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Published by Enhelion, 2020-07-12 09:33:06

Module 2

Module 2

MODULE 2

EVOLUTION OF COMPETITION LAW IN INDIA

2.1 INTRODUCTION

The increase in trade practices made the governments realize the need for rules and
regulations in the competitive market. Gradually, many countries tried to stabilize the price of
the goods & services and support local / domestic production patterns leading to the
introduction of Competition Law. Efforts have been made by the Indian and Roman
civilizations to control the price fluctuations and various unfair trade practices. The object of
Competition Law is to promote healthy competition in the market and protect the interest of
consumers. According to the World Bank in1999 – Competition is “A situation in a market in
which firms or sellers independently strive for the buyers’ patronage in order to achieve a
particular business objective for example, profits, sales or market share”.

During nineteenth century, law and economics developed theories of competition and
ideological defences as a social good in order to eliminate poverty and increase development
through industrialization. The planning commission was set up in March 1950, and saw India
adopt five-year plans towards the development of the economy. As independent India
encouraged Socialism, it followed the Soviet style of industrialization and this meant
intervention of the Government towards the development of the economy. The Directive
Principles of State Policy (DPSP) under the Indian Constitution upheld equality before law
and therefore the government supported industrial development and equal distribution of
wealth.

2.2 MONOPOLIES INQUIRY COMMISSION, 1964

On April 16, 1964, the Government of India set up the Monopolies Inquiry Commission
(MIC), a Commission aimed towards economic development. The objectives of the
Commission were:

§ to inquire into the extent and effect of concentration of economic power in private hands
and the prevalence of monopolistic' and restrictive practices in important sectors of
economic activity; and

§ to suggest such legislative and other measures that might be considered necessary in the
light of such enquiry.

The MIC did not particularly define the term concentration of power, but it did prepare and
submit a report to the Government of India where it was observed that there existed a high
concentration of economic power in over 85 percent of industrial items in India. The MIC
also observed that firms were taking advantage of their dominant position to manipulate the
prices and output of their products and services, and many times even the producers and
distributors were not engaged in restrictive practices. The Government policies were
considered as the main reason of economic concentration because big businesses had an
advantage in securing industrial licences in order to commence and expand their businesses.
During the period between 1948 - 1956, when concentration of economic power and
monopolies grew in India, the Government under the industrial policy resolution tried to
restrict the scope and growth of the private sector by making rules regarding licensing
procedures and guidelines. Due to this, several large organisations entered into combinations
and eliminated the internal competition. Several other enterprises managed to make artificial
scarcities by restricting their production and created an impression of excessive demand for
their products and services. The enterprises were in a position to influence government
policies to their own advantage and secured tax measures and incentives for the purpose of
export and foreign collaboration agreements. They also influenced public sectors, financial
institutions and banks by mobilising the financial resources of the market. The private sector
enterprises enjoyed economic power and restrictive trade practices in the market.

“When a large number of concerns engaged in the productions or distribution of different
commodities are in the controlling hands of one individual or family or group of persons ….
Concentration of economic power will also be clearly considered to exist”, these were the
observations made by the MIC in the report. Monopolistic practices mean “the trade of
achieving the dominant position in the industry by regulating the price of goods and services
or by eliminating competition”. On the other hand, in restrictive trade practices the producers
and distributors of products who are not in a dominant position restrain the competition and
deprive the community from all the benefits of competition. In India, the Industrial Policy
Resolution and Industrial Development and Regulation Act has established a system of
licensing by setting up new project and expansion of existing facilities. While securing
maximum benefits, the MIC has set out objectives for the legislature by recommending to
achieve higher production with least damage to the people.

The Indian Competition Law regime tried to ensure the creation of a competitive market
consisting of competitive yet affordable prices and high-quality products. It was very
important to curb the abuse of market power, therefore the process of competition required
statutory support by means of rules and regulations which could keep a check on unfair trade
practices keeping in mind the idea of a free market and larger consumer interest.

2.3 MONOPOLISTIC AND RESTRICTIVE TRADE PRACTICES ACT, 1969
(AMENDED IN THE YEAR 1984)

The provisions which lead to the enactment of MRTP Act, 1969 were those of Article 38 and
Article 39 of the Constitution of India, 1950 which ensured the fact that the Government
would secure and protect the society, wherein people will get social, economic and political
justice and that it shall address all the organizations of the nation. , The State in its policy
shall direct that: – “There must be proper distribution of the ownership of material resources
and operation of economic system in order to assist the common good. India has adopted a
planned economic development in consequence of above mentioned in order to avoid the
prevention of concentration of economic power.”

