W.P. (C) 4602/2013 and CM No. 10571/2013. Case: South Asia L.P.G. Company Private Limited Vs Competition Commission of India and Ors.. High Court of Delhi (India)
| Case Number | W.P. (C) 4602/2013 and CM No. 10571/2013 |
| Counsel | For Appellant: Dr. Abhishek M. Singhvi, Senior Advocate, Mr. Amitabh Kumar, Ms. Divya Chaturvedi and Ms. Awantika Manohar, Advocates and For Respondents: Mr. Rajeev Saxena, Ms. Toshika Katara, Advocates, Mr. A.N. Haksar, Senior Advocate, Mr. M.M. Sharma, Ms. Deepika Rajpal, Mr. Abhijit Mittal, Ms. Chitra Y. Parande and Mr. Shamik Narain, Advocates |
| Judges | V. K. Jain, J. |
| Issue | Code of Criminal Procedure, 1973 (CrPC) - Section 173; Competition Act, 2002 - Sections 19, 19(1), 2(r), 26, 26(1), 26(7), 3, 4, 4(2)(a)(i), 4(2)(a)(ii); Constitution of India - Articles 14, 21 |
| Judgement Date | September 02, 2013 |
| Court | High Court of Delhi (India) |
Judgment:
V. K. Jain, J.
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The only issue involved in this petition is as to whether the Competition Commission of India (hereinafter referred to as 'the Commission') is required to give notice or hearing to the person against whom an information is given or a reference is made, in terms of Section 19 of the Competition Act, 2002 before the Commission directs further investigation, in exercise of the powers conferred upon it by sub-section (7) of Section 26 of the Act.
Section 19(1) of the Act, to the extent it is relevant, empowers the Commission to enquire into any alleged contravention of the provisions contained in sub-section (1) of Section 3 or sub-section (1) of Section 4. Such an enquiry can be initiated by the Commission either on its own or on receiving any information from any person or a reference made to it by the Central Government or the State Government or a statutory authority.
The respondent No. 3-East India Petroleum Private Limited was engaged in providing terminalling service at Visakhapatnam Port which enabled it to handle imports and exports of bulk liquid products as well as liquefied gas fuels. The LPG/liquefied gases were unloaded from ships by an entity owned by HPCL and pumped by HPCL through a pipeline, part of which was owned by HPCL and part by respondent No. 3. On commissioning of underground cavern by the petitioner, the unloading services offered by HPCL were handed over to it in the year 2008 and gradually the unloading arm of HPCL was discontinued, whereafter all the products were unloaded only through the petitioner-company, which had also installed blender facility for blending liquefied Butane and Propane. The respondent No. 3 submitted an information petition to the Commission, alleging that the petitioner-company had created a dominant position in terminalling services and abused its dominance by setting up of blender facility by the informant and charging exorbitantly for the services being provided by it. It was also alleged that the petitioner before this Court was threatening to discontinue the terminalling as well as bypass services to respondent No. 3, unless exorbitant charges were paid to it. The Commission considered the matter in its meeting held on 28.12.2011 and decided to refer the matter to Director General for investigation. The findings submitted by the Director General, has reproduced in the impugned order dated 01.07.2013 were as under:-
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The findings of the DG are briefly given below:
(a) The relevant product market comprised of the upstream terminalling services and the downstream terminalling services. The relevant geographic market was the Visakhapatnam Port. The relevant market under section 2(r) of the Act was stated to be the 'upstream and downstream terminalling services at the Visakhapatnam Port'.
(b) The OP was the sole provider of upstream terminalling services at Vizag and held 100% market share in upstream terminalling services market and all OMCs were dependent on the services of OP.
(c) The entry barriers were not high, as substantiated by the fact that informant itself had applied for permission of Visakhapatnam Port Trust for laying its dedicated pipeline from its jetty to its terminal in July 2010. Further, informant itself submitted that setting up of pipeline would not cost more than Rs. 20 crore and therefore, the capital costs were not very high.
(d) The monopolistic position of OP was limited by the countervailing buying/bargaining power of its customers i.e. OMCs.
(e) The dominance of OP was not established as its ability to operate was constrained by several factors. Even though it enjoyed 100% market share, it could not dictate prices to OMCs as the same were being negotiated by the OMCs. It did not possess any power to prevent the entry of informant in the upstream terminalling service market. Furthermore, the OMCs could obtain imports from other ports and determine business volumes of OP.
(f) On the allegation of exorbitant pricing by OP, it was found that the provisional terminalling charge of Rs. 1540/- per MT and bypass charges of Rs. 200/- per MT and recommended by OMCs for approval of Ministry of Petroleum and Natural Gas. Further, the OMCs had been paying...
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