Cartels 2019

Last Updated July 11, 2019

India

Law and Practice

Authors



Trilegal has one of India’s largest competition law practices, comprising 23 dedicated competition lawyers with multi-jurisdictional experience. The team is based across India in Mumbai, Delhi and Bengaluru, and has strong domain expertise in successfully navigating the rapidly evolving competition law landscape in India. It works exclusively on a full spectrum of competition law matters, including enforcement (cartels and abuse of dominance), merger control and competition law audits and compliance. The team frequently represents clients on appeal at various fora, including the National Company Law Appellate Tribunal (NCLAT), High Courts in India and the Supreme Court. It has strong domain expertise across a range of industries, such as cement, auto parts, retail, financial services, telecommunications, e-commerce, automobiles, natural resources and alcoholic beverages. Marquee clients that have engaged the firm to advise on competition law, given its subject-matter expertise, include the USD41 billion Aditya Birla conglomerate, LafargeHolcim (the world’s largest cement manufacturer), Schneider, Temasek, the Port of Singapore Authority, Mitsubishi and GIC.

Cartel behaviour/effects in India is/are regulated under the Competition Act, 2002 (the Competition Act). Section 3 of the Competition Act prohibits anti-competitive agreements that cause or are likely to cause an appreciable adverse effect on competition (AAEC) in India. As set out in Section 3(3) of the Act, horizontal agreements that (i) directly or indirectly determine purchase or sale prices, (ii) limit or control output, technical development, services, etc, (iii) share or divide markets and (iv) result in bid-rigging or collusive bidding are presumed to cause an AAEC. Essentially, any agreement between competitors that involves (i) price-fixing, (ii) market or customer allocation, (iii) creating artificial scarcity by limiting production or supply, or (iv) bid-rigging, is tantamount to a cartel.

Under Section 3(3) of the Competition Act, there exists a rebuttable presumption of AAEC for where the burden of proof lies with the defendant enterprise to rebut the presumption of AAEC by producing evidence and arguments in its favour.

The Supreme Court of India (the Supreme Court) recently set aside the Competition Commission of India's (CCI’s) order in a bid-rigging case on the ground that the enterprises alleged to have cartelised were able to rebut the presumption of AAEC successfully (Rajasthan Cylinders and Containers Ltd v Union of India, 2018 SCC OnLine SC 1718).

Under the Competition Act, the CCI is the competition regulator tasked with the implementation of the Competition Act. Section 18 of the Competition Act specifies the duties of the CCI, which include:

  • elimination of practices having an adverse effect on competition;
  • promoting and sustaining competition;
  • protecting the interests of consumers; and
  • ensuring freedom of trade carried on by other participants.

The provisions of the Competition Act relating to anti-competitive agreements under Section 3 of the Competition Act were notified with effect from 20 May 2009.

Further, the Office of the Director General, Competition Commission of India (DG) acts as the independent investigative arm of the CCI and investigates any contravention of the provisions of the Competition Act.

The CCI has the power to initiate investigation into an alleged cartel (i) suo moto, (ii) based on reference from other governmental (both central or state) and statutory authorities and (iii) based on any information filed by any person/enterprise by passing a prima facie order.

Once the CCI passes the prima facie order, the DG is directed to carry out a complete investigation and submit its report to the CCI within 60 days. The CCI also has the power to direct the DG to conduct a further investigation if it is of the opinion that such additional investigation is required. Interestingly, as clarified by the Delhi High Court, the CCI also has the power to review/recall its prima facie order, directing an investigation to the DG (Google Inc v Competition Commission of India, 2015 SCC OnLine Del 8992).

Under the Competition Act, the orders of the CCI can be appealed before the National Company Law Appellate Tribunal (NCLAT) within 60 days of the receipt of the CCI Order (the successor of the erstwhile Competition Appellate Tribunal (COMPAT)). Further, the Competition Act also provides for an appeal of the orders passed by the NCLAT before the Supreme Court.

Additionally, the enterprises/persons also have the option of availing the writ jurisdiction of the respective High Courts in situations where the orders passed by the CCI are against and in contravention of the fundamental rights provided by the Constitution of India or against the principles of natural justice.

