“Unlike the time when recall value of competition was associated only with examinations or sports, the awareness about competition law has come a long way when almost every other day CCI is in the news for reprimanding the erring market players. Fines for anti-competitive conduct are huge as seen in cases such as that of DLF and cement companies. Having completed a little over four years of active enforcement and nearly ten years of advocacy, CCI has carved a niche for itself. The author, Mr. K K Sharma, Chairman, KK Sharma Law Offices and former Director General, CCI, having the rare privilege of both drafting and implementing the law as well as being at the cutting edge by way of sculpting the very first investigations and heading Merger Control and Anti-trust Divisions looks back and sums up the four years of cartel enforcement in India in this article.“

1. B-1672013]
COMPETITION LAW REPORTS SEPTEMBER, 2013
Section B
Articles
India: Prohibition of Anti-Competitive Agreements
and Abuse of Dominant Position*
K K Sharma**
“Unlike the time when recall value of competition was associated only with
examinations or sports, the awareness about competition law has come a long way
when almost every other day CCI is in the news for reprimanding the erring
market players. Fines for anti-competitive conduct are huge as seen in cases such
as that of DLF and cement companies. Having completed a little over four years of
active enforcement and nearly ten years of advocacy, CCI has carved a niche for
itself. The author, Mr. K K Sharma, Chairman, KK Sharma Law Offices and
former Director General, CCI, having the rare privilege of both drafting and
implementing the law as well as being at the cutting edge by way of sculpting the
very first investigations and heading Merger Control and Anti-trust Divisions
looks back and sums up the four years of cartel enforcement in India in this article.“
49
After a long wait of nearly six years,
during which it was exclusively engaged
in competition advocacy duties under
Section 49 of the Competition Act, 2002
(the Act), the Competition Commission
of India (CCI) got enforcement powers
for prohibition of anti-competitive
agreements, cartels and abuse of
dominant cases on 20th
May, 2009.
Perhaps, as can be understood for any
new competition agency, it took some
time for the CCI to put the entire
investigating and secretarial machinery
in place for it to be in a position to carry
out its enforcement mandate effectively.
Although the flow of information (as the
complaints are called under the Act)
started coming in right in the first few
weeks of the enforcement powers being
* This article was first published in Competition Policy International, Inc. For more details
please visit Competition Policy International.com
** K K Sharma Law Offices & Ex-Director General, CCI. The author can be reached at
kksharma@kkslawoffices.com or kksharmairs@gmail.com.

2. Competition Law ReportsB-168 [Vol. 2
COMPETITION LAW REPORTS SEPTEMBER, 201350
expeditiously, and not much after the
cartelization was proved by DG, it would
have had the potential to be an admitted
cartel case with, maybe, a still higher fine
and a much stronger advocacy value.
When compared with Singapore,
wherein the first few cartel cases were
used to showcase the determination of
the authority, this may have been an
opportunity missed here by CCI.
In its very first case, after the enactment
of the Competition Act of 2004, the
Competition Commission of Singapore
(CCS) imposed a penalty totalling S
$262,759.66 on six pest control
companies.2
Interestingly, in this case,
none of the six parties objected to the
findings of CCS3
, nor did they appeal the
CCS’s order. In the same press release4
,
in which this infringement order was
announced, the CCS also showcased its
leniency program and induced the
members of the public as well as any
cartels to come forward with instances
of cartelization. During the course of
investigation, CCS ensured that this case
becomes that of an admitted cartel and
the parties investigated do not file
appeals against the order of CCS.
