The Curious Case of Locus Standi in CCI

THE CURIOUS CASE OF LOCUS STANDI IN CCI

The Competition Act, 2002 (Act) was introduced to regulate the free market economy of India. Under the Act, the Competition Commission of India (CCI) is a statutory body which conducts inquiry into anti-competitive practices, conducted either on its own accord or from information filed or by reference made by the government. It is set by the provisions of the Act, wherein, the Preamble and Section 18 of the Competition Act states that the duty of the Commission is to “eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of the consumers, and ensure freedom of trade carried on by other participants, in markets in India.”

‘Informing’ CCI

Section 2(l) of the Act defines a person as, inter alia¸ an individual or a company. Further Section 19 of the Act empowers ‘any person, consumer or trade association’ to file an information with CCI against alleged anti-competitive practices. The utilisation of the term ‘any’ represents the legislative intent to provide a broad scope for filing information under the Competition Act. This is further affirmed by Supreme Court’s previous interpretation of the term ‘any person’ under Section 53B of the Act in CCI v. Sail, wherein it was held that the term has to be constructed liberally.

The Competition (Amendment) Act, 2007 introduced replacement of the term ‘complaint’ to ‘information’ and ‘complainant or defendant’ were replaced with ‘person or an enterprise’. Hence, by changing the terminology, it is encouraging the legislative intent of allowing anybody filing information rather than giving importance to the identity of the person to notify anti-competitive conduct to CCI.

The nature of competition regulation also mandates the need for a liberal construction of the term ‘any person’. A proceeding in personam is a private conflict between parties, while a proceeding in rem is one directed against no specific person, but is of importance at large. It has been settled in the Telefonaktiebolaget lm Ericsson case that proceedings before CCI are proceedings in rem. This requires allowing any one with public interest to file a case.

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National Company Law Appellate Tribunal (NCLAT)

While the position of locus standi was a settled competition point, the recent appeal of CCI’s Samir Agarwal order before NCLAT raised conflicting views regarding it.

In this matter, Samir Agarwal, an independent lawyer, filed a case against Ola and Uber for their alleged anti-competitive conduct of price fixing before the CCI. Based on evidences produced, CCI dismissed claims of cartelisation against the cab aggregators. The matter was further challenged by Samir Agrawal before the NCLAT. Despite agreeing with the merits of the case, as decided by CCI, the NCLAT held that Samir Agrawal did not have locus standi before competition regulators.

The term ‘any person’ was narrowly interpreted by NCLAT and held that it would refer only to persons who had suffered an invasion of legal rights as a consumer or beneficiary.

There was not enough evidence to prove legal injury suffered by him as a customer or member of consumer or trade association and thus he did not have the locus standi to initiate the proceedings at NCLAT.

The NCLAT reasoned that a broad interpretation of the term person might allow for unscrupulous complaints under the Act. Thus, the NCLAT held that in order to initiate the proceedings under the Act, only an ‘aggrieved person’ can have locus standi and dismissed the appeal since Samir Agarwal is not a consumer of Ola or Uber.

CCI

A conflict was created between previously followed jurisprudence of allowing any informant as opposed to the narrow locus standi that NCLAT established. Despite the NCLAT judgement, CCI adopted a contrary interpretation with regard to the locus standi.

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Post NCLAT’s judgment, while examining allegations against abuse of dominance in Harshita Chawla v. WhatsApp Inc & Facebook Inc, CCI presented its stance on locus standi. The defendants challenged the informant’s information by relying on NCLAT’s decision in Samir Agarwal, highlighting that the informant, Harshita Chawla did not suffer any legal injury and hence, does not have the locus standi to file the case.

In rejecting this argument, CCI referred to the 2007 Amendment introducing the term person or enterprise.

CCI also reaffirmed that cases under the Act are filed in rem and deal with the larger question of market distortions rather than mere private complaints. It pointed out the inquisitorial nature of the Act, wherein CCI is expected to investigate cases in rem

rather than act as a mere authority to determine rights in personam.

CCI also referred to the Surendra Prasad decision by the erstwhile COMPAT. In this case, the COMPAT had pointed out that the Parliament had not prescribed any prior condition or qualification for filing an information under the Act.

Thus, considering the legislative intent in the Amendment and prior decisions, it was held, as opposed to the NCLAT decision, that the complaint does not have to be an aggrieved party for approaching this CCI

Supreme Court

The Supreme Court finally settled the conundrum created by these two contradicting decisions in Samir Agrawal v. Competition Commission of India. The Supreme Court affirmed the expansive scope of locus standi under the Act in the Samir Agarwal Case. It noted that the definition of any person under the Act was ‘an inclusive one and is extremely wide, including individuals of all kinds and every artificial juridical person’. The Court also brought up that the 2007 Amendment of including the phrase “receipt of any information in such manner and” which substituted “receipt of a complaint” was a relevant consideration in determining that information can be received by any person even if he is not personally affected.

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The Court also took heed of NCLAT’s observation of preventing unscrupulous claims under the Act. However, the Apex Court pointed out that the high monetary penalty coupled with the fact that CCI can also pass any order it deems fit against those bringing forth false claims under the Act was a sufficient deterrent.

Further the Competition Commission of India (General) Regulations, 2009 (Regulations) were referred to. The Regulations also do not require informants to outline how they have been personally affected by alleged anti-competitive conduct. The Regulations also uphold that public interest should be foremost in consideration when an application is made to CCI.

Thus, the Court did not uphold the narrow interpretation followed by the NCLAT.

Conclusion

The settled position of locus standi under the Act is an informant, who can be any person, can bring forth a valid claim and has locus standi to submit information to the CCI. The Supreme Court ruling not only expands the scope of locus standi but also expands the component of public interest in the competition law discourse in India. A narrow interpretation of ‘any person’ by NCLAT though well intended, however, while looking at the larger picture, this interpretation will deter individuals and organisations with public intent to work for the enhancement of the nation and its economy. The concept of locus standi has been sufficiently settled by the Act, the Amendment to it and past orders. Current developments due to the Samir Agrawal case has only further solidified the approach that CCI and other adjudicatory authorities will have to adopt towards locus standi under the Act in the future.

Author: Mozammil Ahmad,
Campus Law Centre, Univeristy of Delhi/ IIIrd year student

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