Over the course of the past year, in line with global antitrust sentiment, the Competition Commission of India (CCI), the Indian competition law regulator, has paid significant attention to digital markets.
The CCI held that, prima facie, WhatsApp is in a dominant position in the relevant market of "Over the Top Messaging Applications through Smartphone in India". Therefore, the CCI directed an investigation into the matter. This investigation order by the CCI was challenged by WhatsApp and Facebook before the Delhi High Court, in which the single judge held that there was no jurisdictional error. WhatsApp and Facebook have appealed the matter before the Division Bench of the Delhi High Court.
The Supreme Court of India, which is the apex court of the country, has provided clarity on the issue of locus standi in antitrust proceedings. In a landmark case of Samir Agarwal v Competition Commission of India, the Supreme Court of India settled the legal position surrounding locus standi of the informant in competition law cases. In its ruling, the Supreme Court overruled a decision of the National Company Law Appellate Tribunal (NCLAT) wherein it was held that "informant" under Section 19(1) of the Competition Act is essentially a person who has suffered an invasion on their legal right and thus they could be a customer or a beneficiary. The Supreme Court dismissed this view and observed that any "person" can provide information regarding anti-competitive and abusive practices to the CCI. Therefore, anyone can approach the CCI with information related to competition concerns in any market in India.
There have been several policy decisions in relation to competition law jurisprudence that may affect antitrust litigation.
The Competition (Amendment) Bill, 2020 (the “Amendment Bill”) is currently before the Parliament of India. The Amendment Bill seeks to implement a comprehensive review of Indian competition law, including the insertion of several new provisions that may impact antitrust litigation. For instance, the Amendment Bill proposes to introduce a mechanism by which a party under investigation would be able to offer a settlement or undertake voluntary commitments in relation to anti-competitive behaviour. Other proposed changes include the expansion of the scope of cartels to include "hub and spoke" cartels and vertical agreements to include those that are not entered into between persons who are not at different levels in the production chain. The Amendment Bill also proposes to empower the NCLAT to compound certain offences upon payment of a penalty.
Further, in light of the experience gained and difficulties faced in the enforcement of the present regime for granting confidential treatment of information and documents as provided in Regulation 35 of the Competition Commission of India (General) Regulations, 2009 (the "General Regulations"), the CCI has decided to review the extant confidentiality regime. A detailed draft proposes the setting up of a "Confidentiality Ring" to share confidential information between parties to a proceeding. A draft of the revised Regulation 35 of the General Regulations was put on the website of the CCI, and comments have been invited from the public.
The CCI has also issued a discussion paper on the interplay between blockchain technology and competition law, in April 2021, which gives a background on blockchain, and highlights how the blockchain technology works, its different types, and their unique characteristics. It also gives an overview of its applications and the possible regulatory and policy issues. The paper also discusses the interface between blockchain and competition law in India and concludes with some general guidance for blockchain stakeholders.
Section 53N of the Competition Act provides a right to file for compensation for any loss or damage shown to have been suffered on account of a contravention of the provisions of the Competition Act. The application can be filed by the central government, a state government, a local authority or any enterprise or person before the appropriate appellate tribunal; ie, the NCLAT. The NCLAT is the forum for appeals arising from orders of the CCI.
The NCLAT has the jurisdiction to adjudicate on claims for compensation that may arise from CCI findings of contraventions of the provisions of Chapter II of the Competition Act or of the orders of the NCLAT, in the event of an appeal before the NCLAT.
The NCLAT also rules in compensation claims arising from cases falling under Section 42A of the Competition Act (violation or delay in carrying out the orders or directions of the CCI) or Section 53Q (2) of the Competition Act (violation or delay in carrying out the orders or directions of the NCLAT). The proviso to Section 53N (3) of the Competition Act provides that the NCLAT may obtain the recommendations of the CCI before passing an order of compensation.
An application may be filed for compensation before the NCLAT only after the CCI, or the NCLAT in the case of an appeal, has determined that a violation of the provisions of the Competition Act has taken place, or if the provisions of Section 42A or of Section 53Q (2) of the Competition Act are relevant. Notably, in the case of an appeal from the NCLAT to the Supreme Court, such an application for compensation can only be adjudicated by the NCLAT after the Supreme Court has also held that there was a contravention.
Further, the inquiry to be conducted by the NCLAT shall only be for the purpose of determining the eligibility and amount of compensation due to a person applying for the same, and not for examining afresh the findings of the CCI or the NCLAT (or Supreme Court, as the case may be) on whether any violation of the Competition Act has taken place. As such, the NCLAT in the compensation proceedings is required only to adjudicate upon whether the applicant has suffered any loss or damage and the amount of such loss or damage.
Under the Competition Act, only follow-on claims are available; ie, claims for compensation can be filed before the NCLAT, subsequent to the infringement of competition laws being established by the CCI or the NCLAT (in cases where the initial order of the CCI is appealed). In this type of claim, the party seeking damages does not need to prove that there was an infringement of competition law but rather that the infringement (already established by the CCI/NCLAT) has caused loss or damage.
Standalone claims, in which the party seeking damages must first establish the breach of competition laws before showing that the infringement caused harm, are not available as private antitrust proceedings cannot be initiated under the Indian competition laws.
The CCI is a specialised expert body entrusted with the duty to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in markets in India.
The CCI has the responsibility to inquire into violations of the provisions of the Competition Act, including anti-competitive agreements (Section 3 of the Competition Act) and abuse of dominant position (Section 4 of the Competition Act). The CCI can initiate an inquiry on its own motion or on receipt of any information (complaint) from any person, consumer or trade association, or a reference made to it by the central government, a state government or a statutory authority.
