Author name: CBCL

[By Nikita Parihar] The author is a student of Lovely Professional University, Punjab.   Introduction Competition Amendment Bill 2023 [‘‘CAB23’’] recently introduced in the parliament introduced the concept of penalty on the Global Turnover [‘‘GT’’] of the infringing party in India as well. It is said to be a wild card entry because it is neither introduced in Competition Amendment Bill 2022 [‘‘CAB22’’] nor was recommended by the standing committee report. The earlier penalty was given on the average turnover of the relevant market which watered down the deterrent motive of the law that is to be attained. A penalty on GT is a type of penalty or fine that can be foisted on companies for overstepping competition law. In some jurisdictions, such as the European Union [‘‘EU’’], competition law authorities have the power to impose fines on companies that engage in anticompetitive behavior, such as price-fixing or market allocation. These fines can be significant and are often based on a percentage of the company’s GT. The use of a penalty on GT is intended to make the fine significant enough to deter companies from engaging in anticompetitive behavior, while also considering the company’s size and economic power. By imposing a fine that is a percentage of the company’s GT, competition authorities aim to set the seal that the penalty has a meaningful impression on the company’s bottom line, and remits a strong signal to other companies that anti-competitive behavior will not be endured. It is worth noting that the use of a penalty on GT is not universally accepted, and there is some debate over whether it is an appropriate form of penalty. However, many competition law authorities continue to use this form of penalty, and it remains an indispensable tool for enforcing competition law and stimulating fair competition in global markets. The author argues that it can disproportionately impact companies and that the calculation of GT can be convoluted and can also take hold of India’s market by putting off global players’ entry. A potential barrier to global players Penalizing an enterprise altogether and taking its GT as leverage to keep them truncated might have detrimental effects on the Indian market as it might agitate global corporations to set foot in the Indian market. But that actually depends upon authorities to balance with the most awaiting guidelines for the same, EU also has akin laws to tackle inequitable players and it turned out to be effectual but considering India’s growing market and fluctuations it can serve as a menace to the Indian economy.. As developing nations, we need to captivate corporations to invest and operate in India to contribute to its extension. Still, imposing fines that are detrimental to their growth may affect India’s growth. There are many conglomerates’ deals across many sectors and if CAB23 is passed and they are found doing anti-competitive practices in one sector they will be fined taking turnover all across the sectors they deal in which will be a matter of concern for them as well. Though this can help the Competition Commission of India [‘‘CCI’’] bring down the cases but endangering the entry of global players and the existence of smaller companies or startups will curtail the purpose of the competition law itself. Detrimental to the existence of smaller companies When it comes to small companies, the European Commission’s competition policy recognizes that they may face different challenges compared to larger companies, such as limited financial resources or market power. Therefore, the Commission takes into account the specific circumstances of Small and Medium-Sized Enterprises [‘‘SMEs’’] when applying competition law. The Commission has adopted various measures to support SMEs in their business activities while ensuring a level playing field for competition. For example, the Commission has simplified the procedures for SMEs to apply leniency in cartel cases, and it has also provided guidance on how SMEs can participate in public procurement procedures. In addition, the Commission has established specific funding programs to support SMEs in their business activities and encourage innovation and growth, such as the Horizon 2020 program. However, it’s worth noting that competition law applies equally to all companies, regardless of their size. If a small company engages in anti-competitive behavior, it may face fines and other penalties under EU competition law. The Commission’s goal is to ensure that competition is not distorted, and consumers are not harmed, while also considering the particular challenges SMEs face. Excessive fines leading to over-deterrence The article argues that while fines imposed for anti-competitive practices should be significant, they should also be proportionate to the actual harm caused. Excessive fines can lead to increased scrutiny and compliance burdens for organizations, ultimately impacting customers who may have to pay increased prices. The spirit of competition law in India is to protect customers and market forces, but over-deterrence resulting from disproportionate fines could discourage enterprises from entering the Indian market or result in unfair treatment of customers. Therefore, the author suggests that the CCI should ensure that penalties are in proportion to the harm caused, and not more. While the calculation of GT may pose challenges for the CCI, particularly in the early stages, the author suggests that developing a process for collecting relevant information and consolidating it will be essential for the CCI to handle cases efficiently and effectively. Implementing foreign concepts in the Indian market The first time a penalty was levied on a GT by competition authorities in the EU was in the case of Intel Corporation. In 2009, the European Commission fined Intel a record 1.06 billion euros for abusing its dominant market position by offering rebates to computer manufacturers on the condition that they purchased all, or almost all, of their x86 CPUs from Intel. The Commission found that these rebates were part of a strategy by Intel to exclude its main rival, Advanced Micro Devices (‘‘AMD’’), from the market for x86 CPUs. The Commission also found that Intel made direct payments to a major computer retailer, Media-Saturn, to stock

