Appellant Memo Rizvi.pdf

THE 5TH RLC SAQUIB R IZVI IZVI MEMORIAL NATIONAL MOOT COURT COMPETITION , 2013

IN THE K EDIAN EDIAN COMPETITION APPELLATE TRIBUNAL

APPEAL NO._____/2013

RUDRESH JOURNALISTS’ ASSOCATION

...Appellants ...Appella nts

Vs. PRESS TRUST OF KEDIA & TECH PRINT INC.

…Respondents

Appellant Memorial Filed on behalf of the Appellant

Counsel appearing on Behalf of the Appellant Appellant

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Memorial on Behalf of Appellant

TABLE OF CONTENTS

INDEX OF AUTHORITIES

............................... ................................................ ................................. ................................. .................... ...

3

L IST OF ABBREVIATIONS ................................. .................................................. ................................. ................................ .................. 6

STATEMENT TATEMENT

OF

............................................... ................................. ............................ ........... 7 JURISDICTION ...............................

STATEMENT TATEMENT

OF

F ACTS ................................ ................................................ ................................. ................................. ...................... ...... 8

STATEMENT TATEMENT

OF

ISSUES ................................ ................................................ ................................. ................................. .................... .... 10

SUMMARY OF ARGUMENTS ................................. ................................................. ................................. ............................. ............ 11

................................................ ................................. ................................. ................... 13 ARGUMENTS ADVANCED............................... 1.

THAT 'THE AGREEMENT' BETWEEN PTK AND TECH PRINT I NC IS AGAI NST THE P ROVISIONS

OF THE COMPETITION ACT, 2002. ................................................... ............................................. 13

1.1.

THE AGREEMENT IS A HORIZONTAL AGREEMENT U /S 3(3) OF THE COMPETITION ACT ........... 13

1.2.THAT THE AGREEMENT IS V OID …………………………………………………. 17 OID P ER S EY ………………………………………………….17

2. THAT THE AGREEMENT HAS AN APPRECIABLE ADVERSE EFFECT ON COMPETITION I N THE RE LEVANT MARKET. …………………………………………………………………………..20

2.1 THAT THE AGREEMENT IS 3.

A RESTRCTIVE TRADE PRACTICE ………………………….20

THAT PTK AND TECH PRINT HOLD A DOMINANT POSITION IN THE MARKET AND HAS ABUSED

ITS DOMINANT POSITION U/S 4(1) OF COMPETITION ACT, 2002. ............. ERROR ! BOOKMARK NOT DEFINED.

3.1.

PTK ENJOYS DOMINANT POSITION IN THE MARKET . ........ ERROR ! BOOKMARK NOT DEFINED.

3.2

THERE HAS BEEN AN ABUSE OF DOMINANT POSITION BY PTK. ..................... ....................... .. 28

3.3

THE VERY ACT OF

PTK ENTERING INTO "THE AGREEMENT " IS ARBITRARY AND AGAINST A

HEALTHY COMPETITIVE MARKET .

....................................................................................................... 31

P RAYER ................................ ................................................ ................................. ................................. ................................ .......................... .......... 36

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TABLE OF CONTENTS

INDEX OF AUTHORITIES

............................... ................................................ ................................. ................................. .................... ...

3

L IST OF ABBREVIATIONS ................................. .................................................. ................................. ................................ .................. 6

STATEMENT TATEMENT

OF

............................................... ................................. ............................ ........... 7 JURISDICTION ...............................

STATEMENT TATEMENT

OF

F ACTS ................................ ................................................ ................................. ................................. ...................... ...... 8

STATEMENT TATEMENT

OF

ISSUES ................................ ................................................ ................................. ................................. .................... .... 10

SUMMARY OF ARGUMENTS ................................. ................................................. ................................. ............................. ............ 11

................................................ ................................. ................................. ................... 13 ARGUMENTS ADVANCED............................... 1.

THAT 'THE AGREEMENT' BETWEEN PTK AND TECH PRINT I NC IS AGAI NST THE P ROVISIONS

OF THE COMPETITION ACT, 2002. ................................................... ............................................. 13

1.1.

THE AGREEMENT IS A HORIZONTAL AGREEMENT U /S 3(3) OF THE COMPETITION ACT ........... 13

1.2.THAT THE AGREEMENT IS V OID …………………………………………………. 17 OID P ER S EY ………………………………………………….17

2. THAT THE AGREEMENT HAS AN APPRECIABLE ADVERSE EFFECT ON COMPETITION I N THE RE LEVANT MARKET. …………………………………………………………………………..20

2.1 THAT THE AGREEMENT IS 3.

A RESTRCTIVE TRADE PRACTICE ………………………….20

THAT PTK AND TECH PRINT HOLD A DOMINANT POSITION IN THE MARKET AND HAS ABUSED

ITS DOMINANT POSITION U/S 4(1) OF COMPETITION ACT, 2002. ............. ERROR ! BOOKMARK NOT DEFINED.

3.1.

PTK ENJOYS DOMINANT POSITION IN THE MARKET . ........ ERROR ! BOOKMARK NOT DEFINED.

3.2

THERE HAS BEEN AN ABUSE OF DOMINANT POSITION BY PTK. ..................... ....................... .. 28

3.3

THE VERY ACT OF

PTK ENTERING INTO "THE AGREEMENT " IS ARBITRARY AND AGAINST A

HEALTHY COMPETITIVE MARKET .

....................................................................................................... 31

P RAYER ................................ ................................................ ................................. ................................. ................................ .......................... .......... 36

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DOMESTIC CASE LAWS 1. Aggarwal v. General Manager, Hindustan Steel Limited, [1970] 3 SCR 363 2. Ajay Devgan Films v. Yash Y ash Raj Films Private Limited, CCI Case No. 66 of 2012, decided th

on 5 November 2012 3. C. K. Achuthan v. State of Kerala, [1959] S.C.R. 78 4. District Collector Chittoor vs. Chittoor District Groundnut Ground nut Traders Association, (1989) 2SCC 480) 5. E. P. Rayappa v. State of Tamil Nadu, [1974] 2 SCR 348 6. Electricity board , Rajasthan vs. Mohan Lal, AIR 1967 SC1857 7. Harichanda Aggarwal v. Batala Engineering co. ltd, AIR 1996 SC 483 8. In re L.G BALAKRISHNAN & BROS LTD (RTP Enquiry No. 1347/1987 order dated 11.4.1988) 9. Mahindra and Mahindra Limited v. Union of India 10. Mathura 10. Mathura Prasad Yadav vs. Inspector General, 1974 MPJL 373 11. Neeraj 11. Neeraj Malhotra v. Deustche Post Bank Home Finance Limited, CCI Case 5 of 2009, nd

decided on 2 December 2012 12. Ramana 12. Ramana Dayaram Shetty vs International Airport Authority of India, AIR 1979 SC 1628 13. Rashbihari 13. Rashbihari Panda v. State of Orissa, [1969] 3 S.C.R. 374 14. Raymond 14. Raymond Woolen mills Ltd v MRTP Commission, (1979) 49 COMP Cas 686 (Bom) (

