2023 (10) TMI 1479 - HC - Law of Competition

HC upholds CCI investigation order under Section 26(1) for alleged cement cartel, rejects premature judicial review

Dalmia Cement (Bharat) Ltd. Versus The Union Of India And 3 Ors., Director General Competition Commission Of India and Oil And Natural Gas Corporation Limited, Delhi

The HC dismissed the appeal challenging CCI's investigation order under Section 26(1) of Competition Act, 2002. The appellant contested the investigation ... Cartelisation - challenge to investigation order under Section 26(1) of the Competition Act, 2002 - sufficient grounds for directing an investigation into alleged cartelization and bid-rigging by the appellant and other cement companies or not - HELD THAT:- The CCI had already passed the final order holding that the appellants were guilty of contravention of Section 3(3)(d) and Section 3(3)(a) of the Act and imposed penalties in the Form of fines under Section 27 of the Act. Several affected parties preferred statutory appeals before the Competition Appellate Tribunal who, by its judgment upheld the findings of the CCI. Thus, the Supreme Court Judgment in the case of Rajasthan Cylinders and Containers Limited [2018 (10) TMI 229 - SUPREME COURT] was rendered after final orders had been passed whereas, the appellant is before this Court at a premature stage of proceeding and it was thereby held by the learned Single Judge that the observations made in Rajasthan Cylinders and Containers Limited were not directly applicable to the facts and circumstances to this case. Reverting back to the case at hand, it is discernable from the impugned order of the CCI dated 18.11.2021 in case No. 35/2020 that an opinion was formed by the CCI on the basis of the information received from the respondent no.4 – ONGC, after the documents provided by the ONGC were taken into consideration to express that in no uncertain terms the CCI is of the view that a prima facie exists, requiring issuance of direction for investigation to the DG - it is hereby provided that the copies of the complete set of documents relied upon by the CCI which the appellant has been allowed to inspect and excluding the documents for which privilege is claimed shall forthwith be provided to the appellant so as to give a proper opportunity of defence to the appellant in the subsequent proceedings. Conclusion - The investigation orders under Section 26(1) are administrative and not subject to detailed judicial review at the preliminary stage. The appeal is hereby dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the writ petition challenging the investigation order under Section 26(1) of the Competition Act, 2002, is maintainable at a premature stage.Whether the Competition Commission of India (CCI) formed a prima facie opinion based on sufficient grounds for directing an investigation into alleged cartelization and bid-rigging by the appellant and other cement companies.Whether the CCI's investigation order and subsequent notice were issued within the permissible limitation period as per the Competition Act, 2002.Whether the appellant was denied principles of natural justice by not being provided with certain documents relied upon by the CCI.Whether the CCI's order and the investigation by the Director General (DG) amounted to a roving and fishing enquiry.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Maintainability of the Writ PetitionRelevant Legal Framework and Precedents: The appellant relied on the Supreme Court judgment in Competition Commission of India Vs. Bharti Airtel to argue the maintainability of a writ petition challenging an investigation order.Court's Interpretation and Reasoning: The court held that the writ petition was filed at a premature stage, as the investigation order under Section 26(1) is administrative and not determinative of rights.Conclusions: The court concluded that the writ petition was not maintainable at this stage.Issue 2: Prima Facie Opinion for InvestigationRelevant Legal Framework and Precedents: The CCI formed a prima facie opinion under Sections 3(3)(a), 3(3)(b), 3(3)(c), and 3(3)(d) read with Section 3(1) of the Competition Act.Court's Interpretation and Reasoning: The court noted that the CCI's order was based on comparative statements and allegations of identical pricing and market allocation among the cement companies.Key Evidence and Findings: The CCI relied on comparative pricing data provided by ONGC, indicating possible collusion.Conclusions: The court upheld the CCI's prima facie opinion, finding no grounds to interfere with the investigation order.Issue 3: Limitation Period for Investigation OrderRelevant Legal Framework: The appellant argued that the information was filed beyond the permissible period as per the Competition (Amendment) Act, 2023.Court's Interpretation and Reasoning: The court found that the CCI's order was not barred by limitation, as the information was filed within the permissible period.Conclusions: The court concluded that the investigation order was within the limitation period.Issue 4: Principles of Natural JusticeRelevant Legal Framework: The appellant claimed denial of natural justice due to non-provision of certain documents.Court's Interpretation and Reasoning: The court found that the CCI's order clearly stated the grounds for investigation and that the appellant was allowed to inspect the documents.Conclusions: The court held that there was no violation of natural justice.Issue 5: Roving and Fishing EnquiryCourt's Interpretation and Reasoning: The court found that the investigation was based on specific allegations and data, not a roving enquiry.Conclusions: The court concluded that the investigation was justified and not a fishing expedition.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes: The court noted, 'In view of the foregoing, the Commission prima facie notes that the aforementioned 4 impugned tenders were rigged through collusion/cartelization among the OPs... thus prima facie appear to be in contravention of provision of Sections 3[3][a], 3[3][b], 3[3][c], and 3[3][d], read with Section 3[1] of the Act.'Core Principles Established: The court reinforced that investigation orders under Section 26(1) are administrative and not subject to detailed judicial review at the preliminary stage.Final Determinations on Each Issue: The court dismissed the appeal, upholding the CCI's order and the investigation's continuation, emphasizing that the appellant's concerns were premature.