Violation of the Competition Act is a civil liability offence and the standard of proof is 'preponderance of probabilities'.

Under the Competition Act, the CCI has the power to initiate an inquiry on the basis of the following:

  • any information being filed by any person, consumer or their association or trade association;
  • a reference made to the CCI by the central government, state government or any statutory authority; or
  • suo motu.

However, the CCI has clarified that its orders are in rem and not in personam, which essentially means that a private claim cannot be enforced before the CCI under the Competition Act.

Notably, under the Competition Act, a private compensation claim can be filed with the NCLAT by any enterprise, person, association of persons and statutory or constitutional authority seeking compensation once the CCI has made its final finding on cartelisation. The Supreme Court has clarified that such damages/private compensation can only be heard after the final determination of the alleged violation by the Supreme Court.

Section 2 (c) of the Competition Act defines cartel conduct as an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or trade in, goods or provision of services. Further, the conduct is defined by statute under Section 3 of the Competition Act.

Section 3 of the Competition Act prohibits anti-competitive agreements that cause or are likely to cause appreciable AAEC in India. As set out in Section 3(3) of the Act, horizontal agreements that (i) directly or indirectly determine purchase or sale prices, (ii) limit or control output, technical development, services, etc, (iii) share or divide markets and (iv) result in bid-rigging or collusive bidding are presumed to cause an AAEC. Essentially, any agreement between competitors that involves (i) price-fixing, (ii) market or customer allocation, (iii) creating artificial scarcity by limiting production or supply, or (iv) bid-rigging is tantamount to a cartel.

Under Section 3(3) of the Competition Act, there exists a rebuttable presumption of AAEC for where the burden of proof lies with the defendant enterprise to rebut the presumption of AAEC by producing evidence and arguments in its favour.

The Competition Act also clarifies that the provisions of Section 3(3) (ie, horizontal agreements) shall not be applicable to efficiency-enhancing joint ventures that increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision.

Additionally, Section 3(5) of the Competition Act also exempts the right of any person to enforce its rights of IP conferred upon it under the respective statutes in India; ie, Copyright Act, 1957; Patents Act, 1970; Trade and Merchandise Marks Act, 1958 or Trademarks Act, 1999; Geographical Indications of Goods (Registration and Protection) Act, 1999; Designs Act, 2000; and Semi-conductor Integrated Circuits Layout-Design Act, 2000.

The Competition Act does not provide for any limitation periods to apply and restrict the CCI from passing prima facie orders and initiating investigations by the DG in respect of alleged cartelisation.

However, since Section 3(3) of the Competition Act that prohibits horizontal anti-competitive agreements came into force only on 20 May 2009, the CCI only has jurisdiction over agreements that came into being after 20 May 2009. However, for cartel agreements existing before 20 May 2009, continuing to have effect after 20 May 2009, the courts have clarified that the CCI will have jurisdiction given the continuing nature of the office.

Additionally, the Competition Act provides a 60-day limitation period from the date of receipt of the final order of the CCI or the NCLAT to file the appeal before the NCLAT or the Supreme Court respectively.

The Competition Act empowers the CCI to exercise jurisdiction on all horizontal anti-competitive agreements that have or are likely to have AAEC in India.

Under Section 32 of the Competition Act, the CCI has been given the power to examine anti-competitive agreements that are entered into outside India, or a party to such an agreement is outside India, but which agreement(s) has or is likely to have an AAEC in India.

The duties of the CCI, enshrined in Section 18 of the Competition Act, authorise the CCI to enter into any memorandum or arrangement, with the prior approval of the central government, with any agency of any foreign country.

The CCI has signed memoranda of understanding with the competition authorities of Australia, Canada, China, the EC, the USA and Russia. Additionally, a joint memorandum of understanding has also been signed by the CCI and the competition authorities of Brazil, China, South Africa and Russia.

The Competition Act allows any enterprise, person, statutory or governmental bodies to file any information before the CCI alleging a contravention of the provision of the Competition Act. In practice, the CCI, after receiving the information, conducts a preliminary conference with the informant and in limited instances even invites the opposite parties (against whom the allegations are made) to attend such preliminary conference proceedings. However, the CCI is not mandated by the Competition Act to conduct a preliminary conference and there is no statutory right for the opposite party to be heard at this stage. The Hon’ble Supreme Court has confirmed that there is no right to be heard during the stage at which the CCI forms a prima facie opinion (Competition Commission of India v Steel Authority of India and Anr, (2010) 10 SCC 744).

