Case No. 24 of 2016. Case: South Gujarat Warp Knitters Association Vs Prafful Overseas Private Limited and Ors.. Competition Commision of India

Case Number:Case No. 24 of 2016
Party Name:South Gujarat Warp Knitters Association Vs Prafful Overseas Private Limited and Ors.
Counsel:For Appellant: Sharad Bansali and Jinendra Singhvi, Advocates and For Respondents: Sushil Kumar Dubey and Rakshit Thakur, Advocates
Judges:Devender Kumar Sikri, Chairperson, S.L. Bunker, Augustine Peter and U.C. Nahta, Members
Issue:Competition Act, 2002 - Sections 19(1)(a), 2(r), 26(2), 3, 4
Judgement Date:March 09, 2017
Court:Competition Commision of India
 
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Order:

  1. The present information has been filed under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the 'Act') by South Gujarat Warp Knitters Association (hereinafter, the 'Informant') against Prafful Overseas Private Limited (hereinafter, 'OP-1') and Welspun Syntex Limited (hereinafter, 'OP-2') alleging, inter alia, contravention of the provisions of Sections 3 and 4 of the Act.

  2. As per the information, Informant is an association of warp knitting companies. OP-1 and OP-2 (collectively referred to as 'OPs') are manufacturers of various types of yarn.

  3. During the preliminary conference held on 12th July, 2016, on the request of the Informant, the Commission allowed it to file amended information on or before 5th August, 2016. Subsequently, the Informant, vide letter dated 25th August, 2016, furnished a revised information (hereinafter, 'Information').

  4. As per the Information, the Informant has alleged that OP-1 and OP-2 have formed a cartel with respect to Nylon Fully Drawn Yarn of 240 Deniers with 12 Filaments Semi-dull variant (hereinafter, 'Nylon FDY 240/12 Semi-dull'). The Informant has also alleged that OP-1 has abused its dominant position in the market for Nylon Fully Drawn Yarn of 240 Deniers with 12 Filaments Bright variant (hereinafter, 'Nylon FDY 240/12 Bright'). Both Nylon FDY 240/12 Semi-dull variants and Nylon FDY 240/12 Bright variants are used by the Informant as a raw material for knitting.

  5. With regard to the allegation of cartelization with respect to Nylon FDY 240/12 Semi-dull variant, the Informant has furnished data of sale price charged by OPs, their average sale price, international price and price of Nylon Chips (raw material), which are as under:

    Table. 1 Comparison of Sale Price of Nylon FDY - 240/12 Semi-dull variant of OP-1 and OP-2 with its international price and Nylon Chips price between Sep-2014 and Jul-2015

  6. In this regard, the Informant has submitted that OP-1 and OP-2 are the only manufactures of Nylon FDY 240/12 Semi-dull variant in India. Relying on the above data, the Informant has argued that:

    1. Change in the sale prices of Nylon FDY 240/12 Semi-dull variant for the said manufacturers had no link with the change in international price but were higher than that. In some instances, despite a drop in international price, there was an increase in the prices of the OPs and vice versa.

    2. The average sale price charged by OPs are following a totally different trend as compared to the international prices.

    3. Prices of OPs were moving in parallel to each other.

    4. Worldwide Nylon FDY 240/12 Semi-dull variant prices are a direct function of the prices of Nylon Chips, however, in India such relationship did not exist during the alleged period. Further, that there were some instances, which indicate that despite drop in the price of Nylon Chips, the prices of Nylon FDY 240/12 Semi-dull variant had increased and vice versa.

    In view of the above, the Informant has alleged that OPs have formed a cartel to keep the prices of Nylon FDY 240/12 Semi-dull variant artificially high.

  7. Similarly, with respect to the allegation regarding the abuse of dominant position by OP-1 in the Nylon FDY 240/12 Bright variant market, the Informant has submitted the following:

    Table. 2 Comparison of sale price of Nylon FDY 240/12 bright variant charged by OP-1 with international price and raw material price between Sep - 2014 and Jul - 2015

    1. OP-1...

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