2019 (9) TMI 568 - HC - Indian Laws

Prohibition on anti-competitive agreements - Anti-competitive restrictions - abuse of dominant position - HELD THAT - Regulations 18 (1) and 20 (4) of the CCI Regulations, require the DG to investigate the matter i.e. the allegations made in information or reference, as the case may be , together with all evidence, documents, statements or analysis collected during investigation. The investigation has to be a comprehensive one. The DG may not, in fact, be able to anticipate what information may emerge during such investigation. Merely because the information that emerges does not pertain to the specific subject matter which the DG has been asked to investigate, would not constrain the DG from examining such information as well if it points to violation of some other provisions of the Act. Indeed, the directions given by the CCI to the DG under Section 26 (1) of the Act is only to trigger investigation. In the present case, the Court finds that while the information with the CCI did pertain to the alleged violation by GIL and others under Section 3(3) (a) and (b) of the Act, the direction given to the DG was to investigate the matter , and this enabled the DG to examine violations not only of under Section 3 of the Act, but any other violation that may have come to his notice while undertaking the investigation. An order of the CCI under Section 26 (1) of the Act triggers investigation by the DG, and that the powers of the DG are not necessarily circumscribed to examine only such matters that formed the subject matter of the original complaint. No doubt, the language of the order passed by the CCI issuing directions to the DG will also have a bearing on the scope of such investigation by the DG. In the present case, however, the language of the order passed by the CCI on 26th February, 2011, is broad enough to cover an investigation by the DG into what appeared to be prima facie violation of Section 4 of the Act by GIL. The scope of the powers and functions of the CCI, when it is considering the report of the DG, is a quasi judicial function. It undertakes that exercise after furnishing to the party a copy of the report and then permits the party to make its submissions in relation thereto. This is followed by a full-fledged hearing. At that stage the CCI can in its discretion permit the affected party to lead evidence. Therefore, the scope and extent of participation of GIL in the present case would obviously be different at the stage of investigation before the DG and at the subsequent stage of consideration of the DG s report by the CCI. This Court sets aside the impugned judgment of the learned Single Judge and restores the order dated 30th May, 2013 passed by the CCI. The matter before the CCI will now proceed from the stage where it was when the above order was passed, in accordance with law - Appeal allowed.

Summary

Issues Involved:
1. Whether the Director General (DG) of the Competition Commission of India (CCI) exceeded his jurisdiction by investigating violations of Section 4 of the Competition Act, 2002, when the initial direction was to investigate under Section 3.
2. Whether the CCI's order directing the DG to investigate "the matter" was broad enough to include violations of Section 4.
3. Whether the DG's report on the alleged contravention of Section 4 by GIL was valid and whether it could be treated as 'information' under Section 19 of the Act.
4. Whether GIL was deprived of an opportunity to present its case before the DG, thus violating principles of natural justice.

Detailed Analysis:

1. Jurisdiction of DG to Investigate Section 4 Violations:
The DG submitted a report finding GIL in violation of Section 4 of the Act, although the initial direction was to investigate violations under Section 3. The Single Judge held that the DG exceeded his jurisdiction as the CCI's direction was specific to Section 3 violations. However, this Court reversed the Single Judge's decision, holding that the DG was within his powers to investigate and report on violations of Section 4, as per Section 26(1) of the Act and Regulations 18, 20, and 41 of the CCI Regulations.

2. Scope of CCI's Order to Investigate "the Matter":
The Court noted that the CCI's direction to the DG to investigate "the matter" was broad enough to cover any violations that emerged during the investigation, including those under Section 4. The term "the matter" was interpreted expansively to include any anti-competitive practices discovered during the investigation. This interpretation aligns with the Supreme Court's ruling in Excel Crop Care Limited v. Competitive Commission of India, which emphasized that the DG's investigation should be comprehensive and not limited to the initial complaint.

3. Validity of DG's Report and Treatment as 'Information':
The Single Judge suggested that the DG's findings on Section 4 violations could be treated as 'information' under Section 19 of the Act, requiring a fresh investigation. However, this Court disagreed, stating that the DG's report was already comprehensive and there was no need to treat it as new information. The Court emphasized that the DG's powers are not limited by the initial prima facie view of the CCI and that the DG can investigate any violations that emerge during the investigation.

4. Opportunity for GIL to Present its Case:
GIL argued that it was not given an opportunity to defend itself against the Section 4 allegations during the DG's investigation, thus violating principles of natural justice. The Court held that the extent of the opportunity to be given during the investigation depends on the facts and circumstances of each case. The Court found that GIL had made written submissions to the DG and had a full opportunity to present its case before the CCI, thus satisfying the requirements of natural justice.

Conclusion:
The Court set aside the impugned judgment of the learned Single Judge and restored the CCI's order dated 30th May 2013. The matter will now proceed before the CCI from the stage it was at when the order was passed, in accordance with the law. The appeal was allowed, and no costs were awarded.