2023 has been an important year in the development of competition law jurisprudence in India.
While the Competition Commission of India (CCI) remained inquorate for a substantial part of the year, the Supreme Court of India (Supreme Court), the High Courts, and the National Company Law Appellate Tribunal (NCLAT) (the appellate authority of the CCI) pronounced a number of judgments that impact the jurisdiction and functioning of the CCI, and address contentious issues within the Indian competition law framework.
These key decisions are summarised below.
1. Coal India Ltd & Anr. v. Competition Commission of India & Another (Supreme Court – June 2023) - Competition Act is applicable to State-owned monopolies.
After a ten-year legal battle between Coal India Ltd (CIL) and the CCI on its jurisdiction to examine the conduct of State-owned monopolies, the Supreme Court held that the provisions of the Competition Act, 2002 (Competition Act) apply to CIL and similar public sector undertakings. The Supreme Court decision clarified that the Competition Act is applicable to all government companies and statutory monopolies that operate to further “common good” under the Constitution of India.
Given the Supreme Court’s decision, the CCI’s jurisdiction to investigate and take measures against statutory monopolies similar to CIL in abuse of dominance cases has been confirmed.
2. Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Another (Delhi High Court – July 2023) – Patents Act, 1970 is a code in itself and prevails over the provisions of the Competition Act
A division bench of the Delhi High Court held that disputes relating to allegations of anticompetitive conduct in the licensing of patents cannot be examined under the Competition Act and should be examined under the Patents Act, 1970.
This decision has effectively barred the jurisdiction of the CCI in examining disputes relating to the licensing of patents. Previously, a licensee could approach the CCI impugning terms and conditions in licensing agreements which potentially violated the provisions of the Competition Act. Now, a licensee will have to approach the Controller of Patents on all issues relating to alleged unreasonable conditions in patent license agreements, including allegations of anticompetitive conduct.
The CCI has appealed the Delhi High Court’s decision before the Supreme Court. However, the appeal is yet to be admitted.
3. Institute of Chartered Accounts of India v. Competition Commission of India & Others (Delhi High Court – June 2023) – The CCI does not have the jurisdiction to examine decisions of other statutory regulators
The Delhi High Court held that the CCI does not have jurisdiction to examine the decisions of other statutory regulators taken by them in exercise of their regulatory functions, with no interface with trade or commerce. The Delhi High Court also held that the Competition Act does not contemplate the CCI acting as an appellate court or a grievance redressal forum against decisions of statutory bodies, which are taken in exercise of their statutory powers.
The Delhi High Court decision creates an important exception for statutory regulators / bodies from the CCI’s scrutiny, even if their decisions may create anticompetitive effects.
No appeal has been filed against this decision as on the date of writing this article.
4. Google India Pvt. Ltd v. Matrimony.com Ltd (Madras High Court – August 2023) – Civil Courts’ jurisdiction is ousted by the Competition Act in abuse of dominance cases
Several parties approached the Madras High Court under its civil jurisdiction seeking a declaration that the terms and conditions imposed by a dominant entity in a commercial agreement were illegal and unenforceable. Rejecting the plaint, the Madras High Court held that Section 61 of the Competition Act expressly bars the jurisdiction of civil courts from entertaining suits based on the cause of action relating to the abuse of a dominant position by an enterprise. The Madras High Court further held that even though civil courts are empowered to go into the question of unconscionable nature of agreements entered between parties of unequal bargaining power under the Indian Contract Act, 1872 (ICA) the Competition Act, being a special law, will prevail over the ICA.
This decision is significant as it upholds the jurisdiction of the CCI to examine the conduct of dominant enterprises under Section 4 of the Competition Act.
The decision is currently pending in appeal before the division bench of the Madras High Court.
5. Alliance of Digital India Foundation v. Competition Commission of India & Others (Delhi High Court – April 2023) – Mere defect or vacancy in the constitution of the CCI does not impede its jurisdiction to adjudicate complaints or any other proceedings pending before it
The Delhi High Court held that the CCI could continue its adjudicatory process even in the absence of a coram of three members. The decision notes that a mere defect or vacancy in the constitution of the CCI would not invalidate the proceedings before it.
Prior to the pronouncement of the judgment, the CCI was unable to issue orders for a period of approximately six months due to being inquorate. In February 2023, the Ministry of Corporate Affairs, Government of India allowed the CCI to invoke the “doctrine of necessity” to examine combinations under its merger control mandate to clear the backlog of transactions awaiting approval. However, no such direction was seemingly provided for adjudication of pending enforcement cases.
When a party approached the Delhi High Court seeking directions to the CCI to act on its complaints and provide interim relief, the Court examined various provisions of the Competition Act and noted a distinction between administrative functions (where the Court held that quorum requirements may apply) and adjudicatory functions (where the Court held that there were no strict quorum requirements prescribed under the Competition Act). The High Court also appreciated that preventing the CCI from passing adjudicatory orders would effectively bring its functioning to a standstill which would go against the spirit of the Competition Act.
This decision will ensure that the CCI continues to adjudicate enforcement cases (including urgent applications for interim relief) even if it is inquorate in the future, making sure that adjudication of cases is not halted due to a mere vacancy in the CCI’s coram.
This decision was appealed before the division bench of the Delhi High Court. However, the appeal was subsequently withdrawn.
