TaxTMI 
TaxTMI 
2021 (7) TMI 1398
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....f the common order passed by the learned Single Judge dated 11.6.2021 in W.P. No. 3363/2020 c/w W.P. No. 4334/2020, by which the learned Single Judge has dismissed the writ petitions filed by both the petitioners. 3. The appellant-Flipkart Internet Private Limited is a Private Limited Company incorporated under the Companies Act, 1956 having its registered office at Bengaluru, Karnataka and it operates as an e-commerce platform and online marketplace, which facilitates independent third party sellers to sell goods to consumers. The appellant has about 200 million registered users and 15 million transacting customers per month. 3.1. The facts of the case reveal that respondent No. 2/Delhi Vyapar Mahasangh filed an information on 24.10.2019 to Competent Commission of India (CCI) under Section 19(1)(a) of the Competition Act, 2002 (hereinafter referred to as the Act) against both the appellants alleging that the appellants are involved in alleged anti-competitive practices and conduct, such as deep discounting, preferential listing, sale of private label brands through preferential sellers and exclusive tie-ups, alleged to be in violation of Section 3(1) r/w Section 3(4) of the Act.....
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.... following: (i) The CCI can act on the receipt of a reference from the Central/State government or a statutory authority or on its own knowledge "or information received under Section 19". (ii) The material in its possession must lead the CCI to form an opinion that there exists a prima facie case. 3.5. It has been contended that as explained by the Hon'ble Supreme Court in CCI v. SAIL, "the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter" and the said paragraph, which is at paragraph 37 of the judgment reads as under; "37. As already noticed, in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exer....
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....er was challenged by the appellant/Flipkart inter alia on the grounds that: (i) The CCI Order failed to express its mind in no uncertain terms that the CCI was of the view that a prima facie case exists requiring a direction to the director-general to cause an investigation; (ii) The CCI Order fails to examine whether the alleged agreements were of the kind so as to attract Section 3(4) of the Act; and (iii) The CCI Order failed to take into account (on its own admission on Vol. 4, p. 400-401-CCI affidavit) the provisions of Section 19 in forming an opinion that there was a prima facie case of appreciable adverse effect on competition (AAEC). On a misdirection of law that the provision did not apply at this stage. 3.10. It has been further contended that the facts indisputably establish that the appellant/Flipkart operates an online marketplace platform on which independent third parties and sellers sell their wares. The appellant is neither the seller nor a buyer of goods. The allegations against the appellant were that: (i) There are certain sellers who are designated "assured sellers" (conveniently mischaracterised as preferred sellers) and such designation by the appel....
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.... in the latter words of the provision. It has been further contended that the CCI thus misdirected itself in law. An analysis of the material paragraphs in the CCI Order as well as the submissions made by the CCI makes it apparent that the CCI has not considered the factors in Section 19(3) while passing the CCI Order. This is another fundamental misdirection in law and amounts to a failure to take into account relevant considerations while forming the prima facie opinion. It has been further stated that the CCI has asserted on affidavit before the learned Single Judge that Section 19 is not considered at the stage of Section 26(1) of the Act. During the oral submissions before the learned Single Judge, the CCI took the position that the word "inquiry" in Section 19(1) must mean that Section 19(3) does not come into play at the stage of formation of opinion under Section 26(1) of the Act. This construction by the CCI is in the teeth of Section 19 of the Act. 3.15. It has been contended that the CCI's submission that Section 19 is not required to be considered at the stage of passing an order under Section 26(1) is plainly wrong as Section 19(1) refers to an inquiry at its comm....
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....urt of India in CCI v. SAIL (2010) 10 SCC 744. Heavy reliance has been placed upon paragraphs 37, 97 and 98 and the same reads as under; Para 37 (as extracted above in Para 3 of the present submissions); "97. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions, conclusions or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to Commission. Such opinion should be formed on the basis of records, including the information furnished and reference made to the Commission under the provisions of the Act, as afore referred In other words, the Commission is expected to express prima facie view in terms of Section 26(1) of the Act, without entering into any adjudicatory or determinativ....
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....er merely reiterates the allegations of the Informant and makes some cursory remarks, stating that the allegations 'merit an investigation'. It has been further contended that there is not even a single instance in the CCI Order (and the CCI has also failed to demonstrate the same before this Court from the CCI Order or otherwise from the material available), wherein the CCI, assuming all the allegations against the appellant to be true and correct, concludes that such allegations constitute a contravention of the provisions of the Act. In the absence of such a "formation of an opinion", leave alone being "substantiated" even by "minimum reasons", the CCI Order has been passed contrary to the provisions of Section 26(1) of the Act itself and deserves to be set aside by this Hon'ble Court. 3.19. It has been further contended that the CCI Order is bad in law as it has changed the test for the exercise of the powers under Section 26(1) of the Act from a "prima facie case of contravention of the Act" to a "prima facie case for investigation". In respect of the aforesaid ground, the following observations in the CCI order have been referred: a. "Whether funding of discoun....
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.... opinion on "prima facie case for investigation". The CCI has evidently failed to apply the correct test, i.e., failed to prima facie establish contravention of the provisions of the Act by the appellant, as has been demonstrated in the above paragraph, and on this count alone, the CCI Order deserves to be set aside. The learned Single Judge has also failed to appreciate these facets and prerequisites, and accordingly the Impugned Order too deserves to be set aside. 3.21. It has been contended that in response to the aforesaid submission of the appellant, the CCI made the following submissions: a. An order under Section 26(1) of the Act is a mere administrative order and CCI is not required to undertake any adjudicatory exercise; b. In an order under Section 26(1), the CCI is required to form only a preliminary/tentative opinion; c. An order under Section 26(1) of the Act entails no civil consequences; d. The CCI is merely required to record "some reasons" at the 26(1) stage; e. The CCI has deliberately passed an order directing an investigation with minimal reasons, as a detailed order may influence the DG during its investigation against the appellants. 3.21.1. It is ....
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....hat was said by the Federal Court in Emperor v. Shibnath Banerjee [1961 6 FCR 1 : AIR 1943 FC 75] and approved later by the Privy Council. Quite obviously there is a difference between not forming an opinion at all and forming an opinion upon grounds, which, if a court could go into that question at all, could be regarded as inapt or insufficient or irrelevant. It is not disputed that a court cannot go into the question of the aptness or sufficiency of the grounds upon which the subjective satisfaction of an authority is based." It has been contended that a perusal of the above makes it apparent that: a. The Hon'ble Supreme Court in the Bharti Airtel Case had held that the principles laid down by the Hon'ble Supreme Court in the case of Barium Chemicals Case would be applicable to judicial review of an order under Section 26(1) of the Act; b. The Hon'ble Supreme Court in the Barium Chemicals case was examining the scope of judicial review of an administrative order. Even in the said case, the Hon'ble Supreme Court was not examining an adjudicatory order; c. The Hon'ble Supreme Court in the Barium Chemicals case was also considering validity of an order di....
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....f the provisions of the Act leave alone preliminary/tentative view. A preliminary or tentative view does not mean that the opinion is sans intelligible reasons. Even on this count, even assuming the submission made by the CCI to be correct, the CCI Order deserves to be set aside as the CCI has failed to establish a prima facie of contravention of the provisions of the Act in certain terms, as it is required to do so under Section 26(1) of the Act. 3.21.5. Regarding an Order under Section 26(1) entails no civil consequences, it has been contended that the commencement of an investigation under Section 26(1) of the Act against an entity involves substantial and significant civil consequences for the said entity. This issue has already been dealt with and decided by the Hon'ble High Court of Delhi in Google Case, wherein the High Court was pleased to observe as under: "18(N) The Supreme Court, in Rohtas Industries (Supra) and the Calcutta High Court in New Central Jute Mills Co. Ltd. (Supra), cited by the counsel for the respondent No. 2/complainant, also has held that an investigation against a public company tends to shake its credit and adversely affect its competitive posit....
