By VANSHAJ DHIMAN, A STUDENT OF THIRD-YEAR AT RMLNLU, LUCKNOW
On 29th May, 2020, the National Company Law Appellate Tribunal (‘NCLAT’ or ‘Tribunal’) rendered a judgement – in Samir Aggarwal v. CCI & Ors. – wherein it was held that unless a person’s legal rights “as a consumer or as a beneficiary of healthy competitive practices” have been infringed, he/she cannot file an information before the Competition Commission of India (‘CCI’) levelling allegations for the contravention of Sections 3 and 4 of the Competition Act, 2002 (‘Act’).
This myopic and unnecessary view of the NCLAT, in essence, reserved the position of an informant for the competitors, consumers and their associations only and thereby failed to uphold the true legislative intent behind the said provision. In this blog, the author shall present a two-pronged argument to highlight the errors in the findings of the Tribunal – firstly, the fetters of locus standi will more likely frustrate the very object and scheme of the Act; secondly, it will cause great damage to consumer welfare and effective competition in the market.
In the present matter, Mr. Samir Aggarwal (‘Appellant’) challenged the CCI’s order, wherein the CCI found no prima facie case since no agreement, understanding or arrangement existed either between Ola and Uber and their respective drivers or between the drivers inter-se qua price-fixing. Therefore, the allegations against the Ola and Uber contravening Section 3 of the Act by forming hub and spoke cartel were dismissed by the CCI under Section 26(2) of the Act. While ruling on this matter, the NCLAT also questioned the locus standi of the Appellant, albeit rejected the appeal on the basis of merits as well.
- Tracing the object and scheme of the Act
The CCI was primarily constituted to enforce the competition policy of India and to prevent market failures. The preamble of the Act confers the duty on the CCI to eliminate practices having adverse effect on competition, to promote and sustain competition and to protect the interests of consumers. This wide amplitude of mandate reverberates with Section 18 of the Act as well.
Interestingly, no qualifications or requirements have been prescribed by the legislature which a person has to fulfil before filing an information with the CCI under Section 19(1) of the Act. As per Section 19(1) of the Act, the CCI may carry out an inquiry suo motu; or upon receipt of information from any person, consumer or their association or trade association; or upon a reference made to it by the Central Government or a State Government or a Statutory Authority.
Section 2(l) of the Act defines the expression ‘person’ and includes, inter alia, an individual, Hindu undivided family, company, corporation, association and every artificial juridical person. Indubitably, the expression ‘person’ has been given a broad and inclusive meaning. Thus, the legislative intent seems to be very clear regarding entrusting the duty on every citizen for highlighting any potential antitrust violation before the CCI to uphold the sanctity of the economic legislation.
An Informant cannot be and should not be considered as a party to the dispute merely because of its status of being an informant because he/she merely works as one of the sources of information for the CCI. What matters is the substance of an information and therefore should be given primacy over the standing or antecedents of the informant. As rightly pointed out by the CCI that “antecedents of the informant cannot be made a ground for the Commission to not take cognizance of abusive conduct of any entity”.
In the matter of Saurabh Tripathy v. Great Eastern Energy Corporation Ltd., the CCI observed that in order to highlight any anti-competitive practices before the CCI, the informant need not be a personally aggrieved person from such practice as the proceedings before the CCI are not ‘in personam’ but are rather ‘in rem’ affecting an entire market. Interestingly, even the Director-General (‘DG’) can furnish an information, a complaint or a memo before the CCI under Section 19(1)(a) of the Act, albeit, the DG cannot initiate a suo motu investigation.
In Surendra Prasad v. CCI, the Competition Appellate Tribunal (‘COMPAT’) highlighted the judicious scheme of the Act and held that “there is nothing in the plain language of Sections 18 and 19 read with Section 26(1) from which it can be inferred that the Commission has the power to reject the prayer for an investigation into the allegations involving the violation of Sections 3 and 4 only on the ground that the informant does not have a personal interest in the matter or he appears to be acting at the behest of someone else.”
- Free Market more important than the standing of an informant
In Central Circuit Cine Association v. Reliance Big Entertainment Pvt. Ltd., by assailing the order of the CCI, the appellant i.e. CCCA, questioned the locus standi of the informant (respondent) contending that the CCCA is an association of the distributor or exhibitors and only members of the association are governed by the rules of the association, therefore, non-members should not be allowed to file an information with CCI levelling allegations for contravention of Sections 3 and 4 of the Act. Negating the contention of the CCCA, the COMPAT held that since the CCI can take suo-motu cognizance of any anti-competitive matter, rules of association cannot be made a ground to question the locus of a non-member who attracts CCI’s attention towards an anti-competitive practice flourishing in the market.
Had the information could only be filed by an aggrieved party, the foregoing anti-competitive practices of the association might not be challenged and ultimately, damaged the freedom of trade in the market. Therefore, the role of an informant as information provider is indispensable and should not be weighed on the anvils of antecedents of the informant. The informant only initiates the proceeding before the CCI to obtain a prima-facie order under Section 26(1) of the Act. Accordingly, the DG would then conduct an investigation into the matter and submit its report to the CCI. Indubitably, the locus of the informant’s information is subservient to the evidence brought on record by the DG and further assessed by the CCI. Hence, the case against the opposite parties is made on the basis of findings of the DG and not on basis of any information so being received.
Countering frivolity of information
It is a well-settled principle that a person approaching a court must come with clean hands. Now, even though there was no locus standi requirement under competition jurisprudence, the COMPAT had, in L.H. Hiranandani Hospital v. CCI, cautioned the CCI to critically examine the identity of the informant before acting on the information and regard its submission with suspicion where the informant is a third party espousing someone else’s cause with an ulterior motive.
Indeed, the liberal interpretation of the terms ‘information’ and ‘person’ have resulted in some vexatious and frivolous cases before the CCI but in response to that shackling the CCI with the rule of locus standi cannot be a plausible justification. Alternatively, the CCI may avert unscrupulous people by adopting a mechanism to scrutinize the information and if found agitated with oblique and mala-fide motives, a penalty should be imposed to punish such opportunistic people.
The European Commission has the power to initiate ex-officio investigation into the suspected cartels or infringements of Article 101 of Treaty on the Functioning of the European Union after receiving a complaint or information from various sources such as, inter alia, informant, consumer, whistle-blower or any third party, other departments or competition authorities.
The United Kingdom’s Competition and Markets Authority and Canada’s Competition Bureau may also start an investigation after receiving a complaint or information from consumers, businesses, informants or whistle-blowers leveling allegations for violating their respective competition acts. Evidently, information provided by third parties or whistle-blowers helps countries in making effective Intelligence system vis-à-vis completion policy.
Some antitrust watchdogs including Hungarian Competition Authority and Korea Fair Trade Commission are even authorised to give rewards to the informants or whistle-blowers for providing indispensable information to the competition authorities, which will eventually help them in detecting and unveiling the hard-core cartels.
The concept of an aggrieved party was diluted when the expression “receipt of a complaint” was replaced with a wider expression “receipt of any information” by the Competition (Amendment) Act, 2007. Unfortunately, the NCLAT has now saddled the CCI with the rule of locus standi by overlooking the plain and natural meaning of the statutory provision.
This inhibitive decision of the NCLAT would, ergo, preclude the third parties and whistle-blowers from approaching the CCI regarding any unfair or anti-competitive trade practices carried out in the market. Hence, keeping in mind the foregoing arguments and international practices, the author hopes that either the Supreme Court or the NCLAT itself will soon correct this position in a suitable case, otherwise, its consequences will be far-reaching in the competition domain of India.