Enforcement Matters
Supreme Court emphasizes the need of an effects-based analysis in abuse of dominance cases
The Supreme Court while dismissing abuse of dominance allegations against Schott Glass India Private Limited (“Schott India”) has emphasized the necessity of undertaking an effects-based analysis in determining whether an entity has abused its dominance. Further in its order the Supreme Court has also dealt with the competitive impact and evidentiary thresholds required to be met in order to demonstrate that certain types of commercial arrangements such as volume-based discounts, functional discounts, margin squeeze and tying arrangements cause an appreciable adverse effect to competition in India (“AAEC“).
With respect to abuse of dominance investigations, it was inter alia observed that an effects-based analysis is an obligatory component of every abuse of dominance inquiry because ‘abuse’, by definition, is conduct that distorts the competitive process or harms consumers, and therefore the statute after determining the dominance of an enterprise contemplates two logically separate findings: (a) that the impugned practice falls within one of the types of abusive conduct set out in the Competition Act; and (b) that such conduct results in, or is likely to result in, an AAEC.
Further whilst dealing with averments in relation to the right of cross-examination, the Supreme Court has emphasized that where findings of the CCI depend upon oral statements of witnesses, the denial of cross-examination of such witnesses whose statements were relied upon vitiates the decision of the CCI.
With respect to the specific allegations made against Scott India, in relation to Schott India’s target-based rebate scheme, it was observed that differential pricing would only become abusive when it lacks objective commercial justification or when equivalent customers cannot obtain the same terms. On the allegations in relation to certain discounts that were linked to performing certain functions, the Supreme Court observed that such arrangements were not discriminatory in nature since the conditions for availing such functional discounts were applied uniformly to all the players.
With respect to allegation that the prices at which Schott India supplied its neutral amber and clear glass to an entity in which Schott India’s parent entity was a 50% shareholder (“JV Entity“) resulted in margin squeeze / market foreclosure, the Supreme Court reasoned that the said commercial arrangement was not anticompetitive because (a) Schott India was not present in the downstream market itself; (b) the competitors of the said JV Entity were able to operate with sustainable margins; (c) there were no market exits; (d) the prices in the downstream market did not increase on account of the existing commercial relationship between Schott India and the JV Entity; and (e) the prices charged by the JV Entity in the downstream market were comparable to that of its competitors.
Further while rejecting the allegation that the target-based rebate schemes offered by Schott India resulted in tying because it was based on the aggregate amount of neutral amber and clear glass purchased, the Supreme Court reasoned that the two variants of neutral glass were alternative specifications of one input rather than as independent products, and as such the said arrangement would not result in tying.
Based on the aforesaid, the Supreme Court, while upholding the decision of the Competition Appellate Tribunal, imposed cost of INR 500,000 (approx. USD 5,830.22) on the appellant, owing to the unsubstantiated nature of allegations and prolonged litigation.
Kerala High Court affirms CCI’s jurisdiction over competition issues in the broadcasting sector
On 28 May 2025, the Kerala High Court (“KHC”) dismissed the writ petitions filed by Star India Private Limited (“Start India”), Asianet Star Communications Private Limited (“Asianet”), and Disney Broadcasting (India) Private Limited (“Disney”), which challenged the jurisdiction of the CCI to investigate allegations concerning abuse of dominance against Star India in the broadcasting sector.
It was argued that the complaint before the CCI related to violations of the Telecom Regulatory Authority of India (“TRAI“) Act, 1997 (“TRAI Act”) and allied regulations, which govern broadcasting sector to inter alia ensure fair competition amongst service providers. Accordingly, the TRAI Act, being the special law, should prevail over the Competition Act.
In relation to these averments the KHC observed that both the Competition Act and the TRAI Act are specialised legislations and while some overlaps may exist, the TRAI Act does not contain specific provisions to deal with the assessment of anti-competitive agreements and abuse of dominance and consequently, such matters would fall within the domain of the CCI since the Competition Act provides for the same. Taking note of the fact that regulatory issues and competition issues fall within separate statutory mandates the KHC clarified that the CCI has primary jurisdiction to examine allegations of abuse of dominant position, whereas TRAI’s jurisdiction is confined to matters involving non-compliance with licensing terms or violations of its regulations and tariff orders.
CCI passes its first settlement order while dealing with abuse of dominance allegations against Google in the Android TV market
On 21 April 2025, the CCI accepted the settlement proposal made by Google LLC and Google India Private Limited (collectively referred as “Google”) in relation to an investigation that had been instituted against it and imposed a settlement amount of INR 202.4 million (approx. USD 2.37 million) on Google.
