Apex Court backs CCI probes

Move to investigate can’t be challenged at outset before appellate tribunal

In a clear victory for the Competition Commission of India (CCI) against a sectoral tribunal, the Supreme Court today ruled that the commission has the power to order investigation without preliminary hearing into complaints that it receives alleging anti-competitive agreements and abuse of a dominant position in the market. Its decision to investigate cannot be challenged at the threshold before the Competition Appellate Tribunal (COMPAT).

However, the bench, headed by Chief Justice S H Kapadia, said this power has to be exercised sparingly. It stipulated that the investigation must be completed within 60 days. Moreover, while directing investigations, the commission has to record reasons.

The commission had challenged the order of COMPAT stopping its director-general from investigating into allegations levelled by Jindal Steel & Power Ltd against an exclusive agreement between Steel Authority of India and Indian Railways on the purchase of rails. JSPL contended that the agreement was anti-competitive.

Moreover, there was also abuse of a dominant position because while JSPL also makes rails, SAIL is the sole supplier of the item to the railways. When the commission ordered an investigation, SAIL moved COMPAT and obtained a stay into the probe.

The solicitor-general, who represented CCI, had argued that if the tribunal passes a stay order even before the commission started investigation and forms an opinion, it would be difficult for the commission to function. There was no need to hear the parties even before the commission forms a prima facie opinion on whether there was an injury to a party in the market.

The director-general, after scrutiny, can close the issue if he finds that there was no adverse impact on the market. This is the norm for all competition commissions the world over, and India has adopted the same model to speed up the procedure. He also stated that this was the procedure under several other Indian statutes, like rules regulating anti-dumping.

Appeals against the commission’s decisions are heard by the tribunal of three members headed by a retired Supreme Court judge, Justice Arijit Pasayat.

While JSPL was represented by Pallavi S Shroff of Amarchand & Mangaldas and Harish Salve, Rohinton Nariman represented SAIL. “This decision saves CCI from degenerating into merely a post office on the way to COMPAT. It corrects the balance of power between the CCI and the COMPAT, a balance that had been skewed by the decision of COMPAT,” said Shroff.

This is the first time that the commission has come up before the Supreme Court after it replaced the Monopolies and Restrictive Trade Practices Commission last year.