15. SACCHI SACHHI, Case 41/83 (1985) ECR 880 16. Sahni Silk Mills (P) Ltd. vs. ESI Corporation, (1994) 5 SCC 346 17. Sarbhajit Tewari v Union of lndia & Ors., [1975] 1 SCC 18. Shri Ramachandra Reddy v. HDFC Bank, CCI Case No. 7/28, 25/28, 8/28, 9/28, 10/28, st

decided on 31 May 2011 19. Smt S. P. Uppal v. Sipani Automobiles, (1993) 78 Comp. Cas. 19 (MRTPC) 20. State Oil v. Khan th

21. Surinder v. BCCI, CCI Case No.61/2010, Decided on 8 february, 2013 22. Telco v. RRTA, AIR 1977 SC 973

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23. Umesh vs V.V N Singh, AIR 1968 Pat 3

INTERNATIONAL CASE LAWS 1. Arizona v. Maricopa Country Medical Society, 457 U.S. 332 (1982) 2. Ashton v. CIR, (NZ) 75 ATC 6001 3. Board of Trade of City of Chicago v. US, (1918) 246 US 231 4. Continental T.V. v. GTE Sylvania Inc, 433 U.S. 36 (1977) 5. Jefferson Parish Hospital Distt. No.2 v. Hyde, 466 US 2 (1984) 6. Northern Pacific Railway Co v. United States, 356 U.S.1(1958) 7. Summit Health Ltd et al v Pinhas, 500 US 322 8. United States v. General Motor Corp., 384 U.S. 127 (1966) 9. United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) 10. Volkswagen AG v. Commission of the European Communities, [2003] All ER (D) 55 (Dec)

MISCELLANEOUS •

The Constitution of India, 1950

STATUTES , LEGISLATIONS & CODES •

The Competition Act, 2002

DICTIONARY •

Eric L. Kohler, A Dictionary for accounts.

•

Black's Law Dictionary, 8 Edition, 2004

th

ONLINE DATABASE •

www.manupatra.com

•

SCC Online Case Finder, 2011

•

www.cci.gov.in

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BOOKS R EFERRED •

Dugar, S.M, Guide to Competition Law, containing commentary on The Competition Act, MRTP Act & Consumer Protection Act, Vol I & II Lexis Nexis Butterworth th

Wadhwa Nagpur, 5 Edition, 2010 •

th

Whish & Baliey, Competition Law, Oxford University Press, 7 Edition, 2012

ESSAYS, ARTICLES & R EPORTS •

A. Douglas Melamed, Exclusionary Conduct Under the Antitrust Laws: Balancing, Sacrifice, and Refusals to Deal , 20 Berkeley Tech. L.J. 1247, 1249 (2005)

•

Frank H. Easterbrook, When Is It Worthwhile to Use Courts to Search for Exclusionary Conduct?, 2003 Colum. Bus. L. Rev. 345, 345.

•

U.S. Dep't of Justice, Competition and Monopoly; Single-Firm Conduct Under Section 2 of the Sherman Act (2008), published in 2008.

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List of Abbreviations

§

Section

¶

Paragraph

&

And

A.I.R.

All India Reporter

Art.

Article

Co.

Company

COMPAT

Competition Appelant Tribunal

Ed.

Edition

Govt.

Government

Hon’ble

Honourable

KCC

Kedian Competition Commission

Ltd.

Limited

Mgt.

Management

No.

Number

Ors.

Others

PTK

Press Trust of Kedia

Pvt.

Private

RJA

Rudresh Journalist’s Association

SC

Supreme Court

SCC

Supreme Court Cases

U.O.I

Union of India

v./vs.

Versus

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It is humbly submitted that the Appellants have approached the Hon’ble Kedian Competition Appellate Tribunal under section 53B of the Kedian Competition Act.

All of which is respectfully submitted.

Counsels for the Appellant. Place:

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I.

Tech Print, Inc.; multinational news and broadcasting company based in Texas, USA, is a competitive market player in news and broadcasting sector. According to the Tech Print’s corporate policy, they would like to tread into the market of emerging economics and Kedia is one of the economies that have attracted them.

II.

In Kedia, the news and print market is dominated by the Press Trust of Kedia (PTK), which is a Government sponsored body having exclusive rights over certain political news which other media and news agencies are not permitted to air/print.

III.

Tech Print Inc. enters into an agreement (hereinafter referred to as “The Agreement”) with PTK and according to the agreement terms, Tech Media is allowed to share their superior technological advances in news streaming with PTK and PTK has allowed exclusive rights to Tech Print to broadcast news items which PTK is permitted under the laws of the land.

IV.

Rudresh Journalists’ Association (RJA) is a young journalist association which has been the biggest advocate of freedom of speech and expression in Kedia. It protests against the Government patronage given to PTK and deems the agreement between PTK and Tech Print to be unconstitutional. R J A ’s primary argument is that how the PTK can transfer broadcasting rights conferred upon it by the Government to a foreign company.

V.

Currently, the PTK does not control the news and media which Tech Print is airing/printing, but is merely sharing the profit which the Tech Print is making out of it.

VI.

There were a lot of rumours that the PTK officials (who were members of Kedian Administrative Services) were guilty of taking bribes from Tech Print industries and have allowed them to air all news items including political news which w a s the exclusive domain of PTK.

VII.

RJA filed a writ petition in the High Court of Kedia. The court disposed of the same and the Petitioner was advised to approach the Kedian Competition Commission for appropriate remedy.

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VIII.

Pursuant to the judgment given by the Hon’ble High Court of Kedia, RJA approached the KCC and filed an information stating that PTK and Tech Print, Inc. are monopolizing the market. The KCC issued a notice to PTK and Tech Print Inc. Both PTK and Tech Print Inc. were of the opinion that there is no provision in the Kedian Competition Law which punishes monopolization which is a purely US economic concept and thus the case against them does not survive.

IX.

The KCC having regard to the rival submissions and on the basis of the findings of the Director General (DG) passed the order in favour of Press Trust of Kdeia and Tech Print Inc.

X.

RJA was not satisfied by the order of the KCC and in persuent filed an appeal before the Kedian Competition Appellate Tribunal.

XI.

The laws of Kedia and legal system of Kedia are in pari materia with the laws of India, subject to any exception mentioned.

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I.

II.

III.


WHETHER MTGH AGREEMENT BETWEEN PTK AND TECH PRINT I NC. IS AGAINST THE PROVISIONS OF THE COMPETITION ACT, 2002 OR NOT?

WHETHER THE AGREEMENT HAS AN APPRECIABLE ADVERSE EFFECT MARKET OR NOT?

ON THE RELEVANT

WHETHER THERE IS ABUSE OF DOMINANT POSITION U/S 4(1) OF THE COMPETITION ACT,2002?

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1.


