Competition Act Case Essay

In a revealing opinion. the Supreme Court of India. on Sep. 9. 2010. has efficaciously and judiciously circumscribed the boundaries of exercising of power by both the Competition Commission of India ( CCI/Commission ) and the Competition Appellate Tribunal ( “the Tribunal” ) while presenting its finding of fact in the much anticipated instance Competition Commission of India v. Steel Authority of India Ltd. This Note captures the high spots of the determination for readers of this Web log!

Background:

The Court was hearing an entreaty by the CCI against the order dated Feb. 15. 2010 of the Tribunal in Steel Authority of India Ltd. v. Jindal Steel & A ; Power Ltd. Jindal Steel had filed a ailment before CCI avering anti-competitive patterns and opprobrious behavior by SAIL while it entered into an sole supply understanding with Indian Railways. Upon reception of the complaint/information. CCI issued notice to SAIL to supply certain information for within two hebdomads from the day of the month of reception of such notice. SAIL requested for an extension of clip upto six hebdomads to register the needed information. CCI in its meting deliberated on the petition and decided non to allow any farther extension.

In the said meeting CCI besides formed a leading facie sentiment on the being of the instance and directed the Director General ( DG ) to ask into the affair pursuant to its powers under Section 26 ( 1 ) of the Competition Act. 2002 ( “the Act” ) . SAIL challenged this way before the Tribunal claiming that CCI could non hold formed a leading facie sentiment without hearing it foremost. SAIL besides contended that CCI has non recorded any grounds while organizing the Prima facie sentiment and that the clip provided by CCI to register information was grossly unequal. While registering the entreaty before Tribunal. SAIL did non implead CCI as a party. CCI therefore filed an application before Tribunal for impleading itself as a necessary and proper party and besides assailed the really maintainability of entreaty.

The Tribunal. in its elaborate order. keeping that even the way to ask was appealable under Section 53A ( 1 ) of the Act noted that CCI could non hold directed the DG to ask into the ailment without holding heard SAIL. It farther noted that CCI was neither a necessary nor a proper party in entreaties filed by an aggrieved party before the Tribunal. The Tribunal besides noted that CCI did non enter any grounds while worsening to allow extension of clip and hence it in misdemeanor of rules of natural justness.

Entreaty before the Supreme Court:

Aggrieved by the order of the Tribunal. CCI approached the Supreme Court which framed six wide issues observing some of the allied issues raised by the parties:

( I ) Whether the way passed by the Commission u/s. 26 ( 1 ) of the Act while organizing leading facie sentiment would be appealable u/s/ 53A ( 1 ) of the Act? ( two ) What is the range of the power vested with Commision u/s. 26 ( 10 of the Act and whether parties including the source and other affected parties are entitled to detect at the phase of formation of leading facie sentiment? ( three ) Whether the Commission would be necessary or at least a proper portion in proceedings before the Tribunal? ( four ) At what phase and in what manner the Commission can exert its powers u/s. 33 of the Act while go throughing interim orders? ( V ) Whether it is obligatory for the Commission to enter grounds while organizing leading facie sentiment? ( six ) What waies. if any. demand to be issued by the Court for guaranting proper conformity of the procedural demands while maintaining in head the strategy and object of the Act?

The Verdict:

Issue 1: The Court made an thorough survey of the strategy and the commissariats of the Act and regulations of statutory reading. noted the differentiation between “and” and “or” . referred to Indian. UK and European determinations to unearth settled rules of jurisprudence and eventually concluded that Section 53A ( 1 ) of the Act expressly provides for what determinations or orders or waies may be appealed before Tribunal. The Court noted that right to appeal is a substantial right which derives its legitimacy from the operation of jurisprudence or legislative act. If the Statute does non supply for an entreaty. the Court can non assume such right. The way to do an probe into a affair is passed under Section 26 ( 1 ) of the Act does non find any right or duty of the parties to the Li. It does non happen reference in Section 53A ( 1 ) of the Act and therefore. the Court found that such orders would non be appealable under the Act.

