Antitrust Litigation 2020

Last Updated September 17, 2020

India

Law and Practice

Authors



Gaggar & Partners is a boutique law firm specialising in competition, commercial litigation, arbitration, general corporate, real estate advisory, defence, gaming, IPR and white-collar crime. With a growing team of 25 associates, two directors and seven partners, the firm has been involved in several leading cases across various judicial forums. The firm has been retained by the Competition Commission of India (CCI) to prosecute special cases and represent the Director General (DG) of the CCI in sensitive cases relating to the evolving jurisprudence on investigation. The firm has been a standard-bearer in cases relating to the leniency regime in India. Besides advising clients across sectors on various legal issues, the firm has been involved in the drafting of bills. Amongst the firm’s noteworthy clients are NTN Corporation, National Engineering Industries, Citibank, Denso Ten, Toyo Tire, and Haicheng Vivo Mobile (India). In addition, the firm has also advised and represented celebrity sportspersons such as Virender Sehwag.

The provisions of the Competition Act, 2002 (Act) pertaining to anti-competitive conduct came into effect a decade ago. With respect to the current state of development of antitrust litigation in India, jurisprudence has evolved with the increase in the passing of significant orders by the Competition Commission of India (CCI) and the erstwhile Competition Appellate Tribunal (COMPAT). A large number of appeals, arising from orders of the CCI, are pending adjudication before the National Company Law Appellate Tribunal (NCLAT). Furthermore, the decisions of various High Courts and the Supreme Court of India (SC) on several issues pertaining to important aspects such as jurisdiction of the CCI etc, have provided much-needed clarity on several nuanced aspects of the Indian competition regime.

Pending Cases

There are a significant number of active cases pending adjudication before the NCLAT and the SC, on many important questions of law. The judgment of the NCLAT in Hyundai Motor India Limited v Competition Commission of India & Ors. {Competition Appeal No 06 of 2017}, pertaining to resale price maintenance under Section 3(4) of the Act, is pending before the SC and a judgment by the SC will be the first substantive judgment with respect to vertical restraints under the Act. The issue with respect to whether without initiating action under Section 27 of the Act (ie, only once the company has been found to be in contravention, can the CCI proceed against the individual officers of the company under Section 48 of the Act simultaneously) is pending before the SC in Cadila Healthcare Limited v Competition Commission of India (Special Leave Petition (Civil) No 30641/2018 tagged with Special Leave Petition (C) Nos 13716-13717/2017). The appeal before the SC from the judgment of the Delhi High Court (Delhi HC) in Abbott Healthcare Private Limited v Competition Commission of India & Anr. {LPA 658 of 2018}, is also pending. The Delhi HC had, in light of a review/recall application preferred against an order passed by the CCI under Section 26(1), held that a direction under Section 26(1) is not the performance of an adjudicatory function and is preliminary in nature, and that a right to notice and hearing is available to a party only after consideration of the report of the Director General (DG). The Delhi HC, in its landmark judgment  in Mahindra & Mahindra Ltd. & Ors. v Competition Commission of India & Anr. {W. P. (C) 6610 of 2014}, upheld the constitutional validity of the Act and this judgment is also pending in appeal before the SC.

The issue of whether the imposition of a "no-objection certificate" requirement is anti-competitive, and its validity under the Act, is also pending before the SC in Competition Commission of India v Lupin Limited {Civil Appeal No 3071 of 2017} and Competition Commission of India v All India Organization of Chemists and Druggists {Civil Appeal No 4819/2017}.

The order of the CCI finding Google to have abused its dominant position, in its order dated 31 January 2018 [(07/2012) Matrimony.com Limited v Google LLC & Others (30/2012) Consumer Unity & Trust Society (CUTS) v Google LLC & Others], is pending before the NCLAT and a judgment in this regard would be the first of its kind pertaining to the intersection of big data and competition law in the Indian regime.

Recent Decisions

In terms of recent developments in the regime, the SC has adjudicated upon and decided appeals on several important issues under the Indian competition regime. In Rajasthan Cylinders and Containers Limited v Union of India {2018 SCC Online SC 1718}, the SC clarified the importance of considering the prevalent market structure and extant conditions in cartel cases. In Excel Crop Care Limited v Competition Commission of India & Ors. {AIR 2017 SC 2734} (Excel Crop Case), the SC held that the "turnover" under Section 27(b) of the Act, which is the basis on which a penalty is imposed by the CCI in the event of a contravention, should be confined to the "relevant turnover" and not the entire turnover of the infringing entity. The SC in Competition Commission of India v JCB India Limited & Ors. {2019 SCC OnLine SC 625} held that unless seizure were authorised, a mere search would not, by itself, be sufficient for the purpose of an investigation under the Act.

In a recent order in In Re: Cartelisation in Industrial and Automotive Bearings {Suo Moto Case No 5 of 2017}, even though a contravention under Section 3(3) of the Act was found by the CCI, it did not impose a monetary penalty, but only passed a "cease and desist" order.

The Delhi HC in National Engineering Industries Limited v Competition Commission of India & Anr. (W.P. (C) No 1714/2020) held that in the absence of any adverse finding against an enterprise in the report of the DG, the CCI cannot proceed against such an enterprise under the Act.

In a landmark judgment in Ambuja Cements & Ors. v Competition Commission of India and Ors. {TA (AT) (Compt.) No 22 of 2017 (NCLAT)}, the NCLAT noted the consideration of applicable "plus factors" in establishing cartel conduct and held that the burden of proof is a "preponderance of probabilities" standard and not the criminal law standard of "beyond reasonable doubt". The judgment of the NCLAT is presently pending appeal before the SC.

With respect to the jurisdiction of the CCI, the Delhi HC in Monsanto Holdings Private Limited & Ors. v CCI & Ors. {W. P (C) 1776 of 2016}, differed from the judgment of the SC in Competition Commission of India v Bharti Airtel Limited & Ors. {(2019) 2 SCC 521} (Bharti Airtel Case), wherein the SC had clarified the scope of overlap in the jurisdiction of regulators. The Delhi HC distinguished between the nature of functions of the Telecom Regulatory Authority of India and the Controller of Patents and stated that the two regulatory regimes cannot be equated, and upheld the order of the CCI under Section 26(1) of the Act.

The newly introduced Competition (Amendment) Bill, 2020 proposes several key amendments to the Act; however, the amendments are yet to be incorporated as final amendments to the Act.

One of the key proposed amendments under the Act is the introduction of "settlement" and "commitment" procedures under newly proposed Sections 48A and 48B of the Act.

Under the newly proposed Sections, both settlements and commitments may be offered with respect to violations under Section 3(4) and Section 4 of the Act, and violations of Section 3(3) of the Act have been excluded from the scope of Section 48A and Section 48B. Therefore, settlements or commitments may not be offered with respect to violations of Section 3(3) of the Act.

While previously, settlements and commitments have not formed part of the Indian competition regime, the potential introduction of these procedures under the Act would very likely reduce the number of antitrust cases under the regime.

The protection to intellectual property rights previously afforded under Section 3 of the Act is now proposed to be extended to Section 4 as well. The implications of such an exception being available as a defence in abuse of dominance cases are still to be seen.

Furthermore, in terms of procedure, Section 22(3) of the Act is proposed to be amended to remove the "casting vote" provision of the chairperson of the CCI as well as the quorum requirement, with the implication being that the majority of present members would decide with respect to a case.

COVID-19 and Competition in India

In addition to the proposed amendments, the CCI, in light of the present COVID-19 situation, in April 2019, issued an advisory with respect to the conduct of business in light of the current situation. The advisory accounts for the interruption caused to business and the ensuing need for businesses to co-ordinate activities – including data sharing, sharing infrastructure, distribution networks, transport, logistics, etc – to ensure that certain essential products and services can continue to be supplied.

