Introduction
The procedural and enforcement enshrined under the Competition Act, 2002 (‘Competition Act’) reflects a deliberate departure from the Monopolies and Restrictive Trade Practices Act, 1969 (‘MRTP Act’) era. Unlike the Monopolies and Restrictive Trade Practises Commission (‘MRTP Commission’), the Parliament designed the Competition Commission of India (‘CCI’) as an institution that receives information, undertakes investigations, carries out adjudication, enforces its own directions, and overall promotes a culture of competition enforcement and fair competition in the market.
This unique position of the CCI was highlighted by the Supreme Court’s ruling in Brahm Dutt vs. Union of India, where a three judge Bench of the Supreme Court acknowledged the Commission as an expert body with certain adjudicatory functions but not being a purely judicial tribunal.
The holistic and unified structure gives the CCI broad-based authority across the entire lifecycle of a case. In this piece, we will explore the step-by-step process of anti-competitive agreement (section 3) and dominant position (section 4) cases.
Initiation of Proceedings under section 19
The lifecycle of a competition case for alleged contravention of section 3 or section 4 offences begins with the CCI receiving information under section 19 of the Competition Act from any person, consumer or their association or trade association, or through reference by the Central Government, a Statement Government or a statutory body. Additionally, section 19 empowers the CCI to initiate proceedings on its own motion.
Section 19 lays down the apparatus for determining contravention of sections 3 and 4. While defining the contraventions, sections 3 and 4 provide factors to be investigated for the alleged offences, and factors for determining relevant market, relevant geographic market and relevant product market.
Procedural Charter under section 26
Under section 26 of the Competition Act, the Act provides for the procedure for inquiries under section 19. Pursuant to section 26(1), the first step in this process is the CCI making a prima-facie adjudication on whether the matter requires to be investigated or not. If the decision to investigate is in the affirmative, the Director General (‘DG’) is directed to investigate the matter. In the alternative, the Commission passes an order to close the matter and the same is communicated to the concerned parties.
Once authorised by the CCI, the DG in exercise of its powers under section 41 of the Competition Act investigates alleged contraventions. Under chapter 5 of the Act, the DG is empowered to summon and examine persons, require discovery and production of documents, and record statements. The Director General may also conduct searches and seize material with prior approval of the CCI.
While discussing the powers of the Commission under section 26, it is imperative to touch upon the decision of the Supreme Court in Competition Commission of India vs. Steel Authority of India Ltd. & Anr., wherein a three judge Bench of the Supreme Court clarified the nature of orders passed under section 26(1). The court held that orders passed under section 26(1) are only prima-facie and therefore administrative in nature, clarifying that no appeal can be moved challenging such orders under section 53-A (now section 53-B) of the Competition Act.
Furthermore, the Bench held that at this stage, the concerned parties’ rights are not directly affected as no civil consequences flow from the order and therefore parties were not entitled to be heard by the Commission. However, the Supreme Court has enforced certain safeguards for proper administration of justice directing that orders under section 26(1) even though administrative in nature ought to be reasoned explaining the basis behind their decision.
In this behalf, it is also relevant to make reference to the decision of the Bombay High Court in Cellular Operator Association of India vs. Competition Commission of India & Ors. (later upheld by the Supreme Court in Competition Commission of India vs. Bharti Airtel Ltd., 2018 SCC OnLine SC 2678), where the court held that no remedy shall lie under Article 226 of the Constitution of India towards challenging prima-facie orders under section 26(1) except in extraordinary cases of a jurisdictional error made by the Commission.
Submission of the Investigation Report by the DG
In accordance with section 26(3), the Director General shall render its report within the time prescribed by the CCI. Depending on the investigation, the report of the DG may recommend closing the matter upon finding no merit in the alleged contravention or request the Commission to pass an order directing further investigation into the matter.
The DG may also find that there has been contravention of the provisions of the Competition Act. Upon a finding of contravention within the DG’s report, a case moves from the investigation stage to the adjudication stage before the Commission. The CCI considers the DG’s report, hears the concerned parties under section 36, and evaluates the evidence on record before pronouncing its final order. In the alternative, if the DG’s report does not find any contravention, the CCI gives an opportunity for the parties to be heard either by inviting objections or suggestions on the DG’s report as given under section 26(5) before passing final orders under section 27 of the Competition Act.
Hearing Parties Before the Commission under section 36
The Commission, while hearing parties, is empowered to regulate its procedure under section 36 as long as the procedure is guided by principles of natural justice.The CCI has all the powers of a civil court in discharge of its functions including but not limited to summoning and enforcing the attendance of any person and examining him on oath, requiring the discovery and production of documents and receiving evidence on affidavit.
With the DG’s report forming part of the record, the CCI conducts its hearing under section 36. The Act under section 35 specifically recognises the standing of chartered accountants, company secretaries, cost accountants, and legal practitioners to represent parties before the Commission.
Generally speaking, the parties extend arguments addressing factual issues, the legal position, and the economic assessment that arise from the Director General’s findings. Additionally, as has become commonplace before most courts and fora, written submissions are also filed/submitted to supplement oral arguments made before the Commission. These hearings are crucial to the adjudicatory process as they enable the CCI to hear arguments addressing complex market dynamics, especially in sectors where competitive harm needs detailed economic explanation.
Final Orders
After concluding the hearing in the matter, the CCI evaluates the entire record and the submissions made before it. The Commission applies the statutory tests derived from section 3 and 4 of the Competition Act read with the precedents laid down by courts interpreting the provisions of the Act. Upon reaching its conclusion, under section 27 of the Act, the CCI issues a reasoned order on whether there have been any contraventions of section 3 and 4. The Commission is empowered to impose penalties, direct modification of conduct, or order structural remedies under section 27 of the Competition Act.
Appellate Mechanism
The appellate procedure for orders passed by the CCI has seen significant change over the last two decades. At present, any aggrieved party can approach the National Appellate Tribunal (‘NCLAT’) under section 53-B as opposed to the Competition Appellate Tribunal (‘COMPSAT’) which was abolished in 2017.
Further, under section 42, the Competition Act empowers the CCI to initiate fresh proceedings for compliance which specifically deal with penalties for breach of its orders or for failure to provide information during the investigation.
Conclusion
The procedural pathway for enforcement under the Competition Act possesses a structured design with the Commission itself having an investigative and quasi-judicial arm. With this, it’s also important to acknowledge the process has seen changes including the abolition of COMPSAT and introduction of settlement and commitment mechanism, as well as prospective changes to specifically address challenges to address antitrust concerns within digital markets.
Authored by Saharsh Panjwani, Senior Research Associate (Competition Law and Policy), The Dialogue.
