Introduction

By way of an August 1 2017 order, the Competition Commission of India (CCI) found the Container Trailer Owners Coordination Committee and its four participating associations – namely, the Cochin Container Carrier Owners Welfare Association, the Vallarpadam Trailer Owners Association, the Kerala Container Carrier Owners Association and the Island Container Carrier Owners Association – guilty of anti-competitive conduct. However, the CCI imposed no penalty. Instead, it directed the defendants only to desist from such conduct in future.(1)

Facts

Claimant Cochin Port Trust alleged that between January 2014 and September 2014 the committee had imposed a turn system which led to unilaterally fixed prices. It claimed that during this time, users of container trailers had to book services through the centrally controlled system and that the committee restrained outside transporters from lifting the containers, thereby impeding users' ability to hire trailers of their choice. To support this, the claimant relied on a circular issued by the committee to the members of the Transporters' Association on January 13 2014.

Decision

The CCI noted that none of the defendants disputed the existence of the turn system. Rather, they sought to justify it.

First, the defendants argued that the system was justified on the grounds that it was neither coercive nor mandatory in nature. However, the CCI rejected this argument, holding that a mutually agreed upon collusive agreement is as much a violation of competition law as a coercive diktat imposed by a trade association.

Second, the defendants stated that prevailing conditions during the period (eg, under-quotation by certain container trailer owners and a delay in payment by users of the container trailer transport services) justified imposing the turn system.

The CCI held that the first issue (ie, that the defendants had been under-quoted by other container trailer owners) was one outcome of a competitive market. Therefore, the defendant's justification contradicted the basic principles of competition. The second issue (ie, that the turn system was adopted to ensure timely payments) was also rejected, as it was insufficient to justify the solution devised by the defendants. The CCI held that fixing prices under the newly introduced turn system in order to ensure the timely payment of transportation charges was an excessively restrictive remedy to say the least. Therefore, the defendants were found to have indulged in price fixing pursuant to Sections 3(3)(a) and 3(1) of the Competition Act.

With regard to the violation of Section 3(3)(b) of the act, the CCI held that the total number of container trailers to which users had access was approximately 900, of which 800 were owned by the defendants. However, the CCI found insufficient evidence that the remaining 100 trailer owners had been denied the opportunity to operate in the claimant's port. Further, there was no evidence to suggest that membership had been denied to any of the transport operators or that non-members had been restricted from providing services to users willing to avail the services of the independent trailer owners. Therefore, the CCI held that there was insufficient evidence of the defendants violating Sections 3(3)(b) and 3(1) of the Competition Act.

With regard to issuing a penalty, the CCI held that certain mitigating circumstances existed in favour of the defendants. The turn system had been in operation for only a limited period between January 2014 and September 2014. Further, it had been discontinued before the investigation was ordered. The CCI therefore imposed no penalty on the defendants. Instead, it merely directed them to desist from indulging in such anti-competitive conduct in future.

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For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (mmsharma@vaishlaw.com). The Vaish Associates website can be accessed at www.vaishlaw.com.

Endnotes

(1) CCI decision, August 1 2017. For the full text please see the CCI website.