Competition Commission of India (CCI) Duties, Powers and Functions

Table of Contents:

1. Duties of Commission.

1.1 Duties of the CCI

1.2 International Cooperation

2. Inquiry into certain agreements and dominant position of enterprise.

2.1 Inquiry by the CCI

2.2 Source of Information

2.2.1. Locus to file information

2.2.2 Informant vs. Complainant

2.2.3 Reference from Statutory Authority

2.3 Determination of AAEC

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Duties, Powers And Functions Of Commission

1. Duties of Commission.

Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the inter­ests of consumers, and ensure freedom of trade carried on by other par­ticipants, in markets in India :

Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement, with the prior approval of the Central Government, with any agency of any foreign country.

COMMENTS

1.1 Duties of the CCI

The main objective of competition law is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences.¹² The Competition Act is 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. One of the avowed objectives of the Act is to promote consumers’ welfare by preventing market distortions caused by such actions and agreements of the enterprises which militate against the competition and consumers’ interest. The competition law by its very nature envisages that there are situations where the Commission has a role and has to control behaviour of the enterprises in the market place in order to achieve consumer welfare.¹³

Section 18 of the Act which is in consonance with the preamble of the Act, casts an obligation on the CCI to ‘eliminate’ anti-competitive practices and promote competition, interests of the consumers and free trade.¹⁴ The exercise of power under Section 18 is subject to other provisions of the Act. The aim of the Commission is the institution of a system of undistorted competition which is commensurate to the promotion of the interests of the consumer.¹⁵ The preamble of the Competition Act and Section 18 mandates the Commission to “protect the interest of consumers” and it is important to ensure that consumers’ surplus is not adversely impacted.¹⁶

1.2 International Cooperation

The Commission may enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country.

As mandated under Section 18 of the Competition Act, 2002, the Commission has entered into Memorandum of Understanding (MOU), after obtaining approval from the Government of India, with the following competition authorities till March 2019:

1. 1. Federal Trade Commission (FTC) and Department of Justice (DOJ), USA;
   2. Director General Competition, European Union (EU);
   3. Federal Antimonopoly Service (FAS), Russia;
   4. Australian Competition and Consumer Commission (ACCC);
   5. Competition Bureau (CB) Canada; and
   6. Competition authorities of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa (BRICS Countries).

In the year 2018-19, the Commission processed two MOUs i.e., (i) MOU with Japan Fair Trade Commission (JFTC) (ii) MOU with Administrative Council for Economic Defense (CADE) Brazil. The Commission is awaiting the government approval to sign the MOUs.

Apart from the MoUs mentioned above, CCI is also a member of International Competition Network (ICN); BRICS and has an independent observer status with UNCTAD. The CCI is also a member of the Competition Committee of Organization for Economic Co-operation and Development (OECD). The Commission has been proactively engaging with United Nations Conference on Trade and Development and (UNCTAD) [a UN body responsible to deal with development issues, particularly international trade] and United Nations Conference on Trade and Development the main driver of development (UNCTAD).

2. Inquiry into certain agreements and dominant position of enter­prise.

(1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on its own motion or on—

(a) receipt of ¹⁸[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.

(2) Without prejudice to the provisions contained in sub-section (1), the powers and functions of the Commission shall include the powers and functions specified in sub-sections (3) to (7).

(3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:—

(a) creation of barriers to new entrants in the market;

(b) driving existing competitors out of the market;

(c) foreclosure of competition by hindering entry into the market;

(d) accrual of benefits to consumers;

(e) improvements in production or distribution of goods or provision of services; or

(f) promotion of technical, scientific and economic devel­opment by means of production or distribution of goods or provi­sion of services.

(4) The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following factors, namely:—

(a) market share of the enterprise;

(b) size and resources of the enterprise;

(c) size and importance of the competitors;

(d) economic power of the enterprise including commercial advantages over competitors;

(e) vertical integration of the enterprises or sale or service network of such enterprises;

(f) dependence of consumers on the enterprise;

(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise;

(h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers;

(i) countervailing buying power;

(j) market structure and size of market;

(k) social obligations and social costs;

(l) relative advantage, by way of the contribution to the eco­nomic development, by the enterprise enjoying a dominant position having or likely to have appreciable adverse effect on competi­tion;

(m) any other factor which the Commission may consider relevant for the inquiry.