Notably, in 2021, the CCI had ordered the director general (“DG“) to investigate allegations of anti-competitive practices in relation to the way Google’s Android TV OS was being licensed and made available to smart TV manufacturers (“OEMs”). Pursuant to its investigation, the DG in its report (“DG Report“) noted that Google was dominant in the market for (a) licensable smart TV device operating systems in India; and (b) app stores for Android smart TV OS in India.
Further, the DG Report observed that pursuant to the provisions of certain commercial agreements such as the Television Application Distribution Agreement (“TADA”) and the related Android Compatibility Commitments (“ACC”) Google inter alia required OEMs to mandatorily pre-install the entire suite of Google apps in order to be able to licence Android TV OS which resulted in abuse of dominance since Google imposed unfair conditions and had made the conclusion of contracts contingent upon the acceptance of supplementary obligations which were unrelated to the subject matter of such
contracts. Additionally, it was also noted that by restricting the ability and incentive of device manufacturers to develop and sell devices running on alternative versions of Android (i.e., Android forks), Google had limited technical/ scientific development and also denied market access to developers of Android forks.
In order to address the findings of the DG and allay concerns which the CCI would have in relation to the same, Google inter alia volunteered the following settlement terms in its settlement application which would be applicable on Google for a period of 5 years:
(a) Google would introduce a New India Agreement (“NIA“) pursuant to which current Android TV OEMs as well as other interested OEMs would, for a fee, be able to license, the Google Play Store and Google Play Services for their compatible Android-based smart TVs with no requirement to preload any other Google service. Further these OEMs would not be compelled to include any placement or default requirements for the Play Store or any other Google service. Notably alongside NIA, Google will continue to make TADA available to Android TV OEMs.
(b) Google would eliminate the provisions in the TADA that required OEMs to have a valid ACC for devices shipped in India that do not preload Google apps. Thus, enabling OEMs to sell, develop, and distribute Android forks that did not carry Google’s proprietary apps. Notably this waiver also extended to other types of Android devices such as smart watches or mobile devices.
(c) Google would communicate these developments to its Android TV partners in India through letters that would remind them of their ability to use the open-source Android OS for smart TVs without taking any applications from Google or signing an ACC and their freedom to develop smart TVs using other competing OSs including Tizen, WebOS, and Roku OS.
That said, at this juncture it is pertinent to note that one member of the CCI in its dissenting order raised concerns regarding the nature of choice given to the OEMs to choose between TADA and NIA. The member inter alia noted that the dual structure places OEMs in a position where opting for NIA incurs additional costs, while the bundled applications under TADA remain free but come with restrictive conditions, which was likely to skew market dynamics in favour of the existing arrangements (which were found to be anti-competitive by the DG).
CCI imposes penalty on UFO Moviez India Limited and others for anti-competitive practices
On 16 April 2025, the CCI found UFO Moviez India Limited (“UFO”), its wholly owned subsidiary Scrabble Digital Limited (“Scrabble”), and Qube Cinema Technologies Private Limited (“Qube”) to be in violation of the provisions of the Competition Act that deals with anti-competitive agreements.
In its order the CCI noted that both UFO and Qube supply Digital Cinema Equipment (“DCE”) to Cinema Theatre Owners (“CTOs”) enabling them to display film content. Further noting that in order for film content to be compatible with the DCE it was necessary for it to undergo certain post-production processing which is undertaken by Qube.
In this context, the CCI inter alia observed that while leasing the DCE to CTOs, UFO/Qube (a) mandated that CTOs must avail processing services only from its subsidiary (i.e., Scrabble); (b) imposed conditions that restricted CTOs from procuring film content processed by any other post-production processing service providers; and (c) blocked film content supplied by any other post-production processing service provider through the software installed on the DCEs, thereby forcing CTOs to procure film content processed by UFO (through Scrabble). Consequently, holding that such conduct amounted to anti-competitive tying, excusive supply and refusal to deal.
The CCI imposed a monetary penalty of INR 10.4 million (approx. USD 121,303.64) on UFO and Scrabble and INR 16.6 million (approx. USD 193,330.22) on Qube and also directed them to modify the existing lease agreements by removing the restrictions, and further directing them to cease and desist from such conduct. going forward.
