue a 'Notice of Default' for maturity of the FCCBs issued in 2011 coupled with a 'Cross Default Notice' for the FCCBs issued in 2012. The Trustees demanded payment of both FCCBs issued in 2011 and 2012 upon which the Appellants contended that they did not have adequate liquid funds to redeem all the FCCBs at one go. Moreover, the maturity date of 2012 FCCBs could not be accelerated without prior approval of RBI.
• UPON FAILURE OF NEGOTIATIONS with investors for extension of time of repayment, the Appellant No.1 ZIL informed BSE on October 13, 2011 of its default on FCCBs due in September 21, 2011.
• SHAREHOLDERS FILED SUIT: On October 14, 2011 certain shareholders claiming to be FCCB Holders filed Suit No. 2034 of 2011 before Civil Court to stop the sale of the MSD Business and also approached SEBI for the same. On the other hand, Trustees filed Petition in Bombay High Court on October 21, 2011 seeking reliefs in respect of the FCCBs.
• SHARE PRICE OF ZIL PLUNGES: The respondents QVT Fund LP and Quintessence Fund L.P. submitted that due to non-compliance of utilization of sale proceeds of MSD Business for redemption of FCCBs, the share price of Appellant No.1 fell from Rs. 190/- to Rs. 45/- in a span of 45 trading days in the year 2011.
• CONTENTION OF APPELLANTS - ZIL: The Appellants further contended that the rights and interests of the FCCB Holders had already been protected by the High Court's order dated October 9, 2012 upon passing of Notice of Motion moved by Plaintiff Trustee - 'The Bank of New York Mellon', London Branch.
• CONTENTION OF ZIL AGAINST SEBI's ORDER: It was further contended that the order of SEBI dated March 25, 2013 was without jurisdiction, void ab initio and illegal particularly because the same issue dealt in the impugned order is also the subject matter of the proceedings before the High Court and that the rights and interests of the affected parties in the matter of redemption of FCCBs in question are duly protected by the order dated October 9, 2012.
• ALLEGATIONS OF SEBI OVER ZIL: 

1. The amount received from the sale of MSD Division was not utilized for the purposes for which it was raised i.e. for redemption of FCCBs but was diverted for other purposes.
2. The Appellants failed to inform BSE/NSE about their default in repayment of FCCBs and further tried to hide the information about the default in repayment of FCCBs untill intervention of Stock Exchanges.
3. Appellants did not disclose the Price Sensitive Information as required under the Listing Agreement and SEBI (Prevention of Insider Trading) Regulations, 1992. 

Hence, due to such default, suit and Winding up Petitions have been filed against Appellant by the FCCB holders.

SAT'S COMMENTS OVER SEBI'S AD-INTERIM EX-PARTE ORDER:

Pursuant to the above submissions, it was held that the impugned ad-interim ex-parte order dated March 25, 2013 is not sustainable in the eyes of law as it has been passed in gross violation of the principles of natural justice. Further it was held that SEBI is empowered to pass ex-parte ad-interim orders, however this power can be exercised  in most deserving cases of extreme urgency only as in the present case SEBI had knowledge in the matter from the beginning itself.

COMPETITION COMMISSION OF INDIA IMPOSES PENALTY ON 11 SHOE COMPANIES

The Competition Commission of India has imposed a penalty of Rs. 625.43 lakhs on 11 Shoe Companies in a case filed by Director General - Supplies & Disposal, New Delhi relating to a tender for supply of Poleyster Blended Ankle Boots.

CHARGES:

The Investigation conducted by CCI revealed that 

1. The bidder-suppliers by quoting identical/near identical rates had, indirectly determined prices/rates in the Rate Contracts finalized by DG S&D
2. Indulged in bid rigging/collusive bidding in contravention of the provisions of section 3(1) read with section 3(3)(a) and 3(3)(d) of the Act.
3. The parties had also controlled/limited the supply of the product in question and shared the market of the product amongst themselves under an agreement /arrangement in contravention of the provisions of section 3(1) read with section 3(3)(a) and section 3(3)(d) of the Act.

PENALTY:

CCI has worked out a Penalty @ 5% on the Average of the Gross Turnover for financial years 2008-09, 2009-10, 2010-11. CCI has directed these companies to deposit the amount within 60 days from the receipt of order.

The Order of the Commission was passed on 06/08/2013 (Reference Case No. 01of 2012). 

SAMSUNG ELECTRONICS COMPANY V/S KAPIL WADHWA & ORS

THE HIGH COURT OF NEW DELHI, allowed the Petition filed by Samsung Electronics Company (Petitioner) and restrained Kapil Wadhwa and others (Defendants) from importing, exporting, dealing in printers/ink cartridges/toners bearing the trademark of Samsung and using the Trademark 'Samsung' in any manner.

Further the High Court granted liberty to the Petitioners to take action against the Defendants in accordance with the law and henceforth dismissed the application filed by the defendants.

FACTS OF THE CASE:

1. The act of the Defandents amounted to infringement of  Trademark Law as the Trademark Law prohibits the sale of imported genuine products without the authorization of the registered proprietor in India.
2. Parallel importation and unauthorized sale of goods bearing registered trademark 'Samsung' deprived the Petitioner to legitimately carry on the business under mark 'Samsung'.

Date of Judgment: February 17, 2012

NIRMA INDUSTRIES LIMITED V/S SEBI



THE SUPREME COURT OF INDIA dismissed the Statutory Appeal filed by Nirma Industries Limited for withdrawal of an open offer to acquire the Equity Shares of Shree Ram Multi Tech Limited (SRMTL) against the impugned order passed by SAT, having no merits found in the Appeal.

FACTS OF THE CASE:  

1. Voluntary Offer once made under the Takeover Code can only be withdrawn under Regulation 27 under the exceptional circumstances and 
2. The fact that the market price of the target company (post public announcement) is far below the offer price cannot be a reason for seeking withdrawal of an offer.  

Civil Appeal No. 6082 of 2008

Date of Judgment : May 9, 2013