Competition Law: INFORMATION, UPDATES AND ANALYSIS, Sep 2017
India – Competition Commission of India (‘CCI’)
CCI dismisses anti-competitive allegations against Tata Housing Development Co. Ltd
August 10, 2017
Capt. Deepak Shrikrishnarao Satam (‘the Informant’) filed an Information alleging contravention of the provisions of Section 4 of the Competition Act, 2002 (‘Act’) by Tata Housing Development Co. Ltd. (‘OP‘). The Informant had purchased a 2BHK flat in Pune, Maharashtra, built and developed by the OP. The OP is a wholly owned subsidiary of the TATA Group, a leading builder/developer in the country. It was alleged by the Informant that buyers were manipulated and cheated into signing a standard agreement for sale with unfair and unacceptable terms and conditions. The Informant had challenged various clauses of the agreement for sale with regard to the price of flat, sale of car parking space, charges paid for approval of drawings and plans, area of flat, etc. as being one sided, ambiguous and uncertain. It was also alleged that the OP refused to refund deposits and other illegally collected amounts and has not even provided the final Occupation Certificate to the buyers resulting in financial losses to the Informant and other buyers. It was alleged by the Informant that such conduct amounted to unfair trade practice and abuse of dominant position by the OP. The CCI examined the real estate market in Pune city to ascertain the dominance of the OP in the said relevant market. The CCI was of opinion that the OP faces sufficient competitive constraints from various other major real estate developers like Life Republic Kotle Patil, Blue Ridge Paranjape Schemes, Nyati Group apart from many other small real estate developers operating in the said market and as such the OP is not in a dominant position in the relevant market. The CCI was therefore of the opinion that no case of contravention of the provisions of the Competition Act, 2002 could be made out against the OP.
CCI dismisses allegations of cartelization against various Banks in India
August 23, 2017
Mr. Kush Kalra (‘Informant’) had filed an Information under Section 19(1)(a) of the Competition Act, 2002 (‘Act’) alleging cartelization between Reserve Bank of India; State Bank of India; Syndicate Bank; Punjab National Bank; Bank of Maharashtra; Canara Bank; UCO Bank; Bank of India; Punjab & Sind Bank; Union Bank of India; Vijaya Bank; Bank of Baroda; Corporation Bank; Dena Bank; Andhra Bank; Oriental Bank of Commerce; IDBI Bank; Allahabad Bank; Bharatiya Mahila Bank; and Indian Overseas Bank (‘Banks’). It was alleged in the Information that the Banks control and limit the services offered by them with respect to safety deposit boxes. It was stated by the Informant that while arranging for a safety deposit box for himself, he found that the Banks made the customers sign an agreement wherein it is provided that the Banks will not be responsible for loss of any kind of the articles kept inside the safety deposit box. The Informant had also filed an application under the Right to Information Act, 2005 with the Banks in response to which it was confirmed that as per the agreements entered with customers for hiring/leasing lockers, Banks have no liability for any loss of or damage to the articles placed in the lockers. The Banks did not compensate the customers for any loss or damage to the articles kept in the lockers. The Informant alleged that the Banks have formed a monopoly system and they do not compensate for any loss of articles kept in the bank lockers indicating that they are engaged in a cartel. The CCI was of the opinion that mere common practice followed by all market players emanating from their independent decision making at most indicates an industry practice and not collusion amongst the Banks. The CCI was of the opinion that such common practice cannot be a subject-matter of intervention by it unless there is material that shows that prima facie, the impugned conduct was out of an agreement amongst competitors for pursuing any of the activities prohibited under Section 3(3) of the Act. The CCI did not find any material furnished by the Informant that suggested that there was any agreement between the Banks in contravention of the provisions of Section 3(1) read with Section 3(3) of the Act. The CCI therefore closed the matter under Section 26(2) of the Act.
