TaxTMI 
TaxTMI 
2021 (7) TMI 1398
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....2. The present writ appeals are arising out of 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 viola....
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....case" and a plain reading of Section 26 establishes the 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....
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....elf in law. 3.9. It has been contended by the learned Senior counsel for the appellant that, the CCI Order 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 ce....
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....ment of the agreement relating to entities at different stages or levels of the production chain was not a sine qua non, since other agreements would also fall 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 Se....
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....of an opinion in no uncertain terms" which is a sine qua non for passing an order under Section 26(1) of the Act. This has been settled by the Hon'ble Supreme Court 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....
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....formation of an opinion" in "no uncertain terms". In other words, there is no mention of formation of an opinion by the CCI on any contravention of the provisions of the Act by the appellant. It is further contended that the CCI Order 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....
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....6 would definitely be available in such case." It is contended that in view of the above, it is apparent that the threshold jurisdictional test for exercise of power under Section 26(1) of the Act is formation of an opinion on "prima facie case of contravention of the Act" and not an 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 Ac....
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....1 1 SCR 417] the investigation undertaken under this provision is for ascertaining facts and is thus merely exploratory. The scope for judicial review of the action of the Board must, therefore, be strictly limited. Now, if it can be shown that the Board had in fact not formed an opinion its order could be successfully challenged. This is what 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....
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....for the appellant that the CCI having failed to satisfy the jurisdictional threshold of "formation of an opinion" itself, cannot be permitted to defend its order by stating that an order under Section 26(1) of the Act is merely a preliminary/tentative view. In other words, even if the submission made by the CCI is accepted, the CCI Order fails to record any view of contravention of 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 G....
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....ishable with fine of up to INR 1 crore. The commencement of an investigation under Section 26(1) of the Act involves substantial and significant civil consequences. It has been stated that if the intention of the legislature was to permit an investigation into every allegation that may be made, the requirement of formation of a "prima facie opinion" would never exist in the Act. This specific requirement imposed by 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 Proce....
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....n 19(3) of the Act. It has been further stated that by way of such submissions that the CCI has attempted to circumvent its statutory mandate set out under Section 26(1) of the Act. 3.21.13. Regarding the CCI is merely required to record "some reasons", it has been contended that the CCI has sought to defend the CCI Order by submitting that since it is required to record only "some reasons" in an order under Section 26(1) of the 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 a....
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....ground which weighed with the court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher court in the event of challenge to that judgment .... 14. The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders 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 ....
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....r). The stand that the Director General may be swayed by reasons provided by the CCI is quite unacceptable given the statutory mandate that the CCI must express a prima facie opinion of contravention of the provisions of the Act. It has been further contended that in the event the submissions above made by the CCI are accepted, the same would result in following serious consequences: a. The CCI's role in Section 26(1) of the Act will be reduced to a mere post office, as it will be simply 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 i....
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....azon and its sellers. It has been stated that it has been the categorical stand of the appellant before the learned Single Judge that the CCI Order, failed to form an opinion (even a prima facie one) as to the existence of an agreement to which the appellant was a party. 3.25. It has been stated that the appellant has in its writ petition before the learned Single Judge clearly pleaded that: "11. FOR THAT the Impugned Order fails to record any finding that there is an agreement, let along an agreement in contravention of the provisions 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 Petition....
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.... it admittedly merely provides intermediary services to sellers of products. 3.28. It has been further contended that the production chain starts from the manufacturer and ends with the sellers of products. Indeed, there are different production chains for each product that is being sold on the online marketplace platform, however, the online marketplace platform does not become a part of the production chain merely because it provides certain services to the sellers of products on its platform. As such, an online marketplace platform by providing intermediary services such 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 ....
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....all the products sold on its platform. It has been further contended that the phrase "different stages or levels of production chain" which are found in Section 3(4) of the Act are words of limitation, and the section cannot be read by ignoring those words. It has been stated that if the words are not given their due importance, it would render the words redundant, which would be against all cannons of statutory interpretation. Therefore, as the appellant is not part of the production chain of the products sold on its online marketplace platform, any agreement entered into by the appellant to provide services to sellers on 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 w....
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....ended that the Parliament has carefully crafted the provision by inserting two requirements that have to be fulfilled in order to enable the CCI to exercise its power. The first is that the agreement should be at different stages or levels of the production chain, and the second should be that the agreement causes or is likely to cause AAEC. The submission of the CCI invites this Hon'ble Court to empower the regulator to order an investigation into all agreements in respect of production supply storage and distribution of goods without examining either fulfilment of the limitation (different stages or levels of the production chain) or the 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 ag....
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....n Competition, it has been contended by the learned counsel for the appellant that the CCI Order ought to have carried out a prima facie analysis of the factors under Section 19(3) of the Act to show how the alleged agreement causes or is likely to cause an AAEC. In the absence of such an analysis of Section 19(3) factors, the CCI could not have come to a conclusion of contravention of the provisions of Section 3(4) of the Act, as an agreement is in contravention of the provisions of Section 3(4) of the Act only if such an agreement causes an AAEC. The same is evident from a bare perusal of Section 3(4) of the Act which specifically stipulates that 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.....
