INVESTMENT AND COMPETITION LAW PSDA

MEMORIAL ON BEHALF OF COMPLAINANT

TABLE OF CONTENTS

1. LIST OF ABBREVIATIONS…………………………………………………………..2
2. INDEX OF
AUTHORITIES……………………………………………………………3
3. STATEMENT OF JURISDICTION…………………………………………………..5
4. STATEMENT OF FACTS……………………………………………………………..6
5. STATEMENT OF ISSUES……………………………………………………………..7
6. SUMMARY OF ARGUMENTS……………………………………………………….8
7. ARGUMENTS ADVANCED…………………………………………………………..9
Issue I
1.1 Introduction…………………………………………………………………………9
1.2 Rule of Reason………………………………………………………………...…..10
1.3 Pre-requisites for an agreement to fall under Section 3(4)…………………..……10
1.4 Application on the case………………………………………………………...….11
1.5 Conclusion……………………………………………………………………...…12
Issue II
2.1 Introduction……………………………………………………………………….13
2.2 Presence of a vertical agreement with the elements of resale price maintenance..13
2.3 Resale Price Maintenance agreement causes appreciable adverse effect on
competition…………………………………………………………………………....15
2.4 Conclusion……………………………………………………………………..….16
8. PRAYER………………………………………………………………………..…...…17

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 INVESTMENT AND COMPETITION LAW PSDA
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LIST OF ABBREVIATIONS

ABBREVIATION ACTUAL TERM

& And
AIR All India Reporter
ANR. Another
i.e. That is
SC Supreme Court
SCC Supreme Court Cases
SCR Supreme Court Reporter
UOI Union of India
VS. Or V. Versus
VIZ Namely
Ltd. Limited
Pvt. Private
DLLC Delaware Limited Liability Company
RIPL Rameshwaran India Private Limited
HC High Court
r/w Read with
Ors. Others
OS Operating System
IIT Indian Institutes of Technology
CCI Competition Commision of India
COMPAT Competition Appellate Tribunal
Hon’ble Honourable
§ Section
In re In Reference
The Act The Competition Act, 2002
AAEC Appreciable Adverse Effect on Competition

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INDEX OF AUTHORITIES

LEGAL PRECEDENTS

S. NO. CASE NAME CITATION COURT NAME PAGE

NO.
1. Director General (Supplies & 2013 SCC Competiton 11
Disposals) v. Puja Enterprises OnLine CCI 55 Commission of
India
2. Fx Enterprise Solutions India 2017 SCC Competition 14
Pvt. Ltd. v. Hyundai Motor OnLine CCI 26 Commission of
India Limited India
3. JSW Paints Private Limited v. 2020 SCC Competition 12
Asian Paints Limited OnLine CCI 1 Commission of
India
4. Samir Agrawal v. CCI (Cab (2021) 3 SCC Supreme Court of 14
Aggregators Case) 136 India
5. Shubham Sanitary wares v. Case No. 99/2013 Competition 16
Hindustan Sanitary wares& Commission of
Industries Ltd. India
6. Tata Engineering and (1977) 2 SCC 55 Supreme Court of 10
Locomotive Co. Ltd v. India
Registrar of Restrictive Trade
Agreement
7. Technip SA v. SMS Holding (2005) 5 SCC Supreme Court of 11
(P) Ltd. 465 India
8. Vijay Gopal, In re 2019 SCC Competiton 10, 12
OnLine CCI 4 Commission of
India

STATUTES

1. The Competition Act, 2002, 12 of 2003, Acts of Parliament (India)

REFERENCES

1. Dr. Souvik Chatterji, INDIAN COMPETITION (AMENDMENT) ACT, 2007 HAS NOT
MADE DIFFERENCE BETWEEN PER SE RULE AND RULE OF REASON
2. Namah Bose and Vivek Kumar, A Rule of Reason Analysis Vis-à-Vis Exchange of
Information in Competitive Markets, ISSN:2326-5320, NLUJ Law Review
3. Amit Bansal, Nandita Jain, Prasanna Sakhadeo, Debate on the Legality of Resale
Price Maintenance: Evidence from across countries and time periods
4. Louis Kaplow, The Meaning of Vertical Agreement and Structure of Competition Law,
80 Antitrust Law Journal 563 (2016)
5. Michael Patrick Akemann, The Competitive Effects of Exclusive Dealing
Arrangements
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BOOKS

1. Jonathan Faull & Ali Nikpay, The EU Law of Competition, (3rd ed. 2014)
2. S.M. DUGAR, GUIDE TO COMPETITION LAW 423 (6th ed. 2016)
3. Avtar Singh's Competition Law (2nd ed. 2024)
4. Taxmann's Competition Laws Manual with Case Laws Digest (10th ed. 2023)
5. Competition Law in India (3rd ed. 2013)

