brics competition newsletter

7/23/2019 BRICS Competition Newsletter

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Competition Law and

Policy Development

Enforcement Actions

Merger Review

Advocacy Initiatives

Message from ompetition ommission of India

It gives me immense pleasure to bring to you the first issue of the BRICS Competition

Newsletter on behalf of the BRICS competition authorities. The newsletter is in pursuance ofcommitment of cooperation expressed in the Delhi Accord during the 3rdBRICS International

Competition Conference held at New Delhi in November 2013. Experience sharing in enforcementand advocacy was considered vital for developing cooperation and to meet the challenges ofcompetition enforcement; hence, the newsletter.

The BRICS countries together represent the aspirations of nearly three billion people. Thisrepresents both a heavy responsibility as well as a rich resource. The aspiration for a better life isuniversal and finds particular resonance amongst the people of the emerging BRICS economies.The efficient functioning of markets is crucial to fulfilling this aspiration which is ensured in nosmall measure by the competition law.

All the BRICS economies have embraced modern competition law and are actively enforcing it.A fundamental change in the focus of international competition enforcement has occurred. As in

most other areas, a bipolar world focussed on the US and EU, has become multipolar in the worldof competition. Companies around the world realise that they must be aware of merger control and

competition enforcement developments in Brasilia, Moscow, New Delhi, Beijing, and Pretoria.

BRICS countries face several similar challenges in the enforcement of competition law

challenges such as institutional design problems, government regulations and inadequate awarenessof the law. In such a situation, it stands to reason to cooperate and learn from each other rather thanreinventing the wheel. BRICS Competition platform is an apt Forum for this. BRICS CompetitionAuthorities are also ideally positioned to bridge the gap between mature competition authorities andnascent ones.

The BRICS Competition Newsletter has been conceived as an annual publication and it is aprivilege for the Competition Commission of India to bring out the first issue of the Newsletter. Itcovers important competition policy developments in the BRICS countries in the last few years as

also the enforcement and advocacy activities of the BRICS Competition Authorities during 2014.

This newsletter is a modest but, we believe, crucial step towards cooperation of the BRICS

Competition Authorities and could help in heralding a vibrant competition culture in all the BRICScountries.

(Ashok Chawla)

INSIDE


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CompetitionLawandPolicyDevelopment

Brazil, Russia, India, China and South Africahave played an instrumental role in globalization ofcompetition law. Competition law and policy inBRICS countries have undergone modernisation or

been newly established in the last ten years so as to

be aligned with domestic and internationaleconomic developments. All of them have nowmodern competition authorities equipped toenforce competition law with substantial teeth.

The BRICS competition authorities have startedcompetition enforcement in the backgrounds ofdifferent domestic legislative mandates, yet they doreflect certain similarities. All the BRICScompetition authorities have been empowered bytheir legislative processes to act tough on cartels

and encourage effective use of leniencyprogrammes. The rules on unilateral conduct andmerger control enforced by competition authoritiesin the BRICS match with international best

practices and have been able to draw confidence oflocal and multinational businesses. All BRICScountries have adopted merger review with Brazil

being first one to introduce in 1994 and India beingthe last to enforce in 2011. Chinas merger controlhas been only few years old but is being rigourslyenforced. The emphasis on developing local

competition culture has made their progressremarkable in the last couple of years. As youngcompetition authorities, BRICS competitionauthorities understand that promotion ofcompetition in market forms the necessary base forstrong economic growth and development, andhave therefore laid emphasis on aggressivecompetition advocacy.

BRICS countries share to a great extent similarphases of economic development. Thesesimilarities transpired existence of anticompetitive

practices and conducts across the markets of

BRICS countries. Given the fact that they have gottheir modern competition law and authorities in thelast ten years only, they are still grappling with theherculean task of freeing their economies from theclutches of anticompetitive practices and conducts.

Brazil

The Brazilian Congress approved a new antitrustand unfair competition law in October 2011, whichcame into effect on May 29, 2012. The new law has

been an attempt to resolve issues in the old law and torestructure Brazilian competition policy system(BCPS). The new law has triggered complete changein the structure of government agencies in charge of

completion law enforcement in Brazil. The functionsof investigation of anticompetitive conduct, analysisof merger filings and the final decision are joinedtogether into a single independent agency, theAdministrative Council for Economic Defense(CADE).

The new BCPS or the CADE consists of threemain institutions The Administrative Tribunal,Superintendence General and Department ofEconomic Studies. Cumulatively they enforce the

BCPS.

The Administrative Tribunal: Administrative Tribunalis the main decision making body in charge of makingfinal and binding administrative decisions in bothmerger and conduct cases. The Tribunal consists ofsix commissioners and a President, who are appointed

by the President of the Republic and approved by thenational Senate for four years term.

The Superintendence General: This body is headed bya Superintendent General appointed by the presidentof the Republic and takes office after approval by theSenate for a term of two years, which can be renewedonce. The Superintendence General is in-charge ofinvestigating anticompetitive conducts andresponsible for granting clearance to less complextransactions and for challenging transactions deemedharmful to competition before the AdministrativeTribunal.

The Department of Economic Studies: Thisdepartment of CADE is entrusted with the economicanalysis of mergers and behavioural cases. It is


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CompetitionLawandPolicyDevelopment

headed by CADEs Chief Economist, who isresponsible for providing non-binding economicopinions and preparing economic studies for theAdministrative Tribunal.

Thus, in line with the international bestpractices, new competition architecture in Brazilhas moved from an intricate three-agency structureto a single autonomous body to reduce overlappingfunctions, accelerate merger review, and to fortifylegal certainty. It has substantially contributed tothe modernization of Brazils competition lawenforcement system.

Russia

The 2015 is a year of the Russian Federation

Chairmanship in BRICS. Moreover this year the

FAS Russia celebrates its 25 years anniversary

since its establishment. During last few years the

FAS Russia has made significant efforts to

improve competition legislation and enforcement

practices. FAS has improved its antimonopoly

legislation by following the world practices and

has also developed so-called fourth antimonopoly

package of amendments to the antimonopoly

legislation, which includes significant amendments

to the law On protection of competition and

other related laws. The fourth antimonopoly

package has been drafted in close cooperation

with respective representatives of business society

and competition layers and economists. This new

package of amendments to Russian antimonopoly

legislation has been prepared in accordance withOECD Recommendations and best international

experience in the field of competition policy and

enforcement.

The main focus of the fourth antimonopolypackage, is on the elimination of excessive powersand functions of the FAS, considerably reducingthe administrative constraints for business andsimultaneous reduction of state involvement in the

economy.

The draft law excludes from the purview ofantitrust legislation activity on cross-border markets,which is now under the control of the EurasianEconomic Commission. It excludes the possibility ofrecognizing the dominant position of an economic

entity if its market share in certain product does notexceed 35 percent, except in the case of collectivedominance, as well as other cases specially provided

by the law. The acceptance criteria on "vertical"agreements have been specified. Such agreements areacceptable if the seller or the buyer does not exceedthe proportion of 20 per cent on the commoditymarket, which is the subject of vertical agreements.

From the jurisdiction of the FAS have excludedactions of economic entities with dominant position

related to the infringement of the interests of citizensand organizations in cases not related to businessactivities. Concerted actions of economic entitiesunder joint venture agreements concluded with the

prior consent of the antimonopoly body are allowed.

The draft law clarifies the determination of "cartel"and prohibits the creation of state and municipalunitary enterprises without the prior consent of theFAS Russia. Cartel agreements recognizes not onlyeconomic entities involved in the sale of goods on one

and the same market, but also economic entitiesinvolved in their acquisition, that is, as competitors inthe consumption of such goods / cartel buyers.

The draft law defines the legal status of the Boardof the Members of the FAS Russia. The Board of theMembers of the FAS study provides explanations onthe enforcement of antitrust law. The Board of theMembers of the FAS Russia is empowered to reviewthe decisions on antimonopoly law infringement incase such decision violate the uniformity in the

interpretation and application by the antimonopolyauthorities of the antimonopoly law, or violate therights and legitimate interests of an indefinite numberof persons and other public interests.

Overall fourth antimonopoly package is aimed atsubstantially reducing the administrative interventionin economic activities of the market participants andreduce the administrative burden on business, whilestrengthening control over transactions within thegroup and compliance with the rules.


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Competition Law and Policy Development

In March 2015, amendments to the Art. 178 ofthe Criminal Code of the Russian Federation wereadopted, which states that the person who

participated in the cartel may be exempted fromcriminal liability, if it is the first of the cartel

participants voluntary reported the crime, actively

participated in its disclosure and compensated thecaused damage, and in case, their actions do notcontain elements of other crimes.

The amendments also made changes in theprocedure for determining the damage: forexample, large scale damage is damage more than10 million Rubles (earlier 1 million Rubles) andespecially large scale damage is more than 30million Rubles (earlier 3 million Rubles ).

The amendments are expected to lead toincreased cartels detection and exempting smalland medium-sized businesses from criminalliability for participation in a cartel.