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....tors laid down under Section 19(3) of the Competition Act and therefore cannot be sustained." 3.39. It has been contended that a perusal of the above makes it apparent that analysis of factors provided for in Section 19(3) of the Act is sine qua non for arriving at a finding of contravention of the Section 3(4) of the Act. Additionally, such an analysis needs to be undertaken even at the stage of formation of an opinion under Section 26(1) of the Act. The purpose of carrying out a prima facie analysis of AAEC based on the Section 19(3) factors at the Section 26(1) stage is to ensure that only those information(s) that merit investigation are forwarded to the DG. In the counterfactual, 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....
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....submissions made by the CCI before this Hon'ble Court and before the learned Single Judge (as extracted hereinabove) are devoid of any merits for the following reasons: (a) Such submission is contrary to the judgment of the Hon'ble Bombay High Court in the Star Case (Para 80-84, as extracted hereinabove) wherein the Hon'ble Bombay High Court has held - (i) that for a finding on contravention of the provisions of the Section 3(4) of the Act, it is imperative that there should be a finding on AAEC on the basis of provisions of Section 19(3) of the Act, and, (ii) an analysis of the provisions of Section 19(3) must be undertaken at the stage of Section 26 as well. (b) Such submission 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 cont....
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....s to be compared with Section 19(4) which uses the word "inquiring". The legislature has deliberately used different words in these sections and this should be given effect to. This makes it clear that the legislative intent was that Section 19(3) would be considered at the prima facie stage as well. (h) Further, such an assertion is contrary to the CCI's own practice in the cases set out below, where the CCI analysed the factors provided under Section 19(3) of the Act at the prima facie stage itself: I. Mohit Manglani v. Flipkart India Pvt. Ltd. (an order involving the Appellant); II. Vishal Pande v Honda Motorcycle and Scooter Pvt. Ltd.; III. M/s. Karni Communication Pvt. Ltd. & Anr. vs. Haicheng Vivo Mobile (India) Pvt. Ltd. & 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 fai....
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....ch were essential for directing an investigation against the appellant under Section 3(4) of the Act. 3.46. It has been contended by the learned Senior counsel for the appellant that the CCI's mandate is to enforce the Act, not to investigate and examine things that the Act does not cover. If there is no statutory backing for an examination, that examination cannot be allowed. The CCI seems to be making an attempt to exercise control over and regulate affairs over which it has not been conferred jurisdiction under the grab of public interest. The same is evident from the submissions of the CCI before this Hon'ble Court wherein the CCI has sought to proceed against the appellant merely on the basis of certain "serious allegations", which as per the CCI warranted investigation, without even examining 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 s....
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....egulator, it was mandatory for the CCI, to follow the factual findings recorded by it in the AIOVA Case in relation to the same entities. However, the CCI Order fails to do so, let alone even refer to the AIOVA Order while directing investigation against the appellant. It is stated that the appellant had categorically submitted before the learned Single judge that there were no structural links (by way of any shareholding, board representation, or management rights, or commonality of employees or offices) between the appellant and the sellers on the its marketplace platform. Indeed, this structural link is seminal, as it is on the reliance of this link, that the CCI accepts the allegations against the appellant. It is on the basis of the alleged structural links (which do not exist in case of the appellant) that the CCI arrived 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 t....
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.... no statutory meaning to the term "deep discounting". It has been further contended that low prices are good, and are in fact a goal of competition law - low prices means efficiencies are being generated and passed on to customers. Without prejudice, discounts can be claimed to be of some issue when (a) they lead to prices below cost, (b) they are provided by a dominant enterprise, and (c) they are provided with a view to eliminate competition. The CCI order contains no findings on these three aspects. It is stated that the investigating discounts that do not meet the standard of predatory pricing in Section 4 of the Act (which has the elements set out in the paragraph above. above) is a classic case of over-reach by the CCI. It is submitted that even this alleged practice would not reach to the level of an agreement. A unilateral 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 'pred....
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...." and the appellant does not have any common shareholding, common director, common employee or common office with any such seller. In any event, allegations of preferential treatment, or discrimination in favour of certain sellers, can only be examined under Section 4 of the Act, and would only violate the Act if the enterprise in question was dominant, which the CCI has explicitly rejected in this case. 3.57. In respect of the issue regarding exclusive arrangements it has been contended that the CCI failed to appreciate that the smartphones which were alleged to be exclusively available on the appellant's marketplace, continued to be available on the manufacturers own website as well. That being the case there can be no question of any exclusivity. It is sated that it is ultimately the prerogative of the manufacturer of smartphones to decide which platform 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 ....
