Let CCI do its job

Certain quarters, mainly from the legal fraternity, have been raising the issue that the Competition Commission of India (CCI), given the nature of its functions and processes, must mandatorily include a judicial member. They assert that the CCI is a quasi-judicial body with powers to impose heavy penalties to which it cannot do justice without the benefit of a judicial mind sitting on the panel. This view has been buttressed by a judgment of the Division Bench of the Delhi High Court in the Mahindra vs CCI case that directed that the CCI must ensure the presence of a judicial member while passing final orders, which are adjudicatory.  However, the Delhi HC, in CADD Systems vs. CCI validated final orders (which are adjudicatory) of the CCI passed in the absence of a judicial member; the court clarified that the Mahindra decision did not interdict the functioning of the CCI pending the appointment of a judicial member. It is understood that the government has appealed the Mahindra judgment in the Supreme Court, where a decision is awaited. It is worth analysing whether the protagonists of the ‘mandatory judicial member’ view have a case grounded in facts.

The CCI’s remit encompasses three distinct areas under the Competition Act—competition advocacy explicitly mandated by Section 18 of the Competition Act; merger control viz approval of large M&As; and antitrust cases comprising violations through anti-competitive agreements or abuse of dominance. Under the first category, the CCI proactively undertakes advocacy with the business community and with the government in respect of its policies and practices, advising against activities or policies that may harm competition in the markets. It has also undertaken advocacy with the judiciary at various levels. This does not involve quasi-judicial functions. Under the second category, the proceedings of merger control, which require transactions that pass certain thresholds to be filed and cleared by the CCI, are also mainly administrative. The CCI, after analysing the application mainly in economic and commercial terms, approves it if it is not likely to have an appreciable adverse effect on competition. About half the work of the CCI relates to merger approvals. Thus, in over half of the CCI’s work, functioning of a judicial nature is not involved. 

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Even for the third category, over 50% of the complaints (called ‘information’ under the Act) are dismissed at the initial stage wherein the CCI feels that prima facie a violation of the Competition Act is not made out, and hence, no detailed investigation is called for. Per the CCI’s annual reports, during 2015-18, such dismissals amounted to about 60% of the prima facie orders and during 2018-21, they were about 67% of the orders.  Clearly, in over three fourths of the CCI’s work, quasi-judicial work is not intrinsic to the proceedings. The CCI is primarily a market regulator (mostly ex post except in mergers) whose mandate is to keep the Indian markets clean and efficient from a competitive angle by preventing anti-competitive mergers and interdicting anti-competitive practices. If it is endowed with punitive powers like several other regulators such as Sebi, IRDAI, CERC and even RBI, that does not convert it into a quasi-judicial body. 

Further, it may be noted that most orders of the CCI are subject to appeal to the appellate tribunal (NCLAT), which is headed by a retired SC judge or a retired HC chief justice. Thus, CCI’s orders are subject to judicial review.  In fact, it is recommended that a specialised appellate tribunal needs to be revived, either like the erstwhile COMPAT or a specialised and dedicated bench of the NCLAT. The CCI had included distinguished judicial members in the panel—retired Justice Dhingra and then retired Justice GP Mittal, the latter being the last judicial member from August 2015-July 2018.  It is understood (subject to verification) that subsequently, the government has made efforts to appoint a judicial member, but these remained unsuccessful.

A comparison of the proportion of orders appealed during 2015-18, when there was a judicial member, and during 2018-21, when there was none, indicates that during 2015-18, the percentage of CCI orders appealed was about 37%, whereas during 2018-21, this percentage was 30%. Further, the Appellate Tribunal, during 2015-18, upheld CCI orders in 43% of the cases, whereas during 2018-21, this percentage was 91%. Thus, the number and proportion of appeals against the CCI’s final orders have, in fact, been on a decline in the past few years.  Further, the proportion of orders upheld by the Appellate Tribunal has also increased over the years.  This may be caveated by stating that a one-to-one correlation may not be possible because the orders passed by the Appellate Tribunal in a certain period may relate to the CCI’s orders passed during an earlier period.  However, there is no conclusive data to support that CCI orders passed during when it had a judicial member were qualitatively different and met a more successful fate.

It may be kept in mind that in the Competition Act, work which may involve judicial proceedings, was consciously kept out of the CCI’s ambit and instead entrusted to the Appellate Tribunal. It was felt that the CCI should not get caught in such lengthy adversarial proceedings which are better left to the expertise of a body such as the Appellate Tribunal; the CCI itself should be left to focus on keeping the markets competitive. The Competition Act in Section 8 provides that a member can be appointed from a number of backgrounds/expertise areas viz international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, or competition matters, including competition law and policy. Each of these is relevant to the CCI’s work. The same is true for a judicial background.  However, there is no basis to assert that any one of these backgrounds is more critical than the others.  For example, the CCI is an economic regulator, yet it cannot be said that it should be mandatory for the CCI members to be from an economics background, or any other particular background. The CCI also has specialised staff to support it, most specifically, those with qualifications in law and economics, as well as other specialisations.  This includes an active legal division.

Therefore, there is no compelling reason to mandate that the CCI must mandatorily have a judicial member. On the other hand, as an important market regulator, it needs a diversified composition from the various fields and members with well-honed analytical abilities and an experienced insight into markets and competitive forces.

(Respectively, former head, CCI, and partner, Touchstone Partners)