DATABASES

1. www.scconline.com
2. www.manupatra.com
3. www.jstor.org
4. www.epw.in

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STATEMENT OF JURISDICTION
THE COUNSELS FOR THE COMPLAINANTS, DANISH KHAN AND SANTOSH
KUMAR, HEREBY HUMBLY SUBMIT TO THE HON’BLE COMMISSION’S
JURISDICTION UNDER SECTION 19(1) OF THE COMPETITION ACT, 2002:

(1) The Commission may inquire into any alleged contravention of the
provisions contained in subsection (1) of section 3 or sub-section (1) of
section 4 either on its own motion or on—
(a) receipt of any information, in such manner and] accompanied by such
fee as may be determined by regulations, from any person, consumer or
their association or trade association; or
(b) a reference made to it by the Central Government or a State
Government or a statutory authority.

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STATEMENT OF FACTS

Delaware Limited Liability Company (DLLC), based in Chennai, was established in 2010. It
has created an operating system known as Endroid and offers services such as Delaware Mail,
Delaware Map, Delaware Search, and Delaware U-Tube. This operating system is essential
for smartphones and tablets to operate applications and programs.

Rameshwaram India Pvt Ltd (RIPL), another company located in Delhi, was also founded in
2010. It has developed an operating system called N-droid and provides services like
Rameshwaram Mail, Rameshwaram Search, and Rameshwaram Map. The operating systems
developed by both companies are utilized by smartphone and tablet manufacturers to run
their applications and programs.

The founders of these companies are graduates of IIT Madras and share a strong friendship.
They jointly organize employee training and capacity-building programs in either Delhi or
Chennai, typically every two years. The programs conducted include workshops on Software
Testing, Embedded System, Linux, Architecture, Cybersecurity, and Data Analysis at various
venues.

The top executives of these companies convene biannually to discuss their business strategies
and expansion plans.

DLLC’s operating system and services are not accessible in North and North East India,
while RIPL’s operating system and services are unavailable in South India. They offer their
products and services at a uniform price across India. These companies prohibit their buyers
from dealing with the operating systems and services of other companies. Sellers can only
offer the maximum allowable discount as instructed, and non-compliance with the discount
scheme will result in no future dealings with the sellers.

Two individuals, Danish Khan and Santosh Kumar, lodged a complaint against these
companies, accusing them of anti-competitive practices.

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STATEMENT OF ISSUES

ISSUE III

WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(b) OF THE

COMPETITION ACT, 2002?

ISSUE IV

WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(e) OF THE

COMPETITION ACT, 2002?

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SUMMARY OF ARGUMENTS

I. WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(b) OF

THE COMPETITION ACT, 2002?

It is most respectfully submitted that the agreement between DLLC and RIPL violates
Section 3(4)(b) of the Competition Act, 2002. This section pertains to anti-competitive
agreements that cause an appreciable adverse effect on competition (AAEC) in India. The
agreement between DLLC and RIPL is identified as an exclusive dealing agreement, which
restricts their purchasers from dealing with other companies’ operating systems and
services. This practice is deemed anti-competitive as it creates barriers for new market
entrants, drives out existing competitors, and results in foreclosure of competition.
Therefore, it is argued that the Hon’ble Commission should take appropriate action against
DLLC and RIPL to uphold the principles of fair competition and protect the interests of
consumers and other market participants.

II. WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(e) OF

THE COMPETITION ACT, 2002?

The case before the Hon’ble Commission involves allegations of violations of Section
3(4)(e) of the Competition Act, 2002, by DLLC and RIPL through the establishment of a
resale price maintenance (RPM) agreement. The presence of a vertical agreement with
elements of RPM, including the implementation of a "Discount Control Mechanism," is
evident, as demonstrated by the parties' actions in restricting distributors to offer only the
maximum permissible discount stipulated by them. This agreement indirectly hampers
competition by limiting dealers from providing better terms to consumers and stifling both
intra-brand and inter-brand competition. The adverse effects of RPM extend to higher
prices for consumers, barriers to entry for new competitors, and a reduction in dynamism
and innovation within the market. Moreover, the enforcement of specific discount rates
with punitive measures further exacerbates the anti-competitive nature of the agreement,
violating the principles of fair competition and consumer welfare enshrined in the

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Competition Act. Therefore, it is imperative for the Commission to take decisive action to
rectify the violation and restore fair competition in the marketplace.

