w w w . L a w y e r S e r v i c e s . i n



In Re: Indian Ferro Alloy


Company & Directors' Information:- M. P. ALLOY PRIVATE LIMITED [Strike Off] CIN = U28111UP1995PTC018405

Company & Directors' Information:- B D K ALLOY PRIVATE LIMITED [Amalgamated] CIN = U27106KA1973PTC002355

    Decided On, 26 September 1986

    At, Monopolies and Restrictive Trade Practices Commission New Delhi

    By, THE HONOURABLE MR. JUSTICE D. AGGARWAL & THE HONOURABLE MR. JUSTICE M. SATYAPAL

   



Judgment Text

1. This enquiry under Section 10(a)(iv) read with Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969, was instituted pursuant to the preliminary investigation report dated September 23, 1983. Accordingly, notice of enquiry dated April 30, 1984, was issued against Indian Ferro Alloy Producers' Association, respondent No. 1, and respondents Nos. 2 to 8 who are members of respondent No.1-association. Respondents Nos. 2 to 8 are the manufacturers of ferro manganese. The bulk purchaser of ferro manganese is the Steel Authority of India Ltd. because high carbon ferro manganese is the main raw material in the production of steel. It is stated in the preliminary investigation report, exhibit A-1, that ferro manganese is produced by respondents Nos. 2 to 8 and M/s. Uni Ferro International Ltd., Tumsar, as well as M/s. Maharashtra Electrosmelt Ltd., Chandrapur. M/s. Uni Ferro International Ltd., Tumsar, is not a member of the respondent-association while M/s. Maharashtra Electrosmelt Ltd. is a Government owned company.

2. The allegation is that the ferro manganese manufacturing companies through their association, Indian Ferro Alloy Producers Association (respondent No. 1) are controlling the entire supply of ferro manganese and they act in concert in fixing the prices and settling the terms and conditions respecting delivery schedule. The notice of enquiry as such refers to two meetings dated February 12 and March 11, 1981, having been convened by respondent No. 1 and attended amongst others by respondents Nos. 2 to 8 to consider the terms and conditions to the Steel Authority of India Ltd., against the latter's tenders. The allegation against respondent No. 6, M/s. Ferro Alloys Corporation Ltd., Girividi (Andhra Pradesh), is that it charged discriminatory prices. The prices quoted to the Steel Authority of India Ltd. as per annexure attached to the notice of enquiry, were :

3. The selling prices announced by respondent No. 6 for others are as follows:

4. It is further found that during January 1, 1981 to, April 3, 1981, maximum discount of Rs. 250 was allowed to any party purchasing three wagon loads in the three consecutive months and from April 4, 1981, to August 13, 1981, discount of Rs. 150 per MT was allowed for supplies of ferro manganese in sizes 10mm to 40 mm while during the period April 4, 1981, to August 13, 1981, respondent No. 6 charged to a few selected parties the same prices which were applicable on April 3, 1981.

5. Replies to the notice of enquiry have been filed by all the respondents challenging the notice of enquiry. Respondent No. 1, the association, inter alia, pleaded that the notice of enquiry is not maintainable and it is vague, lacking in necessary particulars. It is also stated that since the alleged restrictive trade practice is said to be qua the Steel Authority of India Ltd. (for short "SAIL") which is owned and controlled by the Government, by virtue of Section 3 of the Monopolies and Restrictive Trade Practices Act, no such enquiry is competent.

6. The respondent-association has denied the charge that it is carrying on restrictive trade practice in such a way as to prevent, distort or restrict competition. It is also denied that the trade practice tends to impose unjustified costs or restrictions on the consumers. According to the respondent, the meetings on two dates, i.e., February 12, 1981, and March 11, 1981, were not convened with the object of giving effect to any collusive tendering with a view to eliminate competition.

7. Before 1970, SAIL used to address the enquiry for the supply of ferro manganese to respondent No. 1 whereon the association would coordinate and organise supplies. The association merely recommends equitable distribution so that not a single manufacturing unit in the country finds its survival precarious. So far as the price is concerned, according to the respondent, it is determined by BICP as the recommended price to be paid by SAIL to the producer. The association does not play any role in the matter of price-quotation. It is further stated that after the tenders are submitted by the manufacturers to SAIL, the representatives of the manufacturers are individually called by the SAIL authorities for negotiations, and in the course of negotiations, the manufacturers are asked to reduce the prices. This becomes possible because under the recommendations by BICP, the freight and overheads are permitted to be charged extra. At the conclusion of the negotiations, a joint memorandam is prepared and signed by the officers of the SAIL and the representatives of the manufacturers, and it is then that the delivery instructions are issued by the various plants of SAIL from time to time. It is emphasised by respondent No. 1 that SAIL rather requires the help of the association to ensure regular supplies to be made by the member-manufacturers.

