2015 (12) TMI 1893 - AT - Law of Competition

Cement Cartel Case Overturned: Tribunal Orders Fresh Probe Due to Procedural Violations and Natural Justice Breach.

Lafarge India Limited and Ors. Versus Competition Commission of India and Ors.

Lafarge India Limited and Ors. Versus Competition Commission of India and Ors. - TMI Issues Involved:1. Whether the Chairperson of the Competition Commission of India (CCI) could be a party to the final order without hearing the arguments.2. Allegation of cartelization by cement manufacturers.3. Procedural fairness and bias in the investigation and adjudication process.4. Confidentiality and handling of sensitive information.Issue-wise Detailed Analysis:1. Whether the Chairperson of the Competition Commission of India (CCI) could be a party to the final order without hearing the arguments:The Tribunal examined whether the Chairperson of the CCI, who did not hear the arguments, could be a party to the final order. It was found that the Chairperson did not participate in the meetings on 21st, 22nd, and 23rd February 2012, where the arguments were heard, yet he joined in passing the final order. The Tribunal emphasized that the rule of law requires that only those who hear the arguments should decide the case. The participation of the Chairperson, who did not hear the arguments, was deemed a violation of the principles of natural justice, rendering the final order invalid.2. Allegation of cartelization by cement manufacturers:The case involved allegations of cartelization by cement manufacturers, leading to price manipulation and reduced production. The Builders' Association of India (BAI) filed information under Section 19(1)(a) of the Competition Act, 2002, against the Cement Manufacturers' Association and 11 cement manufacturers. The Director General's investigation revealed that major cement manufacturers controlled the market, indulged in collusive price fixing, and manipulated production to maintain high prices. The Commission found the appellants guilty of violating Sections 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act and imposed penalties.3. Procedural fairness and bias in the investigation and adjudication process:The appellants argued that the investigation and adjudication process was biased and lacked fairness. They pointed out that the Commission had expressed views on cartelization before receiving the information from BAI, indicating a pre-determined mindset. Additionally, private communications from a former IAS officer complaining about cartel formation were found in the DG's records, raising doubts about the fairness of the investigation. The Tribunal noted that the principles of natural justice require that the person who hears the case must decide it. The participation of the Chairperson, who did not hear the arguments, was seen as a violation of this principle.4. Confidentiality and handling of sensitive information:The handling of confidential information was a significant issue. The appellants complained about the dissemination of confidential information by the DG. The Commission had earlier granted confidentiality to certain data but later revoked it. The Tribunal noted that the Commission must maintain confidentiality as prescribed by the Act and regulations. The Tribunal also highlighted the importance of providing a fair opportunity to the parties to defend themselves, which includes access to relevant data and documents.Conclusion:The Tribunal allowed the appeals, set aside the impugned order, and remitted the matter to the Commission for fresh adjudication. The Commission was directed to hear the advocates/representatives of the appellants and BAI and pass a fresh order in accordance with the law. The Tribunal emphasized the need for the Commission to evolve a comprehensive protocol and guidelines for conducting investigations and inquiries in consonance with the principles of natural justice.