Locus Standi to Approach CCI: The Final Stand
Locus Standi to Approach CCI: The Final Stand

Locus Standi to Approach CCI: The Final Stand

This article has been written by Richa Borthakur, and Rishika Agarwal, Fourth Year students at OP Jindal Global University

The Competition Commission of India (“CCI”), established under the Competition Act, 2002 (“Act”) is empowered to investigate, penalise, and curb anti-competitive conduct and practices in the country. The CCI’s mandate, as per the preamble of the Act is to, inter alia eliminate practices that have an appreciable adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade. The question of who can approach the CCI with a complaint was brought to debate post the NCLAT order dated May 29, 2020 of Samir Agarwal v CCI and Ors. The Supreme Court put the question to rest vide its judgement on the 15th of December, 2020.

Background and the NCLT Order

Samir Agarwal, the informant, alleged that the conduct of cab aggregators Ola and Uber contravened Section 3 of the Competition Act due to the creation of a ‘hub and spoke cartel’. The application stated that the pricing algorithm used by the companies facilitated collusion with and among the drivers. The CCI vide its order ruled that no agreement or understanding existed between the companies and their drivers or between the drivers. It dismissed the case on the ground that there was no prima facie contravention of the Act. Thereafter, the decision was taken to the NCLAT.

Before looking into the matter on its merits, the NCLAT adjudicated that the term ‘any person’ in section 19(1)(a) of the Act was to be interpreted as ‘a reference to a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices’. They further stated that any other interpretation of ‘any person’ in the Act, would make room for ‘unscrupulous people to rake issues of anti-competitive agreements or abuse of dominant position targeting some enterprises with oblique motives’. The judgement emphasised that it was essential for there to exist a direct nexus between the informant and the alleged violation of his legal rights under the Act.

Relying on this order, in the case of Harshita Chawla v. Whatsapp Inc. & Facebook Inc, it was claimed by the opposite parties (Facebook and Whatsapp) that the informant did not have the locus standi to approach the CCI as ‘neither has she claimed injury nor has she suffered invasion of her legal rights as a consumer’. The CCI then held that such a claim was not tenable as the substance of the information holds more importance over the identity of the informant, keeping in mind the in rem nature of the proceedings under the Act. Thus, such a contradictory stand of the CCI as opposed to the NCLAT’s order created ambiguity regarding the true scope of an informant, and the ability of a non-aggrieved party to approach the CCI under the Act.

Supreme Court Order

A three-judge bench comprising of Justices RF Nariman, Krishna Murari and KM Joseph overruled the NCLAT order. The court refused to look into the merits of the case, however, it analysed the law on the locus standi of applicants approaching the CCI. The bench stated that definition of a ‘person’ in section 2(1) is extremely wide and includes all kinds of people including artificial judicial persons.

The 44th Standing Committee on Finance in its report had suggested that the term ‘information’ in Section 19(1)(a) would be more inclusive in its meaning as opposed to the word ‘complaint’. The report opined that it would further enhance the scope and role of CCI as a regulatory body. In light of this, Section 19(1) of the Act was amended in 2007, and the provision was amended from receipt of complaint from ‘any person, consumer or their association or trade association to ‘receipt of any information in such manner’. The Supreme Court rightly went on to observe that such an amendment was not ‘without significance’. The bench held that while a complaint could be filed only by someone who was personally aggrieved by an action, an information on the other may be received irrespective of such considerations.

The court observed that the nature of the proceedings under the Act are ‘in rem’ and not ‘in personam’ and consequently affect public interest at large. The commission owes its duty to prevent anti-competitive conduct towards the market as a whole, and is not concerned with the rights of a single individual, entity or enterprise. Emphasis was laid on the fact that the CCI also has the power to take suo-moto cognisance under Section 19(1) of the Act, and inquire into any alleged anti-competitive conduct. The information of such conduct may be provided to the CCI by any person, who may or may not be personally aggrieved.

The NCLAT judgment was weary of a liberal interpretation of the term ‘any person’ under Section 19(1) (a) of the Act, as it could lead to false claims for ‘oblique motives’ and vexatious litigation. On the other hand, the Supreme Court correctly stated that remedy for such concerns is enshrined in section 45 of the Act itself which provides a hefty penalty up to Rs. 1 crore for false claims. Therefore, the NCLAT’s fear was misplaced as there are sufficient deterrents within the Act itself which provides a safeguard against litigations arising out of frivolous, malicious and false claims.

The Court further supported its findings by analysing the 2009 Regulations, under which Regulation 10 does not mandate an informant to ‘state how he is personally aggrieved by the contravention of the Act’, but only mandates a statement of facts and details concerning the alleged contravention. The bench further stated that the fact that public interest is at the core of the Act is also evidenced by Regulation 25.

In view of the aforementioned considerations, the Supreme Court ruled that any person can be an informant, irrespective of whether such person was personally aggrieved or not. This judgment was in line with past precedents, such as the approach of COMPAT in the case of Shri Surendra Prasad v Competition Commission of India. [rn1] The COMPAT in this case held that the plain texts of Sections 18 and 19, read along with Section 26(1) of the Act revealed that the legislative intention was to not prescribe any conditions for filing an information under Section 19(1)(a).

Concluding Remarks and Analysis

This decision by the Supreme Court is a positive stride towards formulating an unambiguous precedent. The narrow interpretation given to section 19 by the NCLAT was remedied to ensure that the essence of competition law is kept intact. Such an interpretation would not only hamper the legal regime but also make it significantly difficult for whistle-blowers to shed light on anti-competitive practices. It becomes clear from the preamble and Section 18 of the Act that CCI has an indispensable duty of safeguarding interests of consumers at large and maintaining fair competitive conditions in the market. It is important to note that the NCLAT’s order went against international best practices and was antithetical to India’s booming antitrust regime. In fact, in more advanced competition jurisdictions such as the United Kingdom, informants and whistle-blowers are actively encouraged to report anti-competitive conducts and aid the relevant authorities in this regard. The Competition and Markets Authority of the United Kingdom can use different external sources of information from complainants and whistle-blowers to initiate an anti-trust probe. There is also no further ambiguity regarding the CCI’s functions, as it has been deemed to be adjudicatory, inquisitorial and regulatory in nature. Supreme Court has strongly re-iterated that public interest is at the core of Act and the proceedings under it. The Supreme Court’s ruling has ensured that the prevailing market conditions in India will be pushed to be fairer and more competitive, and a robust whistleblowing practice has arguably been put in place.

 [rn1]The author is requested to insert the citation or hyperlink.

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