Monday, June 17, 2013

Competition Act: Status of Director General’s Finding

[The following post is contributed by Akanksha Mehta, a student of Dr. R.M.L. National Law University, Lucknow, who has an interest in competition law]

One of the major loopholes in the present Competition Act, 2002 seems to have found some judicial clarification through COMPAT’s (Competition Appellate Tribunal) order dated 18th April, 2013.

Section 26 of the Act includes all the orders that the Competition Commission of India (CCI) can pass to carry out the procedure for inquiry under Section 19 of the Act. While this Section explicitly gives CCI the power to direct the Director General (DG) to investigate matters, to close the matter if the DG finds no contravention and to order for a further investigation if the DG finds a contravention in his report, it does not explicitly give CCI the power to disagree with the DG and close the matter even when the DG has found a contravention. Though there have been various cases till now where the CCI has disagreed with the DG and closed the matter therewith but there has also been a dissenting opinion by Member R. Prasad in all these cases stating the inability of the CCI to pass such orders as there is no Section or provision giving CCI such powers. This lacuna in the Act has given rise to ambiguities relating to the powers of the CCI and nature of the DG’s report. Does it remain binding on the CCI? Or is it merely recommendatory in nature?

COMPAT’s latest order in the case of M/S Gulf Oil Corp. Ltd. v. CCI & others has brought some clarity to this vagueness. While determining the question of whether it is mandatory for CCI to pass an order under Section 26(7) for further inquiry after the DG has found a contravention in his report, it stated-

The report of the DG is only recommendatory in nature and it is not binding on CCI in any manner. It is only if the CCI formulates an opinion on the basis of the report that the DG has either not done full investigation or that the further investigation is necessary then it proceeds under Section 26(7) and not otherwise. Therefore, it is not in every case where the CCI disagrees with the report of the DG, it has to proceed under Sec 26(7).” 

Though this Judgment has brought certainty and clarity in determining the nature of the DG’s report, yet it does not provide an answer to the most fundamental questions of CCI’s power to close the matter while disagreeing with the DG’s report which has found contravention. This ambiguity can be resolved by either a legislative amendment in the Act or by a purposive interpretation of Section 26 by the Judiciary.

- Akanksha Mehta

1 comment:

Manpreet Singh Sood said...

Manpreet Singh Sood • The DG is appointed under Section 16 of the Act which is reproduced below

Appointment of Director General, etc.

16. The Central Government may, by notification, appoint a Director General for
the purposes of assisting the Commission in conducting inquiry into
contravention of any of the provisions of this Act and for performing such other
functions as are, or may be, provided by or under this Act.

The DG is appointed only for the "purposes of assisting the Commission in conducting inquiry into contravention"

The intention of the legislature has to be read here it intended the DG to be only the administrative arm of CCI to assist in investigation and not as to bind CCI about its finding.

If the legislature wanted to provide a situation under debate the same would have been provided in the Act in simple words.

Moreover Section 26 is a procedural one and the appointment, working and reporting of DG etc is contained in Section 16 which is the substantial section and DG is appointed for assisting CCI which includes powers of CCI to close case even if DG finds contravention as the powers conferred by the act have to exercised by the Commission and not by a report of DG.

Rule of construction is that each and every word of the act has to be given a plain and simple meaning of the words used and another caution is not read something into provisions which has not been provided for.The commission is bound by oath of secrecy as provide under Competition Commission of India (Oath of Office and of Secrecy for Chairperson and other members) Rules, 2003 and DG is just an appointee of the Central Government.

By no stretch of imagination a reporting officer can bind the constitutional functionaries that is the Commission and members.