The primary concern of the Monopolies and Restrictive Trade Practices (MRTP) Act was to
regulate the trade practices and behaviour with discipline so that there was no concentration
of economic power and the interest of consumers got protected from unfair trade practices in
a manner that there was no way that the competition in the market would get affected. . As
per the Doctrine of Reformist, the provisions of the MRTP Act provided that, if on enquiry
the MRTP commission found that an errant undertaking has indulged in either in Restrictive
or Unfair Trade Practices then it can direct such undertaking to discontinue or not to repeat
such undesirable activities. The MRTP Act was inspired by the Directive Principles of State
Policy enshrined under the Indian Constitution. As the preamble of the MRTP Act preached,
“a socialistic philosophy intended to ensure that the operation of the economic system does
not lead to concentration of economic power to the common detriment”. This Act was
legislated for the purpose of prohibition of Monopolistic and Restrictive Trade Practices. The
MRTP Act, 1969 was not meant for all sectors of the economic system as it applied primarily
to the private sector, and did not apply to the public sector, government undertakings and
undertakings by state and central government, corporation, banks, the State Bank of India and
Insurance companies of India, which restricted the scope of this Act. The preamble of the

MRTP Act read: “Act to provide that the operation of the economic system does not result in
the concentration of the economic power to the common detriment, for the control of
monopolies, for the prohibition of monopolistic and restrictive trade practices and for
matters connected therewith or incidental thereto.” The main objectives of the MRTP Act
were –

§ Prevention of Concentration of economic power to the common detriment;

§ Control of monopolies;

§ Prohibition of trade practices (Monopolistic, Restrictive and Unfair).

2.4 MRTP AMENDMENT ACT, 1984

On the basis of the Sachar Committee Report, the MRTP Act was amended in 1984. This
report realized the practical aspects of the operation of this law and found that the role
assigned to MRTP Committee was limited in nature and mostly advisory. The Sachar
Committee made some changes in order to make the MRTP Act more effective and
independent. The concept of “interconnected undertaking” was adopted from the Companies
Act 1956 and introduced into the MRTP Act. In order to guard the consumers’ interest,
government control and parliament oversight was recommended to be brought under the
preview of MRTP for expansions, mergers or setting up of new undertakings.

The Sanchar Committee also amended the definition of Monopolistic Trade Practices which
was originally framed in 1969. The committee suggested that if it is possible for a non-
monopolistic undertaking to indulge in any monopolistic trade practices then there is no need
to mention a separate concept for the “monopolistic undertaking” in the Act. Therefore, the
MRTP (Amendment) Act, 1984 omitted the definition of Monopolistic Undertaking under
Section 2(j) of the Act. Due to this, necessary changes were made to Section 31 of the Act -
This Section provided for the investigation by the commission into the monopolistic trade
practices on a reference being made to it by the Central Government which were to thereafter
pass an appropriate order if the Commission made a finding that the trade practice operatedor
likely to be operated was against the public interest. While section 10 (b) gave power to the
Commission to inquire into the monopolistic trade practice on its own knowledge or
information, there was unfortunately no provision for follow-up action under Section 31,

which only postulated that the same would be inquired into by the commission only on a
reference made to it by the Central Government.

For the purpose of calling a trade practice as falling under the purview of ‘Monopolistic
Trade Practices’ it has to satisfy the requirements of sub-clause (i) of Section 2 of the Act.
The provision states that – “Monopolistic Trade Practice” means a trade practice which has or
is likely to have, the effect of;

i. Maintaining the prices of goods and services at an unreasonable level by limiting,
reducing or otherwise controlling the production, supply or distribution of goods of
any description or the supply of any services or in any other manner,

ii. Unreasonably preventing or lessening competition in the production, supply or
distribution of any goods or in the supply of any services,

iii. Limiting technical development or capital investment to the common detriment or
allowing the quality of any goods produced, supplied or distributed, or any services
rendered, in India to deteriorate.

iv. Increasing unreasonably; ___

§ The cost of production of any goods; or

§ Charges for the provision, or maintenance, of any services,

§ Maintenance of any services;

v. The prices at which goods are, or may be, sold or re-sold, or the charges at which
the services are or may be, provided; or

vi. The profits which are, or may be, derived by the production, supply or distribution
(including the sale or purchase of any goods) or in the provision or maintenance of
any goods or by the provision of any services;

vii. Preventing or lessening competition in the production, supply or distribution of any
goods or in the provision or maintenance of any services by the adoption of unfair
methods or unfair or deceptive practices.