The NCLAT is the appellate tribunal constituted under the Competition Act to adjudicate appeals against certain specified orders of the CCI. The orders of the NCLAT may be appealed before the Supreme Court of India.
Section 61 of the Competition Act provides that the CCI and the NCLAT have the exclusive jurisdiction to inquire and adjudicate on all matters arising out of the Competition Act. No civil court has the jurisdiction to entertain any suit or proceeding in respect of any matter that the CCI or the NCLAT is empowered under the Competition Act to determine.
It is also important to note that the NCLAT does not function as a specialised tribunal as it adjudicates appeals under various other statutes in addition to the Competition Act, including the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016. Previously, a specialised appellate tribunal – ie, the Competition Appellate Tribunal (COMPAT) – exercised appellate functions against orders passed by the CCI in relation to the provisions of the Competition Act. The COMPAT (unlike the existing NCLAT) only heard appeals stemming from the Competition Act. However, by way of an amendment in the Competition Act, incorporated through the Finance Act, 2017, COMPAT was dissolved and all the appellate functions under the Competition Act were conferred to the NCLAT.
As mentioned above, the CCI and the NCLAT have the exclusive jurisdiction to determine and adjudicate on all issues arising under the provisions of the Competition Act. They have pan-India jurisdiction, and there are no other authorities that are empowered to adjudicate competition law issues in India, including in relation to damages actions. No civil court has the jurisdiction to entertain any suit or proceeding in respect of any matter that the CCI and the NCLAT are empowered to decide under the Competition Act. Appeals emerging from the decisions of the NCLAT are filed in the Supreme Court of India.
In the case of compensation proceedings, the burden of proof is on the party that has filed the claim before the NCLAT to establish that it has suffered loss or damage as a result of any contravention of the provisions of the Competition Act committed by an enterprise. The Competition Act does not specify the standard of proof for compensation claims under Section 53N. However, considering that compensation proceedings are civil proceedings, the standard of proof required is the "balance of probability".
The NCLAT has admitted compensation claims but has not adjudicated on the same given the pendency of the appeal before Supreme Court. For example, in the cases of MCX Stock Exchange Ltd. & Ors. v National Stock Exchange of India (the "NSE Case"), the contravention of the provisions of the Competition Act was found by the CCI and the appellate tribunal but an appeal before the Supreme Court is still pending adjudication. Therefore, the compensation applications filed in the NSE Case have not been heard by the NCLAT.
To date, no order has been passed by the NCLAT awarding compensation for loss or damages suffered. Further, there are no express provisions in the Competition Act providing for the “pass-on” defence. Therefore, it is unclear whether it would be available to a defendant in a compensation proceeding.
Section 53N of the Competition Act does not specify whether compensation claims can be brought by indirect purchasers. Any person or enterprise that has suffered loss or damage can seek compensation under Section 53N of the Competition Act. Considering that no order has been passed by the NCLAT awarding compensation for loss or damages suffered yet, it is uncertain whether indirect purchasers can also seek compensation. Though the language of Section 53N of the Competition Act is broad enough to include direct and indirect purchasers, it will depend on the interpretation of the NCLAT. There has been no definite order from the NCLAT in this regard.
In India, it is difficult to lay out a timetable for any sort of litigation because of the uncertainties involved in the judicial process. Therefore, it is not possible to provide an accurate estimate of the typical duration of proceedings regarding claims for compensation. This difficulty is exacerbated by the fact that the NCLAT has also been entrusted with the duty to hear appeals arising under other statutes as well.
It is important to note that Section 53N of the Competition Act provides that a compensation application can be filed after an order of the CCI or the NCLAT in the case of an appeal against the order of the CCI. In cases where the order of a contravention by the NCLAT has been appealed before the Supreme Court of India, the Competition Act does not expressly provide that the compensation proceedings are to be stayed till the disposal of the appeal. However, based on the practice of the Supreme Court, it has been observed that compensation applications are suspended till the disposal of the appeals filed before it. This implies that the compensation proceedings are heard after the Supreme Court passes an order holding an enterprise in violation of the provisions of the Competition Act. The Competition Law Review Committee (CLRC), in its report, has recommended that Section 53N of the Competition Act should be amended to allow applications for compensation to be filed post determination of an appeal by the Supreme Court.
The Competition Act recognises that the conduct of enterprises may affect numerous parties for whom an individual claim may not be viable; accordingly, it provides for class action as a form of redress.
Section 53N (4) of the Competition Act provides that where any loss or damage is caused to numerous persons having the same interest, then one or more of these persons may, with the permission of the NCLAT, make an application for (and on behalf of, or for the benefit of) the interested persons. Further, the provisions of Rule 8 of Order 1 of the First Schedule to the Code of Civil Procedure, 1908 (CPC) will apply to this action. Rule 8 of Order 1 of the First Schedule to the CPC lays down the detailed procedure for the purpose of filing a "representative suit" in civil cases. The Supreme Court, in Chairman, Tamil Nadu Housing Board, Madras v T.N. Ganapathy, has noted that the prerequisite condition under Rule 8 of Order 1 of the First Schedule to the CPC is that persons in a class action must have common interest or common grievance.
A class action can be brought by one or more persons from among the numerous persons having the same interest, who have suffered loss or damage, subject to the permission of the NCLAT. In order to bring a class action under Section 53N of the Competition Act, the following conditions must be met:
If the person or persons permitted to file the compensation application by the NCLAT do not proceed with due diligence in the proceedings, the NCLAT may substitute in their place any other person having the same interest in the suit. The order passed by the NCLAT is binding on all persons on whose behalf, or for whose benefit, the compensation application was filed.
It is also important to note that there is no certification process provided under the Competition Act or the CPC.
There are no provisions in the Competition Act regarding the settlement of collective actions. In the case of any settlement, the NCLAT is required to issue notice to all the interested persons on whose behalf the compensation application was filed.