United Kingdom (‘UK’) – Competition and Market Authority (‘CMA’)
CMA clears Unilever after suspected abuse of a dominant position
August 10, 2017
CMA closed investigation into suspected abuse of dominant position by Unilever plc (‘Unilever’) in the supply of single-wrapped impulse ice cream in the UK as there were no grounds for action. The promotional deals offered by Unilever from January 2013 to February 2017 were such that the CMA feared that they would have an exclusionary effect on the dessert market. Unilever supplied to retailers single-wrapped impulse ice cream products free of charge or at a reduced price if they purchased a minimum number of single-wrapped impulse ice cream products from Unilever. The CMA assessed whether these promotional deals were made to offer the retailer a significant rebate for purchasing single-wrapped impulse ice cream products from Unilever. It considered whether the offers were likely to produce an exclusionary effect by providing incentives to retailers to purchase a large portion of their total requirement from Unilever with the likely effect of filling the retailers’ freezer thereby restricting competition in the supply of single-wrapped impulse ice cream products. However, after considering the evidence CMA was of the opinion that the structure and availability of Unilever’s Package Offers, taken together with the purchasing patterns of retailers, were such that Unilever’s promotional deals were unlikely to have any exclusionary effect in the frozen desserts market and cleared Unilever of any alleged anti-competitive practices.
United States of America (‘U.S.A.’) - Federal Trade Commission (‘FTC’)
FTC approves final order designed to preserve competition in US pharmaceutical market.
August 30, 2017
FTC has approved a final order designed to remedy anti-competitive effects of the proposed acquisition of Claris Lifesciences Preserves Inc. by Baxter International. Baxter International Inc. is a Fortune 500 American health care company with headquarters in Deerfield, Illinois, US. Claris Lifesciences Preserves Inc. is involved in marketing and distribution of generic injectables in United States. The company is a wholly-owned subsidiary of Claris Lifesciences Ltd and is headquartered in New Jersey, USA. According to the complaint, the proposed acquisition is likely to reduce: (i) competition in the U.S. market for the antifungal agent fluconazole, in saline intravenous bags, which is used to treat fungal and yeast infections. In the US Claris and Baxter are two of four significant competitors selling fluconazole and have an estimated combined market share of nearly 60 percent; (ii) future competition in the U.S. market for intravenous milrinone, which dilates the blood vessels, lowers blood pressure and allows blood to flow more easily through the cardiovascular system. Intravenous milrinone is presently sold by three companies in the US including Baxter. Claris is expected to enter the market soon after its application is approved by FDA. FTC was of the opinion that the proposed acquisition would reduce the suppliers of fluconazole from four to three and prevent entry of new supplier of intravenous milrinone which is likely to harm consumers through higher drug prices. The consent order requires the parties to divest all of Claris’s rights to fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags to New Jersey-based pharmaceutical company Renaissance Lakewood LLC.
United States of America
FTC orders Mars to divest 12 veterinary Clinics as a Condition of Acquiring Pet Care Company VCA Inc
August 30, 2017
Mars Incorporated (‘Mars’) has agreed to divest 12 veterinary clinics that provide specialty and emergency services in order to settle FTC charges that Mars $9.1 billion acquisition of VCA Inc. (‘VCA’) would violate US Anti-trust laws. Mars and VCA both provide specialty and off-hours emergency veterinary services in facilities operated across the US. According to the complaint if the acquisition takes place without a remedy it may substantially lessen competition for certain specialty and emergency veterinary services in 10 US localities by eliminating head-to-head competition between Mars and VCA in those localities. Further according to the complaint if the acquisition takes place as proposed it would lead to higher prices and lower quality of services for the pet owners. FTC was of the opinion that these effects are unlikely to be mitigated by the timely entry of new competitors as opening a specialty or emergency services veterinary clinic presents some unique challenges, including the need to recruit specialist veterinarians with considerably greater training than general practice veterinarians. Under the terms of the consent order, Mars and VCA must secure all third-party consents, assignments, releases, and waivers required to permit the buyers to conduct business at the divested clinics, and provide reasonable financial incentives to key employees to continue in their positions. The order also states that for a year after the order takes effect, Mars will be prohibited from contracting with any specialty or emergency veterinarian affiliated with a divested clinic. In terms of the order for a period of ten years, Mars is also required to notify the FTC if it plans to acquire any additional specialty or emergency veterinary clinics in certain geographic areas.