After the preliminary conference (if there is any), the CCI passes its prima facie order dismissing the case if it is of the prima facie view that there is not contravention of the Competition Act or directs the DG to initiate an investigation if it is of the prima facie view that there is a potential contravention of the Competition Act.

The Competition Act empowers the DG (the investigative arm of the CCI) to conduct a surprise search and seizure operation, otherwise referred to as a 'dawn raid'. Under the Competition Act, the DG would require an authorisation by the Chief Metropolitan Magistrate prior to conducting such a dawn raid.

To date, the DG has conducted four dawn raids in India in relation to anti-competitive agreements and abuse of dominance. Interestingly, the first dawn raid conducted by the DG in India, which was conducted at the offices of JCB (and challenged in the Delhi High Court), was in relation to an abuse of dominance investigation. However, recently the Supreme Court in its order clarified that the injunction granted by the Delhi High Court in relation to the JCB dawn raid was unwarranted and vacated the injunction. Apart from the JCB dawn raid, the other three dawn raids have been conducted across India – Mumbai, Gujarat and Bangalore – were in relation to alleged cartels.

Under the provisions of the Competition Act, the DG has substantial powers while conducting a dawn raid to search and seize documents, electronic evidence and information present in the office premises. Further, the enterprise and its personnel are mandated to co-operate with the DG and not hamper the process of the dawn raid. After the dawn raid, the DG is mandated to provide a complete list of information/documents seized from the office premises of the enterprise for its records. Additionally, the DG can also depose the officials of the enterprise and record their statements. Enterprises that are raided have the ability to request the presence of legal counsel.

The preliminary and statutory restriction on dawn raids emanates from the Competition Act itself, which requires that the DG, to conduct a dawn raid, must obtain an order of search and seizure from the Chief Metropolitan Magistrate.

Once the DG has the requisite authorisation from the Chief Metropolitan Magistrate, there is no restriction on the DG raiding all offices of the enterprise, vehicles belonging to the enterprise and homes of personnel if the search warrant provides the requisite authority. Further, the DG during the course of the dawn raid can seize documents, phones, laptops, etc.

The Competition Act has specific provisions that deal with any non-compliance or omission, or wilful suppression of information and imposes a penalty on persons that fall within the scope of such provisions. Under Section 45 of the Competition Act, a person who is found to be suppressing, destroying or omitting to provide information, or provides false information is liable to a maximum penalty of INR10 million.

There is a general obligation on enterprises and individuals to co-operate during a raid and not destroy evidence.

Under the Competition Act, the DG is mandated to obtain an order of search and seizure to conduct a dawn raid from the Chief Metropolitan Magistrate. Further, the Competition Act grants the DG the power to examine any person on oath, as it has the same powers that are granted to the CCI under the Competition Act.

Any refusal to comply with the directions made by the DG, even during a dawn raid, shall attract the provision of non-compliance with the Competition Act and make the person liable for a maximum penalty of INR10 million.

During a dawn raid, if the DG exercises its power to depose an individual, the person has the right to request the presence of his or her legal counsel; however, the legal counsel is not allowed to interfere with the DG’s investigation process.

The enterprise whose premises are raided by the DG in furtherance of its investigation, after the completion of the dawn raid, has the right to obtain a written documentation of the dawn raid and the evidence seized thereof. The enterprise is given a detailed written record of the documents/evidence that are/is seized and reflects the other details of the dawn raid (ie, details of the DG officials, independent witnesses and duration of the raid).

The person whose statement is being recorded by the DG during a dawn raid has the right to ask for counsel to be present during such recording of statement. In India, only external legal counsels have privilege and not in-house counsel.

The Delhi High Court affirmed the right to be accompanied by an advocate before the DG in Competition Commission of India v Oriental Rubber (LPA No 607 of 2016).

