4/6/2020 Case Study 03 – CUTS Institute for Regulation & Competition

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Home (https://circ.in) » Competition Issues (https://circ.in/competition-issues/) » Case Study 03

Case Study 03

Powers And Limitation Of CCI & Compact Competition Commission Of

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India Vs. Steel Authority Of India & Anr
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Forum
 circomp-issue-7
The Supreme Court of India at New Delhi.
(https://circ.in/circomp-issue-
Acts/sections Referred
7-2/)
Competition Act, 2002
1.Section 19: Inquiry into certain agreements and dominant position of  circomp-issue-6
enterprise (https://circ.in/circomp-issue-
2. Section 26(1): Procedure for inquiry under section 19.
6/)
3. Section 33: Power to issue interim orders.
4. Section 53A (1): Establishment of Appellate Tribunal.  ICRR (https://circ.in/icrr/)
5. Section 57: Restriction on disclosure of information.
 February-2020
Parties To The Case
(https://circ.in/february-2020/)
Petitioner- Competition Commission of India Respondent- Steel
Authority of India  Upcoming Webinar
Case Brief (https://circ.in/upcoming-
In October 2009, Jindal Steel and Power Ltd. (JSPL) invoked Section 19
webinar/)
r/w Section 26(1) of the Competition Act, 2002 by providing information
to the Competition Commission of India (CCI) alleging that Steel
Authority of India (SAIL) had inter alia, entered into an exclusive supply TAG CLOUD

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agreement with Indian Railways for the supply of rails. CCI, after nding About Us
(https://circ.in/tag/about-us/)
that a prima facie case existed but without giving an opportunity to
SAIL to le a detailed reply, referred the matter for investigation by the Advocacy
Director General (DG), This order was challenged by SAIL before (https://circ.in/tag/advocacy/)

Competition Appellate Tribunal (COMPAT). COMPAT vide its order dated

Balance-Sheet
February 15, 2010 stayed the investigation proceedings by the DG and (https://circ.in/tag/balance-sheet/)
refused to implead CCI as a party before it. Aggrieved by this order of
Biennial Conference
the COMPAT, the CCI approached the Supreme Court of India (SC).
(https://circ.in/tag/biennial-
conference/)
This verdict of SC has effectively de ned the limits of exercise of power
by both the CCI and COMPAT. Competition & Regulation
(https://circ.in/tag/competition-
Issues Before Supreme Court And Its Observations Thereupon regulation/)

Issue 1: Whether a direction passed by the Commission u/s. 26(1) of the

Competition Policy & Law Course
Act while forming prima facie opinion would be appealable u/s 53A(1) (https://circ.in/tag/competition-
policy-law-course/)
of the Act.
The Court concluded in negative and held that Section 53A (1) of the Event (https://circ.in/tag/event/)
Act expressly provides decisions or orders or directions may be
appealed before COMPAT, and this does not include a direction of CCI External - Publication
(https://circ.in/tag/external-
publication/)

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under Section 26(1) of the Act. The Court noted that right to appeal is a Online-Courses
(https://circ.in/tag/online-
statutory right and if the statute does not provide for an appeal, the courses/)
Court cannot presume such right.
Publication
Issue 2: What is the ambit and scope of power vested with the (https://circ.in/tag/publication/)

Commission under Section 26(1) of the Act and whether the parties,
RegTracker
including the informant or the affected party, are entitled to notice or (https://circ.in/tag/regtracker/)
hearing, as a matter of right, at the preliminary stage of formulating an
Reports
opinion as to the existence of the prima facie case?
(https://circ.in/tag/reports/)
The Hon’ble Court observed that with reference to Section 26 (1) of the
Act, neither any statutory duty is cast on CCI to issue notice or grant Sustainable Infrastructure &
PPPs
hearing, nor any party can claim, as a matter of right, notice and/or (https://circ.in/tag/sustainable-
hearing at the stage of formation of opinion by CCI. However, CCI, being infrastructure-ppps/)

a statutory body exercising, inter alia, regulatory jurisdiction, even at

Training
that stage, in its discretion and in appropriate cases may call upon the (https://circ.in/tag/training/)
concerned party(s) to render required assistance or produce requisite
Webinar
information, as per its directive. CCI is expected to form such prima
(https://circ.in/tag/webinar/)
facie view without entering upon any adjudicatory or determinative
process. CCI has the power in terms of Regulation 17 (2) of the
Regulations to invite not only the information provider but even ‘such

