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4TH RLC SAQUIB RIZVI MEMORIAL NATIONAL MOOT COURT COMPETITION 2012
IN THE COMPETITION APPELLATE TRIBUNAL OF ASPENBERG Appeal No. 17/2012

PETROLEUM COMPANIES ASSOCIATION & ORS ... (Appellants)

V.

COMPETITION COMMISSION OF INDIA .. (Respondent)

On submission in the Appellate Tribunal of Aspenberg

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TABLE OF CONTENTS

1.

INDEX OF AUTHORITIES CASE LAW BOOKS REFERRED STATUTORY COMPILATIONS LIST OF ABBREVIATIONS

2. 3. 4. 5. 6.

SYNOPSIS OF FACTS STATEMENT OF ISSUES SUMMARY OF ARGUMENTS ARGUMENTS ADVANCED PRAYER

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INDEX OF AUTHORITIES

A. CASE LAW 1) TECHNIP S.A VS S.M.S. HOLDING PVT. LTD. 2) UNITED STATES VS. GENERAL MOTORS 3) RRTA VS. W. H. SMITH & SONS LTD. 4) UOI V. HINDUSTAN DEVELOPMENT CORPORATION 5) CEMENT CARTELISATION CASE 6) KINGFISHER AIRLINES LTD. VS. CCI 7) A.K. GOPALAN VS. STATE OF MADRAS 8) UOI VS. J.P. MITTER 9) MANEKA GANDHI V UOI

B. BOOKS REFERRED 1) Oxford Dictionary of Law 2) Competition Law in India: Abir Roy, Jayant Kumar 3) Competition Law and Practise: D.P. Mittal 4) Black Law Dictionary

C. STATUTIES 1) The Competition Commission Act, 2002

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2) The Constitutional Law of India 3) The Indian Evidence Act, 1872

D. LIST OF ABBREVIATIONS

A.I.R. Ltd. ORS. S.C S.C.C.

VS.

All India Reporter Limited OTHERS Supreme Court Supreme Court Cases VERSUS and Competition Commission of Aspenburg Petroleum Companies Association Director General Principal of Natural Justice Union Of India Companies Limited
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& CCA PCA DG PNJ UOI Co. Ltd.

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Pvt. Sec.

Private Section

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STATEMENT OF JURISDICTION

The counsel for the Appellant has the honour to submit the present matter before the Competition Appellate Tribunal of Aspenburg and adjudicate the present matter under Section 3 of The Competition Act, 2002.

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SYNOPSIS OF FACTS

1. Aspenberg is a S out h Asi an C ount r y . After independence, the prices of petroleum, diesel, natural gas and other related products have been regulated by the Government of Aspenberg. In March 2008, due to liberal economic agenda, t h e G o v e r n m e n t e n a c t e d The Competition Act- in 2002 (Act); with provisions brought into force in a phased manner with complete Act came into force in June 2011. 2. Petroleum Companies Association (PCA) is an association of petroleum suppliers, distributors and retailers. PCA together comprise 81 % of the market share of the petroleum and natural gas industry. 3. SCR filed information under Sec. 19 of the Act with the CCA. In regard to violation of Sec 3 & 4, it contended that PCA is indulged in collusive price fixing & hold a dominant share. 4. CCA ordered DG on 23rd January 2011 to investigate the matter. Thereafter the DG investigated the matter and submitted his report on 17 April 2011. 5. DG revealed that PCA is indulged in Production Parallelism which indicated its coordinated behavior & a tacit agreement. DG observed that PCA have divided territories to avoid corruption & indulged in anti-competitive agreements in contravention of provision of Sec. 3(1), 3(3)(a), 3(3)(b) of Competition Act 2002. 6. PCA objected & challenged the jurisdiction of CCA because the data used by DG was prior to period May 20 2009, the date from which the provision of Sec. 3 of the Act were brought into force. DG relieved upon the data to relate the dynamics of industry.
th

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It does not mean the Act have been applied retrospectively. Moreover CCA has necessary jurisdiction to look into such conduct. 7. The Petrol Cos. Argued that they were not given an opportunity to cross examine. But CCA observed that they have given a copy of report to them as per provisions of the Act & are given full opportunity to explain their position. 8. PCA contended that is was established under the Societies Registration Act 1860 to promote common interest. It is their fundamental right to form association & it does not imply that the said association is indulged in any activity which is against the law. 9. The Petrol Cos. In their reply stated that an anti competitive agreement needs to be explicitly established & the DG has failed in adducing any direct and cogent evidence. The Petrol Cos. stated that even if it is conceded for the sake of argument that indirect economic evidence can be admitted for the purpose of speculating the existence of an agreement, it is indisputable that such evidence must be unimpeachable. And the evidences produced by DG were highly vague. They also contended that their actions were guided by market forces & they should not be stopped from responding to market conditions. 10. As compared by Petrol Cos. The main elements of a cartel are (a) coordinating the cartel agreement and to ensure its functioning (b) monitoring the behaviour and conduct of the members of the cartel and (c) punishing members of the cartel who do not fall in line with the decision of the cartel. The DG has failed to produce any evidence in this regard. 11. After hearing the informant as well as the Petrol Cos. and the PCA, the CCA passed an Order under Section 27 of the Act on 19th November, 2011. The PCA and the Petrol Cos. preferred an appeal against the decision of the CCA in the Competition Appellate Tribunal (COMPAT).

