Competition LawRulings

CCI imposes penalty on 3 leading Zinc- Carbon dry cell battery manufacturers for indulging in anti- competitive conduct, invokes lesser penalty provision

CCI Updates

CCI imposes penalty on Eveready Industries India Ltd. (‘Eveready’), Indo National Ltd. (‘Nippo’), Panasonic Energy India Co. Ltd. (‘Panasonic’) and their association AIDCM (Association of Indian Dry Cell Manufacturers) of Rs.245.07 crore, Rs. 52.82 crore, Rs. 74.68 and Rs. 1.85 Lakh respectively for colluding to fix prices of zinc-carbon dry cell battery in India.

CCI reduces the penalty of respective companies by 100 percent, 30 percent and 20 percent after observing that Panasonic had filed an application before CCI under Section 46 of the Competition Act, 2002 (‘the Act’) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’. In addition, Panasonic also informed that there was cartel amongst Eveready, Nippo and Panasonic.

CCI further observes that modus operandi of the Manufacturers, which stated that employees of OPs were actively involved in the cartelisation, inter alia, used to meet and agree on the price increase, which was to be led by one manufacturer of zinc-carbon dry cell batteries and followed by others under the pretext of following the market leader.  CCI further notices that the Manufacturers agreed not to push sales through their channel/ distribution partners aggressively to avoid price war amongst themselves.

CCI further observes that parties had formed cartel for a period of more than 6 years and manufacturers had clear agreement/ understanding to increase the price of zinc – carbon dry cell battery in market. Hence, CCI imposes penalty under Section 27 of the Competition Commission Act, 2002.

CCI states that after observing all relevant factors including duration of cartel, industry conditions, etc. and CCI levies penalty on the three battery manufacturers at the rate of 1.25 times of their profit for each year from 2009-10 to 2016-17. Also, levies penalty of Rs. 1.85 Lakh on AIDCM at the rate of 10% of average of its receipts for preceding three years. Additionally, considering totality of facts and circumstances of the case, penalty leviable on individual officials/ office bearers of the three battery manufacturers and AIDCM was computed at the rate of 10% of the average of their income for preceding three years.

After observing all the relevant factors CCI grants Panasonic and its individuals 100 % reduction in the penalty than was otherwise leviable. Eveready and Nippo, along with their individuals, were granted 30 and 20 % reduction in penalty respectively. Pursuant to reduction, penalty imposed on Eveready was Rs. 171.55crore (Rupees One Hundred Seventy-One Crores and Fifty-Five Lakhs) , on Nippo was Rs. 42.26 crore (Rupees Forty-Two Crores and Twenty Six Lakhs) and imposes no penalty  on Panasonic.

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