The present information has been filed under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the Act) by Confederation of Real Estate Developers Association of India - NCR (hereinafter, the Informant CREDAI-NCR) against Department of Town and Country Planning, Government of Haryana (hereinafter, OP- 1/DTCP) and Haryana Urban Development Authority, (hereinafter, OP-2/HUDA) (hereinafter, OP-1 and OP-2 collectively referred to as the OPs) alleging contravention of the provisions of Section 4 of the Act.

According to the information, the Informant is the National Capital Region (NCR) chapter of the Confederation of Real Estate Developers Association of India (CREDAI) which is an organisation representing around 12000 real estate developers spread across 23 states.

Further, all the leading real estate developers of NCR are the members of the Informant.

OP-1 is a department of the Government of Haryana empowered to regulate urban development in the State of Haryana.

The policies of OP-1 aim at encouraging healthy competition amongst various private developers and public sector entities for integrated planned urban development.

It also renders advisory services to various corporations and boards such as OP-2, Housing Board of Haryana, Haryana State Industrial Infrastructure Development Corporation Limited and Haryana State Marketing Board.

OP-2 is an authority created under the Haryana Urban Development Authority Act, 1977 (hereinafter, the HUDA Act).

It has been delegated the task of planned development of urban areas in Haryana in order to: (i) promote and secure development of urban areas in a systematic and planned way with the power to acquire, sale and dispose of property, both movable and immovable (ii) use the acquired land for residential, industrial, recreational and commercial purposes (iii) make available developed land to Haryana Housing Board and other bodies for providing houses to economically weaker sections of the society and (iv) undertake building works.

As per the information, OP 2 has been empowered under Section 51(1) of the HUDA Act to grant licenses to developers for development of real estate in the State of Haryana and OP 2 has delegated this power to OP-1.

As per the Informant, OP-1, by virtue of this power, has been entering into Letter of Intent (hereinafter, LOI) with prospective developers and thereafter granting licenses to them under the HUDA Act for development of colonies in the State of Haryana.

It is stated in the information that on 15.11.2012, OP-1 had issued the Sohna Master Plan 2031 (hereinafter, Sohna Master Plan) for Group Housing Colony in the revenue estate of Tehsil Sohna of Gurugram District in Haryana.

Based on this plan, various developers submitted their bids and thereafter, the Sohna Letter of Intent (hereinafter, Sohna LOI) were executed between each developer and the Director of OP-1.

It is stated that before execution of the LOI, the developers had fulfilled the conditions stipulated under the Haryana Development and Regulation of Urban Areas Development Act, 1975 (hereinafter, the Haryana Development Act) and the Haryana Development and Regulation of Urban Areas Development Rules, 1976 (hereinafter, the Rules of 1976) including submission of the bank guarantee towards External Development Charges (hereinafter, EDC), Infrastructure Development Charges (hereinafter, IDC) and other charges and fees viz. conversion charges, license fees and scrutiny fees.

Thereafter, bilateral agreements (hereinafter, Sohna Agreement) between developers and Director of OP-1 were executed and licences (hereinafter, Sohna License) were issued to the developers.

It is alleged in the information that some of the terms and conditions of the Sohna License, Sohna LOI and Sohna Agreement are unfair and discriminatory.

It is averred that through the Sohna LOI, the OPs impose unfair and extensive obligations on the developers in terms of the development works that the developer must carry out in the specified territory and the charges levied on them are also required to be paid within tight timelines.

Further, the conditions therein obligate the developers to pay EDC as and when demanded.

However, no claim for damages lies against the OPs for delay in provision of development facilities.

It is further alleged that the charges and payment schedule in the Sohna Master Plan has been decided by the OPs unilaterally without making available the basis of calculation of these charges or implementation schedule of the development work.

The Informant has submitted that although the OPs were obligated under the Haryana Development Act to carry out development work, there is no mechanism for enforcement of these obligations under the Sohna LOI Sohna Agreement Sohna License.

The Informant has further alleged that under the terms of the Sohna License, EDC are subject to revision as per the actual charges incurred including any enhanced land acquisition costs, which is to be worked out later and the developer is liable to pay an additional amount as and when directed.

Furthermore, the assumption on costs or timelines with respect to the development of infrastructure are also not disclosed.

In addition, the Sohna LOI obligates the developers to pay interest on delayed payment of EDC and IDC to the OPs.

It is alleged that the OPs are levying an exorbitant rate of interest on EDC and IDC on developers onerously without any authority under the Haryana Development Act.

Further, the developers are forced to accept fulfillment of such supplementary obligations of payment of interest, which has not been contemplated in the Haryana Development Act.

Further, it is alleged that no activity on infrastructure development has been initiated by the OPs, which has further delayed the development of the projects.

But under the license agreement, the charges and interest continue to be levied on the developers causing undue hardship in the development of their respective projects.

It is alleged that in the light of inaction by the OPs, the developers are faced with the impossible task of fulfilling their obligations under the Sohna LOI, Sohna Agreement and Sohna License within strict timelines and potential penalties covering land that has not even been acquired by the OPs.

Additionally, the developers are also simultaneously exposed to hefty claims from consumers under Consumer Protection Act, 1986 for failing to allot plots to them within the timelines stipulated under arrangements between the developers and consumers.

In view of the above facts, the Informant has prayed the Commission to direct the Director General (hereinafter, the DG) to cause an investigation into the affairs of the OPs in performing their obligations under the HUDA Act and Haryana Urban Development Act and abuse of their position in the State of Haryana restrain the OPs from invoking the bank guarantee against the developers pending adjudication of this information restrain the OPs and direct them to cease and desist from compelling developers to pay any pending EDC and IDC or any increase thereof along with interest direct the OPs to renegotiate the licenses and bilateral agreements with realistic time-schedules based on mutually agreeable development milestones and payment schedules direct the OPs to return interest on EDC and IDC paid in advance by the developers in territories where they have carried out no development work direct the OPs to revise the EDC and IDC as mutually feasible and as per reasonably acceptable development schedule impose penalty on the OPs for abusing their dominant position to the prejudice of the developers and pass such other and further order, as the Commission may deem fit and proper in the circumstances of the case.

The Commission considered the information in its ordinary meeting held on 31.08.2017 and decided to have a preliminary conference with the parties on 27.09.2017.

On 27.09.2017, the Informant and the OPs appeared through their respective learned counsel.

While the learned counsel for the Informant argued the matter, the learned counsel appearing on behalf of the OPs sought extension of time to file a response to the information.