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....the law on the CCI is significant and mandatory and requires compliance which compliance must be disclosed from the reasons as contained in the order under Section 26(1) in no uncertain terms. 3.21.9. It has been contended that the High Court of Delhi in the Google case has held that the powers of the Director General during such an investigation are far more sweeping and wider than the powers of investigation conferred on the Police under the Code of Criminal Procedure 1973. It has been stated that the Delhi High Court in the Google case has observed as under; "18(E) It would thus be seen that the powers of the DG during such investigation are far more sweeping and wider than the power of investigation conferred on the Police under the Code of Criminal Procedure. While the Police has no power to record evidence on oath, DG has been vested with such a power." 3.21.10. It is stated that therefore, it may not be correct to aver that an order under Section 26(1) does not entail any civil consequences. On the contrary, an order under Section 26(1) has very serious consequences, which casts an additional responsibility on the CCI to ensure that the jurisdictional threshold are satis....
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....Act, the CCI Order is a valid order. However, such submission is incorrect and is premised on a selective reading of the judgment of the Hon'ble Supreme Court in CCI v. SAIL and completely ignores para 97 of the judgment. The Hon'ble Supreme Court in para 97 of the CCI v. SAIL judgment has observed that "at the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General". Therefore, though the CCI is required to record "some" or "minimum" reasons in an order under Section 26(1) of the Act, it is not absolved from expressing its prima facie opinion of contravention of the provisions of the Act in "no uncertain terms" and therefore, as the CCI has failed to do so in the CCI Order and on this ground alone, the CCI Order should be set aside. 3.21.14. In support of his contention, the learned Senior counsel for the appellant has placed reliance upon the following extracts from the judgment of the Hon'ble Supreme Court in CCI v. ....
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.... so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality. The distinction between passing of an order by an administrative or quasi-judicial authority has practically extinguished and both are required to pass reasoned orders." It has been stated that in this very judgment, the Hon'ble Supreme Court while referring to other decisions held that it is essential that administrative authorities and Tribunals should accord fair and proper hearing to the affected persons and record explicit reasons in support of the order made by them. Reliance has also been placed upon paragraphs 96 and 97 of the aforesaid judgment and the same reads as under; 96. Even in cases of supersession, it was held in Gu....
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....ply forwarding all information(s) received to the DG for investigation and will not be required to apply its mind to the information(s) and forward only those information(s) to the DG that merits investigation. b. Given that there is no right of hearing at the Section 26(1) stage, the only protection available to an opposite party against arbitrary exercise of power by the CCI, i.e., disclosure of mind in no uncertain terms with reference to material on record, will be taken away (pertinently, there is no other protection available to an opposite party in the form of opportunity of hearing, reasoned order etc.). c. An opposite party will be subjected to a very intrusive investigation without there being any checks and balances. 3.22. In respect of the issue that the CCI Order failed to satisfy the existence of jurisdictional facts of contravention of the provisions of the Act, it has been contended by the appellant that the impugned order fails to consider that the CCI Order does not demonstrate the formation of a prima facie opinion on the contravention of the provisions of the Act, which by necessary implications would have involved the formation of a view on: a. the exist....
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....s of the Competition Act. The Impugned Order only records that the Information's allegations relating to four supposed "practices" namely, (a) exclusive launch of mobile phones; (b) preferred sellers on the marketplace (c) deep discounting; and (d) preferential listing or promotion of private labels. Further the Impugned Order does not identify in clear terms the parties to these unilateral practices and how the same would fall with[in] the ambit of Section 3(4) of the Competition Act. 12. Instead of identifying such alleged ant-competitive agreements the Impugned Order refers to the alleged unilateral practices of the Petitioner. . It is respectfully submitted that mere unilateral practices of an enterprise do not amount to an "agreement" for the purpose of Section 3 of the Competition Act. An agreement by its very definition under the Competition Act, requires the concurrence of wills, i.e., it is a bilateral action having the concurrence of two or more parties. Furthermore, it much be noted that the only agreement that the Information identified was the Amazon Seller Agreement. No Agreement of any nature was identified by the Informant with respect to the Petitioner. " (....
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....ch as storage and warehousing, does not become part of the production chain for the purpose of Section 3(4) of the Act. These are adjunct services which are outside the purview of a production chain. It has been stated that the appellant is an online commerce marketplace platform on which various sellers sell different products which are purchased by customers. The platform neither buys the goods nor sells them. It only facilitates the sale and purchase of products by providing intermediary services. The online marketplace provides a platform to the sellers for sale of products but does not add any value to the products being sold. Unlike a seller, the online marketplace platform does not take title to goods but provides intermediary services for the sale of such products on its platform. 3.29. It has been further contended that the appellant stands on the same footing as an entity which owns and operates a shopping mall. Similar to an entity which owns and operates a shopping mall, the appellant only provides a platform for the different sellers to sell their products to consumers that visit the shopping mall. Merely providing the platform, i.e., space in the shopping mall, does ....
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....its platform cannot be held to be an agreement between enterprises operating at different levels of the production chain. Accordingly, such an agreement could not have formed the basis for the CCI's direction to investigate violation of Section 3(4) read with Section 3(1) of the Act. Hence, the orders passed by the CCI and the learned Single Judge deserves to be set aside. 3.32. It has been contended that during the oral submissions before the learned Single Judge, the CCI had submitted that the words "production chain" as used in Section 3(4) of the Act would derive its colour from the latter part of Section 3(4) of the Act, i.e., "supply, distribution, storage, sale or trade". It is stated that such a submission is completely erroneous and contrary to the principles of statutory interpretation. The same completely ignores the language used in Section 3(4) of the Act. The provision expressly refers to "enterprises or persons at different stages or levels of production chain in different markets" and thereafter specifically states that the "agreement in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services". Therefor....
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.... prima facie existence of facts and circumstances that show an appreciable adverse effect on competition. It has been further contended that the CCI has sought to argue that "production chain" must be read as supply chain. Whilst making the above submission during the oral submissions before this Hon'ble Court, CCI had referred to the judgment of the Hon'ble Supreme Court in Excel Crop Care Ltd. v. CCI, (2017) 8 SCC 47. It is important to note that the Excel Crop Care decision was a decision regarding collusive bidding (a horizontal agreement in violation of Section 3(3) of the Act, where an appreciable adverse effect on competition ("AAEC") is presumed and as opposed to Section 3(4) of the Act, AAEC need not be established at the prima facie stage. Further. the reference made in paragraph 21 of this judgment to the "supply side" is wholly unrelated to vertical agreements that are in question here, and was instead a discussion regarding how competition law seeks to regulate enterprises selling goods to consumers, for the benefit of said consumers. This does not, in any manner, take away from the statutory requirement under Section 3(4) of the Act to establish an agreement b....