The advisory clarifies that in the event businesses undertake any such co-ordination, the CCI would assess that conduct in light of the factors including:

  • accrual of benefits to consumers;
  • improvement in production or distribution; or
  • promotion of technical, scientific or economic development.

The advisory clearly sets out that only conduct “necessary” and “proportionate” to meet concerns arising due to the COVID-19 situation will be accounted for by the CCI. Any cartel conduct without a valid justification, will be inquired into by the CCI under the Act and there is no universal exemption under the advisory. Therefore, any such co-ordinated conduct must be supported by a clear rationale of efficiency.

Under the Act, the legal basis for a compensation claim is predicated on an applicant demonstrating the suffering of a "loss" or "damage" from a contravention of the Act.

Under the Act, a claim for damages for a breach of competition law is statutorily provided for and has been set forth under Section 53N of the Act. A claim for private damages may be made by a person; however, such action for loss or damages may only be brought upon the finding of a contravention by the CCI.

Under the Indian regime, while the term "follow-on" is not used under the Act with respect to compensation applications, the nature of the compensation application procedure is that of a follow-on claim, which necessarily implies that under the Act, a claim for compensation would follow a finding of a contravention under the Act and standalone compensation claims are not envisioned under the Act.

The COMPAT, in an order in National Stock Exchange of India Limited v CCI & Anr. {Appeal No 15 of 2011}, noted that Section 53N has a separate application and is independent of any other provisions of the Act. The COMPAT noted that any person can apply before the appellate tribunal to decide on a claim for compensation arising from the findings of the CCI, or the orders of the appellate tribunal in an appeal arising against an order of the CCI.

Enforcement of anti-competitive conduct is the domain of the CCI, which is the apex regulator of the competition regime in India and is established under the Act. The CCI, under Section 18 of the Act, is responsible for the elimination of harmful practices having an adverse effect on competition, promotion and sustenance of competition, protection of interests of consumers, as well as ensuring freedom of trade in the market.

Under Section 8 of the Act, the CCI consists of members who are specialists in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters (including competition law and policy), which in the opinion of the central government, may be useful to the CCI, and are competent to adjudicate upon issues pertaining to any alleged competition law contravention.

Upon passing of the final order by the CCI, a party aggrieved by such an order can prefer an appeal before the NCLAT, which is a specialised court constituted for hearing commercial and competition matters in India. However, there is no particular bench of the NCLAT before which the competition matters are listed. A further statutory appeal from a judgment of the NCLAT would lie with the SC, which is the apex court in India and which can adjudicate upon cases from all spheres of law.

Furthermore, orders of the CCI, with respect to which no provision for appeal has been made under the Act, may be challenged by way of a writ petition before the respective High Courts, and there are predetermined subject-wise rosters already set in place according to which the competition matters would only get listed before a specific judge of any High Court.

A further statutory appeal from a judgment of the respective High Courts would lie with the SC, which is the apex court in India and which can adjudicate upon cases according to predetermined subject-wise roster.

With respect to the transfer of cases from one High Court to another, in the case of writ petitions having been preferred from an order of the CCI, the power to transfer such cases rests solely with the SC, and has been enshrined under Article 139A of the Constitution of India. The SC has held that a case may be transferred from one High Court to another if there is a reasonable, genuine and justifiable apprehension on the part of a litigant that justice would not be dispensed otherwise. Therefore, transfer of cases between High Courts is a power that is exercised by the SC sparingly.

The CCI is the Indian national competition authority. However, the orders passed by the CCI are not binding on any other court or tribunal as a clear hierarchy and appellate procedure has been set forth under the Act. The orders of the CCI would have a strong persuasive and evidentiary value if the findings are relied upon in any other proceeding. The judgments of the NCLAT are binding on the CCI and once a matter is finally determined by the SC, it becomes binding on all subordinate courts and tribunals in India. The CCI cannot intervene in cases of damages but is entitled to impose a penalty on the offender.

Prima Facie Case

The standard or threshold of proof varies in relation to the stage of the inquiry before the CCI. Under Section 26(1) of the Act, the CCI orders the DG to commence an investigation with respect to an alleged contravention if there exists a prima facie case, as held by the SC in Competition Commission of India v Steel Authority of India Limited & Anr. {(2010) 10 SCC 744}. At this stage the function of the CCI is analogous to a departmental rather than an adjudicatory one, and the threshold for passing an order under Section 26(1) of the Act is lower. This function of the CCI is in the nature of a "preparatory" measure and not a decision-making process.

At this initial stage (ie, the passing of the prima facie order), the burden rests on the informant to demonstrate substance in the allegations with respect to a contravention of the Act. In a recent judgment in Reprographic India v Competition Commission of India & Anr. {Competition Appeal No 9 of 2019}, the NCLAT noted that the informant is required to show that the information is based on substantive allegations. The appeal before the NCLAT was preferred against a final order of the CCI, closing the matter pertaining to allegations of bid-rigging by the informant. The CCI noted that the informant had failed to level reasonable allegations based on substantial evidence. The NCLAT noted that the order of the CCI was passed with application of mind and that the informant had, in fact, made allegations without any evidence and had not made a prima facie case necessitating an investigation. An appeal has been preferred before the SC against the judgment of the NCLAT.

Section 3(3) Offences and Presumption of Harm

Under the Indian competition regime, there has been no final determination with respect to compensation applications, and therefore, the jurisprudence with respect to compensation is yet to be settled and clarified, and whether a "pass-on" defence may be legitimately adopted is yet to be seen. Furthermore, with respect to the burden of proof regarding contraventions under Section 3(3) of the Act, the SC in Rajasthan Cylinders and Containers Limited v Union of India {2018 SCC OnLine SC 1718} noted that while agreements under Section 3(3) raise a presumption that such agreements cause appreciable adverse effect on competition, this presumption is rebuttable in nature. Once the CCI notes that a case falls under Section 3(3), the burden is on the enterprise to rebut the presumption with sufficient evidence and upon a sufficient rebuttal of the presumption, the burden would shift back to the CCI to establish a contravention with reference to the factors under Section 19(3) of the Act.

Cartels

The NCLAT in Ambuja Cements & Ors. v Competition Commission of India and Ors. {TA (AT) (Compt.) No 22 of 2017}, referring to the judgment of the erstwhile COMPAT in M/s International Cylinder (P) Ltd. and Ors. v Competition Commission of India {Appeal No 21 of 2012}, held the test for establishing a cartel to be that of a "preponderance of probabilities" and not a "beyond reasonable doubt" standard of criminal law. This standard, which is different from the strict "beyond reasonable doubt" standard, allows for the establishment of a contravention on the basis of circumstantial evidence.

In a recent order in Unilazer Ventures Private Limited v PVR Limited & Ors., {Case No 10 of 2019}, the CCI, in a matter pertaining to allegations of cartelisation under Section 3(3), referring to the judgment of the NCLAT in Reprographic India v Competition Commission of India & Anr., noted that the informant had failed to put forth any "plus factors" and a mere allegation of parallel behaviour is not enough to establish a concerted practice.

Burden of Proof

With respect to Section 3(4) of the Act, the burden lies on the person alleging a contravention and such a person is required to provide sufficient evidence to support the allegation. The CCI would then analyse the factors under Section 3(4) of the Act to determine whether a contravention under Section 19(3) is established.

The COMPAT in Ravinder Kaur Sethi v DLF Universal Limited {Appeal No 75 of 2015}, with respect to an allegation under Section 4, noted that the burden of proof was on the informant/appellant to produce material before the CCI that the respondent had the largest share in the market, and dismissed the appeal.

Under Section 53N of the Act, there is no bar upon direct or indirect purchasers from filing an application for compensation, which is similar to a claim. The Act, however, does not use the terminology of "direct" or "indirect" purchaser, but includes within its purview, the central government, state government, local authority, any enterprise or any person which may make an application to the NCLAT to adjudicate on a claim for compensation.