The Commission directed the OPs to file their reply within four weeks.

Subsequently, a counter affidavit dated 08.12.2017 was filed by OP-1.

In the counter-affidavit, OP-1 has submitted that the present complaint is not maintainable, as OP-1 does not fall within the definition of enterprise as defined in Section 2(h) of the Act.

It is not engaged in any activity relating to the production, storage, supply, distribution, acquisition or control of articles or goods or the provision of services of any kind.

It only deals with the planning of urban areas and is the implementing agency for the provisions of the Haryana Development Act and Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963 (hereinafter, the Punjab Development Act).

It is averred that as none of the functions being performed by OP-1 under these Acts fall within the definition of enterprise as defined in the Section 2(h) of the Act, the present complaint ought to be dismissed.

Further, OP-1 has argued that since the developers neither buy any goods nor hire or avail any service as defined in Section 2(u) for consideration from OP-1, neither the Informant nor the developers getting licence for development of colonies are the consumers of OP-1 as defined in Section 2(f) of the Act.

Moreover, the agreements executed by the developers are required to be executed as part of the Rules of 1976 framed under the Haryana Development Act and the same do not fall within the ambit of anticompetitive agreements or abuse of dominant position under Sections 3 and 4 of the Act.

Hence, the present complaint against OP-1 is not maintainable and is liable to be dismissed.

Furthermore, regarding the issues raised by the Informant relating to payment of EDC in accordance with the terms and conditions of the bilateral agreement executed between OP-1 and the developers, OP-1 has submitted that these issues have been already examined and decided by the Honble High Court of Punjab and Haryana at Chandigarh in CWP Number 9558 of 2015 titled VPN Buildtech Pvt.

Limited v. State of Haryana and Others and other connected petitions, vide order dated 15.12.2015.

OP-1 has submitted that even before the Honble High Court, the developers had contended that the conditions stated in the agreements are unilateral and arbitrary and hence, they are not liable to pay the tentative ad hoc EDC amount as stipulated in the agreements.

Further, it was contended that the OPs are not entitled to collect further instalments of EDC amount till the External Development Works are carried out and also no amount of interest is payable by them on the delayed payment of instalments of EDC.

In addition, the developers had contended that they are liable to pay the EDC in proportion to the expenditure incurred by the OPs on execution of the External Development Works around their colony and that the practice and procedure adopted by the OPs requiring the developer to pay the entire amount of EDC without linking the same to the extent of development being carried out is illegal and unjustified.

A plea was also raised that certain charges such as land cost, cost of grid sub-station, administrative charges, cost of maintenance of energy charges and cost of price escalation should not be counted while calculating the total cost of EDC.

However, the Honble High Court vide order dated 15.12.2015 dismissed these petitions.

Against this order, some of the developers filed Special Leave Petitions (hereinafter, SLP) before the Honble Supreme Court, which are still pending including the main SLP Number 5459 of 2016 titled Magnolia Propbuild Pvt.

Limited v. State of Haryana and Others.

In the meanwhile, the Honble Supreme Court, vide interim order dated 31.03.2016, has restrained OP-1 from encashing the bank guarantees submitted on account of nonpayment of EDC.

Thus, it is submitted that as the matter for the same cause of action is already pending adjudication before the Honble Supreme Court, the present complaint ought not to be entertained by the Commission.

OP-1 has also contended that in the above circumstances, the plea raised before the Commission that the terms and conditions of Sohna LOI, Sohna Agreement and Sohna Licence are unilateral and arbitrary is misconceived and without merit.

It is only an attempt to avoid paying the EDC amount, which the developers have expressly undertook to pay in instalments in consideration of the licences granted to them by the OPs for developing colonies.

The developers, having derived benefits under the very agreements by developing the colonies and selling the premises therein, are now seeking to avoid their financial obligations.

Hence, grant of any relief would be unfair and financially disastrous for the OPs and hamper the development works in the State of Haryana.

Responding specifically to the allegations in the information, OP-1 has stated that, up to October 2017, about 41 licences had been granted in the Urban Estate of Sohna for development of residential plotted group housing commercial IT park colonies.

These licences were granted to the developer companies and their associate companies individual land owners after they had complied with the terms and conditions of the LOI and executed LC-IV agreement with OP-1. OP-1 has contended that before grant of licence the developers themselves had undertaken to pay the due amount of EDC.

No plea was raised by them at that time that payment of EDC should be linked to the execution of the External Development Works by the Government.

However, when the developers failed to comply with their undertakings, they raised a plea that the conditions of payment of EDC were unilateral.

Under the LC-IV agreement, the developers had opted to pay EDC amount in instalments, alongwith interest and additional penal interest at the rate of 3 p.a., in case of default in payment of instalments.

However, EDC amount due as per schedule fixed in the agreement was not paid by all the developers.

In fact, some developers did not even pay the first and second instalments.

As a result, an amount of around Rs. 121399.7 lacs is still outstanding against the licencees.

OP-1 has stated that in such a situation, the allegations that any steps for execution of the External Development Works around the colony area of the developers had not been initiated or that the terms and conditions of the agreements are arbitrary and unjustified.

Further, OP-1 has stated that since all the developers to whom licence has been granted in the Urban Estate of Sohna have not made full payment of the due amount of EDC, the external development works can be taken up in full swing only after due payment has been made by the developers otherwise, the development works would come to grinding halt due to paucity of funds.

The incomplete projects would neither benefit the developers nor the ultimate beneficiaries i.e. allottees.

Otherwise also, the Government will not be able to divert its funds from other projects for this work.

Responding to the contention of the Informant that the execution of the External Development Works should be in proportion to the amount paid by the developers, OP-1 has explained that the word proportion as used in Section 3(3)(a)(ii) of the Haryana Development Act only means that the developer is required to pay the amount of EDC in proportion to the area for which licence has been obtained by it qua the total area of the town proposed to be developed as per the Development Plan prepared under Section 5 of the Punjab Development Act.

Thus, the clause regarding payment of EDC amount mentioned in Section 3(3)(a)(ii) of the Haryana Development Act as well as Rule 11 of the Rules 1976 and in the LC-IV agreement is with respect to the quantum of EDC amount payable and is not linked to the amount quantum of External Development Works carried out at any given point of time.

Further, OP-1 has stated that it is also not practically possible to execute the development works in proportion to the amount paid by the developer.

It is not feasible that if the developer pays say Rs. 1.00 crore, HUDA should first spent Rs. 1.00 crore on part execution of the development works.

