Battery cartel case: Geep challenges CCI’s recovery notice for levying interest from 2018

The case was argued for a while before both parties sought more time. The matter has now been adjourned to August 16. Representational picture

Battery cell manufacturer Geep Industries Pvt Limited challenged a notice from the Competition Commission of India (CCI) seeking recovery of a monetary penalty imposed on it for cartelising with other battery manufacturers at the Delhi High Court.

The case came up for hearing on August 7 before Justice Subramonium Prasad of the high court. The case was argued for a while before both parties sought more time. The matter has now been adjourned to August 16.

According to the plea, which Moneycontrol has reviewed, Geep has challenged CCI's recovery notice dated July 17 levying 1.5 percent simple interest on the Rs 2.4 crore penalty amount. CCI found the company guilty of cartelisation in 2018. The company claimed that a levy of interest on a penalty is in violation of CCI's penalty recovery regulations.

CCI’s penalty

In 2018, CCI initiated suo motu proceedings under the provisions of Section 19 of the Act based on the disclosure made by Panasonic under Section 46 of the Act read with the Lesser Penalty Regulations.

The application disclosed the existence of a “bilateral ancillary cartel” between Panasonic (India) and Geep industries pertaining to the sale of dry cell batteries. Furthermore, it was revealed that Panasonic (India) had a cartel with Everyday Industries India and Nippo.

The three companies coordinated the market prices of zinc-carbon dry-cell batteries, thus giving an unfair edge to Panasonic as it had the knowledge about the time of price increase and it used as leverage to negotiate and increase the basic price of the batteries being sold by it to Geep Industries. It was also found that Panasonic and Geep Industries agree on the market price of the batteries being sold by them to maintain price parity.

CCI, therefore, imposed a penalty of Rs 9.6 crore on Geep for cartelising with Panasonic India.

The company appealed against CCI’s order at the National Company Law Appellate Tribunal (NCLAT). The appellate tribunal in March 2023, upheld CCI’s finding that Geep had indeed violated the competition act by cartelising, however, it reduced the penalty from Rs 9.6 crore to Rs. 2.4 crore as the company was a smaller player.

Penalty recovery notice

In May 2023, CCI sent a notice to Geep to recover the penalty that has been levied on them. The notice demanded Geep to pay to deposit the penalty amounts along with simple interest at 1.5 percent for each month from 10/12/2018 till the date the demand is paid.

In June 2023, the company requested CCI to withdraw the interest portion of the demand and permit them to pay the penalty in instalments. However, CCI while permitting their request to pay the penalty in instalments, rejected their request to waive off interest.

Geep has moved the plea in Delhi HC alleging that CCI failed to meet the requirement to issue demand notices as mandated under the Penalty Recovery Regulations. According to the plea, such demand notices must be issued after the expiry of the 60-day period stipulated under the CCI’r order. It also alleged that CCI did not issue such demand notice at any time during the pendency of the appeal at NCLAT.

The plea alleges that as per the penalty recovery regulations, interest can be levied only after the 'issuance' and 'service' of a demand notice. It has also been argued that the demand notice must provide 30 days from the date of 'service' for the deposit of penalty, only after which any interest will become payable.