However, the CCI by way of an amendment to the CCI (General) Regulations, 2009 (General Regulations) has introduced certain prerequisites for the advocate to be present during the recording of the statement by the DG, which include that this advocate shall make a written request and submit along with it a power of attorney to the DG before the commencement of the proceedings; the advocate shall not be allowed to sit in front of the person whose statement is being recorded by the DG and the advocate shall not confer and interact with his or her client during the recording of his or her statement. Notably, this amendment by the CCI was challenged before the Madras High Court and its operation has currently been stayed.

Typically, it is not mandated for individuals of an enterprise to engage separate counsels. However, where there is a conflict between the defence of the individuals and the enterprise, it is advisable to obtain separate legal counsel.

The first procedural step that a defence counsel is required to ensure is filing of an authorisation letter, or vakalatnama, with the CCI authorising the counsel to represent the enterprise/person before the CCI.

Once the counsel is authorised, the next step can be to conduct an inspection of the public non-confidential documents available with the CCI and requesting the certified copies of such documents that are essential for drafting and forming a complete defence.

Typically, the documents for which certified copies are requested are the information/complaint filed against the enterprise/person and the prima facie order passed by the CCI initiating an investigation by the DG into the matter.

The certified copies of the documents mentioned above provide a description of the conduct/activity that has been alleged to be anti-competitive by the informant/complainant and the basis on which the CCI has passed the prima facie order of investigation.

After obtaining the aforesaid documents, the defence counsel can start assessing the merits of the case and assessing the options available to the client.

The Competition Act provides the DG the power of a civil court; therefore, the DG has a wide ambit of powers in relation to discharging its functions under the Competition Act. Accordingly, the DG can undertake the following to obtain evidence/ testimony:

  • direct the parties to the investigation to appear before the DG for recording of statements;
  • issue a request for information (RFI) to the parties to the investigation or other third parties directing them to submit the information/documentation required within a stipulated time period and direct such information to be submitted by way of an affidavit; and
  • the DG can also requisition any public information/document from any public authority.

Particularly in cartel investigations, the CCI and the DG have often placed reliance on circumstantial evidence to support their findings of anti-competitive conduct by the enterprises/persons. The DG takes note of evidence such as fluctuations in the price of the allegedly cartelised products, any abnormal change in the financials of the enterprises during the alleged cartel period, etc.

Accordingly, the DG also has the option of calling upon experts from fields such as economics, commerce, accountancy and international trade to assist in the investigation.

Further, the DG also carries out economic analysis, including correlation analysis.

The Competition Act grants the CCI and the DG extraterritorial jurisdiction and allows it to carry out an investigation even though the enterprises/persons are located outside India, provided that the effect of the alleged cartel was in India and caused AAEC. Thus, the DG has the power to summon for information even if it is stored outside India or on the cloud.

Section 126 of the Indian Evidence Act prohibits advocates from disclosing communication with clients that has been received during the course of the advocates’ engagement with the client.

The provisions of attorney-client privilege do not apply to communications between in-house counsel of a company and the company itself.

Aside from the attorney-client privilege and the confidentiality granted under the Competition Act, there are no other privileges granted and recognised under the Competition Act.

The Constitution of India recognises the right against self-incrimination.

The Competition Act has separate penal provisions for non-compliance with an investigation undertaken by the DG.

Under the provisions of the Competition Act, the maximum penalty for non-compliance is up to INR100,000 for every day of non-compliance, with a maximum penalty of INR10 million.

The protection of confidential and proprietary information is provided under Section 57 of the Competition Act and provisions of the General Regulations. According to the provision of the Competition Act and the General Regulations, no information relating to an enterprise that is obtained by the CCI shall be disclosed without the written permission of such enterprise except for compliance with or for the purpose of the Competition Act or any other existing law in force.

The defence counsel can raise arguments to persuade the enforcement agency to forgo taking action against the alleged cartel activity, typically at all stages of the investigation.

The defence counsel can make such arguments requesting the CCI to forgo taking action initially at the stage of a preliminary conference (if any). This would be the first opportunity for the defence counsel to raise such arguments and convince the CCI to close the matter to avoid a prima facie order directing an investigation.

Thereafter, if the CCI passes a prima facie order directing an investigation, the defence counsel is free to raise such arguments before the DG during its investigation stage by way of its responses to the RFIs issued by the DG. However, the enterprises should also simultaneously keep providing information to the DG that is requested in the RFI to avoid any non-compliance proceedings.

