CCI issues cease and desist order against Kraft Paper Mfrs and 4 associations for indulging in anti-competitive practices
13 October 2022: The Competition Commission of India (CCI) issued a final order against four regional associations of Kraft Paper manufacturers, including their 115 members. They were found to have contravened the provisions of Section 3 (3) read with Section 3 (1) of the Competition Act, 2002 (the ‘Act’), which proscribes anti-competitive agreements. The 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, direct 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.
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. 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 a lesser penalty, in return for providing full, true and vital disclosures in respect of the alleged cartel to the Commission.
Keeping in mind the peculiar facts and circumstances of the case including the fact that many of the Kraft Paper Manufacturers were MSMEs and were going through economic and financial crises as a fallout of the COVID-19 pandemic, the CCI refrained from imposing any monetary penalty upon the infringing associations and Kraft Paper Manufacturers. Further, several Kraft Paper Manufacturers also admitted their wrongdoings and adopted a cooperative and non-adversarial approach.
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.
