Introduction
India’s shift from the erstwhile Monopolies and Restrictive Trade Practices Act, 1969 [“the MRTP Act”] to the current Competition Act, 2002 [“the Act”] came as a relief at the advent of the 21st century. Where the former act fell short in the context of technological and business-related developments, the 2002 Act reintroduced the pre-1991 common-citizen centric approach.[1] This emanates from Articles 38 and Article 39 of the Constitution, which direct the state to frame its policies in a manner that inequalities in status, facilities and opportunities amongst groups of people engaged in different vocations are eliminated. Further, it is to ensure that the ownership, control and distribution of community resources serves the common good with the operation of the economic system being steered in a manner that does not result in the concentration of wealth and economic means.[2] Due regard was given to these directive principles of state policy for the drafting the Act,[3] and thus, a framework for the regulation of deleterious restrictive trade practices such as abuse of dominance, mergers and anti-competitive agreements was established.
For this purpose, the Competition Commission of India [“the Commission”] has been set up under Section 7 of the Act,[4] which aims to promote a healthy competitive environment and implement the Act’s policies. It also takes into cognizance any violations of the provisions of the Act, and may inquire into pass orders to rectify such circumstances. For the purpose of this project, we evaluate the manner in which inquiries are initiated for the purpose of looking into alleged contraventions of policies regarding ‘dominant position’, i.e. Section 3(1) and Section 4 of the Act.[5]
Under Section 19(1) of the Act, the Commission may inquire into such matters in three ways:[6]
On its own motion
On being informed by any person, consumer, or their association or trade association
On a reference made by the Central or State Government or any Statutory Body
Where the first and third methods are clear in application, Courts have often been riddled with ambiguity while interpreting the ambit of ‘any person’ as under Section 19(1)(a). A plain reading of the phrase would show that the scope furnished by the legislature is broad and the question of competence of a person to file information before the Commission is irrelevant. Yet, recent decisions of the Supreme Court have substantially digressed from this understanding, to confer the qualification of locus standi upon ‘any person’.
I. ‘Any Person’: Interpretation by Courts and Tribunals
a. Pre-Samir Aggarwal
Decisions before Samir Aggarwal[7] have mostly upheld the plain meaning of the text, declining to read into the provision a condition of locus standi. The case of Shri Surendranath Prasad v. Competition Commission of India,[8] related to cartel formation aimed at collusive bidding for contract liaison of coal movement. Here, the COMPAT referred to Section 18 of the Act, which obligates the Commission to eliminate any anti-competitive practices as well as the legislative intention behind the section, concluding that the question of locus does not arise due to the non-provision of any qualification for an informant as well as non-prescription of any pre-condition for the filing of such information.[9]
In the case Hiranandani Hospital v. Competition Commission of India & Anr., it was recognised that there are no qualification prescriptions. Here, though, the COMPAT issued an advisory, suggesting that the Commission must act with caution where an informant is a third party.[10] The Commission heeded to this guideline in Saurabh Tripathy v. Great Eastern Energy Corp. Ltd. and admitted that the scheme of the Act, it is not necessary for a person to be aggrieved from the conduct of the respondent for the filing of information.[11]
The Supreme Court has commented on the nature of the Commission, stating that it carries out functions as a market regulator as well as an inquisitorial and adjudicatory body.[12] In furtherance of this, in the case Reliance Agency And Chemists and Druggists Association of Baroda & Others,[13] the Commission issued a further clarification:
“The proceedings before the Commission are inquisitorial in nature and as such, the locus of the Informant is not as relevant in deciding whether the case filed before the Commission should be entertained or not. As long as the matter reported to the Commission involves anti-competitive issues falling within the ambit of the Act, the Commission is mandated to proceed with the matter.”
It is also pertinent to note at this juncture prior to the 2007 Amendment to the Act,[14] the terminology used was ‘complaint’ and was subsequently replaced by ‘information’. This issued further clarity on the intention of the Parliament and strengthened the position against the requirement of locus. In a plethora of cases that followed, Courts and the Commission recognised that the powers of inquiry as conferred upon the Commission are very wide. This is apparent as an investigation can be conducted even without the existence of an ‘aggrieved’ person, given that the ultimate objective of the Act is to prevent unscrupulous activities.[15]
b. Samir Aggarwal
This case was filed before the NCLAT by the appellant, who happens to be an unrelated third party, challenging the business operation of shared-economy businesses Uber and Ola cab services, on the grounds of cartel formation and price-fixing. Where on the merits of the case it was dismissed prima facie by the Commission as well as by the NCLAT, the Tribunal also commented upon the fact that the appellant was without locus in providing the information to the Commission.
