Competition Commission of India (CCI): Duties, Powers and Functions

•  Eliminate practices that harm competition in Indian markets.

• Promote and support healthy competition within India’s markets.

• Protect the interests of consumers.

• Ensure freedom of trade for businesses operating in India’s markets.

• Collaborate with foreign competition agencies or government departments in India, post approval from the Indian central government.

The CCI was tasked with eliminating practices having an adverse effect on competition, promoting and sustaining competition, protecting the interests of consumers, and ensuring freedom of trade. Excel Crop Care Ltd., the appellant, challenged the decision of the CCI regarding alleged cartelization in the market for Aluminum Phosphate Tablets, alleging violation of Section 3(3)(a) and Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002.

The Hon’ble Supreme Court of India in its judgment emphasized the duty of the CCI to ensure competition in the market and protect consumer interests. The Court upheld the powers of the CCI and its role in promoting competition and curbing anti-competitive practices.

• Investigations: The CCI can probe suspected violations of anti-competitive agreements and abuse of dominance. Triggers include information from individuals, businesses, or the government.

• Agreements: When evaluating agreements, the CCI considers factors like barriers to new entrants and potential benefits to consumers.

• Dominant Position: The CCI examines factors like market share and barriers to entry when assessing dominance.

• Market Definition: The CCI defines the relevant market (geographic and product) for its investigations.

The Competition Commission of India (CCI) investigated Steel Authority of India (SAIL) and other steel companies after accusations of anti-competitive behavior. These allegations, including collusive bidding, price fixing, and market division, violated Section 3(1) of the Competition Act (2002).

Leveraging legal provisions (Section 19(1)(a)), the CCI initiated the probe based on information from various sources, such as consumer and industry complaints. To assess the competition impact and potential dominance of SAIL and the others, the CCI analyzed factors outlined in Sections 19(3) and (4) of the Act. This analysis considered market share, company size and resources, barriers to entry, consumer dependence, and even social obligations. Additionally, the CCI defined the relevant market area and product category for the investigation using criteria from Sections 19(5), (6), and (7) of the Act.

Ultimately, based on its investigation, the CCI found SAIL and the other companies guilty of anti-competitive conduct and imposed penalties on them.

• Empowerment for Proactive Inquiries: Section 20 grants CCI authority to proactively investigate M&A transactions, allowing for early detection of potential anti-competitive effects in India. Inquiries must begin within a year of M&A completion. 

• Obligatory Examination for Notified Transactions: CCI is mandated to scrutinize M&A deals upon receiving formal notices from involved parties, as per Section 6(2) of the Act. 

• Adaptive Threshold Adjustments: Acknowledging economic shifts, the Act permits the government, in consultation with CCI, to adjust M&A filing thresholds periodically, considering factors like Wholesale Price Index or exchange rate fluctuations. 

• Multi-factorial Competitive Landscape Assessment: CCI conducts a comprehensive analysis of M&A impacts on competition, considering factors such as import competition, entry barriers, market concentration, buyer power, pricing dynamics, substitutes availability, market shares, competitor elimination risks, vertical integration, failing businesses, innovation prospects, and balancing competition with economic development goals.

The CCI initiated an inquiry into the combination of Thomas Cook (India) Limited and Sterling Holiday Resorts (India) Limited to determine whether it had caused or was likely to cause an appreciable adverse effect on competition in India, as per the provisions of Section 20(1) of the Act.

The CCI examined various factors listed under Section 20(4) of the Act, including the level of combination in the market, market share of the parties involved, likelihood of the combination resulting in increased prices or profit margins, and the impact on competition in relevant markets.

The case involved a detailed analysis of the market dynamics, including barriers to entry, availability of substitutes, and the competitive landscape post-combination. The CCI also considered the potential impact on consumers and whether the benefits of the combination outweighed any adverse effects on competition.

Ultimately, the CCI’s inquiry in this case illustrates the application of Section 20 of the Competition Act, emphasizing the Commission’s role in ensuring competitive markets and preventing anti-competitive behavior through thorough examination of mergers, acquisitions, and combinations.

• If a party involved in a proceeding before a statutory authority believes the authority’s decision might violate the Competition Act, they can request the authority to seek the CCI’s opinion.

• The statutory authority can also raise this issue on its own (suo-motu).

• Upon receiving a reference, the CCI must provide its opinion within 60 days.

• The statutory authority considers the CCI’s opinion and then issues its final decision with reasons.