One of the key amendments to the Competition (Amendment) Bill, 2020 is the insertion of a “settlement” procedure, to be included as Sections 48A and 48B of the Competition Act. It is proposed that the concept of settlement should be added with respect to violations under Section 3(4) and Section 4 of the Competition Act. Therefore, settlement of collective actions might become a possibility when the Amendment Bill becomes law.
There are no provisions under the Competition Act for a strikeout or summary judgment once an investigation is under way. All orders, including those closing an investigation, have to be reasoned orders, wherein due process must be followed.
However, in order to initiate an investigation into any contravention of Section 3 (anti-competitive agreements) and Section 4 (abuse of dominance) of the Competition Act, the CCI is required to form a prima facie opinion and issue an order under Section 26(1) of the Competition Act directing such an investigation. At this stage, if the CCI is of the opinion that no prima facie case for investigation exists, it may summarily close the matter under Section 26(2) of the Competition Act.
As discussed above, the CCI and the NCLAT have the exclusive jurisdiction to entertain any suit or proceeding in respect of any matter arising under the Competition Act. Additionally, a writ petition can also be filed in the High Court if the parties are aggrieved by an order passed by the CCI.
The CCI also has extraterritorial jurisdiction over acts taking place outside India but having an effect on competition in India. Section 32 of the Competition Act provides that the CCI has the power to inquire into agreements, abuses of dominant market position or combinations, if those agreements or abuses of dominant position or combination abuses have, or are likely to have, an appreciable adverse effect on competition in the relevant market in India, irrespective of the following:
The Competition Act does not provide a limitation period for applications for compensation under Section 53N of the Competition Act. In cases where no limitation period has been prescribed under the statute, Indian courts generally adhere to the principle of the "doctrine of laches". This principle provides that proceedings ought to have been initiated within a reasonable period of time and that a failure to do so results in serious prejudice and harm to the defendant and adversely affects the ability of the defendant to defend itself.
The NCLAT, in Food Corporation of India v Excel Crop Care Limited & Ors., noted the application of the doctrine of laches with respect to Section 53N of the Competition Act, as no limitation period has been prescribed under the section. The CCI, in the case of Neha Gupta v Tata Motors Ltd. & Ors., observed that the Competition Act does not envisage or provide for any period of limitation because the inquiries conducted by the CCI are in rem in nature.
Any person who files a compensation application under Section 53N of the Competition Act before the NCLAT is required to establish that loss or damage has been suffered on account of a contravention of the provisions of Chapter II of the Competition Act or a violation or delay in carrying out an order of the CCI or the NCLAT. As such, the applicant will be required to produce evidence to establish its claim for compensation.
Under the Competition Act, there is no duty or obligation on the enterprise against which the compensation application has been filed to disclose or produce documents on which the applicant intends to rely. However, the applicant may file an application before the NCLAT seeking an order directing the defendant to disclose these documents.
The NCLAT has been given wide powers under the Competition Act in relation to its adjudicatory functions. Section 53O (2) of the Competition Act provides that it has, for the purposes of discharging its functions under the Competition Act, the same powers that are vested in a civil court under the CPC while trying a suit, namely:
In India, professional communications between attorneys and clients are protected as “privileged communications” under Sections 126 and 129 of the Indian Evidence Act, 1972 (the "Evidence Act"). Section 126 of the Evidence Act provides that an attorney is not permitted, unless with a client’s express consent, to:
It should be noted that legal privilege continues even after the professional employment of the attorney has ceased.
Section 129 of the Evidence Act provides that no one shall be compelled to disclose to the court any confidential communication that has taken place between them and their legal professional adviser, unless they offer themselves as a witness, in which case they may be compelled to disclose any communication the court considers necessary in order to explain any evidence that they have given, but nothing else.
In light of the above, the defendant in compensation proceedings before the NCLAT may be permitted to withhold documents from disclosure on the basis that they are legally privileged.
Under the Competition Act, there are no provisions that allow the CCI to enter into a settlement agreement with a party alleged to have contravened the provisions of the Competition Act. This implies that in every case in which the CCI directs an investigation, the investigation cannot be halted or set aside on the basis either of a settlement between the CCI and the enterprise being investigated or of a settlement between the enterprise being investigated and the party that filed the information (complaint) before the CCI. Once an investigation is directed, the Director General (DG) will be required to conduct an investigation, the report of the DG will be placed before the CCI and shared with the parties to the matter (parties will be permitted to file their response or objections to the DG’s report), oral hearings will be carried out before the CCI, and the CCI will be required to pass a final order setting aside the information or holding the enterprise being investigated in contravention of the provisions of the Competition Act.
However, as discussed in 3.3 Settlement, the proposed Amendment Bill provides for a settlement mechanism whereby an application can be submitted by the parties after the DG’s report but prior to a final order from the CCI. The CCI may, at its discretion, accept or reject applications, after taking into consideration the nature, gravity and impact of the contravention and in accordance with the regulations to be framed under the Competition Act. Such an order by the CCI allowing or rejecting the settlement application would not be appealable to an appellate court. Therefore, the concept of settlement would likely be enshrined into Indian competition law once the Amendment Bill is cleared by Parliament and receives the assent of the president of India.
Section 46 of the Competition Act gives the CCI the power to impose a lesser penalty as it may deem fit, if it is satisfied that any producer, seller, distributor, trader or service provider included in any cartel, alleged to have violated Section 3 of the Competition Act, has made a full and true disclosure in respect of the alleged violations and such disclosure was vital. There are certain exceptions to the power of the CCI to impose a lesser penalty. The CCI cannot impose a lesser penalty in cases where the disclosure was made after the report of the DG was received by the CCI. Further, the lesser penalty will only be provided to those enterprises that made full, true and vital disclosures.
