Debate over CCI closing cases after probe wing finds breaches

Written by Ashish Sinha | New Delhi | Updated: Jan 31 2013, 09:17am hrs
Experts have batted for relief for companies that have virtually lost the right to appeal in several cases where the Competition Commission of India (CCI) has overruled the report filed by its investigation arm, which found the firms violating the Competition Act. Terming it as a lacunae in the existing Competition Act, legal experts said the government and the CCI should look at providing retrospective relief in cases that have already been affected as the proposed amendments to the competition laws may correct the situation only with prospective effect.

The cases include Cine Prekshakula Viniyoga Darula Sangham (a society for the welfare of cine goers) versus Hindustan Coca-Cola Beverages and Inox, a multiplex chain; Jindal Steel and Power (JSPL) versus Steel Authority of India (SAIL) and Indian Railways; and Arshiya Rail versus Indian Railways and Container Corporation of India.

In these cases and a few others, the complaints about companies indulging in cartelisation/abuse of dominance got verified and endorsed by the CCIs director general (DG) of investigations. However, in its final order, the CCI overruled the DGs report but did not specify the section of the Competition Act under which the complaints were dismissed.

Although in many cases the complaints approached the Competition Appellate Tribunal (Compat) against the CCI rulings, the appellate panel sought to know under which section of the Act was the CCI order challenged. Due to a gap in the competition law, the CCI order does not mention under which section the case is being dismissed, the Compat does not admit the appeal, a senior lawyer representing one of the companies said about the problem. So, the question is whether CCI has the power to close a case where its rulings is contrary to the DGs findings.

Experts said, the Competition Amendment Bill is making an attempt to solve this problem.

Clause 11 and 17 of the Amendment Bill, when passed by Parliament, would remedy the current impasse. There may be a defect in legislative drafting but the statutory or quasi-judicial authorities cannot fold its hands and blame the draftsmen, as outlined in an earlier Supreme Court judgment. In doing so, the statutory intent of the law gets defeated and unfortunately the decision of the trial level authority then becomes the law of the land, says Manas Kumar Chaudhuri, partner in Khaitan & Co, a specialised law firm that deals with cases involving competition laws. While the amendments will apply from a future date, they will not have a retrospective effect. Something should be done to provide relief to cases which are already impacted, Chaudhuri added.

In the JSPL-SAIL matter, the CCI had given a clean chit to the railways and a SAIL MoU in January 2012 stating that JSPLs allegations did not hold ground as it would be incorrect to say that SAIL had misused its dominant position to create entry barriers. However, the DG report had found otherwise.

The complaint dates back to December 2009, when JSPL had alleged that the exclusive arrangement between SAIL and the railways barred JSPL from supplying rail steel to Indian Railways.

Even in the Coca-Cola issue, while the DG investigation report found merit in the complaint filed by the Andhra Pradesh-based society which had complained that the beverage company along with the multiplex chain had got together to increase soft drink retail prices, thereby abusing their dominant positions. The DG report found Coca-Cola selling the products to Inox at a higher MRP thereby making it a clear case of abuse of its dominance position by directly or indirectly imposing unfair and discriminatory pricing in sale of goods. This contravened the provisions of section 4(2)(a)(ii) of the Act, the DG had said in its report. But the final CCI order had overruled it.

Then last year, the CCI had let off Indian Railways and the Container Corporation of India (Concor) in an abuse of dominance case filed by Arshiya Rail. The commission in its order said that it did not find Indian Railways as dominant in the relevant markets and accordingly finds no abuse of dominance with regard to the violation. Also Concor is not dominant in this market and the allegation cannot be upheld, it had said. Arshiya Rail had approached the CCI in 2010-11 with a complaint against the railway ministry.