Here, the NCLAT stated that the provision must necessarily be construed only to provide locus to persons that have suffered due to an “invasion of legal rights as a consumer or beneficiary of healthy competitive practices”.[16] The aim of such an understanding was to sift genuine ‘issues’ of anti-competitive practices from unscrupulous action in efforts to achieve ‘oblique motives’. The NCLAT also discusses the jurisprudence behind public interest litigation, but draws a distinction with the Act, stating that where statutory provisions have been made, there is a necessary construction of locus standi as discussed above.
c. Post Samir Aggarwal
The most significant decision to follow Samir Aggarwal is a case before the Commission earlier this year. In Re Harshita Chawla and WhatsApp Inc., Facebook Inc., the submissions made by the “Opposite Party” i.e. WhatsApp and Facebook, relied upon Samir Aggarwal for lack of locus and alleged that the informant indulged in the practice of “forum shopping”.[17] The Commission digressed from the ruling of the NCLAT in Samir Aggarwal, drawing a distinction between competition issues in rem and in personam. The Commission stated that it is more than a mere ‘arbiter’ and is expected to perform inquisitorial functions on top of its adjudicatory functions. Larger questions of market distortion, adverse effects on competition and restrictions on the freedom of trade may be incidental to disputes before the Commission and in keeping with the objective of establishment of the Act, must be dealt with regardless of who the informant is. The Commission also noted that the focus is on evaluating whether the practices being followed are fair and not the motive or intention of the informant behind providing the information to the Commission.[18]
II. Analysis Based on Rules of Interpretation
Literal Rule of Interpretation
Literal rule is applied when the words of the text are “plain” and there is inherently no need for interpretation.[19] If the words of the statute are in themselves precise and unambiguous,[20] then no more can be necessary than to expound those words in their natural and ordinary sense,[21] or the grammatical sense of the word.[22] The words themselves alone do, in such case, best declare the intention of the lawgiver.[23]
Following the principles of textualism and originalism, this method of statutory interpretation relies upon the plain text of the statute itself for determining the meaning of the legislation. In this regard, Section 19(1)(a) reads as follows:-
“receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association”
A plain reading of the provision does not lead to any ambiguity or absurdity as such, and therefore, the phrase “any person” must not be restricted to a person who has suffered invasion of legal rights. This understanding also flows from the express differentiation the lawmakers have made between the “any person” and “consumer” in the provision itself. The normal and ordinary sense of the words lead us to the conclusion that a consumer, who might have been a victim of anti-competitive practices does not have exclusive right to approach the Commission. Therefore, there is no nexus between locus standi under Section 19(1) and personal interest.
In addition to the text of the statute, literal rule also takes into account the true intention of the legislature.[24] It is a settled understanding of the courts that the intention of the legislature must be, first, found in the text of the statute.[25]
In order to determine the legislative intent, reference must be made to the object and reasons of the Act which is “to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India”[26] Courts have often, based on the object and reasons of the Act, made an observation as to the scope and applicability of the Act, i.e. in rem and not in personam.[27] As a result, the Commission is entrusted with the responsibility of ensuring minimal anti-competitive practices and market abuse,[28] rather than treating market as a collection of individual rights. Thus, the word “any person” must be construed with the imagination of the purpose[29] with which the Competition Act was introduced.[30]
Further, as mentioned in previous sections, the Parliament confirmed the inquisitorial nature of the Commission as it replaced “complaint” with “information,”[31] while also highlighting the wider meaning it wanted to adopt. With respect to the role of the Commission itself, it is imperative to recognise the nature and extent of powers it enjoys. Under Section 26, the Commission is vested with the powers of investigation and shut the matter at a prima facie stage in absence of any violation. In the opinion of the authors, the wide powers of the Commission allow the body to deal with issues like unawareness of consumers which, otherwise, may encourage anti-competitive practices.
Addressing concerns of the larger public interest is necessary in cases of competition law.[32] Such public interest considerations are so predominant in the scheme of the Competition Act, that the provisions of the Act may override the rules of independent associations which expressly disallow non-members to approach the Commission under Section 19.[33] This approach of the Court (based on the Act itself) is strikingly different from the approach of NCLAT in Samir Agarwal focussed on not leaving any room for “unscrupulous people” to raise objections with “oblique objectives.”
