The national company law appellate tribunal (NCLAT) has upheld the Rs873-crore penalty imposed by fair trade regulator CCI (competition commission of India) on United Breweries and other beer-makers.
A two-member bench comprising justices Rakesh Kumar and Ashok Kumar Mishra said after examining the materials and considering the arguments, it was of opinion that the "appellants had already admitted in the leniency application regarding their involvement in the cartelisation."
"Lesser penalty application is like an admission of guilt in a cartel. Once they have admitted their involvement in an application filed under Section 46 read with Regulation 5, they were only entitled to question the imposition of penalty," the two-member bench said.
CCI had on 24 September 2021, imposed penalties totalling over Rs873 crore on UBL, Carlsberg India, All India Brewers' Association (AIBA) and 11 individuals for cartelisation in the sale and supply of beer.
The said order was challenged before NCLAT, which is an appellate authority over the CCI against any direction issued or decision made or order passed by the regulator.
NCLAT also dismissed the submissions made by the beer makers that a CCI order is liable to be set aside in the absence of a judicial member which is required to be noticed only for its rejection.
Rejecting it, NCLAT observed that "nowhere it has been indicated that CCI must consist a judicial member and the Act (Competition Act) does not reflect to add a judicial member for deciding the proceeding." CCI had rejected their pleas for leniency application and Gopal Subramaniam, senior counsel appearing for the beer-maker, had argued that the order forming a prima facie case and directing enquiry on the basis of leniency application was not valid.
"However, we are of the opinion that there is no substance in such argument, particularly in view of the fact that in the present case while respondent/Carlsberg India Pvt Ltd had filed a leniency application he had claimed confidentiality," NCLAT said in its 81-page order.
Over the quantum of penalty, NCLAT said it is evident that, though CCI had the discretion to impose a penalty of up to 10% of the average turnover for the past three financial years, in the present case, besides granting benefit on leniency application, CCI has taken a lenient view. It determined the quantum of penalty at 0.5 times profit for each year of the continuance of cartel or 2% of the turnover for each year of the continuance of cartel whichever was higher.
CCI had passed the final order against United Breweries Ltd (UBL), SABMiller India Ltd, now renamed as Anheuser Busch InBev India Ltd (AB InBev), and Carlsberg India Private Ltd (CIPL), among other entities.
The period of cartelisation was considered to be from 2009 to at least 10 October 2018, with Carlsberg India joining in from 2012 and AIBA serving as a platform for facilitating such cartelisation since 2013. All three beer companies were lesser penalty applicants before the regulator.
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