Defining limits of competition bodies

Written by Indu Bhan | Indu Bhan | Updated: Apr 17 2014, 08:07am hrs
The Competition Act, 2002, has run into rough weather even after the legislation was passed 12 years ago. A writ petition has been filed by a Bangalore-based explosives companyKeltech Energies Ltds (KEL)challenging certain provisions relating to the quasi-judicial functions of the Competition Commission of India (CCI) and the constitution of the Competition Appellate Tribunal (COMPAT). The Supreme Court has sought the Centres views on KELs petition challenging the legality of the Act on the ground that in the absence of a judicial member, the anti-trust watchdog acted arbitrarily in its case.

The petition comes in the wake of CCI in 2012 asking 10 companies, including KEL, to pay penalties equalling 3% of the average of their three-year turnovers for forming a cartel to bid for supply to Coal India. The companies controlled 75% of the explosives supplies. The tribunal upheld CCIs order, slapping a R3.12 crore penalty on KEL for allegedly not participating in a reverse auction in 2010, but reduced the penalty by 10%. According to advocate Sameer Parekh, who represented KEL, these provisions are clearly beyond the legislative competence of Parliament, contrary to the requirements of separation of powers and contrary to the provisions of the Constitution of India including Article 14 thereof and failure to comply with the requirements of natural justice.

The jurisdiction of CCI covers anti-competitive agreements (cartels, abuse of dominance, unfair or discriminatory pricing, etc). The law provides for investigation, inquiry and adjudication by CCI and contains provisions for penalties and also for non-compliance with its orders. CCI is also responsible for competition advocacy, public awareness and training.

Going through various judgments and commentaries on the tribunalisation of justice, the Supreme Court had laid down the parameters that must be complied with by the government to validly constitute a tribunal. It emphasised that there should be no bureaucratisation of tribunals, which should have an equal number of judicial members and the adjudicatory functions must be separate from the regulatory or administrative or advisory functions.

All these issues came up in the matter of Brahm Dutt before the Supreme Court where the Centre sought to amend the Act. However, the situation was made worse after the amendment. The Act, prior to 2007 Amendment Act, had expressly provided for judicial members on CCI for the purpose of discharging the adjudicatory functions. While the Competition (Amendment) Act, 2007, omitted the relevant provisions, providing for the Benches of Commission as well as the judicial members thereon, it did not divest CCI of the power to discharge the adjudicatory functions. The adjudicatory functions, in exercise of the judicial power of the state, are today being discharged by CCI without any judicial member thereon; thereby clearly violating the well-recognised constitutional principles of separation of powers and independence of the judiciary, say experts. Now all judicial functions are discharged by CCI in meetings, by voting and without any requirement of judicial members.

This is contrary to the several Constitution Bench judgments of the apex court including the judgment in the case of Union of India vs R Gandhi, President Madras Bar Association. The SC laid down the manner and method by which a quasi-judicial body can be set up and laid down specific guidelines to be followed for constituting a tribunal to ensure that the independence of the judiciary and the impartiality in the administration of justice is maintained and that constitution of the tribunal is not violative of Article 14 of the Constitution of India.

When CCI decides a listan affirmation by one party and denial by another, there is an exercise of the judicial power of the state. Such a power can be exercised by a court or a tribunal having the trappings, although not all, of a court, it said. KEL in its petition said the top court has held that even where the presence of technical members is required, the presence can only be in addition to the judicial members and not in substitution of the same. Indiscriminate appointment of technical members in all tribunals will dilute and adversely affect the independence of judiciary.

These complex questions of law crop up more often in the courts. So the apex court needs to settle the issue once for all as it did in 2010 when it curtailed the powers of the appellate tribunal. It said that COMPAT does not have the power to second-guess CCIs decisions to investigate anti-competitive behaviour in the case of CCI vs SAIL. Depending on how the Centre responds, the issues raised by KEL could throw up interesting answers and a possible new direction on how commissions and tribunals may shape up in the future.