STANDING OF A THIRD PARTY BEFORE THE CCI: HEADING IN A NEW DIRECTION OR VENTURING INTO OBLIVION?

[Prerna Raturi - A final year student at Symbiosis Law School, Pune]


Competition laws across the globe work with a common objective of promoting a robust competition regime, as a means of achieving not only consumer welfare but also efficiency among competitors. Considering the direct and substantial effect of competition law infringement on the consumers, the scheme of competition law in various jurisdictions rides heavily on the principle of consumer welfare. However, this objective of preventing consumer interests poses a significant question that whether the loss suffered by any person or undertaking as a consumer must be the only deterrent for anti-competitive activities. Notably, even though direct consumers deserve a reparation for the injury suffered consequent to an anti-competitive conduct, a third party’s concern regarding impairment of competition in the market must not go unheard only because no harm has been caused to him.


Recently an order of National Company Law Appellate Tribunal (NCLAT), adjudicating on the issue of locus standi of an informant, has created ripples and invigorated the debate around the legal standing of a third party before the Competition Commission of India (CCI). In Samir Agrawal v. Competition Commission of India & Ors., an independent law practitioner filed an information alleging price fixing by cab aggregators viz Ola and Uber, using price algorithms. However, NCLAT holding otherwise observed that “suffering invasion of legal rights as a consumer or as a beneficiary of healthy competitive practices” is a prerequisite for filing an information before the CCI under Section 19(1)(a) of the Competition Act, 2002 (Act). Thereby, since the informant did not suffer a legal injury at the hands of Ola and Uber, he was denied locus standi to maintain an action.


Nevertheless, this is not the first time that a third party has been denied a legal standing to maintain an action before the CCI. In 2014, while hearing an appeal against the CCI’s order, the Competition Appellate Tribunal (COMPAT) in Jeetender Gupta v. Competition Commission of India & Ors. opined that the CCI should not have entertained the information in the first place on the ground of lack of locus standi for the legal machinery under the Act cannot be moved by a person who has no concern whatsoever with the subject matter of the information filed.

Approach of Comparative Jurisdictions


A breach of the European Union (EU) competition law can be brought to the attention of the European Commission (EC) through various means, one of them being a complaint made by a third party. A third party can be either a customer or the competitor of the infringer, but not necessarily be interested in the litigation or have suffered an invasion of his legal rights. Even a whistleblower i.e. a party seeking leniency in a cartel case, can prompt an investigation by the EC.


Similarly, in the United Kingdom ­­­­­­­­­­­­­­­­­­­­­­­­­­, the Competition and Markets Authority (CMA) may launch an investigation after receiving a complaint from a third party. Moreover, the CMA has always believed that complaints and information received directly from third parties represent an important source of intelligence. Even in the United States of America, there is no bar in filing third party complaints before the Federal Trade Commission (FTC) which often results in enforcement actions. Further, complaints can also be made to the Antitrust ­­­­­­Division of U.S. Department of Justice as well, by any citizen and business believing that companies or individuals are engaged in anti-competitive conduct.


The issue of legal standing of a person to approach the EC to ascertain an alleged infringement of the competition law came for consideration in the case of Bureau Européen des Medias est de l'Industrie Musicale (BENIM) v Commission. The Court of First Instance held that any natural or legal person is entitled to submit an application under Article 3(2)(b) of Council Regulation No 17 to bring an action for infringement of Articles 85 and 86 of the EC Treaty (now Articles 103 and 104 of Treaty on Functioning of the European Union). However, the same shall necessarily be done to protect or claim a “legitimate interest”. The Court went on to explain what constitutes a “legitimate interest” and stated that where the undertakings operating in the market, not necessarily the complainant, are either affected or likely to get affected by the alleged anti-competitive conduct, a legitimate interest arises. Further, since even a natural or legal person, who is not directly concerned by an alleged anti-competitive conduct, can have a legitimate interest in lodging a complaint, a third party can also bring an action against the said anti-competitive conduct before the EC or any National Competition Authority.


Myopic Approach of the NCLAT


It is evident that the approach of Indian antitrust watchdog stands variant from what is usually followed in comparative jurisdictions; however, at the same time, it is also based on a myopic conceptual understanding of the Indian competition law. Thus, it is significant to evaluate its viability in the light of the existing jurisprudence and statutory provisions of the Indian competition law.


  • Scheme of the Competition Act, 2002

Section 19(1)(a) of the Act mandates that the CCI may inquire into any alleged contravention of the Act on receipt of any information from “any person” and the term “person” is defined under Section 2(l), which in no manner limits the scope of the term to include only those individuals whose legal rights have been violated consequent to the contravention of the Act. Further, the word ‘any’ in Section 19(1)(a) gives a wider meaning to the term “person” and is indicative of the fact that there is no eligibility criterion to be satisfied in order to highlight an alleged infringement of the Act before the CCI.


