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COMPAT: Speedy Justice at the cost of bypassing the Competition Act?

Ashim Gupta

In such a short time of its commencement, the Competition Act, 2002 (“Act”) has seen great amount of litigation. From constitutional validity of certain provisions, quasi-judicial nature of the body to Principles of Natural Justice (PNJ), the statute is continuously answering contentious questions of law. AN equally interesting matter has been the investigation related to antitrust cases.

One such recent COMPAT decision which created quite a news is Surendra Prasad v. Competition Commission of India. This was the first time that COMPAT asked the Directorate General (DG) directly to investigate a matter. The matter was against Maharashtra State Power Generation Company Ltd. (MAHAGENCO) and the CCI ruled that there is no need for investigation by DG. On appeal, COMPAT set aside CCI's order and asked the DG to investigate the matter.

Enumerating the brief facts of the case, MAHAGENCO issued a tender and M/s BSN Joshi & Sons (BSN) had lowest price among all the participants but the tender was not issued to it on the basis that it does not fulfill the essential conditions. The said decision was challenged in the High Court which did not rule in favour of BSN, but Supreme Court set aside High Court's order and asked MAHAGENCO to give BSN another chance. After failing to comply with the SC’s decision, the Court in a contempt petition condemned MAHAGENCO for cartel like behavior as it had given the contract to the other three companies for different areas. MAHAGENCO gave a one-year contract to BSN but terminated it after a few months on the grounds of ‘unsatisfactory performance’.

Surendra Prasad approached CCI alleging violation of section 3 and 4 of the Act saying that MAHAGENCO encouraged cartel behavior by giving the contract to the three companies for different areas and relied on the Supreme Court ruling in which it had the same opinion. CCI rejected the application on the grounds that it is a case of favoritism and corruption and does not come under its jurisdiction. On the contrary however, the COMPAT overruled CCI by relying on the judgment of Supreme Court and taking into consideration the observations made by the Supreme Court. COMPAT also asked the DG to conduct investigation on that matter despite CCI's order to the contrary.

This decision of COMPAT led to a debate on whether the COMPAT had the authority to ask the DG to conduct the investigation or it should have remanded the case back to the CCI and asked them to look into it again. Section 26(1) of the Competition Act clearly gives this power of DG investigation to CCI, but it does not explicitly limit it to CCI. Even though Section 53B does not give COMPAT the power to ask the SG to conduct investigation, Section 53B (3) of the Act allows it to pass orders as it deems fit. There are equivalent Sections in Customs Act, 1962 (Section 129) and Central Excise Act (Section 35C) which allow the Appellate Tribunal to pass such orders, however there is little doubt that Courts have been reluctant in exercising the power to direct investigation agency. However in COMPAT’s case it not only exercised its extraordinary powers in this case, but ordered the DG to conduct investigation in cases like Uber v. Ola among others.

COMPAT exercising such powers has its share of advantages. Given that CCI had already decided the said matter in a certain manner, COMPAT jumping the remitting stage and directly ordering the investigation clearly saves time. The Act is a business law which tries to regulate the shape of dynamic market. As decided in CCI vs SAIL (2010) judgment, the overall scheme of the Act is faster and speedy disposal of cases, therefore any step in such a direction should be appreciated.

In fact the CCI orders wasn’t one without a flaw. It did not consider the conclusion drawn by the Supreme Court in its judgment which said that the parties were involved in cartel type behavior and reprimanded the parties for the same. CCI even ignored the price charts of the three companies which clearly showed that the prices of the three companies were very identical and in a narrow margin. It is clear from COMPAT's judgment that it supported the minority opinion in CCI's order by Justice Dhingra.

This judgement clearly shows the path towards speedy judgment as COMPAT avoided the three months of time that would have been wasted in CCI's reconsideration. There was no point for such a lag when COMPAT already supported the minority decision in CCI's judgment on the matter crux. This decision also signifies a good trend towards speedy justice in competition law cases where time is the essence of most of the issues.