Further, the defence counsel can also make these arguments before the CCI, once the DG submits its investigation report to the CCI.

The Competition Act provides for a leniency regime, which allows cartel participants to disclose the detail of the cartel before the CCI for a proportionate reduction on penalty leviable, as under the Act. The provisions of the Competition Act state that to avail the benefit of the leniency regime, the cartel participant has to make a full and true disclosure.

In addition to the Competition Act, the intricacies of the leniency regime in India are further substantiated through the CCI (Lesser Penalty) Regulations, 2011 (Lesser Penalty Regulations).

A leniency application under the Indian leniency regime can be filed by any enterprise that has been part of a cartel and even by an individual applicant who had been involved in the cartel on behalf of an enterprise.

In order to avail the benefit of the leniency regime, the applicant shall (i) cease to participate further in the cartel as soon as the leniency application is submitted to the CCI (unless directed otherwise by the CCI); (ii) provide vital disclosure regarding the cartel conduct; (iii) provide all relevant information/documents as required by the CCI; (iv) provide full co-operation to the CCI and the DG throughout the investigation proceedings; and (v) not conceal any information/document that establishes the cartel conduct.

Further, the CCI has final discretion over the quantum of the reduction in penalty that is granted to the applicant. The variables that the CCI shall consider when deciding on the reduction in penalty are as follows:

  • the sequence of availing leniency, if multiple applicants;
  • the stage of the proceedings at which the applicant comes before the CCI;
  • the evidence that the CCI already has in possession;
  • the quality of the information/evidence provided by the applicant; and
  • the facts and circumstances of the case.

Accordingly, the Lesser Penalty Regulations stipulate that:

  • the leniency applicant that files an application enabling the CCI to form a prima facie case by submitting evidence of a cartel and making vital disclosure may be eligible for up to a 100% reduction in penalty leviable;
  • thereafter, the second leniency applicant may also be eligible for up to a 50% reduction in the penalty leviable if the second applicant provides a significant value addition to the evidence/information already in possession of the CCI; and
  • leniency applicants after the second applicant may be eligible for up to a 30% reduction in the penalty leviable, provided that there is a value add that has been submitted by the third or the subsequent applicant.

Under the Competition Act, the applicant shall make a communication to the CCI (even through e-mail or fax) for providing such information pertaining to a cartel. Based on this marker application, the CCI then awards a market status to the applicant and communicates the same to the applicant, directing it to file a complete leniency application within 15 days of the communication by the CCI. However, in practice, the CCI does not disclose the priority status of the applicant until the final order is passed, to protect the identity of the leniency applicants.

The Competition Act provides the DG the power of a civil court; therefore, the DG has a wide ambit of powers in relation to discharging its functions under the Competition Act. Accordingly, the DG can undertake the following to obtain evidence/testimony: (i) direct the parties to the investigation to appear before the DG for recording of statements; and (ii) issue an RFI to the parties to the investigation or other third parties directing them to submit the information/documentation required within a stipulated time period and direct such information to be submitted by way of an affidavit.

The DG issues RFIs to companies/enterprises directing them to submit and provide documentary evidence. Similar to the RFIs issued to individuals, the RFIs issued to companies/enterprises also consist of fixed timelines in which the response has to be filed with the DG.

The process of requisitioning information from companies or individuals located outside India is similar to the process used by the DG to requisition information from companies/individuals located in India. Further, the authorised legal representative is also sent a copy, which is valid service.

The DG issues requests for information (RFI) to such companies/individuals and in practice may also email RFIs to such companies/individuals located outside India. If the DG directs the response to the RFI to be filed by way of an affidavit, such affidavit has to be apostilled/legalised before it is submitted to the DG.

The Competition Act states that the CCI can initiate proceedings based on references received from a central government, state government or statutory authority. Therefore, there is a possibility for other statutory authorities within India to make a reference to the CCI, to look into the alleged anti-competitive conduct.

In practice also, the CCI has taken up cases based on references received from other government departments/agencies, such as the Department of Sports, the Ministry of Youth Affairs & Sports, the Rail Coach Factory and the Central Bureau of Investigation.