THAT THE AGREEMENT BETWEEN PTK AND TECH PRINT INC IS AGAINST THE PROVISIONS OF THE COMPETITION ACT, 2002 1.1 THAT THE AGREEMENT IS A HORIZONTAL AGREEMENT U/S 3(3) OF THE COMPETITION ACT. IT IS HUMBLY SUBMITTED THAT A HORIZONTAL AGREEMENT IS BETWEEN PARTIES ACTNIG ON THE SAME LEVEL OF PRODUCTION CHAIN. THESE AGREEMENTS ARE PRESUMED TO BE VOID ON THEIR VERY BASIS , AS OVER THE YEARS MRTP COMMISSION AS WELL AS COMPETITION COMMSIION OF I NDI A HAV E TRA TED THE M VER Y HAR SHY AS THE Y TEN D TO GRAVELY AFFECT COMPETTION IN I NDI A. 1.2 THAT THE AGREEMENT ON ACCOUNT OF BEING A HORIZONTAL AGREEMENT IS V OID P ER S EY .

IT

IS HUMBLY PUT FORTH THAT THE DOCTRINE OF VOID PER

SEY HAS RECEIVED

RECOGNITION FROM VARIOUS COURTS AND TRIBUNALS OVER THE YEARS.

ACCORDING

TO

IT , HORIZONTAL AGREEMENTS HAVE A GRAVE EFFECT ON COMPETITION HENCE ON THE FIRST SIGHT SHOULD BE TERMED AS VOID.

3(3) OF 2.

THE COMPETITION

R ULES

TO DETERMINE IT ARE GIVEN IN SECTION

ACT , 2002.

THAT "THE AGREEMENT" HAS AN APPRECIABLE ADVERSE EFFECT ON THE RELEVANT MARKET

2.1 That the agreement is a restrictive trade practice.

IT

IS HUMBLY SUBMITTED THAT

ERSTWHILE

MRTP

R E STRICTIVE

TRADE PRACTICES ARE DEFINED IN THE

ACT AND ARE VERY SIMILAR TO THE CURRET LAW AS PROPOUNDED IN

COMPETITION LAW. EVERY AGREEMENT IS TO BE JUDGED ON THE BASIS OF ‘R U LE OF R E ASON’ ANALYSIS , ACCORDING TO WHICH IT IS TO BE DICIDED THAT WHETHER IT HAS AN APPRECIABLE ADVERSE EFFECT ON COMPETITION OR NOT. I N T HE PRE SEN T C ASE APPRECIABLE ADVERSE EFFECT IN THE RELEVANT MARKET DOES EXIST DEPENDS ON RULES GIVEN IN SECTION

19(3).

3. THAT PTK HOLDS A DOMINANT POSITION IN THE MARKET U/S 4(1) OF COMPETITION 3.1 THAT PTK AND TECH PRINT HOLD A DOMINANT POSITION IT IS HUMBLY PUT FORTH THAT RULES TO DETERMINE A DOMINANT POSITION IS GIVEN UNDER SECTION 19(4). ALTHOUGH HOLDING A DOMINANT POSITION DOESN’T CREATE AN APPRECIABLE ADVERSE EFFECT ON COMPETITION BUT THROUGH VARIOUS CASE LAWS IT CAN BE SEEN THAT HOLDING SUCH POSITION IS ENOUGH TO ABUSE THE PROCESS.

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3.2 THAT PTK AND TECH PRINT HAVE ABUSED THEIR DOMINANT POSITION. IT IS HUMBLY SUBMITTED THAT THE POSITION BEING ENJOYED BY PTK HAS BEEN ARBRITARILY TRNSFERED TO A PRIVATE FOREIGN BODY. SUCH A BODY ONLY FUNCTIONS FOR PROFIT MOTIVE AND IN NO TIME BREACH PROVISIONS OF SECTION 4(2). THE PURPOSE BEHIND EXCLUSIVE RIGHTS BEING GIVEN TO A STATUTARY BODY WAS THE BENEFIT OF GOVERNMENT

AND

CITIZENS,

RATHER

THESE

POWERS

ORGANISATION WITH ONLY MOTIVE BEING PROFIT MAKING.

HAVE

BEEN

GIVEN

TO

A

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1. THAT THE AGREEMENT BETWEEN PTK AND TECH PRINT INC IS AGAINST THE PROVISIONS OF THE COMPETITION ACT, 2002 1.1 THAT THE AGREEMENT IS A HORIZONTAL AGREEMENT U/S 3(3) OF THE COMPETITION ACT. 1.1.1 It is humbly submitted that in the present matter Tech Print media entered into an agreement with Press Trust of Kedia (hereinafter called as PTK) to broadcast news items which PTK is permitted to exclusively broadcast under the laws of the land.The Agreement is a horizontal agreement u/s 3(3) of the competition act, 2002.

1.1.2 It is humbly submited that the agreement is Primae Facie a horizontal agreement where the two parties are at the same level of production that is, broadcasting of news items. The horizontal agreements are presumed to have an appreciable affect on competition within the relevant market. Certain horizontal agreements are said to be void per se due to their very nature. 1.1.3 It is humbly submitted that Section 3(3) of the Competition Act, 2002 specifically states about the agreements between persons or enterprise ‘engaged in identical or similar trade’. The word trade has been defined in section 2(x) as “trade means any trade, business, industry, profession or occupation relating to the production, supply, distribution, storage or control of 1 goods and includes the provision of any services”. 1.1.4 It is most humbly submitted that the agreement between Tech Print and PTK comes under “ Agreement ” as defined under Section 2(b) of the Competition Act, 2002 which states that: •

“ Agreement ” here does not mean any standard agreement but any arrangement or understanding or action in concert whether formal or in writing; or whether or not such arrangement, understanding, or action is intended to be enforceable by legal proceedings.

1.1.5 In the very pertinent case of Volkswagen AG v. Commission of the European Communities2 the Hon’ble Court stated that there is no need for an explicit agreement in writing but there should be a consensus between the parties concerned, also referred to as meeting of minds or concurrence of will. In the present case there was an express agreement formed between Tech Print and PTK wherein PTK allowed exclusive rights to Tech Print to broadcast news items

1 2

Volkswagen AG v. Commission of the European Communities, [ 2003] All ER (D) 55 (Dec) Supra Note 1

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which PTK is permitted under the laws of the land and Tech Media shared its superior technological advances in news streaming with PTK. 1.1.6 Section 2(h) of the Competition Act, 2002 defines the word “enterprise” and includes “a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods”. Further Section 2(l) defines “person” as: •

An individual;

•

A Hindu undivided family;

•

A company;

•

A firm;

•

•

An association of person or body of individuals, whether incorporated or not, in India or outside India; Any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956).

1.1.7 It is humbly put forth that in the present matter the exclusive rights given to a statutary body, that is PTK, have been given to a foreign private body, thus tranferring such rights in a manner, which seems highly suspecious. There are also alleged claims that PTK officials have taken bribes from Tech Print making the conditions worse. 1.1.8 It is humbly submitted that the agreement is in itself full of anomolies, which conclusively gives it an anti-competitive nature. It is to be noted that the monopoly given to a statutory body though given for general benefit will come under the purview of competition law as 3 decided in European Competition commission case of SACCHI . 1.1.9 It us humbly put forth that competition laws are meant to ensure that competing producers/sellers do not destroy free and fair competition that should exist amongst them or do not exploit their consumers or competitors due to market power. 1.1.10 It is humbly submitted that customers choice must be sacrosanct in a market economy because it is expected that a consumer would decide what is best for it and free exercise of consumer choice would maximize the utility of the product or service for the consumer.

