UB cheers as Supreme Court stays ₹873 crore penalty on beer companies for cartelisation

The Supreme Court on Friday stayed an order of the National Company Law Appellate Tribunal (NCLAT) that had upheld a ₹873 crore penalty on United Breweries (UB) and other companies for alleged carterlisation in the production and sale of beer in India [United Breweries Limited v. Competition Commission of India and ors]..A bench of Justices Vikram Nath and Dipankar Datta issued the interim stay in a batch of appeals filed by the companies and some individuals against the NCLAT order that had refused to interfere with the penalty imposed by the Competition Commission of India (CCI) in 2021..Senior Advocates Aryama Sundaram and Aditya Sondhi appeared for United Breweries Limited.They were instructed by a team from Trilegal led by Partner & National Head – Competition Nisha Kaur Uberoi, along with Partner Gautam Chawla, Senior Associate Rahat Dhawan and Associates Shivangi Chawla, Aditi Khemani, Samriddha Gooptu, Prerana De, Ishan Arora and Mehar Dang..UB, Carlsberg India and the All-India Breweries Association had challenged the NCLAT order passed in December 2022 that had upheld the CCI's penalty.The issue had arisen when Crown Beers India and SABMiller India filed information alleging cartelisation against the appellants in relation to the production, marketing, distribution and sale of beer in India.Thereafter, the CCI initiated suo motu proceedings that culminated in the imposition of the penalty..Before the NCLAT, the appellant companies had argued that the CCI’s order was liable to be set aside since it found them guilty only on the basis of their leniency application. It was contended that a leniency application was to be examined at the time of imposing a penalty, and could not be treated as information for initiation of inquiry.The NCLAT had examined provisions of the Competition Act and the Code of Criminal Procedure to conclude that an application for lesser penalty was like admission of guilt in a cartel.The tribunal had gone on to note that on the basis of the leniency application, the penalty amount was reduced. Further, the right to appeal on merits against the CCI order was forfeited once the appellant’s request shows involvement.