Merger Control
CCI fines CA Plume Investments and Bequest Inc. for wrongly filing under the green channel route
On 26 June 2025, the CCI imposed a penalty of INR 400,000 (approx. USD 4,629.73) on CA Plume Investments and Bequest Inc. for incorrectly filing a combination notice under the green channel route. The case involved the acquisition of up to 23.6% equity stake in Quest Global Services Pte. Ltd. by CA Plume Investments and approximately 9.17% equity stake by Bequest Inc. The CCI found that the combination did not qualify for the green channel approval as there were certain existing vertical and complementary overlaps between the products/services of the affiliates of the acquirers and the target.
Consequently, the CCI declared the notice and deemed approval granted to the combination as void ab initio. Further, while the acquirers admitted to inadvertent errors in the identification of overlaps and tendered unconditional apologies the acquirers were also held liable for gun-jumping since the combination had already been consummated. Additionally, the CCI also directed the acquirers to file a fresh notice providing complete information as required under the applicable form within thirty days from the date of receipt of the said order.
Developments in the Legal Framework
CCI releases new merger control FAQs
On 20 May 2025, the CCI published revised frequently asked questions (“FAQs“) on merger control which provides clarity and guidance on the various concepts of merger control provisions of the Competition Act as well as allied rules and regulations. Set out below are some of the key concepts discussed in these FAQs:
Change in Control
It has been clarified that the phrase “change in control” as used in the Competition (Criteria for Exemption of Combinations) Rules, 2024 (“Exemption Rules“) is not only limited to changes between joint and sole control (i.e., joint to sole or sole to joint control), but rather encompasses all situations where there is a change in the quality or degree of control.
Notably it has also been explained that (a) ‘Quality of Control’ refers to change in the controlling arrangements that exist between the same set of shareholders that remain within the same shareholding thresholds that are relevant for inferring control; and (b) ‘Degree of Control’ relates to changes in shareholding that cross relevant thresholds and includes substantial changes in rights that transform the nature of control (e.g., from negative control to positive control). Furthermore, it has also been explained that a change in the degree of control occurs when a controlling shareholder exits, or a new controlling shareholder enters.
Calculation of the Deal Value Threshold
With respect to some of the types of consideration that will be considered for the purpose of the INR 2,000 crore Deal Value Thresholds (“DVT“) it has been clarified that:
- With respect to call options: Both the premium paid for the option and the consideration paid for shares upon full exercise will be considered for the purpose of the DVT.
- With respect to future events: Future payments based on predetermined future events are to be included while calculating the DVT. However, corporate guarantees and unplanned future investments or acquisitions will not be included withing the scope of DVT.
- With respect to prior acquisitions: The value of consideration paid by an acquirer and/or its affiliates for the acquisition of shares in a particular target company in the two years preceding the date of the transaction being assessed will be included in the DVT.
- With respect to multiple co-investors participating in the same funding round: The consideration paid by the multiple co-investors is to be aggregated only if their respective transactions are ‘inter-connected’ in nature.
- With respect to the treatment of debt: It has been clarified that pure debt transactions (debt not convertible to equity) are not notifiable, and therefore, their value will not be included while calculating the DVT. However, if, as part of the consideration for an acquisition, any debt is assumed by the acquirer, the amount of assumed debt should be included in the DVT.
- With respect to ongoing business arrangements: It has been clarified that payments flowing from the target/seller to the acquirer or its affiliates for ongoing business arrangements (e.g., services, goods) after the conclusion of the equity deal are not included in the computation of the DVT since the focus of the CCI is on the consideration provided by the acquiring party to the seller. That said, whilst calculating the DVT additional payments made to a seller post-closing that are contingent on the target’s performance (e.g., earn-outs) must be included.
- With respect to internal reorganizations: If the reorganization does not qualify for an exemption, then the DVT will be calculated by aggregating the value of all inter-connected steps involved in the reorganization.
With respect to acquisition of multiple targets: If an acquirer simultaneously purchases multiple targets, consideration for all the targets should be aggregated for applying DVT test.
Thresholds to determine Substantial Business Operations in India
If a transaction meets the DVT discussed above, then the said transaction can trigger a CCI approval requirement provided that the target entity has Substantial Business Operations (“SBO“) in India which is determined on the basis thresholds linked to such Target’s India turnover, Gross Merchandise Value (“GMV”) and/or users (in case of digital services). With respect to the assessment of whether the SBO thresholds are met, the FAQs inter alia clarify that:
- GMV thresholds will apply only if the target facilitates sales/services as an agent or otherwise, regardless of whether a digital or traditional business model is used. However, it will not apply if the target solely sells goods/services on its own behalf.