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....a 64, Page 65). 3.61. In respect of the issue regarding the appellant ought to have been treated differently from Amazon, it has been contended that there are a number of observations in the Impugned Order and the CCI Order which confuse the facts between Amazon's case and the appellant's case and this itself is a ground which vitiates the CCI Order. The Informants had alleged the violation of Section 4 of the Act by the combination of Amazon and the appellant - a concept which was rejected by the CCI itself. Having done so, the CCI should have independently examine the case against each of the two platforms on the facts relevant to those platforms. The failure to do so, and the consequences of which are apparent from a reading of the CCI Order, vitiates the CCI Order. The CCI failed to notice that some of the facts which were present in the case of one were not present in the case 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 (th....
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....n record is the Agreement to which Amazon is a party. Amazon does not dispute this. There is no Agreement on record, and none has even been alleged to even be in place in so far as the appellant is concerned. As such, contrary to the submissions of Amazon, it is the evidence and allegations against Amazon which are sought to be attributed against Flipkart. Moreover, it is submitted that unlike in the case of Amazon there are no structural links of any kind between the appellant and its sellers who operate on the marketplace platform. The CCI is aware of this in view of its categorical findings in the AIOVA Case. 3.65. In light of the aforesaid, it has been contended that the CCI Order was passed without having regard to the mandatory prerequisites under Section 26(1) of the Act and is therefore liable to be set aside. The Impugned Order passed by the learned Single Judge erred in not exercising the 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 ....
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....ch the CCI may pass an injunction during the enquiry as compared to Section 26(1) order. It is an order passed at pre-enquiry stage and not during the enquiry. The power under Section 33 of the Act of 2002 to pass a temporary restraint order, can only be exercised by the CCI when it has formed a prima facie opinion and directed investigation in terms of Section 26(1) of the Act of 2002. Therefore, the formation of satisfaction while passing an order under Section 33 of the Act of 2002 has to be much higher degree than formation of prima facie view under Section 26(1) of the Act of 2002. (CCI v. SAIL, paragraph 31). She has further contended that no notice or hearing is necessary at this preliminary stage while passing an order under Section 26(1) of the Act of 2002 as held by the Hon'ble Supreme Court in the case of CCI v. SAIL. 4.3. The learned Additional Solicitor General has further contended that 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 u....
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.... aggrieved person to file an information under Section 19 and under Section 26(1) stage the CCI does not have the benefit of thorough fact finding exercise/investigation carried out by the expert investigator (DG) appointed for this very purpose under the Act of 2002 r/w CCI (General) Regulations, 2009. It has been contended that the only requirement is of a prima facie case for passing an order under Section 26(1). She has further contended that the order passed by the CCI establishes that the allegations and material brought before it were serious enough to warrant an investigation and the expression of a prima facie case at this stage, when the enquiry is yet to take place, cannot and ought not to amount to a predetermination of the issues involved. It has been further contended that the order passed under Section 26(1) entails no civil consequences and awaits an investigation report by the by the DG and expert 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 inv....
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....in the market for services provided for online market platforms for selling goods in India and was abusing its dominance under Section 4 of the Act of 2002, thereby allegations of deep discounting, preferential treatment accorded to certain sellers, such as, WS Retail Services Private Limited and leveraging its dominant position to promote its private labels such as "Smartbuy" and "Billion". 5.2. The contention of the learned counsel for the appellant is that the CCI after granting an opportunity of hearing to the present appellant and by holding a preliminary conference has passed an order on 6.11.2018 dismissing the information filed by AIOVA in terms of Section 26(2) of the Act of 2002. (AIOVA case) 5.3. It has been further stated that the appellant has been subjected to undue harassment on account of various writ petitions preferred before various High Courts by CAIT and its affiliates. A petition was preferred before the Delhi High Court alleging violation of 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 av....
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....cle 226 of the Constitution of India to interfere with a manifestly unwarranted, arbitrary, unreasonable order passed by the CCI, which resulted in civil consequences against the appellant. It has been further contended that the learned Single Judge has failed to appreciate that prima facie the order passed by the CCI was ultra vires the objective and purpose of the Act of 2002 and it has been contended that the learned Single Judge has failed to appreciate that the Summum Bonum of the Act of 2002 itself was to foster competition within India. It has been further contended that the learned Single Judge has failed to appreciate that an online market place, which by its very design is an instrument to promote competition could not be treated as anti-competitive, unless there was a clear and cogent evidence to that effect. 5.8. It has been further stated that the learned Single Judge has failed to appreciate that the CCI had failed to furnish either clear or cogent evidence to support 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 v....
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....iness to have an online presence without being required to operate their own websites. 5.11. It has been further stated that the learned Single Judge has failed to appreciate that the prima facie order of the CCI effectively initiated an investigation against an online marketplace which itself existed for the purpose of facilitating the competition, and for which purpose, the Foreign Direct Investment policy permitted a 100% Foreign Direct Investment (hereinafter referred to as FDI) in the marketplace-based model of e-commerce. It has been further stated that the learned Single Judge has failed to apply the suitable standards of judicial review keeping in view the judgment delivered by the Hon'ble Supreme Court in the case of Rohtas Industries Limited v. S.D. Agarwal & Anr, reported in 1969(1) SCC 325. It has been further contended that the learned Single Judge has failed to appreciate the dictum of the Hon'ble Supreme Court in the case of 63 Moons Technologies Limited v. Union 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 Sing....