Republic of India
Notification regarding exemption of Regional Rural Banks from Section 5 and 6 of the Competition Act, 2002
August 10, 2017
The Central Government in exercise of the powers conferred by Section 54(a) of the Competition Act, 2002 has exempted the Regional Rural Banks in respect of the notification under Section 23A (1) of the Regional Rural Banks Act, 1976 from the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of five years from the date of publication of the notification in the Official Gazette. (i.e. August 10,2017 )
Notification regarding exemption of nationalized banks from Section 5 and 6 of the Competition Act, 2002
August 30, 2017
The Central Government in exercise of the powers conferred by Section 54(a) of the Competition Act, 2002 has exempted all cases of reconstitution, transfer of the whole or any part thereof and amalgamation of nationalized banks, under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 from the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of ten years from the date of publication of the notification in the Official Gazette.(i.e. August 30, 2017)
United Kingdom (UK)
CMA approves proposed merger of two Birmingham hospital trusts
August 30, 2017
CMA was of the opinion that the merger of Heart of England NHS Foundation Trust (HEFT) and University Hospitals Birmingham NHS Foundation Trust (UHB) could give rise to competition concerns across a number of elective specialties. However, NHS Improvement, the sector regulator advised CMA that HEFT had experienced sustained difficulties in governance, quality of care and finances since 2012 which successive managements were unable to address The appointment of UHB management to HEFT’s executive team in October, 2015 has already benefited HEFT patients such as reduced waiting times and improvements in the quality and safety of patient care. It was advised by NHS Improvement that these improvements and a number of other longer-term benefits would disappear without the merger and the continued presence of the UHB management at HEFT. On the basis of evidence available, CMA found that HEFT would be a relatively weak competitor to UHB without the merger and that both parties were experiencing capacity constraints. On the basis of the available evidence, the CMA found that the benefits of the merger outweighed the CMA’s potential competition concerns. The merger was therefore approved by CMA.
European Union (‘EU’)
European Commission approves acquisition of Pelican Rouge by Selecta
August 25, 2017
The EC has approved acquisition of vending services provider Pelican Rouge by Selecta (‘Parties’) subject to divestiture by Selecta of all vending activities in Finland. Selecta of Switzerland provides vending services in Europe in both public and private settings such as sale or lease of vending machines, sale of consumables used to stock vending machines as well as stocking and maintenance of vending machines for both food and beverages vending. Pelican Rouge of Netherlands is engaged in supply, installation and operation of vending equipment. The EC examined the effects of the acquisition in Belgium, Finland, France, Ireland, the Netherlands, Spain, Norway and the UK where the activities of the Parties overlap. The EC concluded that the proposed acquisition would not affect the competition in the market for vending services in the said countries except Finland where the Parties have a high combined market share. The EC cleared the acquisition of Pelican Rouge by Selecta, subject to the condition that Selecta will divest all of its vending service activities in Finland. The divestiture will entirely remove the overlap between Selecta and Pelican Rouge in Finland and restore the same level of competition as was before the proposed acquisition.
EC to investigate merger of Monsanto by Bayer
August 22, 2017
EC has opened further investigations into the proposed acquisition of Monsanto Inc. by Bayer Inc. (‘Parties’). Bayer headquartered in Germany, operates three business segments under Bayer Crop Science division: (i) Crop Protection; (ii) Seeds and Traits; and (iii) Environmental Science. Bayer is also active in developing digital agriculture technologies. Monsanto, headquartered in the United States, is an agriculture company which produces seeds for broad acre crops, fruits and vegetables as well as plant biotechnology traits. The Parties together have a diversified consumer base extending to various countries and agricultural markets. The EC is of the opinion that the proposed acquisition is a threat to the agriculture industry as the transaction would result in the largest integrated pesticides and seeds company. The EC has concerns that the proposed acquisition could reduce competition in a number of different markets resulting in higher prices, lower quality, less choice and less innovation. On July 31, 2017 Bayer and Monsanto submitted commitments to address some of the Commission’s preliminary concerns. However, the EC considered these commitments insufficient to clearly dismiss its serious doubts as to the transaction’s compatibility with the EU Merger Regulation.
The Lex Julia de Annona was enacted during the Roman Republic around 50 BC, is the earliest surviving example of modern competition law.
In house contributors
Avsi Malik Sharma
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Doc ID: CL/22/17