8. It is added that the prices quoted by the manufacturers are not identical inasmuch as under the joint memorandum for the supplies during April, 1981, to March, 1983, there was a variation of Rs. 112 per ton between the highest and the lowest negotiated prices. This, according to respondent No. 1, negatives the possibility of collusive tendering.

9. The respondent defends the rule of regulating supplies to SAIL by each manufacturer because the total installed and licensed capacity of all the ferro manganese producers is greater than the domestic demand.

If the demand by the SAIL is not so regulated and equitably distributed among the manufacturers, some of them will face closing down. The quantum to be supplied by each is worked out on the inter se ratio of licensed and installed capacity of the producers. Since 1970, the tender enquiry is addressed to the producers individually but a copy thereof is endorsed to the respondent-association. So, it is submitted that even if the act of the respondents be termed as restrictive trade practice, it is not prejudicial to public interest under Clauses (c), (d), (e), (h), (j) and (k) of Section 38(1) of the Monopolies and Restrictive Trade Practices Act. Inter alia, it is submitted that the SAIL benefits from this arrangement as they are able to maintain their inventories at the minimum level inasmuch as they are in a position to obtain supplies from the manufacturers spread over four States on a short notice in "guaranteed quantities" and at agreed prices.

10. Respondents Nos. 2 to 4 adopted the replies as given by respondent No. 1 while respondent No. 5 stated that they were not party to submitting any tender enquiry to SAIL in 1981. This being so, according to respondent No. 5, the allegation of collusive tendering against it is untenable. Moreover, the ferro manganese produced at its Joda plant is primarily meant for captive consumption in its steel works at Jamshedpur.

11. Respondent No. 7 contended that it manufactures refined ferro manganese which is different from the high carbon ferro manganese required by SAIL. Since the production of high carbon ferro manganese is less than 5% of the total production, it did not make any supplies to SAIL. Respondent No. 8 does not seem to have filed any reply to the notice of enquiry but in answer to interrogatory given under regulation 74 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974, the respondent stated that it did not submit any tender for the supply of ferro manganese to SAIL in the year 1981.

12. In an affidavit dated September 10, 1984, Mr. Kumarvel, the secretary of respondent No. 8, stated that although Shri S.Venkatramiah, the chief executive of this respondent, was present at the meetings of the association held on February 12, 1981, and March 11, 1981, he did not participate in the deliberations concerning submission of tenders to SAIL for supply of ferro manganese, inasmuch as the letter dated February 6, 1981, addressed by the association to several manufacturers was not addressed to respondent No. 8. So, there is no cause of action against this respondent and the enquiry as against it is not maintainable.

13. Respondent No. 6, Ferro Alloys Corporation Ltd. (FACOR), has, inter alia, stated that it did attend the two meetings but these were not to consider the terms and conditions to be offered to SAIL. This respondent denied that it indulged in collusive tendering and that what transpired at the said meetings could at all be said to be a trade practice, what to say of it being termed as restrictive trade practice.

14. As regards the charge of quoting discriminatory prices, the respondent says that it has fixed identical price on FOR destination basis in order to enable the customers throughout India to receive the goods at the same price. The bills are prepared on the basis of the FOR-destination- price less freight, thus showing that the FOR-price-ex-works, though it may be different to various customers depending on the distance, yet the FOR-destination-price would remain the same. Thus, according to the respondent, the prices were not discriminatory but were based upon the principle of "similar ex-destination prices".

15. The quantity discount, according to the respondent, reflects saving in costs though, of course, it is an insignificant amount of a transitory nature which cannot affect competition.

16. It is further stated that SAIL is the biggest consumer of ferro manganese and no single producer can cater to its full demand. Unless the demand is equitably distributed among all the producers, some of the units will face closing down. In other respects, this respondent adopted the pleas taken by respondent No. 1.

17. Rejoinders were filed by the Director-General along with applications under Regulation 74 whereby interrogatories were delivered to the respondents. The pleadings gave rise to the following issues:

1. Whether the respondents have been indulging in the trade practices as mentioned in the notice of enquiry dated April 30, 1984 ?