[By Aneesh Raj] The author is a student of National Law University and Judicial Academy, Assam.   “Necessity knows no law.” – Aesop INTRODUCTION The doctrine of necessity and the Competition Commission of India’s (CCI) combination regime are two important concepts in the realm of competition law in India. The doctrine of necessity refers to situations where a law may be relaxed or suspended in cases of emergency or other extreme circumstances. The CCI’s combination regime, on the other hand, pertains to the assessment of mergers and acquisitions that may have an impact on competition in India. A newspaper article says that the CCI could use the “doctrine of necessity” to look into merger and acquisition deals. The current situation is that there is a lack of the required quorum, which means that many deals are awaiting CCI approval. So, a significant question arises here: in the existing scenario, can CCI invoke the doctrine of necessity to clear its regulatory logjam? In this article, we will explore these two concepts and their relationship in the context of Indian competition law and also find the answer to the above question. THE DOCTRINE OF NECESSITY The doctrine of necessity is a legal principle that allows for the relaxation or suspension of laws in cases of emergency or other extreme circumstances. The doctrine is based on the idea that laws are created to serve the public good, and that in certain circumstances, strict adherence to the law may be detrimental to the public interest. The doctrine of necessity is not a blanket license to ignore the law, but rather a recognition that in certain situations, strict adherence to the law may not be practical or desirable. The Supreme Court has established that the doctrine of necessity should not be invoked on a regular basis for minor matters because it may result in the absence of the rule of law, if given the choice between allowing a biased person to act on a matter or stopping the matter itself, the former will be preferred over the latter, even if the latter may be afflicted by that biased person’s or authority’s bias; however, the decision of that biased person will be upheld. ORIGIN OF THE PRINCIPLE OF DOCTRINE OF NECESSITY Necessity is a legal principle that can be used to justify an individual’s actions in an emergency situation that they did not create. This means that if a person is faced with a situation that requires immediate action to prevent harm or danger to themselves or others, they may be allowed to take actions that would normally be considered unlawful or illegal. In 1954, Chief Judge Muhammad Munir of Pakistan was faced with a situation where the Governor General, Ghulam Moulam, had exercised emergency powers that went beyond the limits of the constitution. Munir recognized the urgency of the situation and made the ground-breaking decision to sanction the Governor General’s actions, coining the term “doctrine of necessity” for the first time. This doctrine essentially meant that in extreme circumstances, such as an emergency or crisis, the law could be temporarily suspended or modified to ensure the safety and well-being of the people. To support his decision, Chief Judge Munir referred to the ancient legal maxim of Bracton, who stated that “That which is otherwise not lawful is made lawful by necessity.” Munir’s decision was a landmark one that established the concept of the doctrine of necessity in law. It recognized the need for flexibility and pragmatism in times of crisis, while also emphasizing that such extraordinary measures should only be taken as a last resort and with the goal of preserving the rule of law and protecting individual rights. APPLICATION OF PRINCIPLE IN INDIA The doctrine of necessity, which allows for the justification of actions taken in emergency situations, was first used in India in the significant case of Gullapalli Nageswara Rao v. APSRTC[1] in 1958. This decision paved the way for the further development of the doctrine, with subsequent cases providing new interpretations, applications, and invocations of the principle. One such case was the landmark decision of Election Commission of India v. Dr. Subramanian Swamy, which is credited with transforming the necessity doctrine into the absolute necessity doctrine. However, some legal experts have argued that over-reliance on this principle could lead to the erosion of the rule of law. Consequently, the Supreme Court has emphasized that the doctrine of necessity should only be used in the most extreme and urgent circumstances. In other words, while the necessity doctrine provides a means of justifying actions taken in emergencies, it should not be used as a loophole to circumvent the law or justify questionable decisions. Instead, the doctrine should be invoked sparingly, and only when there is no other alternative to address a situation that threatens public safety or welfare. Even though this is unprecedented for the CCI, Indian regulators have had trouble in the past because of late appointments. Take into account the central government’s four-year difficulty in locating a qualified “technical member” for the patent bench of the Intellectual Property Appellate Board (IPAB), which hears appeals relating to patents. Similarly, after technical member CKG Nair retired in March 2021 and his replacement was appointed almost a year later, India’s highly regarded securities market regulator SEBI’s appeal tribunal, the Securities Appellate Tribunal (SAT), went nearly a year without a technical member. Both of these tribunals’ inability to make critical decisions was hampered by the delay in the appointment of crucial members, which had serious economic and regulatory repercussions. But when important appointments to statutory bodies and tribunals were not made on time, like in these two cases, the courts stepped in to keep the justice system from getting stuck. The Delhi High Court reinstated and functionalized the IPAB’s patent bench in Mylan Laboratories Limited v. Union of India[2] (2019), noting that the Constitution required that all citizens have the right to access justice, which would be compromised if tribunals were unable to fulfil their

