Description

In February 2019, many retailers across Delhi observed a ‘bandh’ and made fervent calls for boycotting Pakistani and Chinese goods/services in light of Pulwama terror attack. A similar campaign gained traction in 2020/2021 due to the Chinese incursions into the Indian territory of Ladakh. Another example is from 2017, where two prominent Trade Associations in Tamil Nadu called for boycott of products from Pepsi and Coca-Cola on the ground of safeguarding fragile water resources from being misused by these soft drink giants. More recently, both commercially and/or politically motivated calls are often made for ban and boycott of certain films and this prevalent practice has affected the Bollywood movie industry at large.

In India, Trade Unions and Associations are registered under the Trade Unions Act, 1926 and the Societies Registration Act, 1860 respectively. There can be other kinds of unincorporated/unregistered associations also. These bodies collectively represent their grievances and thereby have a superior bargaining power in market. Sections 17 and 18 of the Trade Unions Act provides ‘civil and criminal immunity’ to members with respect to activities in furtherance of the union’s objectives, even though such activities may have adverse effects on competition. For instance, threatening ‘boycott or non-cooperation or collective refusals’ would amount to foreclosure of competition by hindering entry into the market and thus their activities may fall foul of the Competition Act, 2002.

Trade Associations vociferously defend their boycott calls by claiming that if they do not want to stock a certain product, they have every right to do so, as they are merely exercising their ‘right to choice’. They also contend that they are not engaged in any ‘economic function’ and they are merely a forum for opposition and such ‘right of opposition’ is a part of their fundamental right to protest. While these arguments may sound logical, but in practice, orchestrating a boycott may violate both the Competition Act and the recently passed Consumer Protection Act, 2019. Although ‘right to form associations/unions’ is a fundamental right under Article 19(1)(c) of the Indian Constitution, their right to call for boycott may impinge Article 19(1)(g) of the Constitution.

The Indian Supreme Court in Competition Commission of India (CCI) vs. Co-ordination Committee (AIR 2017 SC 1449) has held that trade associations cannot engage in anti-competitive activities under the “cloak of trade unionism.” The laws concerning the interface between fair market regulators and their impact on trade unions/associations is undergoing changes around the world. In India too, the situation is constantly evolving, particularly when it comes to the concept of group/collective boycotts. In this context, the presenter would like to delve into the legality of group boycotts under Indian Competition law by comparing the same with global anti-trust legislations.