Similarly, if the very first case of
cartelization before the CCI was used to
gain visibility (the case had great
potential coming from the high visibility
entertainment sector) and credibility, by
making it an admitted cartel and
announcing the decision quickly, the
journey of the CCI towards being seen as
an effective and mature competition
agency could have been much quicker
as such actions give credibility and
confidence to any new competition
agency.
given to the CCI, and although the first
investigation reports from the Director
General began flowing in from
September, 2009 onwards, it took a while
for the CCI to start delivering its orders
restraining erring market players or
imposing penalties on them or their
associations. The reasons for this were
not far to seek. The CCI had to give an
opportunity of being heard to the
different parties involved. The Indian
lawyers, used to the judicial system in
India, had their own ways of asking for
inspections, copies of various documents
or adjournments on one excuse or
another which, effectively, meant a delay
in the proceedings. “Justice delayed is
justice denied” is not just a saying but a
vibrant reality in Indian sub-continent,
not just India. This is almost an article of
faith amongst some lawyers who,
perhaps, believe that howsoever weak
their defense may be, tomorrow may
develop some escape route.
On 25th
May, 2011, disposing off the very
first information before the CCI (Case No.
1 of 2009), the CCI agreed1
with the
findings of the Director General (DG) that
the United Producers and Distributors
Forum (UPDF) had indulged in
cartelizing conduct by way of not
supplying prints of the motion pictures
to multiplex theatres, but imposed a
token penalty of Indian rupees 100,000
(only about USD $1,667) each on the
cartelizing members. Some of the parties
still went in appeal before COMPAT. In
absence of any strong defence, agreeing
clearly with the categorical finding of DG
and still imposing a token fine-after
keeping the matter pending for nearly two
years-it is not very easy to understand. If
finalization of this matter had been done
1 http://www.cci.gov.in/May2011/OrderOfCommission/FICCIOrder260511.pdf
2 http://www.ccs.gov.sg/content/ccs/en/Public-Register-and-Consultation/Public-
Register/Anticompetitive-Agreements.detail.collusive_tenderingbid-
riggingfortermitetreatmentcontrolservices.html
3 Para 359 Ibid 3
4 http://www.ccs.gov.sg/content/ccs/en/Media-and-Publications/Media-Releases/
CCS-Fines-Pest-Control-Operators-for-Bid-Rigging.html

3. B-1692013]
COMPETITION LAW REPORTS SEPTEMBER, 2013 51
currency derivative segment from the
receipts being collected by an NSE from
its operations in the share market
segment. A further allegation of MCX-
SX against NSE was that NSE was merely
waiting for MCX-SX to fail before being
in a position to capture and exploit the
market. This tactic of predatory pricing
was used by NSE to ensure that the new
entrant into the market, MCX-SX, was
wiped out. It was a matter where the CCI
had a ready case of predatory pricing. It
may be mentioned that, across the
competition world, cases of predatory
pricing are extremely difficult to prove.
This is true for the reason that predatory
pricing requires intense economic
analysis which may not be easy for a new
competition agency in a developing
economy, as was the case with the CCI.
However, things were made easier by the
fact that the predatory price, in this case,
was not a finite price but a zero price.
Naturally, it made the task for the CCI
easier. The second factor that went in
favor of MCX-SX was that its net worth
was continually eroding and it was
public knowledge as to how long it could
survive. The complainant could bring out
forcefully before the CCI that it is,
financially, on a death bed and it is only
a matter of time before it is totally wiped
out from the market, and that the
predator exploits the market to its
advantage. Another factor that went
against the NSE was that although
originally treated as a promotional price,
zero pricing continued nearly
indefinitely on one pretext or the other
that were not fully explainable.
The order against the NSE set the pace of
the future course of action of the CCI to
come heavily against all anti-competitive
practices. This order, imposing a penalty
of INR 55.5 crores (about USD $9.25
million.), was followed by another
India: Prohibition of Anti-Competitive Agreements and Abuse of Dominant Position
The next order coming from the CCI
related to a trade association was Paper
Merchants Association of Delhi (PMAD)
in Vijay Paper Merchant5
case (Case No.
7 of 2010). Although no penalty was
levied on the PMAD, cognisance of the
anti-competitive clauses in the
constitution of the association was taken
and the PMAD was directed to modify
the constitution and report back to the
CCI. Even without imposing a penalty,
this was the first case taking cognisance
of anti-competitive clauses in the
constitution of a trade association. It is
important to note that, despite a lapse of
nearly four years of enforcement, the trade
association activities remain a big
headache for the CCI even today. Case
after case, the dubious role of the trade
associations keeps on surfacing in the
matters before the CCI. This also
indicates in India how rampant the old
business practices are, many times under
the guise of trade associations, which are
either instances of plain cartelization or
border on cartelization.
