Locus to File Information before the CCI: A Critical Analysis of Samir Agrawal v. CCI

Keywords: Competition Law, Section 19(1)(a), Informants, Locus Standi.


Shaurya Shyam and Shivek Sahai Endlaw[i]


Recently, the National Company Law Appellate Tribunal (‘NCLAT’) in Samir Agrawal v. Competition Commission of India dismissed an appeal impugning a 2018 Order of the Competition Commission of India (‘CCI’) which refused to investigate cab aggregators ‘Ola’ and ‘Uber’ for anti-trust violations. The CCI held that the information provided by the appellant/informant did not disclose a prima facie case against the opposite parties and closed the matter forthwith. The NCLAT upheld the impugned Order on merits. However, it also accepted the objection of the respondents that the appellant/informant had no locus standi to furnish information before the CCI regarding an alleged contravention of the Competition Act, 2002 (‘Act’). The NCLAT further decided that only those persons who suffer an invasion of their legal rights as consumers, or as beneficiaries of healthy competition practices, possess locus standi to qualify as informants under Section 19(1)(a) of the Act.


In this article, the authors argue that the interpretation afforded by the NCLAT substantially narrows the scope of persons to provide information to the competition regulator regarding prohibited activity. Subsequently, they discuss that the subject decision is problematic as it (a) contradicts settled canons of statutory interpretation; (b) abrogates the sentenia legis behind Section 19(1)(a) of the Act and (c) disregards the importance of an informed citizenry to provide information to the CCI.


“Any Person”, “Information” and Legal Injury under Section 19(1)(a) of the Act


A literal reading of Section 19(1)(a) states that the CCI can initiate an inquiry into an alleged contravention of the Act on receipt of information from (i) any person; or (ii) a consumer, or (iii) their association or trade association. However, the NCLAT decision states that legal injury is an essential element to provide information under this Section. Additionally, the decision states that the term “any person” in the provision must be limited to mean a consumer or a beneficiary of healthy trade practices. This contradicts the language and legislative intention behind the provision.



The NCLAT erred in inserting legal injury as an essential element to provide information under Section 19(1)(a) of the Act. The Supreme Court in Delhi Airtech Services Pvt. Ltd. and Ors. vs. State of U.P. and Ors. has held that the courts can neither add nor subtract from the plain language of the statutory provision. The subject provision does not envisage legal injury as a qualification to furnish information regarding anti-competitive activity. Even Sections 2(f) and 2(l) of the Act which define ‘consumer’ and ‘person’ respectively, do not require them to be an aggrieved/injured party for the purposes of the Act. Therefore, the interpretation afforded in the NCLAT decision is not good in law.


Further, the NCLAT erred in limiting the scope of “any person” in the provision to mean a consumer or a beneficiary of healthy trade practices. The Supreme Court in Commissioner of Income Tax, New Delhi vs. East-West Import and Export (P) Ltd. and Indore Development Authority vs. Manoharlal and Ors., has held that when in relation to the same subject matter, different words are used in the same statute, there is a presumption that they are not used in the same sense. Section 19(1)(a) of the Act creates three distinct genus of ‘person', ‘consumer’ and ‘their association’ to act as informants for the purposes of the Act. However, the interpretation in the decision closes the door for persons who are neither consumers nor beneficiaries of healthy trade practices to provide information about prohibited activity. Therefore, the decision contradicts the specific classifications created and language employed in the Statute.


A restrictive reading of Section 19(1)(a) of the Act is also ultra vires the legislative intention behind consciously employing the term ‘information’ in the provision. In 2007, the legislature amended the Section to empower the CCI to initiate an inquiry “on receipt of any information” as opposed to “on receipt of a complaint”. The Delhi High Court in Walmart India Pvt. Ltd. vs. Central Vigilance Commission used this amendment as an example to highlight that the term ‘information’ is broader and more inclusive than ‘complaint’. The Section post-amendment intentionally casts a wider net to cover all persons to file information about possible contravention of the Act rather than the narrow bracket of only complainants. Therefore, the NCLAT decision contradicts the legislative intent to encourage any and all information about anti-competitive activity.


In view of the above, it appears that the decision to restrict the sources of information through which the CCI can initiate an inquiry abrogates settled canons of statutory interpretation and the object behind the 2007 Amendment to the Act.


Vexatious Litigation and the Existing Framework


The NCLAT decision reasons that Section 19(1)(a) of the Act should be restrictively interpreted to curb information filed by unscrupulous persons with oblique motives. However, the interpretation afforded also inhibits bona fide persons who have not suffered a legal injury to approach the CCI with information about illegal activity. This is contrary to the CCI’s primary objective of eliminating practices having an adverse effect on competition. Therefore, narrowing the scope of informants is a disproportionate measure to curb vexatious litigation, since it exceeds its object and causes more harm than good.