It is pertinent to note that the interpretation of the word ‘any’ came up for consideration in Shri Balaganesan Metals v. M.N. Shanmugham Chetty, and on referring to the meaning ascribed to the word in Black’s Law Dictionary, the Supreme Court (SC) held that the word ‘any’ has a diversity of meaning and may be employed to indicate ‘all’ or ‘every’ as well as ‘some’ or ‘one’ and its meaning in a given statute depends upon the context and the subject matter of the statute. The same interpretation of the word ‘any’ was reiterated by the SC in Lucknow Development Authority v. M.K. Gupta and in various other cases as well.


With respect to the context and subject matter of the Act, it is pertinent to note that if the legislature had intended to construe Section 19(1)(a) with reference to only those persons who have a nexus with the subject matter of the information filed, the usage of the word ‘any’ would have been avoided. Moreover, pursuant to the Competition Amendment Act, 2007, Section 19(1) was amended and the phrase “receipt of a complaint” was substituted by “receipt of an information”, thus giving an equal latitude to everyone to flag any antitrust violation.


Additionally, it is an established principle that while interpreting a statute, words must be given their ordinary and natural meaning if the statutory provision is plain and unambiguous and judges are not at liberty to add to or to take away from the letters of law. Therefore, the expression ‘any person’ under Section 19(1)(a) cannot be given a restricted meaning. Furthermore, the objective of the Act is to promote and maintain vigorous competition in Indian markets and the same is also enshrined in the Preamble of the Act and overtly emphasized in Section 18 of the Act. Thus, even on purposive construction of the Act, it can be identified that the intention of the legislators was to fend off the practices having adverse effect on the competition and that is why the CCI and other competition authorities must take the same into consideration while interpreting the enactment of Section 19(1)(a).


  • Avoiding Unscrupulous Informants with Oblique Motives

The NCLAT in its order has stated that a direct nexus between the informant and the violation of his legal rights under the Act is necessary for any divergence from the same would lead to “targeting of enterprises by unscrupulous people with oblique motives.” Conversely, the Act provides for enough safeguards to prevent frivolous or motivated allegations. Section 26 of the Act provides that the CCI directs the Director General to cause an investigation into the matter, only if it is satisfied that there exists a prima facie case and if it is of the contrary opinion, it may instantly close the matter. Since the CCI comprehensively examines an information before directing an investigation, an information relating to an alleged contravention of the Act must not be dismissed on the grounds of lack of locus standi, fearing vexatious allegations or complaints. Notably, in order to avoid false and frivolous complaints, various statutes contain provision for dismissal of such complaints with a penalty, such as Section 26 of the Consumer Protection Act, 1986. Thus, the same can be incorporated even in the competition law to elude the meritless information.


  • Perturbing the Settled Canons

Another important point for consideration is that the issue of legal standing of a third party to bring an action before the CCI is not res integra for the same has been discussed in detail by the CCI and erstwhile COMPAT in its earlier decisions. In Shri Surendra Prasad v. Competition Commission of India and Ors. the COMPAT gauged the legislative intention behind the Section 19(1)(a) and opined that Parliament has neither prescribed any qualification for the person who wants to file an information nor prescribed any condition which must be fulfilled before an information can be filed. The Tribunal held that the plain language of Sections 18 and 19 read with Section 26(1) does not infer that the informant must have any personal interest in the matter. A similar view was also taken by the CCI in Shri Saurabh Tripathy v. Great Eastern Energy Corporation Ltd. wherein it noted that the Act allows a person to approach the CCI with an information, bringing to the notice any anti-competitive conduct in the market, without necessarily being aggrieved by such conduct.


Conclusion


The CCI is the sole regulator of competition in India and is responsible for enabling a competitive environment in Indian markets. Thus, any source of information that underlines an existing or potential competition violation must not be restricted. It is important to consider that a consumer in a relevant market suffers harm only because the competition in the market has been affected. Therefore, the interests of the consumers are an end that can be achieved only through the means of fostering competition in the markets, by all means.


Additionally, the CCI has iterated in its various orders that the proceedings before it are proceedings in rem and not in personam. This suggests that irrespective of who the informant is, the CCI is obliged to assess the allegations levelled in an information and proceed further if it believes there exists a violation. In the light of the same, confining the eligibility of a person to bring an antitrust violation to the notice of the CCI, by inserting a mandatory condition of locus standi, is not only unfavorable to the competition but also runs contrary to the primary objective of the Act.

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©2020 by The Competition and Commercial Law Review.