Thereafter, the next true first affirmative
order of the CCI imposing penalty on a
market participant was in the case of
National Stock Exchange (NSE) (Case
No. 13 of 2009). This was a complaint
from MCX Stock Exchange (MCX-SX)
against the NSE for not charging any
transaction fee for two long years despite
recurring costs for providing its services.
The allegation of MCX-SX was that the
NSE was cross subsidising its
operations in providing services for
Case after case, the dubious
role of the trade associations
keeps on surfacing in the
matters before the CCI
5 http://www.cci.gov.in/menu/OrderVijay150411.pdf

4. Competition Law ReportsB-170 [Vol. 2
COMPETITION LAW REPORTS SEPTEMBER, 2013
landmark order against realty major in
India, DLF Ltd.6
A massive penalty of
Indian Rs. 630 crores (about USD $105
million) was imposed on DLF for
abusing its dominant position. People
may keep debating as to whether it was
a consumer matter or a competition issue,
however it certainly marked the
beginning of an upbeat CCI confident of
passing similar orders in other cases of
infringements in a way to signal that it
would not take violations of competition
law lightly.
Another important case was that of LPG
Cylinder Manufacturers.7
It may be
interesting to note that the case was
brought against Public Sector Oil (PSU)
major, Indian Oil Corporation by a
manufacturer of LPG cylinder, Pakaj Gas
Cylinders, who was a member of LPG
Cylinder Manufacturers Association.
During the course of investigation by DG,
it was found that not only were the
allegations untrue, but the complainant
was a part of a cartel of LPG Cylinder
Manufacturers Association that was
consistently rigging bids of the tenders
floated by the oil processing companies.
The case against the Indian PSU
company was predictably turned down.
However, the CCI simultaneously took
cognizance, on its own, of the cartel of
LPG Cylinder Manufacturers
Association members who were
consistently submitting bids after the
pre-bid meetings amongst all the
members of the association. This
investigation resulted into very
interesting results. It was found that the
association was a hotbed of anti-
competitive conduct. Not only were they
indulging in anti-competitive practices
but they also had the gumption to
approach the CCI.
A look at the orders handed down by the
CCI in cases of anticompetitive
agreements, including cartels, or cases
of abuse of dominant position, shows a
trend that the CCI is not shying away
from the imposition of heavy fines just
because it happens to be a new
competition authority. In the case of DLF,
being held guilty of abuse of dominant
position within the relevant market of
Gurgaon, a suburb of Delhi in the
adjoining state of Haryana, the CCI
imposed a penalty of 7 percent of its
average turnover for the last three years.
This was a bold move if we compare the
evolution of competition law either in the
United States of America or the European
Union. Similarly, the CCI did not think
twice before imposing a fine of 10 percent
of turnover in the case of Cement
Manufacturers Association in the
cartelization by cement companies,
which is the maximum allowable fine
under Section 27 of the Act.
The CCI has also shown maturity in not
imposing multiple fines if a cause of
action has been addressed by its earlier
orders passed, in the case of same parties
against which information has been
received in the past. It happened in the
case of DLF Ltd. Around the same time,
when information against DLF was
received from Belair Owners Association
(which finally resulted in fine). A number
of additional information against DLF
Ltd. were received by the CCI against
various completed projects of DLF.
Several of this information was
forwarded to the DG for investigation.
The investigation reports from the DG
came at various stages but not spaced
too much apart from each other. It so
happened that multiple cases against
DLF were being heard before the CCI at
6 http://www.cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf
7 http://www.cci.gov.in/May2011/OrderOfCommission/LPGMainfeb2.pdf
52

5. B-1712013]
COMPETITION LAW REPORTS SEPTEMBER, 2013
around the same time. The first of these
cases to be decided by the CCI was that
of Belair Owners Association. In this
case, as is widely known and mentioned
earlier in this writing, a penalty of
7 percent of the average turnover of last
three years, totalling to Rs 630 crores
(about USD $105 million) was imposed
on DLF Ltd. Thereafter, in the other
multiple cases against the DLF, the CCI
did pass “Cease and Desist” but
declined to impose any monetary
penalty. It was a very sagacious
approach signalling fairness.