ARGUMENTS ADVANCED

I. WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(b) OF

THE COMPETITION ACT, 2002?

1.1 INTRODUCTION

It is most respectfully submitted before the Hon’ble Commission that:

The acts of the opposite parties are in violation of Section 3(4)(b) of the Competition Act,
20021. The section deals with the agreements which are anti-competitive in nature and lists
down various instances of agreements which are termed as being anti-competitive for
causing appreciable adverse effect on competition within the markets of India.

The section has been reproduced hereunder:

“3(4). Any agreement amongst enterprises or persons at different stages or levels

of the production chain in different markets, in respect of production,
supply, distribution, storage, sale or price of, or trade in goods or provision
of services, including—
(a) tie-in arrangement;
(b) exclusive dealing agreement;
(c) exclusive distribution agreement;
(d) refusal to deal;
(e) resale price maintenance,
shall be an agreement in contravention of sub-section (1) if such agreement causes
or is likely to cause an appreciable adverse effect on competition in India.”

The term “exclusive dealing agreement” as mentioned in clause (b) of sub-section (4) of
section 3 has been explained as:

1 The Competition Act, 2002, (12 of 2003), Acts of Parliament (India)

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“”exclusive dealing agreement” includes any agreement restricting in any manner the
purchaser or the seller, as the case may be, in the course of his trade from acquiring
or selling or otherwise dealing in any goods or services other than those of the seller
or the purchaser or any other person, as the case may be;”

1.2 RULE OF REASON

The Rule of Reason assesses the impact of competition based on the specifics of the case,
the market, and the existing competition, as well as the actual or potential restriction on
competition. The Supreme Court of India interpreted this rule in the case of Tata
Engineering and Locomotive Co. Ltd v. Registrar of Restrictive Trade Agreement 2.

There are various factors that the Commission gives due regard to while determining
whether an agreement causes appreciable adverse effect on competition under Section 3.
These factors are3:
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition;
(d) benefits or harm to consumers;
(e) improvements in production or distribution of goods or provision of services; or
(f) promotion of technical, scientific and economic development by means of production or
distribution of goods or provision of services.

1.3 PRE-REQUISITES FOR AN AGREEMENT TO FALL UNDER SECTION 3(4)

In order to scrutinize a matter under Section 3(4) of the Act, the following aspects need to
be evaluated4:
(a) The presence of an agreement;
(b) The agreement is between ‘enterprises’ or ‘individuals’;
(c) These entities are involved at various stages or levels in the production chain across
different markets;
(d) The agreement pertains to the production, supply, distribution, storage, sale or pricing
of goods, or the provision of services;

2
(1977) 2 SCC 55
3
The Competition Act, 2002, §19 (3)
4
Vijay Gopal, In re , 2019 SCC OnLine CCI 4
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(e) The agreement includes elements such as tie-in arrangements, exclusive dealing
agreements, exclusive distribution agreements, refusal to deal, and resale price
maintenance; and
(f) The agreement results in or is likely to result in an AAEC in India.

1.4 APPLICATION ON THE CASE

The first requirement to prove that an agreement is in violation of Section 3(4) is that there
has to be an agreement. ‘Agreement’ under the Act has been defined as not only including
an express agreement but also ‘an arrangement or understanding or action in concert’
howsoever informal and regardless of whether it intended to create a legally enforceable
liability.5

It is clear from the plain reading of the facts that DLLC and RIPL had an agreement
between them. The facts clearly mention the top executives of the two companies meeting
twice every year to discuss their business strategies and expansion programs. 6

The second requisite is that the agreement has to be between ‘enterprises’ or ‘individuals’.
It is humbly submitted that both the DLLC and RIPL are enterprises as defined under
Section 2(h) of the Act and are involved at various levels in the production chain in
different markets.7

The next essentials talks about the content of the agreement. The agreement should be
about production, supply, distribution, storage, sale or pricing of goods, or the provision of
services. There is no need to provide any arguments on the point that the agreement
between DLLC and RIPL is about the provision of services that are offered by both of the
enterprises.8

It is humbly submitted that the agreement involves elements of an exclusive dealing

agreement. As already mentioned above, an exclusive dealing agreement means any
agreement that in any way limits the buyer or the seller in their trade from purchasing or

5
The Competition Act, 2002, § 2 (b); Director General (Supplies & Disposals) v. Puja Enterprises, 2013 SCC OnLine CCI 55;
Technip SA v. SMS Holding (P) Ltd., (2005) 5 SCC 465
6
Moot Proposition, Para 4
7
Moot Proposition , Paras 1 and 2
8
Moot Proposition, Para 5
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selling or otherwise transacting in any goods or services other than those belonging to the
seller, the buyer, or any other individual.

