In a major relief to Swedish mobile infrastructue player Ericsson, the Delhi High Court has restrained the Competition Commission of India (CCI) from passing any final orders on a probe that the competition watchdog had initiated on a plaint filed by Indian handset maker Micromax.
The CCI, on November 12, initiated a probe against Ericsson after it formed a prima-facie view that the company was abusing its dominant position by charging higher royalty on GSM technology patents and was involved in unfair trade practices.
Justice Manmohan of the Delhi High Court said the observations made by the CCI shall not stand in the way of any rate negotiations Ericsson enters into with third parties on its patented technologies, adding that the observation shall not be considered in respect of any adjudication proceedings filed by the parties in the Delhi High Court or in any other court.
The High Court also said the CCI’s director-General (investigation) can only call upon a local officer of the company but not any officers stationed abroad. On the other hand, Ericsson has been granted liberty to provide documents concerning the probe to the director-general of CCI on the next date of hearing in the High Court.
?A substantial question of conflict of jurisdiction arises in the matter before the court. The court is of the prima facie view that CCI has entered into adjudicatory and determinative process by recording such a detailed order as a result of which the remedy available to the petitioner (Ericsson) has been denuded,? the judge said, holding that the watchdog under section 26 (1) of the Competition Act was only required to pass an administrative order, recording its prima facie view on the case and not a detailed order.
The Swedish company filed a suit in the High Court against Micromax, claiming infringement of its patented mobile technology. Subsequently, both parties arrived at an interim arrangement as per which royalties payable by Micromax were to be deposited in the Delhi HC. This arrangement was to carry on pending the final determination of royalties payable by the local handset manufacturer.
Ericsson’s counsel Pratibha Singh told the court that despite arriving at the interim arrangement, through a consent order, Micromax approached the CCI challenging the royalty rates on the ground that they were ?unreasonable, anti-competitive? and that by demanding such royalties, Ericsson was abusing its dominant position. She added that CCI, on the basis of such representation, made by Micromax passed an order that is beyond the jurisdiction of the watchdog as royalty rates are to be dealt under the Patents Act and not the Competition Act.
?The CCI cannot sit in judgment over orders passed by the civil courts and High Court by assuming jurisdiction under the Patent Act and other statutes. Royalty rates cannot be decided by the competition commissions anywhere in the world. The CCI does not have the jurisdiction to go into the reasonableness of the conditions of royalty payment.?