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STATEMENT OF ISSUES

1) Whether PCA is cartel or not ? 2) Whether CCA & DG had jurisdiction to use data prior to the enactment of Section 3? 3) Whether DG & CCA violated the Principal of Natural Justice?

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SUMMARY OF ARGUMENTS

1) Whether PCA is cartel or not ? Yes, PCA is a cartel. PCA has been contending that DG hasnt provided any direct or cogent evidence. While the formation of a cartel amounts to an anti-competitive trade practice, which is in disputably against the public interest, the existence of a cartel is seldom proved by direct evidence.

2) Whether CCA & DG had jurisdiction to use data prior to the enactment of Section 3? Yes, CCA & DG had jurisdiction to use data prior to the enactment of Sec. 3. There is absolutely no illegality in the proceedings in the present case and the arguments and the contentions of the parties on this aspect have no force. It is further cleared in arguments of advanced that merely using the data prior to the May 2009 do not amount to using the Provisions of Sec. 3 retrospectively.

3) Whether DG & CCA violated the Principal of Natural Justice? No, DG & CCA have not violated the Principal of Natural Justice. Further details are provided in arguments advanced.

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ARGUMENTS ADVANCE

ISSUE 1: Whether PCA is cartel or not ? 1.1 According to sec 2(b) of The Competition Act, 2002, agreement means: agreement includes any arrangement or understanding or action in concert,(i) whether or not, such arrangement, understanding or action is formal or in writing; or (ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings.

1.2 In TECHNIP S.A VS S.M.S. HOLDING PVT. LTD. 1 The court observed that the term covers an understanding as well as an agreement, & an informal as well as a formal arrangement which leads to the purchase of share to acquire control of a company. No written proofs of agreement are required as writing has been done away with.

[(2005)5 scc 465]

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1.3 In UNITED STATES VS. GENERAL MOTORS2, it was observed that there is no need for an explicit agreement in cases of conspiracy where joint & collaborative action is pervasive in the initiation, execution & fulfillment of the plan.

1.4 According to Lord Denning in RRTA VS. W. H. SMITH & SONS LTD.3 People who combine together to keep up prices do not shout it from the housetops. They keep it quiet. They make their own arrangements in the cellar where no one can see. They will not put anything into writing nor even into words. A nod or wink will do. Parliament as well is aware of this. So it included not only an agreement properly so called, but any arrangement, however informal. 1.5 Further it was a cartel as section 2(c) of the Competition Act, 2002 defines: cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement among themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services. 1.6 In UOI V. HINDUSTAN DEVELOPMENT CORPORATION 4 a cartel is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly. 1.7 PCA has been contending that DG hasnt provided any direct or cogent evidence. While the formation of a cartel amounts to an anti-competitive trade practice, which is in disputably

( 384 US 127), [1969]3 ALL ER 1065; [1969] 1 WLR 1460. (1994) CTJ 270 (SC) (MRTP)

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against the public interest, the existence of a cartel is seldom proved by direct evidence. Generally no express agreement showing its existence is ever found. It has to be proved by circumstantial evidence by setting up a chain of events leading to a common understanding or plan. Determination of the existence of a cartel by cogent evidence is a herculean job for the competition authorities because of less or no evidence of price pattern

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ISSUE 2 : Whether CCA & DG had jurisdiction to use data prior to the enactment of Section 3?

2.1 According to facts of the case, an objection was raised by the PCA and the Petrol Cos. challenging the jurisdiction of the CCA on the ground that the DG could not have investigated into allegations and considered, looked into data pertaining to a period prior to May 20, 2009 i.e. the date from which the provisions of section 3 of the Act were brought into force. The Commission, in this regard observed that it is true that the DG has referred to the data of the petroleum industry relating to the installed capacity, production, utilization, dispatch, prices and profit margins for period prior to May 20, 2009, the date with effect from which the provisions of section 3 of the Act have been made effective. 2.2 Therefore, it is clearly visible that the present issue in front of us is clear like water. Further, in the case of in re. Cement Cartelisation Case5, even in cases where the alleged anti-competitive conduct was started before coming into force of section 3 and 4, the Commission has the jurisdiction to look into such conduct if it continues even after the enforcement of relevant provisions of the Act. This position has been settled by the Hon'ble HC of Bombay in, Kingfisher Airlines Ltd. v. Competition Commission of India decided on 31.03.2010. In the said case, it has been held by the Hon'ble Bombay HC that though the Act is not retrospective, it would cover all agreements covered by the Act though entered into prior to the commencement of the Act but sought to be acted upon now, i.e., if the effect of the agreement continues even after 20.5.2009. In the present case, practices of the parties alleged to be anti-competitive have been found by the DG to be still continuing and there is

