Jurisdiction of Competition Commission of India: An authority under perpetual judicial scrutiny

[By Badal Singh]

The author is a student of Hidayatullah National Law University.

 

Introduction

Owing to the nascent origin of Competition law in India, not many judicial precedents have been set with respect to the jurisdiction of CCI. Instances of conflict of jurisdiction between CCI and specific regulators have become a common muddle for the judiciary to deal with. The judiciary’s role in determining the conflict of jurisdiction or “forum shopping” has become crucial in a period where innumerable such cases have been on the rise.

Delhi High Court’s recent judgment in the case of ICAI v. Competition Commission of India, excluding the role of CCI as a market regulator in matters concerned with other independent statutory regulators not related to trade or commerce has re-augmented the need to define and determine the jurisdiction and scope of power of CCI to inquire into matters pertaining to market monopoly and competition. The court in its judgment held that CCI’s jurisdiction to entertain matters is limited only to matters that impact the market and are related to trade, business, or commerce.

In this article, we shall be discussing the extent of CCI’s jurisdiction as provided under the Competition Act,2002 with special reference to the recent decision passed by the Delhi High Court in the matter of ICAI v. Competition Commission of India and various other judicial pronouncements.

Jurisdiction of CCI as per Competition Act, 2002: Extent and challenges

Section 18 of the Competition Act,2002 elucidates it to be the duty of CCI to eliminate practices having a negative impact on the competition prevailing in the market, preserve the interests of the consumers, and promote freedom of trade carried on by individuals in the Indian market. Along with that, Section 19 is a complementary clause that ensures that CCI carries its duties in the prescribed manner. It provides CCI the power to inquire into any alleged contravention of provisions mentioned under Section 3(1) and Section 4(1) of the concerned act. These provisions prohibit the parties from entering into any agreement that is likely to cause an “appreciable adverse effect” on the market in India and abuse of dominant position in the market in India respectively. The use of the “may” clause makes it a discretionary power at the instance of CCI whether to carry out such inquiries or not. Also, Section 20 of the act provides CCI similar powers to conduct inquiries in matters of the combination of entities.

It is evident from the manner in which the provisions have been drafted that the jurisdiction of CCI is wide and legislative restraints upon the same are minimal.  Section 60 of the act stipulates the provisions to have an overriding effect over other laws, meaning anything inconsistent with any other statute in force for the time being shall not invalidate the provisions of the concerned act. It can thus be concluded that CCI’s power to carry out inquiries and its untamed jurisdiction over the stipulated matters widens the ambit of its interference in business matters.

CCI’s jurisdiction has always been a matter of deliberation before the Judiciary in the recent past. The dispute arises when there exists a point of intersection with respect to the ambit of statutory regulatory authorities and the jurisdiction of CCI to inquire into the matter. The major reason behind the same is due to the usurping of the jurisdiction of other regulators or courts by the CCI, in matters that are to be specifically dealt with and tried by them. Legislative ambiguity, jurisdictional error, or irregularities in interpretation, whatever the reason may be, the conflict has always been a cumbersome task for the judiciary to determine and decide.

CCI and its conflict with IPR and statutory regulatory authorities

IPR and Competition: A Conflict of Jurisdiction

IPR and competition are antithetic notions and an approach that balances the interests of IPR holders and promotes competition within the market is essential to attain the goal of a free and fair market. The Competition Act, 2002, through its section 3(5) tries to create such balance by excluding IPR holders and their rights to restrain from any kind of infringement or to impose any “reasonable” restrictions necessary for the protection of their IPR, from the purview of anti-trust or anti-competitive agreements. But the protection is diluted by “reasonableness” as the condition precedent in providing licenses to the registered users, and the power to determine whether the conditions imposed are “reasonable” and not in restraint of competition, vests in the Competition Commission of India. Thus, a dilemma as to when CCI can enjoy jurisdiction in matters related to patents, copyright, and other forms of IPR has been one of the prime causes of the rise of litigations.

The primary case dealing with a similar conflict of jurisdiction between the Competition Commission of India and The Copyright Board was Super Cassettes Industries Ltd. vs. UOI & Ors. Delhi High Court in its judgment held that the authority and jurisdiction granted to CCI and Copyright Board govern diverse aspects of law and that the Copyright Board is not a potent instrument capable of dealing with and promoting competition in the Indian market.  The court held that in case there exists a conflict between the Competition Act and the Copyright Act, the authority to determine the jurisdiction shall vest in the Competition Commission of India.