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other person’ which would include all persons, even the affected
parties, as it may deem necessary. In that event it shall be ‘preliminary
conference for whose conduct of business CCI is entitled to evolve its
own procedure.

Issue 3: Whether the Commission would be a necessary, or at least a

proper, party in the proceedings before the Tribunal in an appeal
preferred by any party?
The SC observed that, in cases where the inquiry has been initiated by
CCI, suo moto, CCI shall be a necessary party and in all other cases the
CCI shall be a proper party in the proceedings before the Competition
Tribunal. The presence of CCI, as a party before the Tribunal would help
in complete adjudication along with effective and expeditious disposal
of matters. Being an expert body, its views would be of appropriate
assistance to the Tribunal. Thus, CCI in the proceedings before the
Tribunal would be a necessary or a proper party, as the case may be.

Issue 4: At what stage and in what manner the Commission can exercise
powers vested in it under Section 33 of the Act to pass temporary
restraint orders?
SC held that during an inquiry and where CCI is satis ed that the act is

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in contravention of the provisions stated in Section 33 of the Act, it may

issue an order temporarily restraining the party from carrying on such
act, until the conclusion of such inquiry or until further orders without
giving notice to such party, where it deems it necessary. This power has
to be exercised by CCI sparingly and under compelling and exceptional
circumstances. The power under Section 33 of the Act to pass temporary
restraint order can only be exercised by the Commission when it has
formed prima facie opinion and directed investigation in terms of
Section 26(1) of the Act.

Issue 5: Whether it is obligatory for the Commission to record reasons

while forming prima facie opinion?
SC held that in consonance with the settled principles of administrative
jurisprudence, CCI is expected to record at least some reason even while
forming a prima facie view. However, while passing directions and
orders dealing with the rights of the parties in its adjudicatory and
determinative capacity, it is required of CCI to pass speaking orders
(written/reasoned orders), upon due application of mind, responding to
all the contentions raised before it by the rival parties.

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Issue 6: What directions, if any, need to be issued by the Court to ensure

proper compliance in regard to procedural requirements while keeping
in mind the scheme of the Act and the legislative intent?
The Court directed that
(i) all proceedings, including investigation and inquiry be completed by
CCI/ DG most expeditiously and wherever during a course of an enquiry
the CCI passes an interim order, it should pass a nal order in that
behalf as expeditiously as possible and in any case not later than 60
days; and
(ii) DG should submit the report in terms of section 26(2) of the Act
within the time as directed by CCI, but in all cases not later than 45
days from the date of the directions issued under section 26(1) of the
Act.

Analysis Of The Judgement

The Judgement of the Hon’ble SC in the instant matter is the stepping
stone towards the development and expansion of the Indian
competition jurisprudence. This case not only de nes the extent of
powers of CCI but also its limitations.

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Through this judgement, the Hon’ble Supreme Court has erased

ambiguities pertaining to the interpretation of the provisions of the
Competition Act, 2002 and more precisely it has put to rest the various
controversies with regard to the demarcation of the power of the
COMPAT and CCI.

However, all the powers attributed to CCI through this judgement come
with a caution i.e. to upheld utmost responsibility and the underlying
spirit of the Act. It also postulates the greater responsibility of
maintaining con dentiality by CCI as provided under Section 57 of the
Competition Act, 2002.

–Prepared By: Molshree Bhatnagar, CIRC

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