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

These practices included the FPBAI fixing overseas forex change charges of import/export of books/journals greater than prescribed RBI charges, capping reductions which can be supplied by members to libraries/establishments, prescribing phrases and situations with respect to credit score interval, rate of interest and verification of costs of a compulsory nature, and issuing advisories to libraries, booksellers and establishments to buy books solely from FPBAI permitted distributors.

Discovering such practices to have an considerable antagonistic impact on competitors, the CCI held,

“… fixation of conversion charges imposed upon the remainder of members of the ebook trade has resulted in greater costs to the top shoppers the place such charges had been accepted by the procuring libraries/ establishments. Useless to say that non-acceptance of GOC charges by the procuring establishments resulted in beneficial properties to the importer booksellers at the price of the remaining bookseller members. Subsequently, both methods, one neighborhood or the opposite needed to face the brunt. Furthermore, circulation of permitted vendor lists together with the month-to-month circulars coupled with non-withdrawal of earlier advisory (pertaining to cope with members solely) has the potential to foreclose alternative for non-member booksellers, thereby distorting stage taking part in subject, thus leading to entry limitations for brand spanking new entrants in addition to the danger of driving current opponents out of the market.”

Part 3 explains what anti-competitive agreements are. Part 3(3)(a) consists of an settlement entered into between enterprises or associations or individuals or a call by them, the place they’re engaged in equivalent or comparable commerce of products or provision of providers, which “instantly or not directly determines buy or sale costs”. Part 3(3)(b) states an settlement which limits or controls manufacturing, provide, markets, technical growth, funding or provision of providers.

Part 3(1) states that no enterprise or affiliation of enterprises or individual shall enter into any settlement for manufacturing, provide, distribution, storage, acquisition or management of products or provision of providers, which causes an considerable antagonistic impact on competitors inside India.

Details

Upon a grievance filed by one Pranav Gupta (informant), CCI framed a prima facie case in opposition to FPBAI and referred the matter to the Director Basic (DG) for investigation.

The DG’s report highlighted that the Good Workplaces Committee (GOC), a subsidiary of FPBAI, mounted overseas change charges for ebook imports which had been 3-5% greater than the prescribed financial institution charges, thereby amounting to cost fixation and benefiting a couple of importer booksellers. It additionally highlighted the FPBAI’s failure to withdraw discount-related circulars and to sensitise members of the CCI order in M/s Worldwide Subscription Company v. FPBAI, the place it was held that {discount} management by FPBAI was in violation of Sections 3(3)(a) r/w Part 3(1) of the Act. Additional, the report noticed that GOC circulars prescribing phrases and situations successfully managed the book-trade market. Lastly, the report said that FPBAI’s failure to withdraw earlier appeals urging libraries to deal solely with its members created entry limitations for non-members and distorted truthful competitors.

Submissions of the Events:

The FPBAI and its members submitted that fixation of GOC conversion price was a ‘legacy apply’ which was merely ‘suggestive’ and never ‘obligatory. It entailed no punitive penalties and members had been free to decide on costs as per their business methods. It was additional argued that such charges don’t create entry limitations as they influence an insignificant portion of value. With respect to conversion charges being adopted in libraries, they submitted that many libraries don’t observe the charges and the choice of some libraries to observe the identical displays their impartial business determination. Lastly, it was submitted that FPBAI had no obligation to intimate members that the {discount} clause doesn’t apply anymore and neither is it duty-bound to publicly withdraw the sooner appeals.

Opposite to this, the informant submitted that FPBAI used its platform to incentivise cartel-like conduct amongst its members by fixing GOC conversion charges and provide phrases. He additionally argued that membership certificates mandated members to observe phrases “mounted by GOC,” which established that the circulars weren’t merely advisory. Highlighting discrepancies within the DG’s report, he submitted that the DG restricted the investigation to FPBAI solely and ignored key affiliated events and people, who weren’t correctly examined and a few related statements and paperwork had been additionally excluded from the DG’s report.

Findings

On the outset, CCI famous that the plea taken by FPBAI that fixation of GOC charges was a ‘legacy apply’ can’t absolve them from the penal penalties of indulging in anti-competitive practices. CCI referred to a number of testimonies from stakeholders, together with the informant, which highlighted that booksellers had been usually compelled to stick to GOC conversion charges and non-compliance may result in cancellation of membership.

With respect to the argument that fixation of GOC conversion charges doesn’t quantity to dedication of value and GOC conversion charges represent an insignificant proportion of the general value, the Fee stated:

“For example, a ebook with the value 100 GBP, with GOC conversion price of 1 GBP = INR 104, will value INR 10,400 to the buyer, whereas with financial institution conversion price of 1 GBP = INR 101, the identical ebook will value INR 10,100 to the buyer. As might be seen, the quantum of influence of GOC conversion price can be instantly proportional to the ebook worth; greater the ebook value, bigger the influence of GOC conversion price can be. Subsequently, the Fee doesn’t discover any substance within the plea taken by FPBAI that fixation of GOC conversion price doesn’t quantity to cost fixation and it constitutes an insignificant proportion of the value of the ebook/ journal.”

Thus, the Fee held that publication of conversion charges greater than RBI charges quantities to cost fixation and violates Part 3(1) r/w 3(3)(a) of the Act.

Relating to the problem of declaration of reductions to be supplied by members, CCI famous that regardless of its ruling in Worldwide Subscription Company, comparable allegations of {discount} management by FPBAI resurfaced. Circulars from November and December, 2021 had been examined from the web site of FPBAI which recommended that it continued to interact in {discount} management, with no public clarification by FPBAI withdrawing such insurance policies. Towards this backdrop, CCI concluded that FPBAI didn’t take requisite measures to withdraw discount-related circulars and to intimate its members in regards to the anti-competitive nature of {discount} management as highlighted in Worldwide Subscription Company.

Furthermore, CCI additionally referred to the phrases and situations of GOC circulars, which included an obligation on suppliers to essentially present for 60-days or 90-days credit score interval for making funds, and held that the spirit of the phrases and situations didn’t look like recommendatory.

Noting that such stipulations prohibit business liberty, CCI additional held,

“… the Fee finds the act of prescribing such phrases and situations by FPBAI in GOC circulars which aren’t solely circulated to all its members, member state associations, but in addition adopted by ebook trade normally, having the impact of limiting or controlling the marketplace for ebook commerce, in contravention of the provisions of Part 3(1) learn with Part 3(3)(b) of the Act.”

Lastly, relating to the problem of urging libraries, booksellers and establishments to buy books solely from FPBAI permitted distributors, CCI held,

“… presence of an enchantment/advisory asking procurer to buy solely from FPBAI or different nationwide/ regional booksellers’ affiliation’s members and circulating a listing of permitted members subsequently, has the impact of sending an oblique message and such conduct of FPBAI distorts the extent taking part in subject and tilts it within the favour of the permitted distributors/ members of FPBAI by foreclosing participation of non-members. The Fee due to this fact, finds such conduct to be in contravention of the provisions of Part 3(1) learn with Part 3(3)(b) of the Act.”

Case Particulars:

Case Title: Pranav Gupta v. Federation of Publishers’ and Booksellers’ Affiliation in India

Case Quantity: Case No. 38 of 2021

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