India

The Competition Act, 2002 (the Act hereinafter)enacted by the Parliament of India established the newcompetition regime in India and repealed the earlierMonopolies and Restrictive Trade Practices Act, 1969,Indias earlier version of competition law. Under theAct, CCI has been established as a statutory authorityto enforce the provisions of the Act throughout India.

CCI comprises of chairperson and six members,who are appointed by the Government of India. Theday-to-day affairs of CCI are coordinated by a

secretariat headed by the Secretary. The investigationarm of CCI is called the office of Director Generalwhich investigates contravention of the provisions ofthe Act on direction of the Commission.

Organisational structure of CCI comprises ofvarious divisions: Advocacy, Anti-trust, CapacityBuilding, Combination, Economic, Investigation,Legal and Administration and coordination. Thedivisions are manned by qualified cadre ofprofessionals.

CCI established in March, 2009 has legal mandateto prevent practices having adverse effect oncompetition, to promote and sustain competition inmarkets, to protect the interests of consumers and toensure freedom of trade carried on by other

participants in markets in India. CCI has powers to

investigate and levy heavy penalties under the Act.Section 3 & 4 relating to anti-competitive agreementsand abuse of dominance were enforced from May2009 while Section 5 & 6 relating to mergers wasenforced from June 2011.

Section 64 of the Competition Act empowers theCommission to make regulations consistent with theAct and rules made thereunder to carry out the

purposes of the Act. Regulations so far framed by theCommission are; Competition Commission of India

(General) Regulations, 2009, CompetitionCommission of India (Determination of Cost ofProduction) Regulations, 2009, CompetitionCommission of India (Lesser Penalty) Regulations,2009, Competition Commission of India (Manner ofRecovery of Monetary Penalty) Regulations, 2011,Competition Commission of India (Meeting forTransaction of Business) Regulations, 2009,Competition Commission of India (Procedure ofEngagement of Experts and Professionals)Regulations, 2009, Competition Commission of India(Procedure in regard to the Transaction of BusinessRelating to Combinations) Regulations, 2009. Theseregulations have smoothened the process of enforcingcompetition law in India. Besides, these regulationsgive clarity to the stakeholders, and bringtransparency & fairness in procedural aspects ofadministering the competition law in India.

CCI has completed five years of competitionenforcement in 2014. In order to develop a robust

system of Merger review, CCI amended the Merger(Combinations) regulations thrice, i.e, in February,2012; in April, 2013 and in March, 2014. CCI has setfor itself a vision to promote and sustain an enablingcompetition culture through engagement andenforcement that would inspire businesses to be fair,competitive and innovative; enhance consumerwelfare; and support economic growth.


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China

Chinas Antimonopoly Law, or AML, came intoeffect in August, 2008. In order to ensure theeffective implementation of the AML, the StateCouncil established the Anti-MonopolyCommission, which is responsible for organising,coordinating and guiding anti-monopoly efforts inChina. The AML applies to all kinds of marketentities, namely, the operators. Any operator,whether state-owned or private or domestic-founded or foreign-invested must abide by theAML, anyone who violates the regulation bearslegal liability. In terms of the application scope ofregion, the AML applies not only to those

behaviours that take place within Chinese territory,but also to those overseas behaviours that will leadto exclusion and restriction of competition in thedomestic market.

There are three main government players, whoplay roles in competition enforcement in China.These are: the Ministry of Commerce (MOFCOM),the State Administration of Industry andCommerce (SAIC) and the National Developmentand Reform Commission (NDRC). Each of these

government bodies house an AML enforcementdepartment.

SAIC:SAIC is an administration level organisationwith several roles, including the companiesregistry, trademark office, and regulator of marketorder. The SAIC administers the Anti-unfairCompetition Law (AUCL) and the ConsumerProtection Law, both of which came into existencein 1993. The SAIC is responsible for supervisingthe monopoly agreement, abuse of market

dominant position and the exclusive and restrictivecompetitive behaviour by abusing administrative

powers (price monopoly behaviour is notincluded). China's State Administration forIndustry and Commerce (SAIC) has announcedthat it has formally begun the task of revising theAnti-Unfair Competition Law (AUCL). Revision isintended in considerable part to harmonize theAUCL with the AML.

MOFCOM: MOFCOM has responsibility fordomestic and international commerce including

approval of foreign investment in China. Togetherwith SAIC, MOFCOM was responsible for handlingantimonopoly filings under the 2006 provisions on theAcquisition of Domestic Enterprises by ForeignInvestors. Now MOFCOM had established a Bureauof Anti-monopoly Investigation. MOFCOM handles

merger reviews and assists Chinese companies withcases in other jurisdictions and international co-operation. The MOFCOM is also responsible for theinvestigation of operators concentration. The AMLdoes not oppose operators becoming bigger andstronger legally, but it stipulates that the operatorconcentrations must be reported to the state anti-monopoly committee in advance. For those, who donot report are not allowed to carry out theconcentration.

NDRC: NDRC has evolved from the State PlanningCommission and, as the name suggests, has primaryresponsibility for state economic planning, includingindustrial policy. NDRC administers the pricing law,which includes provisions on price fixing, pricediscrimination, false or misleading pricing, etc.

NDRCs Department of Price Supervision isresponsible for dealing with monopoly agreements inabuse of dominance matters, which involve pricing.

NDRC also deals with anti-cartel investigations.

South Africa

The origin of competition law in South Africa maybe traced to the Regulation of MonopolisticConditions Act, 1955. Later on, a new law, theMaintenance and Promotion of Competition Act, 1979was enacted, which was administered by theCompetition Board, Subsequently, a modern law, theCompetition Act, 1998 came into effect in 1999. Thislaw fundamentally reformed the country's competitionlegislation substantially strengthening the powers ofthe competition authorities as per best international

practices. The power of decision was taken away fromthe Minister and given to an independent CompetitionTribunal. The Competition Act was amended in 2000,in part to clarify the relationship between generalcompetition law and other regulatory bodies. TheCompetition Act sets up three institutions, to bedirectly involved in its application:

Competition Commission: The CompetitionCommission of South Africa is the investigative and


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executive body with responsibility to investigatemergers and anti-competitive conduct. It has the

power to disallow small and intermediate mergers,and makes recommendations on larger mergers tothe Competition Tribunal.

Competition Tribunal: The Competition Tribunal isthe adjudicative body that rules on cases referred toit by the Competition Commission. The Tribunalis the first-instance decision-maker about largermergers and complaints about restrictive practicesand abuse of dominance. It also adjudicates appealsfrom Commission decisions about smaller mergersand exemptions.

Competition Appeal Court: Appeals from decisionsof the Competition Tribunal, and reviews of

decisions of the Tribunal and the Commission, areheard by the Competition Appeal Court, which hasthe status of a High Court and has power of appealand review.

The Department of Economic Developmentguides the work of the Competition Commissionand the Competition Tribunal. The CompetitionLaw Amendment Act, 2009 introduced measuressuch as concurrent jurisdiction between thecompetition authorities and other sector specificregulators, market inquiries, personal (criminal)liability for cartel conduct, complex monopolies;and the Competition Commissions corporateleniency policy. Although the Act was signed intolaw by the President in 2009, only the marketinquiries chapter of the Act has been madeeffective from 1 April 2013 (without any referenceto the balance of the provisions contained in theAct).

In line with international best practice, theCommission directs its resources and capacity

through the prioritisation of the sectors in which it

undertakes investigations and advocacy.

Prioritisation ensures meaningful and maximum

impact and mobilises resources effectively and

efficiently. For 2014, the Commissions priority

sectors were:

1. Food and agro-processing

2. Intermediate industrial products (such assteel, plastics and polymers)3. Construction and infrastructure.

Law is live and changing

Competition law in BRICS countries is stillevolving in its various contours and growingsteadily with international peers. Although

BRICS competition authorities may berecognised as relatively young competitionauthorities, their investigations andenforcement actions in the last couple of yearshave carved a niche in the internationalcompetition map.


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Enforcement Actions

All the BRICS competition authorities havetough legislative mandate to deal with cartels andabuse of dominance and have wide ranging powersto penalise them. All of them are very active intheir enforcement actions. Some of key cases

handled by them in 2014 are briefly highlightedbelow:

Brazil

1. CADE condemns bid-rigging cartel for refuse

collection in Rio Grande do Sul

In February 2014, the CADE condemned threecompanies and six employees connected to themfor big-rigging cartel intended to hire garbagecollection services in the cities of Santa Rosa,Bozano, So Paulo das Misses, and EstnciaVelha, in the state of Rio Grande do Sul (RS) andfined total of BRL 1.2 million. Four individualsinvolved in the process were acquitted for lack ofevidence.

The companies viz., Coletare Servios Ltda.,Simpex Servios de Coleta Transporte e DestinoFinal de Resduos Ltda. and Wambass Transports

Ltda. received letters of invitation from city hallsto compete in bidding processes for urban orhospital refuse collection. However, they

previously agreed as to how they would act or whowould win the bid. In the investigation,anticompetitive conducts such as price-fixing

between the companies that disputed the biddingprocess to prevent final prices falling below adetermined level were detected. The ReportingCommissioner highlighted that the severecompetition violation caused losses to municipal

treasuries. He reminded that, according to theOrganization for Economic Cooperation and

Development (OECD), cartels generate waste ofresources, inefficiency and cause harm to consumers.

