CCI to investigate Monsanto Mahyco Monsanto Biotech (I) Limited
By way of a June 9 2016 order, the Competition Commission of India (CCI) directed the director general to investigate Mahyco Monsanto Biotech (I) Limited, Monsanto Holdings Private Ltd, Monsanto Inc, United States and Maharashtra Hybrid Seeds Company Ltd (collectively, the 'seed producers').(1) The investigation was based on information filed by Kaveri Seed Company Ltd, Ankur Seeds Pvt Ltd and Ajeet Seeds Pvt Ltd which alleged that the seed producers were in contravention of Sections 3 and 4 of the Competition Act.
It was alleged that the seed producers were abusing their dominant position by:
- imposing unfair and discriminatory conditions;
- charging unfair trait value;
- limiting scientific development; and
- denying market access.
The informants further alleged that the seed producers had entered into an exclusive supply agreement, under which they refused to work with other Indian seed manufacturers and reserved the right to fix the price for seeds in certain circumstances, in contravention of Section 3(4) of the act.
Notably, by an majority order dated February 10 2016, passed under Section 26(1) of the act, the CCI directed the director general to investigate the matter (for further details please see "CCI investigates global hybrid seeds giant Monsanto for abuse of dominance").
Mere collusion or coordination is not enough
By way of an order dated June 28 2016, the CCI held that M/s Ruchi Soya Industries Ltd, M/s Betul Oils Ltd and and M/s Ganganagar Commodity Ltd were not in contravention of Sections 3 and 4 of the Competition Act, as alleged by informant Shri Nirmal Kumar Manshani.(2)
The informant stated that the guar producers appeared to be part of a cartel in relation to the trading of guar seeds and guar gum in various commodity exchanges in India. The informant alleged that the parties were inflating the price of guar seeds and gum by artificially increasing demand through self-trading and circular trading, which caused huge losses to traders, hedgers and farmers.
The director general's investigation concluded that the guar producers were in contravention of Sections 3(3)(a) and 3(3)(b) read with Section 3(1) of the act based on the collected evidence – for example:
- calculation sheets depicting profit distributions;
- email exchanges between Ruchi Soya and Betul Oils; and
- evidence of a common employee being entrusted to manage the guar-related business activities of both groups.
Allegations against Ganganagar Commodity could not be substantiated by the facts and evidence gathered during the investigation.
The CCI observed that although there appeared to be a collusion agreement between the producers, this was not in itself a decisive violation of the Competition Act. To be considered a violation of the act, agreements or arrangements must actually determine the price of the commodity in question or otherwise control or limit the supply thereof.
The appreciable adverse effects arising or likely to arise out of such conduct must be shown in the markets in India – particularly when the parties strenuously rebut the statutory presumption. The CCI noted that it was not the quantity but rather the quality of evidence that matters. It is a time-honoured principle that evidence must be weighed and not counted. The test is whether the evidence is cogent, credible and trustworthy. The CCI thus noted that mere collusion or coordination per se is insufficient to reach a finding of contravention of Section 3(1) read with Section 3(3) of the Competition Act.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4929 2525) or email (firstname.lastname@example.org). The Vaish Associates website can be accessed at www.vaishlaw.com.
(1) Order dated June 9 2016. For the full text, see the CCI's website www.cci.gov.in.
(2) Order dated June 28 2016. For the full text, see the CCI's website www.cci.gov.in.
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