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Apex court rules in favour of CCI

Apex court rules in favour of CCI
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First Published: Thu, Sep 09 2010. 11 22 PM IST
Updated: Thu, Sep 09 2010. 11 22 PM IST
New Delhi: India’s nascent competition law framework remains intact, with the Supreme Court (SC) ruling on Thursday that entities against which complaints have been made to the Competition Commission of India (CCI) do not have the right to be heard while the body decides on the legitimacy of these complaints.
The court also ruled that the appeals body looking at competition law has the powers to only hear cases on which CCI has passed an order.
India’s competition law regime has two levels. At the first, the competition law body— CCI—decides whether an entity has violated competition law, investigates the said entity if it has, and issues an order. At the second level, the appellate body Compat (Competition Appellate Tribunal) hears appeals from entities that believe CCI has ruled unfairly against them.
Pallavi Shroff, senior partner at Amarchand Mangaldas, who represented Jindal Steel and Power Ltd (JSPL) in the case, described the judgement as seminal and said it corrects the balance of power between CCI and its appellate body.
CCI rules on cases and complaints related to monopolies, unfair competitive practices, and cartelization.
Although CCI is yet to rule in any case—the process is cumbersome—its appeals body was called into play by Steel Authority of India Ltd (SAIL), the state-owned steel maker. Last year, JSPL filed a complaint with CCI, alleging that an agreement for supply of rails between Indian Railways and SAIL was anti-competitive. SAIL is the exclusive supplier of rails to the railways.
CCI, like it usually does in the case of complaints, first sought to establish whether there was merit in it. It eventually decided that there was some substance in the complaint and referred it to its director general (investigations) in December. Before the director general could begin its investigations, SAIL appealed to Compat, which stayed the very investigation in February. It also ruled that CCI would not be party to such appeals.
CCI appealed Compat’s ruling in SC. Initial hearings suggested that the court was of the opinion that CCI should involve entities against which complaints had been received in its process of assessing the merits of such complaints.
In Thursday’s order, however, SC said such entities do not have the right to be heard by CCI even as it looks into the merits of these complaints. It has, however, asked CCI to complete this process within 60 days of a complaint being made.
CCI follows a two-stage process because it dismisses several complaints, typically frivolous ones, in the first stage itself.
SC also ruled that CCI will be a party to all appeals before Compat, and that it must necessarily be involved in appeals involving orders arising from an investigation it has launched on its own accord and that it can choose to be involved in appeals involving orders arising from complaints made by others.
“The decision clearly defines the Compat’s powers of appellate review and will allow the CCI to conduct investigations into potentially anti-competitive activities without having to go through protracted appeal proceedings at every stage,” said Samir R. Gandhi, partner at Economic Laws Practice, which represented CCI.
An independent lawyer echoed those sentiments. “This judgement will help CCI function independently and with least interference from the parties being investigated,” said SC lawyer Atul Chitale.
Dhanendra Kumar, chairman of CCI, and justice Arijit Pasayat, chairman of Compat, could not be reached for comment.
sangeeta.s@livemint.com
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First Published: Thu, Sep 09 2010. 11 22 PM IST