Ambiguity in Section 26 of the Competition Act, 2002.
Is CCI empowered to disagree with DG’s Report where DG has found contravention of the provisions of the Competition Act, 2002 and close the case and what is the remedy available against such orders of CCI?
Competition Commission of India was established to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for the matters connected therewith or incidental thereto.
In pursuance of the objectives and the duties of Commission, Commission has wide powers even to penalise the enterprises indulging in contravening activities.
Section 26 of the Competition Act, 2002 (hereinafter “The Act”) provides for procedure for inquiry on receipt of information from any person, consumer or their association or trade association or upon reference made to it by Central Government or a State Government or a statutory authority under section 19 of the Act.
Section 26(8) of the Act reads as under:
(8) If the report of the Director General referred to in sub-section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act.
Section 53A of the Act reads as under:
“53A. (1) The National Company Law Appellate Tribunal constituted under section 410 of the companies Act, 2013 shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017, be the Appellate Tribunal for the purpose of this Act and the said appellate Tribunal shall –
(a) to hear and dispose of appeals against any direction issued or decision made or order passed by the Commission under sub-sections (2) and (6) of section 26, section 27, section 28, section 31, section 32, section 33, section 38, section 39, section 43, section 43A, section 44, section 45 or section 46 of the Act;”
On a plain reading of these sections, it appears that when the Director General (“DG”) has found contravention of the provisions of the Act, Commission has to inquire into such contravention in accordance with the provisions of the Act. Further, against the order passed in section 26(8) of the Act, no appeal lies under the Act.
However, section 26(8) and section 53 A as it stands now seem to be inconclusive as the question still remains unanswered that what happens when the Commission does not agree with the Report of DG and wants to close the matter and the remedy available against such orders of CCI?
Though an amendment was proposed in the year 2012 vide The Competition (Amendment) Bill, 2012 amending section 26 and section 53A of the Act as under:
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in sub-section (8), after the words "in accordance with the provisions of this Act", the words "and make appropriate orders thereon after hearing the concerned parties" shall be inserted.
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in sub-section (1), in clause (a), for the words, brackets and figures "sub-sections (2) and (6)", the words, brackets and figures "sub-sections (2), (6), (7) and (8)" shall be substituted.
But unfortunately, the said Bill lapsed.
In Jyoti Sawroop Arora Vs. The Competition Commission of India & Ors. [2016]136SCL486(Delhi), Hon’ble Delhi High Court, opined that even against an order where CCI disagrees with the report of the DG and closes the case, an appeal to COMPAT lies and the writ petition would thus not be maintainable.
If we assume this opinion to be correct, then, what can be inferred is that the orders of CCI closing the matter would fall either under section 26(6) or 26(8) of the Act. But interestingly, section 26(6) talks of a situation when DG does not find contravention of the Act and further, section 26(8) is not appealable as per the Act.
However, the questions raised herein are still to be decided by Court of Law.
It is undisputable that DG is only a fact?finding body and CCI is not bound by the report of DG. Also, the Commission cannot be said to be handicapped in a situation where though DG finds contravention of the Act but CCI is of the view that no contravention is made out. Further, in order to carry out its duties envisaged in Section 18 of the Competition Act, 2002, CCI has to bring the matter to a logical conclusion. In my opinion, CCI is empowered to pass an order closing the matter if it does not find contravention of the Act. Also, Appeal being a statutory right is not provided to such orders and therefore the only remedy available is a writ.