India: Jurisdiction Of The CCI: Navigating Through Muddy Waters

The jurisdiction of the Competition Commission of India (CCI) has been widely debated in the recent past. The scope of the CCI's powers is under challenge for varying reasons in several matters. A few matters that have regularly made headlines are DLF1, Micromax/Ericsson2, IOCL3, ICAI4, DDA5 and JCB/Bull Machines6. Most of these cases have been either been completely or partially stayed by high courts as the verdict on the CCI's jurisdiction is yet to be finally decided.

The foundation of most jurisdictional challenges seems to fundamentally be based on the CCI usurping the jurisdiction of another regulator or court. The Micromax/Ericsson case (which appears to be the closest to reaching closure before the Delhi High Court) relates to Ericsson allegedly demanding unfair, discriminatory and exorbitant royalty for licensing its standard essential patents (of which it is the sole licensor) regarding GSM technology. The main argument adopted by Ericsson is the encroachment by the CCI upon the jurisdiction of the Intellectual Property Authority Board as well as the Delhi High Court. Ericsson has argued that the Delhi High Court was already hearing an infringement suit against Micromax in relation to the same standard essential patents and the CCI's exercise of jurisdiction could lead to conflicting decisions on the same issue.

Similar to this is the case of JCB/Bull Machines where the issue is based on a certain civil suit which was filed by JCB, a construction equipment manufacturer, against Bull Machines for infringement of its intellectual property as a premise used by JCB to foreclose the market for Bull Machines. Despite the pendency of these proceedings before the High Court, Bull proceeded against JCB before the CCI on the ground that JCB denied market access to Bull Machines by way of obtaining an injunction from the High Court; and the CCI took cognizance of this matter. JCB moved the High Court against the CCI as the institution of this investigation would have inter-alia translated into the CCI pre-deciding the outcome of the civil suit even though the same is pending disposal before the High Court.

Another closely watched case has been the dispute between DLF, a player in the realty sector and allottees of apartments in a few projects in Gurgaon. The main grievance of the allottees has been the increase in number of floors which has led to an increase in the super area and the consequent decrease in the common area.7 Basis this and amongst others, the one-sidedness of the clause permitting the developer to increase the super area has been agitated before the CCI and later the Competition Appellate Tribunal (COMPAT). The matter is now pending before the Supreme Court of India. DLF has strongly argued that the CCI has closed a multitude of matters that have been filed before it on the ground that such disputes are contractual disputes and the CCI is not the correct forum to bring these disputes before.8 It has gone on to state that the appropriate forum for disputes of such nature is the State and the National Consumer Redressal Forums as there are no competition issues involved. However, when similar grievances were raised by the allottees against DLF, the CCI took action. There appears to be some inconsistency in the approach adopted by the CCI in respect of its jurisdiction as different yardsticks are being used for different players in the same sector.9 It is seen that the scope of CCI's jurisdiction overlaps with that of the consumer dispute forum as there are numerous cases that have been decided by the NCDRC on the same issues.10 More so, the CCI in a recent order relating to the real estate sector11 has itself held that consumers have adequate curative remedy available to them in the form of consumer forums and in addition, it is the potential real estate regulatory authority that would look into the broader issues and concerns in this market.

Similarly, the CCI directed its investigative arm, the Director General (DG) to look into the practices of the Delhi Development Authority. Meanwhile, the allottee who had approached the CCI, filed a writ before the Delhi High Court seeking possession of the flat and interest on the amounts paid by him.12 The DDA approached the Delhi High Court praying that the CCI ought to first decide the question of jurisdiction prior to proceeding with the merits of the case, which was acceded to by the High Court.13 This comes as a pleasant and welcome surprise as the High Court has previously shown resistance in passing such an order.

Last year, the CCI also instituted a case into certain practices of the Institute of Chartered Accountants of India (ICAI), a statutory body established under the Chartered Accountants Act, 1949, which regulates the profession of chartered accountants in India. The ICAI filed a writ against the order of the CCI stating that it cannot be subject to the jurisdiction of the CCI when it is discharging its functions under the Act as it does not carry on any trade, business or commerce. The Court observed that since a question of the CCI's jurisdiction is involved, the investigation ought to be stayed.

To add to this list, the CCI is before the Delhi High Court in respect of the proceedings initiated by it (filed by Reliance Industries14) against IOCL, BPCL and HPCL for violations of both Sections 3 and 4 of the Act15 in respect of supply of aviation turbine fuel to Air India. The issue primarily raised by the parties relates to the CCI not having jurisdiction in the matter as the jurisdiction clearly and unequivocally rests with the Petroleum and Natural Gas Regulatory Board – and the stay on the proceedings before the CCI is still in operation.

The common thread that runs through the above cases is the CCI exercising its power in respect of matters which may not be subject to its jurisdiction at the very outset. The list above demonstrates very patently that the CCI itself is grappling with the overlap between its jurisdiction and that of other regulators.

For instance, the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act) states that one of the functions of the Board is to "protect the interest of the consumers by fostering fair trade and competition amongst the entities"16 Moreover, even the preamble states the PNGRB Act is to inter-alia promote competitive markets and for matters connected therewith or incidental thereto. Similarly, the Controller of Patents is required to look into the market effects while setting the terms and conditions of compulsory license which translates to determining the effect on competition.17

This critical issue which is a starting point in most cases is creating a vacuum as investigations are being stayed for several months (and sometimes years). The parties have to face the rigor of multiple litigations before the CCI is directed to decide the jurisdictional issue at the first instance prior to proceeding into the merits of a matter. For instance, even though the case was filed against the DDA in the beginning of 2013, it is only now that the CCI is proceeding to decide whether it has jurisdiction. In the DLF case, jurisdiction has become a focal point as the decisions of the CCI and the COMPAT would have no value if the Apex Court decides that the consumer forum was the appropriate authority for the nature of the grievance raised by the consumers.

There is no thumb rule as there are no clear exceptions specifying the nature of cases that can be taken cognizance of by the CCI. However, this overlap and exercise of authority by two regulators in respect of the same issue, would not only delay justice but act as a barrier to justice. A way to mitigate this to a certain extent may be to call upon the parties prior to passing a prima facie order and deciding the question jurisdiction at the very threshold. All eyes are on the Ericsson case to shed some light on this issue and provide the much needed guidance.

Kanika Chaudhary Nayar, Managing Associate

Kanika Chaudhary Nayar is a Managing Associate in the Competition Law Practice Group at the Firm. She received her master's degree in 2009 from the prestigious Kings College London with merit in International Commercial Laws along with EC Competition Law.

She deals with intricate and complicated competition issues and assists in rendering strategic solutions in terms of the Indian Competition Law including the use of economic theory to put forth arguments before the Competition Commission of India and the Competition Appellate Tribunal, in addition to making merger filings before the Competition Commission of India. Kanika has acted for clients engaged in various fields, including, fast moving consumer goods, steel, cement, glass, tyre, broadcasting, real estate and film production and distribution.

Kanika has also been actively involved in developing competition compliance/training programmes for various multinational and Indian corporations and has specific experience in preparing clients for 'dawn raids'.

She is also an Associate Editor for the Manupatra Competition Law Reports, a bi-monthly journal featuring articles, new developments worldwide, national and international news and notes on international competition law/antitrust cases and has various publications to her credit. She contributes a section on 'International Developments' in the Manupatra Competition Law Reports in each issue. She also contributes significant developments on Competition Law to India Law Journal.

Footnotes

1. DLF Ltd. v. Competition Commission of India & Ors., Civil Appeal No. 6328 of 2014 and other connected appeals (arising from Case No. 19 of 2010 before the CCI and attendant Appeal No. 20 of 2011 before the COMPAT).

2. Ericsson v. Competition Commission of India, W.P.(C) 464/2014 and other connected matters (arising from Case No. 50 of 2013 and 76 of 2013).

3. WP (C) No. 8211 of 2011 (arising out of Case No. 26 of 2010).

4. Institute of Chartered Accountants of India v. Competition Commission of India, W.P.(C) 2815/2014 (arising from Case No. 93 of 2013).

5. Delhi Development Authority v. Competition Commission of India, W.P.(C) 6892/2014 (arising from Case No. 06 of 2013).

6. JCB v. Competition Commission of India & Ors., W.P.(C) 2244/2014 (arising from Case No. 105 of 2013).

7. Super area commonly means the apartment built up area along with the proportionate share in common area. Also, Common area commonly means the area which is available for use by more than one person for eg. park, swimming pool.

8. For instance, Subhash Yadav v. Force Motor Ltd. & Ors, Order dated October 05, 2012, Case No. 32 of 2012.

9. Please see Mr. George Kuruvilla v. Hiranandani Palace Gardens Pvt. Ltd., Order dated February 09, 2012, Case No. 67 of 2011; M/s Abir Infrastructure Private Limited v. M/s Emaar MGF Land Limited, Order dated November 02, 2011, Case No. 61 of 2011; Eastman Cast & Forge Ltd. v. Exact Developers & Promoters Pvt. Ltd. and Vipul Ltd., Order dated January 12, 2012, Case No. 77 of 2011; Ravi Suri v. M/s Today Homes and Infrastructure Pvt. Ltd., Order dated January 12, 2012, Case No. 80 of 2011; Shri Kaushal K. Rana v. DLF Commercial Complexes Ltd., Order dated December 13, 2012, Case No. 50 of 2012; Praveen Kumar Sodhi v. Omaxe Limited and Others, Order dated February 21, 2012, Case No. 83 of 2011.

10. Please see DLF v. Kamal Sood, (First  Appeal  No. 557 of 2003); Lalit Kumar Gupta & Ors. v. DLF Universal Ltd. (First Appeal No. 88 of 1999 and 345 of 2001); Emaar MGF Land Ltd. v. Karnail Singh, I.A. No. 3876 of 2014; Sanjay Goyal v. Unitech Ltd. (Consumer Complaint No. 344 of 2012).

11. Jyoti Swaroop Arora v. M/s Tulip Infratech Limited & Ors., Order dated February 03, 2015, Case No. 59 of 2011 at para 357.

12. http://zeenews.india.com/news/delhi/2010-housing-scheme-hc-seeks-cci-response-on-ddas-plea_1483144.html (last accessed on 29.03.2015)

13. Delhi Development Authority & Ors. v. Competition Commission of India & Anr., LPA No. 154/2015, dated March 17, 2015.

14. http://articles.economictimes.indiatimes.com/2010-07-15/news/28441651_1_ril-moves-cci-aviation-companies-atf (last accessed on 06.04.2015) – WP (C.) No. 8211 of 2010.

15. Section 3 of the Act deals with anti-competitive agreements and Section 4 deals with abuse of dominant position.

16. Section 11(a) of The Petroleum and Natural Gas Regulatory Board Act, 2006.

17. Please see Section 90 (1) (ix) of the Patents Act, 1970.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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