The evidence that led to the condemnation of thecartel was obtained through phone call interceptions,in addition to search and seizures at the companysheadquarters, performed by the Rio Grande do Sul

State Prosecutors Office (MP/RS) in 2008. TheAdministrative proceeding (08012.011853/2008-13)was opened in 2009 after a complaint made by theMP/RS. CADEs General Superintendence hadrendered an opinion asking for the condemnation ofthe three companies and the six individuals and sentthe case to be judged by CADEs Tribunal.

All the fines applied by CADE are destined to theMinistry of Justices Federal Fund for the Defense ofCollective Rights (FDD for its acronym inPortuguese) that transfers the raised resources to

projects that aim at the recovery of collective rightsand goods, such as the environment, the historical andcultural heritage, the consumer protection, amongothers.

2. Cement cartel in Brazil penalised BLR 3.1

billion

In May 2014, the CADE condemned unanimouslythe so-called cement cartel. CADEs Tribunal finedsix companies, six individuals, and three associations

around BLR 3.1 billion. The Council also imposed thefirst ever structural remedy by way of divestment ofplants, and prohibition of carrying operations in thecement and concrete sector until 2019. It wasestimated that the infringement caused damages of atleast BRL 28 million to the society over twenty years.

The cartel acted in the Brazilian cement andconcrete market by fixing prices and sales quantity,and by sharing regionally the market and theallocation of customers amongst the cartel members.The companies, managers and class associations

condemned also acted to prevent the entry of newcompetitors in these segments. The body of evidenceincluded emails, notes and several documents seizedduring the dawn raid. Documents included notes inwhich the colluded members distributed customersand sales quotas among themselves and a cartelscommon understanding document, describing rightsand obligations of the members. In this document,common objectives are also mentioned andexpressions like prices will be agreed among the

parties throughout time, aiming at harmonizing themaximization of results and avoid the entrance of new

players, as well as efforts to control the total output


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Enforcement Actions

of the other players of the region, and previousagreement of these parts and furtheracknowledgement of other parts.

In the cement market, the collusion controlledthe inputs sources needed for manufacturing the

product. Thus, it prevented other competitors fromaccessing the raw material and compete in themarket with the cartel members.

Due to the integration between cement andconcrete plants, which was used as basis for thecartel functioning and market closure, CADEimposed the divestment of cement and concrete

plants aiming at reducing entry barriers andencourage rivalry in the sectors. The cementcompanies must divest completely any

shareholding interest, minority or not, and eventualcorporate crossings made by the cartels cementand concrete companies.

CADE also imposed the divestment of 20% ofthe concrete production capacity in the regions inwhich the condemned companies own more thanone concrete plant. These assets can be soldconjointly or separately to any buyer that did nothave any participation in the collusion. The 20%

proportion was defined according to a technical

analysis and it is believed to be a minimumparticipation percentage to be owned by acompetitor to enable effective rivalry in onemarket. All the divested assets and shareholdinginterests are confidential in order not to harm theirsocial and economic value. Furthermore, thecondemned companies are prevented from carryingoperations between themselves in projects in thecement sectors and to acquire any asset in theconcrete market for five years. The assetsdivestment obligation, as set forth by law, is a new

remedy in cartel condemnations by CADE. All theCommissioners that voted in the case agreed withthe need to apply a structural measure.

3. Cartel in the market of medical and hospital

services

The General Superintendence of theAdministrative Council for Economic Defense CADE recommended in an opinion published inJune 2014 condemning the Unio Nacional dasInstituies de Autogesto em Sade UNIDAS

(National Union for Self-Management Institutions

in Healthcare) and three hospitals for infringements inthe market of medical and hospital services in theFederal District (Administrative Proceeding no.08012.006969/2000-75).

According to the investigation, in 2000 the

hospitals Santa Luzia, Santa Lcia and Anchietacollectively negotiated with health insurers higher

prices for the provision of medical and hospitalservices in virtually identical levels. After healthcareinsurance companies refused to accept the claimedrise in prices, the competing hospitals communicated,in parallel, the termination of contracts or suspensionof services provided to healthcare insurances

beneficiaries.

The conjoined establishment of prices and other

conditions by the three hospitals, which wereconsidered to have higher quality in the FederalDistrict at the time, characterizes the practice ofcartel. According to the opinion, the conduct wouldhave caused the increase of prices of healthcareinsurances above the competitive level, harming themarket and the final consumers.

The Administrative Proceeding also ascertainedthat Unidas negotiated uniformly the acquisition ofmedical and hospital services on behalf of several

competing healthcare insurances linked to it, leavingno room for negotiations among the healthcareinsurances and services providers.

For the Superintendence, the practice, along withthe relevant participation in the insurances market ofthe insurance companies represented by Unidas in theFederal District (approximately 40% of the total

beneficiaries in the region) endowed the self-management insurances, in a coordinated way, higher

purchasing power in the negotiation of prices for theservices providers.

4. CADE condemns bid rigging cartel in the

market of metal detector security doors

In December 2014, the Administrative Council forEconomic Defense (CADE) condemned thecompanies Beringhs Industry and Commerce Ltd.,IECO Development and Machinery and ApparatusLtd., Mineoro Electronics Industry Ltd. MPCI andMetal Protector Ltda for cartel formation in

procurement processes for the supply of metal

detector security doors. The Tribunal also condemnedtwo directors and eight sales representatives of these


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Enforcement Actions

companies for participating in the anticompetitiveconducts. The administrative proceeding was filedin regards to other three companies due to the lackof evidence. The applied fines totalize BRL 12.7million.

The investigation began after an anonymouscomplaint sent to CADE by e-mail. In December2013, the General Superintendence issued anopinion suggesting the condemnation of the fourcompanies and the ten employees. According to theReporting Commissioner, Gilvandro Arajo, thecompanies and individuals involved in thecollusion divided market and clients, fixed prices,and presented coverage proposals in public and

private bids. Thus, it was possible for them torotate as winners of the bidding processes and itshowed an apparent competition among them.These strategies were executed, at least, since 2002in procurements held in many states of the country.

E-mail transcriptions and electronicconversations, and other documents obtainedthrough judicially authorized dawn raids at theheadquarters of the investigated companies are partof the body of evidence. The dialogues clearlyshow that the cartel members committedthemselves to present higher proposals to guaranteeother participant to win the bid. Furthermore, byanalysing the minutes of the bidding processes, itwas verified that the employees, in fact, had theexact behaviour, previously agreed among them,throughout the whole process.

Minutes of a bidding process of Banco doBrazil, for example, showed that the dialogue oftwo employees took place during the auction forthe acquisition of security doors, and that the bidswere made at the same time they were agreed inthe electronic conversation. It was also verified thatthe companies had a rotation system, combiningamong themselves which would be the winner foreach procurement. The strategy included scoretables, which organized the cartel participantsranking, in order to determine the order that eachcompany would win future bids. The marketdivision was also implemented by tables thatregistered how many products would becommercialized by each member of the collusion.

For the anticompetitive practices, the companieswere condemned to the payment of fines of BRL

11.7 million in total. The individuals involved in thecase must pay fines that totalize BRL 1 million.CADEs Tribunal also decided to prohibit the fourcondemned companies to take part in public

procurements held by the federal, state, municipal

administration and by the Federal District for a five-year period. Any other company in which one of thecondemned individuals own equity interest is also

prohibited to participate in the public biddingprocesses.

The Reporting Commissioner determined yet thatthe vote must be sent to the Office of ComptrollerGeneral to inform about the prohibition, and to Bancodo Brazil to adopt the measures it deems necessary.

Russia1. Pollock Cartel

In August 2014, Appeal Court upheld the decisionof FAS in the case of Pollock cartel. The FederalArbitration Court of Moscow upheld the decision ofthe Moscow Arbitration Court and the ruling of the

Ninth Arbitration Court of Appeal on the recognitionof the legitimate and reasonable decision of the FAS

Russia imposed for violation of antimonopolylegislation in the market of mining and wholesaledistribution of Pollock and its products. In December2012, FAS Russia found 26 fishing companiesoperating in the Far East guilty for the cartel collusionto maintain prices and limit mining of Pollock duringthe spawning period, and non-commercialorganization "Pollock Association" in prohibitedcoordination of economic activities. All participantsof the cartel at that time were members of thisassociation.

The decision of the Antimonopoly Service againstone of the largest Russian cartels was supported bythree courts. FAS Russia managed to stop theactivities of the cartel that existed in the domesticmarket for over 4 years and create conditions forincreasing the volume of supplies of Pollock in theRussian Federation.

According to the results of the proceedings, thelegal persons were fined over 120 million Rubles. The

case was transferred to the law enforcement agenciesto initiate a criminal case against the guilty officials.