2. If answer to issue No. 1 is in the affirmative, then whether the said trade practices are restrictive trade practices within the meaning of Section 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969 ?

3. If answer to issue No. 2 is in the affirmative, then whether the respondents are entitled to avail of the gateways provided under Section 38(1) of the Monopolies and Restrictive Trade Practices Act ?

18. Both the issues are inter-linked and need not be discussed separately.

19. The evidence consists of the statements of Shri G.R. Bhatia, Assistant Director General, AW-1, who appeared in support of the notice of enquiry and RW-1, Smt. S. Hariharan, secretary of respondent No, 1 association, RW-2, Shri K.S. Mallya, for respondent No. 6. The documents relied on and produced in evidence are PIR (exhibit A-1), letter dated July 15, 1981, exhibit A-2, statement of production and sale by Jeypore Sugar Co. (JSC) respondent No. 4, exhibit A-3 ; statement of price by respondent No. 4, in the year 1981-82, exhibit No. 4 and statement for the year 1982-83, exhibit A-5 ; explanatory note by respondent No. 4, exhibit A-6 ; letter dated February 6, 1981, convening a meeting to be held on February 12, 1981, exhibit A-7 ; letter dated March 13, 1981, from respondent No. 1 to its members, exhibit A-8, letter dated June 18, 1983, from respondent No. 6, exhibit A-9 ; letter dated July 8, 1983, from respondent No. 5, exhibit A-10 ; letter dated January 22, 1983, from SAIL inviting tenders exhibit R-1 ; letter dated April 22, 1982, from SAIL to respondent No. 1, exhibit R-2 ; letter dated May 5, 1981, from SAIL to respondent No. 1, exhibit R-3 ; purchase order dated October 13, 1981, from SAIL to respondent No. 2, exhibit R-4 ; and record note of discussion held on April 21, 1981, to April 24, 1981, exhibit R-5.

20. Smt. S. Hariharan, secretary of the respondent association (RW-1), stated that in all, the membership of the association comprises 12 manufacturers and only 8 of them are manufacturing ferro manganese. Out of them, Maharashtra Electrosmelt Ltd. is a Government owned company ; while respondent No. 5, Tata Iron & Steel Co. Ltd., manufactures ferro manganese only for captive consumption and does not make any supply to SAIL. M/s. Dandeli Ferro Alloys, respondent No. 7, manufactures very little quantity of high carbon ferro manganese and so they are also not making any supply to SAIL. So far as M/s. Sandur Manganese & Iron Ore Ltd., respondent No. 8, is concerned, it is stated, it was not manufacturing ferro manganese in 1981, the year which is the subject of enquiry in the matter of supplies to SAIL. However, as stated hereinabove, Mr. R. Kumarvel, secretary of this company, admitted in his affidavit dated September 10, 1984, that the chief executive was present in the meetings of the association on February 12, 1981, and March 11, 1981, though he did not participate in the discussion concerning supplies to SAIL.

21. Smt. S. Hariharan, secretary of the respondent association (respondent No. 1), says that the annual requirement of SAIL is around 70% of the total sales made by the manufacturers that there are ten manufacturers in India, and that the total production capacity of high carbon ferro manganese is around 2,65,000 tonnes. The installed capacity is as much as double the demand for the product in the country. The export of high carbon manganese is possible but because of severe competition in the international market prices, and the high cost of production in the country, the export of manganese is not remunerative.

22. It is stated that the association merely decides, on the basis of the past performance of each member-manufacturer, the quantity to be supplied to SAIL by each of its members. This intervention by the association has become necessary because the demand is much less than the production capacity. The association regulates supplies to SAIL only because the latter is the biggest buyer and if only some were to supply the entire demand, the other plants would be idle. Ultimately, these may have to be closed down. As regards the price, she says that the association has no role to play in determining the prices to be quoted by each supplier. The association has no idea of the price policy adopted by respondents Nos. 2 to 8. Mrs. S. Hariharan further says that the object of the association is not only to ensure supply to SAIL but also to promote the interest of the industry as a whole ; for instance, the association makes representations to the authorities whenever the Government policy is considered to be contrary to their interests. In answer to a question whether in the matter of supplies to SAIL, the prices were charged on negotiation basis and not on the basis of BICP formula, she stated that, BICP had fixed the base price for individual producers as well as the escalation cost on four important raw materials. This escalation formula is part of the purchase order issued by the steel plants of the SAIL to the ferro manganese producers individually. By reference to document, exhibit R-5, she stated that during April 1, 1981 to March 31, 1983, in the matter of supplies to SAIL, the variation in the prices ranged between Rs. 3,325 per tonne to Rs. 3,437 per tonne and the same was in consonance with the BICP formula.