6. Ultratech Cement Ltd v. Competition Commission of India & Another (Delhi High Court – December 2023) – The CCI may allow impleadment of any party with “substantial interest” and “in public interest”
The Delhi High Court ruled that the CCI has the power to implead any party to a competition proceeding at any stage provided it satisfies the two-fold test of ‘substantial interest’ and ‘public interest’ under Regulation 25 of the Competition Commission of India (General) Regulations, 2009. It further clarified that such an impleadment does not change the nature of proceedings as proceedings in personam but merely assists the CCI to conduct proceedings in a better and effective manner enabling it to reach an informed decision.
This is one of the first decisions where the CCI allowed the impleadment of a party after the DG had concluded its investigation in the matter. The decision also provides much needed clarity regarding the test for impleadment to matters pending before the CCI for third parties who are interested in the outcome of the proceeding.
The decision is currently pending in appeal before a division bench of the Delhi High Court.
7. Google LLC & Anr v Competition Commission of India & Others (NCLAT – March 2023) – The CCI must conduct an “effects analysis” for proving abuse of dominance under the Competition Act
The NCLAT held that the CCI must conduct an “effects analysis” to prove that an entity has abused its dominant position in violation of Section 4 of the Competition Act. The test to be employed while conducting an “effects analysis” is to show whether the abusive conduct in question is anticompetitive. Notably, the NCLAT also held that the CCI cannot impose a behavioural remedy on a dominant enterprise unless there is a specific finding of abuse of dominance in relation to such conduct.
The NCLAT’s decision is significant because the wording of Section 4 of the Competition Act does not expressly require the CCI to consider the anticompetitive effects of an impugned conduct to arrive at a finding of infringement. However, in contrast, the legislature has provided for such a stipulation when the CCI examines anticompetitive agreements under Section 3 of the Competition Act.
The NCLAT’s decision marks an important shift in Indian competition law jurisprudence where previously, the CCI has found dominant entities to violate Section 4 of the Competition Act, irrespective of whether their conduct led to an anticompetitive effect in the market. There have also been instances of the CCI imposing positive behavioural remedies on dominant entities, without finding a specific finding of abuse in relation to such conduct.
Given the NCLAT’s decision, the CCI will have to conduct a thorough examination of the anticompetitive effects of a dominant entity’s conduct, if any, to support a finding of infringement and prior to imposing any behavioural remedies on such entity in ongoing and future cases.
The NCLAT’s decision is currently pending in appeal before the Supreme Court. However, no stay has been granted on the operation of the decision.
8. Consumer Unity & Trust Society v. Competition Commission of India & Others (NCLAT – August 2023) –Transactions exempt from merger review cannot be examined under the provisions concerning anticompetitive agreements or abuse of dominance
The NCLAT clarified that the provisions relating to anticompetitive agreements or abuse of dominance cannot be invoked to investigate a transaction that is exempt from notification under the merger control provisions of the Competition Act.
The decision provides clarity between the difference in the legal frameworks for horizontal agreements and mergers under the Competition Act (and how they operate in completely different fields). It further clarifies that while a merger between entities (which is exempt from notification to the CCI) cannot be examined by the CCI ex-ante under Section 3 and 4 of the Competition Act, the parties’ conduct can be scrutinised under these provisions ex-post (after the fact) if there is some evidence of violation of the Competition Act.
This decision will ensure that mergers which are otherwise exempt from notification to the CCI are not halted by frivolous complaints and interim relief applications filed before the CCI alleging violations of Section 3 or 4 of the Competition Act.
No appeal has been filed against this decision as on the date of writing this article.
9. The U.P. Glass Manufacturers Syndicate v. Competition Commission of India & Others (NCLAT - July 2023) – Third-parties do not always have a right to submit comments against combinations pending approval before the CCI
The NCLAT held that third-parties are not entitled to submit comments / submissions against or in favour of combinations pending approval before the CCI, unless the CCI invites such comments or information. The NCLAT clarified that the public’s right of participation arises only when the CCI directs the parties to the combination to publish the details of the combination to bring the combination to the knowledge of the public and persons affected or likely to be affected.
The NCLAT’s decision clarified that combination orders cannot be challenged by third-parties on the grounds of violation of principles of natural justice for failing to consider suggestions / objections by the public, unless the CCI has specifically directed the parties to publish the details of the combination and sought comments from the public.
The NCLAT’s decision is currently pending in appeal before the Supreme Court. However, no stay has been granted on the operation of the decision.
10. Balrampur Chini Mills Limited v. Competition Commission of India & Others (NCLAT – October 2023) – One who hears should decide
The NCLAT held that the composition of CCI members who hear final arguments in a matter must be part of the decision making and pronouncement of the final judgment. The appellant submitted that the CCI’s order was patently illegal since it was pronounced by a composition of three CCI members, whereas the final arguments were heard by a composition of six CCI members. The NCLAT broadly accepted the argument, and set aside the CCI’s order on the grounds that: (a) it was pronounced after an inordinate delay of thirteen months after the matter was heard; and (b) due to this inordinate delay, some of the members that heard final arguments in the matter had left office before the final order could be pronounced.
This decision is significant considering that several cases during the inception years of the CCI were heard by a composition of different members, some of which are still pending in appeal.
No appeal has been filed against this decision as on the date of writing this article.
About the authors: Rohan Arora is a Partner and Shivek Sahai Endlaw is an Associate in the Competition Law Practice at Shardul Amarchand Mangaldas & Co, New Delhi.
Disclaimer: The views expressed in this article are personal. They do not purport or reflect the opinions or views of SAM & Co or its members.