(5) For determining whether a market constitutes a “relevant market” for the purposes of this Act, the Commission shall have due regard to the “relevant geographic market” and “relevant product market”.

(6) The Commission shall, while determining the “relevant geo­graphic market”, have due regard to all or any of the following factors, namely:—

(a) regulatory trade barriers;

(b) local specification requirements;

(c) national procurement policies;

(d) adequate distribution facilities;

(e) transport costs;

(f) language;

(g) consumer preferences;

(h) need for secure or, regular supplies or rapid after-sales services.

(7) The Commission shall, while determining the “relevant product market”, have due regard to all or any of the following factors, namely:—

(a) physical characteristics or end-use of goods;

(b) price of goods or service;

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products.

COMMENTS

2.1 Inquiry by the CCI

Section 19 of the Act permits the CCI to conduct an enquiry into certain kinds of agreements and dominant position of enterprise. Sub-section (1) of Section 19 empowers the Commission to inquire into any alleged contravention of the provisions contained in sub-section (1) of Section 3 (i.e. anti-competitive agreements) or sub-section (1) of Section 4 (i.e. abuse of dominant position).

2.2 Source of Information

As per Section 19(1) of the Act, the Commission is empowered to inquire in to any alleged contravention of Section 3 or Section 4 either suo motu or on:

(a) Receipt of information 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.

Vide the Competition (Amendment) Act, 2007, the provisions of Section 19(1) (a) were amended substituting the words “receipt of a complaint” with “receipt of any information”. This amendment clearly reflects the legislative intention of emphasizing the inquisitorial nature of the proceedings of the Commission. The Commission does not adjudicate lis between informant and the opposite party. Rather, it acts to restore competition in the market.¹⁹

The Competition Commission of India (General) Regulations, 2009 lays down the procedural requirements to file information with the Commission:

• • Contents of information or reference (Reg. 10)
  • Signing of information or reference (Reg. 11)
  • Procedure for filing of information or reference (Reg. 12)
  • Procedure for filing of information or reference in electronic form (Reg. 13)
  • Procedure for scrutiny of information or reference (Reg. 15)
  • Power of Commission to join multiple information (Reg. 27)
  • Amendment of information (Reg. 28)
  • Confidentiality of identity of informant (Reg. 35)
  • Fee under clause (a) of sub-section (1) of section 19 of the Act (Reg. 49)

2.2.1. Locus to file information

The Competition Act, 2002 does not prescribe any qualification for the person who wants to file information under Section 19(1) (a). There are no conditions which must be fulfilled before information can be filed under the section. Further, there is nothing in the plain language of Sections 18 and 19 read with Section 26(1) from which it can be inferred that the Commission has the power to reject the prayer for an investigation into the allegations involving violation of Sections 3 and 4 only on the ground that the informant does not have personal interest in the matter or he appears to be acting at the behest of someone else. Thus, the Informant need not necessarily be an aggrieved party to file a case before the Commission. Further, it is because of the inquisitorial scheme of the Act, that the Commission in appropriate cases, defends its orders in higher forums, regardless of the fact as to who brought such case before it, which is not a normal feature in adversarial proceedings.²⁰

2.2.2 Informant vs. Complainant

The Hon’ble Supreme Court in Samir Agarwal²¹ approved the aforesaid position regarding locus standi of the Informant. The Apex Court relied on the following reasoning to come to the said conclusion:

