The Private Competition Enforcement Review: India

Overview of recent private antitrust litigation activity

The year 2020 marked the onset of the second decade of enforcement of the Competition Act, 2002 (the Competition Act) in India. From April until June 2020 in India, just as in the rest of the world, several governmental actions were taken, including a national lockdown to contain the covid-19 pandemic. This necessitated a temporary hiatus in the functioning of the Competition Commission of India (CCI) – the nodal agency enforcing the Competition Act. The CCI was, however, quick to respond to the challenges posed by the pandemic to both market participants and its own physical functioning. It implemented several measures to deal with the dynamically changing economic landscape, as well as to cope with its functioning in the virtual era. These measures continue to be in operation in 2021, with minor alterations. The changes are detailed below.

In April 2020, the CCI issued an advisory to businesses on the application and impact of the Competition Act on concerted practices among competitors during the pandemic (the Advisory). In the Advisory, the CCI acknowledged that change in the market conditions caused by covid-19 may require coordination between businesses to ensure availability of essential commodities, medicines, etc. Coordination may be achieved through sharing of stock level data, use of distribution networks, research and development, production, etc. The CCI advised that conduct coordinated to increase efficiencies was to be favourably assessed where it was necessary and proportionate to address concerns during the pandemic. However, the CCI was of the view that the Competition Act in its present form has inbuilt safeguards to protect certain concerted actions from sanctions and accordingly no specific exemptions are required in relation to the pandemic.2

The CCI started conducting virtual hearings through video conferencing and adopted a standard operating procedure to facilitate the process. All physical filings were stopped and, instead, e-filing was introduced for old and new behavioural cases and for combination notifications. Pre-filing consultations for combinations were conducted through video conferencing.

Similarly, the National Company Law Appellate Tribunal (NCLAT), which is the appellate tribunal dealing with competition law matters, adopted virtual hearings to prevent a backlog of cases in appeal. The Competition Act prescribes a 60-day limitation period for filing appeals from certain CCI orders.3 However, given that the national lockdown limited the movement of persons to within cities and prevented movement across city borders, this limitation period was relaxed temporarily by direction of the Supreme Court of India (the Supreme Court). This ensured that no appeal was barred on technical grounds of being filed after expiry of the limitation period. This relaxation was withdrawn with effect from 2 October 2021 as the restrictions imposed on account of the pandemic were lifted in India.

In July 2021, the CCI issued a practice direction relaxing the requirement for the signing of pleadings in the wake of the ongoing pandemic. While the CCI (General) Regulations, 2009 (the General Regulations) provide that pleadings must be signed by the managing director or, in his or her absence, any duly authorised director, the CCI noted the practical difficulties that might be faced by parties in achieving this. Hence, it granted the liberty to any employee authorised in this regard to sign pleadings.4

In 2021, the CCI continued its initiative to conduct studies in different sectors to better understand the market dynamics. The trend that started with the e-commerce market study in 2020 was followed by a telecoms sector study, a discussion paper on blockchain technology and competition law and a pharmaceutical sector market study.

In 2019, the CCI conducted a detailed market study into the e-commerce sector. During the market study, the CCI gathered insights from various stakeholders, such as retailers, manufacturers, online marketplace platforms, service providers and payment systems. The objective was to better understand the functioning of e-commerce in India and its implications for markets and competition. The final report, with key observations, was released in 2021.5 While the e-commerce market study was not undertaken with a pre-identified target business practice or market participant, it was instrumental in the CCI initiating investigations into alleged anticompetitive practices by several entities operating in the e-commerce sector.

In January 2021, the CCI published the key findings and observations from its market study on the telecoms sector in India.6 The report assessed the shift in competition strategies of market participants, including the trend of cooperation between telecoms services and related industries, such as over-the-top services, network tower companies and infrastructure providers. The study also highlighted that competition in the market was shifting from price-related factors to non-price parameters. The CCI, however, refrained from expressing any concrete views in relation to the competition concerns in the telecoms sector.

The CCI also published a discussion paper on blockchain technology and the challenges it could pose from a regulatory and competition perspective.7 This is an initiative by the CCI to engage with stakeholders and developers from an early stage to raise awareness of the likely competition concerns that may arise from this technology in the future, and to ensure compliance with competition law in this novel area.

In November 2021, the CCI published its findings pursuant to the market study in the pharmaceutical sector.8 With the overarching objective of understanding the factors that influence price competition in the pharmaceutical sector, the study focused on the specific realms of pharmaceutical distribution and the role of trade associations therein, trade margins and drug pricing, and the prevalence of branded generic drugs in India and its implications for competition. Because the pharmaceutical sector is a regulated sector, the study also attempted to explore the areas of interface between regulation and competition with a view to ascertain the CCI's advocacy priorities. The study also briefly discussed the emergence of e-pharmacies and the two major competition concerns: discounts and the concentration of personal health data on only a small number of platforms.

