In this India Update 2015 Volume 4, Avinash Amarnath reports on a recent decision of the CCI and the thin evidence that still led to imposition of a maximum fine.
CCI fines All India Motor Transport Congress for calling for price hike
The Competition Commission of India (CCI) imposed the maximum penalty of 10% of the average turnover on the All India Motor Transport Congress (AIMTC) the apex trade association for road transport service providers (both cargo and passenger) in India.
The CCI found that AIMTC had called for a hike of 15% in freight charges following an announcement of increase in diesel prices by state run oil marketing companies. AIMTC tried to argue that there was no evidence such as written circulars, directions or minutes of such a decision except for news reports which could not be considered as credible evidence without other corroborative evidence. Further, AIMTC argued that in any event, the members had, in fact not acted upon such a call.
The CCI, while observing that evidence was generally bound to be sparse in cartel investigations and an agreement could be inferred even in the absence of written circulars or directions found that:
- AIMTC had already been penalized for similar conduct in the past under the old Monopolies and Restrictive Trade Practices (MRTP) law.
- Two newspaper reports of two different officials of AIMTC located at two different places being quoted on exactly the same decision can only show that there was a collective decision on behalf of AIMTC to call for a price hike.
- The evidence on record showed that members of AIMTC had in fact hiked prices following such a call.
- One member had expressly admitted that it always followed the decisions of AIMTC.
- In the past, AIMTC, describing itself as the mother body for the road transport fraternity had given similar collective calls for a strike.
The CCI imposed the maximum percentage of penalty permissible under the statute taking into account the fact that AIMTC was a repeat offender having already been penalized under the old MRTP law. The CCI has also decided to proceed against the members of the AIMTC and noted that since these members had not filed their replies to the Director General’s investigation report, orders would be passed against such members separately.
A burning issue that this case brings to the fore is that of sufficiency of evidence in cartel investigations and the need to encourage leniency applications. The CCI cannot simply use the fact that evidence is bound to be scarce in cartel investigations and penalize parties with minimal evidence. Decisions of the CCI have serious penal consequences for parties and due process dictates that decisions need to be robust enough to withstand judicial scrutiny. The CCI needs to take serious steps towards encouraging leniency applications. This would ensure that the CCI is able to unearth sufficient evidence in cartel investigations. It is not surprising that in mature jurisdictions like the EU and the US, almost all cartel decisions nowadays arise from leniency applications.
The full decision of the CCI is available here.