Therefore, in the given case of Samir Agarwal, there was no need to go beyond the litera legis to import a restrictive understanding of “any person” under Section 19.
d. Mischief Rule of Interpretation
Another guiding principle of interpretation which supports the conclusion reached in the WhatsApp case is that a statute must be read as a whole in its context.[34] Section 2(l) of the Act defines ‘person’ to include an individual, a HUF, a company, a firm and an association amongst others. Therefore, when the statute is read as a whole, the theme of inclusivity is apparent and Section 19(1) also incorporates the same.
In addition to the literal rule, the contours of mischief rule, i.e. statute as a whole, the repealed statute, the scope and the mischief the statute intends to remedy,[35] also confirm the broader view of “any person” The decision of the parliament to do away with the MRTP Act stemmed from its realisation of the present day challenges in the field of competition which rendered the erstwhile act obsolete. Therefore, the new act was drafted in a manner that it responds to the modern forms of competition effectively. This view was confirmed by the Supreme Court in the case of CCI v. Coordination Committee of artists and technicians of W.B. Films and Television, holding that the Act seeks to “remedy” the violations occurring as a result of the “activities of those undertaking who while undertaking their economic activities, indulge in practices which effect the competition adversely or take advantage of their dominant position”[36] In the opinion of the authors, a very pertinent question for the courts to consider, while interpreting, is “what is the meaning of the word when read against the background of the human conduct with which the Act is dealing?”[37] The Competition Act deals with human conduct of anti-competitive behaviour and misuse in the market and thus, Section 19(1) is to be read in the context of this mischief that the Act aims to address, which is possible when a broader scope for locus standi is ensured for third-party informants.
III. Conclusion
The decision of the NCLAT in the case of Samir Agarwal is a classic case of judicial overreach even when no patent ambiguity existed in the scheme of the Act. Such an instance has the potential to have far reaching consequences, especially in light of the intention of the legislature and the object of the Act itself.
It is pertinent to note that had the intention of the Legislature been to allow only the categories as provided by the Appellate Tribunal, it would have categorically provided for the same. But, in the absence of a clear mention by the Legislature, and in view of the unambiguous wording of the provision, it was not open to the NCLAT to supplant its own view against the wording of the statute. There are a catena of judgments which categorically provide that if the language of the statute is clear and unambiguous, the same are to be interpreted in a strict manner.
Additionally, the courts are required to be mindful of the social context and public interest considerations that are associated with the Act, and an interpretation in such a light would probably minimise instances of judicial overreach. Persons who are at most risk of a violation of rights as a result of anti-competitive practices, are often not economically and socially strengthened enough to approach a given forum and therefore, “informants” have been the given the right to appear before the court to report any malpractice in the market. This would enable the Act to serve its purpose in the truest form, and also give meaning to the intention of the legislature in real life.
Lastly, given the decision of the Commission in the WhatsApp case does not overrule the position of law upheld by NCLAT in Samir Agarwal, it is the need of the hour for the Supreme Court to clarify the law which does not correlate personal interest and locus standi under the Act in any form.
This article has been authored by Rishika Arya and Bhavyakirti Singh, 3rd-year students at National Law University, Jodhpur.
[1][1] Justice Altamas Kabir, Competition Laws and the Indian Economy, 23(1) National Law School of India Review 1-8 (2011).
[2] Articles 38(2), 39(b) and 39(c), Part-IV, Directive Principles of State Policy, the Constitution of India, 1950.
[3] In a number of cases before the Supreme Court, it has been held that DPSPs under Part-IV and fundamental rights under Part III are complementary to each other and hold the same importance before policymakers and Courts (see Dalmia Cement v. UOI, (1996) 10 SCC 104, Olga Tellis v. BMC, (1985) 3 SCC 545 etc.).
[4] Section 7, Competition Act, 2002, No. 12 of 2003.
[5] Section 3(1) and Section 4, Competition Act, 2002, No. 12 of 2003.
[6] Section 19, Competition Act, 2002, No. 12 of 2003.
[7] Samir Aggarwal v. CCI, Competition Appeal (AT) No. 11 of 2019.
[8] Shri Surendranath Prasad v. Competition Commission of India, COMPAT Appeal No. 43 of 2014.
[9] Id. ¶ 21-22.
[10] Hiranandani Hospital v. Competition Commission of India & Anr., COMPAT Appeal No. 19 of 2014, ¶ 25.
[11] Saurabh Tripathy v. Great Eastern Energy Corp. Ltd., CCI Case No. 63 of 2014, ¶ 15.
[12] Competition Commission of India vs. Steel Authority of India Ltd. (SAIL), Civil Appeal No. 7779 of 2010.
