[By Samyak Deshpande and Vedika Kulkarni]
The authors are students of Maharashtra National Law University Mumbai
Introduction
Recently, the Hon’ble Supreme Court of India (SC), in CCI v Schott Glass India, upheld the decision of the Competition Appellate Tribunal (COMPAT), dismissing the appeal filed by the Competition Commission of India (CCI). The Court held that the Director General’s (DG) report was lacking in evidentiary value. To be specific, it was the denial of cross-examination to the affected parties under Section 36 of the Competition Act, 2002 (the Act), a significant procedural lapse putting into question the DG’s entire findings. This shows how such procedural lapses can affect CCI’s decisions’ validity, urging an analysis of the procedure for Indian competition law enforcement.
In 2015, the COMPAT had strongly opined that “the time has come for the Commission to lay down guidelines for conducting the investigation/inquiry in consonance with the rules of natural justice.” This came in the Builders Association of India v. Cement Manufacturers’ Association and Others, where the Chairperson of the CCI signed the order without physically attending hearings. The remark pushed for transparency and consistency in the procedure. Yet, nearly a decade later, CCI has issued no formal procedural rules or regulations in this regard.
This article highlights the procedural failures of CCI through such cases and analyses the impact of procedural lapses and inconsistent adjudications on businesses. Further it argues that there is an urgent need to implement an enforceable mechanism for procedural fairness within the framework of CCI.
The article first outlines the due process requirements under Indian competition law and their role in ensuring fairness. It then analyses key procedural deficiencies, including denial of cross-examination, reliance on incomplete evidence, and delays in adjudication. Thereafter, it subsequently assesses the financial and reputational impact of such lapses on businesses and investor confidence. The discussion concludes by examining international best practices and recommendations, and proposing reforms to embed enforceable due process safeguards within CCI’s framework.
Understanding the Due Process
Under the CCI (General) Regulations, 2009 (Regulations), the investigation process begins when the CCI forms a prima facie opinion under Regulation 16 of a possible contravention and directs the DG under Regulation 18 to investigate, who then collects evidence and prepares a report for the CCI. Upon receipt of the DG’s report, the CCI may under Regulation 20 invite objections or suggestions from the concerned parties and, if deemed necessary, may direct further investigation. Thereafter, the CCI considers all submissions and evidence on record before passing a final order. The parties are generally afforded an opportunity to be heard in accordance with the procedure established by law. This is the general process followed by CCI.
Due process, on the other hand, is the backbone of fair law enforcement, requiring the state to respect principles of natural justice. It goes beyond mere rule-following to ensure that the procedure itself is fair and just. With this foundation in mind, it becomes important to explore how lapses in procedural standards undermine fairness and lead to significant financial and operational consequences for businesses.
The Need for Due Process?
1.Lapses in Procedural Standards
Despite nominal procedural safeguards under the Act and the Regulations, the CCI’s investigative process suffers from serious procedural flaws that seriously undermine fairness and due process.
For example, Regulation 41 allows evidence from informants or 3rd parties to be recorded without the enterprise’s presence, causing concerns of bias. Further, the DG is vested with discretionary authority to permit or deny cross examination of witnesses. When there is no mandatory right to cross-examine, it becomes harder to test the veracity of evidence and ensure a fair trial. In the recent Schott Glass case, the SC noted that despite a clear request for cross-examination, the CCI refused it on the technical ground that no “separate application” had been filed. It made no attempt to assess whether cross-examination was necessary or if its denial would cause prejudice. It was evident that the request was rejected on procedural formality rather than substantive fairness. The Court referred to several precedents that contradicted the CCI’s approach. In Raymond Woollen Mills Ltd. v. Director General (Investigation and Registration) and State of Kerala v. K.T. Shaduli Grocery Dealer, the courts upheld the right to cross-examination as a fundamental aspect of fair procedure. Similarly, in Andaman Timber Industries v. Commissioner of Central Excise, Kolkata, the SC held that denying cross-examination undermined the entire proceeding and vitiated the decision. The Delhi High Court, in Cadila Healthcare Ltd., reinforced this view by holding that when findings rely substantially on oral statements, refusal to permit cross-examination invalidates the decision. It emphasized that discretion to allow or deny cross-examination must be exercised judicially, as was followed by the Schott Glass ruling.
