CCI can’t take retrospective action, NCLAT says giving clean chit to SKF India in abuse of dominance complaint

MUMBAI: The Competition Commission of India (CCI) can't take action retrospectively on abuse of dominant position where the event occurred before the enactment of law, the National Company Law Appellate Tribunal (NCLAT) has held.

Giving a clean chit to SKF India Ltd, a subsidiary of Swedish bearing and steel maker SKF, in a case of alleged abuse of dominant position, the NCLAT upheld that the alleged instances took place before the relevant provisions of the Competition Act came into force.

The NCLAT ruling came on a petition filed by Asmi Metal Products Pvt Ltd challenging a CCI order that dismissed allegations of abuse of dominance against SKF India.

When contacted, Vijayendra Pratap Singh, senior partner at the law firm AZB & Partners, who represented SKF India, confirmed the development but refused to divulge any details citing client confidentiality.

In its complaint before the CCI, Asmi had argued that it had, on the suggestion of SKF India, established a forging plant near Pune in 2004 at an investment of around Rs 1.15 crore to reduce its costs towards procurement and transportation of raw material, and to ensure timely delivery of products to SKF.

But SKF India later backtracked on its commitment, resulting in heavy losses to Asmi, the complaint said. It further alleged that in April 2017, Asmi Metal and SKF India entered into an understanding which stated that SKF would not be responsible for any losses or damages to Asmi.

Asmi argued that this amounted to abuse of dominant position by SKF and that it contravened Section 4 of the Competition Act, 2002.

Giving a clean chit to SKF, the CCI observed that a majority of the alleged instances of abuse of dominance took place prior to 2009 and, therefore, did not fall within the purview of the Competition Act, relevant provisions of which came into effect only in 2009.

The CCI also held that as per the “relevant market”, SKF cannot be held to be in a dominant position.

In 2018, Asmi challenged the CCI ruling before the NCLAT.

On March 12, a division bench of NCLAT, while upholding the stand taken by the CCI, dismissed the petition and observed that “Since the respondent does not appear to be in a dominant position in the relevant market, the question of abuse of dominant position does not arise”.

Vaibhav Choukse, partner at law firm J Sagar & Associates, said the provisions relating to Section 4 (abuse of dominance) have been brought into force only on May 20, 2009. “Hence, the action that has been undertaken prior to May 20, 2009, cannot be scrutinised under the Competition Act, unless such an action/conduct continued post-May 20, 2009,” he said.