Introduction:
The COVID-19 pandemic has obstructed businesses and the income of a large number of people globally. Businesses are merging to find solutions and means to make sure of the undisturbed supply of necessities, as the global logistics network has been affected. In these unparalleled times as companies merge together to face the challenges, they must be aware of their continuing duties under the ruling laws.
Competition Regime
The Competition Act forbids businesses from entering into contracts in respect of manufacture, supply, dissemination or warehouse which results or is likely to result in an appreciable adverse effect on competition (AAEC) within India. Section 3(3) of the Competition Act assumes certain contracts among businesses to have an AAEC. Section 3(4) of the Competition Act states the contracts among businesses engaged at various stages of the manufacturing chain, such as dealers, brokers, retailers, etc. Section 4(2) of the Competition Act forbids governing businesses foisting unjust or biased pricing, which involves price-cutting operations. ¹ (Saket Shukla and Aditi Sharma, 2020)
Role of Competition Commission of India
The major roles of Competition Commission of India are: –
- Safeguarding and encouraging consumer welfare while stabilizing industry assumptions.
- The CCI has the distinctive task of encouraging and assisting competition in the markets.
- Controlling activities which might have an appreciable adverse effect on competition.
- Safeguarding the interests of consumers in India. ² (Krushika Choudhary and Animesh Kumar, 2020)
During the Time of COVID-19 CCI Provided Advisory to Businesses
On 19th April 2020 Competition Commission of India known as CCI has provided an “Advisory to Businesses during the time of COVID-19”, i.e, “Advisory” similar to other competition law regimes. It was provided with an aim to supply advice to businesses during the time of COVID-19 pandemic.
Particularly, Advisory explains the basis that the CCI would observe in evaluating synchronizing activities by undertakings from the view of competition rules as provided in the Act. Advisory also gives advice that enterprises need to make sure that synchronized conduct or marshalling effect in rising efficiencies which may be in means of organisation in manufacturing, supply, dissemination, warehousing, purchase or jurisdiction of goods or providing services. This Advisory also makes aware the enterprises not to avail the benefit of COVID-19 to violate any of the provisions of the Act. Advisory also provided advice to enterprises by laying down that the said Act has an inherent defence to safeguard enterprises from punishments for some synchronised conduct, provided such settings, will end up in rising efficiencies. These provisos will notify the resolutions of the Commission. ³ (Vinay Kumar Sanduja, 2020)
Extent of the Advisory provided by CCI
As it is provided that CCI has supplied this Advisory as part of its authority to implement the Act, it is necessary to look into the extent of Advisory provided by CCI and what it means for enterprises. Advisory supplied to enterprises in time of COVID-19 should not be recognized to approve enterprises to involve in competition distorting performance while managing their conducts in a restricted sense, namely to handle with the notable disruptions in the supply chain. Correspondingly, enterprises should take caution to make sure that only such cooperated management which is unavoidable and consistent to respond to the troubles forming from COVID-19 is taken on.
Advisory augments the prevailing competition law regime. CCI has provided the said Advisory to make sure that the management of enterprises while synchronising some activities is corresponding with the regulations of just play as enshrined in the Act.
According to the Act, CCI is obliged to remove applications having a negative impact on competition, encourage and assist competition, safeguard the interests of consumers, and make sure freedom of commerce conducted on by other members, in markets in India. Correspondingly, it appears that under the current unusual situations, CCI will closely watch the growth taking place in markets so as to find out enterprises which spoil in competition distorting activities by taking benefits of the present situation and take steps in opposition of such enterprises.
Further, it is pertinent to note that dominant business in relevant markets while coordinating their conduct must exercise extra care as their actions are likely to be more vulnerable to competition law violations given the market power they possess. Additionally, enterprises exploiting their governing place by acquiring competition disrupting activities in respect of censorious healthcare things and necessary services in the COVID-19 pandemic may not be able to support their management. ⁴ (ibid)
Competition Evaluation of Coordinated Conduct in COVID-19
If coordinated conduct of an enterprise in the period of COVID-19 comes under inspection, the same will be examined by CCI as per the principle of reason approach as provided in provisos in connection to competition disrupting contracts. It means that before coming to an end, CCI will consider the pros and cons of the impact of such performance on the competition.
Provided the fact that mode of the agreement is not relevant under the Act, any adaptations, apprehensions, acts in show if or not the same is official or in writing or is likely to be applicable by litigation will comply under the meaning of agreement enshrined in the Act and can be surveyed by CCI on the benchmark of the provisos in connection to competition disrupting agreements. Correspondingly, any transmissions or performances among businesses, through a person or by email, record, mobile or by any other modes that are by gestures like a wink or a nod will certify as agreement and can be examined by CCI.
Enterprises must recognize that section 3 of the Act bans agreement that results in or is likely to result in an appreciable adverse effect on competition. By virtue of section 3 (3) of the Act, some combined acts among competitors such as forming as a monopoly, price-determining; restricting or controlling production, provision market, technical growth investment or provisos of services etc. are assumed to result in an appreciable adverse effect on competition. Nevertheless, as per provision to section 3 (3), the above-mentioned assumption is not applicable to joint enterprises, if such agreements augment competency in manufacture, supply, dissemination, warehouse, acquisition or control of goods or supply of services.