In order for any such purchaser to seek compensation under the Act, a demonstration of loss or damage is necessary as a legal basis for such an application.

With respect to an issue of a claim, which would be similar in nature to a compensation application under the Indian competition regime, the application can be filed after the finding of a contravention by the CCI or a final order of the NCLAT and thereafter, the application would be finally decided upon after final adjudication by the SC, if any appeal is preferred before the SC. The duration of proceedings would depend on the stage at which the application has been filed. It is pertinent to highlight that even though there are a number of compensation applications pending before the NCLAT, in the absence of any final orders/settled jurisprudence on the issue of compensation applications, it would difficult to state the typical duration of proceedings.

There is no concept of parallel investigation under the Act, as the DG is the only investigative arm under the Act and the inquiry can only proceed before the CCI. Specifically, with respect to compensation applications, the appeal and application procedures are separate, and it is only upon final determination of the appeal that the application is heard and decided.

Typically, the grounds for challenge of an order passed under the Act by the CCI are with respect to lack of jurisdiction of the CCI or any other errors pertaining to violation of the principles of natural justice. An aggrieved party can approach the appropriate High Court and seek a stay on the proceedings before the CCI or the NCLAT. However, the regime with respect to compensation applications is still evolving and the jurisprudence is yet to be settled. 

Under the Act, the concept of "class actions" has been envisaged with respect to the seeking of compensation by multiple parties under Section 53N of the Act. Specifically, under Section 53N of the Act, a single compensation application may be preferred by multiple parties with the same interest; however, such an application may be preferred only with the permission of the NCLAT.

Furthermore, an order by the NCLAT with respect to such a compensation application would be applicable to all the parties to such an application.

The Act does not stipulate a definition for class actions and the procedure with respect to such class actions, and therefore does not provide for whether such actions would be on an opt-in or opt-out basis and the procedures with respect to the same are governed under the Code of Civil Procedure, 1908 (CPC). The procedure prescribed under Order I, Rule 8 of the CPC shall apply to compensation applications brought by multiple parties by way of a common suit. Specifically, under the CPC, power has been granted to the court to substitute a party that is not suing or defending the suit with diligence, with another party.

Under the Act, the prerequisite for preferring a compensation application is for the party to demonstrate loss or damage arising due to a contravention of the Act. No express bar has been stipulated with respect to seeking of compensation by an indirect purchaser; however, the condition for establishing loss or damage from a contravention would equally apply to such an indirect purchaser under the Act.

Under Section 53N of the Act, a person eligible to make an application for compensation for any loss or damage, is also eligible to institute a class action for seeking compensation. However, the procedure set forth under the CPC would have to be adhered to in bringing such a class action.

There is no additional certification requirement under the prescribed procedure under the Act. However, Order I, Rule 8 of the CPC, envisages seeking the permission of the court prior to instituting a class action suit and the court would then direct such persons to defend the suit on behalf of all interested persons.

The SC in Chairman, Tamil Nadu Housing Board, Madras v T. N. Ganapathy {1990 AIR 642}, observed that the intent of Order I, Rule 8 of the CPC was to avert multiplicity of litigation. The SC noted that the prerequisite condition is that the persons in a proposed class action suit must have a common interest or a common grievance. 

Under the Act, compensation applications are only finally decided once final determination in respect of a contravention is complete. Compensation applications under the Act are determined by the NCLAT, which is a judicial body, and has both judicial and non-judicial members. Therefore, the adjudication of a compensation application under the Act is through a judicial process.

At present, there are various compensation applications filed before the NCLAT. However, in National Stock Exchange v Competition Commission of India & Anr. {Civil Appeal No 8974 of 2014}, the SC has granted an interim stay on the proceedings with respect to compensation, till the appeal is pending before the SC. Eventually however it may be reasonably estimated that the courts seized with the matter of compensation claims could make suggestions, during the pendency of those compensation claims, for a settlement between the parties. Having said that, the courts cannot force a settlement between parties if either party is unwilling to enter into that settlement.

The Act does not envisage a summary judgment procedure; however, the issuance of an order by the CCI under Section 26(1) of the Act provides for the determination of a prima facie liability, on the basis of which the investigation proceeds. A summary judgment may however be passed if the defending party accepts the allegations in toto. 

As the apex regulator under the Act, the jurisdiction of the CCI extends to the entire territory of India. However, under the Act, the CCI is also empowered to exercise extra-territorial jurisdiction under specified circumstances. Section 32 of the Act encapsulates the “effects doctrine” and has a wide application. Under this Section, the CCI is empowered to inquire into any agreement which is likely to have an adverse effect on competition in the relevant market in India, irrespective of the fact that:

  • the agreement has been entered into outside India; or
  • any party to such agreement is outside India.

Under the Act, the jurisdiction of the CCI extends over an “enterprise”, which would mean and include a person or a department of the government, that is alleged to have, or has, engaged in any anti-competitive conduct in violation of the Act. The only exclusion to the otherwise broad definition of “enterprise”, is governmental activities that relate to sovereign functions, which include activities of governmental departments in atomic energy, currency, defence and space.

Furthermore, under Section 3(5) of the Act, agreements pertaining to the export of goods or provision of services fall outside the prohibition under Section 3 of the Act. Additionally, steps that may be taken by an entity for the protection of its intellectual property rights are exempt from the application of Section 3 of the Act.

The SC, in the Bharti Airtel Case, held that in a situation of overlapping jurisdiction of sectoral regulators, the jurisdiction of the CCI would not be ousted, but the CCI would deal with the anti-competitive aspects of the case at a later stage after the sectoral regulator had dealt with the technical aspects of the case.

In situations where a limitation period has not been specifically prescribed under the Act, the doctrine of laches would be applicable. The SC in Prabhakar v Joint Director Sericulture Department & Ors. {AIR 2016 SC 2984}, explained that where an aggrieved party has not availed themselves of the available remedy or procedures under an applicable act, relief can be denied on the ground of an unexplained delay and it can be presumed that such a person has waived their right. The NCLAT, in Food Corporation of India v Excel Crop Care Limited & Ors. {Compensation Application (AT) No 1 of 2019}, noted the application of the doctrine of laches with respect to Section 53N of the Act as no limitation period has been prescribed under the Section. The NCLAT further observed that with respect to compensation applications the limitation period is three years.

While there is no limitation period prescribed with respect to the filing of information, the belated nature of filing may weaken the case being put forth before the CCI and reduce the credibility of the allegations being put forth. In its order in Accessories World Car Audio Private Limited v Sony India Private Limited & Anr. {Case No 3 of 2020}, the CCI had taken note of the belated filing of the information.

Under the Act, statutory limitation periods have been set forth with respect to the period within which appeals may be filed against the orders passed by the CCI and the NCLAT, respectively. Under Section 53(B)(2) of the Act, an aggrieved party is required to file an appeal before the NCLAT within 60 days from the receipt of the order from the CCI. With respect to orders of the NCLAT, the statutory limitation period for filing an appeal before the SC is 60 days from the receipt of the order of the NCLAT under Section 53T.

No limitation period has been prescribed with respect to any anti-competitive conduct under the Act. The provision with respect to anti-competitive conduct under the Act came into effect on 20 May 2009. However, the interpretation of the Act has been taken to have a retroactive and not retrospective effect, with the implication that the CCI can examine conduct that occurred prior to May 2009, with the condition that there was continuity in such anti-competitive conduct after 20 May 2009, and only in the event of such continuity can the preceding conduct be examined as well.

