May 11, 2020NCLAT Affirms CCI Order Rejecting Allegations of Abuse of Dominance against SKF India Ltd.
On March 12, 2020, NCLAT dismissed an appeal filed by Asmi Metal Products Pvt. Ltd. (‘Asmi Metal’) against CCI’s order rejecting allegations of abuse of dominant position against SKF India Ltd. (‘SKF’)[1].
Asmi Metals alleged that SKF was a dominant entity in the market for supply of bearings in ‘Western India’. Further, SKF had forced Asmi Metal (which was the supplier of bearing rings and other fabricated metal products to the former) to make irrelevant expenditures on expansion of manufacturing capacity and imposed discriminatory conditions at the time of awarding contracts, thus abusing such dominant position. It was alleged that during 2004 to 2006, SKF recommended a costly plant upgradation for Asmi Metal but failed to comply with its promises in relation to payment for construction and upgradation of the plant. It was further alleged that from 2006 onwards, SKF unilaterally started importing raw materials from China instead of allowing Asmi Metal to procure them from domestic suppliers, which led to payment of heavy import duty and clearance charges by Asmi Metal, ultimately leading to closure of Asmi Metal’s plant. Additionally, SKF failed to pay VAT on the steel purchased by Asmi Metal for the period 2005 – 2009 which was in violation of an agreement executed between them and led to the liability being forced upon Asmi Metal. Last, Asmi Metal alleged that an MOU was executed between them wherein the liability for any losses incurred by Asmi Metal was removed from SKF.
NCLAT rejected Asmi Metal’s contention that the relevant geographic market should be ‘Western India’ in absence of any evidence which shows that SKF did not incur any transportation costs to supply the goods to other parts of India, concluding that the relevant geographic market is ‘India’. NCLAT further held that a majority of the allegations pertained to the time period prior to 2009 when the relevant sections of the Act were not in force. In addition, as per the materials on record, NCLAT noted that the relevant market is fragmented in nature and no player enjoys a position of strength and thus SKF could not be said to dominant. Accordingly, NCLAT dismissed the appeal.
[1] Competition Appeal (AT) No. 27 of 2018