Amazon and Flipkart found violating Competition law in India-DG investigation report out
COMPAT by its order dated April 18, 2016 has set-aside the order of CCI where AIMTC was penalized for allegedly exhorting truck transporters for increasing prices of transportation by 15% following an increase of diesel price by INR 5/Ltr on 13 April 2012. In the present case, an information was filed by Indian Foundation of Transport Research & Training alleging that pursuant to hike in diesel prices by the Government on 13 April 2012, the Vice-President, former President as well as then-President of AIMTC issued press statements to the effect that the transport tariffs would be increased by 15% with effect from 14 September 2012.
The CCI directed the Director General for investigation, where after , DG observed that the fact that the statements made by the President/Spokesperson of the appellant in press amounted to a direction/message conveying the decision of the Executive body to all its members; that the alleged announcement in public to increase the freight charges subsequent to hike in diesel price had a major role in determining the price of truck rental indirectly and this act of AIMTC is violative of Section 3(3)(a) of the Act and that the AIMTC has asked its members to effect 15% increase in freight charges across the country ignoring the actual effect of the diesel price hike and as such it has contravened Section 3(3)(a) of the Act.
The CCI approved the findings of the DG Report and imposed a penalty of INR 1424521/-on AIMTC.
In appeal filed by AIMTC, the COMPAT ruled that the DG had placed undue importance of the identity of replies given by some transport companies. However, the DG completely ignored the contents of the replies of almost all the transport companies which categorically denied receipt of any diktat/directive/instruction from or on behalf of the appellant to increase the truck freight by 15%. This approach of the DG has been considered as “cherry-picking” by the COMPAT meant to support the DG’s “imaginary conclusion” that the transport companies had discussed the issue together before submitting reply to the investigation notices. Further, if the DG felt that the transport companies had internally circulated the draft replies before submitting to the DG, he could have summoned the representative of concerned respondent using the powers vested with him under the Act. However, the DG did not invoke the relevant statutory provisions to find out whether his assumptions were correct.
Further, the COMPAT considered that the DG and CCI did not factually verify the actual increase in rates pursuant to the alleged announcements/press releases. A perusal thereof showed that on 14 routes the range of increase was 0–5%. On 16 routes, it was between 5.1 – 10%. On 7 routes, it was 10.1 – 15% and on 14 routes it was above 15%. In the absence of any evidence to that the truck rental/freight was increased by the transporters by 15% across the board with effect from 14 September 2012 or immediately thereafter, no person of ordinary prudence could have recorded a finding of contravention of Section 3(3)(a) of the Act.
As regards the press releases, the COMPAT observed that the AIMTC had only expressed its resentment against the hike in diesel price and expressed that road transport industry will not be able to absorb the said hike. There is nothing in the two press releases from which one could infer that the appellant had exhorted its members to increase the truck freight by 15% in the light of hike in diesel price. It is unfortunate that the DG and the CCI have misconstrued the press releases as a clarion call given by AIMTC for increase in truck freight by 15%. Without going into the evidence available on record the CCI and the DG based their finding on the uncorroborated and unsubstantiated news reports, treating the same as gospel truth despite the vehement denial of the same by AIMTC and its two-office bearers.
Lastly, the COMPAT also considered that the DG as well the CCI had laid undue emphasis on the earlier MRTPC decision which has no bearing on the present case. The COMPAT held that the findings recorded by the DG were based on pure conjecture and assumption as also misreading of the record and were not based on any tangible evidence. The CCI committed grave error by approving the findings recorded by the DG and, as such, the impugned order is legally unsustainable. (Source: Order dated April 18, 2016. For full text see COMPAT website-www.compat.nic.in)
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