Once an order has been passed by the CCI under Section 26(1) of the Act, directing the DG to commence investigation with respect to an alleged contravention, the DG begins the investigation, which is the stage during which the DG collects evidence with respect to the allegation. Even at the stage of an order under Section 26(1) of the Act, the party filing the information needs to disclose those documents that are necessary for the CCI to form a prima facie view or else the CCI can require the party to disclose such documents.

The DG, which is the investigative wing of the CCI, has been granted a wide range of powers under Section 41(2) of the Act, including:

  • summoning and enforcing attendance of any person and that person's examination under oath;
  • receiving evidence on affidavit; and
  • requiring discovery and production of documents.

Upon the commencement of an investigation, and in the exercise of such powers, the DG will issue notices or requests for information to the parties, directing the furnishing or submission of information required for the investigation of the alleged anti-competitive conduct. It should be noted that such notices are not only sent to the parties whose conduct is being examined but to other relevant third parties such as vendors, manufacturers, third-party service providers and even statutory authorities.

Once a party to the investigation does receive a notice or a request for information, it is essential to determine the extent and scope of disclosure that will be made to the DG. In determining the quantum and nature of disclosure to be made to the DG, parties typically consult their legal counsel to ensure compliance as well as to protect themselves against excessive disclosure.

Disclosure pursuant to the DG notice is mandatory in nature and attracts consequences for non-compliance under Section 43 of the Act.

After the submission of the DG report, the CCI, inquiring into the matter on its own, can also ask the parties to disclose further documents, if any.

The Act also grants powers to the DG to conduct "dawn raids" to collect crucial evidence when there is an anticipation of destruction or modification of such evidence by an entity.

The principle of attorney-client privilege is applicable to inquiry under the Act. The concept of privileged communication between client and attorney is enshrined in Indian legal jurisprudence under the Indian Evidence Act, 1872 (Evidence Act) and disclosure of such privileged communication is prohibited. However, under the Evidence Act, in-house lawyers do not fall within the meaning of "advocates" and therefore communications between in-house counsel and a client do not qualify for privilege and would therefore, not be protected from disclosure. However, documents or communication between an advocate and a client would fall within the purview of such protection and may be withheld from disclosure.

In Telefonaktiebolaget LM Ericsson v Competition Commission of India & Anr. {LPA 246 of 2016}, the Delhi HC granted the request of the petitioner to withhold privileged communication between the petitioner and its legal advisors/advocates from disclosure.

The standard of confidentiality with respect to the leniency regime in India is a stricter standard compared to the general confidentiality regime prescribed under the Competition Commission of India (General) Regulations, 2009 (General Regulations). Under the CCI (Lesser Penalty) Regulations, 2009 (Leniency Regulations), confidentiality is accorded to the identity of the lesser penalty applicant as well as the evidence or information furnished by that applicant. Once the investigation is complete and upon submission of the DG report, inspection of the non-confidential versions of the information may be permitted.

Disclosure of the applicant’s identity, or the evidence or information furnished, can only be allowed in certain circumstances as listed under the Leniency Regulations if:

  • the disclosure is required by law;
  • the applicant agrees to such disclosure in writing; and
  • the applicant makes a public disclosure.

In cases where the DG deems it necessary to disclose any information or evidence, and where the applicant has not agreed to that disclosure, the DG can obtain approval from the CCI to make such a disclosure.

The Delhi HC, in an order in NTN Corporation v CCI & Anr. {W. P. (C) No 3051 of 2016}, noted that while at the investigation stage the information can be withheld from parties, at the hearing stage before the CCI, all material is to be provided to the concerned party to enable that party to undertake cross-examination of the witnesses in the matter and a complete opportunity to lead evidence.

Settlement agreements have, till now, not been accepted under the Indian regime; however, there is a proposal to introduce settlement and commitment procedures under the Act and if so introduced, the specific regulations would encompass aspects of their confidentiality.

Under the Act, witnesses of fact are routinely summoned and relied upon as part of the investigation process.

Evidence from such a witness may be furnished both in written and oral form. Under Section 41 of the Act, the powers of the DG are wide in nature and also empower the DG to summon a witness to furnish non-documentary evidence in the nature of an oral statement.

Upon the furnishing of a statement by a witness, the DG may, if it is deemed necessary or expedient, permit cross-examination of that witness, under Regulation 41(5) of the General Regulations. In addition to summoning a witness to furnish an oral statement, the DG may also require a witness to furnish written evidence on affidavit. Even though the Act does not make cross-examination a rigid right, the courts have generally adopted the attitude of granting cross-examination wherever a party has sought it, with reasonable cause being shown.

Non-compliance with any direction by the DG to appear for an oral statement or to furnish evidence on affidavit would attract severe consequences under the Act, including the imposition of a fine. Furthermore, if the witness that has been summoned to furnish an oral statement under Section 41(2) of the Act does not comply with the direction, this would lead to the DG drawing an adverse conclusion in the report which would be submitted to the CCI.

In the event a witness who has furnished oral or written evidence on oath is summoned by the DG for cross-examination by a party who has sought the right to cross-examine that witness, he or she would be required to comply with the summons. Non-compliance with a direction of the DG would result in the imposition of a fine under Section 43 of the Act, and such fine may be up to INR100,000 per day for each day of non-compliance, subject to a maximum of INR10 million.

The CCI routinely relies on expert evidence as part of the inquiry procedure.

Under Section 36(3) of the Act, the CCI is empowered to call upon experts from various fields – such as economics, commerce, accountancy, international trade, or any other discipline – for the purpose of assisting the CCI in the inquiry procedure. Furthermore, the CCI is also empowered under Section 17(3) of the Act to engage experts and professionals with special knowledge in disciplines related to competition to assist the CCI in the discharge of its functions under the Act.

Under Regulation 41(2)(a) of the General Regulations, the CCI or the DG may also admit the opinions or analyses of experts based on market evidence, economic studies or other authoritative texts, as material evidence. Furthermore, under Regulation 52 of the General Regulations, the CCI can invite experts to assist it in the discharge of its functions.

Under the scheme of the Act, the Competition Commission of India (Procedure for Engagement of Experts and Professionals) Regulations, 2009 govern the engagement of experts and other such professionals by the CCI, including provisions for the terms of their engagement.

Even in cases pertaining to combinations under the Act, the CCI relies on expert opinions to gain a deeper understanding of a particular market and its dynamics.

The evidence of experts so appointed is in the form of opinions and analyses and would not generally be subject to cross-examination under the Act or the General Regulations.

During the course of an investigation, parties have the right to substantiate their submissions to the DG with the opinions and analysis of experts. Upon the completion of the investigation, if the DG has placed reliance on any reports or analyses put forth by a party, other parties have the right to rebut the findings in those reports as part of their objections to the DG report. The CCI, in its order in Belaire Owner’s Association v DLF Limited & Ors. {Case No 19 of 2010}, took into consideration the DG report as well as the opinions and analysis of experts relied upon by the informant and the opposite parties, such as analysis and reports from La Salle Meghraj (JLLM), ICICI Direct Analyst, RBS (The Royal Bank of Scotland) Analyst, Knight Frank, Goldman Sachs, Prop Equity and QuBREX.

The CCI, in MCX Stock Exchange v National Stock Exchange of India Ltd. & Ors. {Case No 13 of 2009}, also relied upon submissions of the parties as well as opinions and analyses of experts relied upon by the parties.

Under the Act, damages that may be sought with respect to a contravention of the Act are in the nature of a private claim for damages or compensation that may be sought under Section 53N of the Act. However, such an action for damages may be instituted only subsequent to the finding of a contravention by the CCI or NCLAT and would be granted by the NCLAT.

Under the Indian competition regime, there has been no final determination with respect to compensation applications, and therefore, the jurisprudence with respect to compensation is yet to be settled and clarified and whether a pass-on defence may be legitimately adopted is yet to be seen.