Dawn raids were carried out in 2021 as part of an investigation on several companies operating in the vegetable seeds sector for alleged price collusion. While the CCI has not published an order in this case, the information is based on publicly available sources and news reports.

The legislative reform proposed under the Draft Competition Amendment Bill 2020 (the Draft Bill 2020),9 which was released for public comments by the Ministry of Corporate Affairs in 2020, has not seen any progress since February 2020. The Draft Bill 2020, if passed by the two houses of the Indian Parliament, will be the first amendment to the current version of the Competition Act since it came into force in 2009.10

The Draft Bill 2020 proposes several changes to the substantive law, as well as to the procedural law. It also suggests changes to the structure and functioning of the CCI and the powers of the Office of the Director General (DG) – the investigative arm of the CCI.

In addition to the above developments, the Supreme Court, the high courts, the NCLAT and the CCI have made significant judicial pronouncements in the past two years that have enriched competition jurisprudence in India.

In a landmark judgment on the Indian jurisprudence on vertical restraint in general and resale price maintenance in particular, the CCI penalised Maruti Suzuki India Limited, a leading car manufacturer, US$26 million for enforcing its dealer discount policy. By way of the dealer discount policy, Maruti succeeded in controlling the minimum price of its cars, thereby eliminating intra-brand competition among its dealers, as well as impacting inter-brand competition.11

In a significant decision regarding the CCI's jurisdiction, the Delhi High Court (the Delhi HC), in line with an earlier decision,12 upheld the jurisdiction of the CCI in a dispute involving stringent sublicence terms by a patent holder. The Delhi HC concluded that the focus of the Patents Act, 1970 and of the Competition Act are different and that there was no irreconcilable repugnancy between the two acts. Accordingly, the jurisdiction of the CCI to entertain complaints of abuse of dominance in respect of patent rights could not be excluded.13 In Brickwork Ratings India Pvt Ltd v. CRISIL Ltd and Ors,14 the CCI, relying on the Supreme Court's judgment in Competition Commission of India v. Bharti Airtel Limited and Others,15 reiterated that the presence of a sectoral regulator does not oust its jurisdiction to adjudicate upon issues related to anticompetitive conduct.

A major shift in the CCI's approach towards punishing cartels has been observed since the onset of the pandemic. For the first time, the CCI refrained from imposing penalties in cases of hardcore cartel conduct. On the basis of a leniency application, the CCI found four industrial and automotive bearings manufacturers to have acted in concert and cartelised with respect to pricing. Despite significant evidence of collusion, the CCI only issued a cease-and-desist order and noted that the ends of justice would be met if the parties ceased the cartel behaviour and desisted from it in future.16

The CCI continued this approach in the case of In Re: Chief Materials Manager, South Eastern Railway v. Hindustan Composites Limited & Ors.17 Upon 'reference'18 from Indian Railways, the CCI found 10 brake block manufacturers to have engaged in bid rigging. The companies quoted identical prices in tenders and offered identical reductions during negotiations. Smoking-gun evidence of collaboration among the companies was found in the form of WhatsApp communications, text messages, company personnel call records, statements recorded during the investigation and admissions by company representatives. Despite the evidence available, only a cease-and-desist order was passed. In deciding not to impose financial penalties, the CCI took an empathic view given the low annual turnover of some of the companies and the impact of the economic downturn caused by the pandemic. This reasoning was recently followed in In Re: Eastern Railway, Kolkata v. M/s Chandra Brothers and Ors,19 In Re: Mr. Rizwanul Haq Khan v. Mersen (India) Pvt Ltd and Anr (Rizwanul Haq)20 and Food Corporation of India v. Shivalik Agro Poly Products Ltd and Ors.21 All three cases concerned cartelisation in the medium, small and micro enterprises sectors, which have been severely impacted by covid-19, and the CCI passed cease-and-desist orders only in all of them.

Shortly after the release of its e-commerce market study, the CCI commenced an investigation into e-commerce majors Amazon and Flipkart in relation to anticompetitive vertical agreements in the market for online sales of mobile phones.22 The allegations included: (1) exclusive launches of mobile phones; (2) preferred sellers on the marketplace; (3) deep discounting; and (4) preferential listing or promotion of private labels. Notably, the CCI dismissed allegations relating to abuse of dominance by the two companies and limited the scope of the investigation to vertical arrangements. The CCI's order was challenged before Karnataka High Court, which initially granted an interim stay on the investigation;23 however, subsequently the probe by CCI was allowed by Karnataka High Court24 as well as the Supreme Court.25

In a separate case, the NCLAT set aside a CCI order dismissing allegations of abuse of dominance against Flipkart and directed the CCI to initiate an investigation into the matter.26

The CCI is also investigating online travel booking sector entities and hotel franchisors for alleged abuse of dominance and anticompetitive vertical agreements, respectively.27 The CCI, in a rare occurrence, given the dynamic nature of the industry, passed an interim order granting relief to the informants against the online travel aggregator28 and directed that the informants be relisted on the online travel aggregator's platform.

