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SC clarifies: Delineation of relevant market not mandatory for all allegations of anti-competitive agreements

05-Jul-2018

On 7 May 2018, the Supreme Court of India (Supreme Court) passed an important order (Clarification Order) in Competition Commission of India (CCI) v. Coordination Committee of Artist and Technicians of West Bengal Film and Television Industry clarifying certain ambiguous portions of its judgment dated 7 March 2017 (2017 Order).

Background

In the 2017 Order, the Supreme Court dealt with an issue of alleged cartelisation and anti-competitive conduct under section 3 of the Competition Act, 2002 (Section 3). In this regard, the Supreme Court noted that section 19(3) of the Competition Act, 2002 (Competition Act) sets out criteria for ascertaining whether an agreement causes appreciable adverse effect on competition (AAEC) in terms of Section 3 (Anti-competitive agreements).  The Supreme Court observed that since section 19(3) specifically uses the term ‘market’ (which the Supreme Court construed to mean ‘relevant market’), it was necessary to first define the relevant market in which competition was “effected”, prior to making an assessment of AAEC under Section 3. This observation led to certain uncertainties among parties as well as the CCI, since the Supreme Court’s views were divergent from the decisional practice of the CCI and the explicit language of the legislation (specifically relating to the presumption of AAEC under sub-section 3 of Section 3). Consequently, the CCI preferred an application for clarification of the 2017 Order before the same bench resulting in the Clarification Order.

Decision of the Supreme Court

By way of the Clarification Order, the Supreme Court has now clarified that the delineation of the relevant market is not a mandatory pre-condition for determination of violations of Section 3, particularly where the agreement/conduct of the parties falls under the statutory presumptions set out in Section 3.

Comment

Under the construct of the Competition Act, presumption of AAEC in an agreement between competitors under Section 3(3) of the Competition Act is condition precedent to decide “cartel” and therefore, there is no requirement to define a relevant market in such cases. The 2017 Order appeared to be varied from this settled position to include the need for defining the relevant market as well as affected markets in all Section 3 cases. The Clarification Order provides much needed clarity on the subject and equally reaffirms the decisional practice of the CCI.  It is expected that the Clarification Order will relax the burden on the CCI to define and demonstrate effects on the market while discharging its adjudicatory powers in relation to cartel cases.

  • Sagardeep Rathi (Associate Partner), Anisha Chand (Principal Associate) and Akash Karmarkar (Associate)

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Sagardeep Rathi (partners) , Anisha Chand (partners)

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