India: Tribunal upholds penalty imposed on Carlsberg, United Breweries for beer cartelisation

The National Company Law Appellate Tribunal (NCLAT) has upheld a ₹873 crore penalty imposed by the Competition Commission of India (CCI) on United Breweries Ltd, Carlsberg India and All India Breweries Association for cartelisation in beer making [Pawan Jagetia v CCI], the Bar and Bench reported on December 27.

Judicial Member Justice Rakesh Kumar and Technical Member Dr Ashok Kumar Mishra held that the appellant had, in their leniency application, already admitted to their involvement in the cartelisation.

“Once they have admitted their involvement in application filed under Section 46 read with Regulation 5, they were only entitled to question the imposition of penalty.”

Further, it was stated that in the case of cartelisation, the same could be inferred even from their conduct.

The issue arose when Crown Beers India and SABMiller India made an application alleging cartelisation against the appellants in relation to the production, marketing, distribution and sale of beer in India.

Thereafter, suo moto proceedings were initiated which culminated in the penalty being imposed.

The appellants before the NCLAT argued that the CCI’s order was liable to set aside since it found the appellants guilty only on the basis of their leniency application. It was contended that a leniency application was to be examined at the time of imposing a penalty and could not be treated as information for initiation of enquiry.

The NCLAT examined provisions of the Competition Act and the Code Of Criminal Procedure to conclude that an application for lesser penalty was like admission of guilt in a cartel.

“Once the appellants admitting their guilt made a disclosure of alleged violation of Section 3 of Act he may claim lesser penalty", the order read.

The tribunal went on to note that on the basis of the leniency application, the penalty amount was reduced. Therefore, the right to appeal on merits against the CCI order was forfeited once the appellant’s request shows involvement.

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