PRACTICE AND

PROCEDURE
 CCI- Composition
The Commission consists of a Chairperson and not less than two and not more than six members
who are appointed by the Central Government.
The Chairperson and other members are whole time members of the commission.

The Chairperson and every other Member of the commission is a person of ability, integrity and
standing and have special knowledge and professional experience of not less than fifteen years in
international trade, economics, business, commerce, law, finance, accountancy, management,
industry, public affair, or competition matters including. (Section 8)
The Chairperson and other Members shall be selected in the manner as may be prescribed- under
section 9
The Chairperson and other members of the Commission are appointed by the Central Government
from a panel of names as recommended by the Selection Committee as below --
1. The Chief Justice of India or his nominee for Chairperson.
2. The Secretary in the Ministry of Corporate Affairs for the member.
3. The Secretary in the Ministry of Law and Justice for the member.
4. Two experts of repute who have special knowledge and professional experience in international
trade, economics, business, commerce, law, finance, accountancy, management, industry, public
affairs, or competition matters including competition law and policy for the member of the
committee.
Pre-2006- selected in a manner as prescribed by the Central Government.
 Bramh Dutt v Union of India (2005)
The Competition Commission of India (Selection of Chairperson and Other Members of the
Commission) Rules, 2003: Under Rule 3, the Central Government was to constitute a Committee
consisting of a person who has been retired Judge of the Supreme Court or a High Court or a retired
Chairperson of a Tribunal established under an Act of Parliament or a distinguished jurist or a Senior
Advocate for five years or more, a person who had special knowledge of and professional experience of
25 years or more in international trade, economics, business, commerce or industry, a person who had
special knowledge of and professional experience of 25 years or more in accountancy, management,
finance, public affairs or administration to be nominated by the Central Government.
The Central Government was also to nominate one of the members of the Committee to act as the
Chairperson of the Committee.
The function of the Committee was to fill up the vacancies as and when vacancies of Chairperson or a
member of the Commission exits or arises or is likely to arise and the reference in that behalf had been
made to the Committee by the Central Government. 
Writ Petition filed to strike down Rule 3.
The essential challenge was on the basis that the Competition Commission envisaged by the
Act was more of a judicial body having adjudicatory powers on important questions of
legalistic nature and in the background of the doctrine of separation of powers
recognized by the Indian Constitution, the right to appoint the judicial members of the
Commission should rest with the Chief Justice of India or his nominee.
Further, the Chairman of the Commission had necessarily to be a retired Chief Justice
or Judge of the Supreme Court or of the High Court, to be nominated by the Chief
Justice of India or by a Committee presided over by the Chief Justice of India.
In opposition, it was contended by the Union of India that the Competition Commission
was more of a regulatory body that requires expertise in the field. Such expertise cannot
be supplied by members of the judiciary who can, of course, adjudicate upon matters in
dispute.
Further, that so long as the power of judicial review of the High Courts and the Supreme
Court is not taken away or impeded, the right of the Government to appoint the
Commission in terms of the statute could not be successfully challenged on the principle of
separation of powers recognized by the Constitution.
Also, that even in other countries, competition regulatory authorities are presided over by
persons qualified in the relevant disciplines other than judges or judicial officers.
■ if an expert body is to be created as submitted on behalf of the Union of India consistent
with what is said to be the international practice, it might be appropriate for the
respondents to consider the creation of two separate bodies, one with expertise that is
advisory and regulatory and the other adjudicatory.
■ Establishment of the Competition Appellate Tribunal- A 3-member quasijudicial body
headed by a person who is/has been a retired judge of SC/CJ H. Selection by Selection
Committee headed by the CJI/nominee+Secretary of Law+ Secy of Ministry of
Corporate Affairs.
Rangi International Ltd v Nova Scotia Bank- SC set aside an order of the AT on the ground
that the impugned orders were bereft of any reasons in support of the conclusions. Noted
that the CCI and the AT are performing quasi judicial functions and therefore, the minimum
that is required of them is that their orders be supported by reasons.
■ Appeals from order/decision of CCI would lie with the COMPAT. Initially, the Act
provided that an appeal from CCI would go directly to the SC.
 CCI- Term of office- Section 10
The Chairperson and every other member of the commission shall hold office for a term of five years from the date of
appointment and is eligible for re-appointment. However, the Chairperson or any other member should not be of age
more than sixty-five years while appointment.

Any vacancy which is caused by resignation or removal or death will be fulfilled by a fresh appointment in accordance to
the provisions of section 9 of this act.

The Chairperson and every other member must take an oath of the office and of secrecy in in front of an authority as
prescribed.