Interestingly, when DLF filed an appeal
before COMPAT, the CCI was directed
by COMPAT to not just find fault with
the buyer builder agreement, which was
found to have lacunae in the case of DLF,
but also give an alternative model of a
similar agreement which would not
violate the provisions of the competition
law and, by implication, act as a model
agreement between a buyer and a
builder. Undoubtedly it was a positive
step forward. In response to the direction
of COMPAT, the CCI did draft a model
agreement which would be appropriate
for the builder and the buyer to enter into.
This agreement, available on the website
of the CCI, was passed in the form of a
supplementary order8
to the order of
DLF, a modification to the original order.
It is a very positive development.
Interestingly, it is around this time that
on account of various pressures, the
Government of India is also seriously
considering bringing about a regulator
for the housing and building sector.
When that becomes a reality may not be
known, but the order of the CCI has done
an excellent job of focussing the spotlight
on the unequal relationship between a
buyer and seller of residential
accommodation.
One of the cases decided by the CCI
stands out for understanding its
approach while dealing with different
types of business segments. This is Case
5 of 2011.9
A blatant case of collusive
bidding was referred to the CCI by South
Eastern Railways in which all the
bidders tendered identical price down
to the second decimal digit. DG
confirmed the prima facie opinion of
collusive bidding of the CCI. The CCI
passed a cease and desist order but did
not impose any penalty, stating that all
the parties being micro and small scale
industries having low awareness of
competition law. For a comparison, in
its second case of cartelisation by 16
coach operators and their association10
,
the Competition Commission of
Singapore noted “ignorance or a mistake
of the law is no bar to a finding of intentional
infringement under the [Competition] Act.”
This is an important indication of the
approach of the CCI keeping in mind that
since 2003 the CCI has been doing high
decibel competition law advocacy in
India.
When we look at the landscape of the
cases decided by the CCI, one thing is
certain: in a short span of about three
years, the CCI has been able to touch
nearly all sectors of the economy-be it
pharmaceuticals, really, entertainment,
software, advertisement, finance
8 h t t p : / / w w w . c c i . g o v . i n / M a y 2 0 1 1 / O r d e r O f C o m m i s s i o n / 1 9 2 0 1 0 S . p d f ;
http://www.cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf
9 http://www.cci.gov.in/May2011/OrderOfCommission/REF-052011.pdf
10 http://www.ccs.gov.sg/content/ccs/en/Public-Register-and-Consultation/Public-
Register/Anti-competitive-Agreements.detail.price_fixing_of_coachbusservicesfortravelling
betweensingaporeand.html
India: Prohibition of Anti-Competitive Agreements and Abuse of Dominant Position
53

6. Competition Law ReportsB-172 [Vol. 2
COMPETITION LAW REPORTS SEPTEMBER, 2013
companies, stock exchanges, and basic
commodities such as onions, sugar, et
cetera. Luckily, the orders of the
COMPAT have been of help in
establishing the rule of enforcement of
competition law in India. In a good
number of cases, the orders of the CCI
have been confirmed by COMPAT, such
as the case of cartelization brought by
Coal India Ltd. before the CCI, in which
penalty imposed by the CCI has been
confirmed by COMPAT11
with some
modifications. In a number of cases,
although the quantum of penalty has
been reduced the basic allegation has
been upheld. The confirmed cases
include a good number of cartel cases
including those relating to the travel
agents association, and many others.
As already mentioned in this article, in
the case of cement companies, COMPAT
has insisted on payment of at least 10
percent of the penalty amount imposed
by CCI on the cement companies
involved. Despite having travelled up to
the Supreme Court, the finding of the
COMPAT has been upheld. This is a big
victory for the competition law and a big
setback for cartelization tendencies.