The CCI has signed several memoranda of understanding (MoUs) with different enforcement agencies around the world. However, these MoUs do not ensure co-ordination between such enforcement agencies in respect of anti-competitive agreements and their enforcement. Specific waivers are often required from parties before any information exchange.

The Competition Act is a civil liability offence. There is no criminal liability under the Competition Act.

The CCI has the power to initiate investigation into an alleged cartel (i) suo moto, (ii) based on reference from other governmental (both central or state) and statutory authorities, and (iii) based on any information filed by any person/enterprise by passing a prima facie order. In practice, the CCI, after receiving the information, conducts a preliminary conference with the informant and in limited instances even invites the opposite parties (against whom the allegations are made) to attend such preliminary conference proceedings. However, the CCI is not mandated by the Competition Act to conduct a preliminary conference and there is no statutory right for the opposite party to be heard at this stage. The Hon’ble Supreme Court has confirmed that there is no right to be heard during the stage at which the CCI forms a prima facie opinion (Competition Commission of India v Steel Authority of India and Anr., (2010) 10 SCC 744).

Once the CCI passes the prima facie order, the DG is directed to carry out a complete investigation and submit its report to the CCI within 60 days. The CCI also has the power to direct the DG to conduct a further investigation if it is of the opinion that such additional investigation is required. Interestingly, as clarified by the Delhi High Court, the CCI also has the power to review/recall its prima facie order, directing an investigation to the DG (Google Inc v Competition Commission of India, 2015 SCC OnLine Del 8992).

The evidence is collected by the DG during its investigation and on the basis of such evidence collected, the DG prepares and submits the investigation report to the CCI.

Under the Competition Act, the orders of the CCI can be appealed before the NCLAT within 60 days of the receipt of the CCI Order (the successor of the erstwhile Competition Appellate Tribunal (COMPAT)). Further, the Competition Act also provides for an appeal of the orders passed by the NCLAT before the Supreme Court.

Additionally, the enterprises/persons also have the option of availing the writ jurisdiction of the respective High Courts in situations where the orders passed by the CCI are against and in contravention of the fundamental rights provided by the Constitution of India or against the principles of natural justice.

Violation of the Competition Act is a civil liability offence and the standard of proof is 'preponderance of probabilities'.

The defendants have the right to undertake inspections of the CCI files and accordingly seek certified copies of the documents inspected. Further, once the investigation report of the DG is submitted with the CCI by the DG, the CCI shares the complete investigation report with the supporting annexures with the defendants, directing them to file their comments/objections to the investigation report (if any). Further, the defendants have the right to seek cross-examination of the individuals who have been deposed by the DG and whose statements have been relied on in the investigation report.

Typically, the proceedings against all the cartel participants are tagged together in a single investigation/matter.

However, if the same cartel participants are also members of another cartel for a separate product/service, the CCI is likely to undertake separate proceedings for the separate product.

In leniency matters, where there is a confidentiality ring, the CCI conducts separate proceedings.

Cartel arrangements are held to be per se in violation of the Competition Act, which means that any agreement between the enterprises or persons operating at a horizontal level are presumed to have an AAEC in India.

However, such a presumption under the Competition Act is rebuttable, which has recently also been affirmed and clarified by the Supreme Court (Rajasthan Cylinders and Containers Ltd v Union of India, 2018 SCC OnLine SC 1718).

In the first instance where a horizontal anti-competitive agreement is presumed to have an AAEC in India, the onus to rebut the presumption is on the opposite parties and once the presumption is rebutted, the onus shifts to the CCI to prove that there is indeed an AAEC in India by way of such an agreement.

The DG is the investigative arm of the CCI, which is given the responsibility of undertaking investigation and collecting information (by summoning the opposite parties, recording statements, etc). Thereafter, the DG is directed to file its comprehensive investigation report to the CCI.

However, the CCI is not mandated to follow or abide by the conclusions of the DG in the investigation report submitted. The CCI only considers the investigation report of the DG and independently applies the law to the facts of the case.

The statutory appellate tribunal (ie, the NCLAT) recently clarified that the CCI should not merely rubber-stamp the DG’s investigation report and shall apply its own mind and make independent findings on appreciation of the facts and the application of law.