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....udge has failed to appreciate the fact that CAIT/respondent No. 4 had in fact issued a demand draft for a sum of Rs. 50,000/- accompanying the information filed by the informant and was in fact the front for alleging the case against the appellant. 5.16. The learned Senior counsel for the appellant/Amazon has placed reliance upon the following judgments; 1) Udyami Evam Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in (2008) 1 SCC 560; 2) Mohinder Singh Gill v. Chief Election Commr., reported in (1978) 1 SCC 405; and his contention is that the learned Single Judge has failed to appreciate the law laid down by the Hon'ble Supreme Court in the aforesaid cases and in fact by no stretch of imagination enquiry could have been ordered keeping in view the facts and circumstances of the case and the observations made in the prima facie order are likely to cause serious prejudice to the reputation and goodwill of the appellant amongst third party sellers and brands which list their 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 pr....
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.... such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use; (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use; *** (l) "person" includes-- (i) an individual; (ii) a Hindu undivided family; (iii) a company; (iv) a firm; (v) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (vi) any corporation established by or under any Central, State or....
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.... 3 or sub-section (1) of Section 4 either on its own motion or on-- (a) receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or (b) a reference made to it by the Central Government or a State Government or a statutory authority. *** 26. Procedure for inquiry under Section 19.--(1) On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under Section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter: Provided that if the subject-matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information. (2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under Section 19,....
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.... Commission may also pass such other order as it deems fit. *** 53-B. Appeal to Appellate Tribunal.--(1) The Central Government or the State Government or a local authority or enterprise or any person, aggrieved by any direction, decision or order referred to in clause (a) of Section 53-A may prefer an appeal to the Appellate Tribunal. (2) Every appeal under sub-section (1) shall be filed within a period of sixty days from the date on which a copy of the direction or decision or order made by the Commission is received by the Central Government or the State Government or a local authority or enterprise or any person referred to in that sub-section and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of sixty days if it is satisfied that there was sufficient cause for not filing it within that period. (3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or....
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....ereupon, the provisions of Rule 8 of Order 1 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to the application before the Appellate Tribunal and the order of the Appellate Tribunal thereon. Explanation.--For the removal of doubts, it is hereby declared that-- (a) an application may be made for compensation before the Appellate Tribunal only after either the Commission or the Appellate Tribunal on appeal under clause (a) of subsection (1) of Section 53-A of the Act, has determined in a proceeding before it that violation of the provisions of the Act has taken place, or if provisions of Section 42-A or subsection (2) of Section 53-Q of the Act are attracted. (b) enquiry to be conducted under sub-section (3) shall be for the purpose of determining the eligibility and quantum of compensation due to a person applying for the same, and not for examining afresh the findings of the Commission or the Appellate Tribunal on whether any violation of the Act has taken place. *** 53-S. Right to legal repre....
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....(b) complete postal address in India for delivery of summons or notice by the Commission, with Postal Index Number (PIN) code; (c) telephone number, fax number and also electronic mail address, if available; (d) mode of service of notice or documents preferred; (e) legal name and address(es) of the enterprise(s) alleged to have contravened the provisions of the Act; and (f) legal name and address of the counsel or other authorised representative, if any; (2) The information or reference referred to in sub-regulation (1) shall contain-- (a) a statement of facts; (b) details of the alleged contraventions of the Act together with a list enlisting all documents, affidavits and evidence, as the case may be, in support of each of the alleged contraventions; (c) a succinct narrative in support of the alleged contraventions; (d) relief sought, if any; (da) details of litigation or dispute pending between the informant and parties before any court, tribunal, statutory authority or arbitrator in respect of the subject-matter of information; (e) Such other particulars as may be required by the C....
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....s online marketplace. 4. Amazon marketplace, having its registered office at Bengaluru, is the marketplace affiliate of Amazon.com Inc., a multi-national technology company based in Seattle, Washington and operates the Amazon India e-commerce portal, operating as a platform facilitating third party sellers to sell their goods to consumers on its online marketplace. 5. The Informant states that there are instances of several vertical agreements between (i) Flipkart with their preferred sellers on the platform and (ii) Amazon with their preferred sellers, respectively which have led to a foreclosure of other non-preferred traders or sellers from these online marketplaces. It has been alleged that most of these preferred sellers are affiliated with or controlled by Flipkart or Amazon, either directly or indirectly. Allegations under Section 3(4) of the Act 6. The Informant alleges that there is a clear violation of Section 3(4) read with Section 3(1) of the Act. Allegedly, there is an existence of various vertical arrangements between (i) Flipkart with their preferred sellers on the platforms; and (ii) Amazon with their preferred sellers on the plat....
