NSK Limited gets 100% penalty reduction even as CCI slams brakes on Power Steering cartel

NSK Limited gets 100% penalty reduction even as CCI slams brakes on Power Steering cartel

Aditya AK

The Competition Commission of India (CCI) recently found that Japanese industrial machinery manufacturers NSK Limited and JTEKT Corporation and their Indian subsidiaries indulged in cartelisation related to the supply of Electronic Power Steering (EPS) systems to automobile manufacturers.

However, the CCI granted a 100% penalty reduction to NSK, in light of its cooperation in the investigation into the allegations of cartelisation. JTEKT was granted a 50% penalty reduction for similar reasons.

The case reached the CCI after NSK itself filed an application under Section 46 of the Competition Act, 2002 read with the Competition Commission of India (Lesser Penalty) Regulations, 2009. Subsequently, the CCI formed an opinion that a prima facie case of contravention of Sections 3(3)(a) and (d) read with Section 3(1) of the Act was made out, and ordered for an investigation by the Director General in 2014. JTEKT also approached the CCI with a similar application during the pendency of the investigation.

After going through the evidence garnered from the investigation, the CCI held that NSK, JTEKT and their Indian subsidiaries indulged in cartelisation in the EPS systems market, from at least 2005 to 2011, by directly or indirectly determining price, allocating markets, co-ordinating bid response, and manipulating the bidding process of automobile manufacturers.

The CCI Bench headed by Chairperson Ashok Kumar Gupta also held that whether or not JTEKT profited from such a cartel would have no bearing on the finding of contravention of provisions of the Competition Act.

It was also noted that NSK was entitled to 100% penalty reduction. The order states,

“…the Commission notes that NSK provided vital disclosures by submitting evidence of the cartel, which enabled the Commission to form a prima facie opinion regarding the existence of the cartel and the Commission at that time, did not have sufficient information to form such opinion. Also, NSK co-operated genuinely, fully, continuously and expeditiously throughout the investigation and further proceedings before the Commission. 

Thus, the Commission, keeping in mind the quality of information provided by NSK and the facts and circumstances of the case, decides to grant NSK/ RNSS, benefit of reduction in penalty of 100% (percent) in terms of Regulation 4 (a) of the LPR.”

Finding that JTEKT added significant value to the evidence already in its possession, the CCI reduced the penalty applicable to the company by 50%.Thus, JTEKT was ordered to pay a penalty of Rs. 17 crore.

This the fifth time the CCI has granted full immunity to an applicant under the Lesser Penalty Regulations.

NSK Limited was represented by Somasekhar Sundaresan, who was briefed by a team from Trilegal headed by Partner and National Head of Competition Law Nisha Kaur Uberoi, Senior Associate Shravani Shekhar and Associates Mathew George and Varun Thakur.

JTEKT was represented by a team from AZB & Partners headed by Partners Samir Gandhi and Aditi Gopalakrishnan, along with Senior Associate Nikita Agarwal and Associates Karan Sood and Rajshree Sharma.

Read the order:

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