CCI directed to reconsider cartel penalty on LPG cylinder manufactures for a second time |

COMPAT by its order dated March 01, 2016 has directed CCI to re-consider penalties imposed on the 47 LPG manufactures for big-rigging in procurement of 14.2 KG LPG cylinders in IOCL.

As a background to the case, the CCI by its order dated February 24, 2012 had imposed penalty of 7% of the preceding three years turnover on 47 LPG manufacturers for bid-rigging in procurement of 14.2 KG LPG cylinder by IOCL.

Through COMPAT’s judgment dated December 20, 2013, the order of CCI was upheld on merits. However, COMPAT directed re-consideration by the CCI on the question of penalties imposed on the LPG cylinder manufacturers.

Upon re-consideration, the CCI upheld the original penalty imposed at the rate of 7% of the turnover on all the parties except in case of M/s Confidence Petroleum Ltd, the penalty on was reduced on account of error of calculation in the original order.

This order of CCI dated August 06, 2014 was appealed by the LPG manufacturers.

COMPAT, through its latest judgment dated March 01, 2016 has again set-aside the order of CCI dated August 06, 2014. The COMPAT has set-aside the order on essentially two considerations. Firstly, the COMPAT held that the CCI had not considered the relevant turnover of the LPG manufacturers while imposing penalties, and instead had imposed the penalty on average of total turnover of LPG manufacturers.Secondly, the COMPAT opined that CCI had not given due weightage to the mitigating factors pleaded by many of the LPG manufacturers for reduction of penalties, such as nature of anti-competitive agreement, appreciable adverse effect on competition, financial health of the enterprise and market condition.

ii.Predicting Cartels: Difficult Task for Competition Regulator

About the author

M M SHARMA

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.  Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal. Included as a ‘Recognised Practitioner’ in Individual Lawyers’ranking by Chamber’s Asia Pacific Guide 2020 for Antitrust/Competition Law.