3

Case 41/83 (1985) ECR 880)

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Memorial on Behalf of Appellant 4

Raghavan Committee defines a Horizontal agreements as•

Horizontal Agreements are entered between two or more enterprises that are at the same level of production chain and in the same market. Such agreements are often between same manufacturers or producers of goods or services or between distributors of services like in our present case.

1.1.11 The per se rule and its rationale were explained by the US courts in a number of cases, e.g., 5 6 Northern Pacific Railway Co v. United States , Arizona v. Maricopa Country Medical Society 7 and Continental T.V. v. GTE Sylvania Inc . In the case of Northern Pacific Railway, the court observed that ‘there are certain agreements or practices which because of their pernicious effects on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and, therefore illegal without any elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints that are proscribed by the Sherman Act more certain to the benefit of everyone concerned , but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable-an inquiry so often wholly fruitless when undertaken.” 1.1.12 The Competition Commission of India in the very recent case of FICCI – Multiplex Association of India, United Producers/ Distributors Forum, followed the presumptive rule. Where the opposite party was found to be indulging in anti competitive activities. 1.1.13 In Jefferson Parish Hospital Distt. No.2 v. Hyde8, the court observed that the ‘rationale for per se rule, in part, is to avoid a burdensome inquiry into the actual market conditions in situations where the likelihood of anti-competitive conduct is so great as to render unjustified the costs of determining whether the particular case at bar involves anti-competitive conduct. The per se rule, as opposed to the rule of reason, has been applied by the courts in respect of particularly harmful agreements such as agreements relating to price fixing, limiting supply, allocation of territories, bid rigging, group boycotts, concerted refusal to deal, and resale price maintenance.’ 9

1.1.14 In Northern Pacific R. Co. v. United States , it was observed by the US Supreme Court that, “ However, there are certain agreements or practices which, because of their pernicious effect on competition and lack of any redeeming virtue, are conclusively presumed to be 4

Report of High Level Committee on Competition Law and Policy, SVS Raghavan, 2000 356 U.S.1 (1958) 6 457 U.S. 332 (1982) 7 433 U.S. 36 (1977) 8 466 US 2 (1984) 9 Supra Note 5 5

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unreasonable, and therefore illegal, without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of every one concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable – an inquiry so often wholly fruitless when undertaken.’ 1.1.15 The above stated observation of the US Supreme Court was also followed in the case of 10 United States v. General Motor Corp , and is confirmed in the decision of the competition 11 commission in Neeraj Malhotra v. Deustche Post Bank Home Finance Limited. ER 1.2 THAT THE AGREEMENT ON ACCOUNT OF BEING A HORIZONTAL AGREEMENT IS V OID P EY S . 1.2.1 It is humbly submitted that the agreement between PTK and Tech Print is void per se as per the rules laid down by various Indian and foreign courts and tribunals. The illegality of the agreement is to be observed on the basis of the fact that it directly breaches the provisions of section 3(3)(b) of the Competition act, 2002 which states that, ” Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which (a) Directly or indirectly determines purchase or sale prices (b) Limits or controls production, supply, markets, technical development, investment or provision of services.

1.2.2 The Agreements in the nature of the current agreement between PTK and Tech print do not need much of investigation as the very nature of these agreements poses a threat to a healthy competitive market, which the competition act aims to achieve. For this purpose itself the doctrine of void per se was propounded by Competition Commission of India hence it should be applicable in the present case. 1.2.3 It is humbly submitted that PTK had a mala fide intention in entering into the contract with Tech Print. It is to be noted that in the order by the Hon’ble KCC the members observed that PTK although had a 100% share in political news but lagged behing in the area of Sports, entertainment, general news, films, edutainment and other categories. PTK entered into the agreement to make use of the technological adnavcement of Tech print and subsequetly capture the whole market of News and print media. To attain these ends it gave away the exclusive rights obtained by it from the Gove rnment of Kedia.

10

384 U.S. 127 (1966) Neeraj M alhotra/Deustche Post Bank Home Finance Limited , CCI Case 5 of 2009, decided on 2 nd December 2012

11

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1.2.4 In the case of State Oil v. Khan , it was held by the Supreme Court of United States that some types of restraint on trade have such predictable and pernicious anti-competitive effect, and such limited potential for pro-competitive benefits, that they are deeme d unlawful per se. 13

1.2.5 The above stated doctrine was also used in Northern Pacific R. Co. v. United States where the Supreme Court of United States observed that there are certain agreements or practices, which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonably and therefore illegal under the Sherman Act without elaborate inquiry as to precise they have caused or business excuse for their use. 1.2.6 The above stated common law doctrine of ‘ per se illegal’ has been subscribed to by India in the Apex Court’s judgement in Mahindra and Mahindra Limited v. Union of India14 wherein it stated that there may be trade practices which are such that by their inherent nature and inevitable effect, they necessarily impair competition and in case of such trade practices, it would not be necessary to consider any other facts or circumstances for they would be per se restrictive trade practice. 1.2.7 It is humbly put forth that it is an accepted doctrine that the onus of proof in cases of per sey illegal agreements lie on the other party. 1.2.8 It is humbly put forth that PTK enjoyed a position where it had the exclusive rights to show certain political news. These rights were conferred upon PTK by the government, looking at it in the competition sense, Tech print now has power to directly determine the sale price of the particular service breaching provisions of section 3(3)(a), also it has the power to limit the distribution of the news items it was allowed to broadcast ie a contravention of section 3(3)(b). In the past these powers were enjoyed by PTK, a statutary body over which the government of Kedia had some amount of control now these have been given to a private foreign body. 1.2.9 It is humbly submitted that the purpose of the agreement is not only to share technological advances or exclusive rights rather the ultimate aim is to create a further dominanace in the market of news and print media, and subsequently drive the existing competitors out of market, and also to directly determine sale price of the service. Hence indulge into anticompetitive activities. 1.2.10 It is humbly pleaded that the per se rule should be applicable in the present case as the agreement primae facie has large amount of elements which are of anti competitive nature.

12

522 U.S. 3 (1997) Supra Note 5 14 1984 (18) ELT 262 Bom 13

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1.2.11 It is humbly submitted that in the estwhile MRTP act as well the per sey rule has been made an integral part. The trade practices that tend to obstruct the flow of capital or resources into the stream of production or to bring about manipulation of prices or conditions of delivery or to affect flow of supplies of goods or services so as to impose unjustified cost or restrictions on consumers is a restrictive trade practice. Further every agreement that, “limits, restricts or withholds the output or supply of any goods or allocate any area or market for the disposal of 15 the goods”. is a restrictive trade practice within the meaning of the Act. As held in Smt S. P. 16 Uppal v. Sipani Automobiles. 2. THAT

THE AGREEMENT HAS AN APPRECIABLE ADVERSE EFFECT ON

COMPETITION IN

THE

RELEVANT MARKET.

