The CCI (Competition Commission of India) issued an advisory for businesses during the COVID-19 pandemic. The advisory clarifies that businesses may coordinate in a bona fide manner through joint ventures to address supply and demand changes from COVID-19, by sharing information and infrastructure. The advisory provides safe harbor for "coordinated conducts" that increase efficiency and are necessary and proportional to address COVID-19 concerns. However, the CCI will still scrutinize such conduct under the Competition Act and may take action for anti-competitive behavior.

1. ‘COORDINATED CONDUCT’
UNDER COMPETITION ACT,
2002, IN TIMES OF COVID-19
PANDEMIC
APRIL 21, 2020
Tuhin Batra
Corporate Counsel

2. CCI has recently issued a note titled “Advisory To Businesses In Time Of Covid-
19” (The “Advisory”), Thereby advising businesses not to take advantage of
Covid-19 To contravene the provisions of Competition Act, 2002 (the
“Competition Act” Or “Act”) AND clarifying that businesses may, in a bona-fide
‘Coordinated Conduct’ and through a ‘joint venture’, act together to cope with
significant changes in supply and demand patterns arising out of this
extraordinary situation, by way of sharing data on stock levels, timings of
operation, sharing of distribution network and infrastructure, transport logistics,
R&D, production etc. and to ensure continued supply and fair distribution of
products (e.g. medical and healthcare products such as ventilators, face masks,
gloves, vaccines etc. and essential commodities & services (e.g. logistics,
testingetc.).
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

3. LET US ANALYZE THE ADVISORY THROUGH THESE FAQs:
1. WHAT CONSTITUTES ‘COORDINATED CONDUCTS’ AND WHICH
‘COORDINATED CONDUCTS’ ARE PERMITTED UNDER LAW?
2. DOES THE ADVISORY LIMITS APPLICATION OF SAFEGUARDS TO
CONDUCTS NECESSARY AND PROPORTIONATE TO ADDRESS CONCERNS
ARISING FROM COVID-19?
3. WHAT CONSTITUTES A “JOINT VENTURE” WITHIN THE ADVISORY?
4. HOW CAN YOUR BUSINESS TAKE BENEFIT OF THE ADVISORY AND THE
‘IN-BUILT SAFEGUARDS’ UNDER THE ACT?
5. HOW CAN CCI INITIATE ACTION AGAINST YOUR BUSINESS IN CASE OF
VIOLATION OF ADVISORY?
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

4. CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)
1. WHAT CONSTITUTES ‘COORDINATED CONDUCTS’
AND WHICH ‘COORDINATED CONDUCTS’ ARE
PERMITTED UNDER LAW?
The Advisory states that the Act has built-in safeguards to protect
businesses from sanctions for certain ‘coordinated conducts’. Let’s analyze
what are these coordinated conducts and which certain “coordinated
conducts” are exempt from sanctions by CCI. The term “coordinated
conduct” in the Advisory invariably refers to ‘Horizontal Agreements’
described under S. 3(3) of the Act. Horizontal Agreements are agreements
entered into between businesses which function at same level of the
‘Supply Chain Hierarchy’ and engaged in identical or similar trades. The
agreements described in S. 3(3) are arrangements analogous to
cartelization and are ‘per-se violations’ or ‘presumed violations’ of the Act
and need to be proved otherwise by the erring businesses.

5. These ‘Horizontal Agreements’ include:
 Determining purchase or sale prices;
 Limiting or controlling production, supply, markets, technical development,
investment or provision of services;
 Sharing market or sources of production or provision of services by way of
allocation of geological are of market, type of goods or services or number of
customers in market;
 Bid rigging or Collusive bidding.
It is very important to take note that the above agreements (including all S.3
Agreements) are required to undergo the test of determination further
prescribed in S. 19(3) of the Act, just as violations under S. 4 (abuse of
dominance) are required to undergo test of determination prescribed in S. 19(4)
of the Act. What the Advisory further refers to as the ‘safeguard’ under the Act is
a Proviso to S. 3(3) which provides that value enhancing joint venture
agreements which increase efficiency in production, supply, distribution, storage,
acquisition or control of goods or provision of services, are not per-se violations.
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

6. It is very important to understand here that said Proviso only exempts
such ‘value enhancing joint ventures’ from the wrath of the ‘per-se or
presumed violation principle’ and are still required to test of
determination under S. 19(3) which under this case would attract S.
19(3)(d) to (f), i.e.:
 (d) Accrual of benefits to consumers;
 (e) Improvements in production, distribution, provision of services;
 (f) Promotion of technical, scientific and economic development.
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