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Enforcement Actions

2. Pangasius cartel

In May 2013, the Federal Antimonopoly Service(FAS Russia) recognized non-profit organization"Association of industrial and commercial

enterprises of Fish Market" and the ManagementCommittee on pangasius export to the Russianmarket (Vietnam) guilty in violation of theantimonopoly legislation. The infringementexpressed in signing and participation in theanticompetitive agreement, which led or could leadto a competition restriction by creating access

barriers to other economic entities at the market offrozen fillets of pangasius (paragraph 3 of Part 4 ofArticle 11 of the Law on Protection ofCompetition).

In 2014, this case was allocated to a separateproceeding, when the FAS Russia issued aDecision on cartel case in the market of frozen

pangasius fillets supplied from Vietnam. The FASRussia on consideration of the case found thatfrozen pangasius fillets were supplied to theRussian Federation by the companies-participantsof the Association.

The FAS Russia imposed administrative fines

(over 30 million RUB in total) upon several cartelparticipants on the market of supplying pangasiusfillet produced in Vietnam to Russia.

The materials of the antimonopoly case areforwarded to the Ministry of Interior to open acriminal case against companys officials.

3. Rosta CJSC and Pharmstandart OJSC

penalised for drug cartel

In March 2014, the 9th Arbitration AppealCourt pronounced legitimacy of holdingPharmstandart OJSC administratively liable andfining the company over 201 million RUB. In2009, the Ministry of Health Care and SocialDevelopment organized a tender for centralized

procurement of Pulmozyme for the state needs.The medicine is used for treatment of some chronic

pulmonary diseases (congenital lung defects,chronic pneumonias, immunodeficiency with lungdamage, etc.)

In 2012, the FAS Commission established thatRosta CJSC and Pharmstandart OJSC had

concluded and implemented an agreement thatresulted in maintaining prices of the tender at themaximum possible level. It was found that thecompanies had violated Clause 2 Part 1 Article 11 ofthe Federal Law On Protection of Competition.Courts supported this decision. The total finesimposed by the Federal Antimonopoly Service uponRosta CJSC and Pharmstandart OJSC for

participating in the cartel reached 402 million RUB.Earlier the 9th Arbitration Appeal Court also

pronounced legitimacy of the fine imposed uponanother cartel participant Rosta CJSC.

4. Rosgosstrakh Ltd. penalised for unfair

business conduct

In April 2014, the Commission of the Office of theFederal Antimonopoly Service in the Republic ofTatarstan (Tatarstan OFAS Russia) found thatRosgosstrakh Ltd. in the person of its branch in theRepublic of Tatarstan violated Clause 3 Part 1 Article10 of the Federal Law On Protection ofCompetition.

Since the end of 2013, Tatarstan OFAS Russiastarted receiving complaints from physical personsthat when they wished to buy a mandatory third party

liability insurance agreement (OSAGO) fromRosgosstrakh Ltd., they were forced to purchaseindividual accident insurance policy (Fortuna-Avto). If a customer did not wish to purchase anadditional policy, this customer was unable toconclude an OSAGO agreement.

To resolve the situation promptly, Tatarstan OFASRussia issued a warning to Rosgosstrakh Ltd. tostop imposing voluntary accident and illnessinsurance policies (including, Fortuna-Avto

insurance policies) when customers buy a mandatorythird party liability insurance; to stop refusingconcluding voluntary accident and illness insuranceagreements if a consumer disagrees to buy voluntaryaccident and illness insurance policies (includingFortuna-Avto); and to provide possibility for theclients of Rosgosstrakh Ltd. to purchase mandatorythird party liability insurance policies withoutimposing other agreements irrelevant to the subjectmatter of an agreement or disadvantageous for theclients.


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Enforcement Actions

Nevertheless, Tatarstan OFAS Russia continuedreceiving complaints from citizens that they wereforced to buy Fortuna-Avto policy to enter intoan OSAGO agreement. It constituted the groundsfor initiating a case against the insurance companyupon signs of violating the antimonopoly law. Atthe time of making a decision on the case by theCommission of Tatarstan OFAS Russia, there weremore than a hundred complaints.

Having investigated the case, the Commissionof Tatarstan OFAS Russia issued a determinationto Rosgosstrakh Ltd. Members of staff or agentsof Rosgosstrakh Ltd. must not force physical

persons vehicle owners to buy additionalinsurance services, in which those physical persons

are not interested, and cannot refuse to concludeOSAGO agreements if the insured do notsimultaneously buy policies for other insuranceservices.

The Commission of Tatarstan OFAS Russiaissued a determination to transfer the income,obtained as a result of violating the antimonopolylaw by Rosgosstrakh Ltd., branch in theRepublic of Tatarstan to the federal budget.

5. Omskoblgaz OJSC penalised

In April 2014, the Federal Arbitration Court ofWest-Siberian District upheld the determination ofthe Office of the Federal Antimonopoly Service inthe Omsk region (Omsk OFAS Russia) to fineOmskoblgaz OJSC over 1.9 million RUB. Thefine was imposed when in February 2013 theAntimonopoly Service found that OmskoblgazOJSC abused market dominance by violating Part1 Article 10 of the Federal Law On Protection of

Competition, since the company unreasonablycharged a fee for providing technical possibility ofconnecting to the gas-supply system with theowners of residential houses, residing in Rakitinkavillage, the Omsk district, the Omsk region.Omskoblgaz OJSC disagreed with the acts

passed by the antimonopoly body and filed alawsuit. The Courts of three instances upheld thedetermination of Omsk OFAS Russia anddismissed the claim.

6. Ashan Ltd. penalised for unfair conduct

In May 2014, Moscow Arbitration Courtconfirmed legitimacy of the decision anddetermination of the Federal Antimonopoly Service(FAS Russia) with regard to Ashan Ltd. In 2013,

the Antimonopoly Service found that Ashan Ltd.violated the Law On Trade. The company createddiscriminatory conditions for suppliers of milk andmilk products (a violation of Clause 1 Part 1 Article13 of the Federal Law On the FundamentalPrinciples of State Regulation of Trading Activities inthe Russian Federation).

The FAS Commission established that AshanLtd. charged suppliers of milk and milk productsdifferently for the same volume of services for

promoting and increasing sales (advertising goods bydemonstrating goods supplies in Ashan stores). TheAntimonopoly Service issued a determination to thecompany to eliminate violations of the antimonopolylaw. Based on its decision, FAS initiated cases againstAshan Ltd. on administrative violations. Thecompany disagreed with the decision anddetermination of the Antimonopoly Service and fileda lawsuit; however, Moscow Arbitration Courtdismissed the claim.

7. FAS fined crab cartel participants 213 million

RUB

In December 2014, the Federal AntimonopolyService (FAS Russia) held crab cartel participantsadministratively liable. FAS imposed a turnover fineupon Aqua resource-DV Ltd. - 106.6 million RUBand Taifun Ltd. 106.6 million RUB.

In February 2014, FAS found that these companiesviolated Clauses 2 and 3 Part 1 Article 11, Clause 3

Part 4 Article 11 and Article 16 of the Federal LawOn Competition Protection by entering intoagreements at tenders for the right to concludecontracts for the quotas on catching (harvesting)aquatic biological resources horsehair crab, bluecrab, king crab in the Primorie sub-zone (to the southof the Golden cape).

Antimonopoly control on allocating quotas in thisfield becomes especially significant since catchingaquatic biological resources is of strategic importance

for Russia. In the near future FAS will complete theprocedure of holding all participants of the anti-competitive agreement administratively liable,


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pointed out the Head of FAS Anti-CartelDepartment, Andrey Tenischev.

8. FAS imposed a turnover fine upon Novo

Nordisk for refusal to supply Insulin

In December 2014, the Federal AntimonopolyService (FAS Russia) found that Novo NordiskLtd., a major international pharmaceuticalcompany, committed an administrative offence andimposed a fine for over 30 million RUB. FASRussia held that Novo Nordisk Ltd. violated thelaw by refusing to conclude a contract withouteconomic or technological justification withSevero-Zapad (Trading and ProductionEnterprise) for supplying insulin -NovRapidPenfill, NovMix 30 Penfill,

LevemirFlexPen and terminating supplies ofthose medicines, which led to competitionrestriction. The antimonopoly case was initiateddue to a refusal of Novo Nordisk Ltd. to executethe FAS warning, legitimacy of which had been

pronounced by Arbitration Court.

Novo Nordisk could change its marketconduct and prevent an antimonopoly violation.Instead, the company incurred material and

reputational costs associated with theantimonopoly case, judicial proceedings and, as aresult, it will be forced to pay the fine for violatingthe antimonopoly law, pointed out Deputy Headof FAS, Andrey Kashevarov. It is not the first timewhen Novo Nordisk Ltd. has violated theantimonopoly law. For instance, in 2010 Novo

Nordisk Ltd. was fined 53.5 million RUB foreconomically and technologically unjustifiedavoidance of contracts for supplying medicines andcreating discriminatory conditions for potential

counteragents.

