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Navigating Tricky Waters Developments in Indian Competition Law 2014-15

Shardul Amarch and Mangaldas & Co. Booklet, 2015

This is our third annual review of developments in Indian competition law. Last year, our theme was “breaking new ground”. This year, it is one of “navigating tricky waters”. The articles that follow discuss developments which make it even more imperative for enterprises and their people to steer a clear course to comply with competition law requirements, between shoals of uncertainty androcks of complexity. Examples of such developments can be drawn fromour main areas of practice. In relation to restrictive agreements, the CCI, in its Hiranandani Hospital decision, departed from its previously-stated position to find that agreements which are neither horizontal nor vertical in nature can nonetheless be prohibited under Section 3 of the Competition Act. Despite the novelty of its approach, the CCI imposed a penalty of 4% of average turnoverfor the last three financial years. In relation to abuse of dominant position, a large number of motor car manufacturers were fined 2% of their average turnover for abusing their dominant positions in the supply of their “genuine” spare parts and diagnostic tools. The CCI made it clear that manufacturers could not limit supply to nonauthorised dealers and repairers on safety grounds. As a result, suppliers in other sectors must look at their own distribution strategies to ensure compliance with competition law. However, the CCI’s order is currently under challenge before the High Court on constitutional grounds, so the prognosis is unclear. In the field of merger control, the CCI has proved to be a severe judge when it comes to notifications made after a strict 30-day limit. In the Tesco/Trent Hypermarket case, Tesco was fined a “nominal” INR 3 Crore (approx. USD 500,000) for late notification. There was no intent not to notify, and the late notification resulted from a misunderstanding of ambiguous provisions in the Combination Regulations, but the CCI was unforgiving.

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