Under Section 53N(3) of the Act, the NCLAT, after enquiring into the allegations in the compensation application, may make an order directing the contravening enterprise to make payment of compensation to the applicant, towards the loss or damage so suffered. Furthermore, explanation (b) to Section 53N clarifies that the NCLAT is required to determine the eligibility and amount of compensation due to the compensation applicant. Therefore, in conducting such an inquiry, an enterprise against whom such an order is passed may assume the pass-on defence to state that the loss or damage stated to be suffered by the applicant has, in fact, been passed on to another person or entity and that therefore the applicant is ineligible for compensation. However, the tenability and acceptability of such a defence remains untested under the Indian regime.

At present, as there has been no final determination with respect to any compensation application filed under the Act, the jurisprudence on compensation claims, including the interest (if any) to be levied, is yet to be conclusively determined. However, it can be reasonably expected that interest may be granted if damages are assessed from the date of the passing of the order of compensation until its actual payment.

Under Section 19 of the Act, information may be filed against several enterprises, alleging anti-competitive conduct. Upon the passing of an order by the CCI under Section 26(1) of the Act, the DG would proceed to gather evidence against all parties identified to have, prima facie, contravened the Act. At the stage of passing of a final order under Section 27 of the Act, after having considered the report of the DG along with the objections or suggestions of the parties to the DG report, the CCI would proceed to impute liability for contraventions of the Act and may, along with the imposition of a monetary penalty, also pass other orders under Section 27 of the Act. However, under the Act, the liability of multiple parties would be several and not joint in nature. Therefore, while multiple parties may be liable for the same contravention, such entities would be individually liable and not be liable for the contravening acts of the others. Furthermore, even the office bearers of an enterprise would be separately liable under Section 48 of the Act.

With respect to cartel cases, wherein applications for a lesser penalty may have been preferred by one or more cartel members, the extent of the liability that a cartel member would have towards a direct purchaser would depend on the specific findings with respect to that cartel member in the final order of the CCI as well as the quantum of lesser penalty imposed by the CCI pursuant to the leniency application. However, jurisprudence in this respect has yet to evolve under the Indian regime.

Unlike other jurisdictions, where contribution proceedings are with respect to cartel offences, there is no such specific provision with respect to contribution proceedings under the Indian Act. However, at the same time, there is no provision under the Act to preclude the institution of contribution proceedings.

At present, there are proceedings with respect to certain compensation applications pending before the NCLAT; however, there is nothing to suggest that any contribution proceedings have been brought in any of these matters. It would, however, be interesting to see how the jurisprudence evolves in all such proceedings.

Under the Act, injunctive relief may be granted by the CCI. Under Section 33 of the Act, if the CCI is of the opinion that a contravening act under Sections 3 or 4 has been committed, continued being committed or is about to be committed by a party, the CCI may order that party to restrain itself from carrying out any such act till further orders.

Under the Act, the CCI may pass an interim order only where a prima facie opinion has been formed by it and investigation has been directed under Section 26(1) of the Act.

Regulation 31 of the General Regulations requires the CCI, where it has, by an order, restrained a party from conducting a contravening act, to pass an order at the earliest possible opportunity. Where an interim order has been passed by the CCI, it is required to hear the party against whom such an order has been passed at the earliest possible opportunity, under Regulation 31(2) of the General Regulations. Furthermore, in cases where an interim order has been passed, the CCI is required to pass the final order within 90 days of the date of the interim order, under Regulation 31(3) of the General Regulations.

The power to pass such interim orders must be exercised only in exceptional circumstances and the CCI must pass a reasoned order:

  • recording satisfaction that a contravention has been committed, continues to be or is about to be committed;
  • it being necessary to pass such an order; and
  • it being apparent to the CCI that irreparable damage would be suffered by a litigant or that there may be an adverse effect on competition in the market.

Upon satisfaction of the above-mentioned criteria for the passing of such an order, the CCI may pass the order without notice to the other party.

With respect to furnishing of cross-undertakings, there is limited jurisprudence under the Indian regime. In Indian National Shipowners’ Association v Oil and Natural Gas Corporation Limited (ONGC) {Case No 1 of 2018}, on an application under Section 33 by the informant, the CCI directed ONGC to furnish an undertaking that it would refrain from invoking a certain impugned clause of the agreement. In this case, the CCI had passed an order under Section 26(1) directing an investigation into the alleged abuse of a dominant position by ONGC. However, pursuant to receipt of the DG report, in the final order passed by the CCI under Section 26(6) of the Act, the CCI held there to be no abuse of a dominant position by ONGC.

There are no subsequent consequences for applicants if they succeed in obtaining an injunction but fail at the trial of the substantive case. However, with respect to cross-undertakings in damages or compensation, the jurisprudence is yet to be settled.

Under the Act or applicable rules, there is no provision that permits the reference of competition disputes to alternative dispute resolution, including arbitration.

The SC in Booze Allen and Hamilton Inc. v SBI Home Finance Ltd. and Ors. {AIR 2011 SC 2507}, clarified the difference between rights in rem and rights in personam, and stated that a right in rem may be exercised against the world at large whereas a right in personam is a right sought to be exercised against specific persons. It was also noted that rights in rem require adjudication by the courts and would not be suited to private arbitration. However, the SC also observed that disputes pertaining to subordinate rights in personam that arise from rights in rem would be treated as arbitrable.

Under the Act, the nature of enforcement action against anti-competitive conduct is with respect to rights in rem and does not pertain to rights in personam and the same was held by the Delhi HC in Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India {(2016) 232 DLT (CN) 1}.

Even though enforcement under the Act would be with regard to rights in rem, the right to file an application for compensation under Section 53N may be considered to be in the nature of a right in personam arising from a right in rem (ie, the contravention of the Act itself). However, there is no precedent or determinative jurisprudence under the Act with respect to whether such compensation applications may be referred to arbitration.

Litigation funding or third-party litigation funding entails the financing of litigation costs by a third party for a stake in the final monetary result of the litigation. In the Indian context, litigation funding is not an entirely novel concept; however, there is no dedicated legislation governing the framework for litigation funding.

The SC in Bar Council of India v A. K. Balaji & Ors. {2018 5 SCC 379} noted that there appears to be no restriction with respect to third parties funding litigation and receiving payment pursuant to the final outcome of the case; however, advocates in India cannot fund litigation for their clients.

There is no specific provision under the Act or the rules with respect to litigation funding; there would, however, appear to be no bar with respect to such funding of competition litigation in India.

Under Section 27(e) of the Act, the CCI is empowered to direct parties to comply with directions, including payment of costs.

Under Order XXV of the CPC, at any stage, a court can, either on its own motion or the application by a party, order a plaintiff to give a security for any costs that may be incurred by a defendant. Such an order is usually made by a court in instances where a plaintiff may be situated outside India and does not possess sufficient immovable property in India. Furthermore, failure to furnish a security ordered by the court would result in dismissal of the case by the court.

Precedents for the Grant of Costs

There are several precedents in the Indian competition regime, for the grant of costs to a party in a litigation. The erstwhile COMPAT in Deepak Kumar Jain & Anr. v Competition Commission of India & Ors. (Appeal No 79 of 2014), imposed a cost of INR500,000 on each of the appellants as they had deliberately concealed material facts from the CCI, the COMPAT as well as the National Commission. The COMPAT noted that the appellants had squandered valuable public time and caused loss to the public exchequer. However, on a subsequent application made by the appellants, the COMPAT waived the costs that were imposed.

In Dalmia Cement v Competition Commission of India & Ors. {Appeal No 26 of 2016}, the appellants had sought leave of the COMPAT to withdraw an appeal, and the CCI had pleaded that costs should be imposed on the appellants in view of the fact that substantial time had been spent in dealing with the appeal. The COMPAT noted that allowing the CCI’s plea for imposition of costs would have far-reaching consequences in other cases and the COMPAT and other superior courts refrain from granting costs against any quasi-judicial or judicial body in view of the functions discharged by them.

