The Competition Commission rejected an alphabet's claim that Airport Authority of India and Power Grid Corporation abused dominance by restricting lab accreditation standards, ruling both entities are consumers, not suppliers in the relevant market.
The matter is ordered to be closed as no case of contravention of the Act is made out.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
COMPETITION COMMISSION OF INDIA
Case No. 75 of 2017
In Re:
Prem Prakash Industrial Area, Khurai Road Bina, Sagar District Madhya Pradesh – 470113
Informant
And
Airport Authority of India Department of Structure Operational Offices Gurugram Road New Delhi - 110037
Opposite Party No. 1
Power Grid Corporation of India Ltd. Corporate Centre Saudamini, Plot No. 2 Sector 29, Gurugram Haryana – 122007
Opposite Party No. 2
CORAM
Mr. Devender Kumar Sikri Chairperson
Mr. Sudhir Mital Member
Mr. Augustine Peter Member
Mr. U. C. Nahta Member
Mr. Justice G. P. Mittal Member
Case No. 75 of 2017 Page 1 of 12
Order under Section 26(2) of the Competition Act, 2002
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be done only by laboratories which are accredited by a full member MRA [Mutual Recognition Arrangement] of International Laboratory Accreditation Cooperation ( ILAC )/ Asia Pacific Laboratory Accreditation Cooperation ( APLAC )/ International Accreditation Forum (‘ IAF ’). Such stipulation has been alleged as a contravention of Section 4 of the Act.
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propagated by it. The Informant insisted AAI to amend its guidelines that require testing only from NABL accredited labs.
“The laboratory shall have accreditation as per ISO/IEC17025 from any accreditation body having an MRA (Mutual Recognition Arrangement) with International Laboratory Accreditation Cooperation (ILAC)/ International Accreditation Forum (IAF) such as National Accreditation Board for Testing & Calibration Laboratories (NABL) etc. The relevant documents of the accreditation body shall be submitted by the laboratory to be empaneled, along with other necessary documents.”
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transmission lines and sub-stations in next four years is estimated to be around INR 1,00,000 crore. This suggests that PGCIL is a dominant entity in this sphere. To further portray the dominance of PGCIL, reliance has been placed upon information available on the website of PGCIL and Ministry of Power.
“… in addition to already accepted labs/institutions working with POWERGRID, Third Party Labs accredited by any agency which operates in accordance with the requirements of ISO/IEC 17011, having full membership & MRA of ILAC /APLAC are acceptable to provide testing/calibration services to POWERGRID” .
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titled Accreditation Commission for Conformity Assessment Body Pvt. Ltd. v. Quality Council of India and Ors. , which clarified that anybody would have the authority to act as accrediting body provided such body has the necessary infrastructure .
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“14. It is quite clear that in order to determine dominant position, relevant market needs to be determined within which a certain entity is considered dominant. In the instant case it is an admitted fact that the Appellant offers laboratory testing services for construction material in India whereas the Respondent, PGCIL is engaged in transmission of electricity. These two are entirely different areas of services rendered by the Appellant and the Respondent. Neither the Appellant has in its information made a case that the Respondent, PGCIL is engaged in providing laboratory services for testing of construction material nor the Commission or the Appellant have made a mention to that effect. The Appellant himself is engaged in providing laboratory services for testing of construction material and his allegations are in relation to these services alone. The Commission in its discussion on delineation of the relevant market has examined three possibilities and finally narrowed down the market delineation to ‘laboratory services for testing construction material in India’. We agree with the Commission’s delineation
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of the relevant market. If the Respondent does not operate within the relevant market as delineated by the Commission, it cannot be said to be in dominant position and consequently abusing it. Neither the information nor the appeal memo nor oral arguments advanced on behalf of the Appellant made a case under Section 3 (4) of the Act suggesting that there was a vertical relationship between the Respondent and the Appellant; the facts also do not support an assessment that there is such a relationship. The argument on behalf of the Appellant that the Respondent could be considered as a consumer only when he paid for a service, is an unsustainable argument. It is quite clear that the Respondent has been taking the services of the Appellant between 2011-2014 and even now prepared to take those services if its conditions were met. There is no doubt that the Respondent is in the nature of a consumer of laboratory testing services for construction material. It is an admitted fact that in order to lay power lines the Respondent outsources construction work and from time to time in order to keep a check on the quality of civil work mandates testing of construction material used in various civil works by third party labs which are accredited by NABL or which could be accredited by any other agency which has a full membership of ILAC/APLAC and a MRA with these organizations. It is a different issue that in India only NABL has a full membership. There is no doubt that several other construction agencies within the government and outside are comfortable with accreditation provided by simply an Associate Member as distinguished from full member who may not have a MRA but the Respondent should have liberty in deciding the standards of quality of work which they expect from their contractors and if full membership and MRA with ILAC/APLAC is considered as an important parameter, we should have no objection to the Respondents adopting that practice. In any case since the Respondent does not operate within the relevant market, the Respondent cannot be said to be dominant in the relevant market and therefore, abusing its dominant position by enforcing a conduct on its downstream partners. The Appellant has himself in his rejoinder stated that PGCIL is engaged in the business of transmitting power and laying power lines across India. Thus, there is no common course of business between the two entities involved in this case and it could not be said that PGCIL exercised any dominant position in the relevant market delineated by the Commission about which the Appellant nurses a grievance.