• • A reading of the provisions of the Competition Act and Competition Commission of India (General) Regulations, 2009 shows that “any person” may provide information to the CCI. The definition of “person” in section 2(l) of the Competition Act, is an inclusive one and is extremely wide, including individuals of all kinds and every artificial juridical person. This may be contrasted with the definition of “consumer” in section 2(f) of the Act, which makes it clear that only persons who buy goods for consideration, or hire or avail of services for a consideration, are recognised as consumers.
  • A look at section 19(1) of the Act would show that the Competition Act originally provided for the “receipt of a complaint” from any person, consumer or their association, or trade association. This expression was then substituted with the expression “receipt of any information in such manner and” by the 2007 Amendment. This substitution is not without significance. Whereas, a complaint could be filed only from a person who was aggrieved by a particular action, information may be received from any person, obviously whether such person is or is not personally affected. This is for the reason that the proceedings under the Act are proceedings in rem which affect the public interest. That the CCI may inquire into any alleged contravention of the provisions of the Act on its own motion, is also laid down in section 19(1) of the Act. Further, even while exercising suomotu  powers, the CCI may receive information from any person and not merely from a person who is aggrieved by the conduct that is alleged to have occurred. This also follows from a reading of section 35 of the Act, in which the earlier expression “complainant or defendant” has been substituted by the expression, “person or an enterprise,” setting out that the informant may appear either in person, or through one or more agents, before the CCI to present the information that he has gathered.
  • Section 45 of the Act is a deterrent against persons who provide information to the CCI, mala fide or recklessly, inasmuch as false statements and omissions of material facts are punishable with a penalty of up to rupees one crore, with the CCI being empowered to pass other such orders as it deems fit.
  • Regulation 10 of the Competition Commission of India (General) Regulations, 2009, does not require the informant to state how he is personally aggrieved by the contravention of the Competition Act. Also, regulation 25 of the Competition Commission of India (General) Regulations, 2009 shows that public interest must be foremost in the consideration of the CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. It is also extremely important to note that regulation 35 of Competition Commission of India (General) Regulations, 2009, by which the 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.

The Act has been conceived to follow an inquisitorial system wherein the Commission is expected to inquire cases involving competition issues in rem, rather than acting as a mere arbiter to ascertain facts and determine rights in personam arising out of rival claims between parties. Hence, the Informant need not necessarily be an aggrieved party to file a case before the CCI.²²

The Commission has been vested with the power to suo motu take cognizance of any alleged contravention of Section 3 or Section 4 of the Act and hold an inquiry which means that the Commission is not required to wait for receipt of a reference from the Central or the State Government or a statutory authority or a formal information by someone for exercising power under Section 19(1) read with Section 26(1) of the Act. In a given case, the Commission may not act upon an information filed under Section 19(1)(a) but may suo motu take cognizance of the facts constituting violation of Section 3(1) or Section 3(4) of the Act and direct an investigation.²³ The Commission may also take cognizance of the reports appearing in print or electronic media or even anonymous complaint/representation suggesting violation of Sections 3 and 4 of the Act and issue direction for investigation under Section 26(1). The Commission can take suo-motu cognizance of a case based even on an anonymous complaint.²⁴ The only limitation on the exercise of that power is that the Commission should feel prima facie satisfied that there exists a prima facie case for ordering into the allegation of violation of Section 3(1) or 4(1) of the Act.

2.2.3 Reference from Statutory Authority

As per Section 2(w) “statutory authority” means any authority, board, corporation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of goods or provision of any services or markets therefor or any matter connected therewith or incidental thereto. The Commission has taken up references from Enforcement Directorate²⁵, CAG²⁶, Chief Engineer of Railway Division²⁷, Material Manager, Railway Coach Factory.²⁸, etc. The DG will not be taken as a ‘statutory authority’ under S. 19(1)(b).²⁹

Apart from the statutory Authority, the Central Government or the State Government may make a reference to the Commission to inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) of section 4.

