HOPE Ltd is a manufacturer of cars of various models and is catering to both domestic and export markets. For this purpose, Hope Ltd avails various schemes such as Export Promotion Capital Goods (EPCG), Target Plus, Focu

CS Professional · Multidisciplinary Case Studies · PYQS · December 2022
HOPE Ltd is a manufacturer of cars of various models and is catering to both domestic and export markets. For this purpose, Hope Ltd avails various schemes such as Export Promotion Capital Goods (EPCG), Target Plus, Focus Product Scheme (FPS), etc., announced by DGFT, Ministry of Commerce, Government of India (GOI). EPCG scheme is an initiative of DGFT to promote exports out of India. PQR Ltd is Competitors of Hope Ltd and informant to the Competition Commission, according to the Informant, Hope Ltd is allegedly misusing the EPCG Policy framed by DGFT for promotion of exports out of India. Hope Ltd is alleged to be importing the Capital Goods for manufacture of different models of cars that are meant for exports but selling them domestically. As the Capital Goods imported under the EPCG scheme are exempted from customs duty, it is alleged that the same are purchased by Hope Ltd at cheaper rates - reducing its cost of production viz-a-viz its competitors. As per the allegations, Hope Ltd is in fact not using the imported Capital Goods to meet even 50% of the Export Obligation, which is mandatory for it to do. Whether the complaint filed to Competition Commission as provided under the Foreign Trade (Development and Regulation) Act, 1992 is correct and it also violation of Competition Act, 2002. Give reasons in support of your answer.

Answer & Explanation:

The facts of the given case are similar to Hyundai Motor India Ltd (HMIL) with regard to misuse of an export promotion policy. It was alleged that HMIL had misused the Export Promotion Capital Goods (EPCG) policy, framed by the DGFT, to reduce cost of production compared to its competitors. Dismissing the complaint, the Competition Commission of India (CCI) said the allegations raise issues relating to the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962, while noting that no competition issue arises out of the information presented or is otherwise made out. The Competition Commission of India has perused the information/ additional submissions and the documents filed therewith. The allegations made by the Informant raise issues relating to the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962. No competition issue arises out of the information presented or is otherwise made out. The reliefs sought by the Informant do not fall within the ambit of the Competition Commission of India as provided under the Act. In the result, the Commission is of considered opinion that no case of contravention of the provisions of either Section 3 or Section 4 of the Competition Act is made out against OPs in the instant case. The Informant has sought protection from disclosure of his/her identity in terms of Regulation 35(1) of the General Regulations, 2009. The Commission is of opinion that identity of the Informant may be protected from disclosure, as prayed for. In view of the above, the Competition Commission of India is of the opinion that no case of contravention of the provisions of the Act is made out against the Opposite Parties and the information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Competition Act.

Topics: Competition Law

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