NCLAT Sets Aside Plea against CCI's Rs 873-Crore Penalty on UBL, Other Beer Makers

The National Company Law Appellate Tribunal on Friday upheld the Rs 873-crore penalty imposed by fair trade regulator CCI on UBL and other beer makers
  • Deeksha Tiwari News Correspondent

The National Company Law Appellate Tribunal on Friday upheld the Rs 873-crore penalty imposed by fair trade regulator CCI on UBL and other beer makers.

The appellants "had already conceded in the leniency application to their role in the cartelization," a two-member panel stated after reviewing the papers and taking the arguments into account.

The NCLAT stated in reference to the group of petitions submitted to the CCI by the beer manufacturers asking for a decrease in penalty: "A lesser penalty application is like an admission of guilt in a cartel."

The two-member bench, made up of Justices Rakesh Kumar and Ashok Kumar Mishra, stated that once they had acknowledged their involvement in an application filed under Section 46 read with Regulation 5, they were only permitted to contest the imposition of a penalty.

On September 24, 2021, the Competition Commission of India fined UBL, Carlsberg India, the All India Brewers' Association, and 11 people a combined sum of about Rs 873 crore for cartelization in the sale and supply of beer.

The aforementioned order was contested in front of the NCLAT, which has appellate jurisdiction over the CCI with regard to any directives issued, judgements rendered, or orders passed by the regulator. The NCLAT also rejected the beer manufacturers' arguments that a CCI order can be overturned without a judicial member present and simply needs to be noted for its rejection.

NCLAT, however, rejected it and noted "Nowhere does it state that CCI must include a member of the judiciary. The addition of a judicial member to decide the process is not contemplated by the Competition Act."

Gopal Subramaniam, a senior attorney representing the beer company, said that the order building a prima facie case and initiating an investigation on the basis of a leniency application was invalid. The CCI had rejected their requests for leniency.

Regarding the severity of the penalty, NCLAT stated that it is clear that, despite the CCI's discretion to impose a fine up to 10% of the average turnover for the previous three fiscal years, in the present case, in addition to granting the benefit of the doubt on the leniency application, the CCI has also adopted a lenient stance. The amount of the fine was calculated as follows: 0.5 times profit for each year the cartel persisted, or 2% of total revenue for each year the cartel persisted, whichever was higher.

With Carlsberg India joining in from 2012 and AIBA acting as a forum for supporting such cartelization from 2013, the era of cartelization was deemed to span from 2009 to at least October 10, 2018. Before the regulator, all three beer businesses submitted applications for reduced penalties.