Competition Law: INFORMATION; UPDATES AND ANALYSIS (Covering August, September, October and November 2013)

United States of America

United States of America v. JTEKT Corporation
September 26, 2013

JTEKT Corporation, Japan (‘JTEKT’) and the United States of America have entered into a Plea Agreement dated September 19, 2013, in respect of two count charges contained in the Information, whereby it is alleged that ‘JTEKT’ and its co-conspirators participated in a combination and conspiracy to suppress and eliminate competition in the automotive parts industry.

Under count one of the Information, JTEKT will be  charged with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, rig bids for, and to fix, stabilize, and maintain the prices of bearings sold to Toyota Motor Company, certain of its subsidiaries, and other Japanese automobile manufacturers and Japanese automobile component manufacturers (‘Japanese automobile and component manufacturers’) in the United States and elsewhere, from at least as early as 2000 and continuing until as late as early 2011, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Under count two of the Information, JTEKT will be charged with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, rig bids for, and to fix, stabilize, and maintain the prices of electric powered steering assemblies sold to Nissan Motor Company Ltd. and certain of its subsidiaries (‘Nissan’) in the United States and elsewhere, from at least as early as 2005 and continuing until as late as October 2011, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ stipulates the ‘Guidelines Fine Range’ as $129.09 million to $258.18 million.

United States of America v. Kuo Hsuan “Chuck” Chang

November 04, 2013

Kuo Hsuan “Chuck” Chang and the United States of America have entered into a Plea Agreement dated November 04, 2013, in respect of two count charges contained in the Information, in respect of a combination and conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Francisco County, in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Under count one of the Information, the defendant will be charged for participating in a conspiracy to rig bids to obtain the selected properties. The primary purpose of this conspiracy was to suppress and restrain competition to purchase the selected properties at non-competitive prices.

Under count two of the Information, the defendant and his co-conspirators will be charged for wilfully and knowingly agreeing to devise and intending to devise and participate in a scheme and artifice to defraud mortgage holders, other holders of debt secured by the selected properties, and in some cases, the defaulting homeowners and to obtain money and property from them by means of materially false and fraudulent pretenses, representations, and promises.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ lays down fines for both counts separately.

United States of America v. Daniel Rosenbledt

November 05, 2013

Daniel Rosenbledt and the United States of America have entered into a Plea Agreement dated October 17, 2013, in respect of four count charges contained in the Information.

Count one of the Information charges the defendant with participating in a conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public real estate foreclosure auctions in San Mateo County, in the Northern District of California, in violation of the Sherman Act, 15 U.S.C. § 1.

Count two of the Information charges the defendant with conspiracy to commit mail fraud in San Mateo County, California, during 2008 to 2011.

Count three of the Information charges the defendant with participating in a conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public real estate foreclosure auctions in San Francisco County, in the Northern District of California, in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Act, 15 U.S.C. § 1.

Count four of the Information charges the defendant with conspiracy to commit mail fraud in violation of 18 U.S.C. § 1349, in San Francisco County, California, during 2009 to 2011.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ lays down fines compositely for counts one and three; and two and four.

United States of America v. Mitsuba Corporation

November 06, 2013

Mitsuba Corporation, Japan (‘Mitsuba’) and the United States of America have entered into a Plea Agreement dated September 26, 2013, in respect of charges contained in the Information.

Under count one of the Information, ‘Mitsuba’ and its co-conspirators participated in a combination and conspiracy to suppress and eliminate competition in the automotive parts sold to automobile manufacturers in the United States and elsewhere. The said conspiracy resulted in unreasonable restraint of interstate and foreign trade and commerce in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Further, under count two the defendant will be charged for altering, destroying, mutilating, concealing, covering up, falsifying and making false entries in documents and tangible objects with the intent to impede, obstruction and influence the investigation of the conduct charged in count one.

The defendant under the ‘Plea Agreement’, agreed to pay a criminal fine of $ 135 million, in instalments without any interest and within five years from the date of imposition of the sentence.

United States of America v. Yasuhiko Ueno

November 21, 2013

Three high-level executives of Tokyo-based Takata Corp. have pleaded guilty for their participation in a conspiracy to fix prices of seatbelts installed in cars sold in the United States. The executives have also agreed to serve time in a U.S. prison. According to the one-count felony charges filed separately against each of the executives in the U.S. District Court for the Eastern District of Michigan in Detroit, Yasuhiko Ueno, Saburo Imamiya and Yoshinobu Fujino participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of seatbelts sold to Toyota Motor Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Fuji Heavy Industries Inc. – more commonly known by its brand name, Subaru – and Mazda Motor Corp. in the United States and elsewhere. The three executives have agreed to serve prison sentences ranging from 14 to 19 months, and to cooperate with the department’s ongoing investigation. Ueno has agreed to serve 19 months in prison and to pay a $20,000 criminal fine. Imamiya has agreed to serve 16 months in prison and to pay a $20,000 criminal fine. Fujino has agreed to serve 14 months in prison and to pay a $20,000 criminal fine.

According to the charges, the Takata executives and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to the automobile manufacturers. Each of the executives is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

European Union

Antitrust: Commission opens proceedings against container liner shipping companies

November 22, 2013

The European Commission has opened formal antitrust proceedings against several container liner shipping companies to investigate whether they engaged in concerted practices, in breach of the European Union (EU) antitrust rules. Container liner shipping is the transport of containers by ship at a fixed time schedule on a specific route between a range of ports at one end and another range of ports at the other end. Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialised trade press. These announcements are made several times a year and contain the amount of increase and the date of implementation, which is generally similar for all announcing companies. The announcements are usually made by the companies successively a few weeks before the announced implementation date.