2.1 THAT THE AGREEMENT IS A RESTRICTIVE TRADE PRACTICE.

2.1.1 It is humbly submitted that § 3 of The Competition Act, 2002 aims at those Anti-Competitive agreements, which are in nature of Restrictive Trade Practices under the erstwhile MRTP Act, 1969. The purpose of clause of § 3(1) is to prevent those anti-competitive agreements, which are likely to cause an ‘appreciable effect’ on competition within India. § 3(1) is the covering section of the entire Chapter on ‘‘Prohibition of agreements’’ and it is the broader provision, which covers both § 3(3) and § 3(4). It means that whenever there is contravention of § 3(3) and § 3(4), the contravention of § 3(1) has to be there. § 3(1) is inherent and implicit in § 3(3) and §3 (4). 2.1.2 The aforementioned argument can be appropriately established from the principles derived 17 from cases of Shri Ramachandra Reddy v. HDFC Bank and Neeraj Malhotra v. Deustche 18 Post Bank Home Finance Limited . In cases of exclusive distributive agreements the test whether an agreement ‘appreciably’ effects the competition in India or not should always to be followed as propounded in a recent order of CCI in Ajay Devgan Films v. Yash Raj Films 19 Private Limited . 2.1.3 It is submitted that the ‘rule of reason’ has to be applied in order to determine whether an agreement has an appreciable adverse effect on competition or not. Raghavan Committee observed that, “ Agreements are considered illegal only if the result is unreasonable restriction on competition. Based on U.S law, this is tested on what is known as ‘rule of reason’

15

Section 33 (g) of The Monopolies and Restrictive Trade Practices Act, 1969 (1993) 78 Comp. Case.19 (MRTPC). 17 Shri Ramachandra Reddyand ors/HDFC Bank and ors. CCI Case No. 7/28, 25/28, 8/28, 9/28, 10/28, decided on st 31 May 2011. 18 Neeraj M alhotra/Deustche Post Bank Home Finance Limited , CCI Case 5 of 2009, decided on 2 nd December 2012. 19 Ajay devgan films/Yash Raj Films, CCI Case No. 66 of 2012, decided on 5 th November 2012. 16

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analysis”. As propounded in one of the most famous American cases, Board of Trade of City 20 of Chicago v. US . 2.1.4 It is humbly put forth that at this point it is important to determine the relevant market in the present case. The rules to determine a relevant market have been defined under § 19(5) and § 19(6) of the act. 2.1.5 Pursuant to the provisions under Sec 19 of the Competition Act, 2002 it can be said that, the relevant geographical market in the present case is the whole of Kedia, and the relevant product market is ‘The market of broadcasting of news and print media’. 2.1.6 It is humbly submitted that the word “appreciable” has not been defined in the Act, rather it 21 has been defined in Blacks Law Dictionary as, “Capable of being estimated, weighed, judged of, or recognized by the mind, capable of being perceived or recognized by the senses.” It is purely in the realm of estimation and is subjective. Whether the adverse effect on competition is appreciable or not, will vary according to facts and circumstances of each case. 2.1.7 It is humbly put forth that adverse effect on competition within India, if is the result or is a likely result of the agreement, this particular agreement is void within the meaning of § 3(1). The purpose of such agreement should not necessarily have been to produce an adverse effect on competition. 2.1.8 In Ashton v. CIR22 their Lordship said that if an arrangement has a particular purpose, then that would be its intended effect and that if it has a particular effect; it will be its intended purpose. Adverse effect should be the consequence of the agreement, though that consequence may not be intended. 2.1.9 It is humbly submited that although primae facie there has been no such harm to any body or any competitor but even if that consequence is probable, the agreement is anti-competitive. The mere probability of its consequence as appreciably affecting competition is the requirement. The focus is upon the potential harm to the competition that would ensue if the 23 agreement were successful and not upon the actual consequences. 2.1.10 It is humbly put forth that in the case of Raymond Woolen mills Ltd v MRTP Commission24 it was stated that, “The essesne of justification is that a given practice or agreement produces some benificial effects. It is like balancing a see saw or the scales of weighing machine. On one side are benefits claimed and on the other side the extent of injutry to the public. The standard to judge a given trade practice is that of public interest”.

20

(1918) 246 US 231 th 8 Edition, 2004 22 (NZ) 75 ATC 6001 23 Summit Health Ltd et al v Pinhas, ( 500 US 322). 24 ( 1979) 49 COMP Case 686 (Bom) 21

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2.1.11 It is humbly submitted that the onus of proof lies on the respondent to show that the impugned restriction in fact are not pejudicial to public interest as held in In re L.G BALAKRISHNAN & BROS LTD.25 2.1.12 It is humbly submitted that PTK offered no opportunity to other parties for the agreement. Being a statutary body it should in its capacity and release an open tender before entering into agreements such as these. It has thus indulged into denial of market aceess and creation of barriers for new entrants in the market. If the only criterion to enter into the contract was the technological advancement of Tech print then the basis of such selection becomes questionalble and hence raising the suspecion of payment of bribes as indicated in the fact sheet. 2.1.13 It is humbly put forth that the preamble of the competition act says that “ An act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto”. 2.1.14 It is submitted that Kedia is an emerging economy and there is no doubt that it is in dire need of new technological advances and better technology but for this purpose the effect on the consumers should not be forgotten. Television media and print media with respect to political news are a very big source of information for the consumers but the government is already curtailing it, and now a foreign company is enforcing the same restrictions. These rights and interest of consumers could be under serious threat. 2.1.15 It us humbly put forth that competition laws are meant to ensure that competing producers/sellers do not destroy free and fair competition that should exist among st them or do not exploit their consumers or competitors due to market power. 2.1.16 It may also be noted that according to The Monopolies and Restrictive Trade Practices Act, 1969, restrictive trade practices are defined as “where a trade practice has the effect, actual or probable of restricting, lessening or destroying competition it is liable to be regarded as a restrictive trade practice.”(Section 2(o), The Monopolies and Restrictive Trade Practices Act, 1969. ) Thus whenever the question of whether a certain trade practice is restrictive or not, it has to be decided not on any theoretical or a prior reasoning, but by inquiring whether the trade practice has or may have the effect of preventing, distorting or restricting competition 2.1.17 It is humbly put forth that the test to whether a certain agreement appreciably effects competition within the relevant market or not has been given under §19 (3) of the act. The 25

RTP ENQUIRY NO 1347/1987 ORDER DATED 11.4.1988

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rules include•

Creation of barriers to new entrants in the market;

•

Driving existing competitors out of the market;

•

Foreclosure of competition by hindering entry into the market;

•

Accrual of benefits to consumers;

•

Improvements in production or distribution of goods or provision of services;

•

Promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

It is humbly put forth that each of these points shall be taken individually – •

Creation of barriers to new entrants

The Agreement definitely created a barrier to new entrants. PTK while entering into the contract never realeased a tender which is a requirement in all government agencies. No other enterprise got an opportunity to compete with Tech print for the agreement. Also in the future the technological advacement of Tech print will allow it to increase their maket share and gain a clear dominanace in the field of news and media, that is the relevant market hence entry of new entrants will be difficult. •