The orders passed by the CCI in these cases of leniency are not privileged or protected from disclosure and are available in the public domain. As such, compensation proceedings may be initiated on the basis of the order passed by the CCI in such matters. It is pertinent to note that strict confidentiality is accorded to the identity of the lesser penalty applicant along with the evidence or information provided by that applicant under the CCI (Lesser Penalty) Regulation, 2009 (the "Leniency Regulations"). However, there are certain circumstances enlisted in the Leniency Regulations where disclosure of the applicant’s identity can be allowed.
There are no specific provisions under the Competition Act for the presentation or reliance upon witnesses or fact, including in compensation proceedings before the NCLAT. Any party claiming compensation or putting forward evidence of any contravention of Section 3 or Section 4 of the Competition Act before the NCLAT may produce witnesses of fact to establish its claim. In such scenarios, the right to cross-examination is likely to be granted to the party against which the claim has been filed as refusal to grant such a right may amount to a violation of the principles of natural justice. However, it is at the discretion of the NCLAT or the CCI to allow such cross-examinations.
The NCLAT, the CCI and the DG have been vested with the powers of a civil court, and thus can summon and enforce the attendance of any person and examine them under oath. They are bound by the principles of natural justice. The NCLAT also has the power to regulate its own procedure.
There are no specific provisions under the Competition Act pertaining to expert witnesses in any proceedings before the CCI or the NCLAT, including in compensation proceedings. Any party claiming before the NCLAT is required to establish that it has suffered loss or damage on account of the contravention of the competition laws. It is also required to establish the amount of loss suffered. The applicant may produce expert evidence – for example, an economist – to support its claim of compensation. Such expert witnesses are subject to cross-examination. The right to cross-examine is subject to the NCLAT's discretion.
The Competition Act does not provide for a specific criterion for the assessment of damages. Further, the term "compensation" has not been defined in the Competition Act. Considering that the applicant is required to show the loss or damage that has been suffered, it is likely that the NCLAT will interpret the word "compensation" in its most general sense, meaning something meant to make good any loss or damage shown to have been suffered.
The Competition Act does not provide the NCLAT with the power to award exemplary or punitive damages.
The Competition Act does not specifically provide for a "passing-on" defence. To date, no order has been passed by the NCLAT awarding compensation under Section 53N of the Competition Act. Given the lack of jurisprudence regarding damages in competition cases, it is uncertain whether the NCLAT and the Supreme Court of India will recognise the passing-on defence.
There is no provision for interest on compensation provided under the Competition Act. However, the awarding of interest as well as the duration over which that interest is to be calculated is subject to the discretion of the NCLAT.
The Competition Act does not provide for the joint and several liability of the enterprises that form part of a cartel. Under Section 53N of the Competition Act, a claim for compensation for any loss or damages must be filed against an enterprise shown to be in contravention of the provisions of Chapter II and where that contravention resulted in those losses or damages. Also, it should be noted that while imposing a penalty under Section 27 of the Competition Act, the CCI does not impose a joint and several liability but imposes an individual liability on the cartel members based on their respective turnovers or profits.
There are no provisions under the Competition Act that provide a right to a defendant to bring contribution proceedings against a third party.
Under Section 33 of the Competition Act, the CCI has the power to issue interim orders. An order of injunctive relief can be passed by the CCI if it is satisfied that an act in contravention of Section 3, 4 or 6 of the Competition Act has been committed and continues to be committed or that such an act is about to be committed. The CCI may temporarily restrain any party from carrying out such an act until the conclusion of its inquiry or until further orders, without giving notice to the party where it deems it necessary. Recently, while granting interim relief in Federation of Hotel & Restaurant Associations of India v Casa2 Stays and MakeMyTrip, the CCI noted that one of the primary reasons that weighs in the mind of the CCI while exercising its power under Section 33 of the Competition Act is not merely the harm caused to a party seeking a relief under the said provisions, but also the likely harm that has been caused, or can be caused, to competition in the market if the impugned act/conduct is not restrained at the interim stage pending an inquiry.
An application for injunctive relief can also be filed before the NCLAT. For the purpose of seeking interim relief before the CCI or the NCLAT, the applicant will be required to establish the following:
There is limited jurisprudence in India with respect to the furnishing of cross-undertakings. In Indian National Shipowners’ Association v Oil and Natural Gas Corporation Limited (ONGC), on an application under Section 33 of the Competition Act 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) of the Competition Act directing an investigation into the alleged abuse of a dominant position by ONGC. However, pursuant to receipt of the DG’s report, in the final order passed by the CCI under Section 26(6) of the Competition Act, the CCI held there to be no abuse of a dominant position by ONGC.
Section 61 of the Competition Act provides that the CCI and the NCLAT have the exclusive jurisdiction to entertain any suit or proceeding in respect of any matter that they are empowered by or under the Competition Act to determine. Further, any proceeding on any matter pertaining to the Competition Act cannot be adjudicated through alternative dispute resolution and the Competition Act does not provide or grant the NCLAT with the power to direct the parties to the compensation claim to use alternative dispute resolution.
In the matter of Union of India v Competition Commission of India, the petitioner (Union of India through the Chairman, Railway Board, Ministry of Railways) challenged the jurisdiction of the CCI to direct an investigation against it on the basis of information filed by a respondent with which it had an arbitration agreement. The Delhi High Court dismissed the petition filed by Union of India and held that the scope of the CCI’s proceedings, and the focus of its investigation and consideration, is very different from the scope of an inquiry before an arbitral tribunal. An arbitral tribunal may not go into aspects of abuse of dominant market position by one of the contracting parties and would have neither the mandate, nor the expertise, nor the wherewithal to conduct an investigation to come up with a report, which may be necessary to decide on these issues.
