Case No. 16/20101. Case: Prints India Vs Springer India Private Limited and Ors.. Competition Commision of India

Case NumberCase No. 16/20101
CounselFor Appellant: Mr A.N. Haksar, Mr. Ramji Srinivsan, Sr. Advocates & Associates and For Respondents: Mr. Krishnan Venugopal, Sr. Advocate & Associates, Mr. C.S. Ravi Kumar, Advocate and Mr. A.N. Thakur, Advocate
JudgesAshok Chawla, Chairperson, H.C. Gupta, Member (G), R. Prasad, Member (R), P.N. Parashar, Member (P), Geeta Gouri, Member (GG), Anurag Goel, Member (AG), M.L. Tayal, Member (T) and Shiv Narayan Dhingra, Member (D)
IssueCompetition Act, 2002 - Sections 19, 19(1), 19(4), 19(6), 19(7), 2, 26(1), 26(2), 26(6), 26(8), 27, 3, 3(1), 3(3), 4, 4(1), 4(2), 44, 45
Citation2012 (109) CLA 411
Judgement DateJuly 03, 2012
CourtCompetition Commision of India

Order:

  1. The Competition Commission of India (Commission) received an information on 12/04/2010, filed by M/s Prints India (hereinafter referred to as Informant / Prints India) under section 19(1) (a) of the Competition Act (hereinafter referred to as Act) alleging certain anticompetitive behavior by Springer India Private Ltd. (hereinafter referred to as Opposite Party / Springer India) and eight Indian institutes as mentioned above.

    Factual Background

    As submitted by the Informant, Prints India, a sole proprietorship firm founded in 1966, is engaged in the business of distribution and exports of Indian Journals for domestic and foreign clients. It is also a major supplier of back volumes of Indian journals. Prior to the entry of Springer, Prints India has been distributing most of the reputed Indian scientific journals published by several institutes of national repute in their respective fields.

  2. Springer India is a part of Springer Science + Business Media, a leading global academic and scientific publisher. The latter has around 60 publishing houses in about 20 countries in Europe, Asia and USA. According to its website, Springer publishes over 1700 journals and more than 5500 new books every year, making it the second largest publisher of journals in science, technology and medicine (STM) sector with largest STM e-book collection worldwide. Springer India commenced its operations in India in October 2002 as publisher and distributor of journals.

    2.1. Opposite parties No. 2 to 9 are the leading academic / research institutes of India.

    2.2. Business of the Informant as per the submissions had been running smoothly on cordial terms with the publishers of the Indian journals until Springer India entered the Indian market. Thereafter, the latter started acquiring control over most of the Indian journals by entering into exclusive co-publishing agreements with the institutes publishing most reputed journals in STM market in India.

    2.3. Springer India entered into co-publishing arrangements with 33 institutes and societies (in STM segment). Through these agreements, Springer India reserved for itself the right to decide, inter alia, the terms and conditions for the sale of these journals. It also took away the right of the institutes to further license the publication, distribution and sale of these journals, thus making it an extremely powerful player.

    2.4. After Springer India became co-publisher it imposed the following terms and conditions on Prints India:

    i) Prints India to pay according to the USD list price of the journals. However, final payment to be made in INR after conversion at on going forex market rates.

    ii) Discount reduced to 5% on the list price from existing 10-25% offered by the Institutes previously.

    iii) Prints India to provide end-user client details to Springer India. In case such details are not provided, Springer refuses to supply journals to Prints India.

    iv) Prints India required to make 100% advance payment for the order placed with Springer India.

    2.5. To remain in business, Prints India had to abide by the conditions imposed by Springer India. However, after noticing that it lost some of the clients whose details had been provided to Springer India, Prints India declined to provide any further client details. To this, Springer retaliated by refusing the supply of journals to Prints India. As a result, Prints India lost its clientele and its revenue took a hit.

    Relevant market

  3. In order to delineate the relevant market, the Informant has relied on the experience of the European Commission in various cases, general industry categorization and observation of competition experts. On the basis of its analysis, the Informant has identified the relevant market as 'market for publishing Scientific, Technical and Medical (STM) journals in English language'. Citing the provisions of the Act, the geographic market has been limited to India.

    3.1 This definition of the relevant market has been premised on the fact that STM is considered to be a group of similar subjects under the academic publishing industry and promises supply-side substitutability and to some extent demand-side substitutability from the perspective of libraries or institutional subscribers that have a requirement for a bouquet or portfolio of journals in the said category.