23. It is not in controversy that meetings dated February 12, 1981, and March 11, 1981, were convened by the respondent association. However, only the minutes of the meeting held on March 11, 1981, have been made available. The record of these minutes was sent to each member by letter dated March 13, 1981, exhibit A-8. This meeting dated March 11, 1981, appears to have been attended by the representatives of respondent Nos. 2, 3, 5, 6, 7 and 8. It was also attended by a representative of Maharashtra Electrosmelt Ltd. In paragraph 3 of the minutes dated March 11, 1981, letter dated February 24, 1981, of M/s.

Maharashtra Electrosmelt Ltd. "in regard to the quotations made to SAIL against their ferro manganese tender" was considered. It is stated therein that Mr. G. Lobo informed the committee that the concerned ferro producers assembled in the association office after the tender was floated by SAIL and various aspects including the quantities and the prices to be offered were discussed. The record of discussion further shows that the representatives of M/s. Khandelwal Ferro Alloys Ltd. and M/s. Universal Ferro and Allied Chemicals Ltd. had suggested that there should be a gap between the quantities asked for and the quantities to be offered. This arrangement was not agreed to by the representatives of Maharashtra Electrosmelt Ltd. and Ferro Alloys Corporation Ltd., because according to them the gap between the demand and supply would weaken their case with the Ministry in the matter of export-quota. It was then in a meeting at Nagpur that the quantities to be offered by individual members were finalised. Since M/s. Uni Ferro International was a hundred per cent, export unit, no quantity of ferro manganese was earmarked for it for supply to SAIL, but at the time of the opening of the tender, it was noticed that Uni Ferro International Ltd. had not only offered to supply ferro manganese to the extent of its full installed capacity of 45 thousand tons but also the price was lower than "their old unit". So, it has been remarked : "thus they have weakened the case of other ferro producers as well in their price negotiation with SAIL".

24. As to the discussion that ensued on this matter, we had better extract the relevant portion of paragraph 3 of the record of the minutes as here-under : "Mr. P.R. Khandelwal as well as other members present flatly denied that they ever had any knowledge of the tender copy being sent to Uni Ferro International Ltd. It being a hundred per cent export oriented industry, members had no idea that Uni Ferro was interested in quoting for the internal sales to SAIL. Mr. K.S. Mallya, said that during the course of Nagpur meeting they even enquired from Mr. C.L. Malik, whether Uni Ferro has come into production. While Mr. Malik informed that it was due to commence production shortly, he never disclosed to the members their intention to quote against this tender. Earlier at a meeting held on January 27, 1981 also, when the surplus quantity available for export was assessed by the Ministry, M/s. Uni Ferro's production was never taken into account.

Intervening in the discussion, the Chairman observed that 3 or 4 years back, the activities of the association had almost come to a standstill. The image of the association was also very low with the Ministry. When the contract for ferro manganese was then negotiated with SAIL, the ferro producers did not get a better bargain. Hence, she urged the members to think in the larger interest of the industry. Since every problem has a solution, only the willingness to solve the problem amicably is required. She only warned members against using the strength and prestige the association has gained during the last few years by coming together under one platform."

25. The record of the minutes amply confirms that besides the decision on quantities in the supply by the members individually the question of price to be quoted was not entirely left to the individual discretion of the members. The lower price quoted by M/s. Uni Ferro International did cause a grave concern to the association. The blurt out that M/s. Uni Ferro had weakened the case of other ferro producers "in their price negotiations with SAIL" reflects that the question of price has not been outside the ambit of discussion in the meetings of the association.

26. The minutes of the meeting held on February 12, 1981, have not been furnished and Mrs. S. Hariharan in her affidavit dated December 17, 1984, in answer to the interrogatory denied that there was any meeting of the committee on February 12, 1981. In this respect, on behalf of the Director-General, Mr. B.N. Nayyar, advocate, solicited that from the withholding of the minutes, an adverse inference can be drawn against the association with regard to price quotations offered by each member for its supplies to SAIL. Mr. Ashok Desai, Senior Advocate for the respondents, however, contended that an adverse inference can be drawn only where there is no doubt regarding the existence of the document, but it is withheld. In the instant case, according to learned counsel, the document itself is not in existence and, therefore, no adverse inference can be drawn from its non-production.