- With respect to e-commerce platforms that also sell their own products, it has been clarified that such entity’s overall GMV should be considered for the purposes of calculating whether the SBO thresholds are met.
- GMV should be calculated on a target enterprise level for the purposes of calculating whether the SBO thresholds are met. However, if a portion or division is acquired, only the GMV (or users in case of digital services) of that relevant portion are to will be considered.
- When an acquirer simultaneously purchases multiple targets, for purposes of assessing SBO thresholds, users, turnover, and GMV of all the targets should be aggregated for applying SBO tests.
- Digital Services has been explained to mean the provision of a service, digital content, or activity via the internet, in this regard it has been clarified that selling ‘goods’ via a website is not a digital service, however providing services to facilitate such transactions will be considered to be digital services.
Merely using the internet as a distribution channel will not classify an offline service as digital. A service will not exclusively be classified as ‘digital’ based on being offered, delivered, and consumed online. The determination of ‘digital services’ will be based on the nature of the service and not the delivery channel. Some examples of digital services provided in the FAQs include e-commerce platform services, cloud services, and online gaming.
Commercially Sensitive Information
It has been clarified that Commercially Sensitive Information (“CSI”) is data crucial for competitive positioning and will include information relating to pricing, costs, profit margins, capacity, quality market shares, customer terms, pipeline products, innovations, technology, R&D, trade secrets, and strategic plans. However, it will not include publicly available information, information available to an ordinary shareholder of a company, unaudited or audited financial statements (provided that such statements only contain the information found in the entity’s audited annual financial statements submitted to the Registrar of Companies or equivalent regulatory authority), historical information that is not relevant to commercial decision making or information not linked to a specific company.
Further, in the context of the exemption relating to creeping acquisition not leading to a holding of more than 25% in the target enterprise, it has been clarified that if an acquirer already has the right or ability to access a target’s CSI by virtue of director or observer rights, it cannot benefit from the relevant exemption even if other criteria are met.
Interconnected Transactions
It has been clarified that acquisitions by different persons will be treated as inter-connected when they are steps toward achieving a common ultimate intended effect, and there is a meeting of minds between the acquirers regarding the decision to invest in the target, based on factors such as (a) simultaneity of investments; (b) mutual interdependence or conditionality; (c) common agreements; and (d) functional and economic links. That said, the FAQs highlight that having separate agreements in and off itself will not preclude parties from the inference of interconnection, if other facts indicate that the investors/acquirers acted with shared intent.
With respect to the notification of interconnected transactions, the FAQs provide that if acquisitions by different persons are inter-connected, and one or more steps constitute a notifiable transaction, then all the acquirers must jointly notify the interconnected transactions in a single notice before the CCI. In this regard, it has been clarified that if a particular acquirer’s transaction(s) qualifies for an exemption under the Exemption Rules, then such acquirer need not furnish overlap details in the filing. However, the CCI will nonetheless retain the discretion to request such details if needed, based on the facts of the case.
Acquisitions through stock exchange
It has been clarified that while acquisitions undertaken as ‘block deals’ and ‘bulk deals’ through a stock exchange would be able benefit from the derogation from standstill obligations; ‘preferential allotments’ would not be able to benefit from the derogation of standstill obligations. The FAQs explain that reason for this distinction is because block/bulk deals involve the secondary acquisition of existing shares on a stock exchange, whereas preferential allotments are primary acquisitions where new shares are allotted by the company.
CCI notifies the Competition Commission of India (Determination of Cost of Production) Regulations, 2025
On 7 May 2025, the CCI notified the Competition Commission of India (Determination of Cost of Production) Regulations, 2025 (“Cost Regulations 2025”) which replaced the erstwhile regulations of 2009. Set out below are some of the key changes that have been introduced through these new regulations 2025
- The definition of ‘total cost’ has been revised to explicitly include depreciation and to exclude financing overheads, thereby ensuring a more appropriate and consistent measurement of the cost of production.
- The definition of ‘long run average incremental cost’ (“LRAIC”) has been updated to include all variable and fixed costs, including sunk costs, that are directly or indirectly attributable to the production of a specific product or service. This encompasses product specific fixed costs incurred either before or during the period under investigation. The definition further clarifies that, for multi-product enterprises, common costs are included in LRAIC to the extent they are caused by or incrementally attributable to the production of the relevant product or service.
For more information contact:
Zenia Cassinath
Practice Head – Competition
zenia.cassinath@veritaslegal.in
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