CLC-CCI Moot Court on Competition Law, 2019

Place: CAMPUS LAW CENTRE, UNIVERSITY OF DELHI,

NORTH CAMPUS, CHHATRA MARG, DELHI-110007

PG Pacedena Private Limited (“PG”) and Others

…APPELLANTS

VERSUS

Competition Commission of Pacedena (“CCP”) and Another

…RESPONDENTS

Most Respectfully Submitted before the Hon’ble Chairperson

and the members of the National Company Law Appellate Tribunal

MEMORIAL FILED ON BEHALF OF : RESPONDENT

COUNSEL APPEARING ON BEHALF OF: RESPONDENT
 CLC-CCI Moot Court on Competition Law, 2019 .
MEMORIAL ON BEHALF OF: RESPONDENT

BEFORE THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

CIVIL APPELLATE JURISDICTION

APPLICATION NO. OF FEB, 2019

(UNDER SECTION 53B OF THE COMPETION ACT, 2002)

(WITH PRAYER TO UPHELD THE ORDER OF PENALTY)

PG Pacedena Private Limited (“PG”) …APPELLANT NO.1

Qui Pacedena Private Limited (“Qui”) …APPELLANT NO.2
Tam Pacedena Private Limited (“Tam”) …APPELLANT NO.3
Trade Association …APPELLANT NO.4

VERSUS

Competition Commission of Pacedena (“CCP”) …RESPONDENT NO.1

Pacedena National Railways (“PNR”) …RESPONDENT NO.2

Written Statement on behalf of the Respondent

Counsel for Respondent

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TABLE OF CONTENTS

Index of Abbreviations…………………………………………………………………….…4

Index of Authorities…………………………………………………………………………..6

Statement of Jurisdiction……………………………………………………………………..8

Statement of Facts……………………………………………………………………………9
.
Issues Raised………………………………………………………………….……………...13

Summary of Arguments……………………………………………………………………...14

Arguments Advanced………………………………………………………………… ……..15

Final Submission/Prayer………………………………………………………………..……25

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INDEX OF ABBREVIATIONS

& And
S. Section
CCP Competition Commission of Pacedena
DG Director General
AIR All India Reporter
PG PG Pacedena Private Limited

Qui Qui Pacedena Private Limited

TAM Tam Pacedena Private Limited

PNR Pacedena National Railways

R/W read with
W.R.T. With respect to
CTR Current Tax Reporter Co. Company
DCIT Deputy Commissioner of Income Tax Del Delhi
DIT Department of Income Tax
DTR Direct Tax Reports
Dy. Deputy
ed. Edition

Fed. Federal II

Id. Ibidem
CTA Competition Act
ATA Antitrust Appeal
DEL Delhi
Ltd. Limited
Ors. Others

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 CLC-CCI Moot Court on Competition Law, 2019 .
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SC Supreme Court
SCC Supreme Court Cases
SOT Some Other Orders of Tribunal
COMPAT Competition Appellate Tribunal
NCLAT National Company Law Appellate Tribunal
UOI Union of India
u/s Under Section
v. versus

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INDEX OF AUTHORITIES

CONSTITUTION

1. Ss
2. Ss

STATUTES

1. Asas
2. Asasas
3. Aadadad
4. XxsxASA
5. SDSADSAXSAX
6. DSAXSAXSA
7. XSAXSAXSA
8. ASSADCSAD
9. fwecweecewcwc

JUDICIAL PRECEDENTS

1. dsdsadsa
2. sxsscscs
3. cscscscs
4. scscscsc
5. cscscscscscs
6. cscscscscscsc
7. cscscscscscsc
8. scscscsccscs
9. scscscscscs
10. scscscscscscs
11. scscscscscscsc
12. cscscscsdsdsscscscsc

BOOKS

1. asasasas
2. sasasasas

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3. asasasasa
MISCELLANEOUS

1. aadasdsad
2. asdsadsadsadasdsa
3. ddsd

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 CLC-CCI Moot Court on Competition Law, 2019 .
MEMORIAL ON BEHALF OF: RESPONDENT