Also, the procedural lapses are not limited to just cross-examination but extend beyond the broader rules of fairness and principles of natural justice. There are plenty of matters where the appellate stage revealed such various procedural lapses. To highlight a few, in Google v CCI, the SC held that non-disclosure of key documents violated due process. In Balrampur Chini Mills Ltd. v. CCI, the CCI’s order was overturned primarily due to violations of the principles of natural justice where only three members signed and pronounced the final order despite six members having heard the matter. Further, the parties were not provided an opportunity to be heard after receiving the Supplementary Investigation Report or regarding the quantum of penalty before its imposition. There was also an inordinate delay of 13 months between the conclusion of hearings and the pronouncement of the order, during which the bench composition changed, all of which cumulatively amounted to a breach of the principles of natural justice and procedural fairness. In BCCI v. CCI, CCI was found to have relied on information from the internet public domain materials without giving BCCI an opportunity to respond to that material, thereby violating principles of natural justice.
Such procedural lapses in adjudication not only undermine the integrity of the regulatory process but also give rise to significant financial and operational repercussions for the affected companies and businesses. It is thus pertinent to delve deeper into these consequences and to highlight the tangible costs and broader financial fallout that procedural failures impose on businesses.
2.The cost of procedural failure and financial fallout
Due process in competition law is not to be seen as just a formality; it protects companies from serious commercial fallout. CCI’s orders, especially those that start investigations or find violations, can sharply affect a company’s stock value and public image. According to the empirical study by Dr. Jayasankar Ramanathan titled ‘Stock Market Reaction to Regulatory Action on Anticompetitive Practices in India’, investigation orders from the CCI caused cumulative returns of negative 5.45% over a 41-day period, a clear erosion of shareholder value even before any final determination. Worse, in numerous cases later overturned by appellate bodies such as highlighted above, companies endured irreversible losses in goodwill, investor trust, and financial standing despite ultimately being vindicated. The duration of proceedings (averaging 224 to 489 days) further compounds and increases the damage. This systemic delay not only causes legal and reputational costs but also lessens the investor confidence, as markets react to mere regulatory scrutiny. The absence of fixed procedural safeguards at the CCI stage then makes companies seek relief through appeals, increasing the delays and uncertainty. For example, the Whatsapp LLC v. Competition Commission of India & Ors., where a 5-year ban and a ₹213 crore penalty were challenged, resulting in a partial stay and additional costs. Recognizing the widespread implications of such procedural gaps, international forums have also called for stronger due process protections to ensure fairness and consistency in competition enforcement.
International Calls for Due Process Integration
The need of integrating due process framework, as addressed above, in the antitrust regime is acknowledged by various global platforms as well. Toward the end of 2014, Competition Policy International observed that due process improves legal outcomes and enhances precedential value. Incorporating due process norms into CCI’s regulations could ensure fairer and more effective adjudication.
Even earlier than this, the International Chamber of Commerce (‘ICC’) in 2010 had recommended a higher standard of procedural protections including due process. To emphasize the support on this recommendation, an observation can be drawn to a similar paper on ICC discussion in 2017. It was based on the recommendations put out by the American Bar Association, the Organization for Economic Cooperation and Development, and the International Competition Network. This highlights the global call for stronger procedural standards in competition enforcement, making it imperative for the CCI to strengthen its framework.
Conclusion
There is a serious deficiency in the due process which is revealed by the CCI’s ongoing pattern of procedural errors, which are further highlighted by SC decisions such as Schott Glass. These errors cause organizations to suffer significant financial and reputational losses, undermine market trust, and overload appellate courts with avoidable litigation. The time has come for CCI to go beyond discretionary standards.
The persistent procedural shortcomings within the CCI’s investigative and adjudicatory framework have been noted by the lack of formal guidelines for evidence collection, the discretionary and often arbitrary approach to cross-examination, inconsistent relationship it has with natural justice principles, and inordinate delays in the adjudication process. These together disturb the efficacy of India’s antitrust laws.
The absence of enforceable due process safeguards compels affected parties into prolonged litigation, undermining the very purpose of a regulatory body designed to ensure fair competition. International calls, practices and comparative studies have long recognized that a due process doctrine is integral to both the rule of law and practical efficiency. To restore confidence in the competition enforcement process to fulfil the legislative intent, the CCI must introduce rules or regulations to incorporate an enforceable due process mechanism within its framework.