The services as envisaged to be provided as per clause (g) of Section 2 of the Haryana Development Act cannot be executed in parts.

For example, the land required for construction of colleges, hospitals, sports complex or other similar purposes cannot be acquired in parts.

Similarly, if some water pipes for bringing water to the city are required to be laid down, they cannot be purchased or laid out in parts.

The External Development Works are executed over a period of time and these are long gestation projects linked to the growth of population of the town.

It is unreasonable to expect that the State could execute all the External Development Works immediately without being funded in toto for the same from the developers getting the licences.

Regarding charging of interest penal interest on delayed payments, OP-1 has submitted that according to the terms and conditions of the LC-IV agreement, the developers have the option to pay the EDC amount in lump sum without interest within 30 days from the date of grant of licence or in eight to ten equal half yearly instalments alongwith interest.

It is also provided that in case of default in payment of instalments on due dates, additional 3 p.a. penal interest would be charged.

Thus, the provision for interest and penal interest is an integral part of the contract executed between OP-1 and the developers.

Accordingly, the developers are liable to pay interest on the delayed payment of the EDC.

In addition to above, OP-1 has stated that as per the terms and conditions of LC- IV Agreement, initially the services like water supply, sewerage and drainage etc.

are to be provided by the developers and they are supposed to take care of the immediate needs of the plot flat holders.

These services are later on connected to the services provided by the HUDA.

Therefore, even with the completion of internal services within a colony, provision of which is the responsibility of the developer, it should be possible for the plot flat holders to take possession of their plot flat and raise construction thereon.

OP-1 has denied that the OPs have used their dominant position in the relevant market to impose unfair conditions for grant of licences.

Further, it is also denied that the terms and conditions of the Sohna LOI are unfair or that there is extensive obligation on the developers in terms of the development works.

OP-1 has stated that as per the terms and conditions of the Haryana Development Act and the Rules of 1976 made thereunder, the internal development works have to be completed by the developer.

No cost of execution of the internal development works is recovered by the OPs.

The licence fee is also prescribed in the Rules.

The EDC amount to be paid by the developer is in proportion to the area for which licence is granted.

The amount is determined by OP-1 and the Applicant for licence is aware about the EDC IDC and the conversion charges that are to be paid in case license is granted.

These charges are fixed and the developer is aware about the payment schedule.

This is also intimated to the developer in the LOI.

Furthermore, the agreement does not state that the development works would be executed in proportion to the amount of EDC paid by the developer.

Rather it was made clear to the developers of Sohna that it would take some time for HUDA to initiate the development works in Sohna and until then they would have to make their own internal arrangement for providing such facilities.

Therefore, it cannot be alleged by the Informant that the OPs have abused their dominant position.

In fact, the developers getting licence in the Urban Estate of Sohna have not paid the due amount of EDC payable by them as per the terms and conditions of the agreement and are now wrongly alleging that the OPs have failed to perform their obligation regarding execution of the External Development Works.

Also, OP-1 has stated that it is incorrect that the developers have no opportunity to negotiate the clauses of the licence agreement.

It is stated that the agreement clauses have been mentioned in the Rules of 1976 itself.

Therefore, the developers are aware about the clauses even before they submit application for grant of licence.

If the terms and conditions of the agreement do not suit them, they are free not to submit an application for grant of licence.

Finally, OP-1 has submitted that the Government is not denying its responsibility to execute the External Development Works in the urban estate of Sohna.

Every penny received from the developer companies on account of EDC would be spent for execution of the External Development works in Sohna Urban Estate only.

The Commission has considered the material available on record and has also heard the parties.

At the outset, it is noted that OP-1 has firstly challenged the jurisdiction of the Commission to investigate the instant matter.

Accordingly, the Commission finds it appropriate to first deal with the preliminary issue of jurisdiction, before delving into the merits of the case.

It has been submitted that the OPs do not fall within the definition of enterprise and, therefore, the present information against them is not maintainable.

On the contrary, the Informant has alleged that the OPs are covered within the ambit of definition of enterprise, as given in Section 2(h) of the Act.

In this regard, the Commission observes that Section 2(h) of the Act defines enterprise as a person or a department of the Government, which is engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind.

The definition is very wide and covers every type of engagement in any activity.

The only exception which is carved out in the said definition is the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space.

In the instant case, it is observed that even if the activity of issuing licenses by OP-1 were to be construed as exercise of sovereign power, the levy of EDC IDC by it on the developers and consequently upon the end-consumers i.e. allottees home- buyers, cannot be construed as such.

Moreover, the mere fact that OP-1 is in a particular position by virtue of statutory provisions with respect to certain activities and there is absence of profit therefrom, does not imply that it is performing a sovereign function necessitating its exclusion from definition of enterprise.

Clearly, the activities of OP-1 in the form of levying of EDC IDC have a direct economic commercial impact.

In other words, OP-1 is performing actions relating to economic commercial activities, which in turn is affecting provision of development and construction services by the developers.

Thus, in view of foregoing, the Commission is of the opinion that OP-1 is covered within the ambit of the term enterprise as defined in the Act.

Another contention raised by OP-1 is that the developers are not consumers under the Act.

In this regard, the Commission observes that the definition of consumer under the Act includes not only end consumers but also intermediate consumers i.e. those who buy goods or avail services for any commercial purpose.

The OPs here are engaged in provision of commercial economic services, which are being availed by the developers on payment of requisite fee and charges levied on them.

Thus, the Commission finds that the developers in this case are covered within the definition of consumer under the Act.

Next, OP-1 has submitted that as the matter is pending before the Honble Supreme Court, the information before the Commission on similar grounds should not be entertained.

The Commission finds this contention devoid of any merit for the reason that the availability of remedies before any other fora or under any other law do not oust the jurisdiction of the Commission per se.

It is the duty and the mandate of the Commission to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets and for fulfillment of such objectives, the Commission can proceed with the instant matter simultaneously with the proceedings of the Honble Supreme Court.

As per Section 62 of the Act, the provisions of this Act are in addition to the provisions of any other law for the time being in force.

Further, Section 61 of the Act provides that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Commission is empowered by or under this Act to determine.

Certainly, it is not the case of the OPs that the matter pending before the Honble Supreme Court involves issues relating to abuse of dominant position by the OPs in violation of Section 4 of the Act.

Thus, the Commission may examine the instant matter in order to ascertain if there is any anti-competitive conduct or practice in the markets in terms of the provisions of the Act.