Arguendo, the Act is already equipped with provisions that protect the interests of accused parties and deter ill-motive information. Contrary to a suit or a criminal complaint, merely filing information before the CCI does not trigger the competition machinery. The Supreme Court in Competition Commission of India v. Steel Authority of India and Anr. has previously explained that Section 26(1) of the Act ensures that the CCI orders investigation into a piece of information only after it forms a prima facie finding against the accused. In case the CCI believes that the information discloses no prima facie case, it can reject the information and close the case. This mechanism minimises the scope of frivolous litigation, since any action of the CCI is conditional on the merits of the information, regardless of whom it receives it from. Moreover, the CCI in Alkem Laboratories Limited and Ors. vs. Competition Commission of India and Ors. has held that Section 45 of the Act gives it the power to impose a hefty penalty on an informant if it finds the information provided to be false or suppressing material information.


Further, the CCI (General) Regulations, 2009 contain safeguards to filter information filed with unclean hands. Regulation 10(da) requires informants to disclose any pending litigation between them and an opposite party regarding the information they provide to limit nuisance actions. In case informants try to hide behind the garb of confidentiality, Regulation 35 empowers the CCI to reveal their identity in bona fide interest of the proceeding.


The above examples highlight that the NCLAT decision is excessive and unwarranted since the competition framework effectively satisfies its concerns.


Importance of Informants


The NCLAT decision disregards the importance of information furnished by the public before the CCI regarding restricted activity. The decision reasons that since the Act already provides powers to the CCI to initiate suo moto inquiry into restricted matters, the scope of information/complaints it receives from the public should be limited. However, according to CCI’s Annual Report (2018-19), the percentage of suo moto investigations is comparatively less as compared to those in which information was received under Section 19(1)(a) since 2010. This highlights the importance of the information sourced from the public in efficiently investigating and penalising violators of the Act.


Many common law jurisdictions rely on information received from the public about possible competition law contraventions. In Canada, Section 66.1 of the Competition Act, 1985 promotes persons regardless of their standing to share information about any offences in their knowledge. The Competition and Markets Authority in the United Kingdom runs a reward program for persons, who are willing to share information about illegal cartel activity. Even in India, the Department of Revenue runs an Income Tax Informants Rewards Scheme for persons who provide information about income tax evasion, since an offence of such nature affects the economy and society as a whole. The above examples highlight how information received from an active citizenry should be encouraged rather than repelled fearing abuse of process of law.


The appellant in the present case put forth an interesting submission comparing the role of informants to that of concerned citizens, who have the right to file an FIR about some crime in their knowledge. The Bombay High Court in Kingfisher Airlines Limited and Ors. vs. Competition Commission of India has previously held that information received by the CCI is akin to an FIR. The Supreme Court in Excel Crop. Care Limited vs. Competition Commission of India and Ors., agreed that similar to a heinous offence, a contravention of the Act is considered a crime against society. The role of the CCI is similar to that of a police officer whose primary purpose is to prevent and investigate crimes against citizens and society. Therefore, in case a person possesses information about a possible violation of the Act, they should have the means to furnish it before the concerned authority and rely on its discretion to take any necessary action.


Conclusion


In the opinion of the authors, the NCLAT entered the realm of legislating by employing qualifying criteria for persons to act as informants under the Act. The decision contravenes the legislative intention to widen the CCI’s power to initiate an inquiry on receipt of information regarding anti-competitive activity. Restricting the scope of persons to furnish information before the regulator can result in prohibited activity to go undetected. Violators may also take advantage of this decision to set aside bona fide information against them on the ground of locus of the informant.


The law relating to anti-competitive activities in India is comparatively at a nascent stage. Unlike the competition regulators in foreign jurisdictions, the research and market intelligence divisions which gather information based on which suo moto action can be taken are still evolving in India. Under such circumstances, the CCI should scrutinise all information it receives about possible contraventions of the Act and not limit its inquisitorial powers. It remains to be seen whether the decision would be upheld in a possible appeal to the Supreme Court, or reconsidered by a larger bench of the NCLAT in the future.


[i] Shaurya Shyam and Shivek Sahai Endlaw are Final Year Students of B.A. LL.B. (Hons.) at Amity Law School Delhi, GGSIPU. For any discussion related to the article, they can be contacted via mail at shauryashyam@gmail.com and shivekendlaw@gmail.com respectively.





This article was co-edited by Snehal Dhote (Managing Editor) and Shruti Dhonde (Associate Editor).





Preferred Citation: Shaurya Shyam and Shivek Sahai Endlaw, "Locus to File Information before the CCI : A Critical Analysis of Samir Agrawal v. CCI", Arbitration and Corporate Law Review, Published on 22nd July 2020



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