CCI has also commenced an investigation into Google for dominance and likely abuse resulting from its unified payments interface application, Google Pay.29 Recently, an investigation into allegations of abuse of dominance and anticompetitive vertical agreements against Google in the market for licensable smart television device operating systems has also been initiated.30 This is the fourth investigation commenced against Google in India.

Further, the CCI imposed penalties for bid rigging in tenders floated by GAIL (India) Limited. The contravening parties had submitted their bids from the same office premises and with only a one-day gap between them. Further, answers to technical queries addressed to one party were based on answers provided by the other party. In light of mitigating circumstances, such as the company's poor financial condition, the CCI imposed only nominal monetary penalties in addition to a cease-and-desist order.31

In an investigation triggered by a leniency petition wherein the whistle-blower informed the CCI of a cartel in the beer industry, the CCI found four beer companies in India colluding on the price and supply of beer in various states. Despite the leniency granted by the CCI, a cumulative penalty of US$116 million has been imposed on three of the companies.32

The CCI also penalised the Federation of Publishers' and Booksellers' Associations for anticompetitive horizontal agreements in relation to price and supply of books, journals and other printed works by way of its discount control policy and by limiting the supply of printed works, and enforced the diktat with the threat of expulsion.33

Over the past year, several public sector enterprises have been found to be abusing their position of dominance by the CCI. For instance, the CCI ordered Odisha State Civil Supplies Corporation Ltd to desist from abusing its dominant position in the market for procurement of custom milling services for rice in the state of Odisha. No penalty was imposed due to certain positive measures that were undertaken to ameliorate the abuse.34 On the other hand, the CCI, penalised Uttarakhand Agricultural Produce Marketing Board (a state enterprise) for, inter alia, imposing unfair terms in its agreements and denying market access in the market for wholesale procurement and distribution of branded alcoholic beverages in the state of Uttarakhand.35

The CCI also found unilateral abuse in the film distribution industry. The Tamil Film Producers Council and Telugu Film Chambers of Commerce (a regional association of film producers) was ordered to cease and desist from limiting and controlling the production, supply and provision of services in the Tamil cinema. No penalty was imposed because the anticompetitive conduct did not result in an absolute restriction on the release of films.36

It is apparent from these highlights that a number of significant developments have taken place in the competition law regime in India over the past year.

General introduction to the legislative framework for private antitrust enforcement

The Competition Act, along with the regulations framed thereunder, provides the legislative framework for private antitrust actions in India. The jurisdiction of the CCI and the appellate jurisdiction of the NCLAT are exclusive with respect to matters under the Competition Act. The CCI is empowered to investigate anticompetitive agreements (both horizontal and vertical) and abuse by dominant firms under the Competition Act.37

An investigation can be initiated in one of three ways; (1) suo moto by the CCI; (2) upon 'reference'38 from the government; and (3) by way of an information memorandum (an 'information') filed by a person (this includes third parties and public-spirited individuals, and as a result of leniency applications).

Upon receipt of an information, the CCI can form a prima facie view to either direct an investigation39 by the DG or dismiss the information40 and close the matter. The DG is vested with wide investigative powers that include summoning and enforcing attendance of any person and examining him or her on oath, requiring discovery or production of documents, receiving evidence on affidavit, issuing commissions for the examination of witnesses or documents, and carrying out search and seizure operations, such as dawn raids.41

The DG under the Competition Act cannot initiate an investigation itself; however, it can request the CCI to widen the scope of an investigation; the Delhi HC made this observation in its judgment in Mahindra Electric Mobility Ltd & Anr v. Competition Commission of India & Anr.42 This means that the DG's investigation is not limited as regards either the parties or the issues mentioned in the information.43 The law as propounded by these judicial precedents led to an amendment44 to the regulations, broadening the investigative powers of the DG. This principle has recently been reiterated in Rizwanul Haq.

While the investigation is ongoing, the CCI, upon fulfilment of certain preconditions, can pass interim orders45 restraining parties from engaging in the alleged anticompetitive practices. The Supreme Court, in its landmark Steel Authority of India v. Competition Commission of India & Anr (SAIL judgment),46 laid down three factors to be considered by the CCI prior to passing an interim order: (1) whether there is a prima facie case of contravention of the Competition Act; (2) whether irreparable or serious mischief to the plaintiff will ensue; and (3) whether refusal of the ex parte injunction would cause greater injustice than its granting would. This power must be used by the CCI sparingly and only in the most compelling circumstances. The CCI has shown deference to this principle, which is bolstered by the fact that it has issued interim orders only twice in the past year.47

At the end of an inquiry, the DG submits a report to the CCI. Thereafter, the CCI can issue one of three orders: (1) an order under Section 26(6) finding no violation; (2) an order under Section 26(8) directing further investigation by the DG; or (3) an order under Section 27 finding a violation of the Competition Act. Under Section 27, the CCI can impose penalties, direct parties to cease and desist from their anticompetitive actions and seek rectification of the anticompetitive conduct by the parties.