[By Shourya Mitra and Ishaan Saraswat] The authors are students of Jindal Global Law School.   Introduction  Upon perusing the National Company Law Appellate Tribunal’s (NCLAT) approach to competition appeals, it appears that there is a trend of requiring a 10% deposit to the NCLAT as a prerequisite for hearing penalties resulting from an order of the CCI. However, questions arise regarding the imposition and impact of this mandate. In the case of Make My Trip (“MMT-GO“), the NCLAT sought a 10% deposit of the penalty as a precondition for hearing the appeal, but no stay was granted by the NCLAT regarding the remaining fine. The Delhi High Court had to clarify that no recovery could be initiated on the remaining 90% penalty amount after MMT-GO deposited 10% of the penalty amount to the NCLAT. However, in the case of Google, the NCLAT did not stay the order or elaborate further on the penalty despite seeking a 10% deposit. This piece analyzes the validity of such a condition and discusses inconsistencies in the imposition of the 10% penalty by the NCLAT in the aforesaid cases involving MMT-GO and Google. The Saga of an Appeal Section 53B of the Competition Act, 2002 (“the Act”) provides for the right to appeal against the decision of the CCI before the NCLAT. It is a settled position in law that the right to appeal is created by the statute, which means that the right to appeal can only be limited or restricted by the provisions of the statute that creates it. In other words, the right to appeal is not an absolute right, and it can be subject to certain conditions or restrictions. Under the Act, the aggrieved party must file the appeal within sixty days of the decision being appealed against. Apart from this, the Act does not impose any other requirements or limitations on the aggrieved party. We can trace the inception of the 10% of penalty amount to the case of Ultratech Cement Ltd. v. Competition Commission of India, wherein an ancillary question before the Supreme Court of India  was whether the NCLAT  can direct the aggrieved party to deposit ten percent of the penalty imposed as a condition precedent to hearing the appeal. The Supreme Court opined that decisions or penalties involving the payment of money are seldom overturned since the affected party can usually be compensated if the decision is later found to be flawed. Therefore, according to the Apex Court, if the Tribunal decides to require the appellants to pay ten percent of the penalty owed, it would be appropriate, even if it’s only an interim measure. Rather, it would be an equitable way to handle the matter. Additionally, as per the Supreme Court in Himmatlal Agrawal v. Competition Commission of India (“Himmatlal”), the NCLAT is a legal body created by a statute, and its actions are limited by the provisions of the law. The Act does not state that the Tribunal has the power to require an appellant to deposit a specific amount before hearing their appeal. Rather, the condition to deposit ten percent of the penalty was only imposed in relation to the stay of the penalty order issued by the CCI. Therefore, in the event that a deposit is not made, the Tribunal has the authority to lift the stay on the CCI’s decision and continue with the appeal, rather than dismissing the appeal itself. In this regard, the NCLAT has the authority to mandate that a portion of the penalty be deposited as security to stay the decision of the CCI. A Fork in the Road Having discussed the jurisprudence of the 10% penalty, it is clear that the imposition of the 10% penalty as a precondition to hearing the appeal cannot be sustained as a mandate and that the lack of an explicit stay on the penalty would go against the settled position of law. However, such an inconsistent application of law will now be shown through the contrasting orders of MMT-GO and Google. The CCI on October 19, 2022, imposed penalties on MMT-GO for violating the provisions of the act, as it was abusing its dominant position. The Commission also found that MMT-GO had contravened the provisions of Section 3(4)(d) read with Section 3(1) as MMT-Go had entered into Vertical anti-competitive agreements with the service providers. On appeal to the NCLAT, the Tribunal directed MMT-GO to deposit 10% of the fee as a precondition to hearing the appeal. However, this was challenged before the Delhi High Court as the NCLAT did not impose any stay on the recovery of the remaining penalty.. The Court noted that the pre-deposit of the 10% could not be merely for the admission of the appeal. The Court felt the need to clarify the stay on the order and consequently, it confirmed that no recovery could be initiated with respect to the 90% remaining penalty amount. The outlier in a similar time period as the case of MMT, is the case of Google. Therein, the CCI had imposed penalties on Google for contravening the provisions of the Act. One of them pertained to the abuse of dominance via mandatory installation of apps (Competition Appeal (AT) No. 1 of 2023) while the other was for imposition of payment methods on the developers (Competition Appeal No.4 of 2023). Across the two orders, NCLAT sought the deposition of 10% fine. However, the NCLAT did not stay the order in either of the cases. In Competition Appeal (AT) No. 01 of 2023, NCLAT stated that there was no requirement for an interim stay with respect to the order of the CCI. It did not elaborate on the penalty nor any consequent stay. The tribunal simply held that there was no need for passing any interim order. The question that the authors are proposing is whether there could be any forceful deposition of the 10% penalty as a precondition to hearing the appeal and without any stay on recovery of the