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The Competition Commission of India (CCI) has issued a cease-and-desist order against four regional associations of Kraft Paper manufacturers, including their 115 members for indulging in anti-competitive practices.
However, the Competition watchdog has refrained from imposing any monetary penalty upon the infringing associations and Kraft Paper manufacturers as many of them were MSMEs and were going through economic and financial crisis as a fallout of Covid-19 pandemic.
The CCI case was initiated on the basis of information filed by three federations/associations of corrugated box manufacturers.
It was alleged that the various associations of Kraft Paper Manufacturers, by way of periodic meetings and correspondences, directed their members (i.e., Kraft Paper Mills) to: (i) increase the price of the paper to be sold to the buyers, i.e., corrugated box manufacturers; and (ii) create a condition of shortage to enforce the unjust price increase and shut the operation of the paper mills in a region collectively.
Contravention of provisions
Based on the evidence on record such as minutes of meetings, e–mail communications, WhatsApp messages exchanged on WhatsApp groups as well as oral depositions of various representatives, the CCI found 119 parties including four regional associations of Kraft Paper Manufacturers in contravention of provisions of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Competition Act, except one Kraft Paper Mill, which was found guilty of contravention of provisions of Section 3(3)(a) read with Section 3(1) of the Act, only.
Of the 119 opposite parties, 31 Kraft Paper Mills were lesser penalty applicants before the CCI. Under Section 46 of the Act, a cartel member may approach the CCI by way of filing an application seeking lesser penalty, in return for providing full, true and vital disclosures in respect of the alleged cartel to the Commission.
Several Kraft Paper Manufacturers admitted their wrongdoings and adopted a cooperative and non-adversarial approach. Thus, the CCI considered the aforesaid as the mitigating factors for not imposing any monetary penalty and issued a cease-and-desist order against the contravening entities.
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