Exclusive Dealing Agreements restrict a buyer or purchaser from engaging with other
providers. If a supplier with considerable market influence enters into an exclusive dealing
agreement with a buyer or purchaser, creating a barrier to entry for other suppliers, the
contract can be perceived as exclusionary and anti competitive. 9 One form of exclusive
dealing agreements is where the manufacturer mandates its dealers to solely purchase
goods from them, thereby prohibiting them from transacting with rival products. 10

The agreement between DLLC and RIPL is indeed an agreement including elements of
exclusive dealing agreement. It is clear from the facts that the companies do not allow their
purchasers to deal with the operating systems and services of other companies. This is a
clear violation of the competitiveness in the market. 11

The final requirement for an agreement to be violative of Section 3(4)(b) is that the
agreement causes or is likely to cause AAEC in India. When a producer engages in
exclusive dealing, it restricts competitors’ access to the market and limits dealers’ ability to
carry competing goods. This type of agreement can eliminate competition and potentially
create obstacles for newcomers, negatively impacting intra-brand competition. 12 The
practice of threatening to stop supply is characteristic of exclusive supply. Such an
agreement was deemed to be anti-competitive because it obligated dealers to procure parts
solely from specific suppliers. 13 This allowed these suppliers to monopolize their product’s
aftermarket, thereby erecting barriers.

It is, hence, clear that the agreement between DLLC and RIPL causes AAEC in India. The
companies do not allow their purchasers to deal with any other company, which is an anti
competitive practice as this creates barriers for the new entrants in the market, it drives out
existing competitors out of the market and results in foreclosure of competition.

9
Supra Note 4
10
Jonathan Faull & Ali Nikpay, The EU Law of Competition, (3rd ed. 2014)
11
Moot Proposition, Para 5
12
S.M. DUGAR, GUIDE TO COMPETITION LAW 423 (6th ed. 2016)
13
JSW Paints Private Limited v. Asian Paints Limited, 2020 SCC OnLine CCI 1
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1.5 CONCLUSION

In light of the above arguments, it is evident that the agreement between DLLC and RIPL
is in contravention of Section 3(4)(b) of the Competition Act, 2002. The agreement not
only restricts the freedom of their purchasers to deal with other companies but also creates
significant barriers for new entrants in the market. This practice drives out existing
competitors and results in foreclosure of competition, thereby causing an appreciable
adverse effect on competition (AAEC) in India.

The actions of DLLC and RIPL are thus anti-competitive in nature, violating the principles
of free trade and competition that form the bedrock of a healthy market economy. It is,
therefore, respectfully submitted that the Hon’ble Commission may consider the facts and
arguments presented and take appropriate action against the opposite parties to uphold the
principles of fair competition and protect the interests of consumers and other market
participants.

I. WHETHER THERE IS A VIOLATION OF SECTION 3 (4)(e) OF

THE COMPETITION ACT, 2002?

2.1 INTRODUCTION

It is most humbly submitted before the Hon’ble Commission that:

The acts of the opposite parties are in violation of Section 3(4)(e) of the Competition Act,
2002. The section deals with anti-competitive agreements, specifically those in relation
with resale price maintenance.

According to the explanation (e) provided under Section 3(4), the term “resale price
maintenance” means as under:

‘”resale price maintenance” includes, in case of any agreement to sell goods or provide
services, any direct or indirect restriction that the prices to be charged on the resale by the
purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices
lower than those prices may be charged’

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2.2 PRESENCE OF A VERTICAL AGREEMENT WITH THE ELEMENTS OF

RESALE PRICE MAINTENANCE

The pre-requisites for a matter to fall under Section 3(4) have already been discussed
above.14

The Commission observed that existence of an agreement, understanding or arrangement,

demonstrating/indicating meeting of minds, is a sine qua non for establishing a
contravention under Section 3 of the Act. 15

Requisites (a) to (d) have been proved above and do not need any more contemplation.

The next two requisites involve the presence of the element of resale price maintenance in
the agreement and the element to be causing an appreciable adverse effect on competition.

RPM is an agreement wherein the price to be charged on resale by the purchaser would be
stipulated by the seller. It is an agreement with the direct or indirect object in the
establishment of a fixed or minimum resale price level, whether intentional or
unintentional will amount to RPM. It includes agreements involving a discount control
mechanism by which the manufacturer sets a maximum permissible limit which is allowed
and not above that recommended range.

