COMPAT v. CCI: A Power Tussle


Recently, the Government of India decided to merge the Competition Appellate Tribunal (Compat) with the National Company Law Appellate Tribunal (Nclat). While the debate is still ongoing as to the benefits and drawbacks of this decision, it is interesting to see the approach of the Compat in a few cases which came before it in the last few months. In the recent past, the Competition Commission of India (CCI) has often found itself at the receiving end of the Compat, in more ways than one. Several of the CCI’s orders have been set aside, primarily on grounds of failure to adhere to the principles of natural justice. However, following a string of recent orders of the Compat, it now appears that the Compat has been steadily slipping into the CCI’s adjudicatory shoes!

In a recent decision[1] of the CCI involving alleged abuse of dominance by Gas Authority of India Limited, the Compat disapproved[2] of the CCI for being overly diligent while passing a prima facie order. The Compat noted that at the initial stage of forming an opinion on whether there exists a prima facie case, the CCI is required to merely conduct a preliminary analysis based on averments made in the information. It further noted that the CCI cannot conduct a detailed examination of the allegations, evaluate evidence and record its findings on the merits of the issue given that such exercise can be undertaken only after receiving the investigation report from the Director General (DG). Accordingly, the Compat reversed the CCI’s finding of no prima facie violation under the Competition Act, 2002 (Act) and simultaneously directed the DG to investigate the matter.

In view of the Compat’s observations in the GAIL order, the scope of adjudicatory powers of the CCI has yet again come into question. What would be the adequate amount of information that should be considered by the CCI to pass a prima facie order and at what point in the investigation process can the CCI assume an investigatory role, are some of the questions that merit further deliberation.

The GAIL order also assumes significance as it appears to be an extension of the Compat’s growing proclivity to order a DG investigation in a matter after forming a prima facie view of a potential violation of the Act (in contrast with the CCI’s finding). For example, the Compat set aside[3] a prima facie decision[4] of the CCI ordering closure of the matter, in a case of alleged abuse of dominant position and anti-competitive practices by Uber. Interestingly, Uber has moved to the Supreme Court against the Compat order based on the plea that Compat’s probe order suffers from a patent jurisdictional flaw. While the GAIL[5] and Uber[6] orders were both decisions of the CCI at the prima facie stage, the Compat has not shied away from “taking matters in its own hands” by ordering the DG to investigate even in appeals arising out of final orders of the CCI (i.e. post DG investigation). One such instance is the case involving allegations of abuse of dominance and anti-competitive practices against International Air Transport Association (IATA). While dismissing the CCI’s findings, the Compat ordered[7] the DG to initiate a fresh investigation in view of the DG’s omission to record a specific finding on the allegation of abuse of dominant position by IATA.

This begs the question as to whether the scope of the powers of the Compat under the Act includes the power to bypass the CCI to determine the existence of a prima facie case by itself and direct an investigation by the DG, or whether the Compat is required to let the CCI re-examine the matter and pass appropriate orders. One may argue that the Act allows the Compat, as an appellate body having overarching powers, to pass such orders as it thinks fit, confirming, modifying or setting aside the direction, decision or order appealed against and therefore, the Compat is well within its powers to direct the DG to conduct investigations. However, another school of thought suggests that the power to direct an investigation lies solely with the CCI considering that the DG is the investigative arm of the CCI and reports to the CCI alone. Therefore, arguably, a more appropriate step would be to, perhaps remand the matter to CCI for fresh consideration rather than directing the DG to investigate.

It is thus a moot point as to whether the Compat can exercise such drastic powers and if so, whether any parameters are required to be satisfied before exercise of such powers. Given the regulatory architecture of the Act, it is indeed vital that the role and powers of the various statutory authorities are clear to ensure that each authority functions within its legislative mandate and the parties have certainty in the manner in which their cases are likely to proceed. One hopes that the impending decision of the Supreme Court in the Uber case[8] will settle this procedural dilemma between the competition watchdog and the appellate body. Further, as Compat’s merger with the Nclat is in the offing, appeals from orders of the CCI would lie before the Nclat. Thus, while the cases discussed in this piece analyse the Compat’s approach over the last few months, it remains to be seen how the Nclat would deal with such matters and whether its approach would be aligned to that of the Compat or if it would differ.

Anshuman Sakle is a Partner with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anshuman.sakle@cyrilshroff.com. Anisha Chand is a Senior Associate with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anisha.chand@cyrilshroff.com.

[1] Gujarat Industries Power Co. Ltd. v. Gail (India) Ltd., 2015 SCC OnLine CCI 142.

[2] Gujarat Industries Power Co. Ltd. v. Competition Commission of India, 2016 SCC OnLine Comp AT 404.

[3] Meru Travels Solutions (P) Ltd. v. Competition Commission of India, 2016 SCC OnLine Comp AT 451.

[4] Meru Travel Solutions (P) Ltd. v. Uber India Systems (P) Ltd., 2016 SCC OnLine CCI 12.

[5] 2015 SCC OnLine CCI 142.

[6] 2016 SCC OnLine CCI 12.

[7] Air Cargo Agents Assn. of India v. Competition Commission of India, 2016 SCC OnLine Comp AT 453.

[8] Uber India Systems (P) Ltd. v. Competition Commission of India, Civil Appeal No. 641 of 2017 (SC).

One comment

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    Isn’t this article a bit outdated to be published in August 2018? It’s been a year since the NCLAT took over COMPAT’s duties.

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