Now, in order to examine the conduct of the OPs under Section 4 of the Act, firstly determination of relevant market, in both its product and geographic dimension, is required.

The Informant in the present case has delineated the relevant product market as the market for development of infrastructure and real estate and the relevant geographical market as the State of Haryana.

It is noted that as per the information, the Informant in the matter comprise of a group of persons (Informants members) who are engaged in the development of real estate, particularly housing colonies, in the National Capital Region, which are thereafter sold to individual plot holders.

The grievance of Informant with OP-1 and OP-2 in the instant matter relates to development of Group Housing Colony in the revenue estate of Tehsil Sohna, Gurugram District in Haryana.

Keeping in view the above facts, the grievance of the Informant and the relevant provisions of the Act, the Commission is of the considered opinion that the relevant product market in the instant case is market for issue of licenses and development of infrastructure for residential plotted group housing commercial colonies.

With regard to the relevant geographic market, the Commission observes that the jurisdiction of the OPs covers all the urban areas of Haryana and cannot be restricted to a particular tehsil from which the grievance of the Informant emanates.

Thus, the relevant geographic market in the present case would be the State of Haryana.

Accordingly, the relevant market is delineated as the market for issue of licenses and development of infrastructure for residential plotted group housing commercial colonies in the State of Haryana.

Next, with respect to the issue of dominance of the OPs in the relevant market, the Commission notes that OP-1 and OP-2, by virtue of being statutory authorities under the Haryana Development Act and HUDA Act for issue of licenses and development of infrastructure in the State of Haryana, appear to be in a position of strength whereby they can operate independently of the competitive forces prevailing in the market.

OP-1 is the only department that can issue license to developers for development of colonies and OP-2 is the only authority to undertake external development works in the State of Haryana.

The developers, who are consumers of these services are entirely dependent on these authorities for these services, owing to their statutory powers.

Thus, prima facie, the OPs appear to be in a dominant position in the relevant market delineated supra.

Regarding abuse of dominant position, the Commission notes from the information that under the Sohna Master Plan, several proposals were made to facilitate development of infrastructure facilities such as providing connectivity and transportation, public utilities etc.

for which land was to be acquired and developed by the OPs.

However, in several instances, OP-1 has failed even to acquire the land for these purposes, even though licenses have been granted to several developers for development under the Sohna Master Plan and EDC IDC amount is being levied upon them.

Further, the Commission observes that the Informant has submitted that its members have till date deposited Rs. 375.38 crores and Rs. 137.18 crores towards the EDC and IDC amounts respectively with the OPs without any progress on the development works.

It has been alleged that even the deployment and use of these funds by the OPs does not seem to be on transparent basis.

To elucidate this, the Informant has stated that despite seeking information regarding receipt and expenditure of EDC IDC amount with respect to Sohna region under Right to Information Act, 2005, no specific response was given by OP-1. OP-1 merely provided its total year wise receipt and expenditure of EDC IDC amount, a bare perusal of which shows that about 60 percent of the total IDC amount was used as loan for refund purposes in other schemes floated by OP-2.

This indicates that OP-1 may be collecting EDC IDC amount for a particular area and applying the same for some other location in the State of Haryana.

In addition, the Commission notes the main allegation of the Informant is that the agreements executed by the OPs with the developers are one-sided and loaded heavily in favour of OP-1.

It has been alleged that by virtue of the terms and conditions in Sohna LOI, Sohna Agreement and Sohna Licence, OP-1 has excluded itself from any obligations and liabilities, and has compelled the developers to agree to the terms of these documents in toto.

It has been further alleged that the conduct of the OPs to impose charges without undertaking any development works or communicating any information on the status of Master Plan and not allowing developers to claim any damages or modification to the clauses imposing penal interest is unfair and onerous on the developers.

Having considered the submissions of the Informant and the response of OP-1 thereto, the Commission is of the opinion that even though the terms of Sohna LOI, Sohna Agreement and Sohna Licence relating to EDC IDC emanate largely from the statutory provisions of the relevant statutes, prima facie the terms of these documents appear to be one-sided and in favour of the OPs.

Further, the alleged conduct of the OPs such as failure to adhere to its obligations under the Sohna Master Plan in a time-bound manner and imposing onerous obligations on the developers to pay EDC IDC, prima facie, appears to be abusive.

In response to the allegations, OP- 1 has not denied that it has not provided External Development Works in accordance with the Sohna Master Plan, rather it has justified that it is not possible to provide such services unless the entire EDC IDC amount is paid by the developers alongwith interest and penal interest.

The Commission finds that the conduct of the OPs whereby they have not undertaken any External Development Works related to the Sohna project is ultimately affecting the end consumers i.e. the allottees home- buyers, as because of non-development by the OPs, the completion of the project is getting delayed and the same is rendered uninhabitable.

Thus, in view of foregoing, the Commission is of the opinion that the conduct of the OPs prima facie appears to be in contravention of the provisions of Section 4(2)(a)(i) of the Act.

Accordingly, the DG is directed to cause an investigation into the matter, complete the investigation within a period of 60 days from the receipt of this order and submit its report.

It is, however, made clear that nothing stated in this order shall tantamount to expression of final opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein.

The Secretary is directed to send a copy of this order along with the information and the documents received in relation to this matter to the DG forthwith.

It is ordered accordingly.

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Order under Section 27 of the Competition Act 2002 The present order shall dispose of the information filed by M section Crown Theatre (hereinafter, the Informant) under section 19(1)(a) of the Competition Act, 2002 (hereinafter, the Act) against Kerala Film Exhibitors Federation (hereinafter, the Opposite Party OP), alleging inter alia contravention of the provisions of the Act.

Facts 2 .1 The Informant, a partnership concern, is stated to be a single screen theatre established in the 1930s in Calicut, Kerala.

It has been engaged in release exhibition of English and Hindi movies for the last 80 years.

In April 2012, the Informant converted itself from a single screen theatre to a theatre with two screens, equipped with state of the art facilities including seating and projection systems.

The Informant claims to have started screening Tamil and Malayalam films in its theatre thereafter.

2 OP i.e., Kerala Film Exhibitors Federation (KFEF) is registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955.

It is stated to be an association representing film theatres in Kerala and about 315 film theatres in the State of Kerala are its members.

Membership of OP is subject to recommendation from one of its executive committee member and two other members as well as approval by its executive committee and working committee.

2.3 The allegations of the Informant are largely directed towards anti-competitive practices and abuse of dominant position by OP in preventing screening of Malayalam and Tamil films in theatres in Kerala.

