While the fact that the CCI did ultimately realise the deceit in this case, is a positive development, the question on its internal capacity to dispose off a case in timely manner largely remains

The Competition Commission of India (CCI) has recently filed a petition before the Supreme Court against various cases pending before different High Courts in relation to an investigation launched by it against Amazon and Flipkart. The CCI, in essence, has pleaded the SC to transfer all these petitions either to itself, or one of the High Courts, preferably Delhi High Court.

Factual background of the case

The CCI passed an order dated 13th January, 2020 under section 26(1) of the Competition Act, 2002 directing the DG to conduct a detailed investigation into alleged anti-competitive practices of Amazon and Flipkart. One of the key issues raised by the Informant, i.e. Delhi Vyapar Mahasangh, includes preferential treatment being granted to certain sellers to the detriment of others. Some of the other allegations include engaging in deep discounting, usage of private label products to further the preferential treatment and utilising the access to data to ultimately foreclose the market and increase the dependence on the two e-commerce platforms.

Procedure at the CCI

The Commission draws its powers from the Competition Act, 2002 which has elaborate provisions to balance the rights of the parties. The Commission is guided by the principles of Natural Justice (PNJ) under section 36 of the Act where no adversarial order is passed against the parties unless a right to hearing is granted. It is important to note that the impugned order is a prima facie order which means nothing is final as on date. The same is made clear from the wordings of the order which reads as follows: “... It is also made clear that nothing stated in this order shall tantamount to a final expression of opinion on the merits of the case and the DG shall conduct the Investigation without being swayed in any manner whatsoever by the observations made therein…”.

What, however, remains due is the factual investigation by the Director General. The DG under section 16 and 41 of the Act can only call for factual information either through exchange of letters, or summoning of officials, and cannot pass any order desisting business practices of the respondent entities regardless of the seriousness of the allegations. To put it in other words, the DG is a fact-finding body which returns a finding of contravention or non-contravention to the Commission with which the final decision awaits. In fact, the DG is bound to submit two versions of the investigation report, i.e. confidential and non-confidential, duly accounting for the commercial secrets of the entities should they come out during the investigation.

Appellate proceedings under the Competition Act, 2002

All said and done, any entity under investigation may feel prejudiced by any of the directions of the DG, or the CCI. This prejudice may be in the form of asking for unrelated information connected to the matter under the investigation, violation of PNJ, non-application of mind and so on and so forth. The correct forum, however, to file such an appeal is the National Company Law Appellate Tribunal under section 53A-B of the Act which is empowered to look into any kind of such prejudice. In fact, the statutory provisions of the Competition Act are exhaustive where they allow the parties to approach the Apex Court under section 53T of the Act.

Applicability of writ petition

It is not the first time that a writ petition is being filed against an order passed by the CCI. It is, however, important to critically assess from a ‘legal certainty’ viewpoint, the scope and limitations of such a process. For instance, the Delhi High Court did intervene in a final order passed by the CCI. The intervention was, however, clear on adjudging the challenge as posed by the petitioners on the constitutionality of section 22(3) of the Competition Act, 2002. Similarly, the Supreme Court in Union of India v. T.R. Verma case while adjudging an SLP filed by the Union of India specifically held that a writ petition cannot be invoked unless other equally efficacious remedies are exhausted.

Critical assessment of the Karnataka HC order

At this point, it is important to critically analyze the stay granted by the Karnataka HC in a daily order passed by it on 27th September, 2024 in a writ petition filed by Appario Retail. The core submission made by Appario was that the Director General, without seeking the necessary permission from the Commission, submitted a report classifying the petitioners, hitherto identified as third parties, as opposite parties for further proceedings. The Karnataka HC’s intervention, while possibly motivated by a concern for procedural fairness, appears to overstep established principles by preempting the role of the NCLAT which is the established appellate authority under the Competition Act. This is, not to mention only one of the many writs pending before different High Courts of the country for disposal on similar grounds.

Implications of cross-litigation and possible outcome

At this juncture, it is important to assess the implication of such interventions. The CCI is uniquely placed in looking into overarching questions of monopoly and preceding effects on Indian economic growth. One of the key considerations while conducting an investigation is to ensure timely course correction of the markets. In fact, this aspect is pronounced in the case of the digital industry where the Digital Competition Bill has been drafted to precisely address this issue. While the parties may be free to approach whichever forum they may find appropriate, any passing of interim order would have larger implications on the economic development of the country.

Based on public information, the CCI has pleaded before the SC stating that multiple attempts are being made by the parties to scuttle its investigation, there is a need for timely disposal of cases and such petitions are causing unnecessary burden on its resources. The point on the resources of the CCI is noteworthy as the Commission is a public body constrained by budget. The said petition causes additional burden on the already meagre-resources available with the CCI.

While the outcome of the SC petition remains unknown, a continuous delay of five years has already occurred in the CCI investigation of Amazon and Flipkart. This reflects on the insurmountability of Big Tech. Clearly, the Respondents have been able to turn the regulatory process on its head making it serve exactly the opposite purpose for which it was delineated in the first place, i.e. ensure equity in the growth. While the SC petition by the CCI for consolidating such cases under one forum seems a logical step, the question on its internal capacity of timely disposal of cases remains. Last but not the least, ‘efficient allocation of resources' remains the only travesty in the labyrinth, of course, in the name of ‘due process of the law’.