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....r, Flashstar Commerce and Flashtech Retail (since July 2017), and allegedly create sa bias in favour of preferred sellers to the detriment of other sellers. Besides receiving deep discounts, such assured sellers also receive preferential listing on the website of Flipkart, pushing the results of the non-preferred sellers further down in the search results without any basis whatsoever. 7.2.2. Amazon lends the word "Fulfilled" to the products sold by preferred sellers and further allegedly creates search bias by listing its preferred sellers in the first few pages of the search results. The products sold by Cloudtail India and Appario Retail allegedly dominate first few pages of search results whereas the products with the same ratings sold by non-preferred sellers are listed on later pages. 7.3. Exclusive Tie-ups and Private Labels: Both the OPs have several tie-ups and private labels which get more preference in terms of sales. The OPs' private label brands, sold through their platforms, are routed through a few preferential sellers. It is submitted by the Informant that this modus operandi is being employed by Flipkart across all categories, including smartph....
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....he provisions of service and market of MSMEs and other small retailers by creating a separate 'preferential list'. The preferred sellers are put into an advantageous position as their names appear on the initial pages as compared to the non-preferred sellers, despite selling product with 'identical rating'. Thus, there has been restriction of services in the market. 10.4. Due to huge market base and market power, the OPs have large repositories of data which allow them to target advertisements based on consumer preferences and marginalise other competitors which are unable to capture the market due to lack of access to data. This has resulted in creation of high entry barriers on account of network effects. 10.5. Both OPs have the ability to unilaterally terminate agreements with their sellers without any reason and treat them arbitrarily. 11. Based on the above, the Informant alleged that Flipkart and Amazon have established an inherently anticompetitive model for e-commerce which consists of providing deep discounts and preferential treatment to a select few preferential sellers on their platform and the same merits examination by the Co....
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....luding-- (emphasis supplied) 17. It is also pertinent to note that the definition of 'Agreement' under the Act is an encompassing/inclusive one. It includes any arrangement, understanding or action in concert neither necessarily in writing nor intended to be enforceable by legal proceedings. Further, the list of vertical agreements provided under Section 3(4) of the Act is an inclusive one. 18. Online intermediation services have been identified as key enablers of entrepreneurship which offer access to new markets to sellers/business users and increase the consumers' choice of goods and services. These services form a fulcrum of the commercial success of the sellers who avail such services to reach consumers on the platform. At the same time, online platforms providing intermediation services result in the growing dependence of businesses on these platforms. 19. The IT industry body the National Association of Software and Services Companies (Nasscom) estimated that the Indian ecommerce market was $33 billion in 2017-18 that reached $38.5 billion during 2018-19. Flipkart and Amazon comprise bulk of the online retail market in India.1 ....
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....he Commission has also noted several reports in the media as well as advertisements by e-commerce portals regarding exclusive launches. Mobile manufacturing companies like One Plus, OPPO, and Samsung have exclusively launched several of their models on Amazon. Similarly, Vivo, Realme, Xiomi etc., have exclusively launched several of heir models on Flipkart. In 2018, Flipkart launched 67 mobile phones and Amazon launched 45 mobile phones exclusively on its platform.2 Thus, it appears that these mobile manufacturers partner with the e-commerce platforms and their brands are sold by the platforms' exclusive sellers. 23. The Informant has also alleged that Amazon and Flipkart have their own set of preferred sellers and that these preferred sellers have nexus with the e-commerce platforms either by way of direct or indirect ownership or some understanding. It is observed that there are only few online sellers, which are selling these exclusively launched smartphones either through Amazon or through Flipkart. Based on the evidence adduced by the Informant and information available in the public domain, it can be prima facie inferred that there appears to be exclusive partner....
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....potential adverse effect on competition on the platforms. 26. Thus, the Commission observes that the exclusive arrangements between smartphone/mobile phone brands and e-commerce platform/select sellers selling exclusively on either of the platforms, as demonstrated in the information, coupled with the allegation of linkages between these preferred sellers and OPs alleged by the Informant merits an investigation. It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the OPs are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Section 3(1) read with Section 3(4) of the Act. 27. In view of the foregoing, the Commission is of the opinion that there exists a prima facie case which requires an investigation by the Director General ('DG'), to determine whether the conduct of the OPs have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof, as detailed in this order. 28. Accordingly, the Commission directs the DG to cause an investigati....
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....par Mahasangh has given information against petitioners under Section 19(1)(a) of the Act alleging contravention of Section 3(1) read with Section 3(4) and Section 4(1) read with Section 4(2) of the Act. It has filed a summary of its case together with documents which it has considered supportive of its allegations. Though, the informant has alleged contravention of Sections 3(1), 3(4), 4(1) and 4(2) of the Act, the Commission has held that Act does not provide for an enquiry or investigation in cases of Joint/Collective dominance and has directed inquiry by the Director General for alleged violation of Section 3(1) read with Section 3(4) of the Act. 17. The informant has alleged that the petitioners have entered into several vertical agreements with preferred sellers and following aspects require investigation and consideration by the Commission: * Deep discounting; * Preferential Listing; and * Exclusive Tie-ups. * Deep Discounting 18. With regard to deep discounting the informant has alleged that; Amazon has several preferred sellers and notably among them are 'Cloudtail India' and 'Appario Retail', which are ....