Section 32 provides that the monopolistic trade practice was deemed to be prejudicial to the
public benefit and to their interest, except under the following conditions and circumstances
mentioned in the sub-clauses –

a. If the trade practice was authorised by an enactment for the time being in force;

b. If the Central Government is satisfied that the trade practice is necessary only after
that it can permit the owner of any undertaking to carry on such trade practice, by a written
order.

Such Trade Practice must be necessary:

§ To meet the requirement of the defence of India or any part of India or for the security of
the state;

§ To ensure the maintenance of supply of goods and services essential to the community;

§ To give effect to the terms of any agreement to which the Central Government was a
party.

In the case of Mahindra and Mahindra vs. Union of India1, the term ‘Restrictive Trade
Practice’ was defined to mean “a trade practice which has or may have the actual or
probable effect of restricting, preventing, lessening or destroying competition”. It was further
viewed that if a trade practice merely regulates and thereby promotes competition, it would
not fall within the definition of ‘Restrictive Trade Practice’, even though it may be to some
extent, in restraint of trade. Therefore, whenever a question arises as to whether a certain
trade practice is restrictive or not, it has to be decided not on any theoretical or a prior
reasoning, but by inquiring into whether the trade practice has or may have the effect of
preventing, distorting or restricting competition.

2.5 IMPORTANT RECOMMENDATIONS OF RAGHAVAN COMMITTEE, 1999

In 1999, the Raghavan Committee was set up in India to evolve the need of a robust
competition regime. This Committee prepared a recommendation report in 2000 for the
purpose of setting up modern competition law by phasing out some features of the MRTP
Act. Raghavan Committee was set up under the Chairmanship of Shri SVS Raghavan in
1999. This Committee raised the opinion of economic reforms and voiced that they had found
certain provisions of the MRTP Act which were obstructive to private investment. This
Committee vide its Order No. 1/9/99-CL. V dated 25th October 1999 observed that the word
‘competition’ has been used sparsely in the MRTP Act. In Section 29(o) while defining

1 1979 SCR (2)1038.

restrictive trade practice the general definition of competition law is provided in comparison
with Section 38(1)(h). This difference leads to contradictory judicial interpretations. This
committee also observed that the MRTP Commission tried to fit the offence in the section of
the act by way of mere interpretations which were not even defined under the Act. , Even the
concept of “cartel” was not defined under any provision or even under any clause of Section
33(1) of the MRTP Act.

It was also found that the MRTP Act was inadequate to deal with the implementation of the
World Trade Organisation (WTO) agreements, in addition to its incapacity to deal with
concerns addressing merger control in India.. The Raghavan Committee recognised that the
provisions of the MRTP Act pertaining to unfair trade practices were quite similar to the
Consumers Protection Act, 1986. In the report of Raghavan Committee it was stated that the
MRTP Act, in comparison to other competition law legislations in other jurisdictions, was ill-
-equipped towards addressing issues pertaining to competition and competition related
concerns in the market Based on this analysis, the Raghavan Committee found it expedient
to have a new competition legislation in the country. The Committee desired the focus of the
new law to be on preventing anti-competitive practices that affect and reduce welfare. While
free markets produce desired outcomes, they do so only when protected from the abuses.
Therefore, “….. The only legitimate goal of the competition law is the maximization of
economic welfare”.

This Committee raised their point that if there is a law for competition then it must be
regulated by a competition authority with established competition law principles. It was also
suggested that there must be a balance between over-intervention and exemption from
sanction, in the name of public interest. This Committee also sought to make new provisions
of merger control by making a distinction between horizontal mergers, vertical mergers and
conglomerate mergers on the basis of their impact or probable impact upon competition in the
market. It was the initiative of the Raghavan Committee to bring the Government enterprises
as well as departments under the preview of competition law, except for the sovereign
function of the Government like Defence.