The Supreme Court of India, in the matter of Bar Council of India v A.K. Balaji and Ors., held that, in India, the funding of litigation by advocates on behalf of their clients is not permitted. However, there is no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.
The Competition Act does not provide for costs to be awarded in compensation proceedings under Section 53N of the Competition Act. Awarding of costs, if any, is subject to the discretion of the NCLAT.
Section 53B of the Competition Act provides that the central government, the state government, a local authority or enterprise, or any person aggrieved by any direction, decision or order referred to in Clause (a) of Section 53A of the Competition Act may appeal to the NCLAT. The NCLAT only has the jurisdiction to hear and adjudicate on appeals against orders that are specified under Section 53A of the Competition Act and not every order or direction passed by the CCI. For example, a prima facie order of the CCI passed under Section 26(1) of the Competition Act directing an investigation cannot be appealed.
The appeal before the NCLAT must be filed within 60 days from the date on which a copy of the direction or decision or order made by the CCI is received by the party. However, the NCLAT may entertain an appeal after the expiry of the 60-day period if it is satisfied that there is sufficient cause to do so.
Under Section 53T of the Competition Act, orders of the NCLAT may be appealed by any aggrieved party before the Supreme Court within 60 days from the date of communication of the decision or order of the NCLAT to the party.
The majority of 2020 throughout the world was spent coping with situations created by the COVID-19 pandemic. The much-coveted GDP growth rate of the Indian economy showed a southward movement; that is, from 4.04% in 2019–20 to -7.96% in 2020–21. One would like to associate the Competition Commission of India’s (CCI's) lack of imposition of monetary penalties in several cases during this period as being linked to the grim economic conditions. Rather than imposing severe penalties, the CCI passed cease-and-desist orders in several cartel cases.
Several news agencies reported that the pandemic was causing hurdles in, inter alia, the supply chain in respect of certain product groups – such as pharmaceuticals, medical devices and/or essential goods/services – which necessitated a certain degree of co-ordination between players in these markets.
In this regard, some foreign competition regulators issued exemption parameters to ensure a fair distribution of scarce products, the continuance of essential services, etc. There were no such reported/notified measures that the CCI undertook or exemptions granted in view of the pandemic. However, the CCI does not release prima facie orders in respect of cartel cases (on its website) until after the final decision, thereby making it difficult to gauge if any measures or exemptions were undertaken/granted by the CCI (including the initiation of fresh investigations).
The pandemic also resulted in most courts, including the constitutional courts (including the Supreme Court of India and various High Courts), in India transitioning to an online mode of hearing cases. Regular hearings of jurisprudential value in the antitrust sphere were deferred; therefore, the development of jurisprudence in this area has been relatively slow in the past year. The pandemic necessitated that hearings before the competition regulator – ie, the CCI – be conducted by way of videoconferencing. The CCI issued standard operating procedures for such hearings, which required strict adherence to the in-camera nature of proceedings. Soon thereafter, the office of the Director General, which initially seemed reluctant to record statements of the concerned parties by way of videoconferencing, also transitioned to conducting proceedings by way of videoconferencing.
As the Indian economy seeks to recover from the pandemic, the consumer digital economy, pegged at USD85–90 billion in 2020, is estimated to continually grow during this decade. It is only natural that the advent and growth of digital markets pose antitrust challenges. The decisions passed by the CCI in 2020 reflect its intention of closely regulating and investigating the conduct of technology companies in these markets.
The recent trends and developments are divided into three parts:
Trends and Developments in Procedural Matters
Credentials of the informant versus the "locus" of the informant
The decisional practice by the CCI was to keep the credentials of the informant as subservient to the allegations made in the information. In an earlier case in 2019 (In re Madhya Pradesh Chemists and Distributors Federation), the CCI held that the informant is a mere information provider and its credentials are insignificant. This was reaffirmed by the CCI in Matrix Info Systems Private Limited v Intel Corporation, wherein it was observed that the antecedents of the informant have no bearing on proceedings before the CCI owing to the in rem nature of such cases.
However, in May 2020, the National Company Law Appellate Tribunal’s (NCLAT's) decision in the Samir Agarwal case held that only a person who has suffered invasion of their legal rights as a consumer or beneficiary of healthy practices is permitted to approach the CCI. In an appeal against the decision, the Supreme Court of India held in December 2020 that the Competition Act empowers the CCI to act in rem, in the public interest, and therefore any person may approach the CCI.
Trends in the granting of interim relief
It is uncommon for the CCI to pass interim orders to restrain anti-competitive practices during the pendency of proceedings before it. The power to issue interim orders has been resorted to by the CCI in only a handful of cases. In 2010, the Supreme Court, in CCI v Steel Authority of India, stated that the power to issue interim orders must be exercised sparingly and under compelling and exceptional circumstances after recording reasons that must be of "higher degree" than required for the formation of prima facie opinion. The principles laid down by the Supreme Court were reiterated by the CCI in 2018 in Indian National Shipowners’ Association v Oil and Natural Gas Corporation Limited.
Continuing this trend, in March 2021, the CCI passed an interim order in the case of Federation of Hotel & Restaurant Associations of India (FHRAI) v MakeMyTrip India Pvt. Ltd. (MMT) & Others, wherein the CCI emphasised the principles laid down by the Supreme Court. In the case, it was alleged that a digital platform (ie, MakeMyTrip, which has been alleged to be a dominant entity in the market for online intermediation services for the booking of hotels) delisted certain hotel chains, such as Treebo and FabHotels, from its website in pursuance to an agreement with OYO Hotels. The CCI passed an interim order directing FabHotels and Treebo to be listed on MakeMyTrip’s online portal during the pendency of proceedings before the CCI. However, in June 2021, the Gujarat High Court set aside the CCI’s interim order on the ground that OYO was not given the opportunity of being heard by the CCI when the latter passed the interim order.