India

1. CCI fined Ferozepur Drug Association for

Cartelisation

In February, 2014, CCI slapped a penalty ofINR 5.542 million on Ferozepur Chemists andDruggists Association in Case No. 60/2012- M/sArora Medical Hall, Ferozepur v. Chemists &

Druggists Association, Ferozepur (CDAF). Theinformation filed with CCI informed that the CDAFmade a mandatory rule in 2010 that any chemist/druggist who wished to take distributorship formedicines of a company in Ferozepur city to get a NoObjection Certificate (NOC) and Letter of Credit(LOC) from CDAF by making a payment of INR2100/- per company. It was alleged that wheninformant objected to the said rule, it was expelledfrom the primary membership of CDAF and passed aresolution to boycott the informant directing itsmembers to stop purchasing goods from the informantand directed all the wholesalers to stop dealings withthe retailers who continued to purchase goods fromthe informant and thereby, alleged to have violated the

provisions of sections 3 and 4 of the Competition Act.

CCI investigated the matter and found that theabove conduct limited/controlled the supply/provisionof goods/services in contravention of Section 3(3)(b)read with section 3(1) of the Competition Act, 2002.

Considering the totality of facts and circumstancesof the case including the nature of contravention, theCommission imposed a penalty on the opposite

parties at the rate of 10 per cent of their respectiveaverage turnover. The CCI also directed CDAF tocease and desist from indulging in such practices that

restrict supplies of medicines in the market.

2. CCI penalised Dr. L. H. Hiranandani Hospital,

Mumbai for anti-competitive conduct

In February 2014, CCI found Dr. L.H. HiranandaniHospital, Mumbai in contravention of section 3 of theCompetition Act, 2002 in case no. 39 of 2012. Theinformant had approached CCI alleging anti-competitive conduct by the opposite party Dr. L.H.Hiranandani Hospital is not allowing any other stem

cell bank to enter its premises to collect the stem cellof a new born except M/s Cryobank with whom it hadan exclusive agreement.

The Commission concluded that the exclusiveagreement between the opposite party and M/sCryobank did not accrue any benefit to the consumer;rather it limited consumer choice. Since the stem cell

banking service is at a nascent stage in India with veryfew players, the Commission took the view that thiskind of exclusive contract between a hospital and astem cell bank had the tendency of distorting marketmechanism as each player, instead of competing with


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other players for efficiency and competitive price,would endeavour to pay commission to differenthospital and mop up clients. The Commissionfurther held that because of the total dependence ofthe expecting mothers on the maternity service

providers to get access to stem cell/cord blood

from newly born in the hospital, the adverse effecton competition is much more telling in this

particular market. The Commission also noted thatthe consumer may suffer in the long run when thestem cell banker tied up with a hospital and

provided downgraded services due to inefficiencyor otherwise vis--vis other competitors.

Based on the above, the exclusive agreementbetween Dr. L.H. Hiranandani Hospital and M/sCryobank was held to be anticompetitive and in

contravention of the provisions of section 3(1) ofthe Act as it caused appreciable adverse effect oncompetition in the market of stem cell banking.Accordingly, CCI passed order under section 27 ofthe Act declaring the agreement of OP hospitalwith Cryobank for the years 2011-12 and 2012-13as null and void. The OP hospital has been directednot to enter into a similar agreement with any stemcell bank in future. CCI also imposed a penalty ofapprox Rs. 38 million calculated at the rate of 4 percent of the average turnover of OP hospital.

3. CCI imposed INR 623 Million on cartel in

Indian Railways tender

CCI investigated on suo moto basis an allegedcartelisation in the matter of supply of spares toDiesel Loco Modernization Works, IndianRailways, Patiala, Punjab. Based on theinformation given by Diesel Loco ModernisationWorks, a unit of Indian Railways at Patiala(Punjab), CCI found three engineering companies,Stone India, Faiveley Transport Rail Technologiesand Escorts guilty of cartelisation.

In its investigation, CCI found that thecompanies acted in concert in rigging the bid byquoting identical bids on the same date. Further,the collusive action was also found to bestrengthened from the past conduct of the partieswhere they were found to have quoted more or lesssimilar price for the tenders of different zonalRailways. The period for which the companies

were investigated was between September 2009and September 2011. Consequently, CCI imposed

a penalty of INR 623 million on the three engineeringcompanies in February 2014. Penalty of INR 19.1million was imposed on Stone India, INR 57 millionon Faiveley Transport Rail Technologies India andINR 547 million on Escorts Ltd. The penalty has beenworked out on the basis of 2 per cent of average

turnover of these companies for the three financialyears from 2009-10 to 2011-12. The companies havealso been directed to cease and desist fromindulging in such anti-competitive conduct in future.

4. Coal India found guilty for anticompetitive

conduct

In April 2014, in Case Nos. 05, 07, 37 & 44 of2013 - M/s Madhya Pradesh Power GeneratingCompany Limited v. M/s South Eastern Coalfields

Ltd. (SECL) and M/s Coal India Ltd. (CIL), CCIfound similar issues and passed a common orderdisposing the cases. In these cases, the informantalleged that M/s South Eastern Coalfields Ltd.(SECL) and M/s Coal India Ltd. (CIL) are involved incontravention of the provisions of sections 4 of theAct, which relates to the abuse of dominant position.

After investigation, the Commission found thatCIL through its subsidiaries operates independently ofmarket forces and enjoys undisputed dominance in the

relevant markets of supply of non-coking coal to thethermal power producers and sponge ironmanufacturers in India. The Commission also held theopposite parties to be in contravention of the

provisions of section 4(2)(a)(i) of the Act forimposing unfair/ discriminatory conditions andindulging in unfair/ discriminatory conduct in thematter of supply of non-coking coal.

In its order, CCI directed opposite parties to ceaseand desist from indulging in the conduct which has

been found to be in contravention of the provisions ofthe Act, and directed modifications in the fuel supplyagreements within a period of 60 days from the dateof receipt of this order. However, the Commission didnot impose any penalty upon the opposite parties as a

penalty of approx INR. 17.7 billion was alreadyimposed upon them in the previous batch ofinformation with respect to the substantially similarconduct.


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5. CCI imposed Penalty of Rs 25.446 Billion on

14 Car Companies

In August 2014, in Case No. 03 of 2011 -Shamsher Kataria v. Honda Siel & Others, theCommission found 14 Car Companies in

contravention of the provisions of the CompetitionAct, 2002 and imposed penalty @ 2% of theaverage turnover of the car companies amountingto INR 25.446 Billion in aggregate.

Ensuing detailed investigation by the DirectorGeneral (DG), the Commission found that theconduct of the 14 car companies was in violationof the provisions of section 3(4) of the Act withrespect to their agreements with local OriginalEquipment Suppliers (OESs) and agreements with

authorized dealers whereby such companiesimposed absolute restrictive covenants andcompletely foreclosed the aftermarket for supply ofspare parts and other diagnostic tools. Further, thecar companies, who were found to be dominant inthe after markets for their respective brands,abused their dominant position under section 4 ofthe Act and affected around 2 crore car consumers.Also, the car companies were found to beindulging in practices resulting in denial of marketaccess to independent repairers as the latter were

not provided access to branded spare parts anddiagnostic tools which hampered their ability to

provide services in the aftermarket for repair andmaintenance of cars. Having a monopolisticcontrol over the spare parts and diagnostic tools oftheir respective brands, the car companies chargedarbitrary and high prices for their spare parts. Thecar companies were also found to be using theirdominant position in the market for spare parts anddiagnostic tools to protect their market for repairservices, thereby distorting fair competition.

Besides imposing aggregate penalty of approxRs. 25000 million, the Commission directed the carcompanies to cease and desist from indulging inconduct which has been found to be incontravention of the provisions of the Act. The carcompanies were also directed to adopt appropriate

policies which shall allow them to put in place aneffective system to make the spare parts anddiagnostic tools easily available in the open marketto customers and independent repairers. They are

also directed not to put any restrictions orimpediments on the operation of independentrepairers/garages.

China

1. NDRC penalised spectacle makers

In May 2014, NDRC fined five spectacle makers

over RMB 19 million for monopolizing the retailprices. The investigated companies included theShanghai branch of French company Essilor, theBeijing branch of Japan's Nikon Corp and theGuangzhou branch of German optical company Zeiss.The Beijing branch of US-based contact lenses

producers Bausch & Lomb and the Shanghai branchof Johnson & Johnson.

Essilor, Hoya, Bausch & Lomb, Nikon and Zeisshave already cut the prices of some of their products

by 10 percent to 30 percent after the NDRC probe. Afine of 2 percent of previous years turnover waslevied on Essilor and Nikon reaching respectivelyRMB 8.8 million and RMB 1.68 million. The fine wasreduced to 1 percent of previous years turnover forZeiss, Bausch & Lomb, and Johnson & Johnson,

based on their active cooperation and proactivecorrective measures. Hoya Corp. and ShanghaiWeicon Optics Co. were exempt from punishment

because they had voluntarily reported monopolistic

practices and rectified the issue.