Raghavan Committee opined against any kind of discrimination or benefits to be provided to
the Government enterprises, by recommending discontinuing the policy of price preference to
Government owned enterprises. Despite the fact that many foreign countries also exempt
Government enterprises from the provisions of the competition law, it was suggested that

there should not be any discrimination between the immediate consumer and ultimate
consumer.

This Committee had an opinion with regards to the jurisdiction of competition law and it
suggested that there must be specialized agency to deal with such cases, even though in many
other countries such cases are decided by regular courts. The Committee further observed the
fact that the Indian judiciary is inexperienced in addressing free market problems. Therefore,
the Committee prepared a detailed description on setting up a competitive authority for
administration of such matters with the objective of setting up “proactively in Governmental
Policy Formulation”. It was suggested by the Committee that the appointed administrative
authority should be an independent and autonomous body vested with the powers to
investigate and prosecute, alongside also having powers to impose fines and punish the guilty
upon contravention of competition law principles. Raghavan Committee observed and
initiated the role of the advocates to bring awareness among stakeholders and the
Government to be familiar with the competition rules and laws of the country.

Due to the above-mentioned flaws and new recommendations made by the Raghavan
Committee, the scope of MRTP Act seemed to be inadequate and therefore, the Parliament of
India proposed and enacted the Competition Act, 2002. The MRTP Act, 1969 was thus
repealed and replaced by the Competition Act, 2002.

2.6 THE COMPETITION ACT, 2002 (AMENDED IN THE YEAR 2007)

The Competition Act, 2002 was passed by the Lok Sabha on 16th December 2002 thereby
repealing the previous legislation- the MRTP Act, 1969. This

The basis of enactment of this legislation was largely due to the recommendations made by
the Raghavan Committee in 2000. As mentioned above, a committee was appointed by the
Government of India on ‘Competition Policy and Law’ and on the basis of the suggestions
made under the report of this committee, the Competition Act, 2002 came into existence.

The Competition Act, 2002 came into enforcement on 13th January 2003. This Act is
extended to the whole of India except the State of Jammu and Kashmir. Later, the
Government of India made certain amendments to this Act by passing the Competition
(Amendment) Bill, 2007. Hence, this Act has was amended in the year 2007 for the first time
after which the next amendment came 10 years later in 2017 under the Finance Act, 2017,

wherein primarily the appellate court got a makeshift from the Competition Appellate
Tribunal (COMPAT) to the National Company Law Appellate Tribunal (NCLAT). The next
primary amendment to the Competition Act, 2002 is due in the year 2020 after the Ministry
of Corporate Affairs (MCA) introduced the Competition (Amendment) Bill, 2020.

The Competition Commission of India (CCI) formed under this Act is a regulator with quasi-
judicial powers. There is a provision for appeal before the National Company Law Appellate
Tribunal (NCLAT) against the orders of the CCI. All the members of CCI shall be appointed
by the Government of India, and the Commission shall be headed by a Chairman.

The CCI replaced the MRTP Commission. After the formation of CCI, the MRTP
Commission was directed to either decide and dispose off all the pending cases of MRTPC
within a year or to transfer all such cases to the CCI. On the other hand, all the pending cases
pertaining to Unfair Trade Practices were transferred to the Consumer Courts, under the
provisions of the Consumer Protection Act, 1986.

This Act got formulated with the objective to prevent such agreements which have or are
likely to have an adverse effect on competition and to promote healthy competition in the
market. The Act also aims to prevent the abuse of dominant position in the society and to
regulate the activities of amalgamation, mergers and acquisitions.

The Competition Act, 2002 includes an aggregate of 66 sections. The Act restricts those
agreements which have or are likely to have an adverse effect on competition in India. This
Civil Courts have no jurisdiction to address competition law cases under the purview of this
Act.

This Act is not applicable on Public Financial Institutions, Foreign Institutional Investors, in
Banks, Venture Capital Funds and on such agreements, which are related to IPR such as
trademarks, patents and copyright, etc. The Central Government has the authority to exempt
any class of enterprise from the provisions of this Act, if such act is in common interest of
national security or public interest.

