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02 May 2019
On 19 April 2018 the Competition Commission of India (CCI) – in its second-ever leniency decision – awarded the leniency applicant, Panasonic Energy India Co Ltd, a 100% penalty reduction. The case concerned cartelisation in respect of zinc-carbon dry cell batteries in India.(1)
This case is the first in which the CCI has awarded a 100% penalty reduction.
The CCI initiated its investigation pursuant to a leniency application filed by Panasonic under the leniency regulations. Panasonic submitted that Eveready Industries India Limited, Indo National Limited (Nippo) and Panasonic (collectively, the 'manufacturers') had been operating a cartel for the manufacture and supply of zinc-carbon dry cell batteries since 2013 in violation of Section 3(3) read with Section 3(1) of the Competition Act. On 22 June 2016, on the basis of the information provided by Panasonic, the CCI ordered the director general to investigate the matter. Eveready and Nippo subsequently filed their own leniency applications on 26 August 2016 and 13 September 2016, respectively.
Cartel's modus operandi
The manufacturers established the cartel in 2013 in order to raise the maximum retail price of zinc-carbon dry cell batteries and thereby increase their profits. In order to implement the cartel, the manufacturers' management and senior employees met regularly to agree the price increases. One manufacturer would implement a price increase and the others would subsequently do the same under the pretext of following the market leader. The manufacturers also agreed not to aggressively push sales through their channel or distribution partners in order to avoid a price war among themselves.
Trade association's role
The Association of Indian Dry Cell Manufacturers (AIDCM) was actively involved in this case. For example, the manufacturers used the AIDCM to coordinate their actions regarding, among other things, pricing. There was also evidence of coordination during AIDCM meetings, which was reflected in the minutes. Further, the manufacturers would meet on the sidelines of AIDCM meetings, which was reflected in the handwritten notes and agenda points prepared by individual members. The AIDCM also compiled information on the manufacturers' production and sale of zinc-carbon batteries, including:
The AIDCM formally shared data on the volume of production and sales of member companies in respect of, among other things, dry cell batteries (both zinc-carbon and alkaline) and torches.
Based on the order in which the parties approached the CCI:
The CCI observed that the investigation had been initiated based on information provided by Panasonic and that its cooperation had been essential for establishing a contravention of Section 3(3) of the Competition Act. Thus, the information provided by Panasonic was deemed to have added significant value to the investigation.
Since the information provided by Panasonic was deemed independently sufficient to establish a contravention of Section 3(3) of the act, the CCI held that the information provided by Eveready and Nippo had added no significant value to the investigation.
However, the CCI noted that although the director general and the CCI had already possessed the evidence furnished by Eveready, the oral statements that it had provided had corroborated this evidence. Thus, the CCI granted Eveready a 30% penalty reduction.
Further, the CCI considered Nippo's continuous and expeditious cooperation in the investigation and thus granted it a 20% penalty reduction.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (firstname.lastname@example.org). The Vaish Associates website can be accessed at www.vaishlaw.com.
(1) For information on the CCI's third-ever leniency decision, please see "CCI issues third-ever leniency decision".
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Man Mohan Sharma