The Competition Commission of India's role as adjudicator

Despite the Supreme Court's order, the Union of India has not provided a separate body headed by a Judicial member under the Competition Act

The Competition Act came into force on March 31, 2003, after the 30-year-old Monopolies and Restrictive Trade Practices Act of 1969 (MRTP ACT) was repealed. The move marked a shift in focus from curbing monopolies to promoting competition in trade and commerce.

The primary objective of the new Act was to deal with horizontal and vertical anti-competitive agreements and abuse of dominant position by enterprises; regulation of combinations (mergers, acquisitions and amalgamations); reference by statutory authorities and competition advocacy. The rest of the provisions of the Act are in aid of the above provisions.

As per the Act, an expert body, the Competition Commission of India (the CCI) consisting of a chairman and not more than ten other members was to be set up to deal with the above provisions, namely, adjudicatory, regulatory and advisory in nature.

The various provisions of the Act indicate that the CCI was required to perform adjudicatory functions, even though the appointment of the Chairman was neither from the higher Judicial body nor was the Chief Justice of India or his nominee involved in his selection.

In 2003 a writ petition (BrahmDutt vs. Union of India) was filed before the Apex Court for striking down the provisions of the Rules, 2003 and for directing the Union of India to appoint a person who is, or has been, a Chief Justice or Judge of the Supreme Court or of the High Court, as CCI Chairman. It was also challenged that there is usurpation of judicial power and conferment of the same on the non-judicial body.

The Union of India argued before the Apex Court that (i) the CCI was more of a regulatory body that requires expertise in the field and as such should not be supplied by Members of the Judiciary, who can adjudicate upon matters in dispute; (ii) so long as the power of judicial reviews of the High Courts and Supreme Court are not taken away or impeded, the right of the Government to appoint the CCI Chairman in terms of the Act could not be successfully be challenged on the principle of Separation of Powers recognized by the Constitution of India; (iii) the CCI was an expert body and it is not as if India was the first country to appoint such a Commission presided over by persons qualified in the relevant disciplines other than Judges or judicial officers; (iv) the main function of the expert body were regulatory in nature; (v) the Government was proposing to make certain amendment to the Act and in the Rules, 2003;(vi) an appellate body would be constituted, which essentially be a judicial body conforming to the consent of Separation of Judicial powers as recognized by the Apex Court.

The Apex Court, after hearing all arguments, was of the view that if an expert body is to be created consistent with what is said to be an international practice, it might be appropriate for the Union of India to consider the creation of two separate bodies with expertise (based on doctrine of separation of powers), that is, (i) Advisory and Regulatory, and (ii) the other as Adjudicatory, followed by an Appellate Body.

The Apex Court, while closing the writ petition vide order dated January 20, 2005, declined to pronounce any order in the light of the proposed amendments in the Act and Rules, 2003, which have clear bearing on the questions which rose in the writ petition, leaving open all the relevant questions regarding validity of the provisions of the Act and the Rules, 2003.

In a nutshell, the message from the Apex Court was loud and clear that the Chairman should be an expert in his field and needn't be a Judge of the High Court or Supreme Court. However, since the CCI is to perform adjudicatory functions, a separate Adjudicatory body headed by a Judicial member should be created.

In the light of the above, an attempt is made herein below to find out the status of the subsequent amendments to the Act vis-à-vis the observations of the Apex Court regarding creation of a separate adjudicatory body.

Competition (Amendment) Bill, 2006

Thirteen months from the Judgment in the BrahmDutt case, the Central Government introduced the Competition (Amendment) Bill, 2006 in Parliament with mammoth changes to wholly revamp the Act, except to follow the observations of the Apex Court in the BrahmDutt case with regard to creation of two separate bodies under the Act.

It is seen from the Bill 2006 that the Central Government, by taking away the power of Awarding Compensation from the CCI and conferring the same to the Competition Appellate Tribunal (the COMPAT) under the Act may have thought that it has complied with the observations of the Apex Court in the BrahmDutt’s Case and there is no need to create a separate adjudicatory body. In fact, from the above conduct of the Central Government, it is apparent that it stuck to its earlier stand before the Apex Court in the BrahmDutt case.

Competition (Amendment) Bill, 2007

After seventeen months, the Competition (Amendment) Bill, 2007 (Bill 2007) was introduced with 50 clauses and yet no provision for creating two separate bodies under the Act as envisaged by the Apex Court in the BrahmDutt Case.  

The Competition (Amendment) Act, 2007 was notified on October 12, 2007 and the CCI kept performing adjudicatory functions in determining cases relating to anti-competitive agreements / practices and abuse of dominant position by enterprises and passing cease and desist orders, imposing hefty penalties.

In a subsequent case, the Apex Court in the matter of Competition Commission of India vs. Steel Authority of India and Another occasioned to consider the functions of the CCI under the Act and observed that the CCI is inter-alia discharging Adjudicatory functions under the Act. Similarly, the COMPAT in the matter of Eastern India Motion Picture Association vs. M.S. Manju Tharad and the CCI has observed that “the CCI was in the role of an adjudicator…”

Keltech Energies Limited has recently filed a writ petition before the Apex Court challenging certain provisions relating to the quasi-judicial functions of the CCI in which a Notice has been issued to the Union of India.

It will be interesting to note that whether the questions left open in the BrahmDutt case vide order dated January 20, 2005 by the Apex Court regarding creation of a separate Adjudicatory body under the Act headed by a Judicial Member, will be settled?

Atul Dua is a Senior Partner and Mr. Agarwal is a Partner at Seth Dua & Associates - A pan India Law Firm. Views are personal