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India – CCI Imposes A Penalty On The All India Motor Transport Congress For Price Fixing Under Section 3(3)(a).

17 March, 2015

 


On February 20, 2015, CCI passed an order imposing a penalty on the All India Motor Transport Congress (‘AIMTC’) for contravention of the provisions of Section 3(3)(a) of the Act. CCI’s proceedings were initiated following a complaint by the Indian Foundation of Transport Research and Training (‘IFTRT’) alleging that AIMTC had given directions to their member transporters to uniformly raise truck freight rates by 15% across the country on account of the diesel price hike of INR 5 per liter. IFTRT also filed some newspaper reports in support of its contention thatsuch an action of AIMTC was in violation of the provisions of the Act.

Post the investigation, DG concluded that, (i) there was a meeting of minds / action in concert amongst the members of AIMTC to fix the price upon the hike in diesel prices; (ii) the announcement in the public to increase the freight charges had a major role in determining the prices of truck rentals indirectly; and (iii) AIMTC acted in a “cartel like” manner by asking its members to effect 15% increase in freight charges across the country, ignoring the actual effect of the diesel price hike.

CCI noted that even de hors the written circular or directions, if material on record indicates a concerted action, it may be enough to find a contravention of provisions of the Act. While examining the evidence presented by DG, CCI observed that various press reports had appeared in the media indicating that the President and the Spokesperson of AIMTC gave statements suggesting the freight charges be increased if the hike in diesel prices was not rolled back by the Government. CCI stated that, unless there was meeting of minds amongst the members, similar statements containing identical issues would not have been issued.

Moreover, CCI was of the opinion that the directions issued by AIMTC not only had great persuasive value due to its pan-India character but were also acted upon by the members of the association. This was evident in the subsequent conduct of various state associations who not only communicated to their members to increase freight charges but also to participate in a nationwide strike. The modus operandi adopted by AIMTC, which was disclosed by Pondicherry Goods Transporters’ Association to CCI, noted that AIMTC described itself as the ‘mother body’ of the road transport fraternity in India and called emergency meetings and took decisions to suspend operations pan-India.

CCI concluded that AIMTC had failed to rebut the presumption that the latter’s impugned action to determine freight rates did not cause an adverse effect within the meaning of Section 3(3) of the Act. Secondly, the print and electronic media also became an easy purveyor of the anti-competitive conduct resorted to by AIMTC.

Based on the above, CCI was of the view that AIMTC, through its impugned conduct, had contravened the provisions of Section 3(3)(a) read with Section 3(1) of the Act. Accordingly, CCI issued a cease and desist order against AIMTC. Further, CCI recognized that the objective of a penalty is to deter the infringing entities from engaging in anti-competitive conduct. In the past, similar orders had been passed by the Monopolies and Restrictive Trade Practices Commission (‘MRTPC’) against AIMTC in RTPE No.03 of 2000 for similar conduct. Considering the totality of facts and the absence of any mitigating factors, CCI imposed a penalty on AIMTC of INR 14,24,521, being 10% of its average turnover for the past three years.

AZB   

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com

Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com

Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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