The author is a student at West Bengal National University of Juridical Sciences, Kolkata (WBNUJS).
Section 26(1) of the Competition Act, 2002 (hereinafter Act) confers power on the Competition Commission of India (hereinafter CCI) to order an investigation when it finds prima facie contravention of the Act. The said investigation is in no way final but a mere departmental inquiry to dig deeper into the case.[i] Furthermore, before passing the order of investigation to the Director-General (hereinafter DG), the CCI, in most cases, relies on the information produced by the Informant in forming a prima facie opinion. The aim of this article is to determine who has a duty to discharge the burden of proof, the Informant, or the Respondent, analyzing whether CCI has adopted a uniform standard of proof to determine prima facie violation.
Standard of Proof of ‘Prima Facie’ Violation
In this part of the article, the author has analyzed the approach of CCI in placing its reliance on the evidence to direct an investigation or close the case that comes before it, under section 26(1) and 26(2) of the Act respectively. It is well settled that on receiving information and documents from the Informant, the CCI cannot evaluate and analyze the evidence on its merit.[ii] This can only be done after the DG submits a detailed report of investigation to the CCI.[iii] Therefore, it is imperative to understand the concept of a prima facie violation and the procedure by which the CCI evaluates complaints.
An Appellate Tribunal gave an important ruling in the case of Reprographic India vs. CCI[iv] where it was held that it is necessary for the Informant to “…demonstrate substance in the allegations…” in order to initiate an investigation and that hurling bald accusations would not fall within the ambit of a prima facie violation.[v] The interpretation of this ruling makes it clear that the burden of proof lies on the Informant at this initial stage. In another case of Maruti Suzuki,[vi] the CCI took an opposite view in which an anonymous mail was sent to CCI alleging Maruti Suzuki’s involvement in anti-competitive practices.[vii] The CCI took a suo moto cognizance and thereby shifted the burden of proof on the OP for its failure to mention the reasons for the imposition of penalties only for the violation of guidelines.[viii] A plain reading of the above two cases in conjunction suggests that CCI has a divergent approach in forming a prima facie opinion. Although the Reprographic India case was in the right direction, the ruling does not explain what this ‘discharging of proof’ and ‘substance in the allegations’ by the Informants mean.
The lacunae in the ruling of the Reprographic India[ix] case can be seen to be carried forward in a recent case of Delhi Vyapar[x] that came before the CCI. In this case, the Informant alleged contravention of section 3(4) read with section 3(1) of the Act. In order to find out a prima facie existence of vertical agreements between the MNCs (Amazon and Flipkart) with their affiliated traders respectively, CCI relied on the screenshots of the SMSes adduced by the Informant and on that basis, it launched an investigation against Amazon. It did not give an opportunity to Amazon to present its objections against the evidence produced by the Informant. It is surprising that Amazon filed a suit in the Karnataka High Court and claimed that the subject matter in the SMSes is not mobile phones as alleged by the Informant but fitness equipment.[xi] When such an objection related to the veracity of the subject matter of the evidence is raised by the OP, it raises some serious doubts about the mechanism adopted by the CCI in basing its reliance on the information given by the Informant. This case, prima facie, required an in-depth assessment and screening process for the evidence provided. This screening was regarding the veracity of the adduced evidence by the Informant which is well within the power of the CCI, therefore the CCI could go into the merits of the evidence. It is indicative of the fact that there needs to be a standard mechanism that CCI should be mandated to rely on to determine the prima facie violation of the provisions of the Act.
Another noteworthy point is that in the case of All India Online Vendors Association[xii], the complaint was filed on similar grounds, but the CCI did not find any prima violation, hence closed the matter under 26(2). In this case, the CCI took a very lenient approach while closing the matter by stating the reason that the e-commerce ecosystem was a nascent area that is still developing against a more aggressive stance as was seen in the Delhi Vyapar[xiii] case. In this case, the CCI closed the matter without stating the substance in the allegation and the reasons for finding a prima facie case. Stating the reasons briefly regarding the reliance on the evidence before ordering an investigation is a ‘sine qua non’ under section 19 and 26 of the Act as it shows a careful application of ‘judicial mind’ by the CCI.[xiv] The ruling of Reprographic India[xv] case was not applied in the case at hand.
These deviations in approaches raise doubts in the methodology and process by which CCI looks into the complaints. Therefore, it is imperative that to avoid such contradictions in the stance taken by the CCI, the term ‘substantiated allegations’ be defined. Once this term is defined, a certain level of uniformity in the process of filtering the evidence and relying on it while screening a complaint received by an Informant. This becomes a very crucial step as this step is the deciding factor in forming a prima facie for investigation. This will further help fix the problem discussed above that arose in cases where complaints in two different cases were filed on similar grounds. However, CCI took two completely different unjustified stances.
From the above discussion, it is clear that CCI has not adopted a uniform approach in evaluating the complaint while forming a prima facie opinion. Through the case laws discussed above, it is evident that CCI has shifted the burden of proof from the Informant to the Respondent in different cases. Regarding this issue, the CCI needs to adopt a uniform mechanism that requires the Informant to prove that the complaint filed is a substantiated one. This also brings to light the loophole in the NCLAT ruling in the Reprographic India case which was in the right direction but failed to define the terms that formed the heart and soul of the judgment. Thus, these lacunas need to be filled by evolving a coherent and uniform standard for evaluating complaints. There are considerable gaps and loopholes in the process of finding the prima facie violation and reaching a final conclusion.
[ii] Gujarat Industries Power Company Limited v. CCI and GAIL, Appeal No. 3 of 2016, COMPAT, Order dated 28.11.2016.
[iv] Competition Commission of India Case No. 41 of 2018.
[vi] Competition Commission of India Suo Moto Case No. 01 of 2019.
[viii] Id., ❡27
[ix] Competition Commission of India Case No. 41 of 2018
[x] Competition Commission of India Case No. 40 of 2019.
[xi] CCI doesn’t have prima facie proof, Amazon tells HC, Economics Times (Bengaluru) February 13, 2020.
[xii] Competition Commission of India Case No. 20 of 2018
[xiii] Competition Commission of India Case No. 40 of 2019
[xiv] Ahkam K., Divyansh P., Mapping the Journey of Competition Analysis in India: From Precedence to Evidence, Kluwer, October 5, 2018, available at http://competitionlawblog.kluwercompetitionlaw.com/2018/10/05/mapping-journey-competition-analysis-india-precedence-evidence/?doing_wp_cron=1595424319.2204511165618896484375 (Last visited July 20, 2020).
[xv] Competition Commission of India Case No. 41 of 2018.