In Shri Saurabh Tripathy v Competition Commission of India & Anr. {W.P. (C) 2079 of 2018}, the Delhi HC, dismissing the writ petition, noted that the proceedings amounted to an abuse of process of law and therefore imposed costs of INR50,000 to be paid to each respondent.

The mode of furnishing of security for costs varies on a case-by-case basis, the Bombay High Court in Alpha Oil International v M. T. Chem Lily {2014 (5) Bom CR 521}, directed the plaintiff to furnish security for costs through a cash deposit with the court or a bank guarantee.

Under the Act, any party that is aggrieved by a final order passed by the CCI, has a right under Section 53B to appeal against such an order before the NCLAT and there is a further right of appeal on both facts and issues, against the order of the NCLAT before the SC under Section 53T of the Act.

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Trends and Developments


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IndusLaw is a full-service law firm with offices in Bengaluru, Delhi, Mumbai and Hyderabad. The competition law team has extensive experience in advising, assisting and representing clients on a range of competition law issues and is known for contesting the most complicated antitrust cases and shaping modern antitrust law. Apart from obtaining several landmark judgments, the firm is credited with obtaining judgment on imposition of penalty on the basis of "relevant turnover" from the Supreme Court of India. IndusLaw represents clients and argues matters before the Supreme Court of India, the National Company Law Appellate Tribunal (NCLAT), the Competition Commission of India (CCI) as well as various High Courts and is currently involved in matters testing the constitutional validity of several provisions of the Competition Act and procedural aspects of investigation (including right of defence). It is also defending the first fully fledged private damage or compensation claim before NCLAT, which is likely to settle jurisprudence with respect to private antitrust damages in India.

The Competition Commission of India (CCI), on 20 May 2019, marked ten years of competition law enforcement in India. The Hon’ble Finance Minister of India, while addressing the CCI’s tenth anniversary celebrations gathering, held on 23 August 2019, urged the CCI to reflect on global developments impacting India and, as the "Competition Commission 2.0", to tackle the challenges of frontierless economies. This bugle call for an exciting 2019–20 was marked by revolutionary prospective changes in the current framework of the Competition Act, 2002 (Competition Act). Firstly, on 14 August 2019, the Competition Law Review Committee constituted by the Ministry of Corporate Affairs submitted a report (CLRC Report) suggesting major recommendations and changes to the current framework of the Competition Act and the functioning of the CCI. Subsequently, on the basis of the recommendations made by the committee in the CLRC Report, a Draft Competition (Amendment) Bill, 2020 (Draft Bill) was introduced by the Ministry of Corporate Affairs. The CLRC Report and the Draft Bill can be considered a "reboot" of competition law in India, capable of traversing future trends and shaping Competition Commission 2.0.

In addition, the Indian competition law regime also witnessed some interesting trends in terms of decisional practice in antitrust litigation. Under the guidance of landmark decisions on procedural aspects; the CCI reinforced continuation of previous trends on the one hand; and evolved with changing markets, on the other. Some of the prominent trends in 2019 and 2020 are discussed below.

Trends in Decisional Practice for Regulating Horizontal Agreements

Section 3(3) of the Competition Act prohibits, inter alia:

  • agreements pertaining to price-fixing;
  • market restrictions;
  • the sharing of a market; and
  • bid rigging, apart from a cartel between horizontally placed players.

Hub and spoke arrangements

In the recent case of Samir Agrawal v Competition Commission of India & Ors., the National Company Law Appellate Tribunal (Appellate Tribunal) took cognisance of hub and spoke arrangement, which went beyond traditional horizontal agreements. The allegations in the Samir Agrawal case pointed towards the use of algorithms by cab aggregators (Ola and Uber) for the resultant hub and spoke arrangement between the app-based platform and the drivers. It was alleged that the cab aggregators mechanisation of the "hub" of respective app platforms facilitated a cartel, resulting in price-fixing among the cab drivers (spokes) associated with each platform. Although the Appellate Tribunal concurred with the CCI’s decision of non-existence of a prima facie case warranting closure of information, it remains interesting to see the scope and applicability of hub and spoke arrangements under the Indian competition law regime.

Appreciable adverse effect on competition

In terms of the Competition Act, horizontal agreements are presumed to have an appreciable adverse effect on competition (AAEC). Until early 2019, the CCI followed a practice of holding companies/parties in violation of the Competition Act if the existence of horizontal agreements or cartels were proved – without even examining the AAEC. However, in the case of Rajasthan Cylinders and Containers Ltd. v Union of India and Others, concerning alleged cartelisation in the supply of LPG cylinders to oil marketing companies, the Supreme Court held that the presumption of AAEC with respect to horizontal agreements is a rebuttable one and if there has been no AAEC then the relevant agreement shall not be in violation of the Competition Act. The parties may rely upon the factors provided under Section 19(3) of the Competition Act, which include:

  • creation of barriers;
  • driving existing competitors out of the market;
  • foreclosure of competition;
  • accrual of benefits to consumers;
  • improvement in production or distribution of goods or services; and
  • promotion of technical, scientific or economic development.

The Supreme Court judgment in Rajasthan Cylinders has brought about a significant change in the CCI’s assessment of cartel matters. In recent cases, the CCI has made an effort to examine the AAEC and arguments about it presented by the opposite parties.

Cases involving pharmaceutical companies and their distributers (as well as the association of chemists and druggists) have increased recently. Several pharmaceutical companies have been penalised by the CCI with respect to the non-appointment of stockists because of non-grant of approval by the chemist and druggist associations. Even though, the pharmaceutical companies and the chemists and druggist association are not similarly or horizontally placed, the CCI has imposed penalties on the pharmaceutical companies while taking shelter under Section 3(1) of the Competition Act and has argued that Section 3(1) of the Competition Act can be invoked independently (without relying upon Section 3(3), which covers horizontal agreements). However, most interestingly, the Draft Bill proposes to include arrangements and agreements which are neither horizon nor vertical under the ambit of Section 3(1) of the Competition Act. At present, Section 3(1) of the Competition Act provides that “no enterprise or association of enterprises or person or association of persons shall enter into any agreement” which causes AAEC. A challenge to the independent reading of Section 3(1) of the Competition Act is pending before the Supreme Court in Cadila Healthcare Limited v CCI. Among other things, the Supreme Court in Cadila is to decide if Section 3(1) is permitted to be read independently, or only meant to be read together with either Section 3(3) pertaining to horizontal agreements or Section 3(4) pertaining to vertical agreements.

Leniency/lesser penalty regulations

The number of final CCI orders imposing penalties under the Competition Commission of India (Lesser Penalty) Regulations 2009 has been in year-on-year decline. With the CCI having passed five final penalty-imposing orders under the Leniency Regulations in year 2018, two in 2019, and only one in 2020. Interestingly, in the 2020 CCI final order under Leniency Regulations in the Industrial and Automotive Bearings Leniency Case, the CCI has not imposed any penalty on the parties (including the party that did not file a leniency application) despite holding that the parties contravened provisions of the Competition Act. This non-imposition of a penalty by the CCI is in contrast to its general practice, where it assesses factors such as co-operation and vital disclosure to proportionately reduce penalties.

Penalties during the COVID-19 pandemic

The COVID-19 pandemic has led to significant changes in the way businesses operate and function. The competition authorities in several jurisdictions have taken cognisance of this and have introduced updated guidelines. India too has been significantly affected by COVID-19 and the CCI, in its recent orders, has taken the present situation of financial and business uncertainty into consideration when imposing monetary penalties. In a recent decision relating to cartelisation in the supply of different types of brake blocks to Indian Railways; the CCI held 11 companies to be in a cartel and in violation of Section 3(3), read with Section 3(1), of the Competition Act but did not impose any penalties. The CCI acknowledged several factors for not imposing any penalties in this case, including:

  • co-operation by parties under investigation that “optimizes the resources of DG apart from expediting the adjudicatory process besides lessening regulatory burden”; and
  • that some of the parties to the investigation were micro, small and medium enterprises (MSMEs), whose annual relevant turnover arising out of composite brake blocks (ie, the product under investigation) was rather small.

