Heavy-handed competition law enforcement can hurt India's bid to become manufacturing hub: Supreme Court

The Supreme Court on Tuesday firmly rejected what it termed "heavy-handed enforcement" of antitrust regulations, warning that such approaches could derail India's ambitions to become a global manufacturing and technology hub [Competition Commission of India v. Schott Glass India]..A Bench of Justices Vikram Nath and Prasanna B Varale ruled, "In today’s global economic climate, prudence is vital. As the United States and Europe retreat behind their newly-minted trade walls of protectionist policies...India’s bid to emerge as a global centre for manufacturing, life-sciences and technology will succeed only if regulation rewards scale and intervenes solely when genuine competitive harm is shown.".In doing so, the Court dismissed appeals by the Competition Commission of India (CCI) and Kapoor Glass against Schott Glass India, establishing critical precedents for how abuse of dominance cases must be evaluated.The case arose from a 2010 information filed by Kapoor Glass alleging that Schott India abused its dominance by offering exclusionary discounts, discriminating against independent converters, tying the sale of different tube variants and refusing supply.The CCI, relying on a report of the Director General, found Schott India in violation of clauses (a) to (e) of Section 4(2) of the Competition Act and imposed a penalty of ₹5.66 crore. The decision was overturned by the now defunct Competition Appellate Tribunal (COMPAT) in 2014, which noted procedural lapses and absence of competitive harm. Both CCI and Kapoor Glass appealed to the Supreme Court..The Supreme Court dismissed the appeals and affirmed COMPAT’s findings. Reiterating that dominance by itself is not unlawful, the Court held that only conduct that results in an appreciable adverse effect on competition (AAEC) can amount to abuse under Section 4.“Section 4 of the Act does not per se prohibit dominance; it prohibits the abuse of dominance.".The Court also clarified the constitutional and economic rationale behind competition law:“Competition law is not designed to humble the successful or to clip the wings of enterprises that have, through industry and innovation, secured a commanding share of the market… If mere size or success were treated as an offence…the law would defeat itself: it would freeze capital formation, penalise productivity, and ultimately impoverish the very public it is meant to protect.”The Court warned that overzealous enforcement, especially in the absence of market effects, could deter long-term capital and technical expertise that India needs to compete globally.“An effects-based standard is…both a constitutional bulwark against arbitrary restraint of lawful enterprise and a strategic necessity if India is to capture the opportunities that more protectionist economies are in danger of forsaking.”.CCI was represented by Senior Advocate Amit Sibal with Advocates Arjun Krishnan, Anand S Pathak, Shashank Gautam, Sreemoyee Deb, Anubhuti Mishra, Soham Goswami, Nandini Sharma, Anisha Bothra, Aashna Manocha, Abhijeet Singh, Saksham Dhingra and Rishabh Sharma..Schott Glass was represented by Senior Advocate Percival Billimoria with Advocates Mahesh Agarwal, Rahul Goel, Anu Monga, Rishi Agrawala, Ankur Saigal, Victor Das, Himanshu Saraswat, Yash Jain, Aditi Sharma, Kriti Khatri, Rachita Sood, Tushar Bathija and EC Agrawala..Kapoor Glass was represented by Senior Advocate A N Haksar with Advocates Saurabh Sinha, Chitra Y Parande, Gautam Prabhakar and Mrigank Prabhakar..[Read Judgment]