STATEMENT OF JURISDICTION

The Appellant has submitted an appeal to hon’ble Appellate Tribunal under Section 53B of
The Competition Act, 2002 hereinafter, referred as Act, challenging the order passed by the
Competition Commission of Pacedena “CCP”, hereinafter referred as Respondent No.1
issued under Section 27 of The Competition Act, 2002 after receiving the report of the “DG”
(in capacity of The Competition Act, 2002) issued under Sub-Section 3 of Section 26 of The
Competition Act, 2002, that the PG Pacedena Private Limited (“PG”)(Appellant no.1), Qui
Pacedena Private Limited (“Qui”)(Appellant No.2), Tam Pacedena Private Limited (“Tam”)
(Appellant No.3), Trade Association(Appellant No.4) henceforth collectively referred as Appellant(s)
had manipulated the bidding process passed by the Pacedena National Railways “PNR”
hereinafter referred as Respondent No.2. The “CCP” and “PNR” henceforth collectively referred
as Respondent(s) humbly submits that the Appeal is not maintainable and challenges the
assertions made in the appeal.

THE PROVISION UNDER WHICH THE PEITIONER HAS APPROACHED THE

HONORABLE COURT IS READ HEREIN UNDER AS:

Appeal to Appellate Tribunal

53B. (1) The Central Government or the State Government or a local authority or enterprise
or any person, aggrieved by any direction, decision or order referred to in clause (a) of
section 53A may prefer an appeal to the Appellate Tribunal.
(2) Every appeal under sub-section (1) shall be filed within a period of sixty days from
the date on which a copy of the direction or decision or order made by the Commission is
received by the Central Government or the State Government or a local authority or
enterprise or any person referred to in that sub-section and it shall be in such form and be
accompanied by such fee as may be prescribed:
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said
period of sixty days if it is satisfied that there was sufficient cause for not filing it within that
period.
(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after
giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it
thinks fit, confirming, modifying or setting aside the direction, decision or order appealed
against.
(4) The Appellate Tribunal shall send a copy of every order made by it to the Commission
and the parties to the appeal.
(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt
with by it as expeditiously as possible and endeavor shall be made by it to dispose of the
appeal within six months from the date of receipt of the appeal.

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STATEMENT OF FACTS

Background

1. PNR is Pacadena’s national railway system operated by the Ministry of Railways,

Pacadena. PNR is fourth-largest railway network in the world by size; revenue of
close to USD 26 billion (PR i.e. Pacadenian Rupee 1.84 trillion). It is the single
largest buyer of goods and services in Pacadena (for running operations of PNR);
attracting established-foreign-companies to participate in tenders floated by PNR.
2. PNR issues specifications for each good and service that it procures by means of
issuing tenders, including recycled-wood tables. PNR procures only one kind of
recycled-wood tables for all its railway coaches in Pacadena. Goods and services are
sourced from the specific and approved suppliers only.
3. There are three leading recycled-wood table companies in Pacedena: (i) PG Pacedena
Private Limited (“PG”), (ii) Qui Pacedena Private Limited (“Qui”) and (iii) Tam
Pacedena Private Limited (“Tam”). The market share of each of them in the recycled-
wood table market (pertaining to PNR) are 25%, 45% and 30% respectively. PG and
Qui are multi-product companies and substantial part of their turnover is from export
sales.
4. The companies (PG, Qui and Tam) have been participating in tenders floated by PNR
by way of a bidding system for procuring recycled-wood tables.

The Bidding Process

1. These are tenders for annual procurement by PNR. The total quantity tendered
annually is a sum of (1) recycled-wood tables in railway coaches as per annual
production capability of railway coaches AND (2) undertaking replacement in
existing railway coaches of PNR.
2. PNR floats tenders and invites sealed bids/quotations from their approved suppliers
of that specific good and service, to be submitted by a fixed date.
3. Once all parties/ approved suppliers submit their sealed bids, PNR opens the sealed-
bids (of all parties/ approved suppliers who participate in the subject tender).
4. The winning bidder is chosen as a result of competitive bidding and price is
discovered after opening of the bids submitted by all parties/ approved suppliers.
However, in certain circumstances winning bidder is also chosen after commercial
negotiations between PNR and bidding company(ies).

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The Allegation

1. There was a newspaper report in 2016 which was circulated widely in UTA that five
(5) manufacturers and suppliers of recycled-wood tables (details below) may have
engaged in cartel and big-rigging since 2000 in UTA.