[13] Reliance Agency And Chemists and Druggists Association of Baroda & Others, Case No. 97 of 2013, ¶ 83.
[14] The Competition (Amendment) Act, No. 39 of 2007.
[15] See Tara Chand v. Gram Panchayat, Jhupa Kurd; see Google Inc. v. CCI ¶ 18(D) (“powers of the [Commission] during such investigation are far more sweeping and wider than the power of investigation conferred on the Police under the Code of Criminal Procedure.”); see XYZ v. Indian Oil Corp. Ltd. ¶ 35 (“the Commission has the power to take action, on its own or upon information provided, to identify any possible anti-competitive conduct in the market. Hence, the powers and duties of the Commission are much wider. The proceedings before the Commission are inquisitorial in nature and targeted toward overall market correction and subsequent effects which may or may not be confined to a specific sector.”);
[16] Samir Aggarwal, ¶ 16.
[17] In Re Harshita Chawla and WhatsApp Inc., Facebook Inc. ¶47.
[18] Alis Medical Store & Ors. And Gujarat Federation of Chemists and Druggists Association & Ors., Case No. 65/2014, 71/2014, 72/2014 & 68/2015, ¶ 96 (“The Commission has to focus on the fair functioning of the market and any motive with which the Informant might have approached the Commission is subservient Case No. 15 of 2020 Page 27 of 41 to that objective”); Vedant Biosciences And Chemists and Druggists Association of Baroda, Case No. C-87/2009/DGIR, ¶52 (“While the Commission does not encourage sham/pretentious information filed to settle scores between the parties, however, if there is merit in the anti-competitive conduct being reported to the Commission, the bonafide/locus/motive of an informant will become subservient to the duty of the Commission to ensure fair functioning of the markets”).
[19] Croxford v. Universal Insurance Co. Ltd., [1936] 2 K.B. 253, at 280.
[20] See Crawford v. Spooner, (1846) 4 MIA 179 wherein the Court held that unless the literal understanding of the text results in absurdity, the courts mustn’t digress from the ordinary meaning of the word.
[21] Abley v. Dale, 11 C.B. 391, per C.J. Jervis; Piara Singh v. Mukla Singh, ILR 4 Lah 325; Aiyer P Ramnathan, Law Lexicon 1134 (2d ed., 2002).
[22] Bharat Singh v. Management of New Delhi Tuberculosis Centre, AIR 1986 SC 842.
[23] Sussex Peerage Case (1844) 11 Cl & amp Fin 85, per Tindal C.J.
[24] Nathi Devi v. Radha Devi Gupta, Civil Appeal No. 5027 of 1999 ¶ 14.
[25] Kanai Lal v. Paramnidh, AIR 1957 SC 907.
[26] Object & Reasons, Competition Act, No. 12 of 2003.
[27] Saurabh Tripathy v. Great Eastern Energy Corp. Ltd., CCI Case No. 63 of 2014, ¶ 15.; In Re: Velankani Electronics Private Limited v. Intel Corporation, CCI Case No. 16 of 2018.
[28] Section 18, Competition Act, No. 12 of 2003 codifies this duty of the Commission.
[29] The CCI recognises the objectives of the Act to be prevention of practices having an adverse impact on competition, promotion of healthy competition in market and protection of interests of the consumers. See https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/CCI%20Basic%20Introduction_0.pdf
[30] See Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama, AIR 1990 SC 981 wherein SC made this observation with respect to the Land Acquisition Act.
[31] The Competition (Amendment) Act, No. 39 of 2007.
[32] Competition Commission of India vs. Steel Authority of India Ltd. (SAIL), Civil Appeal No. 7779 of 2010; Competition Commission of India vs. Bharti Airtel Limited and Ors., Civil Appeal No. 11843 of 2018.
[33] Central circuit cine association v. Reliance Big Entertainment Pvt. Ltd., Civil Appeal No. 70 of 2012.
[34] Padma Sundara Rao v. State of T.N, Civil Appeal No. 2226 of 1997; Maxwell on Interpretation of Statutes (12th ed. 1969).
[35] Union of India v. Elphinstone Spg. & Wug. Co. Ltd., Civil Appeal No. 2995-2997 of 1984; Bengal Immunity Co. Ltd. v. Union of India, (1977) 4 SCC 608.
[36] CCI v. Coordination Committee of artists and technicians of W.B. Films and Television, Civil Appeal No. 6691 of 2014.
[37] John Villis, Statutory interpretation in a nutshell, 16(1) Canadian Bar Rev. 8 (1938).
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