As per the Informant, OP has been controlling and restricting the exhibition of new movies across Kerala.

In September 2012, OP directed its members to strike stop screening films in their theatres as a mark of protest against an increase in service charge and certain policies of the State Government of Kerala towards film industry.

In October 2012, it was decided to indefinitely close down the cinema halls w.e.f 02.11.2012.

The Informant apprehended that this move will lead to huge losses as an upcoming English movie Skyfall was due to be released shortly.

As per the Informant, while the producers of vernacular movies could postpone the release of their movies till the duration of the strike, in case of English Hindi movies which are released all over India simultaneously, the strike would cause huge loss to the Informant.

4 Due to differences with OP, the Informant resigned from its membership in November 2012.

For a few months after resignation of its membership, the Informant continued getting new Tamil and Malayalam films for release and exhibition at its theatre.

However, sometime around May 2013, OP started directing the distributors in the State of Kerala to abstain from giving films to the Informant.

The Informant has alleged that such conduct of OP amounts to abuse of dominant position as it has denied restricted the exhibition of films to non-members in the State of Kerala.

2 .5 The Commission, after examining the facts and material on record, passed a prima facie order dated 08.05.2014, observing violation of the provisions of section 3(1) read with section 3(3) of the Act in the matter.

The Director General (hereinafter, the DG) was directed to conduct an investigation into the matter and to submit a detailed investigation report to the Commission.

DGs Investigation 3.1 In terms of section 26(3) of the Act, the DG submitted the investigation report to the Commission on 25.05.2015.

The primary issue that was investigated by the DG was whether there was denial of distribution of Malayalam and Tamil films to the Informant after May 2013 at the behest of or under the pressure of OP in contravention of section 3(1) read with section 3(3)(b) of the Act.

3 .2 The DG has largely relied on the submissions and evidence provided by the parties, including third parties, and also the findings of investigation in an earlier similar case (Case Number 45 of 2012) against the same OP to conclude that OP has infracted the provisions of section 3(1) read with section 3(3)(b) of the Act.

The subsequent paragraphs highlight the submissions evidence provided by different parties which were relied upon by the DG.

3 . 3 Mr. Roopesh G. Makhija, Manager of R.M. Films (a distributor), Calicut (hereinafter, Mr. Makhija), vide an affidavit dated 15.04.2015 before the DG, has submitted that OP has been indulging in the practice of boycotting theatre owners in case they do not agree to its actions diktats.

With regard to the dispute between the Informant and OP, Mr. Makhija has submitted that OP had some issues with the Informant since the Informants partners disregarded the demands of OP.

As a result, distributors were asked not to supply Malayalam and Tamil films to the Informant.

Mr. Makhija further stated that, in case a distributor does not agree with the diktats instructions of OP, that distributor is also boycotted and OP does not allow the said distributors movies to be screened in Kerala.

Therefore, distributors and theatre owners generally succumb to the directives of OP apprehending that such boycott may lead to huge financial loss to them.

When provided an opportunity to rebut, Mr. P.V. Basheer Ahmed, President of OP has stated that Mr. Makhija is not in the field of distribution for last 10 years.

The same, however, was found to be incorrect by the DG.

3 .4 The DG has also relied on the submissions of Mr. Mukesh Mehta of M section E4 Entertainment, sub-distributor of 20th Century Fox (producer for the film Raja Rani).

Mr. Mukesh Mehta has stated that Mr. Basheer Ahmed had called him to stop screening of the film Raja Rani and asked him to support only those theatres which were regularly screening Tamil and Malayalam films.

He further stated that there is an understanding between the distributors, producers and OP that the distributors would release films only in agreed theatres which the distributors normally consent to.

It is also submitted that Mr. Basheer Ahmed is following enforcing this agreement and as a distributor, M section E4 Entertainment can release movies only in mutually agreed centres.

The DG provided an opportunity to Mr. Basheer Ahmed to contest the submissions made by Mr. Mukesh Mehta.

He accepted the fact of premature withdrawal of the movie Raja Rani from the Informant theatre but stated that the movie was withdrawn due to pressure from government theatres.

However, he failed to produce any evidence to show that any pressure was exerted by the government theatres.

3.5 It has been alleged by the Informant that M section Friday Tickets, a film distribution company, has denied the distribution of the movies Philips and the Monkey Pen and Zachariyayude Garbhinikal to the Informant.

M section Friday Tickets, before the DG, has accepted that it did not distribute the above two films to the Informant because of the ban imposed by OP on the Informant.

It is further stated that going against the ban would lead to serious financial repercussions on its business and it would not be able to exhibit its movies in any other theatre across Kerala.

Ms. Sandra Thomas, Managing Partner of M section Friday Tickets has confirmed that a ban was imposed on the Informant because of OPs threats and has submitted that not following the directions of OP would endanger their business relationship with other members of OP.

When given an opportunity to defend, Mr. Basheer Ahmed merely denied the statement of Ms. Sandra Thomas as baseless.

3.6 M section Lal Jose Film Private Limited is another distributor which refused Malayalam movies to the Informant.

M section Lal Jose Film Private Limited vide its letter dated 30.07.2014 confirmed that though they approached the Informant for the film Pullipulikalum Attinkuttiyum, ten days before the release of the said film they received information of the ongoing dispute between the Informant and OP, due to which they did not release the said film in the Informants theatre fearing financial repercussions.

Further, vide its letter dated 11.03.2015, M section Lal Jose Film Private Ltd. has stated that if they screen the movies against the diktat of OP, it would create problems with other theatres in the Malabar area.

3.7 From the response received from M section Murali Films, the DG observed that though it has supplied the film Nee Ko Njaa Chaa to the Informant, it did not supply the movie Celluloid owing to the problems between OP and the Informant.

Further, the statement given by M section Murali Films reaffirmed the allegations of the Informant that due to pressure of OP, the distributors were not offering fresh release of Malayalam and Tamil movies to the Informant.

When provided an opportunity to counter the statement made by M section Murali Films, Mr. Basheer Ahmed submitted that movie Celluloid was banned by Film Distributors Association and the Informant did not screen it due to the above said ban.

3.8 The DG also relied on its findings against KFEF (i.e., OP) in Case Number 45/2012.

The DG, in that case, found that OP indulged in anti-competitive conduct by restricting new releases to take place in the theatres other than its members.

OP threatened and prohibited the producers distributors also from giving new releases to the non-members.