It has been clarified that the CCI is not compelled to accept the findings of the DG's investigation report. In fact, the NCLAT, in its judgment in Hyundai Motor India Ltd v. Competition Commission of India & Ors,48 set aside the CCI's order on the grounds that the CCI had relied upon the DG's report alone and had failed to conduct an independent inquiry.

To encourage cartel detection through whistle-blowers, the CCI has the power to reduce penalties (including offering a complete waiver) in lieu of 'full, true and vital disclosures' made regarding the existence of a cartel.49 While several leniency applications have been filed with the CCI, thus far final orders have been passed in only eight cases.

The enforcement provisions of the Competition Act were enacted in May 2009 and they only apply prospectively. However, the question arose about the application of the Competition Act in the case of an anticompetitive agreement entered into pre-2009 that continues to exist subsequent to the implementation of the enforcement provisions. To address this issue, the Bombay High Court50 laid down the test of 'continuing effect of past conduct', which, under limited circumstances, allows the CCI to look into anticompetitive agreements entered into pre-2009 if they continue and subsist after May 2009. This test was also applied more recently by the Supreme Court.51

While the Competition Act does not expressly mention whether the CCI has the power to recall or review its own orders, the Delhi HC in a series of judgments52 has clarified that this is an inherent power of the CCI.

The Competition Act does not prescribe any limitation period for actions by the CCI and so far no information has been disallowed on account of a delay in filing. This position has been reaffirmed in Neha Gupta v. Tata Motors and Ors (Tata Motors) wherein the CCI noted that, 'dynamic nature of markets makes application of plea of limitation to antitrust inquiries as wholly irrelevant and ill-suited. In a changing and evolving market scenario, it cannot be determined with any exactitude as to when an anticompetitive behaviour commenced or morphed into another type of behaviour and when such conduct was terminated'.53 However, an appeal arising from an order of the CCI ought to be filed within 60 days of receipt of the CCI order by an aggrieved person.54 Similarly, an appeal against an order of the NCLAT can be filed with the Supreme Court within 60 days of communication of the order.55

In addition to challenging a CCI order in an appeal, parties may also file applications with the NCLAT for compensation.56 Compensation applications can also be for loss or damage resulting from a contravention of CCI or NCLAT orders. The NCLAT has yet to adjudicate upon any compensation application.57

Extraterritoriality

The Competition Act empowers the CCI to investigate all activities that have an adverse effect on competition within India.58 This includes the power to investigate conduct by enterprises incorporated outside India or agreements entered into outside the country. This extraterritorial operation of the Competition Act is protected under the Constitution of India.59

The extraterritorial jurisdiction of the CCI comes into operation in cases where the CCI is required to implead foreign parent companies as parties or call for deposition persons in charge of a foreign parent enterprise in investigations initiated against its Indian subsidiaries. This issue was first raised in an abuse of dominance investigation into the conduct of Google India and its parent company, Google Inc. Without any specific observation in this regard, the CCI imposed a penalty based on the sales of Google Inc's Indian operations.60 Recently, the CCI exercised its extraterritorial reach in an inquiry that was initiated after leniency applications were filed by automobile component manufacturers based in Japan, along with their Indian subsidiaries. The leniency applications followed investigations by the Japanese Fair Trade Commission (JFTC) into anticompetitive agreements between the Japanese parent companies. Because investigations had already been initiated by the JFTC, the CCI limited its investigation to cover the period up until the date on which the JFTC carried out on-site inspections at the offices of the Japanese entities.61

The scope of CCI's extraterritorial jurisdiction is restricted to conduct that has an impact on competition within India, therefore export cartels originating in India are excluded from its jurisdiction.62 When, in a case before the CCI, it was found that the alleged anticompetitive agreement did not have an appreciable adverse effect on competition in India because the entire quantity of the goods in question was being exported, the CCI stopped its investigation for want of jurisdiction.63

A large number of anticompetitive agreements involve cross-jurisdictional parties and effects. With the approval of the central government, the CCI can enter into arrangements with competition regulators from foreign jurisdictions to facilitate cross-jurisdictional investigations.64 In line with this provision, the CCI currently has memoranda of understanding and works in close cooperation with the antitrust authorities of the other BRICS nations (Brazil, Russia, China and South Africa), Canada, the European Union, the United States and Australia. This allows the CCI to work closely with these experienced regulators and engage in knowledge-sharing exercises with them.

