Dec 31, 2018CCI Dismisses Cartel Allegations against Flashlight Manufacturers
On November 6, 2018, CCI dismissed allegations of cartelization raised by way of a Lesser Penalty Application (‘LPA’) submitted by Eveready Industries India Ltd. (‘OP 1’) under Section 46 of the Act.[1] OP 1 in its LPA had submitted details concerning exchange of information regarding sale and production of flashlights between OP 1, Panasonic Energy India Co. Ltd. (‘OP 2’) and Indo National Ltd (‘OP 3’). The information exchange was facilitated by way of Association of Indian Dry Cell Manufacturers (‘OP 5’). Consequently, an LPA was also filed by OP 2, disclosing evidence of information exchange between the OPs in relation to the sale of flashlights. Pursuant to this, CCI directed the DG to institute an investigation against the OPs.
In its analysis, CCI reasoned that the mere exchange of certain information amongst the OPs does not constitute enough evidence for CCI to conclude that the OPs were indeed acting in a coordinated manner contrary to the provisions of the Act. Further, to ascertain whether the agreement to increase prices was implemented by the OPs individually, CCI examined the exchange of commercially sensitive information, which included: (i) printed notes of OP 3 whereby it sought information from OP 1 regarding wholesale price, margins and promotional schemes; and (ii) an e-mail exchange amongst OP 1, OP 2 and OP 3 regarding the entry of a new player, Godrej, in the market. CCI held that while such evidence shows exchange of commercially sensitive information, it was insufficient to establish that the concerned persons agreed upon the actual terms of increasing or determining the prices. Further, while the e-mail exchange between OP 1, OP 2 and OP 3, established that the OPs were monitoring the flashlights market, it did not establish contravention of the provisions of the Act.
CCI concluded that while there was evidence of exchange of production/sales data, draft press release and price information amongst the OPs (indicating the possibility of collusion), there was nothing on record to show that such acts did in fact result in determining the prices of flashlights. Consequently, no violation of Section 3(3)(a) of the Act was found, and the matter was dismissed by CCI.
[1] Suo moto case no. 1 of 2017.