Further, OP banned several movies of producers distributors which disregarded its mandate and ventured out to release their movies in theatres of non- members of OP.

As such, because of its economic clout, OP apparently has a stronghold over the Malayalam and Tamil film industries of Kerala and, resultantly, producers distributors are hesitant to release movies to any theatre other than the members of OP.

3.9 During the investigation, the DG found that the Informant ceased to be a member of OP after its resignation vide letter dated 01.11.2012.

After May 2013, the Informant received only one Tamil movie in its theatre namely Raja Rani.

However, even this film was withdrawn after three days because of the direct interference of Mr. Basheer Ahmed through a phone call made to the sub-distributor of Raja Rani i.e., Mr. Mukesh Mehta of M section E4 Entertainment.

Thereafter, no Tamil Malayalam film was exhibited in the theatre of the Informant in spite of it having two screens and sufficient screen time for vernacular movies.

Thus, the DG has noted that the issue involved in both the cases, i.e. Case Number 45 of 2012 and the instant case, are analogous.

In both these cases there has been denial of new releases to the theatres of non-members of OP because of the economic clout and threat posed by OP.

3.10 In response to the above submissions, OP has not been able to counter the allegations and evidence gathered against it.

OP has merely denied the allegations without producing any cogent evidence whatsoever to show that after the resignation of the Informant and more specifically after May 2013 (when the last vernacular movie was displayed in the Informant theatre), any Malayalam Tamil movie was distributed to the Informant.

OP has only mentioned that a Malayalam movie was released in the Informant theatre in the year 2006.

3 .1 1 Based on the above, the DG reported that the Informant has been denied Malayalam Tamil movies since May 2013 because of the intervention of OP in violation of the provisions of section 3(1) read with section 3(3)(b) of the Act.

3.12 The DG has also identified two key persons involved in the functioning of OP i.e., its President Mr. Basheer Ahmed and General Secretary Mr. M.C. Bobby.

Reply Objections of OP 4.1 OP has filed its objections to the DG report vide its response dated 14.07.2015.

It is submitted that the Informant theatre was established in the year 1930 and has been screening only English and Hindi films from the time it commenced its operations, except one or two Malayalam films.

It is submitted that 95 of English or Hindi films that have been released in India were screened by the Informant and since it screens Malayalam films only during noon shows (non regular shows), the distributors are not willing to give regular release of Malayalam movies to the Informant.

4 .2 It is submitted that on 02.11.2012, a strike was scheduled by OP in protest against the increase in service charge on theatres and also with respect to the policies of the government.

The strike was withdrawn within 8 days after meeting with Ministers.

OP has submitted that the Informants allegation is only with respect to the year 2013.

OP has stated that it never interfered in any matter relating to the Informant theatre being a non member.

It is submitted that the Informant resigned from membership of OP on 01.11.2012 and in its resignation letter the Informant has clearly stated that it screens mostly Hindi and English films, the release dates of which would not possibly be postponed till the end of the strike.

4.3 Further, OP has stated that none of the shows were cancelled in the Informant theatre.

With respect to submissions of M section R.M. Films of Calicut, it is stated that M section R.M. Films has not distributed any films for the past 10 years and even when it was doing business, it never screened any Malayalam movies in the Informant theatre.

OP has also highlighted the statement of Ms. Sandra Thomas (M section Friday Tickets) that they were not aware of the exact reason for the ban of Informant theatre by OP and has submitted that M section Friday Tickets unilaterally decided not to screen their films in the Informant theatre.

OP has also contended that third parties distributors have been erroneously relied upon by the DG as it is clear from their statements that, irrespective of the ban, such distributors had no intent to screen their films in the Informant theatre.

4.4 OP has also pointed out the statement given by Mr. Mukesh Mehta of M section E4 Entertainment whereby Mr. Mukesh Mehta stated that the film Raja Rani was not withdrawn, rather it was mutually decided with the Informant to stop the screening of the film after three days due to apprehension that other exhibitors may refuse to screen the movie.

In the context of Mr. Mukesh Mehtas conversation with Mr. Basheer Ahmed, it is stated that OP had never asked Mr. Mukesh Mehta to stop the movie Raja Rani in the Informant theatre.

It is submitted that the film Raja Rani was screened in Government theatres and also at Ganga Theatre, Calicut.

The Informant had license for 28 shows but it only screened 12 shows.

So it was apparently because of some arrangement between the government theatres and the distributor.

4.5 It is further submitted that Mr. Lal Jose, whose statement has been relied upon by the DG, categorically stated that he did not get timely confirmation from the Informant for release of his film.

As per OP, it never banned any films distributed by M section Lal Jose Film Private Limited and highlighted that the film Neram was screened by the Informant.

4.6 OP has also submitted that no action has been taken against any of its members or any exhibitor in the State of Kerala.

All the theatres in Kerala are screening films of all languages as per their wishes and no restriction ban has been imposed against any of these theatres.

It is alleged that since Mr. Basheer Ahmed filed a case against the Kerala Film Distributor Association before the Commission, the distributors persuaded the Informant to submit the present case against OP and its office bearers.

It is submitted that M section Murali Films has released the film Nico Nan Chaa which was screened all over Kerala, it.

Citing these instances, OP has requested the Commission to dismiss the findings of the DG as elucidated in the investigation report.

Submissions of the Informant 5.1 Though no written reply response was filed to the DG report by the Informant, yet the Informant supported the findings of the DG and urged that the same be accepted by the Commission.

It was further highlighted that OP could not demolish any of the evidence recorded by the DG during the investigation.

The Informant has contended that the film Raja Rani , though screened only for three days in its theatre, received a very good response.

Therefore, the Informant urged that the contention of OP that the film was withdrawn due to Informant being a non-regular Tamil Malayalam releasing theatre does not hold water and is liable to be rejected.

It was further urged that the standard of evidence for proving an understanding agreement is preponderance of probabilities and the same is established from the evidence collected by the DG.

The Informant, therefore, pleaded that the DGs findings need to be accepted in totality.

Findings of the Commission 6 . 1 On a perusal of the investigation report submitted by the DG, the replies objections submissions filed by the parties and other materials available on record, the Commission feels that the primary issue that needs to be determined is: Whether OP interfered with the distribution of Malayalam and Tamil films to the theatre of the Informant in contravention of the provisions of section 3(3) of the Act? 6.2 The Informants case is that the denial of Tamil and Malayalam language movies to be screened at its theatre is due to the interference of OP which is alleged to be in contravention of section 3(1) read with section 3(3)(b) of the Act.

