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Case No. 43 of 2019 Page 1 of 28 Public Version COMPETITION COMMISSION OF INDIA Case No. 43 of 2019 In re: XYZ (Confidential) Informant And Maharashtra Wine Merchants Association Opposite Party 1 306, Allied Industrial Estate 3rd Floor, Prof. Ram Panjwani Marg Mahim (W), Mumbai-400016 Pune District Wine Merchants Association Opposite Party 2 F-27, 2nd Floor, Shanti Kunj, Opposite GPO Pune-411001 Association of Progressive Liquor Vendors Opposite Party 3 5, Dhanlaxmi CHS Ltd. Mahakali Caves Road, Andheri East Mumbai-400093 Pimpri Chinchwad Liquor Dealers Association Opposite Party 4 Shop No. 3, Sai Park Apartment Near Shastri Park, Pimpri, Pune 411017 Case No. 43 of 2019 Page 2 of 28 Public Version CORAM Ravneet Kaur Chairperson Anil Agrawal Member Sweta Kakkad Member Deepak Anurag Member Appearances: For Informant : None For Opposite Party No. 1, Mr. Dilip Jamnadas Giyanani, President Caretaking Committee Opposite Party No. 1, Mr. Balvinder Singh Rekhi, President, Opposite Party No. 1 and Mr. Dayal Idnani, Office Bearer, Opposite Party No. 1 : Mr. Anandh Venkataramani and Ms. Anjali Agrawal, Advocates For Opposite Party No. 2 and Mr. Ajay V Deshmukh, Secretary, Opposite Party No. 2 : Ms. Gauri Puri, Advocate For Opposite Party No. 3, Mr. Arvind Miskin, President, Opposite Party No. 3 and Mr. Sumit Chawla, Vice President, Opposite Party No. 3 : Mr. Manu Chaturvedi, Advocate Case No. 43 of 2019 Page 3 of 28 Public Version Order under Section 27 of the Competition Act, 2002 1. The present Information has been filed by the Informant (who has requested confidentiality over his identity) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against Maharashtra Wine Merchants Association (‘Opposite Party No. 1’ / ‘OP-1’); Pune District Wine Merchants Association (‘Opposite Party No. 2’ / ‘OP-2’); Association of Progressive Liquor Vendors (‘Opposite Party No. 3’ / ‘OP-3’); and Pimpri Chinchwad Liquor Dealers Association (‘Opposite Party No. 4’ / ‘OP-4’) , alleging, inter alia, contravention of the provisions of Sections 3 & 4 of the Act. 2. As per the averments made in the Information, the Informant is a company engaged in the business of manufacturing, distribution and sale of alcoholic beverages (‘Alcobev Companies’). OPs are associations of licensed retail liquor vendors or wine shop owners. The Informant alleged that since 2014, the OPs have been operating as a cartel, by collectively stipulating that the companies engaged in the manufacture, distribution or sale of alcoholic beverages must adhere to terms such as in relation to retail margins, new product launching schemes, transport delivery terms, cash discount rates, credit period, mandatory launching fees, donations etc. The Informant has stated that such unfair and unilateral terms stipulated by the OPs are in contravention of the provisions of Section 3(3) and Section 4(2) of the Act. 3. Further, the Informant has alleged that the OPs have devised a practice under which, whenever a new product is launched by an Alcobev Company, the latter is forced to approach the OPs and the OPs then take a unilateral decision on the selling terms and prices. Thus, the Alcobev Companies are forced to sell their products at a particular price and fixed retails margins to all members of the OPs. Additionally, Alcobev Companies are also charged a mandatory ‘launching fee’ for their new product. The Informant has averred that if any Alcobev Company tries to circumvent the OPs and approach retail vendors (who are members of the OPs), then the OPs ensure that such company’s new product is boycotted. Case No. 43 of 2019 Page 4 of 28 Public Version Directions to the Director General (DG) 4. After considering the Information, and other material on record, the Commission, vide order dated 21.01.2020 passed under Section 26(1) of the Act, formed an opinion that a prima facie case of violation of section 3(1) read with Section 3(3)(a) of the Act for imposing unfair conditions, fixing prices and restricting market access is made out and directed the Director General (‘DG’) to cause an investigation into the matter and submit a report within a stipulated time period. Pertaining to the violation of section 4 of the Act, however, the Commission noted that the allegation of abuse of dominance collectively by all the OPs does not warrant any examination under Section 4 as the present statutory scheme does not provide for joint or collective dominance. Investigation by the Director General 5. To examine the allegations, the DG issued notices to the OPs and third parties to collect relevant information/ data. DG also recorded statements of the office bearer of the OP and third-party witnesses during the investigation. The Investigation Report was prepared on the basis of such documentary evidence, duly corroborated by the oral testimony of the witnesses. 6. The Investigation Report was submitted by the DG on 29. 07. 2022, in confidential and nonconfidential versions, along with case record. In the Investigation Report, the DG, inter alia, concluded as under: 6.1 OP-1, OP-2 and OP-3 (collectively referred as ‘the OPs’) were found to be engaging in anti-competitive conduct by issuing circulars to their members prescribing uniform terms relating to discount, payment conditions and transportation charges. Such concerted determination of commercial terms amounted to price fixing within the meaning of Section 3(3)(a) read with Section 3(1) of the Act. 6.2 By forcing the Alcobev Companies to get NOC from it for the introduction of new products which are in nature of approvals for the launch of the new products in the market OP-1, OP-2 and OP-3 are also in violation of the provisions of Section 3(3)(b) of the Act. 6.3 OP-4 was found to be defunct, and therefore no conclusive findings could be drawn against it. Case No. 43 of 2019 Page 5 of 28 Public Version 6.4 Six office bearers of OP-1 to OP-3 — Mr. Dilip Jamnadas Giyanani, President – Caretaking Committee (OP-1); Mr. Balvinder Singh Rekhi, President, (OP-1); Mr. Dayal Idnani, Office Bearer, (OP-1); Mr. Ajay V. Deshmukh, Secretary, (OP- 2); Mr. Arvind Miskin, President, (OP-3); and Mr. Sumit Chawla, Vice President, (OP-3).) — being in charge of and responsible for the conduct of the respective associations, were held liable under Section 48 of the Act. 7. The Commission considered the Investigation Report of the DG in its ordinary meeting held on 10.08.2022 and directed to forward an electronic copy thereof (non-confidential version) to the Informant, OP-1, OP-2, OP-3 and their respective individuals identified under section 48 of the Act (collectively referred as ‘Parties’) for filing their respective objections/ suggestions, if any to the Investigation Report. 8. OP-1’s individuals and OP-2 sought an 8-week extension to file their replies and financials, while OP-3 filed three separate applications requesting inter alia legible copies of certain documents of Investigation Report and its annexures, the creation of a confidentiality ring to access the non-redacted record, and permission to cross-examine a third-party witness, and the Informant. The Commission, vide order dated 30.09.2022, allowed OP-1 and OP-2 to file their objections/suggestions by 20.11.2022, directed the DG to provide legible copies of the documents as sought by OP-3, and permitted the cross-examination only of the third- party witness, noting that no oral testimony of the Informant was recorded. The DG completed the cross-examination on 13.10.2022 and submitted the report on 02.11.2022. 9. Counsels for OP-1 and OP-2 sought a final extension of ten days to file their replies to the Investigation Report. The Commission, vide order dated 28.11.2022, allowed OP-1 and OP-2 to submit their replies by 30.11.2022. Subsequently, OP-1, OP-2, and their respective individuals filed their replies and financial statements on 09.12.2022 and 05.12.2022, respectively. 10. OP-3, vide application dated 08.12.2022, sought an appropriate version of the report on cross-examination and requested an extension of four weeks to file its objections/suggestions to the Investigation Report from the date of receipt of the said
