The Competition Commission of India (CCI) recently passed a contravention order in Pranav Gupta vs. Federation of Publishers’ and Booksellers’ Association in India (FPBAI) case. The facts of the case were that FPBAI was alleged to fix currency exchange rate for import and export of books higher than the rate set by the Reserve Bank of India and limiting discounts provided by FPBAI members to various institutional buyers. The Association was further trying to control the supply of books in the market by dictating terms & conditions of purchase to various buyers. The Commission found the said practices to be anti-competitive in nature. Notably, this is not the first time FPBAI has been found on the wrong side of fair trade regulation and the Association was held in contravention earlier in the International Subscription Agency (ISA) case for, more or less, on similar charges.
Indian competition legal framework
The Indian Competition Act was enforced in 2009 with the objective of promoting free and fair competition in India. The legislation saw a shift from its predecessor, the Monopoly and Restrictive Trade Practices Act of 1969, where mere existence of dominance was no longer an offence, only its abuse was. The CCI over the past sixteen years has asserted its presence across nation sectors such as real estate, telecom and digital markets and passed some of the notable decisions such as the cement cartel order, excel crop care and the Google Android case. Most recently, the Commission has focused on strengthening the soft law approach and engaging in inter-departmental consultation to ensure robust enforcement of the law. The Commission has further been in the news for its proactivity in the digital industry such as search engine, social media, e-commerce and cloud computing.
This being the background, the Commission has been adjudged as a quasi judicial body which has vast regulatory, administrative, adjudicatory and advisory powers. Cartelisation and monopolisation are some of the core offences which the CCI ought to address and the Commission is empowered to impose a penalty of up to ten percent of the total revenue of the company, or three times the profit earned during the time of contravention whichever is higher. The policy directive is reflected in the passage of the Competition (Amendment) Act, 2023 where the Commission can now look into the global monetary power of the contravening company while imposing a penalty in India. As a standard practice, the Commission is guided by principles of natural justice before it passes a contravention order where parties are further allowed to make submissions on applicability of aggravating and mitigating circumstances strengthening procedure.
Repeated violations
Coming back to the FPBAI case, the fact that a professionally managed Association could afford violation twice at the CCI reflects structural enforcement gaps. The Commission had imposed a total penalty of Rs 4 lacs on the first instance of violation, however it has done a minor revision in the same despite repetition of the same violation. From a ‘law and economics’ standpoint, this leniency risks enabling such entities to flout regulations without substantive financial consequences.
Such patterns are not confined to FPBAI. The Aditya Birla Group (ABG) has also faced multiple competition law violations across diverse sectors such as cement, textiles, and water purification materials. Though the Commission has imposed significant penalties on ABG, these sanctions have arguably not sufficed to dissuade recurrence.
Google’s case is further emblematic of this challenge. The tech giant has been found in violation of competition law three times in India, besides one settlement order. What remains interesting here is the fact that in the first contravention order, the company did not even provide the correct turnover details which forms the very basis of penalty. Even cumulative penalties exceeding INR 2,000 crore in the last eight years have not prevented further scrutiny of the company’s practices within the country.
Comment
Competition is an economic legislation and the regulated companies have understood this long back. The writing on the wall is clear that contravention orders are paper tigers unless it affects the ‘bottomline’ (read ‘profits’). This is the thrust of facing antitrust scrutiny twice, or sometimes even thrice, with comfort and ease. This foul play has been called out in some jurisdictions where European competition authority took stricter action against Microsoft for failure to comply with an earlier antitrust ruling. Similarly, South Korea is creating an exception in its policy where it is made to exhaust multiple rounds of resources in investigating the same company.
It is high time that the Indian competition regulator addresses this enforcement gap and bridges the divide between the theoretical underpinnings of the law and the practical implications of market economy. The goal of fostering a fair and equitable marketplace remains common unless repeated violations become collateral damage. The national policy directive is already in its favour and it must be utilised to ensure that the fruits of competition are distributed between one-and-all in the economy.
(Sumit Jain and Siddharth Mishra, Founding Directors at Centre for Competition Law and Economics.)
Views are personal and do not represent the stand of this publication.
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