The Competition Act allows for references to be sent from other statutory, central or state government authorities to the CCI. Thus, in effect, the CCI can use information passed on by way of such references to carry out its own proceedings. Similarly, the CCI can also pass on information to other statutory authorities by making references to such statutory authorities.

Please note that the CCI does not typically consider information submitted by a leniency applicant in one case and use it in other proceedings. Additionally, as a practice, parties state while submitting leniency applications that the information being provided shall not be utilised in any other proceedings.

The Competition Act gives the power to the CCI to regulate its own procedure. Further, the CCI is given powers equivalent to a civil court in discharging its function under the Competition Act.

Section 36 of the Competition Act allows the CCI to appoint experts to provide assistance to the CCI for conducting its inquiry for the fields of economics, commerce, accountancy, international trade or from any other discipline.

The CCI can utilise this expertise of the experts for the purposes of its inquiry; ie, economic analysis of the evidence/information.

The Competition Act does not recognise any specific privileges.

Typically, all cases emanating out of the same cause of action/conduct are grouped together by the CCI as one proceeding with multiple opposite parties.

However, the CCI can undertake and run separate proceedings if the conduct or cause of action, even though the same, is from a different period. Particularly, in cases of bidding/tenders, the CCI can also run parallel proceedings for every tender separately.

The CCI has the power to impose penalties in the event of any contravention of the Competition Act. However, the investigative arm of the CCI (ie, the DG) is only given the task of undertaking an investigation and submitting its report based on such investigation, therefore it cannot directly impose any penalties on the opposite parties.

Further, the Competition Act also empowers the CCI to impose penalties even in cases on non-compliance and furnishing of incomplete or incorrect information.

There is currently no provision of a settlement under the Competition Act.

The Madras High Court in Tamil Nadu Film Exhibitors Association v CCI & Ors. had read the powers of the CCI to allow for a settlement/compromise between the parties under the power of the CCI to pass any other order as it may deem fit under Section 27 of the Competition Act.

In practice, the CCI has not recognised this and has not allowed for settlements/compromise between parties.

Liability under the Competition Act once fixed by the CCI (or the appellate authorities) may lead to debarment or disqualification from a governmental bidding process and there is no protection against such collateral effects under the provisions of the Competition Act.

Such disqualifications mostly take place in relation to bidding processes, where cartelisation is usually a condition of disqualification and a definitive finding by the CCI may result in disqualification.

Further, penalty under the Competition Act could potentially debar/disqualify a director from appointment/reappointment.

The Competition Act has no powers to impose criminal sanctions for anti-competitive agreements.

The Competition Act empowers the CCI to impose penalties for cartelisation. Under Section 27 of the Competition Act, the CCI can impose a penalty of up to 10% of the average turnover of the last three financial years.

Further, specifically in regard to cartels, the CCI has the power to impose a penalty equivalent to three times the profit earned by the enterprise for the period of the cartel or 10% of the turnover of the enterprise for the cartel period, whichever is higher.

The Competition Act only provides for maximum limits of the penalties and therefore gives the CCI wide discretion for deciding the actual quantum of the penalty to be levied. Additionally, there are also no specific penalty guidelines that govern such decision of the CCI.

Aside from the penalties the CCI can impose, as mentioned above, the CCI can also issue a cease-and-desist order directing that the anti-competitive agreement shall cease to operate, can order the modification of the clauses of the agreements and pass any other order that it deems fit.

The CCI has considered an effective compliance programme as a mitigating factor while deciding the penalty to be imposed on the opposite parties (see Fx Enterprise Solutions India Pvt. Ltd v Hyundai Motor India Ltd, Case No 36 of 2014).

The CCI cannot order a mandatory consumer redressal.

However, the Competition Act allows a private compensation claim to be filed with the NCLAT by any enterprise, person, association of persons and statutory or constitutional authority seeking compensation once the CCI has made its final finding on cartelisation. The Supreme Court has clarified that such damages/private compensation can only be heard after final determination of the alleged violation by the Supreme Court.

