CCI Imposes Over ₹6 Lakh Fine On Publishers & Booksellers Body And Former Office-Bearers For 'Controlling & Limiting' Book Trade

The Competition Commission of India (CCI) has found the Federation of Publishers' and Booksellers' Associations in India (FPBAI) and three of its former office-bearers guilty of carrying out anti-competitive business practices in violation of provisions of the Competition Act. In doing so the commission imposed penalty to the tune of ₹2,56,649/- upon FPBAI, which is stated to be umbrella body/ association of publishers and booksellers in India. Additionally, it imposed upon S.C. Sethi (President and Chairman of GOC in 2020-21 and 2021-22), Pradeep Arora (President of FPBAI in 2020-21 and 2021-22), and Prashant Jain (Hony. Secretary, FPBAI in 2020-21 and 2021-22) penalty of Rs.1,76,305, Rs.1,00,000 and Rs.1,00,000 respectively. The total penalty on the federation and office bearers amounts to Rs. 6,32,954. These practices included the FPBAI fixing foreign currency exchange rates of import/export of books/journals higher than prescribed RBI rates, capping discounts which may be offered by members to libraries/institutions, prescribing terms and conditions with respect to credit period, interest rate and verification of prices of a mandatory nature, and issuing advisories to libraries, booksellers and institutions to purchase books only from FPBAI approved vendors.Finding such practices to have an appreciable adverse effect on competition, the CCI held,“… fixation of conversion rates imposed upon the rest of members of the book industry has resulted in higher prices to the end consumers where such rates were accepted by the procuring libraries/ institutions. Needless to mention that non-acceptance of GOC rates by the procuring institutions resulted in gains to the importer booksellers at the cost of the remaining bookseller members. Therefore, either ways, one community or the other had to face the brunt. Moreover, circulation of approved vendor lists along with the monthly circulars coupled with non-withdrawal of earlier advisory (pertaining to deal with members only) has the potential to foreclose opportunity for non-member booksellers, thereby distorting level playing field, thus resulting in entry barriers for new entrants as well as the risk of driving existing competitors out of the market.”Section 3 explains what anti-competitive agreements are. Section 3(3)(a) includes an agreement entered into between enterprises or associations or persons or a decision by them, where they are engaged in identical or similar trade of goods or provision of services, which "directly or indirectly determines purchase or sale prices". Section 3(3)(b) states an agreement which limits or controls production, supply, markets, technical development, investment or provision of services. Section 3(1) states that no enterprise or association of enterprises or person shall enter into any agreement for production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes an appreciable adverse effect on competition within India.FactsUpon a complaint filed by one Pranav Gupta (informant), CCI framed a prima facie case against FPBAI and referred the matter to the Director General (DG) for investigation.The DG's report highlighted that the Good Offices Committee (GOC), a subsidiary of FPBAI, fixed foreign exchange rates for book imports which were 3-5% higher than the prescribed bank rates, thereby amounting to price fixation and benefiting a few importer booksellers. It also highlighted the FPBAI's failure to withdraw discount-related circulars and to sensitise members of the CCI order in M/s International Subscription Agency v. FPBAI, where it was held that discount control by FPBAI was in violation of Sections 3(3)(a) r/w Section 3(1) of the Act. Further, the report observed that GOC circulars prescribing terms and conditions effectively controlled the book-trade market. Lastly, the report stated that FPBAI's failure to withdraw earlier appeals urging libraries to deal only with its members created entry barriers for non-members and distorted fair competition.Submissions of the Parties:The FPBAI and its members submitted that fixation of GOC conversion rate was a 'legacy practice' which was merely 'suggestive' and not 'mandatory. It entailed no punitive consequences and members were free to choose prices as per their commercial strategies. It was further argued that such rates do not create entry barriers as they impact an insignificant portion of price. With respect to conversion rates being followed in libraries, they submitted that many libraries do not follow the rates and the decision of some libraries to follow the same reflects their independent commercial decision. Lastly, it was submitted that FPBAI had no obligation to intimate members that the discount clause does not apply anymore and neither is it duty-bound to publicly withdraw the earlier appeals.Contrary to this, the informant submitted that FPBAI used its platform to incentivise cartel-like behavior among its members by ...

CCI Imposes Over ₹6 Lakh Fine On Publishers & Booksellers Body And Former Office-Bearers For 'Controlling & Limiting' Book Trade

LIVELAW NEWS NETWORK

Tags