The Investigation

1. Based on the newspaper report, PNR conducted an internal investigation and found
that two of the companies named in the UTA newspaper report participate in tenders
floated by PNR for recycled-wood tables. Based on the same; PNR decided to
conduct a study of price-bids quoted by PG, Qui and Tam since 2003 and reached a
conclusion that aside from similar (sometimes same) prices there was substantial
increase in bid-prices of recycled-wood tables submitted by PG, Qui and Tam. PNR
filed a Reference against the suppliers of recycled-wood tables to PNR in Pacedena
under Section 19 of the Competition Act.
2. The Competition Commission of Pacadena (“CCP”) took cognizance of the
Reference, passed an order under Section 26(1) of the Competition Act and directed
the Director General (“DG”) to initiate investigation into the matter in 2017.
3. On investigation of suppliers of recycled-wood tables in 2018 and rigorous analysis
for more than 9 months (which included depositions of senior management personnel
of the recycled-wood table companies); the DG prepared a report and found that the
suppliers of recycled-wood tables have engaged in bid-rigging in tenders for
procurement of recycled-wood tables by PNR between 2000 to 2018.

“DG” Report

1. The two recycled-wood table companies from UTA were found in violation of
competition laws in UTA and penalties were imposed in 2018;
2. The tenders were floated on an annual basis. While the prices were decided every
year, the supply of the recycled-wood tables used to be once in every three months.
3. The price-bids submitted by all the three companies is as follows:

Year PG (Bid Qui (Bid Tam (Bid- Tender Awarded Price in PR/
Quoted Quoted quoted price table
Price in PR/ Price in in PR/table)
table) PR/ table)
2000 99 - - 88
2001 99 - - 88
2002 120 - - 88
2003 100 88 - 88 (Qui)
2004 88 88 - 85 (Qui)
2005 100 100 - Tender Cancelled
2006 100 100 90 90 (Tam)
2007 100 - 100 100(PG and TAM – equal
quantity)

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2008 100 75 100 75 (Qui)

2009 120 - 119 119 (TAM)
2010 119 119 119 119 (all three equal quantity)
2011 128 128 - 119 (PG)
2012 - 128 128 119 (QUI and TAM equal
quantity)
2013 137 - - Tender cancelled
2013 137 137 137 135 (PG)
retender

2014 - 135 - 135 (QUI)

2015 - 137 137 137(QUI and TAM –equal
quantity)
2016 - - 137 137 (TAM)
2017 137 137 137 Tender cancelled
2018 136 136 136 Tender cancelled
2018 135 135 - 134 (PG)
Retender

4. Cost of recycled-wood tables for each of the companies was marginally different
based on place of factory for each.
5. The average annual procurement of recycled-wood tables by PNR is around PR 78
crores.
6. Ledger accounts of these three suppliers of recycled-wood tables evidenced
commercial dealings with each other.
7. There was also a trade association which existed since 2005 wherein all the recycled-
wood table manufacturers (including the three suppliers to PNR) were members. PG,
Qui and Tam used to meet at the trade association meetings. The said trade
association is still operational.
8. The prices of certain kind of recycled-wood tables by other companies of Pacadena
(i.e. ANA and KDS – not eligible for PNR tenders) were also collected and their
prices were in the range of PR 120/ table (from the years 2013-2016).
9. The prices of certain kind of recycled-wood tables PG, Qui and Tam to enterprises
other than PNR was also in the range of PR 112/ table to PR 130/ table (from the year
2009 to 2017 respectively).
10. Based on the above, the DG concluded that there was an agreement between the
recycled-wood table manufacturers (i.e. PG, Qui and Tam); and they have
engaged in big rigging which is in violation of Section 3(3)(d) of the Competition
Act.

Competition Commission of Pacedena Conclusion

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MEMORIAL ON BEHALF OF: RESPONDENT

1. After the DG report, an opportunity was given to all parties (including trade
association) to provide their oral and written objections on the DG report. Post the
objections, The case is made out under Section 3(1) read with sections 3(3)(a),
3(3)(c) and (3(3)(d) against the recycled-wood table manufacturers and the trade
association.

The Penalty

1. CCP notes that the infringing anti-competitive conduct of the parties pertain to cartel
and bid rigging in respect of the tenders floated by PNR and as such, for the purposes
of determining the relevant turnover for this infringement, revenue from tables has to
be taken into account. It may be noted that the twin objectives behind imposition of
penalties are: (a) to reflect the seriousness of the infringement; and (b) to ensure that
the threat of penalties will deter the infringing undertakings. Therefore, the quantum
of penalties imposed must correspond with the gravity of the offence and the same
must be determined after having due regard to the mitigating and aggravating
circumstances of the case.

