[By Anusha Shekhawat]
The author is a student of Institute of Law, Nirma University
The Competition Commission of India (“CCI” or “Commission”) exercises certain legal powers that are provided by virtue of the Competition Act, 2002 (“Act”), to combat anti-competitive practices and regulate a fair and healthy competition in the market. The purpose of creating a quasi-judicial body was to promote awareness among people in order to make markets work efficiently. However, these powers have often been curtailed in the past, and subjecting them to more limitations would make the work of CCI extremely challenging.
Recently, the National Company Law Appellate Tribunal (“NCLAT”) pronounced a judgment that leads towards a narrower approach of viewing the Act and which is likely to create hindrance upon the ability of CCI to function effectively. This is significantly why it raises many antitrust concerns in the current times.
Critical Analysis Of The Judgment
The NCLAT while reviewing the matter of Samir Agrawal v. Commission, held that a “person” under Section 19(1)(a) of the Act, must be one – “who has suffered an invasion of their legal rights as a consumer or as a beneficiary of healthy competitive practices” [¶ 16].
The judgment necessitates having a direct nexus between the person filing information and the violation of legal rights under the Act; in an absence of which, a third party will not have a locus standi to approach the Commission.
Contrary to the judgment, the Act of 2002 does not provide any limitation upon the locus standi of a person filing information. The reason for this was clarified by CCI in the case of Shri Sarabh Tripathy v. Great Eastern Energy Corporation, wherein it opined that the purpose behind filing information is to notify the Commission with the presence of anti-competitive practice in the market. Therefore, it is not necessary for a person to file information to be personally affected by it [¶ 15].
Similarly, the Act confers upon the Commission, the duty under Section 18 to protect the markets from practices that cause adverse effects on it and restrain consumer harm by using all reasonable measures. Furthermore, in the case of In Re: Indian Motion Picture Producers’ Association v. Federation of Western India Cine Employee, the Commission shed light on the fact that every order passed by it is aimed towards providing “accrual benefits” to the public at large and not only to an individual/group of individuals who file(s) a piece of information. This means that orders of the Commission are “in-rem” and not “in personam” [¶11].
It does not hold much importance as to who has brought information, because if the Commission finds a prima facie violation of the Act, then it is mandated under Section 26 to start an investigation.
Interestingly, for this reason, the Act was amended in the year 2007, where the word “complaint” was replaced with “information”, in order to express the intent of the legislature for providing liberty on locus standi and to avoid adversarial proceedings. Moreover, the Delhi High Court has clarified in the case of Google Inc. & Ors v. Competition Commission Of India, that the powers given to CCI for investigation are comparatively wider than those given to Police for investigation. [¶18(K)]. It is because the Police cannot begin or continue an investigation without the existence of a complaint. However, the Commission need not commence or continue an investigation merely upon receipt of information, but upon believing that a violation of the Act has occurred [¶18(G)].
Similarly, the rationale for giving wider powers was discussed in the case of XYZ v. Indian Oil Corporation Ltd, where it was said by the CCI that the powers entrusted to it are wider in nature in order to ease the capture of wrongdoers who hamper fair competition [¶ 34].
NCLAT through the judgment describes the concern towards “unscrupulous” matters brought to the Commission [¶ 16]. However, it must be taken into account that Section 26 not only gives powers to the Commission for directing an investigation but also assures that if the information seems to stipulate no violation of the Act, is frivolous or unreasonable in nature at a prima facie stage, then the Commission can close the matter thereof. Therefore, the concern of NCLAT has already been addressed by the Act. Moreover, The COMPAT also supports this in the case of Dr. LH Hiranandani Hospital v. Competition Commission Of India, where it held that it is not necessary for the Commission to identify the locus, but it has a duty towards ensuring that the informant does not have an ulterior motive towards someone else [¶ 25].
Lessons From The European Union
The European Union (“EU”) on account of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) restricts every possible practice that is against fair trade in the market. Moreover, when it comes to an investigation, it keeps itself open to any formal or informal options and provides a leeway towards filing complaints by “third parties”.
The Office of Fair Trading (“OFT”) defines a “third party” as someone who is not necessarily related to the investigation. The Competition and Market Authority (“CMA”) of the U.K. also gathers information and investigates the occurrence of anti-competitive practices through various means, including leniency applications, research, and market intelligence, and whistleblowers. Moreover, the OFT for the same has analyzed that taking inputs from informed third parties or complainants has always assisted them to exercise their tasks efficiently.
Conclusion: Taking A Step Back?
The previous orders given by CCI, in light of the Act, justify the very reason for not limiting the third party, on the ground of locus standi to approach the Commission. However, NCLAT while interpreting Section 19(1)(a) of the Act in the impugned judgment has not referred to the provision in its true light and did not understand the legislative purpose behind creating it.
The Supreme court (“SC”) in the case of Nathi Devi v. Radha Devi Gupta, has stated that it is very important to interpret any statue in the right light, considering the true legislative intent behind it [¶ 14]. The Act was created by keeping in mind the implications of a modern economy with the aim to not only restrict the unfair behavior of firms but also to foster competition “by all means”, in the markets of India. Moreover, in the case of CCI v. SAIL, the SC held that while interpreting a provision, it must not be overemphasized in order to change its meaning [¶ 56]. However, NCLAT stood at variance to the same, by restricting the word “any person” with the consumers who are directly affected by the cause.
Furthermore, there are various antitrust issues in the present times and CCI is the sole statutory regulator working towards the enforcement of competition rights. It has to take into account every possible activity that could harm the market. When issues such as cartels (which cause serious injury to the market, and are scrutinized as a high violation under the Competition Act) come into place, then the question of locus standi holds less importance. This is because cartels function in a very secretive manner and it becomes difficult to gather evidence against them. In such instances, it is important that “any person” is able and free to inform the Commission without being personally aggrieved of the same or questioned on its standing.
Moreover, the consumers are mostly not aware that some practices by firms in the market are anticompetitive and causing them harm. Similarly, they are also unaware of any alternative available or their legal rights with respect to an antitrust violation, which gives the defaulter an advantage to evade capture.
It is important to understand that the anti-competitive conduct of a firm does not affect an individual personally but the market as a whole. For this same reason, the substance of information must be taken into consideration rather than the person who brings it to the Commission. This decision is a setback towards the fundamentals of the Act and the Commission to fulfill its role as a regulator of the market. It also sets a limit towards possible opportunities to curb anti-competitive practices and would harm the poorly informed consumers who are unaware of an unfair practice directed towards them. This leads us to the question that are we taking a step back in the antitrust regime? Only time will tell.