Thus, it can be said that remedies provided under various statutes governing IPR and under the Competition Act, of 2002 to are distinct. While the statutes dealing with IPR provide the right in personam, the Competition Act provides the right in rem to the individuals against the abuse of dominant power by several entities. The presence of efficacious remedies under other statutes does not negate CCI’s jurisdiction to entertain the matter and remedies under such acts are capable of standing independently without any conflict. The same has been held in the case of Ericsson v. Micromax as well.

Is CCI usurping the jurisdiction of statutory regulatory authorities or regular courts? Judicial interpretation from “later special statute” to overriding effect of Section 60.

 Even if, with the aim of preventing confrontation between regulatory authorities and CCI, the Competition Act, 2002, through Sections 21 and 21 A, provides for provisions of reference to the Competition Commission against any decision taken or proposed to be taken by the statutory authority which is against the Competition Act or reference to the statutory authority against any decision taken or proposed to be taken by the CCI that is contrary to the provisions of any act whose implementation is entrusted to statutory authority, respectively, the instances of conflict still prevail.

The common thread to the ultimate irregularity regarding CCI’s jurisdiction is the existing legislative dilemma with respect to the jurisdiction of CCI at the very outset of the case. CCI is not at fault as it itself is grappling with the issue of whether it has jurisdiction in a given set of circumstances. The judiciary, through its interpretation, has tried to fill in the lacunae and present a clear picture in this regard.

In the landmark decision given in Anand Prakash Agrawal v Dakshin Haryana Bijli Vitram Nigam and Ors, initially, a complaint was lodged but CCI found no prima facie evidence on the matter, and the same was dropped as per Section 26 of the Competition Act. The decision was appealed before the COMPAT and it held that Electricity Act,2003 had an overriding effect over the competition act. Although Section 60 of the Competition Act,2002 is a “non-obstante clause”, the appellate tribunal held Electricity Act to prevail as it was the “later special statute” consisting of provisions for its own check of abuse of dominance.

But it didn’t take long for the Supreme Court to overturn the decision in the Anand Prakash case. In the case of Competition Commission of India vs. Fastway Transmissions Pvt. Ltd, the supremacy of Section 60 was restored, and the apex court held that Section 60 shall have an overriding in case of conflict with any other statute.

The case of the Competition Commission of India v. Bharti Airtel Ltd unfurled the ever-existing conflict of a dispute of jurisdiction between CCI and a regulatory authority, TRAI.  In this case, CCI was approached by Reliance Jio under section 19(1) of the competition act to carry out an investigation against three major telecom operators in the country. The CCI found prima facie evidence of abuse of dominant power and further directed the investigations in the matter. Writ petitions against the direction of CCI were filed in the Bombay Hugh Court on the grounds of lack of jurisdiction of CCI in the concerned matter. The Bombay High Court quashed the orders of CCI citing lack of jurisdiction.

An appeal against the decision of the Bombay High Court was made in the apex court. But the apex court stood firm with the decision passed by Bombay HC and held that all the aspects related to the development of the telecommunication market are to be dealt with by TRAI and CCI had no jurisdiction in the same. Basing its judgment on the doctrine of harmonious construction, the apex court held that CCI only has follow-up jurisdiction in such cases and the same can be exercised only when the TRAI is of the opinion that the telecommunication companies are involved in anti-competitive practices.

Thus, the courts in India can be said to create a middle ground to solve the existing dispute over jurisdiction and safeguard the autonomy of regulatory authorities.

The contemporary stance of the Judiciary: An Analysis in Line with ICAI v. Competition Commission of India

In its recent decision, the Delhi High Court, on a petition filed by ICAI against the impugned order of CCI, held that the authority to carry out Continuing Professional Education (CPE) falls within its regulatory power granted by the statute, to regulate the accountancy profession and maintain professional standards. It cannot be termed as an abuse of dominance. Such authority is nowhere related to trade or commerce and thus, CCI in such circumstances has no jurisdiction to carry out an investigation on such matters. The court through its decision restricted CCI’s jurisdiction to matters that directly influence the market and entities involved in trade and commerce.

Conclusion

Through the decision, the court has tried to strike a balance between the ambit of the exercise of the power of regulatory authorities and the unruly jurisdiction of CCI. These recent judgments tend to curtail CCI’s overreach in matters that are not directly concerned with market dominance, abuse of such dominance, and monopoly over trade and commerce.

Conclusively, it can be said that there exists no thumb rule to determine the jurisdiction of CCI over certain matters. There exists overlap and such overlap is something that needs to be taken care of in order to reduce the litigation period and overburdening of the judiciary. Be it the common consensus of the parties to fix the route of adjudication at the early stage of dispute or the promulgation of a statute that specifically determines the jurisdiction of authorities over the concerned matter, solving this ambiguity is the need of the hour.

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