The Commission has concerns that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe. The Commission will now investigate whether this behaviour amounts to a concerted practice in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and of Article 53 of the European Economic Area (EEA) Agreement.

Commission fines four North Sea shrimps traders € 28 million for price fixing cartel

November 27, 2013

The European Commission has fined four European North Sea shrimps traders a total of € 28 716 000 for operating a cartel in breach of EU antitrust rules. Article 101 of the Treaty on the Functioning of the European

Union (‘TFEU’) prohibits cartels and restrictive business practices. The companies are Heiploeg, Klaas Puul, Kok Seafood (all of the Netherlands) and Stührk (of Germany). Between June 2000 and January 2009, Heiploeg and Klaas Puul agreed to fix prices and share sales volumes of North Sea shrimps in Belgium, France, Germany and the Netherlands. Kok Seafood participated at least from February 2005 and Stührk was involved in price fixing in Germany in the period from March 2003 to November 2007. The coordinated price level at which the retailer bought their shrimps directly affected the prices charged to the end-consumers. The size of the market varies heavily from year to year depending on the volumes landed by the fishermen and the price paid, but is always at least €100 million. The companies involved have high combined market shares in the European Economic Area (‘EEA’), estimated to be around 80%. The purpose of the cartel was to freeze the market by stabilising the suppliers’ market shares in order to facilitate price increases and stimulate profitability. The cartel affected the EU market and sales in Belgium, Germany, France and the Netherlands in particular.  The cartel took the form of a range of informal bilateral contacts primarily between Heiploeg and Klaas Puul but also involving Stührk and Kok Seafood. The discussions usually covered a wide range of aspects of their business, including their purchase prices from fishermen, conduct towards other traders on the market, market sharing, and prices charged to specific important customers that often set the benchmark price for other customers.

Fines: The fines were set on the basis of the EU 2006 Guidelines on fines. The Commission took into account the companies’ sales of the products concerned in the EU, the very serious nature of the infringement, its scope and its duration. The fines on two of the companies were significantly below the legal maximum.

Klaas Puul received full immunity under the Commission’s 2006 Leniency Notice, as it brought the cartel to the Commission’s attention and provided valuable information to prove the infringement.

United Kingdom (UK)

Office of Fair Trading (‘OFT’) issues statement of objections in mobility scooters sector

September 24, 2013

The OFT has issued a Statement of Objections alleging that Pride Mobility Products Limited (‘Pride’), a manufacturer of mobility scooters based in Bicester, Oxfordshire, and some of its retailers, have infringed competition law.

The OFT has provisionally concluded that the parties entered into agreements, or engaged in concerted practices, that prevented the UK-wide online retailers in question from advertising online prices below Pride’s Recommended Retail Price for certain models of mobility scooter. These practices may have limited consumers’ ability to get value for money.

The OFT’s provisional finding is that these practices occurred over various periods in relation to different retailers between 2010 and 2012. The companies will now have an opportunity to respond to the Statement of Objections and the OFT will carefully consider any representations they make before deciding whether competition law has in fact been infringed.

Republic of India

Anti-competitive agreements including cartels

M/s Reliance Big Entertainment Private Limited v. Tamil Nadu Film Exhibitors Association (now known as Tamil Nadu Theatre Owners Association)

November 05, 2013

The information was filed by M/s Reliance Big Entertainment Private Limited (‘the informant’) against Tamil Nadu Film Exhibitors Association (‘the opposite party’/ TNFEA) alleging inter alia contravention of the provisions of sections 3 and 4 of the Competition Act, 2002 (‘Act’).

As per the agreement between the informant and M/s Balaji Real Media Private Limited, the informant was entitled to distribute a film titled Osthi in Tamil language, which was a remake of Hindi film Dabbang. The film was scheduled for release on 08.12.2011. The informant granted the said exclusive distribution rights of the film for the Territory of Tamil Nadu, Kerala and Karnataka to M/s Kural TV Creations Pvt. Ltd. (‘M/s Kural TV’). Further, the informant assigned the Satellite Rights of the said film to M/s Sun TV Network Ltd. (‘M/s Sun TV’). However, the informant received an e-mail from M/s Kural TV informing the informant that the opposite party association has decided not to screen the said film in any of the screens of its members since the said film’s Satellite Rights were granted to M/s Sun TV.  M/s Kural TV expressed inability to block and book the theaters because of the same. The informant further avers that it learnt from various newspaper articles that M/s Sun TV owed some money to few of the members of the opposite party association and in order to recover this money from M/s Sun TV, the opposite party association decided to ban all the films which are either produced or distributed by M/s Sun TV or even the films whose Satellite Rights are granted to M/s Sun TV. The informant lastly stated that banning its said film in the theatres in Tamil Nadu just because the Satellite Rights of the said film were granted to M/s Sun TV was highly unfair and clearly in contravention of the provisions of the Act. Thus, the informant alleged that the opposite party association was acting mala fide and in an arbitrary manner by boycotting the said film of the informant with an effort to secure a claim of its members against a third party i.e., against M/s Sun TV.