Standing

The question of locus standi for approaching the CCI with an information has been brought up multiple times in the past two years. The Competition Act allows any person to file an information reporting a violation.65 The Supreme Court, in its order in Samir Agrawal v. Competition Commission of India & Ors,66 dismissed allegations of cartelisation against taxi aggregators Ola and Uber and settled the issue of locus standi to file an information before the CCI (the Uber judgment). In the past, divergent views on this issue had emerged from the CCI and the NCLAT. The CCI was of the view that, in its role as an overarching market regulator, it performs an inquisitorial function and therefore any person has the standing to file an information under Section 19(1)(a) of the Competition Act,67 not just a person who has suffered legal injury on account of an anticompetitive action, as had been determined by the NCLAT.68

The Supreme Court, relying on its own SAIL judgment,69 held that under the Competition Act, a 'person' may file an information with the CCI. Further, the term 'person' would have to be interpreted broadly because proceedings under the Competition Act are in rem and it is the duty of the CCI to act in the public interest. Therefore, any person, including those who are not personally affected by anticompetitive conduct, may approach the CCI as well as file an appeal against a CCI order with the NCLAT and the Supreme Court.

In the Uber judgment, the Supreme Court clarified that proceedings under the Competition Act are in rem given that anticompetitive practices affect not only a particular enterprise, but also the functioning of the markets in India. Further, it noted that because the 'CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act'. Accordingly, the right to file an information cannot be restricted. This position was reiterated recently in Tata Motors and Baglekar Akash Kumar v. Google LLC.70

The process of discovery

As described above, the CCI alone has jurisdiction over matters arising under the Competition Act, and civil courts in India are specifically precluded from adjudicating matters under the Competition Act. Proceedings under the Competition Act are inquisitorial and require the CCI (through the DG) to conduct an inquiry into the alleged violations. To facilitate this process, the CCI and the DG are vested with powers akin to the those of the civil courts under the Civil Procedure Code.71 These powers include requiring the discovery and production of any and all relevant information or documents, issuing summonses to parties and conducting examinations of parties, including witnesses or third parties (i.e., persons who are not party to the case) on oath, receiving evidence on oath and requisitioning any public records subject to the provisions of the Indian Evidence Act, 1872 (the Evidence Act).72 Recently, in the case of People's All India Anti-Corruption and Crime Prevention Society v. Usha International Ltd and Ors,73 the DG, in furtherance of these powers, summoned call data records from telecoms service providers while investigating collusive bid rigging. The DG frequently summons these records while investigating cartels.

Further, the CCI can regulate its own procedure for discharging its functions under the Competition Act.74 However, in exercising its powers, the CCI must adhere to the principles of natural justice. The procedure for an investigation under Sections 3 and 4 of the Competition Act are codified in the General Regulations. The General Regulations empower the DG to inspect documents,75 take evidence,76 issue summonses77 and examine witnesses or documents78 in the course of an inquiry.

The evidence collected by the DG during an inquiry and relied upon for the purposes of its investigation report must be placed before the CCI and thereafter made available to all the parties (i.e., the informant and the parties under investigation). The parties can, however, only gain access to information that has not been granted confidential status under Regulation 35 of the General Regulations.

The expansive investigative powers of the DG include the power to conduct surprise search and seizure exercises, commonly known as dawn raids.79 Dawn raids are typically conducted to collect evidence in cartel cases; however, interestingly, the CCI's first dawn raid was in a case of alleged abuse of dominance. So far, the CCI has conducted eight dawn raids, five of which have been in the past three years. The most recent dawn raid was conducted upon a number of vegetable seed companies for alleged price collusion in September 2021.

Use of experts

The Competition Act is sector-agnostic, and investigation into certain sectors or practices may require assistance from experts in those fields. In this respect, during an inquiry, the CCI can call upon experts from the fields of economics, commerce, accountancy, international trade or any other discipline as necessary.80 The CCI regularly engages with institutions (such as universities) and private agencies to conduct market studies and surveys and to assist with econometric assessment of the markets for both behavioural cases and combinations.81

Separately, third-party experts also assist the CCI with reviewing and providing input on legislation and governmental policies from an antitrust perspective.

Class actions

Consumer associations, trade associations, a body of individuals, a cooperative society, non-governmental associations or trusts can file an information alleging violations of Sections 3 and 4 of the Competition Act as class actions.82 Moreover, class actions are also permitted for filing compensation applications before the NCLAT.83 This prevents multiplicities of cases in which parties with the same interest are seeking a similar relief.