    Dominance

  4. The Informant has made the following submission on the issue of dominance in the relevant market:

    i. Springer India has entered into co-publishing agreements with thirty-three institutes and societies that publish oldest and reputed journals in India in the STM segment. Thus, it has extremely powerful journal portfolio which gives it unique market power.

    ii. The STM publishing industry has high entry barriers as it requires several high-cost activities such as recruiting writers, judging, reviewing, copy editing and typesetting articles. Other significant structural barrier to entry in the marker are journal's reputation, built over a time and peer review.

    iii. The academic publication is distinct on account of 'must have' characteristic and is generally considered indispensable by the customers.

    iv. Springer enjoys one of the most powerful positions in the world in respect of STM publication. It has a global turnover of Euro 892 million (2008).

    v. Due to asymmetrical market power between buyer and seller, Springer India has achieved an unassailable position in STM journal publication.

    vi. Out of a total 150 STM journals published in India, 47 are published and distributed by Springer India. Circulation figures reveal that Springer India enjoys 64% market share in the STM segment.

    vii. Springer India publishes 47 journals for which it has acquired the co-publication rights; these journals are popular ones with 'must have' characteristics.

    On account of above considerations, informant has submitted that Springer India enjoys dominant position in the relevant market.

    Summary of allegations

  5. It has been submitted by the informant that Springer India has abused its dominant position in the market for STM journals published in English language in India as under:

    i. Directly imposing unfair (excessive) prices on the consumers in the sale of journals infringing S. 4(2)(a)(ii).

    ii. Imposing unfair conditions in the sale of goods requiring the purchaser to furnish commercially sensitive information infringing S. 4(2) (a) (i).

    iii. Completely squeezing the margin of the distributors by imposing unfair prices on the distributors infringing S. 4(2)(a)(i).

    5.1. The informant has also leveled allegation against Springer India and 8 Indian institutes of entering into anti-competitive agreements (co-publishing agreements), thus violating Section 3(3) of the Act by entering into with the institutes which permits it to:

    a. Directly determine sale price violating S. 3(3)(a)

    b. Control the supply of the journals by imposing unfair conditions of furnishing commercially sensitive information violating S. 3(3)(b).

    c. Share the market by way of allocation of types of goods, i.e. print version and e-journal violating S. 3(3)(c).

    Relief Sought

  6. The informant has prayed for the following reliefs and requested the Commission to:

    i) Find that Springer has infringed Section 4 of the Competition Act, 2002;

    ii) Find that Springer has infringed Section 3 of the Competition Act, 2002 by entering into anti-competitive agreement;

    iii) Find the revised prices to be unfair and order Springer and the Institutes to reduce the prices to reasonable levels with sufficient margins to the subscription agents to survive in the market;

    iv) Find the conditions imposed on the distributors as unfair and order the institutes to supply the journals without asking for end-used details;

    v) Find that the agreements between Springer and the institutes are anti-competitive and declare these to be void;

    vi) Impose the highest level of penalties on Springer in accordance with the Competition Act, 2002, so as to have deterrent effect and ensure fair competition in the STM publishing market in India;

    vii) Require Springer to pay all the complainant's costs; and

    viii) Pending the complaint the Respondent No. 1 may be directed to supply the Journals without asking for end-user details;

    ix) Pass such other order as the Commission may deem fit to ensure fair competition in the STM publishing market in India.

    Additional Information

  7. Subsequently, on 03.06.2010 and 09.07.2010, the Informant made further submissions (additional information) before the Commission to supplement the original Information with additional factual and legal submissions. The additional information is summarized in the following paragraphs. The informant has detailed the background of the opposite party and its parent organization on how they have acquired the present status and has highlighted the fact that globally, Springer has always been trying to strengthen its dominant business position through various means including acquisitions or mergers with other similarly placed business houses.

    7.1. Data pertaining to journals published in India has also been provided, according to which there are approximately 1000 journals published in India. Further, out of 150 STM journals having total circulation of about 55000, Springer publishes and distributes 47 journals having circulation figure of 35000. Thus, Springer has 31% market share in STM journals and about 64% share in total circulation.

    7.2. The informant has submitted that the 47 journals for which Springer has acquired rights to co-publish and distribute are the most popular and are the must have titles for subscribers and these standard makes their position even more dominant in the STM segment. It has also been submitted that because of anti-competitive approach of Springer, there has been a significant drop in the business of the informant to the extent that it is on the verge of elimination from the market. In this connection, the informant has averred...

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