The Commission has ordered and directed the opposite party to cease and desist from indulging in anti-competitive conduct in future. The Commission inter alia issued the following directions to be observed by the film trade associations:

(a) The associations should not compel any producer, distributor or exhibitor to become its member as a pre-condition for exhibition of their films in the territories under their control and modify their rules accordingly; (b) The associations should not keep any clause in rules and regulations which makes any discrimination between regional and non-regional films and impose conditions which are discriminatory against non-regional films; (c) The rules of restrictions on the number of screens on the basis of language or the manner in which a particular film is to be exhibited should be done away with; (d) Associations should not put any condition regarding hold back period for release of films through other media like, CD, Satellite etc. These decisions should be left to the concerned parties and; (e) The condition of compulsory registration of films as a pre-condition for release of any film and existing rules of association as discussed in the preceding paras of this order on the issue should be dispensed with. The Commission has decided to impose a penalty on the opposite party at the rate of 10 % of its average turnover which has been calculated as per the Income/ Receipts of the association as evidenced by Income and Expenditure Accounts for the relevant last 3 years.

Abuse of dominant position

M/s SRMB Srijan Limited v. CRISIL Limited

November 12, 2013

In this case it has been alleged that CRISIL Ltd. (‘the opposite party’) is in abuse of dominance through imposition of unfair or discriminatory conditions in the “Ratings & Surveillance Agreement” in contravention of section 4 of the Act. The opposite party is a rating agency that offers comprehensive range of rating services such as rating all types of bank facilities such as term loans, project loans, etc. The Informant alleged that opposite party was India’s first, largest and most prominent credit rating agency and had a market share of 60% in the Indian ratings market. The Informant contended that it entered into a Rating & Surveillance Agreement with the opposite party for rating bank loans amounting to INR 125 Crores. The Informant stated that it declined to accept the rating, stating that the rating rationale was not appropriate. The opposite party replied that rating was not an annual exercise and could be reviewed any time during the year, depending upon information or additional development. The Informant, dissatisfied with the rating service of opposite party, requested opposite party that the Agreement be terminated with immediate effect and the present rating be immediately withdrawn and removed from all forms of public dissemination. The Informant contended that instead of terminating the Agreement, the opposite party continued to disseminate the rating found to be unsuitable by the Informant. The Informant stated that despite categorically terminating the Agreement, it was being compelled to continue with the Agreement, as the opposite party was using pressure tactics to defame the Informant by way of false information on its website and other media regarding non-cooperation of the Informant. The opposite party mentioned that non-payment of the fee would result in contravention of the Reserve Bank of India (‘RBI’) guidelines and might have an adverse impact on the Informant’s credit rating.

As per the Informant, the illegal actions of the opposite party regarding rating had a negative impact on creditworthiness and reputation of the Informant for the purpose of assessment of the Informant’s group companies by the bankers as both companies had a combined exposure of INR 250 crores. It was also stated that there had been a loss of up to 2% of incremental interest on these bank limits during this period, besides losses on account of reduction in concession of banker charges and loss of goodwill with the bankers, thereby reducing the prospect of future business expansion by the Informant.

The Informant contended that the opposite party, by imposing unfair and discriminatory conditions in sale of services of rating, had abused its dominance in the relevant market in contravention of the provisions of section 4 of the Act.

The Commission is of the opinion that the opposite party was prima facie a dominant enterprise in the relevant market of provision of credit rating services for availing banking facilities in India. Further, it appears that the opposite party was following the regulatory guidelines provided by SEBI for rating agencies and the alleged conduct of the opposite party prima facie was not abusive in terms of the provisions of section 4 of the Act. Commission held that there arose no competition concern actionable under section 4 of the Act.

Combinations

In the matter of notice given under Section 6(2) of the Competition Act, 2002 given by Zulia Investments Pte. Ltd. and Kinder Investments Pte. Ltd.

August 08, 2013

CCI imposed penalty on Temasek (Holdings) Private Limited and its two subsidiaries namely, Zulia Investments Pte. Ltd. and Kinder Investments Pte. Ltd. (collectively referred to as the ‘Acquirers’) for failure to give notice to CCI under Section 6(2) of the Act.

In the instant case, the Acquirers gave notice to CCI under section 6(2) of the Act on 6th June, 2013 with a delay of around 399 days. It has been submitted by the Acquirers that the delay in giving notice to CCI was due to their acting on an erroneous legal advice.

The Acquirers in response to the show cause notice submitted that upon getting conformation from the second set of Indian counsel, Temasek took immediate steps to the collate necessary information and prepare the Notification Form and that the Acquirers have expeditiously and voluntarily filed the Notification Form as soon as they became aware of the 30-day requirement to notify the ‘Proposed Transaction’ (i.e., proposed acquisition of 439,000,000 new ordinary shares of DBS Group holdings Ltd.) with the Hon’ble CCI. The Acquirers requested CCI to take a lenient view and condone the delay by not imposing any penalty under Section 43A of the Act.