The decisions of the CCI can be appealed before the NCLAT (ie, the appellate tribunal that has replaced the erstwhile Competition Appellate Tribunal). The Competition Act allows for an appeal against the order of the CCI within 60 days of receipt of the Order. Interestingly, not all orders of the CCI are appealable; the Competition Act specifically lists the orders of the CCI that can be appealed before the NCLAT.

The NCLAT can remand the matter back to the CCI if it finds a procedural inconsistency with the manner in which the proceedings before the CCI were undertaken. Further, the NCLAT can also take a decision on the merits of the case and decide to allow or dismiss the appeal.

Further, the orders of the NCLAT are appealable before the Supreme Court (ie, the apex court in India). The Supreme Court does not delve into the facts and only decides on questions of law.

Under the Competition Act, a private compensation claim can be filed with the NCLAT by any enterprise, person, association of persons and statutory or constitutional authority seeking compensation once the CCI has made its final finding on cartelisation. The Supreme Court has clarified that such damages/private compensation can only be heard after final determination of the alleged violation by the Supreme Court.

In the event of numerous persons having the same interest suffering loss or damage emanating from the conduct in contravention of the Competition Act, one or more such persons, with the permission of the NCLAT, can file a compensation application for and on behalf of all such persons having the same interests.

Under the provision of the Competition Act, the loss or damage suffered by the applicant has to be shown before the NCLAT; as long as the applicants are able to show the actual loss/damage before the NCLAT, they can file such compensation application.

A private compensation claim can be filed with the NCLAT by any enterprise, person, association of persons and statutory or constitutional authority seeking compensation once the CCI has made its final finding on cartelisation. The Supreme Court has clarified that such damages/private compensation can only be heard after final determination of the alleged violation by the Supreme Court. Therefore, the NCLAT for the purposes of the compensation application shall only refer to the findings of the CCI and only decide the quantum of the compensation based on the loss/damage suffered.

Given the relatively new competition regime in India (almost a decade old), till now there have been no final orders by the COMPAT or the NCLAT pertaining to a compensation application.

Under the Bar Council of India Rules, an advocate in India cannot stipulate for a fee contingent on the results of litigation or agree to share such proceeds. The concept of champerty is not recognised under the Indian legal system.

The NCLAT and Supreme Court have the power to impose costs on the applicant if they find the compensation application to be frivolous and without any merit.

Under the provisions of the Competition Act, an appeal can be filed with the NCLAT against an order passed by the CCI, and before the Supreme Court against an order passed by the NCLAT.

Further, as clarified by the Delhi High Court, the CCI also has the power to review/recall its prima facie order, directing an investigation to the DG (Google Inc v Competition Commission of India, 2015 SCC OnLine Del 8992).

Most recently the Supreme Court has clarified that the presumption of AAEC in respect of an anti-competitive agreement is rebuttable and once the presumption is rebutted by the enterprise, the onus of proof is shifted to the CCI to prove that the anti-competitive agreement indeed has AAEC in India.

Further, the Ministry of Corporate Affairs has also formed the Competition Law Review Committee (CLRC) to review the Competition Act.

The published documentation of the CCI can be accessed from –

Trilegal

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+91 91671 27599

+91 22 4079 1098

Nishakaur.Uberoi@trilegal.com www.trilegal.com
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Law and Practice

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Trilegal has one of India’s largest competition law practices, comprising 23 dedicated competition lawyers with multi-jurisdictional experience. The team is based across India in Mumbai, Delhi and Bengaluru, and has strong domain expertise in successfully navigating the rapidly evolving competition law landscape in India. It works exclusively on a full spectrum of competition law matters, including enforcement (cartels and abuse of dominance), merger control and competition law audits and compliance. The team frequently represents clients on appeal at various fora, including the National Company Law Appellate Tribunal (NCLAT), High Courts in India and the Supreme Court. It has strong domain expertise across a range of industries, such as cement, auto parts, retail, financial services, telecommunications, e-commerce, automobiles, natural resources and alcoholic beverages. Marquee clients that have engaged the firm to advise on competition law, given its subject-matter expertise, include the USD41 billion Aditya Birla conglomerate, LafargeHolcim (the world’s largest cement manufacturer), Schneider, Temasek, the Port of Singapore Authority, Mitsubishi and GIC.

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