Calculating damages

The penalty powers of the CCI are unparalleled among regulators in India. Upon finding a violation of Section 3 or Section 4, the CCI can impose a penalty of up to 10 per cent of a company's average turnover for the preceding three financial years. In the case of cartels, the CCI is empowered to impose a penalty of up to 10 per cent of the average turnover or three times the profits earned during the period of cartelisation by the cartel participants.84 In addition to the penalties imposed on enterprises, trade associations or other entities, persons in charge of such entities can also be penalised for their role in facilitating anticompetitive activity.85

As detailed above, the CCI can also offer reductions in penalties or a complete penalty waiver under the leniency scheme to cartel participants who assist the CCI's investigation by offering full and vital disclosures.86

Other penalties under the Competition Act can be imposed for non-compliance with CCI orders or directions of the DG.87

Additionally, the NCLAT is empowered to award damages for loss or injury resulting from a contravention of the Competition Act. Damages can be claimed (1) from findings of violation of the Competition Act by the CCI or NCLAT,88 (2) for recovery of damage suffered by the plaintiff,89 and (3) for damage suffered because of non-compliance with CCI orders.90

Pass-on defences

The Competition Act does not contain a specific provision for pass-on defences.

However, compensation applications91 decided by the NCLAT require determinations as to eligibility of the applicant and to the quantum of compensation due.92 This allows the respondent to adopt a pass-on defence contending the applicant's eligibility to seek compensation.

Follow-on litigation

The Competition Act does not prescribe any limitation on initiating a private action if there has already been a prior enforcement action with respect to the same matter. However, Section 61 of the Act prohibits civil courts from exercising jurisdiction over any matter that either the CCI or the NCLAT is empowered to try under the various sections of the Competition Act.

Privileges

The Competition Act does not address the concept of privileged communications between an attorney and a client. The issue of privileged communication has not come before the CCI in an investigation, dawn raid or leniency application, therefore the position of the CCI in this regard remains unclear.

The Evidence Act, however, provides protection to professional communications between a client and the client's attorney.93 Section 127 of the Evidence Act extends this protection to communications with external counsel, interpreters, clerks and employees of the attorney. Further, attorneys are prevented from disclosing details of any professional communication with their clients or from disclosing the contents of any documents entrusted to the attorney by the client under this privilege. An attorney cannot be compelled to disclose the details of any confidential communication with a client even to a court of law.94

However, some of the exceptions to this privilege are situations where (1) the client has committed a crime or a fraud during the period of engagement of the attorney,95 or (2) the attorney is called upon as a witness by the client.96

Settlement procedures

The Competition Act does not contain any provision for parties to enter into any form of settlement; however, the Draft Bill 2020 has made a proposal in this regard.

At present, once an information has been filed with the CCI, there is no provision for withdrawing it; therefore, a settlement between the parties would not preclude the CCI from continuing an investigation into violations of the Competition Act. However, there is nothing in the Competition Act to prevent private parties from settling a dispute and this has been recognised by the Delhi HC.97

Arbitration

The issues governed by the Competition Act are not in personam but in rem. Based upon the Indian jurisprudence on which disputes are arbitrable, in rem proceedings have generally been rendered non-arbitrable.98 Moreover, the Competition Act does not permit arbitration or alternate methods of dispute resolution for determination of violations of Sections 3 and 4.

Moreover, the Delhi HC has previously held that the existence of an arbitration agreement is not relevant for the purposes of competition law proceedings under the Competition Act.99

Indemnification and contribution

The Competition Act does not contain provision for indemnification or contribution from third parties, co-defendants or cross-defendants.

Future developments and outlook

The enactment of the Draft Bill 2020 is certainly the most awaited legal development in India. In line with legislation in mature competition jurisdictions, the Draft Bill 2020 proposes to introduce certain new concepts into the Competition Act, such as:

  1. settlement and commitment mechanisms;
  2. hub and spoke cartels to be specifically included within the definition of a cartel;
  3. the CCI to have the power to expand the criteria for assessing competition in markets based on evolving markets (including digital markets); and
  4. the introduction of a governing board, changing the administrative structure of the CCI.

Further, the outcome of the various ongoing investigations in the digital markets remains to be seen. These initial investigations will lay the foundation for the CCI's jurisprudence on digital markets.100

Another highly desirable regulatory advance is the CCI's implementation of penalty guidelines. While the Supreme Court's order in Excel Crop Care Ltd v. Competition Commission of India & Anr101 guides the CCI's sanctioning at present, a set of comprehensive guidelines would ensure consistency and predictability in this regard.

The past two years have been exceptional in all respects and the CCI has recognised this and factored it into its orders. However, the CCI is indisputably reverting to being a proactive regulator and this is demonstrated by the numerous market studies it has initiated, and by its dawn raids in the cement sector and of beer and vegetable seed companies. Moreover, the NCLAT, the high courts and the Supreme Court continue to keep the CCI on track and ensure that it fulfils its mandate unimpeded. The coming years will certainly be the most challenging yet stimulating period for competition jurisprudence in India.

Footnotes

1 Charanya Lakshmikumaran is a partner and Neelambera Sandeepan is a joint partner at Lakshmikumaran & Sridharan.

3 Section 53B of the Competition Act.

5 'Market Study on E-commerce in India: Key Findings and Observations', available at: www.cci.gov.in/sites/default/files/whats_newdocument/Market-study-on-e-Commerce-in-India.pdf.

