CCI grants AA size reprieve to Battery COs after they accept cartelisation charge

The Competition Commission of India (CCI) has found Eveready, Nippo, Panasonic Energy India Co. Ltd. (PECIN) and Association of Indian Dry Cell Manufacturers (AIDCM) guilty of cartelisation in the market for zinc-carbon dry cell batteries..The case was taken up by the CCI pursuant to an application filed by one of the companies, Panasonic Energy India Co. Ltd (PECIN), on the basis of which an investigation into the matter was carried out..In the order passed yesterday, the CCI found that the actions of the battery manufacturers were in contravention of Section 3(3) read with Section 3(1) of the Competition Act, 2002..However, the fact that the opposite parties admitted to the conduct and did not contest the findings of the Director General’s (DG) investigation led the CCI to take a more lenient view of the issue, with PECIN even being exempt from paying a penalty..The companies had entered into an anti-competitive agreement to mutually increase the MRP of zinc carbon dry-cell batteries and indulged in exclusion of ‘price competition’ at all levels in the distribution chain to ensure implementation of the agreement to increase price..The CCI also found that the companies also agreed to control supply in the market to establish higher prices and indulged in market allocation by requesting each other to withdraw their products from the market..“The evidence on record shows that price increases made by OP-2 [Nippo] and OP-3[PECIN] immediately following announcement of price increase by OP-1 were with prior information of imminent price increase by OP-1 [Eveready]. Due to this, OP-2 and OP-3 were able to increase prices of their respective products on most of the occasions with little or no time lag….…they entered into agreement/ understanding/ coordination amongst themselves to cover all other elements of the price structure besides MRP, comprising trade discount, wholesale price, dealer/ stockist landing cost, open market rates, retailers’ margin, sales promotion schemes etc…”.While determining the quantum of penalty to be imposed on the guilty parties, the CCI took into consideration the co-operation provided by the companies to strengthen the case against them. As regards PECIN, the Commission held,.“…full and true disclosure of information and evidence and continuous cooperation provided by OP-3, not only enabled the Commission to order investigation into the matter, but it also helped in establishing the contravention of Section 3 of the Act….…The Commission grants reduction of 100 (hundred) percent of the penalty leviable under the Act.”.Similarly, the penalties on Eveready and Nippo were also reduced by 30% and 20% respectively. Thus, a penalty of Rs. 171.55 crore was slapped on Eveready, while Nippo was required to pay Rs. 42.26 crore and AIDCM was directed to pay Rs. 1.85 lakh..The CCI further imposed a penalty on individuals of the company who carried out the cartelization, calculated at the rate of 10 percent of the average of their income for the last three preceding financial years..Eveready was represented by a team from Khaitan & Co. comprising Competition Law Partner Manas Kumar Chaudhuri, Associate Partner Sagardeep Rathi and Associate Arunima Chatterjee..Indo National Limited (Nippo) was represented by a team from Shardul Amarchand Mangaldas comprising Managing Partner Pallavi Shroff, Partner Manika Brar and Associates Anandh Venkataramani, Supritha Prodaturi and Akkriti Bhat..Chandhiok & Associates appeared for PECIN through a team led by Partner and Head of Disputes and Competition Law Karan Singh Chandhiok, along with Managing Associates Kalyani Singh and Vikram Sobti, and associates, Mehul Parti and Sarthak Pande..Read the CCI order: