Can Competition Commission of India Take Cognizance Of Anti-Competitive Behavior?

Competition Commission of India or CCI as referred in the title was set up to make sure that the behaviour prescribed in the competition laws is followed and there are no anti-competition trends in the market. This is to make sure that the consumer is protected from sky rocketing and unfair prices. This article discusses the very same issue. Read along to know more!

Competition is the founding stone of efficient working market systems. Its target is to secure the interests of the consumers by giving quality products and services at a decreased cost. It quickens growth and development by creating a level playing field for all players in the market so as no one firm has an undue preferred advantage over the other. The New Economic Policy, 1991 set off the dynamic strengths of the competition in the Indian economy by ending license-permit raj. Adam Smith in his book “The Wealth of Nations” observes that when people or organizations are compelled to contend, they will, in the quest for their own particular self-interest, work harder. This results in weak competitors being eliminated, and the rest of the organizations creating better products at lower costs. The economic reforms program which began in the ’90s unleashed exceptional growth energy in the nation. The New Economic Policy, 1991 set off the dynamic strengths of the competition in the Indian economy by ending license-permit raj. As quoted by Dr. Manmohan Singh, the then Finance Minister, in the budget speech said that “it is essential to increase the degree of competition between firms in the domestic markets so that there are adequate incentives for raising productivity, improving efficiency and reducing costs.” The paper discusses the anti-competitive behavior.

Topics Covered in this article

 History & Evolution of commission

The Commission was built up in October 2003, however because of a legal challenge in the case of (Brahm Dutt versus Union of India, (Writ Petition (Civil) 490 of 2003)[2], it didn’t turn out to be completely operational till 2007. The Commission in its initial years focused its endeavors on advocacy initiatives. The Hon’ble Supreme Court discarded the writ with a perception that if a specialist body is to be made, it may be proper to consider the creation of two separate bodies, one with aptitude for advisory and administrative functions and the other for adjudicatory functions, alongside an appellate body in light of the doctrine of separation of powers perceived by 8 the Constitution of India. The Amendment Act of 2007[3] made two separate bodies, specifically, (a) the Commission as a seven-member (one chairperson and 2-6 members) expert Body to function as a market regulator for preventing and regulating anti-competitive practices in the country and to carry on the advisory and advocacy functions in its role as a regulator; and(b) the Competition Appellate Tribunal (COMPAT) as a three-member quasi-judicial body to hear and dispose of appeals against any direction issued or decision made or order passed by the Commission. As per a revision, with impact from 14 October 2009[4], all pending cases and pending examinations were exchanged to COMPAT and CCI individually from the MRTP Commission through the MRTP Act was canceled. The substantive provisions, Anti-competitive agreements (Section 3) and Abuse of Dominance (Section 4) came into constraining on 20th May 2009. The provisions which identified with ‘Regulation of Combinations’ (sections 5 and 6) came into force on 1st June 2011. The Commission contained the Chairperson and six members [5]. On 31st March 2016, it has considered more than seven hundred cases identified with section 3 and section 4 i.e. anti-competitive agreements or abuse of dominance.

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Power of Suo-moto cognizance

The competition commission of India enjoys various powers under the exhibition. The Competition Commission of India (CCI) is engaged to take cognizance of such anti-competitive impacts in the Indian market. As a quasi-judicial body, the CCI is bound by standards of rule of law in giving decisions and the doctrine of precedent. According to the Competition Act the Commission is appropriately enabled to get reports and testimonial by the method for evidence and in this way is appropriate to arbitrate debate before it on the basis of material cited by parties and by utilization of the standards of evidentiary proof under the Evidence Act. The CCI not just hears and explores cases in view of the information received by it, however, it likewise makes suo moto action wherever it finds that a prima facie violation of Competition Act has been conferred.

In 2011, the Commission had taken suo-moto cognizance of the detailed control of the offers by makers of LPG chambers for providing barrels to the Indian Oil Corporation. A punishment of more than Rs.187 crores was forced on parties to the bid-rigging.

A case was taken up by the Commission suo moto, in view of the information received from the Superintendent of Police, Anti-Corruption HQ, Central Bureau of Investigation (CBI), New Delhi vide letter dated 01.04.2014 wherein it was expressed that the CBI, amid an investigation into certainly affirmed wrongdoing by an open hireling, had discovered that three firms i.e., M/s Pyramid Electronics, Parwanoo (hereinafter ‘Operation 1’), M/s R Kanwar Electricals, Noida (hereinafter ‘Operation 2’) and M/s Western Electric and Trading Company, Delhi (hereinafter ‘Operation 3’) (therefore OP 1, OP 2 and OP 3 alluded to as ‘Operations’) had cartelised in regard of the tenders skimmed by the Indian Railways and the Bharat Earth Movers Limited (hereinafter ‘BEML’) for the supply of Brushless DC fans (hereinafter ‘BLDC fans’) and other electrical things.

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The Commission guides them to desist it from enjoying such anticompetitive direct in future. The Commission additionally guides the parties to deposit the penalty amount within 60 days of receipt of the order.

Conclusion

The Competition Commission of India is empowered to act suo-moto in light of a legitimate concern for the general public. It is specified in the act itself that the CCI can follow up on its own cognizance and approached to enquire into anti-competitive practices. CCI must take actions and force heavy penalty and punishments in the case of bid rigging, collusive bidding in government tenders limit the adverse consequences for its purchases and public spending. Many notices have been sent by CCI in the Petroleum sector, Agriculture sector etc. taking cognizance suo-moto. The provisions relating to collective bargaining and its distinction from the anti-competitive agreements should be clearly elaborated in the Competition Act. The main duty of the commission is to eliminate any adverse practices which are detrimental to the interest of the consumers.

[1] Page-4, Speech of shri. Manmohan Singh, Minister of Finance, Budget 1991-92, available at

http://indiabudget.nic.in/bspeech/bs199192.pdf

[2] For more information, see http://judis.nic.in/supremecourt/CaseRes1.aspx

[3] Competition (Amendment) Act 2007, 39 0f 2007

[4] Competition (Amendment) Act 2009, 39 of 2009

[5] For the present composition of the Commission, please visit http://www.cci.gov.in/commission