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....t the agreement shall be in contravention of the section "if such agreement causes or is likely to cause an appreciable adverse effect on competition in India". As such an agreement may be considered to in contravention of the provisions of Section 3(4) of the Act only if such an agreement causes or is likely to cause an appreciable adverse effect on competition in India. 3.37. It has been contended that factors to be considered by the CCI to examine if an agreement causes AAEC or not, have been provided for in Section 19(3) of the Act. Pertinently, Section 19(3) (a) to (c) sets out adverse impact of an agreement on competition and Section 19(3) (d) to (f) sets out positive impact of an agreement on competition. Therefore, the CCI in order to arrive at a finding on AAEC is required to consider both adverse and positive impact of the agreement. The CCI cannot ignore the legislative guidance provided in terms of Section 19(3) as to what constitutes AAEC. It has been further contended that the CCI Order fails to undertake any analysis (leave alone recording any prima facie opinion) if any alleged agreement to which the appellant is party, "causes or is likely to cause an appreciable ....
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....ounterfactual, if the prima facie AAEC analysis is not required or necessary then every information filed with the CCI would be directed for investigation, which is not the intent of the legislature at the Section 26(1) stage. 3.40. It has been contended that the decision of the Bombay High Court in the Star Case though cited finds no mention in the Impugned Order and has not been addressed by the CCI at all during the oral arguments. The decision although under appeal before the Hon'ble Supreme Court, has not been stayed and therefore, binds the CCI. The CCI before the learned Single Judge as well as before this Hon'ble Court (during oral submissions) submitted that it was not required to analyse factors mention in Section 19(3) at the stage of Section 26(1) of the Act. 3.41. It has been stated that in this regard, the relevant extract of the affidavit filed by the CCI before the learned Single Judge reads as under: "33. On the issue of assessment of AAEC at the time passing an order under Section 26(1), it is respectfully submitted that there is no necessity of such a 'prima facie' finding at that stage. 35. It is respectfully submitted that the very nature ....
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....on is contrary to the provisions of Section 3(4) of the Act itself, which provides that an agreement shall be considered to be in contravention of the provisions of the Act "if such agreement causes or is likely to cause an appreciable adverse effect on competition in India". As such factors are provided under Section 19(3) of the Act, at the stage of formation of a prima facie opinion of contravention of Section 3(4) of the Act, CCI cannot be permitted to ignore the factors contained in Section 19(3) of the Act; (c) If the submission of the CCI is accepted then it will lead to an absurd situation wherein the CCI will be required to apply different tests for violation of provisions of Section 3(4) - at the stage of Section 26(1) of the Act as opposed to other stages of the proceedings before the CCI. (d) Such a submission of the CCI does not have any statutory support in as much there is no provision in the Act which provides that the test for contravention of Section 3(4) of the Act is different at the stage of Section 26(1) as against other stages of proceedings before the CCI; (e) If the submission of the CCI is accepted, it will result in giving unbridled powers to the CC....
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.... Ors. (pr. 27-28). 3.43. It is stated that therefore, the CCI has committed a fatal error on interpretation of the provisions of Section 19(3) and Section 3(4) of the Act. This error goes to the root of the matter. A bare perusal of the CCI Order demonstrates that the CCI has not undertaken any analysis of existence of jurisdictional facts for a contravention of the provisions of Section 3(4) of the Act. Having failed to do so, the CCI Order lacks jurisdictional facts and ought to be set aside by this Hon'ble Court exercising its powers of judicial review. 3.44. It has been contended that the CCI has relied on Para 23 and Para 26 as the only instances in the CCI Order wherein it has examined AAEC. The relevant extracts of Para 23 and 26 are produced below: "23 Thus, exclusive launch coupled with preferential treatment to a few sellers and the discounting practices create an ecosystem that may lead to an appreciable adverse effect on competition." "26. It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the Ops are being used as exclusionary tactic to foreclose competition and are resulting in an appreciable ....
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....g the veracity of such information or if prima facie there was any contravention of the provisions of the Act. 3.47. It has been contended that the CCI seems to be approaching this with a premeditated mind - it wants to investigate appellant, and so is figuring out a way to shoe-horn Flipkart's conduct into the Act. That is inappropriate for a statutory regulator. It is stated that as can be seen from the CCI Order, the CCI has ordered an investigation into conduct that is only prohibited under Section 4 of the Act (i.e., only prohibited when carried out by a dominant enterprise) while explicitly finding that there is no case for dominance made out. This is clearly a case of over-reach. In order to justify this, the CCI has sought to aver that if the submissions of appellant is accepted, the CCI would have no recourse under Act. This again shows that the CCI seems to widen its power to investigate even though there is no express provision enabling it to do so. The same is not permissible under the Act. 3.48. It has been further stated that no case of contravention of Section 3(4) of the Act has been made out. In respect of issue of Preferred Sellers, it has been contended tha....
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....rived at its prima finding of preferred sellers/preferential treatment. Considering that the CCI in the AIOVA Case already noted the absence of such structural links, the CCI ought not to have directed the investigation against the appellant for the same facts. 3.51. It has been contended that the allegation against the appellant is that Omnitech, a seller on the appellant's online marketplace platform, is owned by Consulting Rooms Pvt. Ltd., whose director Mr. Ajay Sachdeva was also a director of WS Retail in 2016. However, as the CCI had already noted that there were no structural links between the appellant and WS Retail after 2012, any link between Omnitech and WS Retail in 2016 is irrelevant and cannot be even prima facie considered to constitute a link with the appellant, as the CCI has incorrectly noted. It is stated that in its submissions, the CCI has sought to assign various reasons to justify a complete deviation from its AIOVA Order. It is submitted that none of the reasons now given by the CCI merit any consideration by this Hon'ble Court, as no such reasons were given in the CCI Order. Pertinently, as stated above, the AIOVA Order does not even find a mention....
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....al conduct by the parties can be examined only under Section 4 of the Act and not under Section 3(4) of the Act. 3.54. It has been further contended that to support the allegation of deep discounting, the CCI has relied on the ITAT Order to submit that the appellant seems to deploy a business strategy of incurring loss in the short run by way of 'predatory pricing', to reap benefits and capture the market in the long term. Such reliance on observations in the ITAT Order in the present proceedings is misplaced and untenable in light of the reasons given below: a. The assessee before the ITAT, was not the appellant. The assessee in respect of which the observations were made by the assessing officer was Flipkart India Private Limited, who is not even party to the present proceedings. Therefore, the ITAT Order cannot be seen as evidence of the appellant's business model. b. In any case, the observations relied upon are observations of an assessing officer, whose decision was eventually overturned by the ITAT. c. Moreover, the reliance on the ITAT order by the NCLAT in the AIOVA Case has been stayed by the Hon'ble Supreme Court. d. Even if true, and applicable ....
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.... or mode it chooses to sell its products. An allegation of exclusivity, ought to therefore lie against the manufacturer and not against the platform, which is only an intermediary. 3.58. In respect of the issue regarding the informant abused judicial process by indulging in forum shopping it has been contended that the learned Single Judge failed to appreciate that the Information filed before the CCI was a gross abuse of judicial process, as the Informant has indulged in forum shopping and approached the CCI with unclean hands. It is a settled proposition of law that any party who approaches the court with unclean hands is neither entitled to be heard on the merits of the case nor is the party entitled to any relief. As the Informant is simply a front of CAIT, this is a relevant factor to weigh the credibility of the allegations and the material placed by such Informant. To establish a nexus of the informant with CAIT, the following reasoning was provided by the appellant:- a. the Informant is a member of CAIT, an important fact that the Informant neglected to mention before the CCI, but admitted before the learned Single Judge; b. the Informant's President and authorized....