Driving existing competitors out of market

As discussed in the sub issue 1.1.16 and 1.1.18 the position enjoyed by PTK is such that it is already in a dominant position in its relevant market. Tech print, which has now stepped into the shoes of PTK will try and form and attain bigger market share and exploit the already 26 existing monopoly. It is put forth that in the case of Surinder v. BCCI a member of the commission in his supplementary order has observed that exclusive agreements may provide for barriers to new entrants as well as hindrance to already existing firms in the market in the long run, that is only in the cases where the agreement if for a long period of time like 10 years as in the aforesaid case. The member arrived at this opinion by referring to some case laws in the same respect like KNVB/Sport 7, which was later confirmed in the case of Sh. Surinder 27 Singh Barmi v. BCCI . It is to be noted that according to the rule of reason an unreasonable restriction has to be noted. A restriction to the competition procedure is enough to ascertain an appreciable effect on competition. •

Foreclosure of competition

Breach of this can be seen primae facie itself. 26

Surinder Singh Barmi/Board for Control of Cricket in India, CCI Case No.61/2010, Decided on 8 th february, 2013 27 Ibid

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•


Accural benefits to customers

It is humbly submitted that the Preamble and the spirit of the competition act give a heavy weightage to the amount of benefits to the customers on account of an agreement. In the case 28 of Telco v. RRTA , the Hon’ble Supreme Court confirmed that benefit to the customers hold the utmost importance in the eyes of law to determine whether an agreement adversely affects competition or not. The erstwhile MRTP Commission also gave huge amount of weightage to the public benefit as against the benefit to the enterprise or market as observed in the cases of Raymond Woolen mills Ltd v MRTP Commission and In re L.G BALAKRISHNAN & BROS LTD. 29

In United States v. Microsoft Corp. it was held that, “The impugned act must harm the competitive process and thereby harm consumers. In contrast, harm to one or more competitors will not suffice.”

2.1.18 Public policy has been held to be of utmost importance but cases where no public benefit exist rather it is against the priciple of accural benefit to the cutomers, onus is shifted to the respondents to prove the nature of the agreement. 3.0

THAT PTK AND TECH PRINT INC ABUSED THEIR DOMINANT POSITION IN THE RELEVANT MARKET. 3.1 THAT PTK AND TECH PRINT HOLD A DOMINANT POSITION 3.1.1 It is hubly submitted that PTK on account of the Government of Kedia enjoyed a monopoly/dominant position in the relevant market, that is The market of broadcasting of news and print media in Kedia.

3.1.2 PTK was given exclusive rights by the government to broadcast certain political news where the market share of the enterprise is 100%, while in the market of news and print media PTK has a market share of 35%, while the distant second is only 19%, which clearly establishes its dominanace in both the markets. 3.1.3 It is humbly put forth that Monopolies created by a state come under the purview of the Competition Act, 2002 as has been considered in the European Commission, in the case of 30 CBEM . The abuse of a dominant position with the state as the defaulting enterprise was conclusively upheld by the European Commission with reference to the Treaty of Rome in the aforesaid case thus, establishing the applicability of Anti-trust law and competition law to state entities as well. 28

AIR 1977 SC 973 253 F.3d 34 (D.C. Cir. 2001) 30 Case 311/84 ECR (1985) 03261 29

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31


3.1.4

It is humbly put forth that on account of “The Agreement” Tech Print is now enjoying the dominant and monopolistic position of PTK., also they are now individually dominanat in the relevant market.

3.1.5

It is to be noted that the intention behind giving out such monopoly was to curtail the political news, which may harm the governmental system of the country, and to maintain law and order. PTK a statutary body consists of officials of Kedian Administrative services.

3.1.6

It is humbly submitted that arbritrary power especially the type which is being given out here, if exercised by a governmental body whose interests are at stake is valid to an extent but the same power being enjoyed by a private foreign body is dangerous and may led to misuse. The giving out of such powers are against the basic tenet of the Constitution of India (as laws of Kedia are pari materia with laws of India) and Competition Act, 2002 whereby a clear dominant position is being enjoyed by the enterprise.

3.1.7

It is a basis priciple of Competition law that holding a dominant position is not against the spirit of law rather abusing such postion will breach the law. The US Courts have clearly drawn a line between existence and exercise of dominant position. It must be understood that existence of dominance is not prohibited; it is the exercise of monopoly power that leads to penalty. American Jurisprudence reads “A corporation does not violate the Sherman Act by securing a dominant position as the result of the ability, ingenuity, intelligence and industry of those who direct its activities, such as by offering a better product and furnishing better customer service”31

3.1.8

It shoud be understood that the contention of the other party is that the appellants have alleged monopolisation of market by the other party, while the term itself does not exist in the laws of Kedia. Under the antitrust laws of the United States, the expressions “dominance” or “abuse of dominance” are not used. The corresponding concept under that law is of ‘monopoly’ and ‘attempt to monopolize’. Section 2 of the Sherman Act states: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and…” This section addresses the actions of single firms that monopolize or attempt to monopolize as well as the conspiracies and combinations that attempt to monopolize.

American Jurisprudence, Vol.54, 2nd Ed., p.691

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3.1.9

Memorial on Behalf of Appellant So it should be understood that 2 concepts stand hand in hand and are not different from each other in substance. 32

3.1.10 Moving forward in Berkey Photo Inc v. Eastman Kodak Co it was observed that “As the 33 court recently held in United States v. Grinnel Corp that it is not a violation of § 2 of the Sherman Act for a business with monopoly power to achieve growth or development as a consequence of a superior product, business acumen or historic accident”. The same is used by indian courts as well. 34

3.1.11 In United States v. International Harvester Co. , the Court citing the case of United 35 States v. United States Steel Corp. observed that the law does not make mere size of a corporation, however impressive, or the existence of unexterted power on its part, an offence, when accompanied by unlawful conduct in the exercise of its power. 3.1.12 It is humbly submitted that at this point it is pertinant to define dominant position. § 4(3) defines a dominant position as “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to— •

operate independently of competitive forces prevailing in the relevant market; or

•

affect its competitors or consumers or the relevant market in its favour.

3.1.13 A dominant position is a market controlling position, capable of driving competing business from the market and also dictating a price. It is the power of controlling prices or restricting competition36. It is the ability to operate independently of competitive pressure and appreciably affect the relevant market. Abuse, refers to exploitative behaviour and also of the anti-competitive conduct of the dominant enterprise or group. 3.1.14 The consequeses of such dominant position can be summarised as “A position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of 37 its consumers.”