During the competition evaluation of coordinated conduct by CCI, enterprises need to show that there is a pro-competitive outcome of such synchronised enterprises performance in the means of expansion of advantages to consumers; or advancement in manufacture or dissemination of goods or supply of services; or assistance of technical, scientific and economic growth by mode of manufacture or dissemination of goods or supply of services. Afterwards, it will be for the CCI to evaluate whether the synchronized act results or is likely to result in an appreciable adverse effect on competition inside India on the ground of all or any of the ingredients laid down under section 19 (3) of the Act. For these purposes, CCI will evaluate whether the pro-competitive outcome of coordinated conduct as shown by enterprises exceed the anti-competitive outcome which may affect from such coordinated conduct that is by the creation of fences to newcomers in the market; pushing prevailing competitors out of the market; expropriation of competition by preventing entry into the market. ⁵ (ibid)
Experiential Considerations of Competition Law Adherence by Businesses in Time of COVID-19
On the basis of their position in the market, enterprises should be very cautious while transferring any business data, using any plans such as trade organisations in order to take business decisions. While synchronising their activities businesses must regulate for themselves if the conduct will be legal or could infringe any provisions of the law, i.e, illegal given the fact that the Act functions on a “self-examination” ground.
It goes without saying that prevention is better than cure. In this situation, businesses need to understand that conformity with the Act is significant given the fact that the result of non-conformity may be grave for any enterprises in terms of important monetary punishments which can be enforced under the Act.
For decreasing the risk of infringing the competition law, practising of the employees who may come in face to face contact with competitors is relevant. Such employees must be stimulated about what forms infringement of the Act and how to keenly handle any communication or harmonisation with competitors.
To safeguard themselves from punishments, businesses must expressly and judiciously record that the harmonises conduct will or has led to an expansion of advantages to consumers; improvisations in manufacture or dissemination of goods or supply of services; encouragement of technical, experimental and economic growth by means of manufacture or dissemination of goods or supply of services.
Enterprises should also try to record the reasoning of restricted or not permanent coordination in the time of COVID-19 together with urgency and relation of the conduct. ⁶ (ibid)
International shift
Different administrations like the US, Europe and the UK acknowledge that the competition laws may obstruct essential collaboration among enterprises have taken energetic steps and supplied rules and regulations.
The officials seem to be bothered about the possible benefits taken during these unparalleled times for providing necessary things. The shift seems to be to permit harmonized management which rises efficiency so long as such coordination is conducted to mark worries emerging from COVID-19. The rules and regulations issued by officials under these authorities seem to recommend that except there are assertive propensities to take the benefit of the existing problems, the officials may not challenge collective activities carried on by enterprises in reaction to the pandemic. ⁷ (supra note 1)
Examples
The Tata Group entered into a partnership contract with Sree Chitra Tirunal Institute for Medical Sciences and Technology known as SCTIMST, Trivandrum, in order to increase the commercial production of COVID-19 testing kits. The kits are based on RT-LAMP, i.e, Reverse Transcriptase Loop-Mediated Amplification technology for COVID-19 observation which can generate results in notably lesser time, therefore, augmenting the establishment of labs in India. The tests are awaited to get acceptance briefly and manufacture will start soon after. Tata Sons linked up with SCTIMST follows its association with CSIR-Institute of Genomics and Integrative Biology to generate CRISPR based COVID test kits. These two collaborations will remarkably improve Tata Sons efforts to serve the expanding demand for COVID testing all over the country.
The Basant Fabricators has taken several precautionary measures to deal with COVID – 19 involving the fitting of hand sanitizers at the opening, sanitization of drinking water areas and toilets twice, sellers being asked to work on teleconference and people above 60 years are asked to stay at home. ⁸ (Confederation of Indian industry, 2020)
Landmark Case Law
In the lawsuit of C.C.I. v. Bharti Airtel, ⁹a two-judge bench of The Supreme Court of India, on 5th December 2018 settled the dispute of authority between Competition Commission of India, known as CCI and Telecom Regulatory Authority of India, known as TRAI and the interaction of roles of the two officials. ¹⁰ (Venkatesh Agarwal and Pulkit Agarwal, 2019)
Conclusion
The advisory is a smooth start by the CCI and would help to increase the teamwork between companies to get better of the consequences of the disaster. The advisory does not make any new exception to permit any cooperative activities which are competition distorting. It only requires to again guarantee enterprises that the Competition Act already has enough precautions to safeguard enterprises from any inspections and probable punishments so long as such cooperative actions are required to get better of the challenges activated by COVID-19. Nevertheless, companies would need to be aware that the CCI has not permitted any probable complicity which results in harm to the customers and any such competition distorting conduct may entice inspection from the CCI.
References
1. Saket Shukla and Aditi Sharma. (2020, June 10). India: Anti-Competitive Tendencies And Business Cooperation In COVID-19 Times. https://www.mondaq.com/india/antitrust-eu-competition-/951064/anti-competitive-tendencies-and-business-cooperation-in-covid-19-times. www.mondaq.com.
2. Krushika Choudhary and Animesh Kumar. (2020, April 14). Competitor Coordination Amid COVID-19: Anti-Trust Implications in India. http://www.lawstreetindia.com/experts/column?sid=355. www.lawstreerindia.com.
3. Vinay Kumar Sanduja. 2020. Competition Law Guidance for coordination amongst businesses in the age of COVID 19 disruptions. https://indialawjournal.org/competition-law-guidance-for-coordination-amongst-businesses-in-the-age-of-covid-19-disruptions.php. www.indialawjournal.org.
4.Ibid
5.Ibid
6.Ibid
7.Supranote 1
8. Confederation of Indian industry. 2020. Best Practices . http://www.ciicovid19update.in/best-practices.html. www.cii.in.
9. AIR 2019 SC 113
10. Venkatesh Agarwal and Pulkit Agarwal. (2019, Nov 8). Competition Commission Of India v. Bharathi Airtel: A Case Comment. https://www.rfmlr.com/post/competition-commission-of-india-v-bharti-airtel-a-case-comment. www.rfmlr.com.
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