RTP 52 2006

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nothing on record to contradict the same. Accordingly, the Commission, therefore, is of the considered view that in the light of legal position as discussed above there is absolutely no illegality in the proceedings in the present case and the arguments and the contentions of the parties on this aspect have no force. 2.3 This case further clarified every contention about using of data prior to May 2009 by the CCA & it is further cleared that merely using the data prior to the May 2009 does not amount to using the Provisions of Sec. 3 retrospectively. 2.4 Furthermore, in Section 8 in The Indian Evidence Act, 1872, it states that : Motive, preparation and previous or subsequent conduct.- Any fact is relevant which shows or constitutes a motive or preparation for any fact in issue or relevant fact. The conduct of any party, or of any agent to any party, to any suit or proceeding, in reference to such suit or proceeding, or in reference to any fact in issue therein or relevant thereto, and the conduct of any person an offence against whom is the subject of any proceeding, is relevant, if such conduct influences or is influenced by any fact in issue or relevant fact, and whether it was previous or subsequent thereto. Therefore, it is clear that DG has the authority to use retrospective data & that he has jurisdiction to use data prior to the enactment of Section 3.

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ISSUE 3: Whether DG & CCA violated the Principal of Natural Justice? Oral hearing 3.1 Generally hearing means oral hearing where the parties have right to legal representation to produce witness who may be cross-examined. But in England and America it is settled as a general rule that in absence of statutory provisions & administrative authority is not, bound to afford to the concerned person as oral hearing. In India also the position is same & oral hearing is not regarded as a sine qua non of natural justice. A person cannot claim the right to oral or personal hearing unless such right is concerned by statute. 3.2 In case of A.K. GOPALAN VS. STATE OF MADRAS6 It was observed that: I am prepared to accept the contention that a right to be heard orally is an essential right of procedure even according to the rules of natural justice. That right to defence may be admitted, but there is nothing to support that an oral hearing is compulsory.

3.3 In the case of UOI VS. J.P. MITTER7 it was held by the SC that as a petitioner judge had been afforded an opportunity to submit his case in writing denial of an opportunity of personal hearing, even after request, does not violate the principles of natural justice. Thus, in the absence of any particular statutory requirement, the general rule propounded by the SC of India is that natural justice does not necessarily involve a right to oral hearing.
6

[AIR 1950 SC 27(43)], AIR 1971 SC (1093)

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In the case before us the commission supplied the copies on the investigation reports of DG to both the parties & both the parties were given opportunity to lay their own evidence- both written and oral in order to controvert the findings of DG. 3.4 REASONED DECISION OR SPEAKING ORDER: In case of MANEKA GANDHI V UOI8 it was observed that the power to refuse to disclose reasons in support of the order is ought to be exercised fairly, sparingly & only when fully justified by the exigencies of an uncommon situation. Sec 27(b) of the Competition Act, 2002 empowers the commission to impose such penalty as it may deem fit which shall not be more than ten percent. In the case before us the Respondent only exercised the power vested in it under Sec 27(b) of the Competition Act, 2002 & there was no violation of PNJ on this part. 3.5 The natural justice forms the cornerstone of every civilized legal system. It is not found in the codified statutes. But it is inherent in the nature. Being uncodified, the natural justice does not have a uniform definition. However, it lays down the minimum standard that an administrative agency has to follow in its procedure. Where the legal justice fails, the role of natural justice becomes evident in preventing the miscarriage of justice. Even God never denied the natural justice to the human beings. So the human laws also need to be in conformity with the rules of natural justice. The rule of fair hearing must be followed to prevent the miscarriage of justice. If an accused is punished unheard, the purpose of law is defeated. The adjudicatory authority does not know whether the accused is innocent or not. What if the accused is punished unheard and

(AIR 1978 SC 597)

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later he turns out to be an innocent? Before taking any action the adjudicatory authority has to keep in mind the several considerations.

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PRAYER

In the facts and circumstances of the case and in the interest of justice, it is humbly prayed before this honble bench that the honble high court grant: 1) The case shall be dismissed. 2) Any other judgment in the favor of justice.

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