Complaints dwindle as CCI faces awareness deficit

New Delhi: The number of complaints received and probed by the country’s anti-trust watchdog has been falling thanks to poor awareness levels, delayed compensation, classification under civil law and perceptions that it went soft on some cases, lawyers said.

In 2010-11, the Competition Commission of India (CCI) had forwarded 76 new complaints to its investigation wing, which fell to 43 in 2011-12, and down further to a mere 28 in 2012-13. While final figures for 2013-14 were not available, CCI officials say provisional data hints it may have gone up only marginally to 36.

The regulator routinely turns away a majority of complaints it receives, finding no apparent evidence to investigate them. These numbers, too, have started falling.

While the CCI received 82 complaints in 2009-10— the year it was formed—they rose to 99 in 2010-11, 150 in 2011-12 and 147 in 2012-13. It fell to 114 in 2013-14, as per provisional data.

The figure for 2009-10 includes the 50 cases inherited by the CCI from the former Monopolies and Restrictive Trade Practices (MRTP) Commission, which the new regulator replaced. In addition to these are a handful of cases which the regulator investigates each year on its own on the basis of media reports.

What lies beneath this waning of interest?

Primarily, it seems lawyers, potential complainants and whistleblowers outside big cities are clueless about the new regulator.

“Lawyers practising in courts in smaller towns and cities are almost completely unaware of the CCI and what it does, even though they knew of the MRTP,” says M.M. Sharma, head of competition law practice at the New Delhi-based law firm Vaish Associates Advocates.

That the CCI, a quasi-judicial regulator, has no benches outside Delhi, the lawyer said, aggravates the situation.

The lack of awareness is indeed a major problem, a CCI official admitted, but disagreed with the idea of setting up benches outside Delhi.

“Most of the cases come from Delhi or Mumbai,” he said, requesting anonymity. “Having more benches does not make sense.”

A CCI drive to invite whistleblowers has not worked, the official said.

On 25 July, 2012, Mint had reported on a CCI advertisement in The Economic Times, inviting whistleblowers from within cartels to make “vital disclosures” before it, promising them confidentiality and reduced penalty, as part of a drive to ferret out information about such practices.

One reason whistleblowers are not coming forward is that India does not have a culture of leniency applications, a term that refers to an anti-trust regulator either providing the option of total immunity or a reduced fine to firms involved in cartels that self-report and give evidence, says Manas Kumar Chaudhuri, partner, competition law practice at law firm Khaitan & Co.

The CCI official said since its inception, the CCI had received “just two or three” leniency applications. “Those too were not found fit for investigation and rejected,” he said.

Both Chaudhuri and the CCI official say that another major reason why the CCI has failed to take off is because India’s competition law is a civil law and not a criminal one.

“Just like in the Income Tax Act, you can mostly never get a person jailed for violating the Competition Act. At best, there will be a financial penalty, and that is not deterrence enough. In Europe and the US, it is part of criminal law and hence, there is stricter enforcement,” the CCI official said.

Chaudhuri points out that because of this reason, if officials of a company held guilty flee India, they cannot be extradited.

“But if the US or European Union want to extradite someone from India, they can do so,” he adds.

The CCI official said even when someone is found guilty and fined by the CCI, it does not translate into any immediate financial gain for the complainant, since the firm, or cartel, appeals the decision before the Competition Appellate Tribunal (Compat). Even if Compat upholds the CCI order, the case usually goes to the Supreme Court, and while it is in the courts, the tribunal typically does not award any compensation.

M.L. Lahoty, a Supreme Court (SC) lawyer who won his clients a much-publicised case against real estate major DLF Ltd, agrees. “At the end of the day, everyone wants his pound of flesh. When compensation takes so long, people begin asking, what is in it for them.”

The case, where CCI slapped a ₹ 630 crore fine on DLF, was later upheld by Compat and is now pending before the SC. In fact, most significant cases where CCI prescribed big penalties—including the one in which 11 cement firms were together fined ₹ 6,300 crore and the case against state-owned Coal India Ltd, which was fined ₹ 1,773 crore—are pending in appeals.

Lawyers also said there was a perception that the CCI had gone too soft in many cases.

“Only about 12-15% of the cases coming before the CCI have been penalised, meaning 85% of them do not warrant any action or penalty,” says Chaudhuri.

Sharma says that until December, when it levied a heavy penalty on Coal India, the CCI was seen as being soft on government-owned firms. While he says that the CCI has been quite tardy in its probes, the decline in the number of cases may actually signal something positive.

“I think it is good that they are taking up selective cases,” Sharma says. “It also means that slowly, jurisprudence is getting laid down.”