27. In this respect, it is to be noted that the statement of Smt. S.Hariharan, in her affidavit dated December 17, 1984, is inconsistent with the statement of Mr. R. Kumarvel, secretary of respondent No. 8 in his affidavit dated September 10, 1984. Whereas Mr. R. Kumarvel admitted that Shri S. Venkataramiah, chief executive, was present at the meetings of the respondent association held on February 12, 1981, and March 11, 1981, Smt. S. Hariharan says that there was no committee-meeting of respondent No. 1 on February 12, 1981. In paragraph 8 of the written reply to the notice of enquiry Mrs. S.Hariharan, says : "with reference to the second paragraph of the said notice, this respondent, whilst not denying the fact that two meetings were held by it as stated denies that such meetings were held only to consider the terms and conditions to be offered to SAIL."

28. It is to be seen that this statement contradicts her statement in the affidavit dated December 17, 1984. This being so, under Section 114(g) of the Evidence Act, it is to be presumed that the record of the minutes of the meeting held on February 12, 1981, if produced would be unfavourable to respondent No. 1.

29. It is contended by respondent No. 1 that SAIL itself sends a copy of the tender enquiry as well as of the purchase order to the association and as such the intervention by the association in the matter of supplies to SAIL is of their own seeking. It is lamentable that no officer of the Steel Authority of India has been examined as a witness to depose to these facts to enable the Commission to have an insight into the ramifications of the cartel among the manufacturers through the aegis of their association. Letter exhibit A-7, dated February 6, 1981, addressed to respondents Nos. 2 to 4 and 6 by the association was to call a meeting on February 12, 1981, to consider the terms and conditions to be offered to SAIL against their tender. There is no denying the fact that supplies are regulated by the association through mutual understanding between the members. We have noticed that deliberations at these meetings to decide about the terms and conditions to be offered to SAIL do take note of prices side by side with the quantities to be supplied by each member. Still the officers of SAIL call the manufacturers for negotiations to settle the prices and the BICP formula comes to their help. It seems that the BICP formula does not automatically fix up the prices because if it were so, there was no point in asking the manufacturers to quote their prices in response to the tender floated by SAIL.

30. So, all the circumstances point to the conclusion that the members of the respondent association collectively decided upon the terms and conditions to be offered to SAIL in response to their tender enquiry for the supply of high carbon ferro manganese.

31. The modus operandi, thus, adopted by the respondents attracts Clauses (d) and (g) of Section 33 of the Monopolies and Restrictive Trade Practices Act. Under Clause (d), an agreement to sell goods or to tender for sale or purchase of goods at prices or on terms or conditions agreed upon among the sellers is to be deemed to relate to restrictive trade practice. Under Clause (g) an agreement to limit or restrict the supply of any goods relates to restrictive trade practice.

Needless to say that such ah agreement or arrangement is also likely to have the effect of restricting competition amongst the manufacturers.

32. To this extent, issues Nos. 1 and 2 are to be taken as proved as respects the allegation in the notice of enquiry that the respondent association convened two meetings viz., dated February 12, 1981 and March 11, 1981, and the terms to be offered to the Steel Authority of India Limited were decided mutually by the respondent-members of the association. These terms and conditions related to the quantities of high carbon ferro manganese to be supplied by each manufacturer-member and the price to be settled with the representatives of the Steel Authority of India in the course of their negotiations with them.

33. So far as respondent No. 6 is concerned, learned counsel for the Director-General did not address any argument to bring home the allegation that the respondent indulges in the trade practice of prescribing discriminatory prices to its customers. As a matter of fact, the reply given by respondent No. 6 is explicative of the price differential. So, against respondent No. 6 this charge is not made out.

As already pointed out the contention of the respondents is that if the demand by SAIL is not regulated and equitably distributed on the manufacturers, some of them will face the prospect of being closed down. Vide letter exhibit R-1 dated January 22, 1981, Steel Authority of India Limited addressed tender enquiry to UFA (respondent No. 2). KFA (respondent No. 3), JSC (respondent No. 4), TISCO (respondent No. 5) FACOR (respondent No. 6), DFA (respondent No. 7), Sandur Manganese & Iron Ore Ltd. (respondent No. 8) and also to Uni Ferro International Ltd. and one VISL for supply of high, carbon ferro manganese in the years 1981-82, 1982-83 and 1983-84 in the following quantities :

34. PIR exhibit A-1 at page 4 says, that M/s. Sandur Manganese & Iron Ore Ltd., respondent No. 8 is also a member of respondent No. 1 association but they are not producing ferro manganese for the time being and, therefore, the figures of production of this company have not been included in the statement. While Uni Ferro Ltd., Tumsar, started production only in the year 1981-82 and also because it is licensed primarily as an export unit, the production figures of this company were not reported.