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.... of the other and this would have result in the CCI taking into account irrelevant considerations, which in turn vitiates the CCI Order. 3.62. It has been further contended that both the CCI Order as well as the Impugned Order erred in treating the appellant on the same footing as Amazon (the other online marketplace being investigated). For the CCI to direct an investigation against the appellant, it ought to have come to a prima facie opinion that the appellant (alone and irrespective of the allegations against Amazon) had contravened the provisions of the Act. It is submitted that the allegations and the evidence before the CCI against the appellant were qualitatively different from those relating to Amazon. In fact, Flipkart and Amazon are fierce competitors, a fact which seems to have been lost sight of by the CCI as well as the learned Single Judge. This is all the more essential since the CCI Order, at paragraph 15, has specifically noted that there could have been no violation of Section 4 of the Act ('Abuse of Dominant Position") by the two marketplace platforms, as the Act "does not provide for inquiry into or investigation into the case of joint/collective dominance....
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....e power of judicial review which has been vested in it and therefore, prays to allow the present appeal and set aside the CCI Order. 4. Learned Additional Solicitor General appearing for respondent No. 1/CCI has contended before this Court that the order passed by the learned Single Judge dated 11.6.2021 warrants no interference at all, by which the order passed by the CCI under Section 26(1) directing an investigation has been upheld rightly by the learned Single Judge. It has been contended that the order passed by the CCI under Section 26(1) meets the parameter laid down by the Hon'ble Supreme Court in its authoritative judgment in CCI v. SAIL. It has been further contended that the scope of interference in a writ petition against an order under Section 26(1) of the Act of 2002 is extremely narrow. It is not a case where mala fides are alleged against the Regulator, nor is there any jurisdictional infirmity made out in the peculiar facts and circumstances of the case. It is further contended that the order of the CCI meets with the parameters of Wednesbury reasonableness as held by the learned Single Judge and there is no ground for interference. In fact, it is a sheer abus....
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....the order under Section 26(1) of the Act of 2002 must record "minimal reasons" or at least "some reasons" and elaborate reasons are not required as the CCI is required to express only a "tentative view". She has also stated that no civil consequences arise from an order passed under Section 26(1) of the Act of 2002 as held by the Hon'ble Supreme Court in the case of CCI v. SAIL (paragraph 38). The learned Additional Solicitor General has further contended that the proceedings under Section 26 are time bound and undue time should not be taken in the interest of a free and fair market and economy. Her contention is that the proceedings are time bound only with an object that the market forces can move swiftly and therefore, if anti-practices are not curtailed in time, the damage to the economy can be irreparable. She has further contended that the order passed under Section 26(1) of the Act of 2002 is not an appealable order in contradistinction with the order passed under Section 26(2), 26(6) and 27 of the Act of 2002, which constitutes the determination as held by the Hon'ble Supreme Court in the case of CCI v. SAIL. 4.4. Learned Additional Solicitor General for the CCI ha....
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....rt investigating authority for competition matters and the CCI keeping in view the prima facie material was justified in passing the order under Section 26(1). It has also been brought to the notice of this Court that the CCI as on 31.3.2019 out of 1008 cases has ordered investigation by passing an order under Section 26(1) in only 422 cases and out of 422 cases in which the investigation was ordered, ultimately only in 135 cases findings have been arrived at in respect of contravention and adverse findings have been arrived at resulting in imposition of sanctions/penalties. Thus, the CCI has duly and robustly applied its mind in all cases and especially in the case in hand. 4.6. Learned Additional Solicitor General has placed reliance upon the following judgment; i) Cadila Healthcare Ltd., v. CCI, reported in (2018) 252 DLT 647 (DB) (Delhi High Court) (paras 38, 43-44, P.2632, 2635-2637, Vol. 13, Flipkart's Writ Appeal) ii) North East Petroleum Dealers Association v. Competition Commission of India, reported in 2016 Comp LR 71 (Comp AT) (para 9, p.3337, Vol. 16, Flipkart's Writ Appeal) iii) Karnataka Film Chamber of Commerce v. Kannada Grahakara Koota, W.P. No. 1900....
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.... FDI policy i.e., W.P. No. 9332/2018 - CAIT vs. Union of India and the Delhi High Court by an order dated 5.9.2018 has disposed of the said writ petition noticing that the Flipkart was located in Bengaluru and the averments contained in the writ petition would be considered by the Enforcement Directorate and if any enquiry or investigation was warranted, steps in that regard would be taken by the concerned authorities. 5.4. It has been further stated that after disposal of the writ petition filed by CAIT before the Delhi High Court, another writ petition was preferred i.e., W.P. No. 7907/2018 filed by Telecom Watchdog before the Delhi High Court on 28.7.2018 and the appellant was made a party. It has been further stated that the High Court was informed that a similar issue was pending and therefore, vide order dated 18.3.2019 the Delhi High Court disposed of the writ petition. 5.5. It has been further stated that the CAIT has filed another writ petition before the Rajasthan High Court i.e., W.P. No. 14400/2019 and one more writ petition was filed before the Rajasthan High Court i.e., W.P. No. 15570/2019 by the Marwar Chamber of Commerce and Industry and the same issue was agitate....
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....pport the prima facie order. It has been further contended that the learned Single Judge has failed to appreciate that the overreaching public purpose was the objective which underlay the Act of 2002 (CCI vs. SAIL). It has been further contended that the learned Single Judge has failed to appreciate that the said decision was rendered on the basis that the confidentiality would be maintained by the CCI in respect of prima facie order passed under Section 26(1) of the Act of 2002, which persuaded the Court to take the view that the said orders are administrative in character, however, the CCI did not concede that ever since 16.1.2013 it was publicizing the orders passed under Section 26(1) of the Act of 2002, as a consequence of which the basis of the said decision, itself was displaced. 5.9. Another ground raised before this Court is that the learned Single Judge has failed to appreciate the true effect and purport of the judgment of the Hon'ble Supreme Court in the case of Competition Commission of India v. Bharti Airtel Limited, reported in (2019) 2 SCC 521. It has been further contended that the learned Single Judge has failed to appreciate that the prima facie order of the....
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....ion of India, reported in (2019) 18 SCC 401, which affirm the law laid down in Barium Chemicals v. Company Law Board, reported in (1966) Supp. SCR 311. It has been further argued that the learned Single Judge has failed to appreciate the decision of the Bombay High Court delivered in the case of Star India v. Competition Commission of India, even though it has not been stayed by the Hon'ble Supreme Court in the appeal, which is pending before the Supreme Court. 5.12. It has been further contended that the learned Single Judge has failed to appreciate that the formation of a prima facie view was in the nature of an "essential and mandatory findings before CCI could direct investigation" and its absence vitiated the prima facie order. It has been further contended that the CCI before passing an order under Section 26(1) of the Act of 2002 could not arrive at a conclusion that a prima facie case exists keeping in view Section 19(3) of the Act (AAEC). It has been further contended that the learned Single Judge has failed to appreciate the jurisdictional aspect of the matter and the jurisdiction of the CCI in passing the order in the absence of cogent material before it. It has bee....