32

444 US 1093 (1980 ) 384 US 563 (1966) 34 274 US 693, (1927) 35 251 US 417 36 American tobacco co v. United states, 328 US 781 37 United Brands v. Commission, [1978] ECR 207 33

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3.1.15 No enterprise can be considered dominant on the basis of big name. Dominance has to be determined as per law on the basis of market share, economic strength and other relevant 38 factors stated under § 19(4) of the Act as held in Ajay Devgan Films v. Yash Raj Films. 3.1.16 It is humbly submitted that in the present matter Tech Print has enough market share to operate independently of the competing forces due to its technological advancement and company strength as they also have offices in many countries of the world. Also it certainly has power to affect its competitors or consumers in a way, which may either, be positive or negative. 3.1.17 It is Further submitted that, certain pointers have been stated in § 19(4) to determine whether an enterprise enjoys a dominant position in the relevant market or not, the relevant ones are as follows•

market share of the enterprise;

•

size and resources of the enterprise;

•

size and importance of the competitors;

•

economic power of the enterprise including commercial advantages over competitors;

•

vertical integration of the enterprises or sale or service network of such enterprises;

•

dependence of consumers on the enterprise;

•

monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise

Examining each of them individually it is undisputable that PTK and subsequently Tech Print enjoy a dominant position. 3.2 THAT PTK AND TECH PRINT HAVE ABUSED THEIR DOMINANT POSITION. 3.2.1 There are primarily three stages in determining whether an enterprise has abused its dominant position or not. I. The first stage is defining the relevant market. In the present matter the relevant market is The market of broadcasting of news and print media in Kedia. II. The second is determining whether the concerned undertaking/enterprise/firm is in a dominant position/ has a substantial degree of market power/ has monopoly power in that relevant market. As discussed in the previous sub issue. III. The third stage is the determination of whether the undertaking in a dominant position/ having substantial market power/monopoly power has engaged in conducts specifically prohibited by the statute or amounting to abuse of dominant position/monopoly or attempt to monopolize under the applicable law.

38

2012 CompLR 1099 (CCI)

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3.2.2 In the case of Standard Oil Company v. US In United States, § 3 of the Clayton Act prohibits ‘exclusive dealing’. It declares an ‘exclusive dealing’ arrangement as illegal if it tends to create a monopoly in any line of business. In our present case monopoly is not being created rather it is being tranferred from an instrumentality of state to a private body. 3.2.3 It is humbly submitted that the question is whether the opposite party can restrict competiton using such dominant position. It was noted in the decision of MTRP Commission that a substantial market share shows that the alleged trade practice could 40 have, or can, directly or indirectly restrict competition to a material degree in the market. With a market share of 35% in the relevant market the opposite parties clearly have a capacity to restrict competition. The apprehension that certain pratice may harm the competition process and not the competitors itself is enough to be called a restrictive trade practic. In 1998 the US Supreme Court reaffirmed that Sherman Act liability requires harm 41 to the competitive process, not simply a competitor. It is submitted that the abovementioned observations of the Supreme Court of US is in consonance with the preamble of the Competition Act, 2002. 3.2.4

It is humbly put forth that Tech Print is in a very delicate position whereby it enjoys powers like no other body. It is an established fact that every private body works for profit motive, also in the present case the profit enjoyed by Tech Print is to be shared with PTK as well, which is a clear reason to misuse its dominance and enforce unfair prices.

3.2.5

The relevant market in the present case includes the market of broadcasting of political news and print where there is 100% market share of the opposite parties. Thus such a situation will defintely in all probabilities will lead to abuse of competition process.

3.2.6

Under § 4(2) sates that where the firm directly or indirectly, imposes unfair or discriminatory— •

•

3.2.7

39 40

41 42

condition in purchase or sale of goods or service; or price in purchase or sale (including predatory price) of goods or service. 42

In the case of Print India v Springer india Pvt Ltd , Springer entered into many horizontal agreements, which made it a dominant player in the relevant market where it could conduct business independent of its competitors. The opposite party abruptly increased the prices of its publications within a short period of time. This was held to be anti-competitive by the competition commission of India.

337 U.S 293 (1949) DGIR v.UB-MEC Batteries [1996] 87 Comp. Cas. 891 (MRTPC) 337 U.S 293 (1949) Comp. Case no. 16 of 2010

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3.2.8

It is humbly submitted that in Jefferson Parish Hospital Distt No. 2 v. Hyde citing inter alia United States Steel Corp. v. Fortner Enterprises44, it was observed that market power is the ability to raise prices above those that would be charged in a competitive market.

3.2.9

In American Tobacco Co. v. United States , it was observed that, “The authorities support the view that the material consideration in determining whether a monopoly exists is not that prices are raised and competition is actually excluded but that power exists to raise prices or to exclude competition.”

45

3.2.10 Monopolies inquiry commission observed that “Every monopolistic practice iso the face of it a restrictive practice. Indeed, sometimes the 2 words are used indiscriminately. Thus, in our opinion every practice, whether it is by action or understanding or agreement, formal or informal, to which persons emjoying monopoly power resort in exercise of the same to reap the benefits of the power and every action, understanding or agreement tending to calculated to preserve, increase or consolidate such power should be designated monopolistic practice.” 3.2.11 Raghavan Committee laid down few questions to be answered in order to determine whether there has been an abuse of doinance or not. These are: i. How will the practice harm competiton ? ii. Will it deter or prevent entry ? iii. Will it reduce incentives of the firm and its rivals to c ompete aggressively ? iv. Will it provide the dominant firm with an aditional ca pacity to raise prices ? v. Will it prevent investment in research and innovaton ? The answer to questions number 2, 3, 4 is yes, while answer to question number 5 is no. The weight of negatives is much more than the positives thus giving it a shape of restrictive trade pratice. 3.3

THAT

THE AHREEMENT BETWEEN

PTK AND TECH PRINT

IS INVALID AND AGAINST A

HEALTHY COMPETITIVE MARKET.

3.3.1 It is important to mention here that the validity of the agreement between PTK and Tech Print is based on the validity and the extent of powers conferred upon by the PTK Act, 1950, wherein the broadcasting rights regarding political news had been exclusively conferred upon PTK. To examine the validity of the agreement between PTK and Tech Print, it is of utmost importance to first of all examine whether PTK in the first instance itself had any power to confer such broadcasting rights upon third party by way of an agreement. 43

466 US 2 (1984) 429 U.S. 610, (1977) 45 328 U.S. 781 (1946) 44

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3.3.2 It is pertinent to mention here that PTK is a government sponsored, statutory body established under the PTK Act 1950 by virtue of which, it got exclusive rights to air political news. Art.14 of the Constitution of India itself lays emphasis on the fact that any instrumentality of the state and even the state itself cannot act arbitrarily in entering into relationship, contractual or otherwise, with a third party. Its actions must conform to some standard or norm, which is 46 rational and non-discriminatory. 3.3.3 It is to be mentioned here that the actions of PTK in entering into agreements with the third parties can be governed only if it falls under the category of “state” or any “instrumentality of the state”. Also, the nature of a statutory body, the extent of powers enjoyed by it and the extent of right to further delegate the powers conferred upon it by the statute are the issues to be taken care of. 47

3.3.4 It is humbly submitted that it was held in Electricity board, Rajasthan vs. Mohan Lal that the term “other authorities” under art. 12 is wide enough to include all authorities created by statute, constitution on whom powers are conferred by law. It is not necessary that the statutory authority should be engaged in performing governmental or sovereign function. In the instant matter also, PTK is a statutory body created under the PTK Act, 1950. 3.3.5 It is further submitted that liability regarding arbitrarily entering into agreements with third parties can be also fastened upon PTK, even if it is proved that PTK is an instrumentality of 48 the State because in Ramana Dayaram Shetty vs International Airport Authority of India , the apex court held that bodies which are even though not created by a statute but are instrumentalities of the State come under the ambit of “authorities” used in Art. 12. The apex court had laid down certain tests for determining whether a body is an agency or instrumentality of the government. The first test itself said that if the financial resources of the state are the chief funding source of any body, it would be considered as an “authority” under art 12. In the instant matter too, the facts of the case itself state that PTK is a government sponsored body49. Thus, PTK is an instrumentality of the state and does come under the ambit of “other authorities” mentioned in Art 12 of the constitution and thus would be liable for its arbitrary practices. 3.3.6 It is put forth that it has been proved beyond doubt that PTK is an instrumentality of the State. It is relevant to mention here “Where any body is an instrumentality or agency of Government it would be subject to some constitutional or public law limitations as Government. The rule 46