Cognisance was also placed by the CCI on the “prevailing economic situation arising due to the outbreak of global pandemic (COVID-19) and the various measures undertaken by the Government of India to support the liquidity and credit needs of viable MSMEs to help them withstand the impact of the current shock.” Interestingly, in the same case, the CCI recognised that one of the opposing parties had made disclosures and furnished evidence as a "smoking gun" and acknowledged that said company, complied with all the directions issued by the DG and deposed truthfully. With this observation, the CCI could be seen as rendering a plausible defence to parties facing allegations of cartel-like behaviour in future. However, it will remain a matter of debate as to what constitutes "full and absolute" compliance with the directions of the CCI and/or the Director General.

Will seeking explanations of excessive information requests or demanding compliance with civil procedures, rights of defence and the Constitution of India will be seen as "defiance" or will it still be treated as "compliance"? Some of these questions are pending adjudication before the High Court of Delhi in Cupid Ltd v CCI and also Tranter India Pvt Ltd. v CCI. Also, despite several orders by various High Courts and the Appellate Tribunal to grant cross-examination whenever demanded, the CCI once again refused to grant cross-examination of witnesses to parties and relied heavily upon the statements given by a few witnesses to hold all companies in violation of the Competition Act. It also held several employees of opposing parties in violation of Section 48 of the Competition Act. The Draft Bill seeks amendment to Section 27 of the Competition Act, so as to enable the CCI to impose penalties on individuals under Section 48 of the Competition Act. The constitutional validity of Section 48 of the Competition Act has been challenged before the High Court of Delhi in Tranter India Pvt Ltd v CCI.

Trends in Decisional Practice for Regulating Vertical Agreements

Section 3(4) of the Competition Act governs AAEC arising out of agreements entered into by enterprises operating at different levels of the supply chain. Vertical agreements are tested on the basis of the "rule of reason" (ie, these agreements are not considered to be anti-competitive unless the same has been established by the CCI by assessing AAEC in terms of the pro-competition and anti-competition factors provided under Section 19(3) of the Competition Act (as highlighted above)). Recently, the High Court of Bombay in Star India v CCI – while passing its order on a jurisdictional challenge to CCI’s prima facie order directing investigation against Star India and Sony Pictures (pertaining to allegations of refusal to deal against Noida Software Technology Park) – set aside the CCI’s prima facie order initiating investigation and held that a prima facie finding of AAEC would be an essential and mandatory finding before the CCI could pass a prima facie order directing DG to investigate.

In the prima facie order of Air Works India (Engineering) Private Limited v GMR Hyderabad International Airport Limited & Others (Air Works Case), the CCI provided three guiding criteria/conditions where refusal to deal would amounts to "abuse":

  • the refused input is indispensable for an entity in order to compete on the downstream market;
  • refusal shall most likely eliminate competition on the downstream market; and
  • refusal shall most likely damage consumers.

In another interesting prima facie order initiating investigation against Maruti Suzuki’s implementation of a "discount control policy" vis-a-vis its dealers, and allegations of resale price maintenance, the CCI noted the existence of mystery shopping agencies that controlled the discounting by the distributors where fake customers visited dealers to verify whether the discounts offered were more than what were deemed permissible under discount policy. The fake customer then reported the conduct of such dealers back to the enterprise. 

Trends in Abuse of Dominance

E-commerce

A number of players operating in the e-commerce space were brought to the attention of the CCI for allegedly abusing their dominant position in the market. E-commerce in India has attracted investors from across the world, making India the fastest growing market for the e-commerce sector. Furthermore, the CCI, recently presented a market study on e-commerce in India with a focus on industries such as online travel booking and food technology. With respect to online travel agencies, the CCI noted that, “online bookings as a proportion of total bookings has been rising, though bookings via offline travel agents, corporate tie-ups and walk-in customers remain significant”. In addition, the CCI has also ordered an investigation of e-commerce players in four cases – of which two pertain to the market for hotel bookings in India. In these cases, the CCI has deviated from its past practice of including both online and offline channels (ie, travel agencies, direct suppliers, and online travel aggregators) in the same relevant market. The CCI, in a recent order concerning MakeMyTrip, while delineating the relevant market, noted the distinct characteristics of online channels and treated them differently from the offline channels for booking hotel services. The CCI further noted that “delineation of relevant markets is based on market realities as they exist at the time of assessment and in rapidly changing markets, market assessment cannot have a static approach.”

The CCI has also initiated an investigation against Google. It passed a prima facie order directing investigation into allegations of abuse of dominant position by Google in the mobile operating system market; and highlighted that for each application – such as online video-hosting platforms, browsers, maps, music, etc – there will be a separate relevant market. Furthermore, the CCI, inter alia, relied upon the European Commission to establish Google’s dominance in the worldwide market (excluding China) for app stores for the Android mobile operating system.

In another significant matter, relating to abuse of dominance by Uber, while hearing an appeal against the order of the Appellate Tribunal (finding Uber not to be in a dominant position) the Supreme Court of India noted that “Uber was losing INR204 per trip in respect of every trip made by the cars of fleet owners which did not make any economic sense other than pointing to Uber’s intent to eliminate competition in the market”. Based on the same, the Supreme Court held that Uber was in a dominant position and directed an investigation against it. It is noteworthy that this order of the Supreme Court was passed without giving any observation on the "relevant market" which was delineated differently by the CCI and the erstwhile Competition Appellate Tribunal.

Prima facie orders initiating investigations were also passed against e-commerce marketplaces (Flipkart and Amazon), on information filed by a bricks-and-mortar traders’ association. While reaffirming the position that "collective dominance" is not recognised under the Competition Act, the CCI ruled out the allegation of contravention of Section 4 (Abuse of Dominance). However, the CCI also ordered an investigation against Flipkart and Amazon on allegations relating to exclusivity, deep discounting and preferential listing of sellers in contravention of Section 3(4), read with Section 3(1), of the Competition Act.

Gas supply agreements

While dealing with allegations of abuse of dominance under a gas supply agreement against Adani Gas Limited, the Appellate Tribunal confirmed that if a dominant enterprise under the garb of an agreement imposes unfair conditions on the other contracting parties, then any terms and conditions that are unilateral and dictatorial in nature can be struck down. Interestingly, during the pendency of the proceedings, Adani revised the original gas supply agreement to modify the allegedly violative conditions; which circumstance was used to infer that Adani was conscious of the gas supply agreement conditions being anti-competitive.

Significant Procedural Decisions

A well-defined procedure that is consistent and transparent is vital in achieving justice; procedure defines the mode by which a litigant can enforce its legal right. Even though there are no penalty guidelines under the Competition Act that could help in determining the quantum of penalty, judicial precedent (in terms of the Supreme Court’s judgment in Excel Crop Care Ltd. v CCI.) provides guidance on the relevant factors when imposing a penalty. In the Adani case, the Appellate Tribunal, while holding that Adani abused its dominant position, acknowledged that, because Adani had revised the gas supply agreement during the course of investigation and enquiry before the CCI and implemented the suggestions put forth by the Appellate Tribunal, the penalty should be reduced from 3% (as imposed by the CCI) of the average annual turnover of the relevant three years to 1%.

