The recent judgment of the Competition Commission of India (Case no. 41, 2014) established that the Common Law Admission Test (CLAT) Committee fell beyond the jurisdiction of the CCI as it does not qualify as an ‘enterprise’ under Section 2(h) of the Competition Act. The present information was filed under Section 19(1)(a) of the Act, following which the CCI examined the nuances of Section 2(h) and 2(l) of the Act.
The CLAT Committee organises an annual law admission test that grants admission to a group of 14 National Law Schools across India. The case dealt with alleged concerns regarding the abuse of the CLAT Committee’s dominant position by imposing unfair and discriminatory conditions, such as charging an exorbitant registration and pre-admission fee of Rs. 4000 and Rs. 1 lakh respectively. The informant was the organisation iJustice, a public interest legal advocacy initiative of the Centre for Civil Society. The hike in the registration fee (of about Rs. 1000) and the pre-admission fees (of about Rs. 50,000) as stressed upon by letters sent to the CJI and the President of India lead to the institution of this case. Thus, it was alleged that the CLAT Committee was in contravention with Section 4 of the Act.
The present order has been passed under Section 26(2) of the Act. This implies that the commission was of the opinion that there existed no prima facie case. CCI order did not address the substantive allegation regarding the violation of Section 4 of the Act. Rather, the case was dismissed on the preliminary issue of the CLAT Committee not qualifying as an ‘enterprise’ as required by the Act. The Committee was held to be merely a body constituted through a Memorandum of Understanding between participating National Law Schools.
The CCI was of the view that adjudication upon the alleged abusive conduct of the CLAT Committee as per Section 4 of the Act, was contingent upon examining whether the Committee constituted an ‘enterprise’ under Section 2(h). For this purpose, the CCI went on to cull out the requirements laid down by Section 2(h): (i) entity should be person or department of the Government; (ii) entity should be engaged in the specified economic activities; (iii) such activity must not be a sovereign activity.
The Commission held that the CLAT Committee was neither a ‘person’ not a ‘department of the Government’; hence it was not an ‘enterprise’ as per the Act. Relying on a writ petition filed in Varun Bhagat v Union of India & Ors., the CCI distinguished between an “enterprise” and an entity merely created as a result of a Memorandum of Understanding (MoU). It held that the CLAT was a product of an MoU between seven National Law Universities. The MoU gave the NLUs the power to conduct CLAT and handle the counselling for admission to these prestigious institutes. Therefore, this MoU was merely an ‘agreement’, or rather an arrangement between the participating NLUs for conducting CLAT and facilitating admissions for the same. No separate body/association was deemed to have been created for this purpose.
In its concluding remarks, the CCI dismissed the claims of the informants to hold that the CLAT Committee did not constitute an “enterprise” as under Section 2(h) of the Competition Act. A well-constructed order, CCI was successful in upholding the scheme of the Act by way of addressing the preliminary jurisdictional question.
This post has been authored by Ambika Sahai and Ashrita Gulati, students at the West Bengal National University of Juridical Sciences
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