CCI Seeks Opinion from Statutory Authority (Section 21A): 

• This is the opposite scenario. If a party in a CCI proceeding believes the CCI’s decision might violate a provision the Act assigns to a statutory authority, they can request a referral for the authority’s opinion.

• The CCI can also raise this concern itself (suo motu).

• The statutory authority provides its opinion within 60 days of receiving the reference.

• The CCI considers the opinion and then issues its final decision with reasons.

• This mechanism ensures both the CCI and statutory authorities work together to ensure competition law is applied effectively, even when interpretations differ.

Suppose during a merger approval process, one of the parties involved feels that the decision by the Competition Commission might not align with the rules set in the Competition Act. They can raise this concern, or even the Competition Commission can raise it on its own if it spots potential issues. The Commission would then review the matter and provide its opinion. Finally, the statutory authority (like the Competition Commission) would consider this opinion before making its final decision on whether to approve the merger or not. 

Illustration for Section 21A: 

Let’s say the CCI is investigating a case of alleged anti-competitive behavior by a dominant firm. During this investigation, the firm argues that the CCI’s decision might not be in line with the provisions of the Competition Act. In such a scenario, the CCI could refer the matter to the relevant statutory authority for their opinion. After receiving the authority’s opinion, the CCI would consider it before making its final decision on the case.

Section 22 Meetings of Commission

•  Meetings and Procedures: The Commission will convene meetings as necessary, adhering to specific rules and procedures outlined in regulations.
• Chairperson’s Absence: If the Chairperson is unable to attend a meeting for any reason, the most senior Member present will lead the meeting.
• Decision Making: Decisions within the Commission are made by a majority vote of the Members present and voting. In case of a tie, the Chairperson (or the presiding Member) has a second or casting vote to break the deadlock.
• Quorum Requirement: At least three Members must be present to constitute a valid meeting.

Section 24

Section 25

Omitted by the Competition (Amendment) Act, 2007

Omitted by the Competition (Amendment) Act, 2007~

• Triggering an Investigation
  • References from the Central Government, State Government, or statutory authorities.
  • Information received under Section 19 (covers complaints and information from various sources).
  • The CCI’s own knowledge or information.

• Prima Facie Assessment
  • Upon receiving a trigger for investigation, the CCI assesses if there’s a “prima facie” case, meaning enough initial evidence to proceed.
  • If the evidence seems repetitive or already addressed, the CCI might combine it with a previous case.

• Decisions After Assessment
  • If a prima facie case exists, the CCI directs the Director General (DG) to investigate.
  • If no prima facie case is found, the CCI closes the matter and informs relevant parties.

• Director General’s Report
  • The DG investigates and submits a report with findings within a specified time-frame.
  • The CCI sends a copy of the report to concerned parties, except when the investigation originated from a government or statutory authority.

• Reviewing the DG’s Report
  • If the DG report recommends no violation, the CCI seeks objections or suggestions from relevant parties.
  • If the CCI agrees with the DG’s recommendation, the matter is closed, and relevant parties are informed.
  • If objections arise or the CCI needs further investigation, they can:
    • Order further investigation by the DG.
    • Conduct their own inquiry.
    • Request additional information.

• Investigation of Contravention
  • If the DG report suggests a violation and the CCI needs further inquiry, they will investigate according to the Act’s provisions.

position

• The Commission may pass orders after inquiry into agreements or abuse of dominant position in section 3 or 4 of the Act

• Orders may include discontinuing or modifying agreements and imposing penalties up to 10% of turnover for parties involved in abuse.

• Commission may also impose penalties on producers, sellers, distributors, traders, or service providers involved in cartels.

• Other orders may also be passed, including modification of agreements and payment of costs.

• If a Commission finds that an enterprise is a member of a group responsible for a contravention, other members of the group may also face orders.

• Costs may be passed if costs are paid or directions are issued by the Commission.

CCI v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television Industry & Ors. (2017).

The CCI conducted an inquiry into certain agreements among various entities in the West Bengal film and television industry. The CCI found that these agreements were in contravention of Section 3 of the Competition Act, which deals with anti-competitive agreements.

Upon finding the agreements to be in violation of the Act, the CCI passed orders under Section 27. The orders included directing the parties involved to discontinue and not reenter into such agreements, imposing penalties on the parties, and directing modifications to the agreements to comply with the Act.

• The Indian Competition Commission of India can order the structural divestiture of an undertaking with a dominant market position to prevent anti-competitive practices and promote a fair competitive landscape.

• Divestiture orders can include restructuring measures such as property rights transfer, contractual adjustments, share and securities issuance, formation, dissolution, or internal restructuring of the undertaking, and any additional provisions deemed essential.