The procedural law contains rules and regulations that govern the conduct and relations of the court and litigation in respect of legal proceedings. In India, the High Courts have the power to hold a statute unconstitutional under their writ jurisdiction. The High Court of Delhi, while dealing with challenges to the constitutional validity of the Competition Act, decided several issues of procedural significance. In the case of Mahindra & Mahindra, while examining the challenge to the provision of the Competition Act that provided a "casting vote" (second vote) to the chairman or the presiding member of CCI, the High Court held that “the process of application of mind is entirely subverted if one member, chairperson or senior member is conferred a casting vote. Each member’s opinion and view should carry the same weight.” Accordingly, the provision of a casting vote was declared unconstitutional and void. Furthermore, the High Court of Delhi issued guidelines for ensuring consistent participation by members of the CCI at the time of the hearing a matter. It was clarified that there should be no addition, deletion or substitution in the composition of the bench (of the CCI) during the course of a final hearing. In addition, at the stage of final hearing, the High Court of Delhi in the Mahindra Case made the presence and participation of the judicial member mandatory.

However, relying on the Mahindra case, objections have been raised before the CCI in other cases (for example, in Nagrik Chetna Manch v SAAR IT Resources Private Limited and Ors) that a final hearing cannot be conducted in the absence of a judicial member. The CCI relied on an order of the High Court of Delhi in CADD Systems (decided by a single judge, unlike the two-judge bench in the Mahindra Case) and held that the import of the Mahindra Case cannot be to bring the workings of the CCI to a standstill until the judicial member is appointed. Be this as it may, the approach of the CCI, in relying upon a single judge, is still to be tested.

In another case relating to leniency applications and the CCI’s explicit consent to grant all documents, evidence and material to one of the opposing parties during the investigation process, the High Court of Delhi (division bench) confirmed that once the CCI has consented to provide the documents, evidence, etc (whether exculpatory or inculpatory), it cannot wriggle out of its consent). The appeal filed by the CCI to not press it to supply all documents was dismissed by the High Court of Delhi (division bench). The CCI has challenged the order of the High Court of Delhi before the Supreme Court of India.

The CCI has also witnessed challenges to its jurisdiction on account of the presence of other sectoral regulators. In one such litigation concerning Star India, the High Court of Bombay observed that there are jurisdictional aspects and facts relating to a broadcaster that must be decided by the specialised regulator for the broadcasting sector before the CCI initiates an investigation under the Competition Act. The High Court of Bombay quashed and set aside the order of the CCI directing investigation (under Section 26(1) of the Competition Act) against Star India for abuse of dominance. Recently, the High Court of Delhi placed reliance on its own order in Ericsson v CCI and clarified that the Competition Act is in addition and not in derogation of other statues and, accordingly, the jurisdiction of the CCI to entertain complaints regarding abuse of dominance in respect of patent rights could not be excluded. It further clarified in the Monsanto case the scope of Section 3(5) of the Competition Act (imposition of reasonable restrictions to protect IP rights) to hold that only such agreements as are reasonable for protecting the concerned IP rights are provided the safe harbour under Section 3(5) of the Competition Act.

Private Antitrust Litigation

The competition regime in India has started to witness a new wave of compensation applications before the Appellate Tribunal. In the years 2019 and 2020, three compensation applications were filed before the Appellate Tribunal. In a recent development, the maintainability of a compensation application was challenged before the Appellate Tribunal (in FCI v Excel Crop Care Ltd. and Ors.) mainly on the ground that the relevant provision under the Competition Act (ie, Section 53N of the Competition Act) does not recognise compensation claims arising from the orders of the Supreme Court Regardless of whether a superior court affirms, modifies or overturns the decision of a court or tribunal under appeal, the order of a court or tribunal below cannot retain its independent existence after it merges into the order of superior court. Another challenge to maintainability included the contention that the Competition Act does not allow for a single compensation application to be filed against more than one enterprise because it uses the term "enterprise" and not "enterprises".

At this junction, it is pertinent to highlight that the right of an affected person to seek compensation remains intact despite the fact that the CCI, as a result of the COVID-19 situation, may have refrained from levying penalties on the parties found to be in contravention of the provisions of the Competition Act.

Regulatory and Policy

In order to avoid future conflicts with sectoral regulators and discourage forum shopping, the CCI, in November 2019 introduced an amendment to the CCI (General) Regulations, 2009 whereby, “an Informant at the time of filing information before the CCI is required to disclose details of pending litigation or disputes between the parties in respect of the subject matter of the information.” Furthermore, the amendment allows the CCI to disclose the identity of an informant seeking confidentiality, after giving it the opportunity of a hearing.

In February 2020, the CCI introduced another set of amendments mandating the DG’s investigation report “to contain his findings together with all the evidences or documents or statements or analyses collected during the investigation”.

The CCI, mindful of the COVID-19 pandemic, issued an advisory for businesses in April 2020 whereby businesses were cautioned not to take advantage of the pandemic to contravene any of the provisions of the Competition Act.

The Ministry of Corporate Affairs has also released the report of the Committee on Business Responsibility Reporting (BRR). In the report, the Committee recommended a new two-format reporting framework called the Business Responsibility and Sustainability Report (BRSR), which expects businesses to disclose their infringements of competition law including of Sections 3, 4 and 6 of the Competition Act. It will be interesting to note the reactions of stakeholders, to the BRSR.

Conclusion

Envisaging amendments to, and a makeover of, the existing Competition Act, the Ministry of Corporate Affairs introduced the Draft Bill. Some of the key proposals are set out below.

  • Governing body – an amendment to provide for a governing body, to strengthen the accountability of the CCI; the governing body will consist of a Chairperson, six full-time members, and six part-time members and will perform quasi-legislative functions, drive policy decisions, and perform a supervisory role.
  • Appellate authority – it is recommended that a dedicated bench should be created to hear appeals under the Competition Act.
  • Settlements and commitments – providing an option for settlements in cartel cases and commitments in all cases other than cartels.
  • Hub and spoke cartels – an amendment to include liability of hubs.
  • Penalties on individuals – an amendment to include personal income tax returns so that penalties can be imposed on officers of the company.

The trajectory of the Draft Bill (pre and post-adoption) will be constantly under study and examination by all stakeholders.

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Gaggar & Partners is a boutique law firm specialising in competition, commercial litigation, arbitration, general corporate, real estate advisory, defence, gaming, IPR and white-collar crime. With a growing team of 25 associates, two directors and seven partners, the firm has been involved in several leading cases across various judicial forums. The firm has been retained by the Competition Commission of India (CCI) to prosecute special cases and represent the Director General (DG) of the CCI in sensitive cases relating to the evolving jurisprudence on investigation. The firm has been a standard-bearer in cases relating to the leniency regime in India. Besides advising clients across sectors on various legal issues, the firm has been involved in the drafting of bills. Amongst the firm’s noteworthy clients are NTN Corporation, National Engineering Industries, Citibank, Denso Ten, Toyo Tire, and Haicheng Vivo Mobile (India). In addition, the firm has also advised and represented celebrity sportspersons such as Virender Sehwag.

Trends and Development

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IndusLaw is a full-service law firm with offices in Bengaluru, Delhi, Mumbai and Hyderabad. The competition law team has extensive experience in advising, assisting and representing clients on a range of competition law issues and is known for contesting the most complicated antitrust cases and shaping modern antitrust law. Apart from obtaining several landmark judgments, the firm is credited with obtaining judgment on imposition of penalty on the basis of "relevant turnover" from the Supreme Court of India. IndusLaw represents clients and argues matters before the Supreme Court of India, the National Company Law Appellate Tribunal (NCLAT), the Competition Commission of India (CCI) as well as various High Courts and is currently involved in matters testing the constitutional validity of several provisions of the Competition Act and procedural aspects of investigation (including right of defence). It is also defending the first fully fledged private damage or compensation claim before NCLAT, which is likely to settle jurisprudence with respect to private antitrust damages in India.

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