INDIAN COMPETITION LAW UPDATE: A CAVEAT ISSUED IN THE FORM OF AN ADVISORY

INTRODUCTION

The outbreak of COVID 19 has had a dreadful impact on a global stage. The Competition Commission of India (CCI) has been very prompt in adopting significant measures to ensure its continuous working during unprecedented times. Consequently, the CCI issued several notices and circulars time and again to keep people and businesses updated about its functioning and further plan of action.[1]

Given the on-going uncertainty, there is a continuing imbalance between supply and demand of essential commodities which required immediate corrective steps to ensure availability of such products in this time of crises. In the times of crisis, the companies might go for profit maximization which ultimately may cause harm to the consumers and the market. Thus the anti-trust watchdog has meticulously issued an advisory to businesses to ensure fair trade and mitigate consumer harm.

This article provides a snapshot of the key updates from the competition authorities in India.


THE CCI PROCEEDINGS

Before the lockdown, the CCI was taking up only urgent matters, allowing filings (including e-filings) however with the increase in the nationwide lockdown the CCI had to devise certain plan for the smooth functioning of fair trade.

  • Filings under Section 3 and Section 4:

As per the notice issued by the commission dated 23rd March 2020, all filings with respect to Section 3 and Section 4 of the Act were suspended. In furtherance to this a notice was circulated on 30th March 2020 which suspended all filings and compliances scheduled on or before 14th April 2020 with respect to pending cases.

A fresh notice was circulated on 13th April 2020 which allowed filing of fresh information related to Section 3 and Section 4 of the act. Fresh dates were issued for compliances up to 02nd May 2020 vide notice 20th April 2020.

  • Hearings:

Prior to the nationwide lockdown imposed by the Central Government, the CCI had adjourned all the hearings starting from 17th March till 31st March. As per the latest notices dated 13th April 2020 and 20th April 2020 circulated by CCI all matters which were listed for hearing on and before 03rd May 2020 shall be provided with fresh dates.

  • Pre-filing Consultations:

All the pre-filing consultations which were suspended by the CCI vide notice dated 23rd March 2020, has now been allowed through video conferencing vide notice dated 13th April 2020.

  • Notification of Combinations:

All the notifications with respect to combinations under Section 6 of the Competition Act which were suspended vide notice dated 23rd March 2020 have now been allowed to be filed electronically vide notice dated 13th April 2020.


ADVISORY TO BUSINESSES DURING COVID 19

According to the direction of various governments across the globe, cleanliness, sanitization and covering the face with a mask (N-95, N-99 or surgical) is of utmost importance. In furtherance to this, The Ministry of Consumer Affairs has inserted clause 8 to the Schedule of Essential Commodities Act, 1955 which declared that Hand Sanitizers and Masks are an essential commodity till 30th June 2020. This was done to ensure that there is no paucity of the commodities.


While various other jurisdictions have already issued certain guidelines and temporarily relaxed the scrutiny of competition law, calling the current situation as “extraordinary situation” to ensure that retailers and companies are given an elbow’s room to collaborate to enable adequate response to market needs.


The Competition Commission of India came up with an advisory amidst the increasing threat of COVID 19 to ensure that consumers are not exploited in this unprecedented situation. The anti-trust watchdog relaxed certain provisions to cope up with significant changes in supply and demand patterns which arise out of this extraordinary situation. The anti-trust watchdog observed that under these precarious circumstances businesses may need to coordinate amongst themselves for certain activities, which might include exchange of business-sensitive information to maintain adequate supplies in the market, or coordination to improve the efficiency of the distribution process by segregating the market into smaller divisions, sharing of distribution network and infrastructure etc., to ensure that there is continuous supply of essential commodities.


However, amid the lockdown, while access to and production of essential services has been allowed with certain relaxations from the anti-trust watchdog various concerns have flagged in the markets. In the initial days of the COVID-19 pandemic, a sudden increase in demand for essential products had caused a supply shortage in the market leading to steep increase in prices for such essential products. As COVID-19 terror hiked and patients continued to increase in India, some manufacturers as well as retailers cashed in on the virus terror by jacking up prices of N-95 masks by 2 to 3 times which were originally sold for INR150, were being sold at a gouged price of INR500 each.[2] To wipe out such anti-competitive strategies of businesses, the Competition Commission of India issued a caveat of not taking an advantage of COVID-19 to contravene any of the provisions of the Act. However, only such conduct of businesses which are necessary, proportionate and temporarily undertaken by an enterprise to fight the crisis in compliance with the direction of the Government may not be penalized under the (Indian) Competition Act, 2002.


CONCLUDING REMARKS

In sum, although the anti-trust watchdog has eased certain provisions for smooth supply of essential commodities, the businesses involved in supply of essential commodities in these dreadful times should not indulge in any sort of anti-competitive activities, which distort fair trade and harm consumers. Considering the fact that the Competition Law of India is still at a nascent stage therefore the companies, businesses have less knowledge about the competition law implications in the market and therefore the advisory issued by The Competition Commission of India is a caveat to businesses, to curb such situations at the times of crisis even in the future and shall also give powers to the commission for taking action against the offenders.


Footnotes

[1] Public Notices, https://www.cci.gov.in/what-s-new (last visited Apr. 25, 2020). [2] Coronavirus scare grips India: Price of N95 mask shoots up to Rs.500, sanitizer shortage in stores, Economic Times, Mar 19, 2020, https://economictimes.indiatimes.com/magazines/panache/coronavirus-scare-grips-india-price-of-n95-mask-shoots-up-to-rs-500-sanitiser-shortage-in-stores/articleshow/74476650.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Submitted by,

Abhishek Singh & Kirti Talreja,

National Law University, Odisha.

© 2019 by AmicusX