Issue 2 and 5: The Court noted that the exclusion of rules of natural justness ( PNJ ) is a good known construct and the legislative assembly has the competency to ordain such Torahs. Whether the exclusion of application of PNJ would corrupt the full proceedings would depend upon the nature and facts of every instance in the visible radiation of the Act or Rules and Regulation applicable to the instance. The Court. so. read into assorted commissariats of the Act and the Competition Commission of India ( General ) Regulations. 2009 in order to find the nature of maps of the Commission under assorted commissariats. The Court found that at the face of it. the exercising of power u/s. 26 ( 1 ) of the Act while organizing leading facie sentiment is inquisitorial and regulative.

It held that while organizing leading facie sentiment. the Commission does non reprobate anyone. This map is non adjudicative in nature but simply administrative. This map is in the nature of preparatory steps in contrast to the determination devising procedure and therefore right of notice of hearing is non contemplated u/s. 26 ( 1 ) of the Act. On the issue of grounds to be recorded at the phase of organizing leading facie sentiment. the Court held that the Commission must show its head in no unsure footings that it is of the position that Prima facie instance exists. Such sentiment should be formed on the footing of the records. including the information furnished and mention made to the Commission. The grounds may non be in item but there must be minimal grounds confirming the position of the Commission.

Issue 3: The Court reiterated the settled place of jurisprudence associating necessary party and proper party. A necessary party is one without whom no order can be made efficaciously whereas a proper party is one in whose absence an effectual order can be made but whose presence is necessary for a complete and concluding determination on the inquiry involved in the proceeding. Using the rule of dominie litus. the Court so noted that in instances where the Commission initiates a proceedings suo moto it shall be the proper party. In all other proceedings. it shall be a necessary party.

Issue 4: On powers of the Commission u/s. 33. the Court noted in following footings: “During an enquiry and where the Commission is satisfied that the act is in dispute of the commissariats stated in Section 33 of the Act. it may publish an order temporarily keeping the party from transporting on such act. until the decision of such enquiry or until farther orders without giving notice to such party. where it deems it necessary. This power has to be exercised by the Commission meagerly and under compelling and exceeding fortunes.

The Commission. while entering a sound order inter alia should: ( a ) record its satisfaction ( which has to be of much higher grade than formation of a leading facie position under Section 26 ( 1 ) of the Act ) in clear footings that an act in dispute of the declared commissariats has been committed and continues to be committed or is about to be committed ; ( B ) It is necessary to publish order of restraint and ( degree Celsiuss ) from the record before the Commission. it is evident that there is every likeliness of the party to the Li. enduring irreparable and unretrievable harm or there is definite apprehensiveness that it would hold inauspicious consequence on competition in the market. ”

Issue 6: One of the major results of the instance relates to the Court’s acknowledgment and avowal of the expeditious disposal of ailments filed before the Commission. The Court found this to be a fit instance to publish certain guidelines in the larger involvement of the justness disposal. These waies weigh particular worth in the visible radiation of the fact the Commission. even after more than one twelvemonth of the enforcement of the operative commissariats of the Act. has non issued its order in a individual combative instance.

The Court passed following guidelines: ( a ) Even though the clip period for organizing leading facie sentiment by the Commission is provided in the Regulations ( i. e. 60 yearss from the day of the month of registering information ) it is expected of the Commission to keep its meetings and record its sentiment about being or otherwise of a Prima facie instance within a period much shorter than the declared period. ( B ) All proceedings including probe and enquiry by the Commission/DG must be completed efficiently while procuring the aims of the Act. ( degree Celsius ) Wherever during the class of enquiry the Commission exercises its legal power to go through interim orders. it should go through a concluding order in that behalf every bit efficiently as possible and in any instance non subsequently than 60 yearss. ( vitamin D ) The studies by the Director General u/s. 26 ( 2 ) should be submitted within the clip as directed by the Commission but in all instances non subsequently than 45 yearss from the day of the month of passing of waies in footings of Section 26 ( 1 ) of the Act. ( vitamin E ) The Commission/DG shall keep complete confidentiality as envisaged u/s. 57 of the Act and Regulation 35 of the Regulations. Wherever the ‘confidentiality’ is breached. the aggrieved party surely has the right to near the Commission for issue of appropriate waies in footings of the commissariats of the Act and the Regulations in force.

