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Competition watchdog faces fresh challenge to jurisdiction

Competition watchdog faces fresh challenge to jurisdiction
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First Published: Sun, Jan 23 2011. 11 29 PM IST
Updated: Sun, Jan 23 2011. 11 29 PM IST
New Delhi: India’s antitrust regulator, the Competition Commission of India (CCI), faces a new challenge after being stopped from investigating alleged anti-competitive practices in aviation fuel supply by the Delhi high court at the behest of state-owned oil marketing companies (OMCs).
Mukesh Ambani-owned Reliance Industries Ltd (RIL) had filed a complaint with CCI, alleging that the OMCs—Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd— had formed a cartel to supply aviation turbine fuel to Air India, after his company lost a tender to do so.
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While the case was being investigated by CCI, the OMCs approached the Delhi high court challenging CCI’s jurisdiction, stating that the case fell under the remit of the Petroleum and Natural Gas Regulatory Board (PNGRB).
The court on 8 December stayed CCI’s probe and deleted the commission as a party to the proceedings.
The high court will next hear the case on 15 March.
While CCI chairman Dhanendra Kumar declined to comment on the regulator’s stance since the case was sub judice, another official at the agency, who requested anonymity, said: “CCI has approached the (Delhi) high court for two things. One, on reimpleadment, so that the CCI can be a respondent. And two, (to) vacate the stay order. We still have to hear from the court.”
The petroleum board said it was the right forum to decide the matter. “There are some overlapping jurisdiction (issues). It is the sectoral regulator who should have the first priority to resolve the issue,” said B.S. Negi, member, PNGRB.
Emailed queries sent to an Air India spokesperson remained unanswered. G.C. Daga, director of marketing at IOC, declined to comment.
“What is wrong if a state-owned firm awards a tender to another state-owned firm?” said an IOC executive, who did not want to be identified.
An RIL spokesperson also declined to comment on the grounds that the matter was sub judice.
The dispute is the second that has arisen over jurisdiction, testing the framework of competition law as overseen by the nascent regulator.
CCI started functioning in 2009 with more teeth than the earlier antitrust body, the Monopolies and Restrictive Trade Practices Commission. It has 117 cases pending before it.
Four months ago, the Supreme Court settled fundamental questions on the jurisdiction between CCI and its appellate body, Competition Appellate Tribunal (Compat), which arose from a dispute between Steel Authority of India Ltd (SAIL) and Jindal Steel and Power Ltd (JSPL) over the supply of rails to the Indian Railways. JSPL, which also manufactures rails, had moved CCI claiming that SAIL was using its dominant position in supplying rails to the government and that it was anti-competitive.
However, while CCI, through the office of the director general, had started investigations, SAIL moved Compat, which stayed that inquiry.
The apex court then ruled that entities against which complaints have been made to CCI do not have the right to be heard by the regulator until it passes an order on them.
The court also held that Compat can take up cases only after CCI has passed proper orders and that the regulator would be a necessary party to appeals against its orders before Compat.
The PNGRB Act mandates the regulator “to protect the interests of consumers by fostering fair trade and competition among the entities” operating in this sector, which could be interpreted to mean that the board has a duty to check anti-competitive practices.
The questions of law before the single-judge bench of the high court include whether CCI will have jurisdiction over a section of the market for which there exists a specialized statutory regulator, and whether the high court should have removed the commission as a respondent in the case.
Former chairman of CCI, Vinod Dhall, who now heads a private law firm, said the Competition Act extends across all sectors, regulated or not. “If there is a violation of the Competition Act, then the CCI has jurisdiction. The injured parties can certainly approach CCI,” he said.
But Dhall said the competition law also has consultation provisions, under which CCI can consult regulators of various sectors and vice-versa. “The consultation and cooperation between CCI and the regulators should be at two levels. One, for individual cases like this, and two, at a broad policy level where CCI and the regulators decide who should take the lead role in which type of cases,” he said.
However, Dhall believes that unless expressly provided for, a regulator should allow CCI to probe matters. “There has to be a specific provision in the (PNGRB) Act that if somebody forms a cartel, then what should PNGRB do,” he said.
nikhil.k@livemint.com
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First Published: Sun, Jan 23 2011. 11 29 PM IST