2. NDRC penalised automotive component

suppliers cartels

In August, 2014, the NDRC announced that it hadimposed fines of RMB1.24 billion on ten Japaneseautomotive components suppliers for price fixing incontravention of the AML, while two other companiesreceived immunity.

The NDRCs decisions concern two cartels, eachspanning over a decade. In the first cartel, eightsuppliers (Hitachi Automotive Systems, Denso,Yazaki, Furukawa Electric, Sumitomo Electric, Aisan,Mitsubishi Electric and Mitsuba) were found to havefixed prices of up to 13 types of components suppliedto car manufacturers including Honda, Toyota,

Nissan, Suzuki and Ford. The components includestarters, alternators and wire harnesses. In the secondcartel, four suppliers (Nachi-Fujikoshi, NSK, NTNand JTEKT) were found to have jointly raised prices

on car bearings.


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Considering that both cartels lasted for morethan 10 years and the participants were engaged invarious pricing agreements, the NDRC imposedthe maximum base amount of fine under the AML,10 per cent of the turnover derived from sales ofthe relevant products in China in the year 2013.

On the other hand, under its leniency program, theNDRC granted immunity to the first voluntaryreporter and various degrees of fine reduction tothe remaining cartel participants. In the first cartel,Hitachi received immunity as the first voluntaryreporter of the relevant facts about the conclusionof the price-fixing agreements and the firstcompany to provide important evidence. Denso,as the second such company, received a finereduction of 60 per cent, resulting in a fine of 4 percent of the turnover generated from the sales of the

relevant products in China in 2013. Threecompanies received reductions of 40 per cent each,and the other three companies each receivedreductions of 20 per cent, because they voluntarilyreported the conclusion of the agreements and

provided important evidence. Overall, the finesamounted to RMB832 million ($135 million).

In the second cartel, Nachi-Fujikoshi receivedimmunity as the first voluntary reporter and thefirst company to provide important evidence. NSK,

as the second such company, received a finereduction of 60 per cent, resulting in a fine of 4 percent of the 2013 turnover generated from the salesof the relevant products in China. NTN and JTEKT

benefited from fine reductions (40 and 20 per cent,respectively). In addition to voluntarily reportingthe conclusion of the agreements and providingimportant evidence, the NDRC noted that NTNwithdrew from the cartel at an early stage. Overall,the fines imposed on these cartel participantsamounted to RMB403 million ($65 million).

3. NDRC penalised Insurance cartel

In September, 2014, the NDRC announced thatit had fined 23 insurance companies in theProvince of Zhejiang for participation in acartel. The cartel was organised by the insurerslocal association, which agreed on discount andcommission levels in relation to car insurance

policies. Nine companies (including American and

Japanese companies) that did not participate in thecartel were accordingly not sanctioned.

In its decision, the NDRC found that the insurershad violated the AML and imposed fines of close toRMB110 million ($17 million), representing one percent of the insurers annual sales of the relevant

products. The association, acting as the ringleader,was fined RMB500,000 ($80,000), which was the

maximum amount allowed under the AML.

The insurance companies anticompetitivepractices started in 2009, with different commissionlevels being agreed depending on each companysmarket share. Regarding the calculation of fines, the

NDRC referred to the total sales of the relevantproducts (i.e., commercial car insurance policies) soldby each companys local branch in Zhejiang during2012, the financial year preceding the adoption of thedecision.

The fines imposed on the infringing insurancecompanies were set at the minimum amount

prescribed by Article 46 of the AML, i.e., one per centof the relevant turnover in 2012.

The NDRC granted immunity to the first companythat acknowledged its involvement after the NDRC

began its investigation (the Peoples InsuranceCompany of China). The NDRCs decision specifiedthat the Peoples Insurance Company of China took

the initiative to admit the price-fixing activities andwas the first company to provide important evidence,even though it did so after the NDRC had alreadyinitiated its investigation. Fine reductions of 90 and45 per cent were granted to the second and thirdvoluntary reporters (China Life and Ping An),respectively. None of the remaining insurers receivedfine reductions, apparently because they did notvoluntarily report the conclusion of the illegalagreements or did not provide evidence the NDRCregarded as important.

South Africa

1. Cement cartel impact assessment shows savings

for consumers

In a bid to understand the effect of its work, the

Commission undertook a study of the impact ofuncovering a long running cartel of South Africascement producers. Using estimates of overcharging


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by the cartel, the study found that following itsbreak-up, consumers saved between R4.5 billionand R5.8 billion for the period 2010 to 2013. Therehas also been new dynamism in the market, withfirms entering territories they did not trade in

previously.

In June 2008, the Commission initiated aninvestigation into the cement industry afterconducting a scoping study in the market forconstruction and infrastructure inputs.

Subsequently, Pretoria Portland CementCompany Limited (PPC), the largest cement

producer in South Africa, applied for leniencyaround August 2009 and agreed to fully cooperatewith the Commission by providing information on

the cement cartel. Importantly, PPC also agreed tostop sharing detailed sales information through theindustry association (Cement and ConcreteInstitute or C&CI), an important instrument thathad been used by the cartel to sustain itsoperations.

The cartel involved price fixing and marketallocation through the allocation of market sharesand territories by the main cement producers (PPC,Lafarge, AfriSam and NPC-Cimpor). The cartelmembers had devised ways of continuing tocoordinate their behaviour after the governmentdisbanded an officially sanctioned cartel in 1996.Before 1996, the cartel had been exempt fromcompetition legislation.

In anticipation of the disbandment of the cartelin 1996, cement producers agreed in 1995 that each

producer would continue to hold a market shareenjoyed by them during the official cartel period.

However, immediately after the cartel wasdisbanded, a price war ensued, prompting theproducers to meet in 1998 and devise ways tobring the market back to stability. This meetingculminated in agreements on market shares, the

pricing parameters for different types of cement,the scaling back of marketing and distributionactivities with agreed closure of certain depots incertain regions and banning of discounts on higherquality cement.

In order to police the agreement and deal withthe cartel problem of cheating, the cement

producers devised an elaborate scheme of sharing

detailed sales information through the C&CI. Theinformation sharing saw individual firms submittingtheir monthly sales figures to the associationsauditors according to the geographic region,

packaging and transport type, customer type, productcharacteristics and imports. The data was then

aggregated by the auditors, before being disseminatedto the cement producers by the C&CI. Given thehigh concentration level of the cement industry,firms could use the aggregated data received fromthe association to monitor their own market share. Ifthere were any deviations from an agreed target, afirm could discern from the data exactly where thedeviations came from.

Therefore targeted punishment or volume sheddingcould be undertaken without causing a price war or in

any way destabilising the market. The Commissionconcluded settlement agreements with AfriSam in

November 2011 and Lafarge in March 2012. The twofirms also confirmed the existence of the cartel and itsmodus operandi. The two firms paid settlement finesof approximately R125 million and R149 million,respectively.

Using the estimates of overcharges, the consumersavings as a result of the Commissionsintervention is approximately in the range of R4.5 toR5.8 billion for the period 2010 to 2013.

2. Excessive Pricing Case against Sasol

In June 2014, the Competition Tribunal finedSasol Chemical Industries Limited (Sasol) R534million for excessively pricing purified propyleneand polypropylene to domestic customers. Purified

propylene, produced from feedstock propylene, is amonomer that is a by-product of fuel and is used

as a key input in the production of polypropylene.Polypropylene is a polymer which is a key input forconverters who manufacture household productslike plastic chairs and industrial plastic productslike motor car parts. Sasol supplies polypropyleneto domestic customers at import parity prices andalso sells large quantities to export customers.

The Commission received a request from theDepartment of Trade and Industry (DTI) inAugust 2007 to investigate the pricing practices in

the South African chemicals sector, particularly thepolymers sector. The Commission then initiated a


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complaint against Sasol and at the conclusion ofits investigations referred the case of excessive

pricing (section 8(a)) against Sasol for propylene,and polypropylene in the period 2004-2007. TheCommission also referred a case for collusion(section 4(1)(b)) in relation to polypropylene

against Sasol and Safripol. Both Sasol andSafripol settled with the Commission. Theagreement between the Commission andSafripol was confirmed in August 2010. Safripolagreed to pay an administrative penalty of R16474 573 representing 1.5% of its turnover derivedfrom sales of polypropylene.

The agreement between the Commission andSasol was confirmed by the Tribunal in February2011. Sasol agreed to pay an administrative

penalty of R111 690 000, which represents 3% ofSasol Polymers turnover derived from sales of

polypropyleneproducts.

The legal framework for dealing with excessivepricing Section 8(a) of the Competition Act statesthat a dominant firm in a relevant market is

prohibited to charge an excessive price to thedetriment of consumers. The CompetitionAppeal Court (CAC) in its decision on Mittal

Steel, South Africa Limited and Others vHarmony Gold Mining Company Limited andanother laid a framework to be followed inassessing excessive pricing cases in the context ofsection 8(a). The CAC stated that the analysis ofan excessive pricing case under section 8(a)involves the following: i) determining the actual

price of the good or service in question; ii) theeconomic value of that goods or service; iii)whether the difference between the actual priceand the economic va lu e is unreasonable; and iv)

whether the charging of the excessive price is tothe detriment of consumers. In applying theguidance in the Mittal case, the Commission usedvarious tests namely: price cost tests, acomparison of domestic prices with prices inother geographic markets, and a comparison ofSasols export prices with domestic prices foreachproduct.