35. Interrogatories were delivered to the respondents to enquire about the production figures during the years 1980 and 1981. The production figures of 1981 given by them are as follows :

36. The prices quoted in the year 1981 for supply to SAIL were as follows:

37. Exhibit R-5 also shows that the supplies were distributed on the basis of the negotiations as follows:

38. It is submitted by Shri B.N. Nayyar, learned counsel for the Director-General that after the settlement of rates by negotiation, the difference between the highest quotation and the lowest quotation was as much as Rs. 112 per MT. It has been worked out that if the entire requirement had been purchased at the rate of Rs. 3,325 per MT from respondents Nos. 2 and 3, there would have been a saving of Rs. 31,33,287 by Steel Authority of India Ltd. Be that as it may, the fact remains that not a single manufacturer of high carbon ferro manganese was in a position to meet the entire demand of 1,19,145 MT in the year 1981-82 and 1,30,280 MT in the year 1982-83. In the year 1983-84 also, the position was not different.

39. It has also come in evidence that the export possibilities are rather bleak, for the prices in the international market are lower than the prices in the country. The Steel Authority of India Ltd. is the single biggest buyer. As per RW-1, Smt. Hariharan, the demand of SAIL is around 70% of the total sale of ferro manganese in the country. In this way, the actual production obviously is less than the installed capacity. Moreover, it is pointed out that in some places there has been power shortage over a long time with the result that the plants in Karnataka and Orissa remained idle for a few months of the years. It

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is pointed out that if the entire demand from SAIL were to be supplied by one or two manufacturers, others may find their existence impracticable because the demand from SAIL is assured year after year. It is submitted that even the Steel Authority of India benefits from the allocation of the quantities to be supplied by each manufacturer in that the maintenance of supply in the regulated quantities is assured and if under any eventuality any manufacturer cannot meet his obligation, the association takes care to have the supply effected through another member-manufacturer. The association is concerned only in the matter of dealings of the member-manufacturers with Steel Authority. In this way, we feel inclined to agree with the respondent's counsel that in the existing circumstances, the allocation of supplies by mutual discussion through the aegis of the association is not detrimental to public interest. 40. In so far as the question of price is concerned, no doubt allocation of a specific quantity of ferro manganese to be supplied by each member-manufacturer will pro tanto enable the member-manufacturers to agree amongst themselves as to the minimum price to be quoted, yet due to the market power as the single biggest purchaser enjoyed by SAIL, they cannot afford to be relentless and arbitrary in the matter of price-quotation. We have seen that while responding to the tender enquiry, the price quotations did not show uniformity as much as they did after negotiations with the officers of SAIL. It is in evidence that even then the prices quoted to SAIL are lower than the prices quoted to other customers by the manufacturers individually. Beside it, SAIL has the advantage of negotiating prices on the basis of BICP formula having regard to the cost of production and overhead charges. 41. While so, the restriction as it stems from the intervention of the association in the dealings of the member-manufacturers with SAIL cannot be regarded as restrictive of competition to a material degree nor can it be said to be unreasonable bearing in mind the circumstances which entail regulation of the terms and conditions in trade. If, on the one hand, it entails some restriction to be faced by the SAIL, it, on the other hand, serves the interests of the buyer and of the sellers as well as their employees in ensuring avoidance of adverse effect on the industry and on the level of employment therein, particularly as otherwise some of the plants due to idle capacity will have to face the grim prospects of closure. There is not an iota of evidence to demonstrate that under utilisation of the installed capacity is due to manipulation or some mutual understanding amongst the manufacturers. As held in Board of Trade v. U.S.A. [1917] 246 U.S. 231, the restraint in this trade, under the peculiar circumstances appertaining to dealings with SAIL is more regulatory in character than restrictive as affecting competition to a material degree. We decide issue No. 3 in favour of the respondents. As a result of the above discussion, an order under Section 37(1) is refused. No order as to costs.
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