CCI Dismisses Allegations of Price Fixing and Abuse of Dominance against Arthur Flury AG Switzerland and PPS International, Delhi.

On August 27, 2018, CCI dismissed information filed by the Central Organisation for Railway Electrification (‘CORE’) under Section 19(1)(a) of the Act, alleging violations of Section 3 and 4 of the Act by PPS International, Delhi (‘PPS’).[1] CORE operates under the Ministry of Railways, Government of India and is concerned with railway electrification of the entire network of the Indian railways. To carry out its functions, CORE procures Short Neutral Section Assembly (‘SNS Assembly’/ ‘phase break’) from the authorised Indian distributors of Research Design and Standards Organisation (‘RDSO’),  an original equipment manufacturer namely, Arthur Flury AG Switzerland (‘Arthur’).

As per the information, PPS was alleged to have imposed unfair conditions and artificially increased the prices for sale of SNS Assembly in contravention of Section 4(2)(a)(i) and Section 4(2)(a)(ii) of the Act. It was also alleged that the price increase was pursuant to a concerted decision between Arthur and PPS, in violation of Section 3(3)(a) of the Act. CCI in its assessment at the outset dismissed allegations of violation of Section 3(3)(a) since Arthur (manufacturer) and PPS (distributor) were operating at different levels of the production chain in different markets and Section 3(3) is only applicable to concerted actions between competitors (enterprises active in the same market). As regards allegations of abuse of dominance, CCI identified the relevant market as the ‘market for supply of SNS Assembly in India’ given the specific physical characteristics of SNS Assembly and the geographic scope of homogenous competitive conditions. In the concerned market, CCI observed that PPS was a dominant enterprise since it was the only distributor for Arthur (and Arthur was the only RDSO approved original equipment manufacturer for SNS Assembly). However, as regards allegations of abuse, CCI observed that a case for violation of Section 4(2)(a)(i) was not made out. As regards excessive pricing, CCI analysed the prices charged by PPS over the period of 2006-2018 and observed that the price increase was not continuous and in fact decreased in 2016. For the above reasons, CCI dismissed the allegations of abuse of dominance as well.

[1] Central Organisation for Railway Electrification v. M/s PPS International, Case No. 05 of 2018 (Order dated August 27, 2018)

Published In:Inter Alia Special Edition Competition Law Third Quarter 2018 [ English
Date: September 30, 2018