CCI observed that in terms of Section 43A of the Act, it shall impose on such person or enterprise a penalty which may extend to 1% of the total turnover or the assets, whichever is higher, of such a combination of the Acquirers and DBS Group holdings Ltd. However, considering the response of the Acquirers to the show cause notice, submissions made by the Acquirers through their legal representatives in the course of the personal hearing before the Commission held on 1st August, 2013, additional submissions made on 1st August, 2013 by the Acquirers, particularly the fact that the Acquirers had voluntarily given the notice under sub-section (2) of Section 6 of the Act before the consummation of the combination, and also the fact that the proposed combination was pursuant to an acquisition of the shareholding of one foreign enterprise by another foreign enterprise, CCI considered it appropriate to impose a penalty of INR 50,00,000/- on the Acquirers.

https://www.cci.gov.in/May2011/OrderOfCommission/CombinationOrders/P-C-2013-06-124.pdf

https://www.cci.gov.in/May2011/OrderOfCommission/262/642013.pdf

https://www.cci.gov.in/May2011/OrderOfCommission/27/782011.pdf

https://www.oft.gov.uk/news-and-updates/press/2013/66-13#.Up3HnsQW2VM

https://europa.eu/rapid/press-release_IP-13-1144_en.htm

https://europa.eu/rapid/press-release_IP-13-1175_en.htm

https://www.justice.gov/atr/cases/f301500/301590.pdf

https://www.justice.gov/atr/cases/f301800/301822.pdf

https://www.justice.gov/atr/cases/f301500/301531.pdf

https://www.justice.gov/atr/cases/f301500/301527.pdf

https://www.justice.gov/atr/cases/f301500/301537.pdf



Republic of India (comprising pronouncements on anti-competitive agreements, abuse of dominant position)

Indian Sugar Mills Association and Ors. v Indian Jute Mills Association and Ors. (MANU/CO/0092/2014)

 

The present information under section 19(1)(a) of the Competition Act, 2002 was filed by Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories Ltd. and All India Flat Tape Manufacturers Association (collectively ‘Informants’) against Indian Jute Mills Association (IJMA) and Gunny Trade Association (GTA) (‘Opposite Parties’) respectively alleging an anti-competitive agreement between the members of IJMA and GTA with respect to fixing of sale price of jute packaging material by issuing of Daily Price Bulletin (DPB) by GTA for jute bags for the members of IJMA and the GTA to follow.

The Commission found itself in agreement with the findings of the Directorate General (DG) regarding the existence of a tacit agreement by way of action in concert by the members of GTA under the aegis of GTA to determine and control the price by publication of GTA, DPB and as the transacted prices were followed by the members of the GTA and IJMA the Commission held the impugned acts/conduct of IJMA and GTA to be in contravention of the provisions of section 3(3)(a)/ 3(3)(b) read with section 3(1) of the Act. The Commission issued a cease and desist order against the associations and imposed a penalty on IJMA and GTA @ 5% of the average turnover of the last three years. The Commission also imposed penalties on the persons who were members of the Executive Committee of IJMA and the Executive Committee and the DPB Sub-Committee of GTA @ 5% of the average income of the last three financial years.

The Commission also noted that the provisions of the Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987 placing statutory requirement on the sugar mills to undertake sugar packaging using jute bags only, was against the principle of competitive neutrality as the entities manufacturing matching products were denied market access. Such a policy further not only restricted the choice of customers like sugar mills but it also led to escalating the cost which is ultimately borne by the end-consumers. Accordingly, the Commission expects the Government of India to re-assess the current market situation for removing the market distortions arising out of such policy.

 

In re: Collective boycott/refusal to deal by the Chemists & Druggists Association, Goa (CDAG), M/s Glenmark Company and M/s Wockhardt Ltd. (MANU/CO/0086/2014)

 M/s Varca Druggist & Chemists and others had filed an information with the then Director General (Investigations & Registrations), Monopolies and Restrictive Trade Practices Commission against Chemists & Druggists Association, Goa, (‘CDAG’ / the ‘Opposite Party No. 1)’) for its alleged anti-competitive practices. After repeal of the Monopolies and Restrictive Trade Practices Act, 1969, the said case was transferred to Competition Commission of India. The Commission passed an order under Section 27 of the Competition Act on 11.06.2012. Subsequently, the Commission was informed by Mr. Mario Vaz (the ‘Informant’) that CDAG had not complied with the above said order of the Commission and was restraining pharmaceutical companies such as M/s Glenmark Pharmaceuticals Limited (‘Opposite Party No. 2’) and M/s Wockhardt Limited (‘Opposite Party No. 3’) from doing business with his company. It was alleged that under the guidance of CDAG, all stockists of the Opposite Party No. 3 appeared to have formed a cartel and stopped receiving goods from the Opposite Party No. 3 so as to compel it to stop dealing with the Informant. It was also alleged that under the influence of CDAG, the Opposite Party No. 2 and the Opposite Party No. 3 stopped supplies to the Informant.

Commission observed that CDAG clearly disregarded the Commission’s order dated 11.06.2012 and indulged in anti-competitive conduct. By forcing pharma companies to discontinue supply through non-authorized stockist like the Informant, it continued to carry on its anti-competitive practices. Further, it forced pharmaceutical companies like M/s Glenmark Pharmaceuticals Limited and M/s Wockhardt Limited to follow its mandate by threatening the other stockists in Goa to stop taking supplies or suspend receiving supplies from them till such time they stopped supplies to the informant. The Commission directed CDAG to seize and desist from indulging in the anti-competitive practices and imposed a penalty of INR 10,62,062/-, calculated at the rate of 10% of the average receipts of CDAG for three financial years.

Shri Bijay Poddar v M/s Coal India Limited and its subsidiaries, (MANU/CO/0087/2014)

 Shri Bijay Poddar (‘Informant’) alleged that the terms and condition of Spot e-Auction Scheme 2007 (‘the Scheme’) introduced by M/s Coal India Limited and its subsidiaries (‘Opposite Parties’) were in contravention of the provisions of the Competition Act.  Informant further alleged that the forfeiture clause under the Scheme is arbitrary and illegal and in abuse of monopolistic power enjoyed by the Opposite Parties.

The Commission observed that the stipulations provided in clause 9.2 of the Scheme is in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act whereby a buyer is saddled with penalty by way of forfeiture of EMD for non-lifting of coal after successful participation in the e-Auction without any  corresponding liability upon Opposite Parties for failure to deliver coal in respect of accepted bids. Such arrangement in the Scheme was noted to be a result of market power exercised by the Opposite Parties. Accordingly, the Commission held the Opposite Parties to be in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act for imposing unfair conditions upon the bidders under the Scheme. Apart from issuing a cease and desist order, the Commission ordered modification of the terms and conditions of the Scheme suitably.

 

M/s Sai Wardha Power Company Ltd. v M/s Western Coalfields Ltd.  

The information under Section 19(1)(a) of the Competition Act, 2002 (‘Competition Act’) was filed by M/s. Sai Wardha Power Company Ltd. (‘the Informant’) against M/s. Western Coalfields Ltd. and M/s. Coal India Ltd. (collectively, ‘the Opposite Parties’) alleging contravention of the provisions of Section 4 of the Competition Act. In order to procure the supply of coal for its power plant, the Informant after having obtained linkage and letter of assurance on cost plus basis from the Opposite Parties, had entered into three Fuel Supply Agreements (‘FSAs’) for supply of coal from three different identified cost plus coal mines under the control of the Opposite Parties.  The Informant stated that the Opposite Parties enjoy virtual monopoly over production and supply of coal in India. The Informant alleged that the Opposite Parties, by abusing its dominant position, had forced the Informant to enter into one sided, anti-competitive FSAs under which the Informant had no bargaining power or power to negotiate whatsoever and in the absence of any alternative option for procurement of coal, the Informant was compelled to

accept the dictated terms and conditions stipulated in the FSAs.

The Commission established that the Opposite Parties operate independently of market forces and enjoy undisputed dominance in the relevant market of “production and supply of non- coking coal to the thermal power producers in India”. The Commission further held the Opposite Parties to be in contravention of the provisions of section 4(2)(a)(i) of the Competition Act for imposing unfair conditions in FSAs with the power producers for supply of non-coking coal. Commission directed the Opposite Parties to cease and desist from indulging in the conduct found to be in contravention of the provisions of the Competition Act and to make necessary modifications in FSAs in light of the observations and findings recorded by it.

 

M/s HT Media Limited Informant v M/s Super Cassettes Industries Limited, (MANU/CO/0080/2014]

M/s. HT Media Limited (‘the informant’) filed information under Section 19(1) (a) of the Competition Act, 2002 (‘Competition Act’) against M/s. Super Cassettes Industries Limited (‘the Opposite Party’) alleging inter alia contravention of Sections 3 and 4 of the Competition Act.

The Informant, a leading media companies had launched an FM radio channel called Fever 104. Opposite Party is engaged in manufacture, production and publication of music and videos. The Informant alleged that the Opposite Party has abused its dominant position by (i) charging excessive amount as license fees/royalty from the Informant for grant of rights for the broadcast of the Opposite Party’s music content on Fever 104 radio station; (ii) imposing minimum commitment charges (‘MCC’) to be paid to the Opposite Party per month irrespective of actual needle hour of broadcast of the Opposite Party’s music content by the Informant and (iii) making conclusion of licensing arrangements with the Opposite Party subject to the acceptance of license fees and MCC imposed by them. The Informant alleged that such imposition of exorbitant license fees and MCC by the Opposite Party is an unfair condition imposed by it for granting license to broadcast its music content on radio under the Competition Act which limits and restricts the right of the Informant to broadcast its music content of other music companies/composers thereby limiting the choice of music for the end consumers to only the opposite party’s music content and results in denial of market access for other music companies (publishers, copyright societies etc.) with less market share and bargaining power.

Commission held opposite party to be in contravention of Section 4(2)(a)(i) of the Competition Act. The Commission directed opposite party to cease and desist from formulating and imposing the unfair condition of MCC in its agreements and to suitably modify such unfair conditions within 3 months of the date of receipt of the Order. The Commission also imposed penalty at the rate of 8% of average turnover of the last three years of the Opposite Party amounting to INR 2,83,28,000.



United States of America

United States of America v. JTEKT Corporation

September 26, 2013

JTEKT Corporation, Japan (‘JTEKT’) and the United States of America have entered into a Plea Agreement dated September 19, 2013, in respect of two count charges contained in the Information, whereby it is alleged that ‘JTEKT’ and its co-conspirators participated in a combination and conspiracy to suppress and eliminate competition in the automotive parts industry.

Under count one of the Information, JTEKT will be  charged with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, rig bids for, and to fix, stabilize, and maintain the prices of bearings sold to Toyota Motor Company, certain of its subsidiaries, and other Japanese automobile manufacturers and Japanese automobile component manufacturers (‘Japanese automobile and component manufacturers’) in the United States and elsewhere, from at least as early as 2000 and continuing until as late as early 2011, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Under count two of the Information, JTEKT will be charged with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, rig bids for, and to fix, stabilize, and maintain the prices of electric powered steering assemblies sold to Nissan Motor Company Ltd. and certain of its subsidiaries (‘Nissan’) in the United States and elsewhere, from at least as early as 2005 and continuing until as late as October 2011, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ stipulates the ‘Guidelines Fine Range’ as $129.09 million to $258.18 million.