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....r products on the Amazon marketplace. A prayer has been made for setting aside the order passed by the learned Single Judge dated 11.6.2021 as well as for quashment of the prima facie order dated 13.1.2020. 6. Respondent No. 2/Delhi Vypaar Mahasangh/informant in the present case has vehemently argued before this Court that the question of grant of opportunity of hearing while passing an order under Section 26(1) of the Act of 2002 does not arise and it is an order passed based upon the information submitted by respondent No. 2. It has been further argued that the appellants/Flipkart and Amazon want to crush the proceedings at the threshold and they are not permitting the CCI to proceed ahead in the matter on some pretext or the other. It has been further contended that the principles of natural justice and fair play will certainly be observed and followed as argued by the learned Additional Solicitor General of India on behalf of CCI while conducting an enquiry and the appellants should not feel shy in producing the material i.e., various agreements executed with various parties during the course of the enquiry. It has been further contended that no prejudice has been caused to th....
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....any corporation established by or under any Central, State or Provincial Act or a government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956); (vii) any body corporate incorporated by or under the laws of a country outside India; (viii) a cooperative society registered under any law relating to cooperative societies; (ix) a local authority; (x) every artificial juridical person, not falling within any of the preceding sub-clauses; *** 3. Anti-competitive agreements.--(1) No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. *** (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which--....
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....orthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. *** 35. Appearance before Commission.--A person or an enterprise or the Director General may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of his or its officers to present his or its case before the Commission. Explanation.--For the purposes of this section-- (a) "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1) of Section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; (b) "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; (c) "cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of Section 2 of the Cost and ....
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....ribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal within six months from the date of receipt of the appeal. *** 53-N. Awarding compensation.--(1) Without prejudice to any other provisions contained in this Act, the Central Government or a State Government or a local authority or any enterprise or any person may make an application to the Appellate Tribunal to adjudicate on claim for compensation that may arise from the findings of the Commission or the orders of the Appellate Tribunal in an appeal against any findings of the Commission or under Section 42-A or under sub-section (2) of Section 53-Q of the Act, and to pass an order for the recovery of compensation from any enterprise for any loss or damage shown to have been suffered, by the Central Government or a State Government or a local authority or any enterprise or any person as a result of any contravention of the provisions of Chapter II, having been committed by enterprise. (2) Every application made under sub-section (1) shall be accompanied by the findings of the Commission, if any, and also be accompanied with such fees a....
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.... Explanation.--The expressions "chartered accountant" or "company secretary" or "cost accountant" or "legal practitioner" shall have the meanings respectively assigned to them in the Explanation to Section 35. 53-T. Appeal to Supreme Court.--The Central Government or any State Government or the Commission or any statutory authority or any local authority or any enterprise or any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to them: Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed after the expiry of the said period of sixty days." (emphasis supplied) The relevant regulations that are contained in the Competition Commission of India (General) Regulations, 2009 ("the 2009 Regulations") are set out as under: "2. Definitions.--(1) In these Regulations, unless the context otherwise requires-- * * * (i) "Party" includes a consumer or an enterprise or a person defined in clauses (f), (h) a....
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....itive practices and conduct, such as deep discounting, preferential listing, sale of private label brands through preferential sellers and exclusive tie-ups, alleged to be in violation of Section 3(1) read with Section 3(4) of the Act of 2002. The CCI based upon the information received by it, has passed an order dated 13.1.2020 in Case No. 40/2019 directing an investigation under Section 26(1) of the Act of 2002 by the Director General. 11. The order passed by the CCI dated 13.1.2020 is reproduced as under; Directions for investigation under Section 26(1) of the Competition Act, 2002 1. The present information has been filed by Delhi Vyapar Mahasangh (hereinafter, referred to as 'Informant'/'DVM'), a society registered under the Societies Registration Act, 1860 under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the 'Act') alleging contravention, of the relevant provisions of Section 3(4) read with Section 3(1) and Section 4(2) read with Section 4 of the Act, by Flipkart Internet Services Pvt. Ltd. (hereinafter, 'Flipkart/Flipkart marketplace') and Amazon Seller Services Pvt. Ltd. (hereinafter, 'Amazon/Amazon marketplace')....
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....n, the agreements/arrangements between Amazon and its sellers and Flipkart and its sellers respectively can be said to be in violation of Section 3(1) of the Act which is an omnibus clause. The Informant has alleged that the OPs are involved in following practices which are anti-competitive in view of Section 3(1) read with Section 3(4) of the Act. 7.1. Deep discounting: 7.1.1. Flipkart provides deep discounts to a select few preferred sellers (such as Omnitech Retail) on its platform which adversely impacts non-preferred sellers such as members of the Informant from competing with such sellers on Flipkart's online platform. The Informant alleged that there is evidence in the form of communications from Flipkart to its sellers stating that it would incur a part of the cost during the Big Billion Days (BBD) sales or Diwali sales etc. However, no such opportunity is available to other sellers who are, thus, unable to compete with such preferred sellers. 7.1.2. Amazon has preferred sellers on its platform namely Cloudtail India (a joint venture between Amazon and Catamaran Ventures) and Appario Retail (a wholly owned subsidiary of a joint venture between Amazon and Mr. Ashok....
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.... fixed costs and are devoid of wide pan-India reach which online marketplaces offer. Market Power 8. It is alleged that Amazon and Flipkart are able to cross-subsidise because of the huge amount of funding received from their investors, which has resulted in incentives that allow pricing below cost on their platforms, through their sellers, resulting in creation of high entry barriers and high capital costs for any new entrant in the market. Resultantly, the existing sellers find it difficult to launch their own portals or marketplaces in order to compete with the OPs. 9. The Informant averred that the OPs have the ability to unilaterally terminate their agreements with non-preferred sellers without assigning any reason as a result of which non-preferred sellers have no option but to comply with their mandates (Clause 3 of Amazon Seller Agreement). Thus, unreasonable vertical restraints are created. Sections 4(2)(a)(ii); 4(2)(b)(ii) and 4(2)(c) allegations 10. Both Flipkart and Amazon are alleged to be jointly dominant in the relevant market and are stated to be abusing their dominance in the present case. 10.1. Both OPs individually and jointly have extremely high mark....
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....public domain. 15. At the outset, the Commission notes that the Informant has levelled allegations against Flipkart and Amazon marketplaces under Section 4 of the Act on account of joint dominance. The Commission notes that it is a settled position that the Act does not provide for inquiry into or investigation into the cases of joint/collective dominance as the same is not envisaged by the provisions of the Act. Therefore, the Commission need not deliberate further on allegations on account of joint dominance as the same being untenable under the Act. 16. The Commission notes that Flipkart marketplace and Amazon marketplace are e-commerce entities, following a marketplace based model of e-commerce. They essentially provide online intermediation services to sellers on one side and consumers on the other. These platforms/marketplaces and the sellers selling on these platforms operate at different stages of the vertical/supply chain. Thus, any agreement between the platforms and sellers selling through these platforms can be examined under section 3(4) of the Act, which deals with agreements amongst enterprises or persons at different stages or levels of the production chain in d....
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....by the Informant and the documents provided, the Commission notes that there are four alleged practices on the marketplaces, namely, exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels. 21. The first issue under examination is that of the exclusive launch of mobile phones on the two major e-commerce platforms. The Informant has provided a list of phones which were exclusively launched on the platforms. The Informant has provided the following evidence in the form of text messages, as shown below, to indicate that due to partnership between mobile manufacturer (VivoZ1x and Vivo U10 models) and platforms (Flipkart and Amazon), offline retailers are forced to purchase smartphones either from manufacturers' e-stores or from the platforms e-portals. Vivo Vivo Hi Harshit, thank you for showing your interest in vivo handsets. The handset vivo Zix will be available on our online Estore and Flipkart.com portal only. The safe will be started from 13th September 19. For further information kindly check our official E-store: https://shop.vivo.com/in/product/10073? skuld=1027| Hi Harshit, thank....
