The National Company Law Appellate Tribunal (NCLAT) has reversed the penalty imposed by fair trade regulator CCI on multi-conglomerate ITC for failing to announce its purchase of brands 'Savlon' and 'Shower to Shower' in 2017. Johnson & Johnson Privately sold its antibacterial trademark Savlon and the personal care product brand Shower To Shower to ITC in 2017.

On the eleventh of December 2017, the Competition Commission of India (CCI) fined ITC Rs 5 lakh for alleged failure to provide notice under Section 6 sub-section 2 of the provisions of the Competition Act. The section requires the firm that intends to enter into a partnership to notify the CCI within 30 days of the proposed combination's details.

However, ITC challenged the CCI's order before the National Company Law Appeal Tribunal, which is an appeals authority, claiming that because the value of the deal was Rs 68.37 crore, there was no need for any such notifications under the rules and regulations.

They received an exemption under the de minimis notification, which states that any combination including the target firm with an asset value or turnover of less than Rs 350 crore or Rs 1,000 crore, accordingly, is covered.

Consenting to it, a two-member NCLAT panel said "no fine was required" to be charged on the ITC and overturned the Competition Commission of India's (CCI) order. "We, therefore, hold that the penalty set by the CCI on ITC for failing to notify transactions I as well as II under section 6(2) of the Act should not have been imposed, and to this extent, we set aside the challenged order of the CCI," said NCLAT in its April 27, 2023 decision.

"Insofar as additional concerns linked to the 'combination' that were not raised in the current appeals during argument are concerned, we just want to mention that those problems are left open and not settled in this judgement," it said.

Interestingly, over 9 months before the fine was imposed, CCI had unconditionally allowed the transactions under Section 31(1) of the Act on March 22, 2017, after determining that there was no 'appreciable negative impact on competition' in the designated areas of relevance.

However, on March 29, 2017, it issued a notice of cause for ITC under Section 43A, directing it to file a response to the show cause notice for failing to file the transactions under Section 6(2) for CCI approval. Section 43A empowers CCI to levy penalties for failure to provide information on combinations.