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....ugh petitioners claim that 'any person' can sell his product in their market place, in fact, petitioners promote only selected few and do not maintain platform neutrality. 28. Shri. Abhir Roy, learned Advocate for CAIT submitted that Amazon's market place is owned by M/s. Amazon Sellers Services Pvt. Ltd. Adverting to Company's Master data (at pages No. 154 & 155 of Statement of Objection by informant), he submitted that the said Company and Amazon Retail India Pvt. Ltd. have a common e-mail ID namely '[email protected]'. The registered address of Amazon Sellers Pvt. Ltd., is in the 8th Floor, Brigade Gateway, 26/1, Dr. Rajkumar Road, Bengaluru. He pointed out that though the registered office of Amazon Retail India Pvt. Ltd., is shown as Nehru place, New Delhi, the place where Books of Accounts are maintained, is shown as the registered office of Amazon Seller Services Pvt. Ltd. (petitioner in W.P. No. 3363/2020). He submitted that these facts clearly establish that the Contact e-mail ID of both Companies is the same and maintenance of Books of Accounts of both Companies is at the same address. 29. Shri. Abhir Roy further submitted that A....
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....tions). 32. On the aspect of 'cash burning', Smt. Madhavi Diwan, Learned Addl. Solicitor General, adverting to paragraph No. 7 of order dated 25.04.2018 in I.T.A. No. 202/Bang/2018, also contended that Flipkart's Senior Vice President and Finance Controller of Flipkart Group, has admitted in his statement before the Income Tax Authorities that the strategy of selling at a price lower than the cost price (predatory pricing) is to capture the market and to earn profits in the long run. 33. With regard to the nature of the impugned order, Smt. Madhavi Diwan, submitted that it is an administrative order. In support of this submission, she relied upon CCI Vs. SAIL and CCI Vs. Bharathi Airtel. She submitted that, in CCI Vs. SAIL, it is held that threshold requirement for establishing prima facie case at the stage of Section 26(1), is a low threshold. She adverted to Martin Burn Ltd. Vs. R.N. Banerjee, reported in 1958 SCR 514, and submitted that prima facie case does not mean a case proved to the hilt, but a case which can be said to be established, if the evidence which is led in support of the same were believed. 34. It may be also be profitable t....
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....ives the report from the Director General and if it has not already taken a decision to close the case under Section 26(2), the Commission is not only expected to forward the copy of the report, issue notice, invite objections or suggestions from the informant, the Central Government, the State Government, statutory authorities or the parties concerned, but also to provide an opportunity of hearing to the parties before arriving at any final conclusion under Sections 26(7) or 26(8) of the Act, as the case may be. This obviously means that wherever the legislature has intended that notice is to be served upon the other party, it has specifically so stated and we see no compelling reason to read into the provisions of Section 26(1) the requirement of notice, when it is conspicuous by its very absence. Once the proceedings before the Commission are completed, the parties have a right to appeal under Section 53-A(1)(a) in regard to the orders termed as appealable under that provision. Section 53-B requires that the Tribunal should give, parties to the appeal, notice and an opportunity of being heard before passing orders, as it may deem fit and proper, confirming, modifying or setting ....
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....y 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 the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as afore referred. However, other decisions and orders, which are not directions simpliciter and determining the rights of the parties, should be well reasoned analysing and deciding the rival contentions raised before the Commission by the parties. 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 determinative process and by recording minimum reasons substantiating the formation of such opinion, while all its other orders and decisions should be well reasoned. 98. Such an approach can also be justified with reference to Regulation 20(4), which requires the Director General to record, in his report, fin....
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....s on Amazon and Vivo, Realme, Xiomi etc., have exclusively launched several of their models on the Flipkart. Commission has noticed that Flipkart has launched 67 mobile phones and Amazon has launched 45 mobile phones exclusively on their platforms. Commission has recorded (in paragraph 23) that petitioners have their own set of preferred sellers and there are only few online sellers which sell the exclusively launched smart phones. 41. Commission has further recorded (in paragraph 23) that based on the evidence adduced by the informant and the information available in public domain, it has prima facie inferred that there appears to be exclusive partnership between smart phone manufacturers and e-Commerce platforms for exclusive launch of smart phones. 42. The Commission has also recorded that it has taken note of the emails dated 31.03.2019 and 20.09.2019 etc., allegedly sent by Flipkart and Amazon to their sellers offering to incur a part of discounts offered during big sale events. It has further recorded that certain smart phone brands/models are available at significantly discounted price on petitioners' platforms and are sold largely through the sellers i....
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....itted that when a citizen/litigant is driven to wall, he blows hot and hotter. "29. When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not "blow hot and cold", but they blow hot and hotter. ..." 50. The next contention urged by Shri. Gopal Subramanium is, in CCI Vs. Bharathi Airtel, the Apex Court has upheld the judgment of the High Court that the Commission could exercise jurisdiction only after conclusion of proceedings and TRAI returned its findings. He submitted that in the instant case, Enforcement Directorate is already investigating the matter. Therefore, CCI could not have exercised its jurisdiction whilst investigation by Enforcement Directorate is in progress. 51. In response, Smt. Madhavi Diwan rightly submitted that TRAI is a sectoral regulator and in view of the issues involved in CCI Vs. Bharathi Airtel, it has been held that CCI could exercise its jurisdiction after TRAI returned its findings. She contended that the Statement of objects and reasons of FEMA aim at consolidating and amending the law rela....