Notwithstanding the Gujarat High Court’s intervention, the antitrust jurisprudence in India reflects a consistent trend with respect to the adjudication of applications seeking the granting of interim orders: where the CCI first undertakes the assessment of likely harm that has been caused, or can be caused, to competition in the market if the impugned act/conduct is not restrained, and resorts to the granting of interim relief only in exceptional cases where there exists every likelihood of suffering irreparable damage, or a definite apprehension of causing an adverse effect on competition in the market.
The issue of cross-examination
Another procedural issue that parties have faced whilst dealing with the antitrust regulator relates to the granting of an opportunity of cross-examination. The cross-examination of witnesses, under the Competition Act, is still a matter of concern and litigation before the courts in India. The erstwhile Competition Appellate Tribunal (COMPAT and now the NCLAT) has, in several orders, categorically stated that cross-examination cannot be refused by the CCI and should be granted when sought by the parties. It was also held that the purpose of cross-examination is to bring out the truth. The understanding was affirmed by the High Court of Delhi in the case of Cadila Healthcare Ltd. & Ors v CCI. The Supreme Court of India, in CCI v Steel Authority of India [SAIL], has held that the CCI is bound by the orders of the appellate tribunal; ie, NCLAT/COMPAT.
In the recent past, the CCI has taken a stand by not granting such cross-examination by stating that all such statements will not be relied upon by the CCI during proceedings/hearings (even if the same were part of the investigation report prepared by the Director General). Furthermore, the CCI has suggested that the relevant portions, where the Director General has relied upon the statements of witnesses (of whom the cross-examination has been sought), will be expunged from the investigation report. This, however, means that in many cases the opposite parties will not be able bring out the truth and showcase the nature of witnesses so examined and the evidence so collected by the Director General. Also, it raises questions as to the effectiveness of the investigation by the Director General, when the witnesses as examined and relied upon by the Director General are not taken into consideration by the CCI and such statements expunged from the investigation report.
Developments in Substantive Antitrust Law
Emerging trends in the area of data privacy vis-à-vis antitrust law
There are several cases alleging "dominant" enterprises’ control over sensitive data belonging to consumers that is capable of granting them an edge over their competitors whilst giving rise to privacy issues, including the case against WhatsApp in 2017, wherein it was alleged that WhatsApp was compelling its users to share data with Facebook. The CCI dismissed the information received then on the ground that consumers could "opt out" of sharing information with Facebook. The CCI was also of the view that data privacy concerns that relate to breach of the Information Technology Act, 2000 are beyond the sphere of the CCI.
The difference in the CCI’s approach adopted in March 2021 could arguably be traced to the "Market Study on E-Commerce in India" conducted by the CCI in January 2020, which observed that enterprises should set out a clear and transparent policy on data that is collected on the platform, the use of such data by the platform, and the potential and actual sharing of such data with third parties or related entities. This was followed by the "Market Study on the Telecom Sector in India" in January 2021, in which the CCI observed that an abuse of dominance can result in a reduction of privacy protection and, therefore, falls within the ambit of antitrust law.
Judicial boundaries and overlap: the CCI and sectoral regulators
The issues pertaining to jurisdictional overlap with "sectoral regulators" were once again brought to the fore in cases relating to entities that are regulated by the Securities and Exchange Board of India (SEBI).
In 2020, the CCI proceeded with respect to alleged collusive bid rigging, notwithstanding the fact that the sectoral regulator – ie, SEBI – categorically objected to the CCI exercising jurisdiction. SEBI, by way of its comment, appointed itself as the appropriate regulatory authority to examine the allegations in respect of credit rating agencies and take the appropriate action, if any, required, even in cases of unfair competition (In Re: Brickwork Ratings India Pvt. Ltd. and CRISIL Ltd. and Others, December 2020).
Subsequently, in June 2021, in a case alleging abuse of dominance in respect of the National Stock Exchange (NSE) of India, which is also regulated by SEBI, the CCI proceeded with the matter even though the appeal was pending before the Securities Appellate Tribunal (SEBI’s appellate authority).
Therefore, in light of these recent decisions, including in the NSE case, the trend seems to be moving towards the CCI performing its adjudicatory and inquisitorial functions from the competition perspective, albeit only upon meeting the threshold that the facts and issues involved require it to proceed with the investigations.
Trends in digital markets and "big tech"
The digital markets industry witnessed important developments during the past year. In September 2020, the CCI dismissed allegations against "big tech" giant Amazon for allegations pertaining to fashion merchandise in respect of vertical agreements and abuse of dominant position. However, Amazon’s dominance could not be established due to the presence of other players in the market. Furthermore, the CCI observed that the market relating to the sale of fashion merchandise is replete with a number of vertical, fashion-only platforms that provide significant avenues for fashion brands and retailers to place their offerings before online consumers, and therefore it is unlikely that the alleged conduct of granting benefits to preferred sellers would have any appreciable adverse effect on competition.
The decision in this case is in contrast to the previous decision by the CCI pertaining to allegations of preferential treatment, deep discounting, exclusivity, etc, against Flipkart/Amazon in a complaint relating to smartphones whereby the CCI observed in January 2020 that the allegations were prima facie made out. The CCI observed that the aforementioned two cases were different as the sale of smartphones through online marketplace platforms was considerably higher as compared to fashion merchandise. Likewise, the CCI also noted that fashion products in India are different, with fashion merchandise being more diverse and dispersed.
The order passed by the CCI directing an investigation into the conduct of Amazon and Flipkart in respect of smartphones was challenged by the e-commerce entities before the High Court of Karnataka (at Bengaluru), which, in July 2021, refused to interfere with the prima facie assessment of the Commission on the ground, inter alia, that the Court cannot substitute the views of the adjudicatory body (the CCI) with its own views.