6 'Market Study on the Telecom Sector in India: Key Findings and Observations', available at: www.cci.gov.in/sites/default/files/whats_newdocument/Market-Study-on-the-Telecom-Sector-In-India.pdf.

7 Discussion paper on blockchain technology and competition law is available at: www.cci.gov.in/sites/default/files/whats_newdocument/Blockchain.pdf.

8 'Market Study on the Pharmaceutical Sector in India: Key Findings and Observations', available at: www.cci.gov.in/sites/default/files/whats_newdocument/Market-Study-on-the--Pharmaceutical--Sector-in-India.pdf.

10 The original Competition Act 2002 was amended by the Competition (Amendment) Act 2007 and subsequently by the Competition (Amendment) Act 2009.

11 In Re: Alleged anti-competitive conduct by Maruti Suzuki India Limited in implementing discount control policy vis-à-vis dealers, Suo Moto Case No. 1 of 2019, Order dated 23 August 2021. The investigation was initiated suo moto by the CCI upon receipt of an anonymous letter by a purported Maruti dealer.

12 Telefonaktiebolaget L.M. Ericsson v. Competition Commission of India & Another, W.P.(C) 464/2014.

13 W.P. (C) 1776/2016.

14 Case No. 47 of 2019, Order dated 29 December 2020.

15 (2019) 2 SCC 521.

16 In Re: Cartelisation in Industrial and Automotive Bearings, Case No. 05 of 2017, Order dated 5 June 2020.

17 Reference Case No. 03 of 2016, Order dated 10 July 2020.

18 Section 19(1)(b) of the Competition Act, 2002.

19 Case No. 02 of 2018, Order dated 12 October 2021.

20 Reference Case No. 02 of 2016, Order dated 1 November 2021.

21 Case No. 07 of 2018, Order dated 29 October 2021.

22 In Re: Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and its affiliated entities & Anr., Case No. 40 of 2019, Order dated 13 January 2020.

23 Amazon Seller Servies Private Limited v. Competition Commission of India and Ors., Writ Petition No. 3363/2020.

24 Flipkart Internet Private Limited v. Competition Commission of India and Ors., Writ Appeal No. 562/2021.

25 Flipkart Internet Private Limited v. Competition Commission of India and Ors., Petition for Special Leave to Appeal (C) No. 11558/2021.

26 All India Online Vendors Association v. Competition Commission of India, Competition Appeal (AT) No. 16 of 2019.

27 In Re: Federation of Hotel & Restaurant Associations of India (FHRAI) v. MakeMyTrip India Pvt. Ltd. (MMT) & Others, Case No. 14 of 2019, Order dated 28 October 2019.

28 In Re: Federation of Hotel & Restaurant Associations of India (FHRAI) & Anr. v. MakeMyTrip India Pvt. Ltd. (MMT) & Others, Case No. 14 of 2019 and In Re: Rubtub Solutions Pvt. Ltd. v. MakeMyTrip India Pvt. Ltd. (MMT) and Anr., Case No. 1 of 2020, Order dated 9 March 2021.

29 In Re: XYZ v. Alphabet Inc. and Ors., Case No. 07 of 2020, Order dated 9 November 2020.

30 Kshitiz Arya and Anr. v. Google LLC and Ors., Case No. 19 of 2020, Order dated 22 June 2021.

31 GAIL (India) Limited v. PMP Infratech Private Ltd. and Anr., Case No. 41 of 2019, Order dated 11 October 2021.

32 In Re: Alleged anti-competitive conduct in the Beer Market in India, Case No. 06 of 2017, Order dated 24 September 2021.

33 In Re: M/s International Subscription Agency v. Federation of Publishers' and Booksellers' Associations in India, Case No. 33 of 2019, Order dated 23 February 2021.

34 M/s Maa Metakani Rice Industries v. State of Odisha and another, Case No. 16 of 2019, Order dated 5 August 2021.

35 International Spirits and Wines Association of India and Uttarakhand Agricultural Produce Marketing Board & Ors., CCI Case No. 02 of 2016, Order dated 30 March 2021.

36 XYZ v. Tamil Film Producers Council and Ors., Case No. 07 of 2018, Order dated 22 June 2021.

37 Section 19(1) read with Section 26(1) of the Competition Act.

38 Section 19(1)(b) of the Competition Act, 2002.

39 Section 26(1) of the Competition Act.

40 Section 26(2) of the Competition Act.

41 Section 41 of the Competition Act.

42 2019 SCC OnLine Del 8032.

