The National Company Law Appellate Tribunal (NCLAT) has set aside the penalty imposed by the Competition Commission of India (CCI) on diversified conglomerate ITC for not notifying the purchase of trademarks of Savlon and Shower to Shower from Johnson & Johnson in 2017.

The CCI had on December 11, 2017, imposed a fine of ₹5 lakh on ITC for failing to give notice to the commission about the (trademark) acquisitions under Section 6(2) of the Competition Act. 

It maybe recalled that ITC had challenged the CCI order before NCLAT. 

ITC had initially submitted that the Transactions (I and II for Savlon and Shower to Shower respectively), either taken individually or together, were not notifiable under sections 5 and 6 of the Competition Act as the trademarks acquired did not amount to acquisition of enterprise and this did not amount to a combination as per section 5 of the Act.

Total turnover

In their 23rd page order issued on April 27, 2023, the NCLAT Principal Bench comprising Rakesh Kumar, Member (Judicial) and Alok Srivastava, Member (Technical) said, “We note that the relevant turnover attributable to the two trademarks of Savlon and Shower to Shower, which are being transferred from Johnson and Johnson Pvt Ltd and Johnson and Johnson Pte Ltd respectively to ITC, is ₹68.37 crore. This figure is quite clearly less than the threshold limit of ₹750 core for total turnover that would be exempted in view of the De Minimis Notification. Therefore, both Transactions I and II would be exempt from imposition of any penalty under Section 43A.”

Issuance of penalty

NCLAT held that the penalty imposed by the CCI on ITC for not notifying the Transactions I and II under section 6(2) of the Competition Act should not have been imposed.

“To that extent we set aside the impugned order of the CCI. Insofar as other issues relating to the ‘combination’ and which have not been pressed in the present appeal during arguments are concerned, we only wish to mention that those issues are left open and not decided in this judgement,” said the NCLAT order. 

NCLAT therefore allowed the appeal (by ITC) to the limited issue of penalty.