Therefore, in the case of e-commerce entities facing similar allegations in respect of two classes of productions, the CCI weighed the conduct of the opposite parties with respect to a specific class of products against the requirement of minimum threshold of evidence before forming a prima facie opinion as to whether deeper investigation ought to be conducted.
In another case in the digital market space, the complaint was filed against Google Pay for abuse of dominant position in, inter alia, the market for apps facilitating payment through Unified Payments Interface. The CCI segregated allegations in respect of which evidence was adduced and those in respect of which no evidence or insufficient evidence was presented, whilst directing investigations only in respect of allegations that were supported by evidence. This is particularly interesting since the trend that emerges from the judgments of the High Courts in recent years in respect of the powers of the investigation wing of the CCI (ie, the Director General's office) seems to be moving towards permitting the Director General to investigate new facts that are revealed while the investigation is carried out and therefore the Director General may not be entirely constrained by the prima facie opinion formed by the CCI.
However, in SAIL, the Supreme Court of India stated in no uncertain terms that the CCI is bound to form a prima facie opinion in the matter before sending it to the Director General for investigation. Furthermore, the provisions under the Competition Act categorically state that the Director General shall act in accordance with the directions of the CCI. In the case of Hyundai Motors, the High Court of Madras also stated that once the prima facie opinion against a party has been formed by the CCI and/or the CCI directs an investigation against an opposite party, the Director General is empowered to investigate such named opposite party. In other words, if a party has not been identified or named by the CCI for investigation purposes, such party(ies) cannot be investigated by the Director General on a suo moto basis. Both the Supreme Court of India and other High Courts have also stated that the Director General lacks the suo moto power of investigation. Therefore, the recent trend of the Director General investigating a party not named in the prima facie order requires greater scrutiny by the NCLAT and/or other superior courts. The issue is also pending adjudication before the Supreme Court of India in the case of Cadila Healthcare Ltd.
The pandemic also led to new opportunities in the digital market of videoconferencing services, in which a complaint was filed in respect of Google’s integration of its videoconferencing app (Google Meet) within its email services (Gmail), which was alleged to amount to an abuse of dominant position in so far as Google was using its dominant position in email services to enter into the market for videoconferencing services. However, in January 2021, the allegations were dismissed by the CCI on the ground that there was no compulsion on consumers of Gmail to use Google Meet.
Another development in the digital markets involving a big tech company was in the market for a licensable smart television operating system where the CCI prima facie found substance in the allegations that Google, inter alia, bundles its Play Store with its licensable operating system (Android TV) and does not allow the installation of any third-party app stores on its Android TV operating system. This case is significant as the CCI ordered investigations in respect of vertical agreements and does not want to confine itself to inquiring into alleged "abuse of dominance" by big tech companies but has provided the leeway to expand the scope of investigations to ascertain the role of other parties entering into vertical agreements with tech giants.
The emerging trend in respect of cases alleging abuse of dominant position in light of the recent decisional practice in digital markets is to prima facie analyse the conduct of big tech companies vis-à-vis (a reduction in) consumer choices. A mandatory imposition of conditions that limit consumer choices would lead to the raising of barriers to entry, especially against the backdrop of network effects necessitating a deeper investigation. This was also evident from the CCI’s approach in the WhatsApp case, in which the "take it or leave it" contract proposed by WhatsApp was held to be prima facie in contravention of antitrust rules, as well as the Google Meet case.
Other orders of the competition regulator
The airline pricing industry also saw decisions from the competition regulator wherein the allegation related to "collusive price-fixation". The CCI noted in its decision in Shika Roy v Jet Airways and Ors that with the use of algorithms, there exists a high possibility of collusion with or without the need of human intervention or co-ordination between competitors. However, since no evidence of collusion was found, the matter was closed forthwith. On the issue of use of algorithms, the CCI’s approach was consistent with its earlier decision in February 2021 wherein it had observed that although demand fluctuations can be fed into algorithms, they cannot be modified to capture unforeseen events such as cyclones and Indian Premier League cricket matches that also have a significant bearing on price fluctuations. Thus, the CCI did not find any algorithmic collusion as human personnel played a key role in the determination of airfares, whereas software was merely used to facilitate their decision-making.
The real estate industry has the largest number of complaints in so far as the competition regulator is concerned. However, the emerging trend shows that most of these complaints are dismissed as the real estate sector is, by and large, fragmented and neither complainants nor the CCI could establish the "dominance" of real estate enterprises. The power to impose penalties has been seldom used in respect of real estate developers.
In August 2020, a complaint against a real estate developer (Ashiana Housing) was dismissed after the CCI observed that the developer does not enjoy a position of dominance in the relevant market. Even though the trend of dismissing complaints due to the lack of "dominance" of real estate developers continued, a significant feature that emerged from this case is the delineation of a new type of "relevant product" in the real estate sector; ie, "retirement homes in the form of residential flats". Although, in earlier cases, the CCI had delineated the relevant market in respect of various products – such as low-cost residential flats and residential apartments – a new relevant product emerged in respect of "retirement homes", which has narrowed the relevant market in the real estate sector.
Policy-Related Developments and Legislative Amendments
Proposed changes to the confidentiality regime
The antitrust regulator in India has recognised the need to strike a balance between the rights of the parties to adequately defend their stance by making all adverse information available to them and preventing any injury that may be caused to a party by the disclosure of commercially sensitive information. However, the CCI reported that the prevailing practice of adjudicating, on a case-by-case basis, the claim of confidentiality over any information and the rights of the parties to have full access to unredacted information so as to effectively defend themselves were proving to be highly onerous and unsatisfactory not only for the parties but also for the regulator, resulting in litigation and delays in concluding the inquiry.
