CCI Rejects Claims regarding AAI and PGCIL Acting in Abuse of their Dominant Positions in Setting Unreasonable Accreditation Standards

On February 27, 2018, CCI, while considering the information filed under Section 19(1)(a) of the Competition Act by Shri Prem Prakash, against Airport Authority of India (‘AAI’) and Power Grid Corporation of India Limited (‘PGCIL’), held the same to be insufficient to constitute abuse of dominance under Section 4 of the Competition Act.[1] The primary grievance of Sri Prem Prakash concerned the policy/guidelines of the AAI and PGCIL which require testing of construction materials to be done only by laboratories which are accredited by a full member Mutual Recognition Arrangement (‘MRA’) of International Laboratory Accreditation Cooperation (‘ILAC’)/ Asia-Pacific Laboratory Accreditation Cooperation (‘APLAC’)/ International Accreditation Forum (‘IAF’).

Shri Prem Prakash’s laboratory was Accreditation Commission for Conformity Assessment Bodies (‘ACCAB’) accredited, but the AAI required National Accreditation Board for Testing and Calibration Laboratories (‘NABL’) accreditation. Based on an application filed by Sri Prem Prakash under the Right to Information Act, 2005, it was determined that the AAI did not have any scientific basis for its insistence on NABL accreditation. Similarly, PGCIL being a government company having monopoly over developing infrastructure for inter-state power transmission systems, maintained standards by accepting only private testing laboratories which operated in accordance with ISO/IEC 17011, having full membership and MRA of ILAC/ APLAC. It was contended that ILAC/ APLAC/ IAF were foreign private bodies, and no records pertaining thereto were available with the Bureau of Indian Standards or the Quality Council of India.

It was alleged by Sri Prem Prakash that by requiring accreditation by NABL or by labs having full membership of ILAC/ APLAC/ IAF, AAI and PGCIL put him and other accreditation bodies out of competition, and facilitated the monopoly of NABL. Such stipulation was alleged to be a contravention of Section 4 of the Competition Act.

CCI took notice of earlier information filed by the Sri Prem Prakash alleging abuse of dominance by PGCIL on a similar count, which was dismissed by the COMPAT in appeal after holding that PGCIL did not operate in the same market as Sri Prem Prakash did and instead, was a consumer of laboratory services. The COMPAT had also held that every consumer/procurer must have the freedom to exercise its choice freely in procurement of goods and services and such a choice was sacrosanct in a market economy as the consumers were best placed to evaluate what meets their requirements and has a competitive advantage. Further, while exercising the choice, they are free to stipulate standards for procurement and the same cannot be held to be anti-competitive.

Agreeing with and reaffirming the reasoning given in the above case, CCI concluded that PGCIL operated in a market different from that of Sri Prem Prakash’s, and being a consumer of services, had the right to choose. Accordingly, Shri Prem Prakash failed to prove that PGCIL was dominant or even present in the relevant market and therefore, there was no contravention of Section 4 of the Competition Act. Similarly, AAI was held to be a consumer as well, and not dominant in the ascertained relevant market – “market for laboratory services for testing construction materials in India.”

[1] Case no. 75 of 2017.

Published In:Inter Alia Special Edition Competition Law June 2018 [ English
Date: June 20, 2018