MONDAY, 13 SEPTEMBER 2010
CCI v SAIL: Supreme Court Gets it Right!
In a telling judgement, the Supreme Court of India, on Sep. 9, 2010, has effectively and judiciously circumscribed the boundaries of exercise of power by both the Competition Commission of India (CCI/Commission) and the Competition Appellate Tribunal (“the Tribunal”) while delivering its verdict in the much awaited case Competition Commission of India v. Steel Authority of India Ltd. This Note captures the highlights of the decision for readers of this Blog!
The Court was hearing an appeal by the CCI against the order dated Feb. 15, 2010 of the Tribunal in Steel Authority of India Ltd. v. Jindal Steel & Power Ltd. Jindal Steel had filed a complaint before CCI alleging anti-competitive practices and abusive behaviour by SAIL while it entered into an exclusive supply agreement with Indian Railways. Upon receipt of the complaint/information, CCI issued notice to SAIL to furnish certain information for within two weeks from the date of receipt of such notice. SAIL requested for an extension of time upto six weeks to file the required information. CCI in its meting deliberated on the request and decided not to grant any further extension. In the said meeting CCI also formed a prima facie opinion on the existence of the case and directed the Director General (DG) to inquire into the matter pursuant to its powers under Section 26(1) of the Competition Act, 2002 (“the Act”). SAIL challenged this direction before the Tribunal claiming that CCI could not have formed a prima facie opinion without hearing it first. SAIL also contended that CCI has not recorded any reasons while forming the prima facie opinion and that the time provided by CCI to file information was grossly inadequate. While filing the appeal before Tribunal, SAIL did not implead CCI as a party. CCI thus filed an application before Tribunal for impleading itself as a necessary and proper party and also assailed the very maintainability of appeal.
The Tribunal, in its detailed order, holding that even the direction to inquire was appealable under Section 53A(1) of the Act noted that CCI could not have directed the DG to inquire into the complaint without having heard SAIL. It further noted that CCI was neither a necessary nor a proper party in appeals filed by an aggrieved party before the Tribunal. The Tribunal also noted that CCI did not record any reasons while declining to grant extension of time and hence it in violation of principles of natural justice.
Appeal before the Supreme Court:
Aggrieved by the order of the Tribunal, CCI approached the Supreme Court which framed six broad issues noting some of the allied issues raised by the parties:
(i) Whether the direction passed by the Commission u/s. 26(1) of the Act while forming prima facie opinion would be appealable u/s/ 53A(1) of the Act? (ii) What is the scope of the power vested with Commision u/s. 26(10 of the Act and whether parties including the informant and other affected parties are entitled to notice at the stage of formation of prima facie opinion? (iii) Whether the Commission would be necessary or at least a proper part in proceedings before the Tribunal? (iv) At what stage and in what manner the Commission can exercise its powers u/s. 33 of the Act while passing interim orders? (v) Whether it is obligatory for the Commission to record reasons while forming prima facie opinion? (vi) What directions, if any, need to be issued by the Court for ensuring proper compliance of the procedural requirements while keeping in mind the scheme and object of the Act?
Issue 1: The Court made an exhaustive study of the scheme and the provisions of the Act and rules of statutory interpretation, noted the distinction between “and” and “or”, referred to Indian, UK and European decisions to unearth settled principles of law and finally concluded that Section 53A(1) of the Act...