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.... preferred sellers at Amazon and Flipkart are in some way or the other connected to Amazon and Flipkart, respectively, through common investors, directors, shareholders etc. Relying on these, it has been alleged that these preferred sellers are extension of these marketplaces, operating through different 'proxy' entities blessed with the support of these marketplaces. The Commission perused the prices for different smartphone brands sold through Flipkart and Amazon, i.e. original price and discounted price. It was observed that certain smartphone brands/models are available at significantly discounted price on these platforms and are sold largely through the sellers identified, by the Informant, as the platforms' 'preferred sellers'. Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation. 25. The issue of preferential listing should also be viewed in conjunction with the foregoing. Competition on the platforms may get influenced in favour of the exclusive brands and sellers, through higher discounts and preferential listing. Thus, the allegations are interconnected, and warrant a holistic investigation to exam....
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.... an investigation under Section 26(1) of the Act by the Director General. 13. The order passed by the learned Single Judge in paragraphs 12 to 65 reads as under; 12. I have carefully considered rival contentions and perused the records. Following points arise for consideration in this case: A. What is the nature of the impugned order passed under Section 26(1) of the Act? B. Whether a prior notice and opportunity of hearing is mandatory at the stage of issuing direction to the Director General to hold inquiry under Section 26(1) of the Act? C. Whether impugned order calls for interference? Re. Points A & B 13. Both points A & B are inter-connected and hence they are dealt together. 14. The preamble of the Act states that, keeping in view the economic development of the Country, Competition Act has been brought for establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in the markets, to protect the interests of consumers and to ensure 'freedom of trade' carried on by other participants in the market in India. 15. Under Section 19 of the Act, the Commission may inquire into allegation of co....
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....39;. 22. Preferred sellers such as 'Omnitech Retail' are connected with Flipkart. Flipkart's founder Sachin Bansal and Binny Bansal owned WS Retail till 2012. Reports confirm that more than 90% of Flipkart's sale is routed through WS Retail. 'Omnitech Retail' is owned by Consulting Rooms Pvt. Ltd., whose Director Ajay Sachdeva was also a Director of WS Retail till September 2016. * Preferential Listing 23. It is alleged that Amazon perpetuates the practice of listing its preferred sellers in the first few pages of the search results, thereby creating a search bias. In number of search results, the products are sold by preferred sellers such as 'Appario Retail' and 'Cloudtail' and they dominate the first few pages, whereas, products with same ratings, which are sold by non-preferred sellers are listed in later pages. 24. Flipkart lends the words 'assured' to the products sold by its preferential sellers. * Exclusive Tie-ups 25. It is alleged that petitioners herein have several exclusive tie-ups and private labels, which get more preference in terms of sales. 26. It is further alleged that providing discounts and preferen....
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....arty sellers, who partner with the petitioner to offer products for sale to end consumers on the Amazon market place, it is denied that they are preferred sellers or that the Petitioner has entered into any agreements with either of them to anoint them as preferred sellers. It is further denied that there is a common director between the petitioner and either Cloudtail India or Appario Retail." (Emphasis supplied) 30. He contended that, obviously, Frontizo and Amazon Retail India Pvt. Ltd., shall have common business interest and this is fortified by the fact that both companies have a common Director namely, Sameer Kshetrapal. 31. Shri. Abhir Roy further submitted that on Flipkart Market Place, Omnitech Retail is the preferred and favoured seller. The said Trademark is registered in the name of 'Consulting Rooms Pvt. Ltd.', of which Ajay Sachdeva is one of the Directors. Earlier, he was a Director on the board of WS Retail. He submitted that Flipkart also practices selling its own inventory at discounted prices to its preferred sellers. Flipkart also indulges in 'loss funding' in case of preferred sellers as recorded in Flipkart India Pvt. Ltd. Vs. Assistant ....
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.... Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. xxx 71. The intimation received by the Commission from any specific person complaining of violation of Section 3(4) read with Section 19 of the Act, sets into motion, the mechanism stated under Section 26 of the Act. Section 26(1), as already noticed, requires the Commission to form an opinion whether or not there exists a prima facie case for issuance of direction to the Director General to conduct an investigation. This section does not mention about issuance of any notice to any party before or at the time of formation of an opinion by the Commission on the basis of a reference or information received by it. Language of Sections 3(4) and 19 and for that matter, any other provision of the Act does not suggest that notice to the informant or any other person is required to be issued at this stage....
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....re res integra and has been settled by a recent judgment of this Court in CCT v. Shukla & Bros. [CCT v. Shukla & Bros., (2010) 4 SCC 785 : (2010) 3 SCC (Civ) 725 : (2010) 2 SCC (Cri.) 1201 : (2010) 2 SCC (L&S) 133], wherein this Court was primarily concerned with the High Court dismissing the appeals without recording any reasons. The Court also examined the practice and requirement of providing reasons for conclusions, orders and directions given by the quasi-judicial and administrative bodies. xxx 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the A....
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....ith the settled law. 38. As held in paragraph No. 71 of CCI Vs. SAIL, the intimation received complaining of violation of the provisions of the Act, sets into motion the mechanism stated under Section 26 of the Act. At this stage, the Commission is required to form an opinion whether or not there exists a prima facie case. 39. The informant has alleged violation of Sections 3(1) read with 3(4) and Sections 4(1) read with 4(2) of the Act, by the petitioners. In the impugned order, Commission has recorded that the Act does not provide for inquiry into the cases of Joint/Collective dominance and proceeded further to deal with the violation under Section 3 of the Act. 40. Perusal of the impugned order from paragraph No. 20, shows that the Commission has examined the material produced by the informant. It has analyzed the information under various heads such as exclusive launch of mobile phones, preferred sellers on the market places, deep discounting, and preferential listing of private labels. It has recorded that mobile manufacturing Companies like One plus, Oppo and Samsung have exclusively launched several of their models on Amazon and Vivo, Realme, Xiomi etc., have exclusive....
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....the stage of 26(1) of the Act has been declared by the Apex Court in CCI Vs. SAIL and CCI Vs. Bharthi Airtel, holding that no notice is necessary at the stage of 26(1) of the Act. Therefore, the said ground is untenable. 48. It was contended by Shri. Gopal Subramanium, Shri. Udaya Holla, Shri. Dhyan Chinnappa, learned Senior Advocates that the informant had not approached with clean hands and acted as a front-man for CAIT which has filed writ petitions in High Courts of Delhi and Rajasthan and failed to get any favourable order. They pointed out that the Demand Draft for Rs. 50,000/- tendered along with the information was obtained by CAIT and argued that informant has not approached the Commission with clean hands. 49. Countering this argument, Smt. Madhavi Diwan, submitted that so far as Commission is concerned, what is relevant is the 'information'. With regard to CAIT approaching through Delhi Vyapar Mahasangh, placing reliance on following passage in Swaraj Infrastructure (P) Ltd. Vs. Kotak Mahindra Bank Ltd., reported in (2019) 3 SCC 620, she submitted that when a citizen/litigant is driven to wall, he blows hot and hotter. "29. When secured creditors like the r....