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....y, 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 judgment, state that confidentiality is to be maintained only in terms of provisions of Section 57 read with Regulation 35. She rightly contended that Section 57 merely protects the confidentiality of the information belonging to any enterprise which has been obtained by or on behalf of the Commission or the Appellate Tribunal and the same cannot be disclosed otherwise than in compliance with or for the purpose of this Act or any other law for the time being in force. She further, rightly submitted that an order under Section 26(1) cannot be described as being outside the purposes of the Act and therefore, position is not altered with regard to confidentiality. So far as the aspect of business reputation is concerned, placing reliance on Cadila Health Care Limited & Another Vs. Competition Commission of India & Ors., (paragraph No. 44) she submitted that allowing enquiry is akin to adjudicating a tax or commercial dispute or regulatory dispute. The relevant passage reads as under: 44. [.] Cadila's reliance....
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....dy 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 market study was undertaken as a part of the 'Advocacy mandate' under Section 49 of the Act and market study is in no manner inconsistent with the impugned order. 58. Petitioners have pleaded in extenso and submitted elaborate arguments on the merits of the matter. But, in a writ petition filed under Article 226 of the Constitution of India, seeking judicial review, the High Court can examine only the decision making process with the exception namely the cases involving violation of fundamental human rights. The law on the point is fairly well settled. It may be profitable to recall following opinion of Lord Greene in Associated Provincial Picture Houses Ltd. Vs. Wednesbury Corporation, reported in (1948) 1 KB 223: "It is true that discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It ha....
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....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 error which can be corrected by certiorari but not a mere wrong decision. Quoting Morris J, it is held as follows: 10. "The essential features of the remedy by way of certiorari have been stated with remarkable brevity and clearness by Morris, L.J. in the recent case of Rex v. Northumberland Compensation Appellate Tribunal [(1952) 1 KB 338 at 357]. The Lord Justice says: "It is plain that certiorari will not issue as the cloak of an appeal in disguise. It does not lie in order to bring up an order or decision for re-hearing of the issue raised in the proceedings. It exists to correct error of law when revealed on the face of an order or decision or irregularity or absence of or excess of jurisdiction when shown." 61. In G.B. Mahajan and others Vs. Jalgaon Municipal Council and others, reported in (1991) 3 SCC 91 (para 44) the Hon'ble Supreme Court of India speaking through Justice M.N. Venkatachaliah (as he then was), referring to Prof....
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....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 of administrative discretion. After analyzing the law with regard to Constitutional review in UK and the cases involving human rights, he has stated that it is quite inappropriate to speak of the decline or demise of Wednesbury test. He has concluded that Wednesbury Principles are still alive as follows: "In the ultimate analysis, it can be said that the Wednesbury principles are still alive and applicable in judicial review of administrative discretion where no constitutional/fundamental rights are involved. Wednesbury, is but a facet and an enduring facet of the larger landscape of judicial review. These issues and aspects are not a matter of mere semantics but are the constitutional underpinnings of the exercise of judicial power and the limits thereof." 63. In the case on hand, the informant has filed information and appended material papers, which according to t....
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....essmen 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 competition, interest of the consumer and free trade." 17. In the considered opinion of this Court, the CCI certainly have a jurisdiction to take appropriate steps to curb the anti competitive practices and a detailed mechanism is provided under the Act itself to ensure that no anti competitive practices are undertaken. The appellants, it appears, do not want to participate at all in the proceedings initiated by the CCI and do not want the CCI to proceed ahead in accordance with law. This Court really fails to understand as to why the appellants do not want to participate in the enquiry, in which the appellants will have an opportunity to produce the material before the Director General on the basis of which, after hearing the appellants and after following the due process of law, the Director General shall be able to conduct an e....
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....r 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. 2.2.1.3. Consumer Welfare: Competition policy contributes to economic growth to the ultimate benefit of consumers, in terms of better choice (new products), better quality and lower prices. Consumer welfare protection may be required in order to redress a perceived imbalance between the market power of consumers and producers. The imbalance between consumers and producers may stem from market failures such as information asymmetries, the lack of bargaining position towards producers and high transaction costs. Competition policy may serve as a complement to consumer protection policies to address such market failures." 22. The aforesaid Guidelines also spell out few more benefits of such laws incorporating competition policies by highlighting the following advantages: ....
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....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 market entry and exit--Entry and exit of firms reallocates resources from less to more efficient firms. Overall productivity increases when an entrant is more efficient than the average incumbent and when an existing firm is less efficient than the average incumbent. Entry--and the threat of entry--incentivises firms to continuously improve in order not to lose market share to or be forced out of the market by new entrants. Encouraging innovation--Innovation acts as a strong driver of economic growth through the introduction of new or substantially improved products or services and the development of new and improved processes that lower the cost and increase the efficiency of production. Incentives to innovate are....
