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11 July 2019
By way of a 6 November 2018 order, the Competition Commission of India (CCI) dismissed the allegations of cartelisation in the determination of flashlight prices against Eveready Industries India Limited (EIIL), Panasonic Energy India Co Ltd (PEIL), Indo National Ltd (INL), Geep Industries (India) Pvt Ltd and the Association of Indian Dry Cell Manufacturers (AIDCM) (collectively, the opposing parties). Notably, the CCI exonerated the opposing parties despite the existence of two leniency applications.
The proceedings before the CCI were initiated suo moto pursuant to a lesser penalty application filed by EIIL, which claimed that there had been an exchange of information pertaining to the sale and production of flashlights through the AIDCM. Another lesser penalty application was subsequently filed by PEIL, which disclosed evidence of the information exchange in relation to the sale of flashlights between EIIL, PEIL and INL through the AIDCM.
During his investigation, the director general examined the documentary and electronic evidence furnished by the opposing parties (eg, emails and other incriminating material), along with the documents submitted with the lesser penalty application and the responses to the director general's notices. The director general considered three types of evidence:
Based on the statements of the opposing parties' representatives, the director general concluded that the exchange of data on the sale and production of flashlights had enabled EIIL, PEIL and INL to monitor each other's share in the organised market of flashlights in India, which had facilitated collusion in the market. With respect to Geep, the director general noted that it had been a member of the AIDCM and provided monthly data thereto until mid-2012. However, it had discontinued this practice once it had ceased to be a member of the AIDCM. The director general found no evidence against Geep in respect of concerted behaviour or a strategic decision to raise flashlight prices.
In light of the above, the director general concluded that EIIL, PEIL, INL and the AIDCM had indulged in anti-competitive conduct (including an anti-competitive agreement) and concerted practices in the domestic dry cell battery market of zinc carbon batteries from 20 May 2009 to 31 July 2016, thereby contravening Section 3(3)(a) read with Section 3(1) of the Competition Act.
The CCI observed that the email exchange and statements of key personnel proved that EIIL, PEIL and INL had agreed to increase prices with respect to not only dry cell batteries, but also flashlights. However, in order to ascertain whether the agreement to increase prices had been implemented by the opposing parties individually, the CCI examined the exchange of commercially sensitive information, which included:
The CCI observed that Khaitan's printed notes and the statements of key personnel of EIIL and PEIL showed that there had been an exchange of commercially sensitive information between EIIL and INL regarding the pricing of EIIL products. However, these notes and statements did not establish that the concerned persons had agreed the actual terms of increasing or determining prices. Further, the price discussions between EIIL and INL did not categorically prove that they had fixed prices. In addition, the email exchange between EIIL, PEIL and INL showed that the parties had monitored the flashlight market for entry, but not that they had contravened the Competition Act.
The CCI concluded that although there was evidence that the opposing parties had exchanged production and sales data, a draft press release and pricing information – indicating possible collusion – there was little evidence to show that such activities had resulted in the determination of flashlight prices. Further, there was no information or evidence to show that the opposing parties had acted on the agreement discussed in the March 2012 email exchange.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (email@example.com). The Vaish Associates website can be accessed at www.vaishlaw.com.
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Man Mohan Sharma