2023 (6) TMI 139 - HC - Indian Laws

Validity of CPE program being conducted by ICAI - Conducting the programs on its on instead of outsourcing - Scope and Jurisdiction of the Competition Commission of India (CCI) to Intervene - principal grievance of the Informant (respondent) stems from the fact that only ICAI and its organs are conducting the structured learning activities and ICAI has not affiliated or recognized any other body to conduct such learning activities - amounts to foul of Section 4 of the Competition Act or not. Whether the grievances articulated by the Informant constitutes an abuse of dominant position as contemplated under Section 4 of the Competition Act? HELD THAT - The CCI has proceeded on the basis that ICAI carries out both regulatory functions as well as other economic activities like conducting professional courses including the CPE program and publication of books relating to the profession of accountancy. The CCI had observed in the impugned order that these economic activities of ICAI could be differentiated from the regulatory activities of regulating the CA profession and in view of these non-regulatory activities, ICAI falls within the definition of an enterprise under the CCI Act. The CCI concluded that the relevant market for the purposes of the inquiry be the organizing recognised CPE Seminars/Workshops/Conferences in India . The CCI held that while OP ICAI , as a regulator of the accounting profession, has all the powers to prescribe a policy for continuous up gradation of its members through the CPE Policy and recognition of POUs, however, on its non-regulatory function of organizing CPE Seminars, restricting the same only to itself and its organs, prima facie, appears to be an arbitrary exercise of powers and thus in contravention of Section 4 of the Competition Act. The Informant has no grievances at least none that fall within the scope of the Competition Act regarding the manner in which the seminars are organized or conducted by ICAI. Although, the Informant has mentioned that the seminars are used for elected members of the Council to secure face time with the members, there is no allegation that the conduct of the seminars itself amount to ICAI abusing its position as a service provider. The fundamental premise of the CCI that ICAI has abused its dominant position, with regard to a non-regulatory activity is flawed. As noticed above, the Informant has in unambiguous terms articulated his grievance in the information filed by him. He alleges that the ICAI is abusing its dominant position as a Regulator to create a monopoly in the service of providing CPE seminars, clearly violating Section 4(1) of the Competition Act . The grievance of the Informant, thus, is with regard to the decision of ICAI in making it mandatory for its members to undertake a structured learning program by attending the CPE seminars organized by ICAI and POUs, which according to the Informant and the CCI, are an extended arm of ICAI - essentially, the Informant seeks a review of the decision taken by ICAI in exercise of its statutory powers to regulate the profession of accountancy. It seeks that ICAI should recognize other bodies/organizations to discharge its function of providing education for professional accountants for maintenance of the professional standards, instead of ICAI restricting the said function in house. Whether the CCI as a market regulator for ensuring fair competition in the markets, exercises powers to review the decisions of other statutory regulators, which are taken by them in exercise of their regulatory functions and which have no interface with trade or commerce? - HELD THAT - The Competition Act does not contemplate the CCI to act as an appellate court or a grievance redressal forum against such decisions, which are taken by other regulators, in exercise of their statutory powers and are not interfaced with trade or commerce. A statutory body may in course of its functions, also make decisions which involve trade and commerce. As an illustration, the concerned body may purchase equipment and consumables or avail services of professionals. There is no cavil that any decision in this regard may, if it falls foul of the provisions of the Competition Act, be examined by the CCI. This Court is unable to accept that the jurisdiction of the CCI extends to compelling a statutory body to outsource functions that it performs in discharge of its statutory duties notwithstanding that the same may fall within the sphere of economic activity. It would be erroneous to assume that if any activity falls within the broad definition of economic activity, it would be necessary to create an open market for the same. This Court is unable to accept that the CCI can compel an organisation or an enterprise to outsource its activities. The structured program is conducted only by ICAI and its organs. The credits for unstructured training are based on self-declaration, the same in effect requires the professional chartered accountants to certify that they have devoted certain time for professional development. Importantly, there is no other body or institution, which is engaged in the activity of providing professional training to acquire the classification of a chartered accountant or for the continuing education program. The impugned order is set aside - Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of the Competition Commission of India (CCI) over the Institute of Chartered Accountants of India (ICAI).
2. Whether ICAI is an "enterprise" under Section 2(h) of the Competition Act, 2002.
3. Allegations of abuse of dominant position by ICAI under Section 4 of the Competition Act.
4. The validity and scope of ICAI's Continuing Professional Education (CPE) program.

Summary:

Jurisdiction of CCI over ICAI:
ICAI contended that it is a non-profit organization performing regulatory functions under the Chartered Accountants Act, 1949 (CA Act) and thus, CCI lacks jurisdiction over its activities. ICAI argued that its CPE program is a statutory function and not subject to CCI's review. Conversely, CCI argued that ICAI's activities, including the CPE program, constitute economic activities and fall within its jurisdiction. The court held that CCI does not have jurisdiction to review decisions made by ICAI in the discharge of its regulatory functions under the CA Act.

Whether ICAI is an "enterprise" under Section 2(h) of the Competition Act:
The court examined whether ICAI qualifies as an "enterprise" under Section 2(h) of the Competition Act. The definition includes any person or department of the government engaged in economic activities, excluding sovereign functions. The court concluded that ICAI falls within this definition as it provides educational services, which are economic activities, and thus, is an "enterprise" under the Competition Act.

Allegations of Abuse of Dominant Position by ICAI:
The Informant alleged that ICAI abused its dominant position by restricting the conduct of structured CPE programs to itself and its organs, thus violating Section 4 of the Competition Act. The CCI, prima facie, agreed with the Informant and directed an investigation. However, the court found that ICAI's decision to conduct CPE programs is part of its regulatory function to maintain professional standards and not an abuse of dominant position. The court emphasized that CCI cannot review regulatory decisions made by statutory bodies like ICAI.

Validity and Scope of ICAI's CPE Program:
ICAI's CPE program requires its members to earn CPE credit hours through structured and unstructured learning activities. The Informant argued that ICAI's policy of not recognizing other organizations for conducting CPE seminars is anti-competitive. The court noted that ICAI's CPE program is a structured educational initiative to maintain professional standards and is not interchangeable with seminars conducted by other bodies. The court held that ICAI's decision to conduct CPE programs internally is within its statutory powers and does not constitute an abuse of dominance.

Conclusion:
The court allowed the petition, setting aside the impugned order of the CCI. It concluded that ICAI's regulatory decisions regarding its CPE program are not subject to CCI's review, as they do not pertain to any market involving trade or commerce. The court emphasized that CCI's jurisdiction does not extend to compelling statutory bodies to outsource their regulatory functions.