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....petition 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 insignificance. 29. One has to keep in mind the aforesaid objective which the legislation in question attempts to subserve and the mischief which it seeks to remedy. As pointed out above, Section 18 of the Act casts an obligation on CCI to "eliminate" anticompetitive practices and promote competition, interests of the consumers and free trade. It was rightly pointed out by Mr. Neeraj Kishan Kaul, the learned Additional Solicitor General, that the Act is clearly aimed at addressing the evils affecting the economic landscape of the country in which interest of the society and consumers at large is directly involved. This is so eloquently emphasised by this Court in....
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....mmission 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 in view the nature of the controversies arising under the provisions of the Act and larger public interest, the matters should be dealt with and taken to the logical end of pronouncement of final orders without any undue delay. In the event of delay, the very purpose and object of the Act is likely to be frustrated and the possibility of great damage to the open market and resultantly, country's economy cannot be ruled out. *** 125. We have already noticed that the principal objects of the Act, in terms of its Preamble and the Statement of Objects and Reasons, are to eliminate practices having adverse effec....
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.... 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 levels of economic growth, entrepreneurship, employment, higher standards of living for citizens, protect economic rights for just, equitable, inclusive and sustainable economic and social development, promote economic democracy, and support good governance by restricting rent seeking practices. Therefore, an interpretation should be provided which is in consonance with the aforesaid objectives." 21. In the light of the aforesaid, in order to achieve the object of the Act of 2002, the question of interference does not arise. The appellants do have a right to participate in the proceedings and/or under ....
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....s 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 competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first stage of initiating process under the CCI Act and the enquiry is yet to commence. The appellants do not want to participate in the enquiry for the reasons best known to them. 23. The present case is not a case where the mala fides are alleged against the Regulator, nor there is any jurisdictional infirmity. The order passed under Section 26(1) is neither an adjudication, nor determinative, but merely an inquisitorial, departmental proc....
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.... (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 act is in contravention of the provisions stated in Section 33 of the Act, it may issue an order temporarily restraining the party from carrying on such act, until the conclusion of such inquiry or until further orders without giving notice to such party, where it deems it necessary. This power has to be exercised by the Commission sparingly and under compelling and exceptional circumstances. The Commission, while recording a reasoned order inter alia should: (a) record its satisfaction [which has to be of much higher deg....
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....nction 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 act under this provision, does not contemplate any adjudicatory function. The Commission is not expected to give notice to the parties i.e. the informant or the affected parties and hear them at length, before forming its opinion. The function is of a very preliminary nature and in fact, in common parlance, it is a departmental function. At that stage, it does not condemn any person and therefore, application of audi alteram partem is not called for. Formation of a prima fac....
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....tions 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 is administrative in nature and further that it was merely a prima facie opinion directing the Director General to carry the investigation, the High Court would not be competent to adjudge the validity of such an order on merits. The observations of the High Court giving findings on merits, therefore, may not be appropriate." The Hon'ble Supreme Court in the aforesaid case has held that the order under Section 26(1) of the Act of 2002 is administrative in....
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....ry 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 by the CCI. In the considered opinion of this Court, the learned Single Judge was justified in holding that the order passed by the CCI does not warrant an interference. 32. In the considered opinion of this Court, the other ground raised in respect of violation of Section 3 cannot be looked into as various agreements executed by the appellants with different parties, relevant material in respect violation of Section 3 is yet to be produced befor....
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....bstantial 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 A.P. [A. Subash Babu v. State of A.P., (2011) 7 SCC 616 : (2011) 3 SCC (Civ) 851 : (2011) 3 SCC (Cri.) 267], in which the expression "person aggrieved" in Section 198(1)(c) of the Code of Criminal Procedure, 1973, when it came to an offence punishable under Section 494 of the Penal Code, 1860 (being the offence of bigamy), was under consideration. It was held that a "person aggrieved" need not only be the first wife, bu....
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....e 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 the appellants does not arise. 37. The issue relating to deep discounting, preferential listing and exclusive tie-ups will be looked into in depth at the time of enquiry by the Director General only when various agreements executed by the appellants are brought to the notice of the Director General. At this stage, the petitions/appeals filed are premature and deserves to be dismissed. The learned Single Jud....
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.... 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 and by no stretch of imagination the law laid down by the Hon'ble Supreme Court can be diluted by a judgment of a High Court. The judgment delivered in the case of Bharti Airtel Ltd. (supra) is also not applicable in the peculiar facts and circumstances of the case. 40. We are dealing with a limited issue relating to an order passed under Section 26(1) of the Act of 2002 by the CCI setti....
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....ght 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 or disposal of individual or some cases might not be determinative of the matter which pertains to abuse of dominance, for the reason that it affects the wider public, just as a crime does. It is like saying that a builder or other service provider who indulges in widespread malpractice that amounts to cheating investors or flat buyers, which is exposed by one complaint, that res....