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....f Competition Act shall be in addition to, and not in derogation of the provisions of any other law for the time being in force. 53. With regard to investigation by the Enforcement Directorate, Shri. Abhir Roy submitted that ED is not a regulator but a quasi-judicial body. Placing reliance on Lafarge Umiam Mining Pvt. Ltd. Vs. Union of India and others, reported in (2011) 7 SCC 338 (paragraph No. 122) he submitted that the regulator is a pro-active body with power to frame statutory Rules and Regulations. Regulatory mechanism warrants open discussion, public participation, and circulation of draft paper inviting suggestions. ED is not clothed with those powers and does not have other attributes. Therefore, ED is not a regulator. 54. It was next contended by learned Senior Advocates for petitioners that the Commission has substantially altered the decision in CCI Vs. SAIL with regard to confidentiality and Web-hosting of the impugned order which adversely affects petitioners' business reputation. 55. In reply, Smt. Madhavi Diwan, submitted that decision in CCI Vs. SAIL does not mandate any blanket confidentiality. She argued that paragraphs No. 38 and 135(e) of the said ju....
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.... the DG in going ahead with the inquiry and investigating into the market behaviour of Cadila in anyway affects it so prejudicially as to tarnish its reputation. The CCI has not as yet examined the investigation report in the light of Cadila's contentions; all rights available to it, to argue on the merits are open. (Emphasis supplied) 56. In response to petitioner's contention that CCI could not have taken a contrary stand to the one taken in AIOVA case, Smt. Madhavi Diwan submitted that there is no res judicata in the case of orders passed by CCI because, Competition Act relates to preservation of competitive forces in the market place. She submitted that the Hon'ble Supreme Court of India has held in Samir Agrawal Vs. Competition Commission of India that Competition Act operates in 'rem' and not in 'personam', since it concerns public interest. Placing reliance on Cadila Healthcare Limited and Anr Vs. CCI (paragraph 59) she submitted that the CCI or an expert body should ordinarily not be crippled or hamstrung in their efforts by application of technical rules of procedure. 57. With regard to the market study aspect, Smt. Diwan submitted that ma....
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.... or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction vested in them, or there is error apparent on the face of the record, and such act, omission, error, or excess has resulted in manifest injustice. However extensive the jurisdiction may be, it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made. 60. In T.C. Basappa Vs. T. Nagappa and Another, reported in AIR 1954 SC 440, it is held that a tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be a manifest error apparent on the face of the proceedings, e.g. when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent erro....
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....cessary implication approved by the House of Commons, the guidance being concerned with the limits of public expenditure by local authorities and the incidence of the tax burden as between taxpayers and ratepayers. Unless and until a statute provides otherwise, or it is established that the Secretary of State has abused his power, these are matters of political judgment for him and for the House of Commons. They are not for the judges or your Lordships' House in its judicial capacity." "For myself, I refuse in this case to examine the detail of the guidance or its consequences. My reasons are these. Such an examination by a court would be justified only if a prima facie case were to be shown for holding that the Secretary of State had acted in bad faith, or for an improper motive, or that the consequences of his guidance were so absurd that he must have taken leave of his senses ." (Emphasis supplied) 62. Noted jurist, Shri. V. Sudhish Pai, in his Article 'Is Wednesbury on the Terminal decline?, reported in (2008) 2 SCC J-15, has opined that the Wednesbury test, long established as ground of judicial review will be applicable in examining the validity of the exercise ....
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....ers connected therewith or incidental thereto." The Act of 2002 was enacted to curb anti competitive practices and the CCI is given the task as a Regulator to ensure that no such anti competitive practices are undertaken. 16. In the case of Rajasthan Cylinders and Containers Ltd., v. Union of India, reported in (2020) 16 SCC 615, the Hon'ble Supreme Court in paragraph 73 has held as under; "73. It follows from the above that whereas on the one hand the economic policy of the nation has ushered in the era of liberalisation and globalisation thereby giving free play to the private sector in the manner of conducting business, at the same time, in public interest and in the interest of consumers, a regime of regulators has also been brought to ensure certain checks and balances. Since competition among the enterprises or businessmen is treated as service for a public purpose and, therefore, there is a need to curb anticompetitive practices, CCI is given the task (as a regulator) to ensure that no such anti-competitive practices are undertaken. In fact, Section 18 of the Act casts a specific and positive obligation on CCI to "eliminate" anti-competitive practices and promote com....
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....** 2.2.1.1. Economic efficiency: Economic efficiency refers to the effective use and allocation of the economy's resources. Competition tends to bring about enhanced efficiency, in both a static and a dynamic sense, by disciplining firms to produce at the lowest possible cost and pass these cost savings on to consumers, and motivating firms to undertake research and development to meet customer needs. 2.2.1.2. Economic growth and development: Economic growth--the increase in the value of goods and services produced by an economy--is a key indicator of economic development. Economic development refers to a broader definition of an economy's well-being, including employment growth, literacy and mortality rates and other measures of quality of life. Competition may bring about greater economic growth and development through improvements in economic efficiency and the reduction of wastage in the production of goods and services. The market is therefore able to more rapidly reallocate resources, improve productivity and attain a higher level of economic growth. Over time, sustained economic growth tends to lead to an enhanced quality of life and greater economic development.....
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....tures in order to promote productivity-based growth and regulatory reform eliminates domestic regulation that restricts entry and exit in the markets. Effective competition policy can also increase investor confidence and prevent the benefits of trade from being lost through anti-competitive practices. In this way, competition policy can be an important factor in enhancing the attractiveness of an economy to foreign direct investment, and in maximising the benefits of foreign investment." 23. In fact, there is broad empirical evidence supporting the proposition that competition is beneficial for the economy. Economists agree that it has an important role to play in improving productivity and, therefore, the growth prospects of an economy. It is achieved in the following manner: "International Competition Network -- Economic Growth and Productivity Competition contributes to increased productivity through: Pressure on firms to control costs--In a competitive environment, firms must constantly strive to lower their production costs so that they can charge competitive prices, and they must also improve their goods and services so that they correspond to consumer demands. Easy ....
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....rtels or anti-competitive agreements cause harm to consumers by fixing prices, limiting outputs or allocating markets. Effective enforcement against such practices has direct visible effects in terms of reduced prices in the market and this is also supported by various empirical studies. 27. Keeping in view the aforesaid objectives that need to be achieved, Indian Parliament enacted the Competition Act, 2002. Need to have such a law became all the more important in the wake of liberalisation and privatisation as it was found that the law prevailing at that time, namely, Monopolies and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspects of the Indian economy. The law enforcement agencies, which include CCI and COMPAT, have to ensure that these objectives are fulfilled by curbing anticompetitive agreements. 28. Once the aforesaid purpose sought to be achieved is kept in mind, and the same is applied to the facts of this case after finding that the anti-competitive conduct of the appellants continued after coming into force of provisions of Section 3 of the Act as well, the argument predicated on retrospectivity pales into ins....
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....sion and enactment of the Act was aimed at preventing practices having adverse effect on competition, to protect the interest of the consumer and to ensure fair trade carried out by other participants in the market in India and for matters connected therewith or incidental thereto. 9. The various provisions of the Act deal with the establishment, powers and functions as well as discharge of adjudicatory functions by the Commission. Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act. In exercise of the powers vested in it under Section 64, the Commission has framed regulations called the Competition Commission of India (General) Regulations, 2009 (for short "the Regulations"). 10. The Act and the Regulations framed thereunder clearly indicate the legislative intent of dealing with the matters related to contravention of the Act, expeditiously and even in a time-bound programme. Keeping i....