Regarding propylene, the Tribunal relied on theprice cost tests done by the Commission and

Sasol. The Tribunal came to the conclusion thatSasols markup of purified propylene prices over

actual costs for the period 2004-2007 was on average31.5-33% for both Tier 1 and Tier 2 sales. TheTribunal did not attach weight to the imputedexport price for purified propylene and the pricescharged by other firms in other geographic marketsas advocated by the Commission.

Regarding polypropylene, the Tribunal used theprice cost test, export price comparison and tookinto account thepolypropylene prices of other firmsin other domestic markets. Firstly, on the price costtest, the Tribunal found that on a conservative

basis, Sasols markup of its polypropylene pricesover actual costs in the period 2004-2007 was17.6%-25.4%. On a more realistic basis, the Tribunalconcluded that the markup was in the range of 26.9-36.5%. Secondly, the Tribunal found Sasols markup

margins to be on average 23% higher than averagedeep sea exports. Thirdly, the Tribunal found thatSasols markup was 41% and 47% higher forhomopolymer and raffia grade polypropylenerespectively for the period 2004-2007 compared tothe discounted prices in Western Europe computedon the basis of feedstock costs comparable to Sasol.

The Tribunal rejected the attempt by Sasol todetermine economic value directly, i.e., by

postulating a hypothetical market with notionalcompetitors and their prices and costs in that market.In concluding that Sasols pricing does not bear anyreasonable relation to costs, the Tribunal looked atthe objectives of the Competition Act in the contextof the South African economy, the importance of theintermediate inputs in industrial development,market characteristics and circumstances, and thehistory of Sasol and how it acquired its dominant

position in the market. In considering the history ofstate support that Sasol has enjoyed. Sasol was

supported, owned, and controlled by the state fromits establishment to its privatization. Throughlegislation and regulation, the State ensured thatSasol was sustainable, profitable, and would not fail.The Tribunal also took into account Sasols low costfeedstock advantage. Feedstock propylene is

produced in abundance in South Africa by SasolSynfuels. The Tribunal took into account Sasolsfeedstock advantage and that it was a result of ahistory of state support and the abundance of naturalresources. The Tribunal highlighted that this

feedstock advantage was not a result of risk takingand innovation on the part of Sasol.


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The Commission asked penalty @ 10% ofSasols turnover. The Tribunal imposed areduced administrative penalty of R534million, together with the imposition of aforward- looking behavioural remedy inrelation to propylene and polypropylene. The

Tribunal argued that approach would providerelief and certainty to Sasol and its customers.The remedies have to be viewed in the light ofthe harm caused by Sasols excessive prices inthat Safripol was hindered from growing in themarket and manufacturers were negativelyaffected by the excessive prices and they, inturn, passed the effects of the high prices to theend consumer.

3. Dismantling construction cartels

Rooting out bid rigging cartels has been the keyfocus of the Commission over the past few years.During 2013 the Commission completedsettlements under the Construction SettlementProject (CSP), a special dispensation whichuncovered more than 300 private and public sectorrigged projects including major infrastructuredevelopment in South Africa, such as the 2010FIFA Soccer World Cup stadia, dams, residential

and business buildings, the Gauteng FreewayImprovement Project and other national roads.Public clients, such as the SA National RoadsAgency Limited (Sanral) and local municipalities,are among the biggest casualties of thisanticompetitive conduct.

In July 2013, the Commission settled with 15out of 18 construction firms that participated in theCSP, including the six largest construction firms inSouth Africa. The Competition Tribunal imposed a

total combined administrative penalty for the 15firms of R1.46 billion, the largest ever imposed ina single process in South Africa.

The Commission launched the CSP in February2011, after uncovering widespread collusion in theindustry. The fast track process incentivised firmsto make a full and truthful disclosure of bid riggingin return for penalties that were lower than whatthe Commission would seek if it prosecuted thesecases. Twenty one firms responded to the

Commissions offer of a fast track settlement.While over 300 instances of bid-rigging wererevealed through this initiative, the settlements

were reached only with respect to projects that wereconcluded after September 2006. Any transgressionsthat occurred before then are beyond the prosecutorialreach of the Act.

The various methods used by firms to determine,

maintain and monitor collusive agreements wererevealed as a result of responses to the CSP offer.These included meetings to divide markets and agreeon margins. Different combinations of firms co-ordinated tenders relating to different projects. Firmscolluded to create the illusion of competition bysubmitting sham tenders (cover pricing) to enable afellow conspirator to win a tender. In other instances,firms agreed that whoever won a tender would pay thelosing bidders a losers fee to cover their costs of

bidding. Sub-contracting was also used to compensate

losing bidders.

During 2014, the Commission commenced withphase two of the investigations, which entailsprosecuting firms that did not settle as part of theCSP. It referred 17 cases to the Tribunal for

prosecution, settled five and another five are pendingthe conclusion of settlement agreements. The 17cases that were referred to the Tribunal include the2010 FIFA World Cup stadia tenders which were

subjected to collusive conduct by major constructioncompanies such as Group Five, WBHO, Stefanutti,Murray & Roberts, Grinaker LTA and Basil Read.These firms agreed, among other things, on the profitmargins to be charged for these tenders. The firmsalso agreed on which firms should win which stadiaand which firm should submit cover quotes for whichstadia. If the Commission is successful in its

prosecution, it will request the Tribunal to impose themaximum penalty of 10% of the firms annualturnover.

The dismantling of the cartel in the constructionsector has set the industry in a new competitivetrajectory. Purchasers of construction services, mainlygovernment, will as a result of the Commissionsintervention in the sector, be able to get fair andcompetitive prices. This will in turn reduce the costsof government of enrolling its multi-billioninfrastructure development projects. The dismantlingof the cartel will also enable victims of this collusiveconduct to claim damages from the firms that are

found guilty of collusion.


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4. Competition Commission probes collusive

conduct in automotive industry

In October 2014, the Competition Commissionlaunched investigations into price fixing, marketdivision and collusive tendering in the market for

the manufacture and supply of automotivecomponents supplied to original equipmentmanufacturers (OEMs) such as Toyota MotorCorporation, Daihatsu Motor Company, NissanMotor Company, Isuzu Motor Limited, Fuji HeavyIndustries, Honda Motor Corporation, SuzukiMotor Corporation, General Motors Corporation,Hyundai Motor Company, Yamaha MotorCorporation, Volvo Car Corporation, Mazda MotorCorporation, Mitsubishi Motor Corporations andFord Motor Corporation. The investigation arose

from information received by the Commission thatautomotive component manufacturers colludedwhen bidding for tenders to supply automotivecomponents to the OEMs.

The investigation was launched againstautomotive components manufacturers such asDenso Corporation, Maruyasu Industrial CompanyLimited, Hitachi Company Limited, MitsubishiElectric Corporation, Tokai Rika CompanyLimited, NGK Spark Plug Company Limited,Mikuni Corporation, Aisin Industries CompanyLimited, Panasonic Corporation, FutubaCorporation and Fijistu-Ten Limited.

The information in the possession of theCommission suggests that from 2000 to date, 82automotive component manufacturers havecolluded in respect of 121 automotive components.The 121 automotive components affected by thecollusion include, but are not limited to, inverters,

electric power steering ECUs, glow plugs, electricpower steering systems, rear sunshades, pressureregulators, pulsation dampers, purge controlvalves, accelerator pedal modules, powermanagement controllers, evaporative fuel canistersystems, knock sensors, spark plugs and clearancesonar systems.


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Merger Review

Brazil

1. CADE approved with restriction license

agreement between Monsanto and Bayer

In January, 2014, the CADE approved licenseagreement between Monsanto do Brazil Ltda andBayer S/A with conditions under which Monsantogranted a license Bayer regarding development,

production and commercialization of soybeanseeds with the technology Intacta RR2 PRO.This technology endows plants with resistance to

insects and tolerance to herbicide glyphosate, usedto control weeds.

The merger approval was conditional on themodification of some provisions of the licenseagreement, which could grant Monsanto thecapacity of having unduly control and influenceover Bayers activities on the soy market. Amechanism of creation, maintenance and expansionof control of the licensor over the licensed party isembedded in the contract. This conditions thelicensed companys activities in the soy market asa whole and extrapolates, or even denatures, thecharacteristic of a technology license, saidReporting Commissioner, Alessandro Octaviani. Inhis opinion, some clauses harm the possible orincoming competitors, reducing the options toagriculturists and the whole chain.

The royalties billing mechanism structured byMonsanto, for example, grants to the companyaccess to Bayers sensitive commercialinformation. Since all agents that act or may act in

the productive chain of Intacta soybean areregistered, Monsanto could map the commercialrelationship between them and have access to

information that does not have direct relation withIntacta soybeans production and commercialization.