United States of America v. Kuo Hsuan “Chuck” Chang

November 04, 2013

Kuo Hsuan “Chuck” Chang and the United States of America have entered into a Plea Agreement dated November 04, 2013, in respect of two count charges contained in the Information, in respect of a combination and conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Francisco County, in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Under count one of the Information, the defendant will be charged for participating in a conspiracy to rig bids to obtain the selected properties. The primary purpose of this conspiracy was to suppress and restrain competition to purchase the selected properties at non-competitive prices.

Under count two of the Information, the defendant and his co-conspirators will be charged for wilfully and knowingly agreeing to devise and intending to devise and participate in a scheme and artifice to defraud mortgage holders, other holders of debt secured by the selected properties, and in some cases, the defaulting homeowners and to obtain money and property from them by means of materially false and fraudulent pretenses, representations, and promises.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ lays down fines for both counts separately.

United States of America v. Daniel Rosenbledt

November 05, 2013

Daniel Rosenbledt and the United States of America have entered into a Plea Agreement dated October 17, 2013, in respect of four count charges contained in the Information.

Count one of the Information charges the defendant with participating in a conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public real estate foreclosure auctions in San Mateo County, in the Northern District of California, inviolation of the Sherman Act, 15 U.S.C. § 1.

Count two of the Information charges the defendant with conspiracy to commit mail fraud in San Mateo County, California, during 2008 to 2011.

Count three of the Information charges the defendant with participating in a conspiracy to suppress and restrain competition by rigging bids to obtain selected properties offered at public real estate foreclosure auctions in San Francisco County, in the Northern District of California, in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Act, 15 U.S.C. § 1.

Count four of the Information charges the defendant with conspiracy to commit mail fraud in violation of 18 U.S.C. § 1349, in San Francisco County, California, during 2009 to 2011.

The ‘Sentencing Agreement’ as contained in the ‘Plea Agreement’ lays down fines compositely for counts one and three; and two and four.

United States of America v. Mitsuba Corporation

November 06, 2013

Mitsuba Corporation, Japan (‘Mitsuba’) and the United States of America have entered into a Plea Agreement dated September 26, 2013, in respect of charges contained in the Information.

Under count one of the Information, ‘Mitsuba’ and its co-conspirators participated in a combination and conspiracy to suppress and eliminate competition in the automotive parts sold to automobile manufacturers in the United States and elsewhere. The said conspiracy resulted in unreasonable restraint of interstate and foreign trade and commerce in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Further, under count two the defendant will be charged for altering, destroying, mutilating, concealing, covering up, falsifying and making false entries in documents and tangible objects with the intent to impede, obstruction and influence the investigation of the conduct charged in count one.

The defendant under the ‘Plea Agreement’, agreed to pay a criminal fine of $ 135 million, in instalments without any interest and within five years from the date of imposition of the sentence.

United States of America v. Yasuhiko Ueno

November 21, 2013

Three high-level executives of Tokyo-based Takata Corp. have pleaded guilty for their participation in a conspiracy to fix prices of seatbelts installed in cars sold in the United States. The executives have also agreed to serve time in a U.S. prison. According to the one-count felony charges filed separately against each of the executives in the U.S. District Court for the Eastern District of Michigan in Detroit, Yasuhiko Ueno, Saburo Imamiya and Yoshinobu Fujino participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of seatbelts sold to Toyota Motor Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Fuji Heavy Industries Inc. – more commonly known by its brand name, Subaru – and Mazda Motor Corp. in the United States and elsewhere. The three executives have agreed to serve prison sentences ranging from 14 to 19 months, and to cooperate with the department’s ongoing investigation. Ueno has agreed to serve 19 months in prison and to pay a $20,000 criminal fine. Imamiya has agreed to serve 16 months in prison and to pay a $20,000 criminal fine. Fujino has agreed to serve 14 months in prison and to pay a $20,000 criminal fine.

According to the charges, the Takata executives and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to the automobile manufacturers. Each of the executives is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

https://www.justice.gov/atr/cases/f301500/301537.pdf

https://www.justice.gov/atr/cases/f301500/301531.pdf

https://www.justice.gov/atr/cases/f301500/301527.pdf

https://www.justice.gov/atr/cases/f301500/301590.pdf

https://www.justice.gov/atr/cases/f301800/301822.pdf



Republic of India

Anti-competitive agreements including cartels

M/s Reliance Big Entertainment Private Limited v. Tamil Nadu Film Exhibitors Association (now known as Tamil Nadu Theatre Owners Association)

November 05, 2013

The information was filed by M/s Reliance Big Entertainment Private Limited (‘the informant’) against Tamil Nadu Film Exhibitors Association (‘the opposite party’/ TNFEA) alleging inter alia contravention of the provisions of sections 3 and 4 of the Competition Act, 2002 (‘Act’).

As per the agreement between the informant and M/s Balaji Real Media Private Limited, the informant was entitled to distribute a film titled Osthi in Tamil language, which was a remake of Hindi film Dabbang. The film was scheduled for release on 08.12.2011. The informant granted the said exclusive distribution rights of the film for the Territory of Tamil Nadu, Kerala and Karnataka to M/s Kural TV Creations Pvt. Ltd. (‘M/s Kural TV’). Further, the informant assigned the Satellite Rights of the said film to M/s Sun TV Network Ltd. (‘M/s Sun TV’). However, the informant received an e-mail from M/s Kural TV informing the informant that the opposite party association has decided not to screen the said film in any of the screens of its members since the said film’s Satellite Rights were granted to M/s Sun TV.  M/s Kural TV expressed inability to block and book the theaters because of the same. The informant further avers that it learnt from various newspaper articles that M/s Sun TV owed some money to few of the members of the opposite party association and in order to recover this money from M/s Sun TV, the opposite party association decided to ban all the films which are either produced or distributed by M/s Sun TV or even the films whose Satellite Rights are granted to M/s Sun TV. The informant lastly stated that banning its said film in the theatres in Tamil Nadu just because the Satellite Rights of the said film were granted to M/s Sun TV was highly unfair and clearly in contravention of the provisions of the Act. Thus, the informant alleged that the opposite party association was acting mala fide and in an arbitrary manner by boycotting the said film of the informant with an effort to secure a claim of its members against a third party i.e., against M/s Sun TV.