43 Competition Commission of India v. Grasim Industries, 2019 SCC OnLine Del 10017.

45 Section 33 of the Competition Act.

46 Civil Appeal No. 7779 of 2010.

47 In Re: Federation of Hotel & Restaurant Associations of India (FHRAI) & Anr. v. MakeMyTrip India Pvt. Ltd. (MMT) & Others, Case No. 14 of 2019 and In Re: Rubtub Solutions Pvt. Ltd. v. MakeMyTrip India Pvt. Ltd. (MMT) and Anr., Case No. 1 of 2020, Order dated 9 March 2021; and In Re: Confederation of Professional Baseball Softball Clubs v. Amateur Baseball Federation of India, Case No. 3 of 2021, Order dated 3 June 2021.

48 Competition Appeal (AT) No. 06 of 2017.

49 Section 46 of the Competition Act.

50 Kingfisher Airlines v. Competition Commission of India, 2010 SCC OnLineBom 2186.

51 Excel Crop Care Ltd. v. Competition Commission of India (2017) 8 SCC 47.

52 Google Inc. & Ors. v. Competition Commission of India & Anr., 2015 SCC OnLine Del 8992; Cadila Healthcare Ltd. & Anr. v. Competition Commission of India & Ors., 2018 SCC OnLine Del 11229.

53 Case No. 21 of 2019, Order dated 4 May 2021.

54 Section 53B of the Competition Act.

55 Section 53T of the Competition Act.

56 Section 53N of the Competition Act.

57 At present, seven compensation applications are pending before the NCLAT.

58 Section 31 of the Competition Act.

59 Article 245(2) of the Constitution of India protects the legality of legislation that has an extraterritorial operation.

60 Matrimony.com v. Google LLC & Ors., Case Nos. 07/2012 and 30/2012; Shri Vishal Gupta v. Google LLC & Ors., Case No. 06/2014; and M/s Albion InfoTel Ltd. v. M/s Google Inc. & Ors., Case No. 46/2014, Order dated 31 January 2018.

61 In re: Cartelisation in the supply of Electric Power Steering Systems (EPS Systems), Suo Motu Case No. 07(01) of 2014, Order dated 9 September 2019.

62 Section 3(5)(ii) of the Competition Act.

63 Nirmal Kumar Manhsani v. Ruchi Soya Industries Ltd & Ors, Case No. 76/2012, Order dated 28 June 2016 (the Order is under challenge in W.P.(C) 3922/2017 before the Delhi High Court).

64 Section 18 of the Competition Act.

65 Section 19(1) of the Competition Act.

66 Civil Appeal No. 3100 of 2020.

67 In Re: XYZ v. Alphabet Inc. & Ors., Case No. 07 of 2020, Order dated 09 November 2020.

68 Samir Agarwal v. Competition Commission of India, Competition Appeal (AT) No. 11 of 2019.

69 Steel Authority of India v. Competition Commission of India & Anr., Civil Appeal No. 7779 of 2010.

70 Baglekar Akash Kumar v. Google LLC, Case No. 39 of 2020, Order dated 29 January 2021.

71 Section 36(2) of the Competition Act.

72 Sections 123 and 124 of the Indian Evidence Act, 1872.

73 Case No. 90 of 2016, Order dated 17 March 2021.

74 Section 36(1) of the Competition Act.

75 Regulations 37 and 50 of the General Regulations.

76 Regulation 41 of the General Regulations.

77 Regulation 44 of the General Regulations.

78 Regulation 45 of the General Regulations.

79 Section 41(1) of the Competition Act.

80 Section 36(3) of the Competition Act.

81 The procedure for engagement of experts is codified under the CCI (Procedure for Engagement of Experts and Professionals) Regulations, 2009.

82 Section 19(1) of the Competition Act.

83 Section 53N(4) of the Competition Act.

84 Section 27 of the Competition Act.

85 Section 48 of the Competition Act.

86 Section 46 of the Competition Act.

87 Sections 42 and 43 of the Competition Act.

88 Section 53N of the Competition Act.

89 Section 42A of the Competition Act.

90 Section 53Q(2) of the Competition Act.

91 Under Section 42A of the Competition Act.

92 Explanation (b) to Section 53N of the Competition Act.

93 Section 126 of the Evidence Act.

94 Section 129 of the Evidence Act.

95 Exception to Section 126 of the Evidence Act.

96 Section 128 of the Evidence Act.

97 Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission of India & Anr, Delhi High Court, W.P.(C) 5604/2015, Order dated 14 December 2015, currently under appeal before a division bench of the Delhi High Court in Letters Patent Appeal No. 550 of 2016.

98 Vidya Drolia & Others v. Durga Trading Corporation, 2019 SCCOnLine SC 358.

99 Union of India v. CCI & Ors., 012 CompLR 187 (Delhi).

100 Investigations ongoing into (1) anticompetitive agreements by Flipkart, Amazon, Oravel Stays, Ola, Uber, etc., and (2) abuse of dominance by Google, Makemytrip, Flipkart, etc.

101 (2017) 8 SCC 47.

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