As per CADEs analysis, this would increase thecompanys control over the licensed party, and raiseunduly the market power already enjoyed byMonsanto in the transgenic soy. The Councildetermined the modification of other provisions thatcould ease Monsantos interference in Bayers

possible business with competitor licensees. Amongthe imposed restrictions is the withdrawal of a

provision on Monsantos preference rights in case of apossible acquisition, by Bayer, of related companiesin the soybean market.

2. CADE imposes remedies on the Kroton and

Anhanguera merger-

In May 2014, the CADE approved with restrictionsthe merger of all shares of the social capital ofAnhanguera Educational Participaes S/A by KrotonEducational S/A. The approval is conditioned to thefulfilment of a series of measures foreseen in aMerger Agreement (ACC for its acronym inPortuguese) signed between CADE and the parties.

The first commitment is the divestment ofUniasselvi, owned by Kroton, to a third party. The

deadline for the divestment is confidential. ReportingCommissioner Ana Frazo explained that thismeasure enables a rival to have sufficient conditionsto compete with the merged company in the nationaldistance learning market. During the casedevelopment, CADEs General Superintendence

pointed competition problems in 171 courses in 55cities due to the absence or insufficiency ofcompetitors, since other educational institutionswould not be capable of effectively competing withthe new merged company. Kroton and Anhanguerahad important advantages regarding studentsenrolment, scale, course catalogue, institutions andeducation centres capillarity, prices, marketing andother variables. variables

According to the Reporting Commissioner, thedivestment of Uniasselvi solves most of the concernsdetected in 12 of the 55 cities. To address theremaining issues in the other 43 cities, the ACCimposed behavioural measure that the company withmajor market share Kroton or Anhanguera in the

courses where competition problems were detectedwill be prevented from offering places. The one with


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less market share also cannot increase studentsenrolment. The main objective is to limit theexpansion of the merged parties and to enable thecompetitors to thrive.

The third applied remedy was regarding places,where Kroton and Anhanguera are not

simultaneously present, but a future overlapping isa concern due to previous requests to the Ministryof Education that were not authorized yet. To solvethe potential problem, only one of the parties canoffer the courses that raised more competitionconcerns in the areas.

Furthermore, the ACC foresaw objective qualitygoals with regards to the offer of distance learningcourses by Kroton and by Anhanguera such as, forexample, the increase of the current proportion of

teachers with Masters Degrees and PhDs to 80%and the increase of the available tools and teachingmaterial. This measure aims at ensuring significantquality goals and it will reflect directly in terms of

benefit to the main consumer: the student.

Finally, to solve problems detected in formaleducation, there will be divestments in the cities ofRondonpolis and Cuiab, both in the state ofMatos Grosso.

The Reporting Commissioner highlighted that

the adoption of the structural and behaviouralmeasures was only possible due to the agreementsigned with the parties. The consensual solutionwas the key element to enable an alternative to thedifficult options of structural remedies possible toimplement in the educational market.

3. CADE approves merger of Holcim and

Lafarge cement with restrictions

In December 2014, the Tribunal of theAdministrative Council for Economic Defense

(CADE) approved the merger between Holcim Ltd.and Lafarge. The approval was conditioned to thesignature of a Merger Control Agreement (ACCfor its acronym in Portuguese).

The Reporting Commissioner, GilvandroArajo, followed the General Superintendencesopinion that the transaction would result inconcentration in the cement and concrete marketsin some Brazilian locations. To solve thecompetition concerns, the companies, at the

moment of the notification, proposed to sign anagreement. The agreement proposed that thecompanies will divest the plants in the cities of

Arcos, Matozinhos and Santa Luzia, in the state ofMinas Gerais, and in Cantagalo, in the state of Rio deJaneiro. CADE also determined that the buyer of theunits must be approved by the antitrust agency and themerger between the two cement plants can only becompleted after the sale of the assets.

The proposal presented by the companiesaddresses the concerns pointed by the Council in thecement, concrete, gravel and aggregates. The decisiondoes not conflict with what was already decided byCADE in these markets, stated Gilvandro Arajo, theReporting Commissioner.

Russia

1. FAS disapproved JSC Gazprombank

acquisition

In January 2014, the Supreme Commercial Courtof the Russian Federation denied JSC Gazprombankapplication in submitting case materials to thePresidium of the Supreme Commercial Court andsupported appellate court decisions on that case. Italso confirmed legitimacy of the FAS RussiasDecision in denying approval of JSC Gazprombank

application on acquiring 50.9% voting shares of OJSCMoscow Integrated Electric Grid Company in trustmanagement.

In 2011, the FAS Russia refused to grant approvalto the OJSC Gazprombank on acquisition of 50.9%voting shares of Moscow Integrated Electric GridCompany OJSC in trust management. This deal mayhave caused restriction of competition in electric

power market due to overlapping of natural(exercising services on transferring of electric power)

and competition (production of electric power) typesof activity. The OJSC Gazprombank filed an actionin courts but in January, 2014, the SupremeCommercial Court of the Russian Federationsupported the FAS Russia decision.

2. Russias antimonopoly service allows TMH to

buy Wartsila out of JV

The Russian Federal Antimonopoly Service (FAS)met the request of CJSC TransMashHolding (MOEX:

TRMH) (TMH) about buying Finland's Wartsila's


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stake in the joint venture between the companies,the service said in a statement.

TransMashHolding(TMH) is Russia's largestproducer of rail and subway rolling stock withplants in St. Petersburg, Bryansk, Penza, Moscow,

Rostov and Tver regions. Wartsila produces shipengines, propellers, navigation equipment and

provides technical servicing for sea vessels. TMHand Wartsila had signed the agreement on thecreation on an equal footing of a JV for the

production of diesel engines in 2012.

"The Federal Antimonopoly Service reviewedthe request of CJSC TransMashHolding aboutobtaining the rights, which would allow them todetermine the conditions of the implementation of

the business activities of LLC Wartsila TMHDiesel Engine B.V. and has determined thefollowing: that the transaction, which is the subjectof the aforementioned petition, will not lead tolimiting competition," said the FAS, adding that theservice made the decision to grant this request.

3. TEVA Case

In September 23, 2014, the Ninth ArbitrationCourt of Appeal revoked the lower court decision,

pointing out that the antitrust prohibitions on abuseof dominance are fully applied to the actions of

business entities, regardless of the patent protectionof their goods. In December 2013 the FAS Russiafound the company TEVA PHARMACEUTICALINDUSTRIES LIMITED guilty in violation ofClause 5 Part 1 Article 10 of the Law "OnProtection of Competition" as a result of aneconomically and technologically unjustifiedrefusal to conclude with JSC "MFPDK" Biotec

"contract on delivery of the medicine of"Copaxone." The company also failed to complywith the warning isuued by the FAS Russia.Antimonopoly Service has issued an order toTEVA to provide competition conditions, in

particular by providing contractors non-discriminatory access to it products. TEVA wasfined for committing a violation of antitrust laws.But the company did not agree with the FASRussias decision as well as with the order andappealed to court. The Moscow Arbitration Court

supported the requirements of the company,adopting the arguments TEVA to full withdrawalof the goods that have patent protection from the

scope of application of Article 10 of the Law onProtection of Competition. However, the NinthArbitration Appeals Court revoked the decision of alower court, supporting the FAS Russia's position thatthe actions of economic entities holding dominant

position should not violate the antimonopoly

legislation regardless whether the patent rights appliedin the production and sales of goods.

India

1. CCI approves acquisition of formulations

business of Elder by Torrent

ElderPharmaceuticals Limited (Elder)and TorrentPharmaceuticals Limited (Torrent) had filed a notice

pursuant to the execution of a Business TransferAgreement (BTA) and a Manufacturing and SupplyAgreement (MSA), between the parties. Both Torrentand Elder are engaged in the business ofmanufacturing and marketing of branded genericmedicines in different therapeutic segments.

CCI limited the competition assessment of theproposed combination to acquisition of these brands

in India. For the purpose of the competition analysisof the proposed combination, various products ofElder and Torrent were classified on the basis of theirtherapeutic category i.e. the intended use of thedrugs/formulations. On the basis of this classification,it was observed that there is a horizontal overlap insixteen therapeutic categories, between the existing

products of Torrent and the products being acquiredfrom Elder. It was further observed that in most ofthese therapeutic categories, the combined marketshare of the Parties is not significant enough to raise

any competition concern. Even in those therapeuticcategories where the combined market share is high,this is almost entirely on account of the market shareof one of the parties with the other party having aminiscule share.

The horizontal overlap between the existingproducts of Torrent and the products being acquiredfrom Elder was also assessed at the therapeutic sub-group or molecule level. In this regard, it wasobserved that there is a horizontal overlap between theexisting products of Torrent and the products beingacquired from Elder in eleven molecules/therapeutic


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subgroups, out of which, the post combinationmarket share of Torrent will be 10 per cent or moreonly in respect to three categories. However, in allthree therapeutic subgroups, the combined marketshare of the parties is primarily on account of Elderas Torrent has