The Commission has ordered and directed the opposite party to cease and desist from indulging in anti-competitive conduct in future. The Commission inter alia issued the following directions to be observed by the film trade associations:

(a) The associations should not compel any producer, distributor or exhibitor to become its member as a pre-condition for exhibition of their films in the territories under their control and modify their rules accordingly; (b) The associations should not keep any clause in rules and regulations which makes any discrimination between regional and non-regional films and impose conditions which are discriminatory against non-regional films; (c) The rules of restrictions on the number of screens on the basis of language or the manner in which a particular film is to be exhibited should be done away with; (d) Associations should not put any condition regarding hold back period for release of films through other media like, CD, Satellite etc. These decisions should be left to the concerned parties and; (e) The condition of compulsory registration of films as a pre-condition for release of any film and existing rules of association as discussed in the preceding paras of this order on the issue should be dispensed with. The Commission has decided to impose a penalty on the opposite party at the rate of 10 % of its average turnover which has been calculated as per the Income/ Receipts of the association as evidenced by Income and Expenditure Accounts for the relevant last 3 years.

Abuse of dominant position

M/s SRMB Srijan Limited v. CRISIL Limited

November 12, 2013

In this case it has been alleged that CRISIL Ltd. (‘the opposite party’) is in abuse of dominance through imposition of unfair or discriminatory conditions in the “Ratings & Surveillance Agreement” in contravention of section 4 of the Act. The opposite party is a rating agency that offers comprehensive range of rating services such as rating all types of bank facilities such as term loans, project loans, etc. The Informant alleged that opposite party was India’s first, largest and most prominent credit rating agency and had a market share of 60% in the Indian ratings market. The Informant contended that it entered into a Rating & Surveillance Agreement with the opposite party for rating bank loans amounting to INR 125 Crores. The Informant stated that it declined to accept the rating, stating that the rating rationale was not appropriate. The opposite party replied that rating was not an annual exercise and could be reviewed any time during the year, depending upon information or additional development. The Informant, dissatisfied with the rating service of opposite party, requested opposite party that the Agreement be terminated with immediate effect and the present rating be immediately withdrawn and removed from all forms of public dissemination. The Informant contended that instead of terminating the Agreement, the opposite party continued to disseminate the rating found to be unsuitable by the Informant. The Informant stated that despite categorically terminating the Agreement, it was being compelled to continue with the Agreement, as the opposite party was using pressure tactics to defame the Informant by way of false information on its website and other media regarding non-cooperation of the Informant. The opposite party mentioned that non-payment of the fee would result in contravention of the Reserve Bank of India (‘RBI’) guidelines and might have an adverse impact on the Informant’s credit rating.

As per the Informant, the illegal actions of the opposite party regarding rating had a negative impact on creditworthiness and reputation of the Informant for the purpose of assessment of the Informant’s group companies by the bankers as both companies had a combined exposure of INR 250 crores. It was also stated that there had been a loss of up to 2% of incremental interest on these bank limits during this period, besides losses on account of reduction in concession of banker charges and loss of goodwill with the bankers, thereby reducing the prospect of future business expansion by the Informant.

The Informant contended that the opposite party, by imposing unfair and discriminatory conditions in sale of services of rating, had abused its dominance in the relevant market in contravention of the provisions of section 4 of the Act.

The Commission is of the opinion that the opposite party was prima facie a dominant enterprise in the relevant market of provision of credit rating services for availing banking facilities in India. Further, it appears that the opposite party was following the regulatory guidelines provided by SEBI for rating agencies and the alleged conduct of the opposite party prima facie was not abusive in terms of the provisions of section 4 of the Act. Commission held that there arose no competition concern actionable under section 4 of the Act.

Combinations

In the matter of notice given under Section 6(2) of the Competition Act, 2002 given by Zulia Investments Pte. Ltd. and Kinder Investments Pte. Ltd.

August 08, 2013

CCI imposed penalty on Temasek (Holdings) Private Limited and its two subsidiaries namely, Zulia Investments Pte. Ltd. and Kinder Investments Pte. Ltd. (collectively referred to as the ‘Acquirers’) for failure to give notice to CCI under Section 6(2) of the Act.

In the instant case, the Acquirers gave notice to CCI under section 6(2) of the Act on 6th June, 2013 with a delay of around 399 days. It has been submitted by the Acquirers that the delay in giving notice to CCI was due to their acting on an erroneous legal advice.

The Acquirers in response to the show cause notice submitted that upon getting conformation from the second set of Indian counsel, Temasek took immediate steps to the collate necessary information and prepare the Notification Form and that the Acquirers have expeditiously and voluntarily filed the Notification Form as soon as they became aware of the 30-day requirement to notify the ‘Proposed Transaction’ (i.e., proposed acquisition of 439,000,000 new ordinary shares of DBS Group holdings Ltd.) with the Hon’ble CCI. The Acquirers requested CCI to take a lenient view and condone the delay by not imposing any penalty under Section 43A of the Act.