2.6.1 Brahm Dutt vs. Union of India2

“In this case, an Advocate filed a writ petition to seek an order to strike down Rule 3 of the
Competition Commission of India. As the Competition Act, 2002 received assent of the
President of India on 13th January, 2003 and was published in the Gazette of India dated 14th
January, 2003. For the appointment of a Chairman and the members as composing the
Commission in terms of Section 9 of the Act, the Central Government had to enforce Section
7 and 8 of this Act. According to Rule 3 of CCI, the Central Government was to constitute a
Committee which consisting of a person who has been retired Judge of the Supreme Court or
a High Court or a retired Chairperson of a Tribunal established under an Act of Parliament or
a distinguished jurist or a Senior Advocate for five years or more, a person who had special
knowledge of and professional experience of 25 years or more in international trade,
economics, business, commerce or industry, a person who had special knowledge of and
professional experience of 25 years or more in accountancy, management, finance, public
affairs or administration to be nominated by the Central Government. The Central
Government could also nominate one of the members of the Committee to act as the
Chairperson of the Committee. The function of the Committee was to fill up the vacancies as
and when vacancies of Chairperson or a member of the Commission exits or arises or is
likely to arise and the reference in that behalf had been made to the Committee by the Central
Government. It is said that the Committee so constituted made a recommendation in terms of
Rule 4(3) of ‘the Rules’ and a Chairman and a member were appointed. Though, the member
claimed to have taken charge immediately after being appointed, the person who was
appointed as Chairman, had taken the stand that he would not taken charge since he was
content to await until the issue in contention was resolved by the Hon’ble Supreme Court

The crux of the Supreme Court judgment maybe read as:

“Therefore the present Writ Petition of Mandamus was filed in this Court by a practicing
Advocate essentially praying for reliefs including the issue of directing the Union of India to
appoint a person who is or has been a Chief Justice of a High Court or a senior Judge of a
High Court in India in terms of the directions contained in the decision in Sampath Kumar v.
Union of India3, the essential challenge was on the basis that the Competition Commission
envisaged by the Act was more of a judicial body having adjudicatory powers on questions of

2 AIR 2005 SC 730.
3 1987 SCR (3) 233.

importance and legalistic in nature and in the background of the doctrine of separation of
powers recognized by the Indian Constitution, the right to appoint the judicial members of
the Commission should rest with the Chief Justice of India or his nominee and further the
Chairman of the Commission had necessarily to be a retired Chief Justice or Judge of the
Supreme Court or of the High Court, to be nominated by the Chief Justice of India or by a
Committee presided over by the Chief Justice of India.

It means that, the Chairman of the Commission must be a person who connected with the
judiciary and selected for the job by the head of the judiciary and that person should not be a
bureaucrat or other person appointed by the executive without reference to the head of the
judiciary. The arguments made in this behalf were that the Competition Commission was a
regulatory body and it requires expertise in the field. It is also contended that the power of
judicial review of the High Courts and the Supreme Court is not taken away or impeded, the
right of the Government to appoint the Commission in terms of the statute could not be
successfully challenged on the principle of separation of powers recognized by the
Constitution.

During the pendency of the Writ Petition, two additional counter affidavits were filed on
behalf of the Union of India, in which it was submitted that the Government was proposing to
make certain amendments to the Act and also Rule 3 is made to enable the Chairman and the
members to be selected by a Committee presided over by the Chief Justice of India or his
nominee. This position was reiterated at the time of arguments. Of course, it was also pointed
out that the question of amendment had ultimately to rest with the Parliament and the
Government was only in a position to propose the amendments as indicated in the additional
affidavits. But it was reiterated that the Chairman of the Commission should be an expert in
the field and need not necessarily be a Judge or a retired Judge of the High Court or the
Supreme Court.

The amendments which the Union of India proposes to introduce in Parliament would have a
clear bearing on the question raised for decision in the Writ Petition essentially based on the
separation of powers recognized by the Constitution. The challenge that there is usurpation
of judicial power and conferment of the same on a non- judicial body is sought to be met by
taking the stand that an Appellate Authority would be constituted and that body would
essentially be a judicial body conforming to the concept of separation of judicial powers as
recognized by this Court. In the Writ Petition the challenge is essentially general in nature