The above said principle has been set out in the case of Fx Enterprise Solutions India Pvt.
Ltd. v. Hyundai Motor India Limited 16 where the Commnission was of the view that the
OP has sought to impose an arrangement that results in RPM, which includes monitoring
of the maximum permissible discount level through a “Discount Control Mechanism” and
a penalty punishment mechanism upon non-compliance of the discount scheme.

A discount control mechanism refers to a system or process implemented by a company to

regulate and manage the discounts offered on its products or services. This mechanism
typically involves setting guidelines, policies, or parameters governing the maximum
allowable discounts that can be provided to customers or clients.

14
Supra note 4
15
Samir Agrawal v. CCI (Cab Aggregators Case), (2021) 3 SCC 136
16
2017 SCC OnLine CCI 26
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In the present matter, DLLC and RIPL used a “Discount Control Mechanism” where they
restricted the seller to give only the maximum permissible discount as directed by the
Opposite Parties.17

2.3 RESALE PRICE MAINTENANCE AGREEMENT CAUSES APPRECIABLE

ADVERSE EFFECT ON COMPETITION

The authorized dealers decide the sale price. However, they are indirectly compelled to
offer the price stipulated by seller by imposing a recommended range of discount,
containing an upper limit, it may offer the customers. These conditions indirectly restrict
the dealers from offering better terms to the consumers and such an agreement adversely
affects consumers by restricting the amount of discount that could be offered by
distributors.

RPM agreement eliminates intra-brand competition in a market. When a minimum RPM is

imposed by the manufacturer of a particular brand, distributors are prevented from
decreasing the sale prices and doesn't pave way for effective competition. The stifling of
intra-brand competition results in higher prices which detrimentally affects the ultimate
consumer.

Further, RPM has the effect of reducing inter-brand price competition because preventing
price competition on a popular brand would result in higher prices of competing brands as
well, including those that have not adopted RPM creating barriers to the new entrants in the
market and driving out existing competitors.

Fixing a minimum resale price would allow distributors with larger market power to drive
small dealers out of the business who are unable offer greater discounts in place of lower
quality pre-sale and postsale services. Now, with the RPM, these small distributors may not
be able to compete on the same level as the large distributors, thus foreclosing the market.
By preventing price competition between different distributors, RPM may prevent more
efficient retailers from entering the market which reduces dynamism and innovation at the
distribution level.

17
Moot Proposition, Para 5
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In the present matter, the resale price maintenance agreement recommends a maximum
permissible discount and provides for no dealing with those sellers who do not comply
with these discount parameters which is anti-competitive in nature for the reasons
explained above.18

Furthermore, maintaining the specific rate of discounts which are forcibly implemented by
the opposite parties on their sellers may be construed as a violation of Section 3(4)(e) of
the Act subject to this practice causing an Appreciable Adverse Effect on Competition
(AAEC) in markets in India. 19

2.4 CONCLUSION

In light of the detailed analysis presented in the case between DLLC and RIPL, it is evident
that the parties have engaged in activities that violate Section 3(4)(e) of the Competition
Act, 2002. The establishment of a resale price maintenance (RPM) agreement,
characterized by the imposition of a "Discount Control Mechanism," directly contravenes
the provisions of the Act aimed at fostering fair competition and protecting consumer
interests.

The RPM agreement implemented by DLLC and RIPL restricts distributors from offering
competitive prices and undermines both intra-brand and inter-brand competition within the
market. This not only leads to higher prices for consumers but also erects barriers to entry
for new competitors, stifling innovation and dynamism in the marketplace.

Furthermore, the enforcement of specific discount rates with punitive measures for non-
compliance exacerbates the anti-competitive nature of the agreement, infringing upon the
principles of fair competition and consumer welfare enshrined in the Competition Act.

In light of these findings, it is imperative for the Hon’ble Commission to take decisive
action to address the violation, ensuring compliance with the provisions of the Competition
Act and restoring a level playing field for all market participants. By doing so, the
Commission can uphold the integrity of competition in the marketplace and safeguard the
interests of consumers.

18
Moot Proposition, Para 5
19
Shubham Sanitary wares v. Hindustan Sanitary wares& Industries Ltd., Case No. 99/2013
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PRAYER
Wherefore in the light of issues raised, arguments advanced and authorities cited, it is most
respectfully prayed that:

I. The respondents are in violation of Section 3 (4)(b) of the Competition Act, 2002.
II. The respondents are in violation of Section 3 (4)(e) of the Competition Act, 2002.

All of which respectfully submitted

FOR THIS ACT OF KINDNESS, THE COMPLAINANT SHALL DUTY BOUND

FOREVER PRAY.

On behalf of the Complainant

Counsels for Complainant

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