2021 (12) TMI 1405 - HC - Law of Competition

Electricity Provider Faces CCI Probe for Alleged Market Abuse; Court Dismisses Premature Petition, Urges Cooperation.

The court dismissed the writ petition as premature and upheld the jurisdiction of the Competition Commission of India (CCI) to investigate the complaint ... Abuse of dominant position - prima facie opinion for Director General investigation - maintainability of writ against a notice under Article 226 - special statute prevailing over general law (Electricity Act vis-a -vis Competition Act) - absence of investigative and penal powers in sectoral regulator - power of Commission to refer issues to statutory authority (Section 21-A)Abuse of dominant position - prima facie opinion for Director General investigation - Whether the Competition Commission of India was justified in forming a prima facie opinion of abuse of dominant position and directing an investigation by the Director General. - HELD THAT: - The Commission, on the basis of the information supplied by the informant, found a prima facie case that the opposite party enjoyed a dominant position in the relevant market (generation and supply/distribution of electricity in Tamil Nadu) and that discriminatory supply and load-shedding practices could constitute imposition of unfair or discriminatory conditions in sale of services within the meaning of the Competition Act. The Court refrained from adjudicating merits and accepted that the Commission's expression of a prima facie view authorised initiation of investigation by the Director General; nothing in the Commission's order was treated as a final determination on merits. The petitioner (TANGEDCO) was obliged to furnish information and explanations and participate in the investigation pursuant to the procedures under the Competition Act. [Paras 40, 41, 50, 51, 52]The Commission was entitled to form a prima facie opinion of abuse of dominant position and to direct investigation by the Director General; the Court will not substitute itself for that investigatory exercise at this stage.Special statute prevailing over general law (Electricity Act vis-a -vis Competition Act) - absence of investigative and penal powers in sectoral regulator - power of Commission to refer issues to statutory authority (Section 21-A) - Whether the Electricity Act and the Tamil Nadu Electricity Regulatory Commission oust the jurisdiction of the Competition Commission of India to entertain and investigate the complaint. - HELD THAT: - The Court acknowledged the principle that a special enactment prevails over a general law in respect of matters it covers. Section 23 of the Electricity Act empowers the State Commission to make orders to maintain efficient supply, equitable distribution and promote competition. However, the Court found no express provision in the Electricity Act vesting the State Commission with investigatory or penal powers to probe and prosecute alleged abuse of dominant position analogous to Section 4 of the Competition Act. In the absence of an investigating and penal mechanism under the Electricity Act for abuses of dominance, the Competition Act's investigatory machinery remains applicable. The Court further observed that, if during investigation the Commission concludes that an issue falls squarely within the remit of the State Commission, Section 21-A empowers the Competition Commission to refer that issue to the statutory authority. [Paras 44, 45, 46, 54, 56]The Electricity Act does not oust the Commission's jurisdiction in the present case because the State Commission lacks comparable investigatory/penal powers for alleged abuse of dominant position; the Competition Commission may investigate and, if appropriate, refer issues to the State Commission under Section 21-A.Maintainability of writ against a notice under Article 226 - Whether the writ petition challenging the notice issued by the Competition Commission of India is maintainable and should be entertained at this stage. - HELD THAT: - The Court recognised that writ jurisdiction under Article 226 exists but emphasised that a writ challenging a notice is not to be entertained routinely; such relief is available only on limited grounds (lack of jurisdiction, direct attack on statutory provisions, mala fides). Here the challenge was to a notice issued to facilitate DG investigation and was premature as the Commission had not adjudicated merits and procedures under the Act remained available to the petitioner. The Court declined to adjudicate merits or to quash the notice at this investigatory stage, directing the petitioner to participate in the statutory process and permitting the Commission to complete investigation within judicially fixed timelines. [Paras 6, 17, 55, 57, 58]Although the writ petition was maintainable, it was not entertainable at this stage; the challenge to the investigatory notice was premature and the petition was dismissed without quashing the notice.Final Conclusion: The writ petition challenging the Commission's decision to register the complaint and issue a notice for Director General investigation is dismissed as premature. The Competition Commission was entitled to form a prima facie view of abuse of dominant position and to investigate where the sectoral regulator lacks comparable investigatory or penal powers; the petitioner must participate in the investigation and may rely on Section 21-A for any reference to the State Electricity Regulatory Commission if jurisdictional issues arise. Issues Involved:1. Jurisdiction of the Competition Commission of India (CCI) versus the Tamil Nadu Electricity Regulatory Commission (TNERC).2. Maintainability of the writ petition under Article 226 of the Constitution of India.3. The applicability of the Competition Act, 2002, vis-à-vis the Electricity Act, 2003, in cases of alleged abuse of dominant position.Detailed Analysis:1. Jurisdiction of the CCI versus the TNERC:The primary issue was whether the CCI had the jurisdiction to entertain a complaint against TANGEDCO for alleged abuse of dominant position, given the existence of the TNERC under the Electricity Act, 2003. The court noted that the CCI received a complaint from the Southern India Engineering Manufacturers' Association, alleging that TANGEDCO was abusing its dominant position by imposing discriminatory conditions in the sale of electricity, thus violating Section 4(2)(a)(i) of the Competition Act, 2002. The CCI found a prima facie case and ordered an investigation by the Director General. The petitioners contended that the TNERC, empowered under Section 23 of the Electricity Act, 2003, should adjudicate such complaints, not the CCI. However, the court clarified that while the Electricity Act is a special statute, it does not provide for the investigation of abuse of dominant position, a specific provision under Section 4 of the Competition Act. Therefore, the CCI was within its jurisdiction to investigate the complaint.2. Maintainability of the Writ Petition under Article 226:The court emphasized that writ petitions against notices should not be entertained routinely. A writ could be entertained only if the notice was issued by an incompetent authority, lacked jurisdiction, or if allegations of mala fides were raised. In this case, the court found that the writ petition was premature and not maintainable, as the CCI had merely issued a notice for investigation, and the petitioner had the opportunity to present their case before the CCI. The court stated, 'This Court is not inclined to step-in to the nature of the allegations or its veracity or otherwise, which is yet to be investigated by the Director General under the provisions of the Competition Act.'3. Applicability of the Competition Act, 2002, vis-à-vis the Electricity Act, 2003:The court examined whether the provisions of the Competition Act could apply in the presence of the Electricity Act. The petitioners argued that the Electricity Act, being a special statute, should prevail over the Competition Act. The court referred to the Supreme Court's judgment in the Bharti Airtel case, which held that sectoral regulators like TRAI should first address jurisdictional issues before the CCI could proceed. However, the court noted that the Electricity Act did not have provisions for investigating abuse of dominant position, unlike the Competition Act. Therefore, the CCI was empowered to investigate the complaint under Section 4 of the Competition Act. The court concluded, 'When the Electricity Regulatory Commission is not vested with the power of investigation under the Electricity Act... then the Competition Commission of India is empowered to deal with the complaint with reference to Section 4 and initiate further proceedings.'Conclusion:The writ petition was dismissed as premature, and the court directed the petitioner to cooperate with the CCI's investigation. The court affirmed the CCI's jurisdiction to investigate the complaint under the Competition Act, given the absence of a specific investigative mechanism under the Electricity Act for abuse of dominant position. The court emphasized that the petitioner had the opportunity to present their case during the CCI's investigation and could raise jurisdictional issues if necessary.