and how far that general challenge would be met by the proposed amendments is a question
that has to be considered later, if and when, the amendments are made to the enactment. In,
what is contended by learned counsel for the petitioner is that the prospect of an amendment
or the proposal for an amendment cannot be taken note of at this stage. It will be appropriate
to consider the validity of the relevant provisions of the Act with particular reference to Rule
3 of the Rules and Section 8(2) of the Act, after the enactment is amended as sought to be
held out by the Union of India in its counter affidavits, we are satisfied that it will not be
proper to pronounce on the question at this stage. On the whole, we feel that it will be
appropriate to postpone a decision on the question after the amendments, if any, to the Act
are carried out and without prejudice to the rights of the petitioner to approach this Court
again with specific averments in support of the challenge with reference to the various
sections of the Act on the basis of the arguments that were raised before us at the time of
hearing. Therefore, the challenge raised by the petitioner and leave open all questions to be
decided in an appropriate Writ Petition, in the context of the submission in the counter
affidavits filed on behalf of the Union of India that certain amendments to the enactment are
proposed and a bill in that behalf would be introduced in Parliament.

If an expert body is to be created as submitted on behalf of the Union of India consistent with
what is said to be the international practice, it might be appropriate for the respondents to
consider the creation of two separate bodies, one with expertise that is advisory and
regulatory and the other adjudicatory. This followed up by an appellate body as
contemplated by the proposed amendment, can go a long way, in meeting the challenge
sought to be raised in this Writ Petition based on the doctrine of separation of powers
recognized by the Constitution. Any way, it is for those who are concerned with the process of
amendment to consider that aspect. It cannot be gainsaid that the Commission as now
contemplated, has a number of adjudicatory functions as well.

Thus, leaving open all questions regarding the validity of the enactment including the validity
of Rule 3 of the Rules to be decided after the amendment of the Act as held out is made or
attempted, we close this Writ Petition declining to pronounce on the matters argued before us
in a theoretical context and based only on general pleadings on the effect of the various
provisions to support the challenge based on the doctrine of separation of powers. The Writ
Petition is thus disposed of leaving open all the relevant questions.”

2.6.2 CCI vs. SAIL4

In the landmark judgment of CCI vs. SAIL, the apex court held that ― “No appeal can be
filed against an order of Competition Commission of India (CCI), directing an investigation
into a complaint received by it”. Thus, this judgment played a prominent role in ensuring the
distribution of power of COMPAT and CCI, such that they do not come in the way of the
each other’s proceeding. It provided an effective boundary.

“In this matter, the proceedings were initiated when Jindal Steel and Power Limited (JSPL)
filed a complaint before the Competition Commission of India alleging that SAIL had an
exclusive supply agreement with Indian Railways. SAIL was the biggest player in the market
of manufacture of rail tracks and thus had dominant position in market. It had created its
monopoly. This was anti-competitive and abusive behaviour. Thus, as Indian railway is
largest buyer of rail tracks, JSPL by necessary implications couldn’t supply rails to them.
SAIL used its position to keep other player out of market and thus deprive others from fair
competition.”

The CCI on receiving application, began the process, and issued notice to SAIL to submit
documents with certain information within 2 weeks from date of receipt. But SAIL instead of
complying asked for extension of time for upto 6 weeks. CCI did not accepted the same in its
meeting and also formed a prima facie opinion that there exist a case and asked DG to go
ahead with inquiry under Section 26(1) of the Competition Act, 2002. This was challenged by
SAIL as no hearing was provided to them. Further, no reasons were recorded for such
decision and the time given to them was inadequate from beginning. The COMPAT did not
let the CCI implead as either a necessary party nor as a proper party and finally held that
under Section 53A(1) of the Act, it had the power to listen to appeal even on the CCI’s order
of investigation wherein no fair opportunity of hearing was given and therefore it can granted
a stay order upon the Section 26(1) order of the CCI. Thus, the CCI appealed before to the
Supreme Court, challenging the stay order of the COMPAT.

4 2010 10 SC 744.

2.6.2.1 Issues

1. Whether the directions passed by the CCI in exercise of its powers under Section
26(1) of the Act forming a prima facie opinion would be appealable in terms of
Section 53A(1) of the Act?

2. What is the ambit and scope of power vested with the CCI under Section 26(1) of the
Act and whether the parties, including the Informant or the affected party, are entitled
to notice or hearing, as a matter of right, at the preliminary stage of formulating an
opinion as to the existence of the prima facie case?

3. Whether the CCI would be a necessary, or at least a proper, party in the proceedings
before the Tribunal in an appeal preferred by any party?

4. At what stage and in what manner the CCI can exercise powers vested in it under
Section 33 of the Act to pass temporary restraint orders?