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15. If the Appellant is not in a position to secure a market for its services from the Respondent that is not the end of the world. The Appellant offers testing services for construction material which is a very wide canvass of business within the territory of India and it cannot be said that PGCIL is the only agency or a significant part of the potential market in the Country. It appears that the Appellant has not been able to fully appreciate the finer nuances of the Competition Act in terms of delineation of relevant markets and determination of dominant position and its abuse. By referring to Section 19 (4) (g) of the Act, first of all, the Appellant has erred in assuming that a government company by its very nature is dominant. Secondly, he needs to recognize that Section 19 (4) of the Act is with reference to dominant position as defined in Section 4 of the Act which means that relevant market is the determining factor. Having established that PGCIL does not operate in the relevant market the Appellant has no case to prosecute that PGCIL has abused its dominant position.
16. Learned Senior Counsel for the Respondent also referred us to an earlier case decided by this Tribunal where ACCAB which is the associate member of ILAC and the present Appellant’s lab accreditation agency had filed against NABL. The case specifically dealt with the relevant market which was provision of accreditation services in India. In view of the distinction in the context of relevant market, the case has no bearing on the present case except to show that the issue of NABL’s abuse of dominance has already been addressed in an earlier litigation.
17. In view of the above discussion we conclude that the Appellant has not been able to make out a case of dominance and its abuse against the Respondent, PGCIL. The Commission has not erred in deciding that the Respondent, PGCIL is not dominant in the relevant market and therefore, decided to close the information under Section 26 (2) of the Act. Consequently, the appeal is dismissed.”
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consumer of laboratory services. Every consumer/procurer must have the freedom to exercise its choice freely in procurement of goods and services and such a choice is sacrosanct in a market economy as the consumers are best placed to evaluate what meets their requirements and has a competitive advantage. Further, while exercising the choice, they are free to stipulate standards for procurement and the same cannot be held to be anti-competitive.
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A perusal of the correspondence relied upon by the Informant at pages 39 to 41 of the information shows his claim that all laboratories accredited in accordance with ISO/IEC-17025 are at par and can provide the impugned testing services. If that is the case, then there is no need to distinguish testing labs on the basis of services required in relation to airport infrastructure. The relevant market in the instant case is hence, the “ market for laboratory services for testing construction materials in India ”. It is relevant to note that on similar facts and circumstances, market delineation and analysis of the Commission in another case involving PGCIL i.e. Case No. 41/2016, has been upheld by the erstwhile COMPAT.
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Sd/(Devender Kumar Sikri) Chairperson
Sd/(Sudhir Mital) Member
Sd/(Augustine Peter) Member Sd/(U. C. Nahta) Member Sd/New Delhi (Justice G. P. Mittal) Date: 27/02/2018 Member
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2 issues framed by the court
Whether the Airport Authority of India and Power Grid Corporation of India are in dominant position by requiring laboratories to have specific international accreditation.
Whether the Commissions demand for specific accreditation standards amounts to an abuse of dominant position under the Competition Act.
Colour shows how this judgement treated each authority
Accreditation Commission for Conformity Assessment Body Pvt. Ltd. v. Quality Council of India and Ors.Referred¶56
ACCAB v. Quality Council of India and Ors.
4 provisions across 1 enactments
Devender Kumar Sikri
Sudhir Mital
Augustine Peter
U. C. Nahta
G. P. Mittal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
