Delhi High
Court has recently, in South Asia LGP Company Private Limited v. Competition
Commission of India & Ors, held that the affected party does not
have a right of hearing before the Competition Commission of India
(“Commission”) can order a further investigation under Section 26(7) of the
Competition Act, 2002 (“Competition Act”).
In the
present case, a complaint was made against the petitioner, South Asia LPG
Company Private Ltd, by the respondent no.3, East India Petroleum Private Limited.
It was alleged in the complaint that the petitioner was misusing its dominant position
in the terminaling services at Vishakhapatnam Port. The relevant market under
Section 2(r) of the Competition Act, as identified by the Director General, was
‘upstream and downstream terminaling services at the Vishakhapatnam Port’.
The Commission,
under Section 19 of the Competition Act, may inquiry to check whether there has
a contravention of the provisions contained in subsection (1) of Section 3 or subsection
(1) of Section 4. The said inquiry can be initiated by the Commission either suo moto or on a reference by the
government/statutory authority or on receipt of information from a person,
i.e., complainant. If Commission is of the prima
facie opinion that there is an alleged contravention of the provisions, it
can then direct the Director General under Section 26(1) to cause an
investigation into the matter.[1]In case the Director General comes to the conclusion that no contravention of the impugned
provisions have been made, the complainant is provided with an opportunity to
rebut such findings of the Director General under Competition Act.
In the
present case, the Director General came to the conclusion that the
petitioner has not contravened the impugned provisions. Following this, the
respondent no.3, the complainant/informant, submitted an application for cross-examining
the witnesses whose evidence was recorded by the Director General. The Commission
granted the permission to the complainant for cross-examining the concerned
witnesses and referred the matter back to Director General under Section 26(7).
Not satisfied with returning of the matter back to Director General,
Petitioner filed the present writ petition before the Delhi High Court. It was the contention of the petitioner
that an opportunity should have been provided to him before the matter was
referred back to Director General. This, according to the petitioner, was
violative of the principle of natural justice. It was further contended
that since Section 26(5) is required to invite suggestions or objections if
Director General does not find any contravention, it means suggestions/objections
not only from the informant/complainant but also from the person against who
complaint has been made. To support this, petitioner relied on the definition of
the term “party” under Regulation 2(i) of Competition Commission of India (General)
Regulations, 2009 [“Competition Rules”] which includes an enterprise against
whom any enquiry or proceeding is instituted.
Rejecting
the contention of the petitioner, it was first held by the High Court that
before the Commission considers the report of the Director General under
Section 26(5), it is not necessary to provide a notice to the person against
whom reference has been made. Had there been any requirement, the word ‘and’ and not the word ‘or’ would
have been used between the expression ‘Statutory Authority’ or ‘the parties’. The court further held that ‘The definition of the
expression ‘party’ given in the Competition Rules cannot be used for the
purpose of interpreting sub-section (5) of Section 26 of the Competition Act.
Summing up its reasoning, Court came to the following conclusion:
“If
the law does not mandate issue of notice
to the affected party before directing
investigation to be made by the Director General, there would be
no reason to
imply such a notice before
directing further investigation
in exercise of the
powers conferred upon the
Commission under sub section (7) of the said Section. As far as the
affected party is concerned, there
is no difference
between direction for
investigation or direction for
further investigation, since any further investigation by the Director General
would only be in continuation
of the investigation carried out earlier by it.”
For downloading the
text of the judgment, click here
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