2. CCP decided to impose penalty on Qui, PG and Tam at the rate of 10% of their
average relevant turnover of the preceding three financial years arising out of sale of
tables. The total amount of penalty is worked out as follows:
S. Party Turnover Turnover Turnover Average Penalty
No. from Table 2016-2017 2017-2018 from Table from Table
2015-2016 (in from Table from Table (in PR (in PR
PR crores) (in PR (in PR crores) crores)
crores) crores)
1 PG 150 160 170 160 16
2 QUI 120 100 90 103.3 10.3
3 TAM 65 75 80 73.3 7.3

3. CCP also decided to impose penalty on trade association at the rate of 10% of their
average income based (on their Income and Expenditure account) for the three
preceding financial years as filed by them. The total amount of penalty is worked out
as follows:
S. Party Turnover Turnover Turnover Average Penalty
No. from Table 2016-2017 2017-2018 from from
2015-2016 (in from Table from Table Table (in Table (in
PR crores) (in PR (in PR PR crores) PR crores)
crores) crores)
1. Trade .5 .5 .5 .5 0.05
Association

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 CLC-CCI Moot Court on Competition Law, 2019 .
MEMORIAL ON BEHALF OF: RESPONDENT

ISSUES RAISED

1. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN

LAW THE PRESENT APPEAL FILED BY THE APPELLANT(S) IS NOT
MAINTAINABLE?

2. WHETHER THE ALLEGATIONS BY THE APPELLANT(S) ON REPORT OF

“D.G.” PASSED UNDER SUB-SECTION 3 OF SECTION 26 OF THE ACT IS
VALID?

3. WHETHER THE ALLEGATIONS ON THE APPELLANT(S) ON ORDER

PASSED BY THE “RESPONDENT NO.1” W.R.T. PENALTY ON
APPELLANT(s) UNDER ABEYANCE IS VALID?

4. WHETHER THE AGREEMENT B/W THE MANUFACTURER OF RECYCLE

WOOD TABLE (APPELLANT NO.1 TO 3) AND THE “RESPONDENT NO. 2”,
IS ANTICOMPETITIVE IN NATURE?

5. WHETHER THE APPELLANT(S) HELD GUILTY UNDER THE SPECIFIC SUB-

SECTION 1 OF SECTION 3 R/W CLAUSES (a), (c) AND (d) OF SUB-SECTION 3
OF SECTION 3 OF THE ACT BY “RESPONDENT NO. 1” IS VALID?

6. WHETHER THE APPELLANT(S) HAS VIOLATED SUB-SECTION 1 OF

SECTION 3 R/W CLAUSES (a), (c) AND (d) OF SUB-SECTION 3 OF SECTION 3
AMOUNTS TO CARTEL AND BID RIGGING IN RESPECT OF THE TENDERS
FLOATED BY “RESPONDENT NO. 2”?

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SUMMARY OF ARGUMENTS

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PLEADINGS

It is humbly submitted that,

I. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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II. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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II. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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II. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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II. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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 CLC-CCI Moot Court on Competition Law, 2019 .
MEMORIAL ON BEHALF OF: RESPONDENT

II. THAT THE APPEAL FILED BY THE APPELLANT CHALLENGING THE

ORDER OF THE COMPETITION COMMISSION OF PACEDENA IS NOT
MAINTAINABLE-

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PRAYER

Wherefore, in light of the issues raised, arguments advanced and authorities cited, it is
humbly prayed that this Hon’ble Appellate Tribunal may be pleaded to hold, adjudge and
declare that:

 The Appeal as per the fact and circumstances of the case and in law, filed is
not maintainable.
 To uphold the decision of the Competition Commission of Pacedena,
herewith said as Respondent No.1.
 The report of “DG” has not shown the one side of the coin and is valid.
 The agreement b/w the Appellant(s) and the Respondent No.2 is
anticompetitive.
 The Appellant(s) are liable to be guilty under the provisions of the Act.
 The Appellant(s) are liable for the cartel and bid-rigging.

Or, order any other relief as it may deemed fit in the interest of the Justice, Equity and Good
Conscience.

All of which is humbly prayed,

Counsel for the Respondent.

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