[This is a guest post by Rajat Maloo.]
It has been previously argued on this forum (here and here) that the Competition Commission of India (CCI), in its current form is unconstitutional. The argument hinged on the contention that the CCI is a body with majorly judicial characteristics and functions apart from a few advisory and administrative functions. Thus, the composition and selection of members of the CCI, which is executive-dominant is unconstitutional as it violates the principle of separation of powers. Based on this, the previous posts criticise the Delhi HC’s judgement by arguing that CCI is a judicial body and it should not be characterised as an administrative body. In this piece, I argue that the CCI is in fact a regulatory body possessing a wide range of powers to facilitate its functioning, including inquisitorial, investigatory, administrative, advisory and judicial powers. I contend that first, the CCI is not a judicial body as it does not adjudicate disputes between parties; and second, judicial powers, if any, of the CCI are limited. While making my own case, I wish to respond to some of the arguments made in the previous posts, albeit, I do not analyse/support the Delhi HC’s judgement in detail.
The CCI is not a Judicial Body
The question of independence of judiciary and separation of powers in judicial tribunals is not a new one. The Supreme Court of India (SC) through numerous decisions over the years, including the recent decision in Rojer Mathew, has established that any tribunal performing judicial functions by replacing a court of law must be judicially dominant. This means that majority of members as well as majority of the selection committee of such members must be from the judiciary to ensure independence of judiciary and separation of powers. However, regulatory agencies, not just in India but also in other jurisdictions such as the US, are placed on a different footing as compared with tribunals performing judicial functions. This is because the powers and functions possessed by regulatory agencies are quite different from a judicial or quasi-judicial tribunal. In this part, I will respond to the argument that CCI is judicial in nature.
In brief, the CCI performs four major functions under the Competition Act, 2002–
- Ex-post regulation of anti-competitive agreements – Section 3
- Ex-post regulation of abuse of dominant position – Section 4
- Ex-ante regulation of combinations – Sections 5 and 6
- Competition advocacy and advisory functions – Section 49
Now, it is clear that powers under Section 49 are not judicial in nature. Hence, I shall focus on the CCI’s functions under Sections 3, 4, 5 and 6 of the Act.
Relying on the Cooper v. Wilson test, a judicial decision, in the very first place, presupposes a dispute between parties. However, the CCI’s functions do not include resolving or adjudicating disputes between parties. Under Sections 3 and 4, the CCI’s function is majorly investigatory and then punitive if there is a finding of contravention (Sections 27). Further, the ‘informant’ under Section 19 of the Act is not a party to the dispute before the CCI. The informant is merely a source of information for the CCI, upon which it may or may not conduct or order an enquiry. In fact, under Section 19 of the Act, the CCI can suo motu take up an enquiry or may initiate an enquiry on information provided by the Central or the State Governments. Any person or Government, merely by informing the CCI does not become a party to the dispute. This is also evident from the fact that any decision of the CCI is not in favour of or against any party as such. The CCI may go much beyond the information provided by the informant while inquiring into a matter and possesses wide inquisitorial powers. Thus, the very first rung of the test is not met as there is no adjudication of disputes between parties.
Moreover, any disputing party has a right to approach a Court of law or tribunal for adjudication of the dispute – be it of civil or criminal nature. The Court or tribunal is then expected to listen to both the parties, frame issues, assess evidence and pronounce a decision. A Court cannot in the very first hearing simply refuse to adjudicate upon a dispute merely on the basis that the petitioner is not able to make a prima facie case. However, the CCI has the power to not enquire into an information brought to it by an informant.
In fact, the legislature has very consciously not provided the CCI the power to adjudicate disputes – one such instance is awarding compensation to any informant. Such a matter entails or presupposes a dispute between two parties which is very well left for the Appellate Tribunal (judicially-dominant) to determine under Section 53N of the Act. Thus, the CCI does not adjudicate disputes between parties and the legislature has not required the CCI to do so.
In the alternative, even on the assumption that the CCI adjudicates disputes, the Cooper Test also requires that the parties to a dispute must be given a chance to put forth their case. However, according to the SC, an ‘informant’ is not even entitled to a hearing in case the CCI chooses not to go ahead with the enquiry (CCI v SAIL). This means that the CCI can reject the information provided by the informant for enquiry, without even giving the informant an opportunity of being heard. Thus, the legislature as well as the judiciary has not envisaged the CCI as a body to resolve or adjudicate disputes between parties.
Admittedly, the CCI has been given the powers under Section 27 of the Act to impose penalties on persons or enterprises found to be in violation of Sections 3 and 4. However, mere imposition of monetary penalties, based on an enquiry, does not suffice to characterise the body as a judicial body. Purely executive and other regulatory bodies such as the SEBI etc., have the power to impose penalties, which do not make them a judicial body. Moreover, any penalty imposed by the CCI is appealable to the Appellate Tribunal under Section 53A of the Act. Thus, mere power to impose penalties does not give the CCI a completely judicial characteristic.