CCI observed that in terms of Section 43A of the Act, it shall impose on such person or enterprise a penalty which may extend to 1% of the total turnover or the assets, whichever is higher, of such a combination of the Acquirers and DBS Group holdings Ltd. However, considering the response of the Acquirers to the show cause notice, submissions made by the Acquirers through their legal representatives in the course of the personal hearing before the Commission held on 1st August, 2013, additional submissions made on 1st August, 2013 by the Acquirers, particularly the fact that the Acquirers had voluntarily given the notice under sub-section (2) of Section 6 of the Act before the consummation of the combination, and also the fact that the proposed combination was pursuant to an acquisition of the shareholding of one foreign enterprise by another foreign enterprise, CCI considered it appropriate to impose a penalty of INR 50,00,000/- on the Acquirers.

https://www.cci.gov.in/May2011/OrderOfCommission/CombinationOrders/P-C-2013-06-124.pdf

https://www.cci.gov.in/May2011/OrderOfCommission/262/642013.pdf

https://www.cci.gov.in/May2011/OrderOfCommission/27/782011.pdf



United Kingdom (UK)

Office of Fair Trading (‘OFT’) issues statement of objections in mobility scooters sector

September 24, 2013

The OFT has issued a Statement of Objections alleging that Pride Mobility Products Limited (‘Pride’), a manufacturer of mobility scooters based in Bicester, Oxfordshire, and some of its retailers, have infringed competition law.

The OFT has provisionally concluded that the parties entered into agreements, or engaged in concerted practices, that prevented the UK-wide online retailers in question from advertising online prices below Pride’s Recommended Retail Price for certain models of mobility scooter. These practices may have limited consumers’ ability to get value for money.

The OFT’s provisional finding is that these practices occurred over various periods in relation to different retailers between 2010 and 2012. The companies will now have an opportunity to respond to the Statement of Objections and the OFT will carefully consider any representations they make before deciding whether competition law has in fact been infringed.

https://www.oft.gov.uk/news-and-updates/press/2013/66-13#.Up3HnsQW2VM



European Union (‘EU’)

Antitrust: Commission opens proceedings against container liner shipping companies

November 22, 2013

The European Commission has opened formal antitrust proceedings against several container liner shipping companies to investigate whether they engaged in concerted practices, in breach of the European Union (EU) antitrust rules. Container liner shipping is the transport of containers by ship at a fixed time schedule on a specific route between a range of ports at one end and another range of ports at the other end. Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialised trade press. These announcements are made several times a year and contain the amount of increase and the date of implementation, which is generally similar for all announcing companies. The announcements are usually made by the companies successively a few weeks before the announced implementation date.

The Commission has concerns that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe. The Commission will now investigate whether this behaviour amounts to a concerted practice in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and of Article 53 of the European Economic Area (EEA) Agreement.

Commission fines four North Sea shrimps traders € 28 million for price fixing cartel

November 27, 2013

The European Commission has fined four European North Sea shrimps traders a total of € 28 716 000 for operating a cartel in breach of EU antitrust rules. Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) prohibits cartels and restrictive business practices. The companies are Heiploeg, Klaas Puul, Kok Seafood (all of the Netherlands) and Stührk (of Germany). Between June 2000 and January 2009, Heiploeg and Klaas Puul agreed to fix prices and share sales volumes of North Sea shrimps in Belgium, France, Germany and the Netherlands. Kok Seafood participated at least from February 2005 and Stührk was involved in price fixing in Germany in the period from March 2003 to November 2007. The coordinated price level at which the retailer bought their shrimps directly affected the prices charged to the end-consumers. The size of the market varies heavily from year to year depending on the volumes landed by the fishermen and the price paid, but is always at least €100 million. The companies involved have high combined market shares in the European Economic Area (‘EEA’), estimated to be around 80%. The purpose of the cartel was to freeze the market by stabilising the suppliers’ market shares in order to facilitate price increases and stimulate profitability. The cartel affected the EU market and sales in Belgium, Germany, France and the Netherlands in particular.  The cartel took the form of a range of informal bilateral contacts primarily between Heiploeg and Klaas Puul but also involving Stührk and Kok Seafood. The discussions usually covered a wide range of aspects of their business, including their purchase prices from fishermen, conduct towards other traders on the market, market sharing, and prices charged to specific important customers that often set the benchmark price for other customers.

Fines: The fines were set on the basis of the EU 2006 Guidelines on fines. The Commission took into account the companies’ sales of the products concerned in the EU, the very serious nature of the infringement, its scope and its duration. The fines on two of the companies were significantly below the legal maximum.

Klaas Puul received full immunity under the Commission’s 2006 Leniency Notice, as it brought the cartel to the Commission’s attention and provided valuable information to prove the infringement.

https://europa.eu/rapid/press-release_IP-13-1144_en.htm

https://europa.eu/rapid/press-release_IP-13-1175_en.htm



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Disclaimer

The information in this private circulation is not legal advice and should not be treated as such. The information is taken from public domain and is purely for private and non- commercial purposes. We do not represent that the information is correct, accurate, complete or non- misleading.

This disclaimer will be governed by and construed in accordance with laws of India, and any disputes relating to this disclaimer will be subject to the exclusive jurisdiction of the courts of the Republic of India.

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