3rd Justice Hidayatullah Memorial National Moot Court Competition 2010

3RD JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 22ND 24TH OCTOBER, 2010 MOOT PROBLEM
U.K. Steels is a leading steel company of the United Kingdom. This is an umbrella company under which wholly owned subsidiaries of U.K. Steels produce steel and different products made of steel. U.K. Steels is also a leading giant in the steel business in Europe. In the year 2004, U.K. Steels started expanding its business in Asia with a view to capture Asian markets. In this process it acquired leading steel companies in Japan, Korea China and Malaysia. By end of the year 2008 it had completely dominated the Asian market for steel and steel products. Bharat Ispaat is a leading manufacturer of products made of steel in India. It had 50% market share in India in products made of steel. U.K. Steels acquired 65% share in Bharat Ispaat by January 2009. After this acquisition Bharat Ispaat buys steel only from U.K. Steels and companies acquired by U.K. Steels for the manufacture of its steel products. U.K. Steels and other companies acquired by U.K. steels sell steel to Bharat Ispaat at a fixed price (in terms of rupees) of ` 250 per kg. U.K. steels and other companies acquired by U.K. Steels export steel to other Indian importers also but at not less than ` 700 per kg. U.K. steel sells steel in U.K. at ` 500 per kg. (in terms of rupees) and other companies sell steel in their country at around ` 500 to ` 600 per kg.( in terms of rupees). Companies from Japan, Korea and Malaysia were also selling steel in India before their acquisition by U.K. Steels at the rate of about ` 500 to ` 700 per kg. By the end of the year 2009, market share of Bharat Ispaat had gone up to 70%. Apart from Bharat Ispaat there are three other producers of products made of steel in India, namely, Chennai Steels, India Steels and K& S Steels. Market share of Chennai Steels shrank from 25% to 15%, that of India Steels from 15% to 10% of K&S Steels from 10% to 5%. Satguru Steels, Vinayak & Co Ltd. and Rajshree Enterprises are suppliers of steel in India. Bharat
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3rd Justice Hidayatullah Memorial National Moot Court Competition 2010

Ispaat was their main buyer of steel in India. After acquisition of controlling shares by U.K. Steels in Bharat Ispaat, Rajshree enterprises is almost on the verge of closure, profit margin of Satguru Steels has been slashed by around 40%, Vinayaka &Co. Ltd. shut down one of its steel plants and has also retrenched its employees by 40%. Chennai Steels, India Steels and K&S Enterprises induced Satguru Steels, Vinayak & Co Ltd. and Rajshree Enterprises to file antidumping petition. accordingly filed. The three producers of steel products in return promise to buy steel only from Satguru Steels, Vinayak & Co Ltd. and Rajshree Enterprises. They completely boycott steel of U.K. group of companies and companies related to it. The six companies also get into agreement with leading dealers of steel and steel products in India and they refuse to market steel products of Bharat Ispaat and of U.K. group of companies. Bharat Ispaat and Consumer Welfare an NGO largely financed by U.K. based trusts and organizations, approach the Competition Commission of India alleging violation of section 3 of the Competition Act of 2002. The respondents allege violation of section 4 of the Competition Act by U.K. Steels and its group of companies. They further contend that action by them was necessary to protect them in the market otherwise there would be complete monopoly of Bharat Steels and U.K. group of the companies in the Indian market. Government of India directs the Competition Commission of India that Steel industry in the country is going through a period of crisis and large number of people are employed in that sector. Therefore it should keep this in mind while making any decision. The Commission however, at that point of time is largely manned by persons who have been educated in the U.S. and the U.K. and are supporters of market economy principle. CCI decides in favour of Bharat Ispaat for violation of section 3 of the Competition Act. For the counter claim of violation of section 4 of the Competition Act, it states that since U.K. Steels is not an Indian company therefore there is no use of making any decision regarding it under the Competition Act. Antidumping petition was

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3rd Justice Hidayatullah Memorial National Moot Court Competition 2010

The six companies lobby with the government and the government supersedes the Competition Commission. The government also issues order that all manufacturers of steel products in India should use at least 60% of steel inputs of Indian origin. Bharat Ispaat files a writ in the High Court stating that the order of the Government of India to supersede Competition Commission of India is illegal and the direction to the manufacturers of steel products in India to buy at least 60% of the inputs of Indian origin violates Indias obligations under the WTO. Government of India and the six companies (Chennai Steels, India Steels, K& S Steels, Satguru Steels, Vinayak & Co Ltd. and Rajshree Enterprises) along with the dealers with whom these six companies had agreement are named as respondents in the case. Respondents contend that Commissions decision regarding violation of section 3 and 4 was not proper. In the meanwhile the antidumping petition is decided in favour of complainants and an antidumping duty of 40% is imposed on all dumped imports of steel from U.K., Malaysia, Japan and Korea. Appeal is made to Customs Excise Service Tax Appellate Tribunal (CESTAT) on the ground that there is no dumping of steel in India and hence injury caused to the domestic industry is not caused by dumping but because of competition situation in the Indian market. But the appeal fails. Bharat Ispaat files a writ in the same High Court against the decision of the CESTAT. The

respondents in the antidumping petition request that both the cases should be heard by the same bench together as they are related and decision in one would affect the other case. Bharat Ispaat contends against this request on the ground that both the cases are of different nature and decision on one cannot be made to influence decision in the other.

Following are the issues in the two writ petitions being heard together: 1. Whether the two writs should be heard by the same bench? Assuming that the two writs are being heard by the same bench following are the other issues: 2. Was the governments order of superseding the Commission legal?
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3rd Justice Hidayatullah Memorial National Moot Court Competition 2010

3. Whether the High Court should decide on the issue of violation of Indias obligation under WTO? 4. Whether Commissions decision regarding violation of section 3 and 4 proper and whether High Court should hear the case on merits? 5. Whether there was dumping of steel in India which was causing injury to the domestic industry supplying like product?

Hidayatullah National Law University, New Raipur, 2010.

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