The DG has found evidence to conclude that because of OPs intervention, regional language films i.e., Tamil and Malayalam movies were denied to the Informant theatre and the same has adversely affected the competition in the said market.

6.3 The Commission has considered the evidence relied upon by the DG which inter alia comprises of statements furnished during the course of investigation in form of letters from distributors, their statements on oath, the affidavit of the Informant, submissions and affidavits of third parties etc.

6.4 Mr. Makhija, Manager of R.M. Films, Calicut has submitted that the distributors have been directed by OP not to supply movie prints of Malayalam and Tamil language movies to the Informant.

It is also submitted that if a distributor does not agree to the instructions of OP, that distributor is also boycotted and the OP does not allow that distributors movies to be screened in the State of Kerala in its members theatres.

As such, it is quite clear that the Informant was not given Tamil and Malayalam movies by distributors because of the directions issued by OP.

The evidence clearly brings out that exhibition of Tamil and Malayalam films to the Informant theatre were denied at the behest of OP.

5 Further, the statement of Mr. Mukesh R. Mehta of M section E4 Entertainment, a distributor, makes it abundantly clear that the movie Raja Rani was withdrawn from theatre of Informant due to the pressure exerted by Mr. Basheer Ahmed, President of OP.

The DG investigation has revealed that it is only after Mr. Basheer Ahmeds call that Mr. Mukesh R. Mehta intimated Mr. A.R. Vinod, partner in the Informant theatre, to stop screening the film Raja Rani owing to the pressure exerted by OP.

The circumstances also support the allegation of the Informant in this regard.

As per the Informant, the screening of the film Raja Rani in the Informant theatre was doing quite well for the three days after which it was withdrawn by the distributor i.e., M section E4 Entertainment, due to the interference of the President of OP directing the distributor to withdraw the movie from the Informant theatre.

The Commission is convinced that the said film was withdrawn from the Informant theatre only at the instance of OP.

6.6 Further, as per the statement made by Ms. Sandra Thomas, Managing Partner of M section Friday Tickets, before the DG, they have denied distribution of two films to the Informant because of the ban placed by OP due to the fear of financial repercussions in case they violated this ban.

Similarly, M section Lal Jose Films Pvt.

Limited also confirmed that the only reason it did not release its films with the Informant was the dispute between the Informant OP.

It is evident from the statements of M section Lal Jose Films Pvt.

Limited that it feared retaliation by OP and its member theatres in case it chose to release Malayalam Tamil movies in the Informant theatre.

M section Murali Films also accepted that it did not supply films to the Informant due to the differences between the Informant and OP.

6 .7 All the above statements provided by the third parties before the DG are of utmost relevance as they show how much strength OP possesses in the film industry in Kerala.

As most of the big theatres are OPs members, every film distributor has inhibitions to release its film in any theatre which is experiencing differences with OP.

Dealing with any theatre which is boycotted banned by OP (e.g., Informant theatre in the instant case) would entail financial repercussions to the distributor as its film would not be able to do good business in the State of Kerala if OP did not allow the same to be released in its member theatres.

6.8 The Commission notes, as also recorded by the DG during its investigation, that the conduct of the present OP has also been examined by this Commission in an earlier case i.e., Case Number 45/2012 (Kerala Cine Exhibitors Association and KFEF others).

While holding the conduct of KFEF i.e., the present OP, along with some other Opposite Parties in that case, to be anti-competitive, the Commission had imposed penalty on OP.

6 . 9 The findings of the DG in the present case, which are well supported by convincing evidence, further reaffirm that OP has been indulging in and perpetuating anti-competitive practices.

It is clear from the submissions of various film distributors that because of the diktats of OP, release of Malayalam and Tamil films were denied to the Informant.

It is observed that OP was provided with adequate opportunities, during DG investigation and also before the Commission, to refute the submissions made by various distributors theatres but no sufficient explanation was tendered by OP.

The OP has not been able to furnish any cogent evidence or reason to counter the allegations or the statements of the witnesses examined by the DG.

The conduct of OP, is therefore, found to be anti-competitive amounting to controlling and limiting the supply of Malayalam and Tamil films in the State of Kerala, in contravention of section 3(1) read with 3(3)(b) of the Act.

Since the said conduct falls under the presumptive rule of section 3(3) of the Act, a presumption is raised against OP that the said conduct has caused an appreciable adverse effect on the competition in the film exhibition industry in Kerala.

6.10 In view of the foregoing, the Commission is of the view that the conduct of OP amounts to contravention of section 3(1) read with section 3(3)(b) of the Act.

6.11 With regard to the liability of the office bearers of OP under section 48 of the Act, the DG has identified Mr. Basheer Ahmed and Mr. M.C. Bobby, President and General Secretary of OP, respectively, to be the key decision makers of OP.

Section 48(1) of the Act provides that where a person committing contravention of any of the provisions of this Act is a company (including a firm or an association), every person who, at the time the contravention was committed, was in charge of, and was responsible for the conduct of the business of the company association, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Further the proviso to that sub-section entails that such person shall not be liable to any punishment if he proves that the contravention was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such contravention.

As such the Commission notes that Mr. Basheer Ahmed and Mr. M.C. Bobby, being the President and General Secretary of OP, respectively, are responsible for the conduct of OP.

It is evident that they were involved in the key decisions of OP.

Mr. Mukesh Mehta of M section E4 Entertainment had also categorically stated he was directed by Mr. Basheer Ahmed over the phone to stop providing Tamil movies to the Informant.

As a result, a movie namely, Raja Rani which was released at the Informants theatre was taken down after three days.

As such, it is evident that Mr. Basheer Ahmed played an active role in enforcing the directives of OP in controlling and restricting the exhibition of new movies across Kerala.

Further, Mr. M.C. Bobby, General Secretary of OP, is also responsible for the conduct of OP being in a key position.

Moreover, in spite of ample opportunity given to them, they failed to adduce any evidence to establish that the anti-competitive decisions were made without their knowledge or that they had exercised all due diligence to prevent their commissioning.

6.12 In view of the foregoing, the Commission is of the view that both Mr. Basheer Ahmed and Mr. M.C. Bobby, being in-charge of and responsible for the conduct of business of OP under section 48 of the Act, are liable to be penalised.

6 .1 3 It is relevant to mention that in Case Number 45/2012, Kerala Cine Exhibitors Association v. Kerala Film Exhibitors Federation and Others, the Commission had already found these two office bearers responsible under section 48 of the Act and imposed a penalty 7 of their average income accordingly.

