Navigating The Essential (Interim) Relief Under the Competition Act, 2002

[By Saikishan B Rathore]

The author is a student at Gujarat National Law University, Gandhinagar. 

It is settled law that a statutory body cannot grant interim relief unless such power has been vested by the statute. Section 33 of the Competition Act, 2002 empowers the Competition Commission of India to grant interim relief upon satisfaction that an act in contravention of Section 3(1), Section 4(1) or Section 6 is committed, continues to be committed or is likely to be committed. CCI has issued orders under this section with utmost circumspection. The most recent need arising on 9th March, 2021 as it issued an order granting interim relief to the informants (Fab Hotels and Treebo), restraining the opposite parties (MakeMyTrip and GoIbibo) in Re: Federation of Hotel & Restaurant Associations of India and Anr. v. MakeMyTrip India Pvt. Ltd. and Ors (hereafter “MMT-Go”).

The three-fold test: CCI v. SAIL

In CCI v. SAIL, the Supreme Court recognized CCI’s jurisdiction to grant interim relief, subject to three conditions. Firstly, CCI ought to record its satisfaction in clear terms than an act of contravention of the stipulated provisions has taken place; Secondly, if it is necessary to issue an order of restraint; Thirdly, if there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have an adverse effect on competition in the market.

Applying the 3-fold test: Road to MMT-Go

As mentioned above, CCI has exercised this power very cautiously in the past. In Financial Software Pvt. Ltd. v. ACI (hereafter “ACI case”), the conduct of ACI in restricting the choice of ACI Banks for availing the services of third parties including the informant for customization and modification of a particular software appeared to be in contravention of section 4 of the Act. Thus, the CCI was compelled to grant interim relief pending enquiry subsequent to the order under Section 26(1). Further, in Fast Track Call Cab Pvt. Ltd. v. ANI Technologies Pvt. Ltd., the CCI found it essential to restrain Ola Cabs from charging way below the average variable cost as it posed an imminent threat to the competition in the market. However, in certain cases, there is no requirement for issuing such orders. For instance, in Re. National Shipowners Association v. ONGC, the informant prayed for a direction to restrain ONGC from taking any action, or threatening to terminate the ‘Charter Hire Agreement’ entered into with the member companies of the Informant till disposal of the inquiry and the matter pending before the CCI. Although the CCI noted a clear threat to competition in the market, it was satisfied with ONGC’s undertaking that it would not invoke the clause to terminate the said agreement and thus, refrained from issuing an order under Section 33.

In the recent case of MMT-Go before the CCI, an enquiry was already in progress in furtherance to CCI’s order dated 28-10-2019. However, the properties of the informants were not listed on the website of MMT-Go which was clearly in a dominant position in the relevant market of online franchising services for booking hotels in India. Moreover, as per the order under Section 26(1), it was clear that there existed a confidential commercial agreement between MMT & Oyo that prioritized the listing of Oyo Hotels on the website, thereby, indicating a likelihood to cause an appreciable adverse effect on competition. Further, it was clearly stated by the informants that inquiry has been pending for more than 15 months, and any further delay would eliminate competition in the market with special reference to the informant hotels that have been delisted. Therefore, the CCI rightly responded to the urgent need for interim relief as there is a clear denial of market access which is likely to eliminate competition in the market until there is a final determination.

Section 33 & 26(1): The difference in satisfaction

As laid by the Supreme Court in CCI v. SAIL at para 117, there is an express obligation on CCI to record satisfaction that there has been a contravention of the provisions mentioned under Section 33. However, this satisfaction is to be understood differently from what is required while expressing a prima facie view in terms of Section 26(1) of the Act. While the former is a definite expression of the satisfaction recorded by the Commission upon due application of mind, the latter is a tentative view at that stage.

Whether such ‘definite expression of satisfaction’ amounts to final determination?

The order under Section 26(1) is an administrative order. It merely sets in motion the inquiry, and the final determination is subject to the judicial scrutiny of the DG’s report. It is settled that the degree of satisfaction under Section 33 is not merely tentative. Therefore, it is a legitimate concern whether the exercise of such discretion by the CCI would play a major role in the pending enquiry/matter. There cannot be a uniform degree of satisfaction in every case. As noted by the CCI in the MMT-Go case, it completely depends on the evidence and circumstances of each and every case. For instance, in the recent G-Meet case, the CCI did not find any evidence placed by the informant to order an enquiry. On the other hand, in the MMT-Go case, there was enough evidence at the preliminary stage to display a clear denial of market access and foreclosure of competition by the dominant enterprise.

Another prominent example is the ACI case. When the order under Section 33 issued by the CCI (mentioned above) was appealed before the Competition Appellate Tribunal in ACI Worldwide Solutions Pvt. Ltd v. Competition Commission of India, the Comp AT refrained from expressing any opinion because it was of the view that confirmation of interim relief or otherwise would itself affect the investigation by the DG which is pending and it is also likely that it may affect the merits of the matter. Instead, it directed expeditious disposal of the matter by giving CCI a time limit of two months after submission of the report. Thereafter, the DG after conducting a detailed investigation reaffirmed the opinion of the Commission in its orders under section 26(1) and section 33 of the Act. And ultimately, even the CCI in its final order found in favour of the informants.

However, despite the existence of a more than a prima facie contravention upon interim relief being granted, there is a similarity between the orders issued under these two sections. Both of these orders do not ipso facto determine the issues in favour of the informants. The final determination by the CCI is subject to the application of mind by the CCI after the enquiry has been completed. Moreover, the report is not binding as the CCI can take a divergent view and this final determination by the CCI amounts to complete adjudication of the matter.

Right in rem or personam? – Blurred Lines

Recently, the Supreme Court in the Cab Aggregators Case while widening the locus standi of informants, has clearly stated that the proceedings under the Act are proceedings in rem which affect the public interest. On the other hand, proceedings for interim relief generally entail the protection of the interests of particular parties. Moreover, as succinctly explained by the Supreme Court in K.M Hema Mishra v. State of U.P. – an interim relief can be granted only in aid of and as ancillary to the main relief which may be available to the party on the final determination of his rights in a suit or proceeding. The CCI in the past has even rejected to exercise power under Section 33 when the interim relief sought was completely different from the core issue.

In order to establish the public interest, by relying on CCI’s market study on e-commerce in India, Treebo contended that the low budget hotels are more dependent on online services like MMT-Go which had only been further accentuated due to increased internet penetration due to the pandemic. The agreement between MMT-Go and Oyo clearly prioritised the properties of Oyo at the detriment of other hotels. And as has been made clear, low budget hotels were almost ousted from the competition because of negligible visibility. Therefore, despite the relief being provided to specific hotels, the relief restrains MMT-Go from delisting hotel properties until the completion of the enquiry.

Conclusion

CCI is not a judicial body and the procedural requirements are meant to further the ends of justice. Therefore, in cases where there is a clear threat to competition and several competitors are on the edge of being ousted, it ought to play a more proactive role in providing urgent relief. This can be achieved in two ways a) By directing the DG to complete the enquiry within a reasonable time period and expedite the process in cases that pose an immediate and serious threat to competition; b) Based on the strength of the evidence before it, the CCI can suo motu restrain the Opposite Parties from indulging in any anti-competitive conduct until the completion of the enquiry.

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