In 2021, the Supreme Court of India, in the case of Forech Ltd v CCI, dismissed the CCI’s appeal against the order of the High Court of Delhi. The Supreme Court of India upheld the order of the High Court of Delhi, which directed the CCI to provide all non-confidential documents, evidence and submissions filed by any party, including the leniency applicant in the matter, after redacting the confidential portions and the order of the Director General/the CCI granting confidentiality of such documents. The Court observed that the Competition Act does not debar the CCI from providing the non-confidential data, information and statements to the opposite parties and the same that enable the opposite party to defend the case and answer the questions raised by the Director General. This may not create a precedent, but it is likely to guide the parties/the CCI and the Director General on the issue of access to information, data and statements, along with rights of defence and confidentiality.
The Supreme Court of India’s order in Forech Ltd., CCI in April 2021 sought to review the extant confidentiality regime in light of experience gained over the past decade and invited public comments on the proposed confidentiality rules. Some of the most prominent features of the proposed rules were the formal introduction of the concept of confidentiality rings and the granting of confidentiality on the basis of self-certification.
However, the proposed rules were conspicuously silent on whether a party to the proceedings before the CCI, whose information is sought to be disclosed, can oppose or object to the setting up of a confidentiality ring. Likewise, the proposed rules neither provided for the manner and constitution of confidentiality rings nor for the eligibility and resignation of members thereof. The absence of specific provisions relating to these crucial aspects will foster uncertainty, which is never a desirable characteristic in any legal regime. However, it remains to be seen when, and in what form, the proposed rules will be enforced by the CCI.
The quorum of the CCI
The CCI amended the existing regulations by introducing the Competition Commission of India (Meeting for Transaction of Business) Amendment Regulations, 2021, which state that the hearings and quorum of the CCI would remain constant and such quorum alone would continue to hear and participate in all subsequent proceedings on all hearing dates and would write the final orders. If it becomes impossible to continue the hearings with the same quorum, the matter will be heard afresh with a new quorum. This rule was introduced in pursuance to the principles of natural justice, which require that the one who hears must decide. In 2019, the High Court of Delhi, in a batch of petitions filed by car manufacturers, had held that when the final hearing commences, the same members ought to be present at all hearings of that matter and the same members ought to author the final order(s).
Market studies and discussion papers by the CCI
In 2020, the CCI released reports and discussion papers to provide an overview of antitrust issues in different sectors. The "Market Study on E-commerce in India: Key Findings and Observations" urged e-commerce platforms to put in place transparency measures in search rankings, the collection and use of data, rating mechanisms and discount policies.
The CCI also released its "Market Study on the Telecom Sector in India: Key Findings and Observations" in January 2021, which sought to trace the recent evolution of the industry, analysing threats and challenges to competition, identifying strengths and opportunities in the wake of technological innovations, and recommending measures that will secure the growth of a dynamic telecoms industry.
Furthermore, the "Discussion paper on blockchain technology and competition" released by the CCI in April 2021 recognised that relatively newer technologies such as blockchain can pose antitrust concerns whilst seeking to engage with stakeholders in this sector. According to the paper, awareness about competition issues that may emerge in the case of blockchains may help in the development and use of blockchain applications in line with the principles of competition law. The underlying endeavour of this paper was to engage with blockchain stakeholders at an early stage while the technology is being developed, to ensure that stakeholders are aware about the likely competition law concerns that may arise.
The CCI had also launched a market study in the pharmaceutical sector in October 2020 to identify and address anti-competitive practices, for which the consultation process began with various stakeholders in February 2021.
Co-operation with other foreign jurisdictions
Agreements and developing an understanding between different competition regulators are important for knowledge sharing and the enforcement of antitrust laws. Section 18 of the Competition Act permits the CCI to enter into any memorandum or arrangement with any agency of any foreign country for the purpose of discharging its duties or performing its functions under the Competition Act.
In pursuance thereto, this year, the Union Cabinet, which is chaired by the prime minister of India, approved a memorandum of understanding between the CCI and the Administrative Council for Economic Defence of Brazil.
Likewise, the CCI entered into a memorandum on co-operation with the Japan Fair Trade Commission, which recognises the benefit of co-operation and communication in the field of effective enforcement of competition laws and provides for the exchange of information, technical co-operation and the co-ordination of enforcement activities.
In 2020, the Indian antitrust jurisprudence witnessed some new trends on one hand, whilst the CCI and appellate bodies re-emphasised the principles laid down in earlier cases on the other. It is equally true that the Indian antirust sphere saw a lot of litigation in 2020 in the area of digital markets and platforms, wherein the CCI has sought to intervene and investigate the conduct of technology companies, which is evident from its decisions, wherein prima facie orders directing that investigation be conducted were passed.
It is interesting to note that the finance minister of India, whilst speaking at the tenth anniversary celebrations of the CCI in 2019, noted that the CCI should safeguard Indian enterprises from abuse by overseas entities. At that time, the CCI had opened investigations against technology companies in digital markets. In 2020, some well-known technology companies against which the CCI passed prima facie orders to the effect that investigations be undertaken challenged those orders before the high courts.
However, these companies were not able to convince the High Courts to grant adequate reliefs and the courts did not interfere with the prima facie orders passed by the CCI. During the pendency of litigation before the High Court, against e-commerce giants Amazon and Flipkart, the Indian minister of commerce insisted that instead of "forum shopping", these companies should let the CCI investigate, adding that "their reluctance showed they weren't doing it right".
Investigations against large/monopolistic/dominant entities in the digital space are on the increase across the world and the CCI has taken adequate steps to ensure that the level playing field in the digital market is not disrupted by the conduct of certain entities.