FKCCI accused of abuse of dominance

'Reliance Big Pictures', which is Reliance Big Entertainment's motion picture brand, has approached the Competition Commission of India, alleging that the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has asked producers and distributors of movies to stop distributing prints to 'Big Cinemas', thereby abusing its dominant position in the Bangalore - Mangalore region. An earlier confrontation between the two bodies involved a ban on the distribution of the movies 'Raavan' and 'Raavanan'.

Reliance Big Pictures, led by Anil Ambani, will have to prove not only the facts alleged, but also show that the FKCCI does have a dominant position enabling it to influence producers and distributors so as to ensure non-distribution of prints to Big Cinemas. The CCI is yet to take a stand on the issue and may order an investigation based on preliminary findings.

Source: Business Standard, 30th August 2010

European Commission objects to Oracle's acquisition of Sun Microsystems

The European Commission has issued a formal 'statement of objections' over Oracle's planned acquisition of Sun Microsystems which had earlier obtained the approval of the U.S Department of Justice which expressed that the deal was unlikely to be anti-competitive. Oracle made public its plan to acquire Sun for USD 7.4 Billion in April this year.
The primary concern of the European Commission is Sun's open source MySQL database product. The acquisition by Oracle would have negative effects for the database products market with Oracle also marketing its own 'enterprise' database products.
Oracle in the meanwhile has asserted that the acquisition would not be anti-competitive, especially in the database market since MySQL is open source and it cannot be controlled by any entity. It asserted that the database products market had at least eight strong players including IBM and Microsoft. Oracle argues that the deal is essential for competition in the high-end server market claiming that the deal would revitalise Sun's Sparc processor and Solaris OS platforms. Sourced from: Reuters

Marine hose producers cartel fined € 131 million

The European Commission has fined a world-wide cartel involved in the production and sale of Marine hoses, used to transport crude oil to and ships. Investigations triggered by an immunity application by one of the cartel members, Yokohama of Japan, revealed that the cartel functioned across the globe from 1986 to 2007. The participants included Parker ITR, Manuli, Bridgestone, Dunlop Oil and Marine, Yokohama and Trelleborg, and they met at regular intervals to fix prices and exchange information in locations across Europe, Asia and the United States. Bridgestone and Parker ITR’s fines were raised by 30% owing to their leadership role in the cartel and Manuli’s fine was reduced by an equal margin for co-operating with the investigation. Yokohama received complete immunity from fine under the leniency programme for being the first cartel member to approach the European Commission.

The fine is not the end of it as the companies are also subject to damagesclaims by individuals or firms who have suffered loss due the the cartel.

.Source: EC report

ACCC fines airlines for illegal price fixing

The Australian Competition and Consumer Commission (ACCC) penalised the following airlines for alleged price fixing between 2003 and 2006:

• Air France
• Koninklijke Luchtvaart Maatschappij NV (KLM)
• Cargolux International Airlines S.A. (Cargolux)
• Martinair Holland NV (Martinair)

The alleged contraventions relate to fuel surcharges applied to international carriage of air cargo during that period. Air France and KLM admitted to entering into illegal price fixing understandings with Lufthansa and Martinair admitted to having entered into price fixing agreements with KLM and Cargolux in early 2003. Cargolux also admitted to having entered into such agreements. Acting on these admissions and the recommendations, the Federal Court at Sydney fined Air France and KLM to the tune of $ 6 million and $ 5 million on martinair and cargolux for violations of the Australian Trade Practices Act, 1974. ACCC press release

ACCC approves Chinalco acquisitions in Rio Tinto

The Australian Competition and Consumer Commission (ACCC) has given clearance for Chinalco’s (Aluminium corporation of China) proposal to acquire interests in Rio Tinto plc and Rio Tinto Limited’s assets in iron ore, bauxite, alumina, aluminum and copper assets and a possible increase of up to 18% ownership of the Rio Tinto parent entity.

The ACCC investigated the potential for vertical integration between Rio Tinto’s Australian iron ore operations and Chinese steel makers which could have given Chinalco the ablility to influence global iron ore prices and reduce them to prices below competitive levels through its influence on Rio Tinto. It concluded that they could not unilaterally decrease global iron ore prices.

The Australian regulator observed that “there was limited direct competitive overlap” between the operations of the two entities in the Australian market for supply of alumina, bauxite and copper. It held that the acquisitions were unlikely to result in a ‘substantial lessening of competition.’

CCI chairman stresses on advocacy

The chairman of the Competition Commission of India Mr.Dhanendra Kumar in a recent interview spoke about the need to generate awareness on competition issues and the benefits of voluntary compliance with the recently notified Competition Act. He referred to the mandate of advocacy given by the act. He also said that tackling cartels would be a primary priority for the Commission. The chairman has said in the interview that provisions relating to combinations are likely to be made effective shortly and on enforcement he said that the Commission has sufficient powers of investigation and that the certainty of being caught and punished if one violates the law would assist in ensuring compliance. For the full text of the interview, see: India Law Journal

Power transformer producers fined for market sharing cartel

Seven companies- ABB, AREVA T&D SA, Siemens, Toshiba, Hitachi, Fuji electrics and ALSTOM SA, have been fined 67.6 Million Euros (around 460 Crores in INR) for operating a market sharing cartel selling transformers in the European Economic Area and Japan. The cartel was in operation from around June, 1999 to May, 2003. The companies involved met once or twice in a year in either Asia or Europe, used code names and went to great lengths to hide their illegal actions.
Siemens was granted immunity from the fine under the leniency programme, which was introduced since it was very difficult to gather evidence on cartels without insider support. Under a similar provision on the Competition Act in India, any participant in a cartel who comes forth before investigations are complete and offers full and unconditional cooperation can be exempted from fines.
The cartel is reminiscent of the Lysine cartel which was exposed by the FBI and subsequently had to pay a huge fine apart from federal prison terms for top officials of Archer Daniels Midland. The company also had to settle a class action lawsuit later. The transformers cartel may also face lawsuits from victims of the cartel in national courts and the EC's fine is not inclusive of potential fines that former members of the cartel might incur or payments they might have to make in these lawsuits. For more information see: EC Press Release