5. Whether it is obligatory for the CCI to record reasons for formation of a prima facie
opinion in terms of Section 26(1) of the Act?

6. What directions, if any, need to be issued by the Court to ensure proper compliance in
regard to procedural requirements while keeping in mind the scheme of the Act and
the legislative intent?

2.6.2.2 Analysis

The Apex court in Issue 1 expressed that the direction of the CCI to DG to conduct an
investigation under Section 26(1) of the Act is nonappealable under Section 53A(1) of the
Act, because the order under section 26(1) does not determine any rights or obligations of the
party to the case. The court reached upon this conclusion after analysing the provision under
the Act and rules of interpretation, to note the difference between “and” & “or”. It followed
the principle of Expressum facit cessare tacitum. They referred to Indian and other foreign
legislations like that of the European Union and case laws and finally reached the conclusion
that Section 53(1) provides right of appeal which is a substantive right and this section allows
appeal only in things provided in section.

Further in regard to Issue 2, it was highlighted that the legislature is competent to enact such
laws which exclude the principle of natural justice. Each matter i.e. facts of each case have to
be analyzed in the context of rules and regulation and provisions of the Act. If the same are
vitiated then the whole proceeding could be nullified on the ground of non-application of
principles of natural justice. The power under Section 26(1) of the Act is regulatory and
inquisitorial, i.e. it is the administrative power and not the adjudicatory power of the
commission. It is only a step taken by the commission to prepare for future case i.e.
collection of data and hence at this stage right of notice of hearing is not required to be
issued.

Apex court in Issue 3 held that in a matter wherein the CCI initiated suo moto proceedings, it
will be a proper party and in every other situation it will be a necessary party to such
proceeding.

Further with respect to Issue 4, the power under Section 33 is given to the CCI, which is to be
used in rare situations and only at the time of inquiry to pass a temporary order, to stop a
party from carrying on such act which in accordance to the CCI contravenes the provisions of
the Competition Act, 2002. This order is limited to the period until any further order is passed
or till the end of inquiry. While passing such order, it must be supported by reasoning.

The CCI has responsibility to base its prima facie opinion as per Issue 5, whose terms must
be unambiguous, on basis of records furnished by parties and obtained through complainant
and other sources. The Act does not mandate any detailed reasoning but there must be
“minimum reason” to substantiate the claim of forming a prima facie opinion.

Finally, to ensure proper compliance in regard to procedural requirements the following
directions were given so that the matter could be disposed expeditiously and the same would
be in the larger interest of justice. The directions were as followed –

§ The CCI should hold its meeting and record its opinion much before 15 days (the
maximum time provided in regulation) about its prima facie opinion about complaint.

§ The objectives of act must be strictly followed while inquiry and investigation conducted
by DG and the CCI.

§ If temporary order is passed, the final order must also be passed in short duration (not
later than 60 days).

§ The Director General must submit its report within the period as stated by the CCI (and
not more than 45 days after the direction passed under Section 26(1))

§ The confidentiality must be maintained by the CCI and its delegate.

2.6.2.3 Conclusion

The judgment played an important role towards the development of Competition Law in
India, which was at a very nascent stage in the year 2009. The issues raised in the matter
highlight the ambiguity among people which was clarified by the court. This judgment was
one primary initial step towards the development of Competition jurisprudence in India The
Apex court very well explained the intent of legislature while ruling. The interest of
consumer has to be protected along with freedom of trade. Thus, the overall judgment
ensured proper distribution of power between the CCI and COMPAT.

2.7 AMENDMENT TO COMPETITION ACT, 2002 BY FINANCE ACT, 2017

The Competition Appellate Tribunal (COMPAT) has ceased to exist effective 26 May 2017.
The appellate function under the Competition Act, 2002 (Competition Act) was conferred
upon the National Company Law Appellate Tribunal (NCLAT). These amendments were
brought about under the provisions of Part XIV of Chapter VI of the Finance Act, 2017.
Accordingly, Sections 2(ba) and 53A of the Competition Act and Section 410 of the
Companies Act, 2013 (CA 2013) were appropriately amended and various other provisions of
the Competition Act dealing with the COMPAT were omitted. Further, Section 417A was
introduced in the CA 2013 which dealt with the qualifications, terms and conditions of
service of the Chairperson and Members of the NCLAT.


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