2.3 Determination of AAEC

As per Section 19(3) of the Competition Act, 2002, the Commission while determining whether an agreement has AAEC, shall have due regard to all or any of the following factors:

(a) creation of barriers to new entrants in the market;

(b) driving existing competitors out of the market;

(c) foreclosure of competition by hindering entry into the market;

(d) accrual of benefits to consumers;

(e) improvements in production or distribution of goods or provision of services; or

(f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

As discussed earlier, agreements between competitors (horizontal agreements) of the nature mentioned under Section 3(3) of the Act are presumed to cause AAEC. In such cases, the burden of proof to prove AAEC is not on the Commission, rather it shifts to the opposite parties to prove that the agreement does not cause AAEC by providing adequate evidence. In case such an evidence is led, which dispels the presumption, then the CCI shall take into consideration the factors mentioned in Section 19 of the Act and to see as to whether all or any of these factors are established. If the evidence collected by the CCI leads to one or more or all factors mentioned in Section 19(3), it would again be treated as an agreement which may cause or is likely to cause an appreciable adverse effect of competition, thereby compelling the CCI to take further remedial action in this behalf as provided under the Act.³⁰ The only exception to this presumption of AAEC vis à vis horizontal agreements is the agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services. Vertical agreements of the nature mentioned under Section 3(4) of the Act, on the other hand are not presumed to have AAEC and the burden to prove such effect will be on the Commission. The Commission while determining AAEC can take any or all of the factors laid down under Section 19(3) of the Act.

Clauses (a) to (c) of section 19(3) deals with factors which restrict the competitive process in the markets where the agreements operate (negative factors) while clauses (d) to (f) deals with factors which enhance the efficiency of the distribution process and contribute to consumer welfare (positive factors). An agreement which creates barriers to entry may also induce improvements in promotion or distribution of goods or vice-versa. Thus, whether an agreement

11. Competition Commission of India v. Steel Authority of India Ltd. [2010] 7 taxmann.com 23/103 SCL 269 (SC).
12. Ramakant Kini v. Dr. L.H. Hiranandani Hospital 2014 Comp L R 263 (CCI)
13. Excel Crop. Care Limited v. Competition Commission of India AIR 2017 SC 2734.
14. Shamsher Kataria Informant v. Honda Siel Cars India Ltd. 2014 CompLR 1(CCI).
15. Belaire Owner’s Association v. DLF Ltd. [2012] 28 taxmann.com 435 (CCI).
16. Enforced with effect from 20-5-2009.
17. Substituted for “a complaint,” by the Competition (Amendment) Act, 2007, w.e.f. 20-5-2009.
18. Western Coalfields Ltd. v. SSV Coal Carriers (P.) Ltd. [2017] 86 taxmann.com 126 (CCI).
19. See, Surendra Prasad v. Competition Commission of India [2015] 63 taxmann.com 368 (CAT). See also, Reliance Agency v. Chemists & Druggists Association of Baroda [2018] 89 taxmann.com 31 (CCI). Also see, Harshita Chawla v. WhatsApp Inc. [2020] 118 taxmann.com 421/161 SCL 131 (CCI)
20. Samir Agrawal v. Competition Commission of India (2021) 1 MLJ 364 (SC).
21. XYZ v. Alphabet Inc. [2020] 121 taxmann.com 162 (CCI).
22. See, Surendra Prasad v. Competition Commission of India [2015] 63 taxmann.com 368 (CAT). Also see, Harshita Chawla v. WhatsApp Inc., [2020] 118 taxmann.com 421/161 SCL 131 (CCI)
23. Hindustan Petroleum Corporation Ltd., In re [2019] 109 taxmann.com 415/156 SCL 609 (CCI).
24. Manufacturers of Asbestos Cement Products, In re [2014] 45 taxmann.com 529/126 SCL 312 (CCI).
25. ReSheth & Co., Suo Moto Case No. 04 of 2013: 2015 CompLR 715 (CCI).
26. South Eastern Railway v. Orissa Concrete & Allied Industries Ltd. [2013] 32 taxmann.com 9/119 SCL 1 (CCI).
27. South Eastern Railway v. Orissa Concrete & Allied Industries Ltd., [2013] 114 CLA 280 (CCI). See also, Dy. Chief Materials Manager v. Faiveley Transport India Ltd. [2016] 67 taxmann.com 146 (CAT – New Delhi).
28. ReDomestic Air Lines, Reference Case No. 01/2011 [2012] 107 CLA 382 (CCI) : 2012 Comp. LR 154 (CCI).
29. Rajasthan Cylinders and Containers Limited v. Union of India 2018 (13) SCALE 493.