7. Although The Language Ambit Of Proviso To S.(3) Of The Act Is All
Encompassing And Wide To Cover Any ‘Coordinated Conduct’ Which Adds
Value To The Markets Or The Customers, However Given The Specific
Language In The Advisory And The Following Stipulation At The End Of The
Note: “However, Only Such Conduct Of Businesses Which Is Necessary And
Proportionate To Address Concerns Arising From Covid-19 Will Be
Considered.”, In My Limited Opinion, In Analyzing Any Alleged Violation Of S.3
Under The Current Times Of Covid-19, Cci Will Selectively Take Into
Consideration And Allow The Safeguard Under The Proviso To Only Those
‘Coordinated Conducts’ Which Were Necessary And Proportionate To Address
Concerns Arising From Covid-19.
2. DOES THE ADVISORY LIMITS APPLICATION OF
SAFEGUARDS TO CONDUCTS NECESSARY AND
PROPORTIONATE TO ADDRESS CONCERNS ARISING
FROM COVID-19?
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

8. It Is Only After The Current Crises Is Over That Cci Will Finally Restore The
Original Ambit And Interpretation Of The Safeguard (Proviso) In Its Full Intent
And Substance To Other ‘Coordinated Conducts’/ ‘Arrangements’/ ‘Horizontal
Agreements’ Only After The Current Covid-19 Crises Is Over. The Only Reason
For Me To Interpret The Advisory In This Manner Is That I Believe That Cci Wants
To Restrict All Such ‘Coordinated Conducts’ In The Manner That Businesses
Doesn’t Take Undue Advantage Of The Helpless Consumers, Under The Garb Of
Such Wide Exemption Under The Proviso.
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

9. Needless to say that a typical ‘joint venture’ is either an incorporated or an
unincorporated ‘joint venture’ with clearly stipulated matrix of incentives and risks
for joint venture parties. However, it is very important to understand that not all
‘businesses collaborations’ will constitute a ‘Joint Venture’ under the Advisory or
the Act. In order to effectively take the benefit of the safeguard under the
Advisory and the Act, businesses need to strategically enter into a written joint
venture agreement which clearly stipulates that the intent and purpose of the
joint venture is to increase efficiency in production, supply, distribution, storage,
acquisition or control of goods or provision of services under the Competition
Act, and that it is not intended to violate any applicable laws. Additionally, the
joint venture shall have to be ratified by CII in certain circumstances.
3. WHAT CONSTITUTES A “JOINT VENTURE” WITHIN THE
ADVISORY?
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

10. The Advisory states that supply chain disruptions have occurred in critical
healthcare products and other essential commodities/ services as an example,
however in it certainly does not limit the scope of the Advisory or the in-built
safeguards in the Act to these two sectors alone. However, as also noted by me
above, CCI while analyzing any alleged violation of Section 3 under the current
times of COVID-19, will selectively take into consideration and allow the
safeguard under the Proviso to only those ‘coordinated conducts’ which were
necessary and proportionate to address concerns arising from COVID-19. It is
only after the current crises is over that CCI will finally restore the original ambit
and interpretation of the safeguard (Proviso) in its full intent and substance to
other ‘coordinated conducts’/ ‘arrangements’/ ‘horizontal agreements’ only after
the current COVID-19 crises is over.
4. HOW CAN YOUR BUSINESS TAKE BENEFIT OF THE
ADVISORY AND THE ‘IN-BUILT SAFEGUARDS’ UNDER
THE ACT?
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

11. It is therefore advised that any ‘coordinated conducts’ or arrangements
should only be brought into effect which is necessary and proportionate
to address concerns arising from COVID-19 and the said intent shall also
be clearly mentioned in the ‘Joint Venture’ agreements entered into by
your businesses in order to avoid sanctions by CCI.
5. HOW CAN CCI INITIATE ACTION AGAINST YOUR BUSINESS
IN CASE OF VIOLATION OF ADVISORY?
CCI is in a sense, a market regulator and watchdog for catching hold and
penalizing any business of anti-competitive conduct or abuse of dominance
in India and keeps a constant tab on the markets by virtue of Section 19(1) of
the Competition Act, 2002. Accordingly, CCI has the power to inquire into
any alleged contravention either:
1. on its own motion; or
2. on receipt of information by any person, consumer or association or
trade association; or
3. a reference made to it by Central Govt. or a State Govt.
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra (Corporate Counsel)

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do not necessarily reflect the official position of the Author or the position of any
other agency, organisation, employer or company. Assumptions made in the analysis
are not reflective of the position of any other entity other than the author/(s), and
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hold us to them in perpetuity.
CCI’s ‘BUSINESS ADVISORY’ ON ‘COORDINATED CONDUCT’
Tuhin Batra
Corporate Counsel
The author can be reached at tuhinbatra@gmail.com, +91-9654838120