Now, with regard to ex-ante combination review functions performed by the CCI – once again, it does not entail adjudication of a dispute. At least some form of adjudication of dispute is the very essential requirement for a body to be characterised as a judicial body. However, under Sections 5 and 6, the CCI only preforms regulatory functions to approve or reject potential combinations. In regulating combinations, there is no dispute as such which the CCI has to determine or no parties which come before the CCI for adjudication of a dispute. Merely by giving parties a notice or providing the combining parties an opportunity of hearing does not mean that the CCI is adjudicating a dispute.
Thus, the CCI does not adjudicate disputes and if at all, performs limited number of judicial functions which cannot suffice to characterise it as a completely judicial body.
Limited Judicial Nature
I will now argue that just because the CCI has the power to grant interim orders or other such orders provide it with only certain limited judicial powers and yet again, it does not mean that the CCI is majorly performing judicial functions. Essentially, the judicial powers of the CCI are quite limited and are not enough to give it the authority to function like a full-fledged judicial or quasi-judicial tribunal. For this, the whole functioning of the CCI will have to be examined. The previous post effectively summarises the procedure of enquiry conducted by the CCI regarding the Sections 3 and 4 matters:-
“…the procedure adopted by the CCI in conducting the inquiry under Section 19 is to be examined. The procedure is provided for under Section 26 of the Act. According to the said provision, upon receipt of information or reference, the CCI is required to form an opinion as to the existence of a prima facie case of contravention of the provisions of the Act. If it finds a prima facie case of contravention of the Act, it is required to direct the Director General to investigate the matter. If it finds no prima facie case of contravention of the provisions of the Act from the information provided, it is required to pass an order to that effect and close the matter. It is also required to send a copy of the order to the parties concerned.”
This initial procedure, not just the form but also the substance, is ma inquisitorial rather than judicial. As soon as the CCI receives information, it may order the Director General (DG) to enquire. On the basis of the findings of the enquiry, the CCI gives the Opposite Parties as well as the informant a chance to submit their arguments. However, it is to be noted that the case against an Opposite Party is not made by the informant (as should happen in any adversarial judicial proceeding which entails determination of a dispute) but through the enquiry conducted by the DG. This takes away the judicial nature of a court or a tribunal and indicates that the CCI is more of an inquisitorial body.
The CCI is also provided with a set of factors, on the analysis of which, it is required to come to its decision. Sections 19 and 20 use the word ‘shall’ before laying down the limited factors to determine violations under Section 3 or 4 or factors to regulate combinations. This indicates that the CCI is mandated to give due regard to these factors and must function within them. Such limitation on the scope of the CCI clearly show that it is expected to act as a regulatory body with only a few judicial powers.
In this regard, it is also notable that the CCI is established as a body corporate as per Section 7(2) of the Act. Unlike any Court of law or any judicial tribunal (such as the NCLT, for example), the CCI can be made a party to an appeal. The CCI will also have to defend its own decision on appeal before the Appellate Tribunal, any High Court or the SC. This position of law has also been crystallised by SC in CCI v SAIL wherein it was held that the CCI must be a necessary or proper party in appeals. This is vastly different from any Court of law, such as a Civil Court of first instance or a Criminal Court, or any tribunal. Although, judicial bodies may get their authority from statutes, they cannot be made a party or be required to defend their own decisions upon appeal. This shows that the legislature while establishing the CCI through the Act, has been very clear about the limited extent of judicial powers which the CCI can exercise. Having such limited powers, it cannot be said that the CCI is replacing a traditional court in any manner.
Hence, although it was argued by Dev that the CCI under Sections 27, 28 and 31 possesses enforcement powers, the overall functioning of the CCI is largely different from any judicial or quasi-judicial body.
Now, it may be argued that Section 61 of the Act excludes jurisdictions of civil courts and hence, the CCI replaces a Civil Court – which requires the dominance of judiciary in the selection process. However, I submit that this does not necessitate the CCI to be judicially-dominant body because although Section 61 requires that matters relating to antitrust and competition must be submitted before the CCI, but as argued above, the CCI does not replicate a Civil Court in terms of its powers and functions.
Hence, I submit that the CCI does not adjudicate disputes and has very limited judicial powers which are vastly different from a traditional Civil Court or any judicial or quasi-judicial tribunal for that matter. In such a case, the CCI in its current form is not unconstitutional even if its selection committee is not judiciary-dominant as it is not replacing any Civil Court as such. In any case, the CCI’s decisions which affect any person or enterprise adversely are appealable to a judicial body – the Appellate Tribunal.