Aggarwal v. General Manager, Hindustan Steel Limited [1970] 3 SCR 363, E. P. Rayappa v. State of Tamil Nadu [1974] 2 SCR 348, Maneka Gandhi v. Union of India [1978] 2 S.C.R. 621, 47

AIR 1967 SC1857 AIR 1979 SC 1628 49 Para 2 of Fact Sheet 48

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inhibiting arbitrary action by Government must apply equally where such body is dealing with the public and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will. Its action must be in conformity with some principles which meets the test of 50 reason and relevance.” Thus if State acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that State acting through the instrumentality, or agency of corporations should equally be subject to the same limitations. 3.3.7 It is further put forth that the responsibility and liability of the State in discharging non sovereign functions has to be taken into account in the instant mater In the case of Union of 51 India Vs. Competition Commission of India and Ors. , it was held that, “in the premises, it is held that only primary, inalienable and non-delegable functions of the constitutional government should quality for exemption within the meaning of ‘sovereign functions’ of the government under § 2 (h) of the Competition Act, 2002. welfare, commercial and economic activities, therefore, are not covered within the meaning of ‘sovereign functions’ and the State while discharging such functions is as much amenable to the jurisdiction of the competition regulator as any other private entity discharging such function.” Thus, even a state or any instrumentality of the state can be held liable for anti-competitive practices and transaction between the state or its instrumentality and third party, causing appreciable adverse affect on competition as per § 19(3) of the Competition Act, would be void. 3.3.8 It is put forth that in the instant matter, the PTK Act of 1950 exclusively conferred broadcasting rights of political news upon PTK. Such power was to be the exclusive domain of PTK only. Even the act itself imposed civil and criminal liabilities upon agencies or persons who try to air political news. The Parent Act itself. i.e. The PTK Act, 1950 was silent on the fact whether such broadcasting rights could be conferred upon the third parties by way of any agreement . This cannot be ignored that whenever the law confers power upon a specific body, it is indicative of the fact that the law has placed trust in the judgment of that authority or body, and consequently, it is that boy or authority and no one else, which ought to discharge the functions entrusted to it by the law.52 When an authority has specifically been appointed to discharge a function, it cannot be readily presumed that it had intended that its delegate should 53 be free to empower another person or body to act in its place. 3.3.9 In the instant matter, the PTK was specifically established under the PTK Act, 1950 wherein, the rights and powers regarding broadcasting of political news were entrusted exclusively with 50

Ramana Dayaram Shetty vs The International Airport Authority Of India And Ors ., 1979 SCR (3) 1014 AIR 2012 Delhi 66 52 Harichanda Aggarwal v. Batala Engineering co. ltd, AIR 1996 SC 483. Also Allen, Law And Orders 208(1956); DE Smith, Judicial Review of administrative action 298 (1980) 53 Sahni Silk Mills (P) Ltd. vs. ESI Corporation, (1994) 5 SCC 346 51

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PTK. Such powers in a way were delegated to the PTK. A delegate is entitled not to exercise powers in excess or in contravention of the delegated powers. If any order is issued or framed 54 in excess of the powers delegated, such order would be illegal or void. Such a delegation is valid only where the statute itself authorizes the authority to further sub-delegate the power to any other person or authority. 3.3.10 As it is in the present case the parent act, i.e. PTK Act, 1950 is completely silent on the issue whether such broadcasting powers and right could be further delegated or not. . Sub delegation can be held permissible only when the power to that effect is expressly conferred or when it 55 can be inferred by necessary implication. Such powers of sub-delegation cannot be inferred from the parent act in the instant case. Contrary to this, the provisions of the PTK Act state that any other news agency, airing or printing such political news, runs the risk of losing its license and criminal action can be initiated against its executives. 3.3.11 It is pertinent to mention here that the arbitrary nature of the agreement between PTK and Tech Print can be proved by the very fact that no tenders were invited for conferring such broadcasting rights. Such a situation provides scope for discrimination, arbitrariness and favoritism, which are totally opposed to the rule of law and our constitutional values, and also violates provisions of the competition law. 56 57

3.3.12 The apex court in West Bengal Electricity Board vs Patel Engineering Co Ltd observed that the mode of execution of the work of the project should also ensure that the public interest is best served. Tenders are invited on the basis of competitive bidding for execution of work of the project as it serves given purposes. On the one hand, it offers a fair opportunity to all those who are interested in competing for the contract relating to execution of the work and on the other hand, it affords the appellant a choice to select the best of the competitors on competitive price without prejudice to the quality of the work. Above all, it eliminates favoritism and discrimination 3.3.13 The decision of the Bombay High Court in Larsen & Toubro Ltd. v. Gujarat State Petroleum Corporation Ltd .58 was cited for the proposition that when it comes to the matter of exceeding or abusing the authority to bring about a contractual transaction the judicial review is permissible to prevent arbitrariness in the matter in which the public authority functions while entering into a contract. The absence of any issuance of tender coupled with rumours stating

54

( District C ollector Chittoor vs. Chittoor District Groundnut Traders Association, ( 1989) 2SCC 480). ( Mathura Prasad Yadav vs. Inspector General, 1974 MPJL 373 p.375,376), Justice G.P Singh ,Principles Of Statutory Interpretation 10th Edn. 2006 p. 971). 56 West Bengal Electricity Board v. Patel Engineering Co. Ltd ., AIR 2001 SC 682) 57 Supra Note 56 58 (2001) 2 GLR 934 55

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that PTK officials were bribed by Tech Print Industries, is enough to prove the arbitrary and malafide nature of agreement between PTK and Tech Print. 3.3.14 Further we cannot turn a blind eye to the fact that the principle objects of the competition Act, in terms of its Preamble and Statement of Objects and Reasons, are to eliminate practices having adverse effects on the competition, to promote and sustain competition in the market, to protect the interest of the consumers and ensure freedom of trade carried on by the participants in the market, in view of the economic developments of the country. In other 59 words, the Act requires not only protection of trade but also protection of consumer interest. Even Art 14 of the constitution negates the arbitrary and discriminatory use of power by the state in entering into agreements with third parties. Freedom of trade is cherished value of the constitution, which is ensured at any cost by the competition act. Such capricious use of power by PTK in arbitrarily entering into an agreement with Tech Print will create barriers to the new entrants into the market and the dominant position conferred upon it by way of the PTK Act 1950 will indeed cause an appreciable adverse effect on competition. Thus the agreement not only violates the provision of the competition act, but also violates the constitutional provisions. Such an agreement does not stand valid in the eyes of law.

59

Competition Commission of India v Steel Authority of India Ltd , Civil Appeal No.7779 of 2010 decided on 9th sep 2010

Appellant Memo Rizvi.pdf

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