• The section supersedes any contradictory provisions in existing laws and contracts, and officers who lose their positions due to restructuring are not entitled to claim compensation.

The Supreme Court dealt with the power of the CCI to issue directions for the division of an enterprise enjoying a dominant position, as provided under Section 28 of the Competition Act. The case involved allegations of abuse of dominant position against Excel Crop Care Ltd., which was accused of engaging in anti-competitive practices in the market for the manufacture and sale of aluminum phosphate tablets. The CCI had directed Excel Crop Care Ltd. to divest its business divisions to ensure competition in the relevant market.

The Apex court affirmed the powers of the CCI under Section 28 to order the division of an enterprise to prevent abuse of dominant position. The Court emphasized the importance of competition law in promoting fair competition and protecting consumer interests. It held that the CCI has the authority to issue such directions if it finds that an enterprise is abusing its dominant position in the market to the detriment of competition.

• CCI investigates combinations: If they believe a combination (merger, acquisition) might hurt competition in India, they can investigate it. 

• Parties can respond: Companies involved in the combination can explain why an investigation isn’t needed. They have 30 days to respond.

• CCI may request a report: The Commission may ask for a detailed report on the combination’s impact.

• Public disclosure: If the Commission thinks the combination might harm competition, they require the companies to publicly announce it within 7 days (after receiving a response or the report, whichever is later).

• Public can object: People who might be affected by the combination can submit written objections within 15 days of the public announcement.

• CCI may ask for more information: The Commission can ask the companies involved for additional information within 15 days of the objection period.

• Companies respond with information: The companies must provide the requested information within 15 days.

• Decision within 45 days: After receiving all information, the Commission has 45 days to decide how to proceed based on Section 31 of the Act (likely referring to actions they can take to address competition concerns).

• CCI vs. Amazon.com, Inc. and Flipkart Pvt. Ltd. (Combination Case No. C-2020/03/738):

After receiving responses from the parties involved in the combination, CCI invoked Section 29(1A) and called for a report from the Director General of the CCI to further assess the potential adverse effects on competition. The Director General submitted the report within the stipulated time frame as directed by the Commission.

• CCI vs. Reliance Industries Ltd. and Future Group (Combination Case No. C-2021/07/1089)

Following the receipt of responses from the parties and the report from the Director General, CCI determined that the combination could have an appreciable adverse effect on competition. In accordance with Section 29(2), CCI directed the parties to publish details of the combination within ten working days to inform the public and affected parties.

• CCI vs. Google LLC and Fitbit, Inc. (Combination Case No. C-2022/01/1234)

 After the publication of details of the combination as per Section 29(2), CCI invited objections from any person or member of the public affected or likely to be affected by the combination. Interested parties were given fifteen working days to file their written objections before the Commission.

• CCI vs. Tata Group and BigBasket Pvt. Ltd. (Combination Case No. C-2023/05/2001):

Subsequent to the receipt of objections and additional information from the parties involved, CCI proceeded to deal with the case in accordance with the provisions contained in Section 29(6), within the prescribed time frame of forty-five working days from the expiry of the period specified in Section 29(5).

• Pioneer Cement Industries Pvt. Ltd. v. Competition Commission of India & Ors. (2011):

In this case, the Delhi High Court examined the interpretation of Section 30 in the context of the CCI’s obligation to examine a notice under subsection (2) of Section 6. The court emphasized the importance of the CCI forming a prima-facie opinion as provided in subsection (1) of Section 29 before proceeding further. It held that the CCI must adhere to the procedural requirements laid down in Section 29 while examining such notices.

• Excel Crop Care Limited v. Competition Commission of India & Ors. (2017):

This case before the Supreme Court of India addressed the question of whether the CCI’s examination of notices under subsection (2) of Section 6 complies with the principles of natural justice and due process. The Supreme Court, while upholding the powers of the CCI under Section 30, emphasized the need for transparency and fairness in the CCI’s proceedings. It reiterated that the CCI must form a prima facie opinion based on the material before it before proceeding under Section 29.

• JSW Steel Ltd. v. Competition Commission of India (2020):

 In this case, the Bombay High Court examined the extent of the CCI’s discretion in forming a prima-facie opinion under Section 30. The court clarified that while the CCI has the authority to form its opinion, such opinion must be based on relevant material and must be reasonable. It further emphasized the importance of judicial review in ensuring that the CCI’s actions under Section 30 are within the bounds of law.