It held that the CCI order passed under Section 26(1) of the Competition Act “is an administrative order” and, therefore, unless it is found that the same is “arbitrary” and “unreasonable”, no interference would be warranted.
In a setback to Monsanto and its Indian JV partner Maharashtra Hybrid Seeds Company (Mahyco), the Delhi High Court on Wednesday cleared the way for the Competition Commission of India (CCI) to continue probe into allegations of abuse of dominant position in the BT Cotton technology market.
The controversy relates to the trait fee charged by Mahyco Monsanto Biotech (India) and also the other terms and conditions imposed by it for using the technology for manufacturing BT Cotton seeds.
Justice Vibhu Bakhru, while dismissing appeals filed by the Monsanto group, said that the court did not find any reason to interfere with the CCI’s order directing investigation. It held that the CCI order passed under Section 26(1) of the Competition Act “is an administrative order” and, therefore, unless it is found that the same is “arbitrary” and “unreasonable”, no interference would be warranted. “A review on merits is impermissible at this stage, and therefore, this court is refraining from examining the merits of the dispute,” the judge said.
According to Justice Bakhru, the CCI had merely issued notice and afforded the Monsanto group an opportunity to be heard before considering the complaints filed by the informants under Section 33 of the Competition Act, thus there is “no reason whatsoever to interfere with the order”.
The CCI on February 18, 2016 had directed probe on a 2015 complaint filed by the agriculture ministry and by some of Monsanto’s sub-licensees — three Indian companies Nuziveedu Seeds, Prabhat Agri Biotech, and Pravardhan Seeds — against the Monsanto group alleging abuse of its dominant position to charge them exorbitant prices in the BT Cotton technology market. The informants also alleged that MMBL and Monsanto Group have restricted technical and scientific development relating to goods and services and has thus, violated Section 4(2)(b) of the Competition Act. They alleged that the conduct of MMBL and Monsanto Group has resulted in denial of market access to the seed companies.
Monsanto Holdings (MHPL), Monsanto Company, Mahyco Monsanto Biotech (India) (MMBL) had challenged the CCI’s order that directed its investigative arm, the Director General, to investigate the activities of Monsanto firms and Maharashtra Hybrid Seeds Company (Mahyco). They had also challenged CCI’s order that sought response from them.
Monsanto had argued that the remedies against alleged abuse of any rights by the patentee would fall exclusively under the Patents Act and the CCI lacked jurisdiction to entertain such disputes. It said that the issues related to the royalty fee/trait value are to be determined by the Controller of Patents.
The investigation by the DG, CCI had found that the trait fees charged by MMBL were not based on high costs incurred by MMBL as it was “merely a licensing entity with very limited fixed costs”. Noting that MMBL did not undertake any R&D activity which could push up its costs, the DG had found that MMBL abused its dominant position to prevent the entry of competition by mandating that producers using its technology and provide notice to MMBL before entering into agreements with any provider of competing technologies.