A S NARAYANA Vs. CATERPILLAR INC

JUDGEMENT

(1.) This complaint has been filed under Sections 36a, 36b (a), 10 (a) (i), 36d and 37 of the Monopolies and Restrictive Trade Practices Act, 1969 for enquiring into the alleged monopolistic and restrictive trade practice being carried on by the respondents for prosecution and penalty and anti-trust laws of U. S. A. The complainant is stated to be engaged in import of spare parts, especially for Caterpillar engines and functions as Indenting Agent for few foreign companies and shippers. The complainant used to obtain spare parts for Caterpillar engines from his American Shippers, both for his own account and for account of individual customers. These Caterpillar engine parts are sold to fishing vessels engaged in fishing operations. Respondent Nos.1 and 2 are wholly owned subsidiaries and/or trust companies of Caterpillar Americas Co. engaged in multinational manufacturing and trading operations. Respondent Nos.3, 4, 5 and 6 are Indian Agents and business partners of Caterpillar. Respondents 3 and 4 are sole agents for India and respondents 5 and 6 are business partners of Caterpillar. The complainant next submits that import of Caterpillar spare parts into India is exclusively channelled through their sole agents, respondents 3 and 4 and as Caterpillar policies do not embrace direct dealings with customers except through the intermediary or their exclusive agents or dealer net-work who in turn are tacitly prevailed upon not to deal with persons outside their territorial jurisdictions. These actions impose restraints which has the effect of preventing, distorting and restricting competition which tends to bring about manipulation of prices or conditions of delivery or effect the flow of supplies so as to impose on the consumers unjustified costs which constitute restrictive trade practice as defined in Sec.2 (o) (ii) of the Act.

(2.) The modus operandi of the respondent is reiterated in paragraph 6 of the complaint which may be referred to as below : " (i) Respondent No 1 makes all policy decisions to be adopted by all affiliates and subsidiaries and also determines the net dealer prices, suggested consumer prices and terms of trading which are Restrictive Trade Practices as contemplated under Sections 33 (1) (a) and 33 (1) (d) of the Act. (ii) Respondent No.1 determines the territories in which their respective dealers should operate and also tacitly prevails upon them not to deal with users outside their territories or sell at prices lower than those determined by it. This is a restrictive and monopolistic trade practice as contemplated under Sections 33 (1) (f) and 33 (1) (g) of the MRTP Act as well as under the anti-trust laws of U. S. A. (iii) Respondent Nos.2, 3 and 4 by virtue of totally channelling supply of parts to end-users only through them, refusing to supply to any one else whether sought to be procured for and on behalf of end-users or for resale trade purposes, selling them only at prices suggested by respondent Nos.1 and 2, have indulged in restrictive trade practices as contemplated in Sec.33 (1) (j) and 33 (1) (ja) of the MRTP Act. (iv) Whilst respondent No.3 asserts and claims that their Principals prices are (respondent No.2 as well as respondent No.1) applicable world-wide, the petitioner submits that this is not true as will be evidenced from the differences in basic net dealer prices and suggested consumer prices as between the price lists published by respondent Nos.1 and No.2 from U. S. A. base and the Far-East base. The respondent Nos.1 and 2 thereby misled the consumers to believe that their prices are of universal application as is usually the case with all global companies of repute and yet charging Indian customers 7.5% more than what was being charged to customers in other parts of the world and have thus indulged in unfair trade practices as contemplated under Sec.33 (1) (d) read with Sec.2 (o) of the MRTP Act as well as under the anti-trust laws of U. S. A. (v) Respondent Nos.2 and 3 have misled the public by publishing a separate price-list from Far-East base whose published prices are increased by 7.5% over the published prices of respondent No.1, since it is believed and taken for granted that prices of respondent Nos.1 and 2 are uniform throughout the world. As such, respondent Nos.1 and 2 have indulged in prohibited unfair trade practices as contemplated in Sec.36a (ix) of the MRTP Act. (vi) Respondent Nos.2 and 3 have further indulged in charging Indian customers over and above the inflated prices with "parts Service charge", "impose charge", etc. , when their published terms and conditions clearly state that the prices indicated are FOB parts distribution centres. Whilst the petitioner does not dispute a seller to charge for special services not covered in the price of an article, respondent Nos.2 and 3 have been making such service charges for no apparent services rendered, or even contemplated to be rendered, or at all. This manifestly is a prohibited unfair trade practice within the meaning of the MRTP Act. As evidence of discrimination of such higher prices charged to Indian customers contrary to prohibition of anti-trust laws, the petitioner annexes hereto as Exhibit A true copy of an invoices established by respondent No.2 in respect of direct shipment to an Indian independent importer, super-imposed with corresponding prices of each item as appearing in the then applicable price list of Caterpillar Americas Co. This document, inter alia, high lights the price-discrimination perpetuated by the respondents through separate price-lists from Far East-base by Caterpillar Fareast Ltd. , Singapore, and from U. S. A. by Caterpillar Americas Co. Documents showing the variation in prices in the two lists are being enclosed as Annexure C-1 colly. The original price list of the respondent No.1 effective February 1, 1988 which is applicable to the period of invoice is not being enclosed as the same is quite voluminous and the complainant seeks leave of this Hon'ble Commission to refer to the same and to produce the same at the time of arguments. " The complainant has further submitted in paragraph 7 as follows : "it is established beyond doubt from the recent decision rendered in 1994 (71) ELT 106 (Tribunal) in the case of Collector of Customs and Central Excise, Madras V/s. General Marketing and Manufacturing Co. Ltd. , (respondent No.3) that there is mutuality of interest between respondent Nos.2 and 3 as exhibited by the special stipulations in the nature of restraint/control in the sale and service agreement, and the fact that respondent No.3 by the conditions of agreement is wholly controlled by respondent No.2 since the manpower, the finance, the accounts, the inventories, the associates, etc. are all decided in consultation of with the consent of respondent No.2. These stipulations and control clearly establish that they are indulging undisputedly in monopolistic and restrictive trade practices prohibited under the MRTP Act, as well as under the anti-trust laws of U. S. A. and prejudicial to public interest. Photocopy of the order of CEGAT, Special Bench 'c', New Delhi is being enclosed as Annexure 'c-2'. "

(3.) In view of above the complainant has prayed that a detailed investigation into the monopolistic trade practice carried on by the respondent be taken up and detailed investigation into the cost-structure of respondents be done with a view to prevent them from indulging in such acts or trade practice which result in elimination or lessening competition. The complainant has submitted that respondent Nos.1 and 2 procure nearly 80% or thereabout of components that go into the assemblage of their engines and equipments from outside vendors or adopt components marked by vendors as opposed to in-house manufacture of components. The respondents have filed their separate replies.