NCLAT Dismisses an Appeal filed by Uttarakhand Agricultural Produce Marketing Board on Maintainability

On March 12, 2020, NCLAT dismissed an appeal filed by Uttarakhand Agricultural Produce Marketing Board (‘UT Marketing Board’) against the order of CCI issuing show cause notices to Garhwal Mandal Vikas Nigam Limited (‘Garhwal Mandal’) and Kumaun Mandal Vikas Nigam Limited (‘Kumaun Mandal’), on the grounds that the appeal is not maintainable under Section 53B(a) of the Act[1].

The show cause notices were passed pursuant to information filed by the International Spirits and Wines Association of India alleging that UT Marketing Board, Garhwal Mandal and Kumaun Mandal had abused their dominant position in the market for the wholesale procurement of branded alcoholic beverages in their respective regions by: (i) placing of orders with alcoholic beverage manufacturers for supply of Indian Made Foreign Liquor (‘IMFL’), in an arbitrary and discriminatory manner; (ii) discrimination against certain brands of alcoholic beverages, despite high consumer demand; (iii) non-maintenance of minimum stock levels; and (iv) non-supply of IMFL brands in accordance with the retailer’s demand despite express stipulation in the wholesale order.

Pursuant to the information, CCI directed DG to investigate the matter and submit a report on the veracity of the allegations. The DG’s report held UT Marketing Board to be a monopoly in the market for procurement of alcoholic beverages in the state of Uttarakhand, and held that UT Marketing Board had abused its dominant position. However, DG did not find any contravention on part of Garhwal Mandal and Kumaun Mandal. Further to the DG’s report and after hearing the parties, CCI issued a show cause notice to Garhwal Mandal and Kumaun Mandal, seeking an explanation as to why their conduct should not be held to be in contravention of the provisions of Section 4 of the Act. CCI also clarified that the issuance of the show-cause notice was not a final order on merits. CCI’s order was challenged by UT Marketing Board before NCLAT.

NCLAT observed that CCI had not passed any penal order against the parties under any of the provisions under Section 27 of the Act. In fact, CCI’s order clarified that it was not a final order on merits. NCLAT also noted that Garhwal Mandal and Kumaun Mandal, against whom the show-cause notices had been issued were not parties to the appeal and had not challenged CCI’s order. Accordingly, NCLAT held that CCI’s order did not fall under any of the provisions which are ‘appealable’ in nature under Section 53B(a) of the Act, and dismissed the appeal.

[1] Competition Appeal (AT) No. 84 of 2018

Published In:Inter Alia Special Edition - Competition Law - May 2020 [ English
Date: May 11, 2020