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....d in the manner projected by the appellants, it would defeat the very purpose of the Act, which is to prevent practices having appreciable adverse effect on the competition. Therefore, at this stage, in the considered opinion of this Court, the issues and grounds raised in respect of anticompetitive practices as argued by the learned counsel for the appellants does not arise. The appellants are certainly entitled for opportunity of hearing as provided under the Statute and the present petitions/appeals are certainly premature. 20. The Hon'ble Supreme Court in the same case of Excel Crop Care Ltd.,(supra), in paragraph 108 has held as under; "108. It is well settled that the Competition Act, 2002 is a regulatory legislation enacted to maintain free market so that the Adam Smith's concept of invincible hands operate unhindered in the background. [CCI v. SAIL, (2010) 10 SCC 744] Further, it is clear from the Statement of Objects and Reasons that this law was foreseen as a tool against concentration of unjust monopolistic powers at the hands of private individuals which might be detrimental for freedom of trade. Competition law in India aims to achieve highest sustainable le....
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....n having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter." 22. The Hon'ble Supreme Court in the aforesaid case has held that unless and until the show cause notice is vague or has been issued by an authority not compete....
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....y adjudicatory or determinative process. The Commission is entitled to form its opinion without any assistance from any quarter or even with assistance of experts or others. The Commission has the power in terms of Regulation 17(2) of the Regulations to invite not only the information provider but even "such other person" which would include all persons, even the affected parties, as it may deem necessary. In that event it shall be "preliminary conference", for whose conduct of business the Commission is entitled to evolve its own procedure. (3) The Commission, in cases where the inquiry has been initiated by the Commission suo motu, shall be a necessary party and in all other cases the Commission shall be a proper party in the proceedings before the Competition Tribunal. The presence of the Commission before the Tribunal would help in complete adjudication and effective and expeditious disposal of matters. Being an expert body, its views would be of appropriate assistance to the Tribunal. Thus, the Commission in the proceedings before the Tribunal would be a necessary or a proper party, as the case may be. (4) During an inquiry and where the Commission is satisfied that the ac....
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....has a right to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. 87. Now, let us examine what kind of function the Commission is called upon to discharge while forming an opinion under Section 26(1) of the Act. At the face of it, this is an inquisitorial and regulatory power. A Constitution Bench of this Court in Krishna Swami v. Union of India [(1992) 4 SCC 605] explained the expression "inquisitorial". The Court held that the investigating power granted to the administrative agencies normally is inquisitorial in nature. The scope of such investigation has to be examined with reference to the statutory powers. In that case the Court found that the proceedings, before the High-Power Judicial Committee constituted, were neither civil nor criminal but sui generis. 91. The jurisdiction of the Commission, to a....
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....der passed under Section 26(1), it will certainly prejudice the case of the person against whom a complaint has been made and therefore, the Statute has provided a safeguard for holding an enquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing while holding an enquiry in the matter. Therefore, the petitions filed by the appellants before the learned Single Judge were certainly premature petitions and without permitting the Director General of the CCI to look into various agreements executed by the appellants with the other persons, the appellants want this Court to hold that the appellants have not committed breach of the statutory provisions as contained under the Act of 2002. In the considered opinion of this Court, unless and until a detailed enquiry is conducted by the CCI, the question of giving a finding in respect of the violation of the statutory provisions, does not arise. 26. The Hon'ble Supreme Court in the case of CCI Vs. Bharthi Airtel Ltd., reported in (2019) 2 SCC 521, in paragraph 121 has held as under; "121. Once we hold that the order under Section 26(1) of the Competition Act i....
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....9 and even suo motu cognizance can be taken in the matter and after the information is received, the requirement is, whether a prima facie case exists or not. Hence, at this stage, the question of granting of an opportunity as vehemently argued before this Court does not arise. Once the CCI based upon the material has arrived at a conclusion that the matter warrants an investigation, the question of interference by this Court does not arise as the enquiry is yet to take place for determination of the issues involved. 30. The Hon'ble Supreme Court in the case of CCI v. SAIL has held that the threshold requirement for establishing a prima facie case under Section 26(1) is a low threshold and what constitutes a prima facie case at the stage of Section 26(1) must be gleaned from the stand point of setting the process into motion and not from point of view of granting any interim measure or adjudicating the matter. 31. In the light of the aforesaid, it is apparent from a reading of the CCI order dated 13.1.2020 that the prima facie case was in existence and keeping in view the prima facie case, an enquiry has been ordered by passing an order under Section 26(1) of the Act of 2002 ....
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....which has been set out hereinabove, does not require the informant to state how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Also, Regulation 25 shows that public interest must be foremost in the consideration of CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. What is also extremely important is Regulation 35, by which CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such informant be free from harassment by persons involved in contravening the Act. 20. It must immediately be pointed out that this provision of the Advocates Act, 1961 is in the context of a particular advocate being penalised for professional or other misconduct, which concerned itself with an action in personam, unlike the present case, which is concerned with an action in rem. In this context, it is useful to refer to the judgment in A. Subash Babu v. State of....
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....the Act are proceedings in rem which affect the public interest and a complaint can be filed by such person personally affected or not. The CCI Act also provides that the CCI may enquire into any alleged contravention of the provisions of the Act of 2002 on its own motion and even while exercising suo motu powers the CCI may receive information from any person and not merely from a person, who is aggrieved by the conduct that is alleged to have occurred. 36. Regulation 10 of the Regulations 2009 also provides that the informant is not required to state as to how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Therefore, in the considered opinion of this Court, the CCI was justified in directing an enquiry based upon the complaint made by respondent No. 2 in the matter for forming a prima facie opinion. The order passed under Section 26(1) of the Act of 2002 is an administrative order and no adjudication has been done at this stage and therefore, in the considered opinion of this Court, the question of interference as prayed by the learned counsel for ....
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....her person at that stage. Such parties cannot claim the right to notice or hearing but it is always open to the Commission to call any "such person", for rendering assistance or produce such records, as the Commission may consider appropriate." In the considered opinion of this Court, merely because an opportunity of hearing was not given to the appellants, it does not vitiate the order passed by the CCI. 39. Learned Senior counsel for the appellants have also placed reliance upon a judgment delivered by the Delhi High Court in the case of Google Inc v. CCI, reported in 2015 (150) DRJ 192. The limited question before the High Court in the aforesaid case was whether there exists a power to recall/review notwithstanding the repeal of Section 37 of the Act of 2002, which specifically provides for a power of review and the learned Single Judge of Delhi High Court had no occasion to pass sweeping observations in respect of the powers of Director General, that too, in a manner which is significant departure from the binding judgment of the Hon'ble Supreme Court in the case of CCI v. SAIL (supra). The Hon'ble Supreme Court has in detail gone through Section 26 of the Act of 2002....
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....nly because at some point of time the matter has been looked into by the CCI. 43. In the case of Cadila Healthcare v. CCI, reported in (2018) 252 DLT 647, the Hon'ble Supreme Court has held as under; "59. The last point on this issue is the question of res judicata. Here, the court notices that Grasim Industries was a case where the court had ruled that even though there might be an infirmity in the CCI's approach regarding the initiation of proceedings, the material gathered by DG can be treated as information. Therefore, that in a given case, a decision is rendered may not be conclusive of the matter in entirety; complaints and grievances regarding abuse of dominance have an inherently anti-competitive effect, which pervade the marketplace and tend to stifle competition or create barriers to a free trade in goods and services. Conclusions of one or two specific complaints may not always be determinative of an entity's behaviour in the market place; they tend to cover a larger canvas, influencing the outcomes in terms of price, access to articles goods and services, within the commercial stream and their deleterious effects are felt by the general public. Settlement....