Introduction

The Competition Commission of India is investigating a cartel between major courier and parcel companies. As per the news report, companies such as DTDC, DHL and FedEx are under the scanner where they have colluded to raise prices for business users and end consumers. Cartel investigations, as a standard, are not announced publicly, given the sensitive nature of the evidence and therefore, nothing could be denied or confirmed officially.

Significance of the industry

The Indian courier, express and parcel market is sized at $8.62 billion. The market is likely to grow at a cumulative annual growth rate of 10.72% up till 2030 to the size of ~$14 billion. India recently improved its logistics ranking in the global index by six places highlighting the potential of the industry. The market is important from a competition perspective as the pricing made applicable by the courier companies directly impacts the mid and end consumers. As a normal, horizontally placed companies are expected to compete on prices and various aspects of the supply chain to enhance productivity and consumer welfare.

Contentious issues

One of the primary reasons why cartel investigations are conducted in almost a secretive manner as it is very difficult to capture direct evidence proving the culpability of the parties. In majority of the cases, the colluding parties are aware of the violation and therefore adopt innovative ways to fix and coordinate prices in the market. In this background, the competition authorities world over have to rely on circumstantial evidence where the Indian standard is to first establish price parallelism and then look for ‘plus factors’.

This specific case further involves the question of cross-examination, thereby making the enforcement process complex. As a standard practice, the Commission exercises the discretion granted to itself when it comes to accepting pleas related to cross examination as the evidence sometimes is in document format. Additionally, there are concerns around the confidentiality of the identity of the parties thereby further putting a check on such requests. There has been a change in the legal position, as a proviso has recently been added to the CCI General Regulations, 2009, mandating the DG to entertain such pleas wherever oral testimony is relied upon. The uniqueness of the case lies in the fact that not only the Respondents but even the Informant in this case has been allowed to cross examine the witnesses.

It remains to be seen how the competition authority balances such procedural fairness with the requirement to dispose of the case promptly. This is significant because, in most cases, markets are dynamic, and by the time the authority reaches a decision, the market's nature has already changed. In this instance, the investigation began in 2022, and no decision has yet been finalised.

Way Forward

The parties may apply for cross-examination either before or after the conclusion of the DG investigation. If an anomaly is identified, the Commission is legally empowered to order further investigation. This is particularly important because, unlike in other antitrust cases, respondents cannot avail themselves of an amnesty scheme after submitting the DG report in the matter. This exposes them to the highest penalty under the law, which is either ten per cent of the average annual global turnover for the last three years or three times the profit earned during the cartelisation period, whichever is higher. The final order of the CCI is subject to a dual appellate process should any of the litigating parties be dissatisfied with the verdict.