Reading between the Lines:

The finding of fact of the Apex Court bears huge significance given the timing of and issues involved in the opinion. It may be noted that both “competition jurisprudence and policy” and the Commission are at a really nascent phase within the wide regulative matrix of Indian economic system. The opinion of the Supreme Court has justly echoed the sentiments of advocates of free and just market economic system and it shall travel in long manner to effectual chalk out the competition jurisprudence landscape in the state. At this point. I would wish pull some decisions which may non look apparent at the face of it. They are as follows:

( I ) The Court. in its gap paragraphs. notes the importance of competition jurisprudence and policy for any free market economic system mentioning to three types of efficiencies: i. e. allocative. productive and dynamic. The Court observes that the chief aim of competition jurisprudence is to advance economic efficiency utilizing competition as one of the agencies of helping the creative activity of market responsive to consumer penchants. While it may be excessively early to reason. but this surely indicates that Indian Courts are traveling to tilt towards Chicago School of Thought in the Chicago-Harvard duality. It is the Chicago School of Economists which has brought the efficiency trial as a dominant factor in last three decennaries in US Courts.

( two ) While foregrounding the purposes of competition jurisprudence. the Court makes a reference of the relevant Torahs of other legal powers including that of USA. UK and Australia. It would non be far-fetched to reason that the Court has indirectly hinted that in future. it shall decidedly take into history the competition jurisprudence law developed in these legal powers while make up one’s minding combative issues. That the Supreme Court is traveling to trust on EU and US Court determinations while explicating the substantial constructs involved in competition jurisprudence is farther strengthened by the fact that the Court referred to two determinations EU tribunals i. e. CFI and ECJ in its really first opinion related to the new Act even when there was no substantial construct of competition jurisprudence as such involved.

Remarks:

( I ) The Court has really efficaciously defined the scope and range of the powers of the Commission and the Tribunal at the phase of forming of leading facie sentiment. No legal power by and large allows disputing the way passed by the competition governments to originate probe. However. there may be instances where the sum of information to be filed would be voluminous and the Commission in such instances must supply equal clip. It is dubious whether a individual would be able to dispute the denial of extension of clip by the Commission in such instances.

( two ) In larger involvement of justness disposal. the Court passed certain waies till the Commission formulates its ain ordinances in that respect. Though such a measure by the Court is rather welcome. but the timelines provided by the Court are rather unreasonable and rigorous. For illustration. the Court has directed that the DG must subject its study within 45 yearss u/s. 26 ( 2 ) of the Act. This seems rather burdensome to be implemented in pattern. The aggregation of grounds and ascertainment of facts would necessitate the DG to publish notices to relevant parties. Such parties would hold to fix their responses which they intend to register before DG. All this may non be done within 45 yearss of clip period.

( three ) Though I to the full agree with the Court’s logical thinking as to why Commission needs to give notice to parties at the clip of organizing leading facie sentiment ; the analysis seems to be uncomplete as the opinion has non even referred to commissariats of Section 36 of the Act. The Court should hold analyzed the commissariats of Section 36 while discoursing the issue of conformity or non-compliance of PNJ.

( four ) Finally. the Court besides states that “as far as American jurisprudence is concerned. it is said that the Sherman Act. 1890. is the first codification of recognized common jurisprudence rules of competition jurisprudence. ” I do non desire to sound finical. but to my limited cognition. Canada was the first state to ordain its Competition Act which was one twelvemonth prior to the Sherman Act i. e. in 1889.