Unfortunately, the Courts of the sub-
continent are notoriously slow and it is
jocularly remarked, though based on
stark facts,that the pending workload
before the judiciary, in any Court in the
sub-continent, is so much that it cannot
be completed in this lifetime of the
concerned judge. With the situation
being so serious, it is indeed heartening
to note that the resolution of appeals filed
before the Supreme Court by cement
companies against the order of COMPAT
was quickly disposed of. This has given
a very clear signal to all and sundry
across the country that no violations of
competition law would be taken lightly.
Thus, on the basis of the performance of
the CCI, COMPAT and Supreme Court,
it can be said that, irrespective of
differing opinions on matters of detail,
what is clear is that competition law is
here to stay. Other than cement
companies, there are pending cases
before COMPAT where COMPAT is
insisting on payment of not just 10
percent of the total penalty imposed by
the CCI but, in some cases, as high as 25
percent of the penalty imposed by CCI,
before taking up appeals. All this augurs
well for the establishment of competition
law in India.
This is a far cry from the time when cases
of cartelization used to come before
MRTPC Act but could not be resolved on
account of lack of proper provisions in
the then applicable law, MRTPC Act,
1969 and an absence of a clear definition
of the word “cartel.” In some cases,
because of this, unfortunately, despite
having held that cartel conduct was
there, no penalties could be imposed. In
the present dispensation, not only are the
cases being disposed of quickly by
11 http://compat.nic.in/upload/PDFs/aprilordersApp2013/18_04_13.pdf
In a good number of cases,
the orders of the CCI have
been confirmed by
COMPAT, such as the case
of cartelization brought by
Coal India Ltd. before the
CCI, in which penalty
imposed by the CCI has been
confirmed by COMPAT
with some modifications
54

7. B-1732013]
COMPETITION LAW REPORTS SEPTEMBER, 2013
COMPAT, but the parties are required to
pay at least part of the fines imposed by
the CCI before their appeals can be heard.
This is not a part of law anywhere.
However, these are the practices being
developed by COMPAT.
well drafted or not, and the effectiveness
of the competition agency in pinning
down the anti-competitive conduct. In
view of this, not a single application of
leniency coming to the CCI indicates
some gaps in the leniency program, or
the fact that a full fear of enforcement has
not yet percolated down to the persons
indulging in anti-competitive conduct.
Some attribute it to the lack of certainly,
for the person coming forward to avail
the leniency, of waiver from fines
because of the use of the word “may”
and not a more definitive “shall” in the
operative part of the Regulations12
(clause 4(a) of the Regulations), which
detail as to how much waiver can be
expected by the leniency seeker. There is
a view that the fear among cartel
members in exercise of the CCI’s
discretion is keeping them away from the
CCI. It may or may not be true. However,
if a more definitive and less discretionary
language is used in the leniency
regulations, it certainly would inspire
more confidence in the cartel members
coming forward to the CCI to spill the
beans about cartelization activities. It
may improve the effectiveness of the
agency if leniency Regulations are
amended suitably. However, the agency
has acquitted itself quite well in its
functioning against anti-trust
enforcement. There is always a hope that
tomorrow would be a better day.
As is generally believed, the
success of any leniency
program depends on the
quality of leniency programs,
as to whether it is well
drafted or not, and the
effectiveness of the
competition agency in
pinning down the anti-
competitive conduct
When discussing the enforcement of
prohibition of anti-competitive
agreements and abuse of dominant
position by the CCI, we cannot be
oblivious to the fact that despite leniency
Regulations of the CCI being in place for
nearly three years, not a single serious
application has been filed before the CCI
for leniency. This is slightly unusual. As
is generally believed, the success of any
leniency program depends on the quality
of leniency programs, as to whether it is
India: Prohibition of Anti-Competitive Agreements and Abuse of Dominant Position
55
12 http://www.cci.gov.in/images/media/Regulations/regu_lesser.pdf?phpMyAdmin=
NMPFRahGKYeum5F74Ppstn7Rf00