FKCCI accused of abuse of dominance

'Reliance Big Pictures', which is Reliance Big Entertainment's motion picture brand, has approached the Competition Commission of India, alleging that the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has asked producers and distributors of movies to stop distributing prints to 'Big Cinemas', thereby abusing its dominant position in the Bangalore - Mangalore region. An earlier confrontation between the two bodies involved a ban on the distribution of the movies 'Raavan' and 'Raavanan'.

Reliance Big Pictures, led by Anil Ambani, will have to prove not only the facts alleged, but also show that the FKCCI does have a dominant position enabling it to influence producers and distributors so as to ensure non-distribution of prints to Big Cinemas. The CCI is yet to take a stand on the issue and may order an investigation based on preliminary findings.

Source: Business Standard, 30th August 2010

CCI to automatically approve 'Large M&As'

India’s anti-trust body, the Competition Commission of India (CCI), is planning to come out with regulations for automatic approval to large mergers and acquisitions (M&As) if these are not harming the interest of the consumers. As per the regulations which are being finalised by the CCI, its permission is required for any acquisition where the combined turnover of the two parties (acquirer and the enterprise being acquired) exceeds Rs 3,000 crore or the combined value of their assets is more than Rs 1,000 crore. If it is an overseas transaction, the threshold limit is $500 million worth of assets or turnover in excess of $ 1.5 billion. Sections 5 and 6 of the Competition Act, 2002 which deal with mergers and acquisitions is yet to be notified. Till these sections are not notified, the CCI cannot deal with cases under these two sections. Under the current competition framework, the CCI can take up to 210 days to clear a transaction.

Is the Jet-Kingfisher code sharing deal anti-competitive?

The proposed code-sharing agreement between India’s two biggest private operators in the airline industry, Jet Airways and Kingfisher Airlines has come under the scrutiny of the Competition Commission of India (CCI) as a complaint has been filed with the competition watchdog saying the pact could lead to the formation of a cartel. The scope of the strategic alliance between Jet and Kingfisher, announced in October 2008, includes code-sharing on both domestic and international flights and joint fuel management in order to reduce expenses. Aviation analysts feel that costs for the airlines are at a peak, which has led to a serious dip in demand. This, coupled with the global financial crisis has also made the raising of capital almost impossible.

When two principal competitors come as collaborators, this can only be as a means to survive. If the situation was normal, this alliance could be called anti-competition, more so as both together have a market share of around 60%. But in the given circumstances this alliance is a need of the hour, a rescue plan to bring stability in the industry. However, experts at India’s regulatory body for competition law, the Competition Commission of India while airline alliances can shed costs, these can adversely impact competition in the markets. They reduce choice for the travelling public and increase tariffs. For this reason, airline alliances and mergers have been the subject of investigations by competition authorities.
For more on the same, please see: Business Standard article

ECJ dismisses Akzo Nobel appeal

The European Court of Justice has dismissed an appeal by Akzo Nobel of a 2007 judgement by the Court of First Instance. The fine was originally imposed by the European Commission in 2004 for cartel activities related to the sale of Chlorine Chloride, a feed additive. Subsequently the matter went on appeal to the Court of First Instance and then the European Court of Justice, and both courts have affirmed the findings of the Commission. The case is important since it established that a parent company can be held liable for anti-competitive behaviour of its subsidiaries even if did not itself participate in those activities. For more on the case and a press release by the European Commission welcoming the decision of the ECJ, visit: http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/385&format=HTML&aged=0&language=EN&guiLanguage=en

India yet to implement Section 5 of the Competition Act

India’s new competition regime is nearly operational. In March, the CCI and the Competition Appellate Tribunal were fully constituted and on 20^th May 2009, sections 3 and 4 related to anti competitive agreement and abuse of dominance were notified by the Competition (Amendment) Act, 2007. However, provisions related to combinations i.e. section 5 of the Act has still not been notified. The framework for merger control has been criticised by practitioners. As per the current framework, all mergers or acquisitions of control, shares, voting rights or assets, or acquisitions of control over enterprises where the acquirer controls another enterprise involved with similar goods or services, which result in either the parties to the transaction, or the group to which the target would belong post-acquisition, exceeding specified asset or turnover thresholds, are defined as combinations.

Prior notice must given to the CCI as per the prescribed format which will then determine whether it causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India. The interpretation of this question is left to its subjective determination.

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