ORDER 7 .

Considering the findings elucidated in the earlier part of this order, the Commission finds that OP has indulged in anti-competitive conduct in violation of the provisions of section 3 of the Act.

Further, two of its office bearers, namely, Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby have continued with the said anti-competitive conduct despite the on-going investigation by the DG in Case Number 45 of 2012.

It is thus clear that these persons have been repeatedly indulging in anti-competitive conduct to the detriment of competition in the market.

Section 27 of the Act empowers the Commission to pass all or any of the orders enumerated therein, and issue such other order or direction as it may deem fit in case of contravention of the provisions of section 3 or 4 of the Act.

Further, in case of an anti-competitive conduct committed by a company, including a firm or other association of individuals, the Commission may proceed under section 48 of the Act to penalise the individuals responsible for the anti-competitive conduct on the part of such company.

The Commission observes that OP has been penalised in Case Number 45/2012, Kerala Cine Exhibitors Association v. Kerala Film Exhibitors Federation and Others for indulging in anti-competitive conduct which was of similar nature.

Further, in various earlier cases pertaining to anti-competitive conduct by film associations, this Commission has taken a stern view that such activities are antithetic to competition and fair-play in the market.

With regard to the penalty, it may be noted that the objective of imposing a penalty under section 27 of the Act is two-fold.

Firstly, to discipline the erring party for its anti-competitive conduct and, secondly, as a deterrence to stall future contraventions.

Such deterrence is not only for the concerned erring entity which has been found guilty of contravention, but also for all other entities which are operating under similar circumstances and are indulging in similar anti-competitive conduct.

As spelt out earlier, in numerous cases pertaining to anti-competitive conduct by film associations, the Commission has imposed heavy financial penalties.

As a matter of record, information in one such case was filed by the present OP against Film Distributors Association, Kerala.

Further, the allegations against the anti-competitive conduct by OP was first reported to the Commission in mid-2012 in Case Number 45 of 2012 wherein the Commission directed the DG to initiate an investigation vide its prima facie order 09.01.2013.

The Commission was seized of the matter in Case Number 45 of 2012 when OP further indulged in the similar anti-competitive conduct.

However, it appears that OP has turned a blind eye to the past orders of the Commission against like film associations in other states for similar anti-competitive conduct as well as the on-going investigation against it in Case Number 45 of 2012.

In view of these, the Commission issues the following directions under section 27 of the Act: OP and its office bearers, namely, Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby shall immediately cease and desist from indulging in anticompetitive conduct which they have been found to be indulging in contravention of section 3 of the Act, as explained in earlier paragraphs.

This shall come into effect immediately, i.e., on the day of receipt of this order by them.

OP shall pay penalties as worked out hereunder and deposit the penalties calculated at the rate of 10 of its average income within 60 days from the receipt of the order by them: Further, Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby shall pay penalties calculated at the rate of 10 of their average income as worked out hereunder and deposit the penalties within 60 days from the receipt of the order by them: OP shall not associate Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby with its affairs, including administration, management and governance, in any manner for a period of two years.

This shall be complied with before expiry of 60 days from the receipt of the order by OP.

Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby shall not associate with OP, including it administration, management and governance, in any manner for a period of two years.

This shall be complied with before expiry of 60 days from the receipt of the order by them.

OP shall organize, in letter and spirit, at least five competition awareness and compliance programmes over next six months in the State of Kerala for its members.

The compliance of this shall commence before expiry of 60 days from the receipt of the order by OP.

The OP and the office bearers of the OP, namely, Mr. P.V. Basheer Ahmed and Mr. M.C. Bobby shall file with the Commission a report of compliance each with the above directions, pertaining to them, within 90 days of receipt of this order by them.

Secretary is directed to inform the parties accordingly.

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On 30.07.2015, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) given by Baxalta (Notice).

The Notice has been filed pursuant to the execution of Global Separation and Distribution Agreement (GSDA) between Baxter International Inc. (Baxter) and Baxalta, on 30.06.2015.

As per the details provided in the Notice, the combination relates to the acquisition by Baxalta of the bioscience business and related assets of Baxter (Target Business).

Baxter and Baxalta are stated to be public limited companies registered in USA and listed on the New York Stock Exchange.

As per the information given in the Notice, Baxter provides a broad portfolio of bioscience products (constituting the Target Business), intravenous solutions and nutritional therapies, drug delivery systems, etc.

As stated in the Notice, Baxalta, prior to the combination, was a wholly owned subsidiary of Baxter and did not carry out any business activities.

It has been submitted in the Notice that pursuant to the GSDA, the Target Business has been effectively transferred to the Acquirer on 30.06.2015 (Global Implementation), except in certain deferred jurisdictions, including India, where the transfer of the local target businesses will take place at a later date pursuant to local separation agreements (hereinafter, the implementation of the combination in India is referred to as the India Separation).

Further, on 01.07.2015, Baxter distributed shares of Baxalta on a pro rata basis to its shareholders, cumulatively amounting to 80.50 per cent of Baxaltas shareholding and the remaining 19.50 per cent equity shares were retained by Baxter itself.

In relation to business operations of Baxter in India, it has been submitted that it operates in India through two subsidiaries, namely, Baxter India Private Limited and Gambro India Private Limited.

Under the India Separation, Baxters Indian bioscience business and related assets will be transferred to a newly created wholly owned subsidiary of Baxter, viz. Baxalta Bio Science (India) Private Limited (Baxalta India).

Thereafter, the ownership and control of Baxalta India will be transferred to Baxalta.

As already stated, prior to the Global Implementation, Baxalta was a wholly owned subsidiary of the Baxter, and did not carry out any business activities.

Thus, there was no horizontal overlap or vertical relationship between the business activities of Baxter and Baxalta.

It is also observed that the combination, including the eventual India Separation, relates to a structural separation of the Target Business from Baxter into a newly incorporated company, Baxalta.

Accordingly, the said structural change is unlikely to result in any impact on competition in any market(s) in India.

Considering the facts on record and the details provided in the notice given under sub-section (2) of Section 6 of the Act and the assessment of the combination after considering the relevant factors mentioned in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the combination is not likely to have any appreciable adverse effect on competition in India and therefore, the Commission hereby approves the combination under sub-section (1) of Section 31 of the Act.

This order is issued without prejudice to any proceedings under Section 43A of the Act.

This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

The Secretary is directed to communicate to the Acquirer accordingly.

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