In event of vacancy of Chairperson because of his death, resignation or otherwise, the senior most member of the
commission shall Act as Chairperson until the new Chairperson is appointed and enters the office. Same is when the
Chairperson is unable to discharge his function due to illness or any other cause then the senior most members shall
discharge the functions of that Chairperson until he dates on which the Chairperson resumes the charge of his functions.
 CCI- Duties
Section 18- Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate
practices having adverse effect on competition,
promote and sustain competition,
protect the interests of consumers, and
ensure freedom of trade carried on by other participants, in markets in India.
Provided that the Commission may, for the purpose of discharging its duties or performing its
functions under this Act, enter into any memorandum or arrangement, with the prior approval of the
Central Government, with any agency of any foreign country.
Till date, the Commission has entered into such MoUs with Federal Trade Commission (FTC) /
Department of Justice (DOJ), USA, Director General Competition, European Union (EU), Federal
Antimonopoly Service (FAS), Russia, Australian Competition and Consumer Commission (ACCC),
and Competition Bureau (CB) Canada, and BRICS competition authorities.
 CCI- Features
■ Section 7 (2)- The Commission shall be a body corporate by the name aforesaid having
perpetual succession and a common seal with power, subject to the provisions of this Act, to
acquire, hold and dispose of property, both movable and immovable, and to contract and shall,
by the said name, sue or be sued.
Section 60- Act to have overriding effect
■ 60. The provisions of this Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in force.
Section 61- Exclusion of jurisdiction of civil courts
■ 61. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any
matter which the Commission or the Appellate Tribunal is empowered by or under this Act to
determine and no injunction shall be granted by any court or other authority in respect of any
action taken or to be taken in pursuance of any power conferred by or under this Act.
Section 36
■ In discharge of its functions, Commission guided by : Se
• Principles of Natural Justice
• Rules made by Central Government; and
• Its own procedure.
■ The Commission is also entrusted with certain powers of Civil Court under Section 36 (2)
• Summoning & enforcing attendance and examination on oath;
• Discovery and production of documents
• Receiving Evidence on Affidavit
• Issuing Commission for examination of witnesses and documents
• Requisitioning of Public Records under Indian Evidence Act
■ The Commission, may under section 36(3) of the Act, call upon such experts, from the field
of economics, commerce, accountancy, international trade or from any other discipline as it
deems necessary, to assist the Commission in the conduct of any inquiry by it.
 Procedure and Manner of Inquiry
Under Section 19 of the Act, the Commission may either suo-motu or on receipt of any information
from any person, consumer or their association or trade association, initiate inquiry into any alleged
anticompetitive agreement as defined in Section 3 or any abuse of dominant position by an enterprise
as defined in Section 4 of the Act.
The manner of providing information along with the fees has been laid out in the general regulations.
Reference can also be made by the Central Government or a State Government or a Statutory
Authority to the Commission.
If the Commission is satisfied that the matter raised in any information, or reference, or application,
received subsequently is directly and substantially similar, it may at any time after receipt of an
information, or a reference, or an application, consolidate two or more similar information, or
references, or applications, as the case may be, for consideration.
Preliminary scrutiny: Each information of reference received in the Commission shall be
scrutinized by the Secretary of the Commission to check whether it conforms to the
regulations and defects, if any, shall be communicated to the party within a reasonable time.
If the defects are not removed within the time specified, the information or the reference
shall be treated as invalid and the fee paid on such information shall stand forfeited. The
Commission, may however, allow filing of fresh information or reference with applicable
fees.
Existence of prima facie case and direction to the Director General:
Section 26- Procedure for inquiry on complaints under section 19.—
(1) On receipt of a complaint or a reference from the Central Government or a State
Government or a statutory authority or on its own knowledge or information, under section
19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the
Director General to cause an investigation to be made into the matter. (within a time period
prescribed by the Commission, ordinarily not exceeding 60 days)
(2) The Director General shall, on receipt of direction under sub-section (1), submit a report
on his findings within such period as may be specified by the Commission.
(3) Where on receipt of a complaint under clause (a) of sub-section (1) of section 19, the
Commission is of the opinion that there exists no prima facie case, it shall dismiss the
complaint and may pass such orders as it deems fit, including imposition of costs, if
necessary.
(4) The Commission shall forward a copy of the report referred to in sub-section (2) to the
parties concerned or to the Central Government or the State Government or the statutory
authority, as the case may be.
(5) If the report of the Director General relates on a complaint and such report recommends that there
is no contravention of any of the provisions of this Act, the complainant shall be given an opportunity
to rebut the findings of the Director-General.
(6) If, after hearing the complainant, the Commission agrees with the recommendation of the Director
General, it shall dismiss the complaint.
(7) If, after hearing the complainant, the Commission is of the opinion that further inquiry is called for,
it shall direct the complainant to proceed with the complaint.
(8) If the report of the Director General relates on a reference made under sub-section (1) and such
report recommends that there is no contravention of the provisions of this Act, the Commission shall
invite comments of the Central Government or the State Government or the statutory authority, as the
case may be, on such report and on receipt of such comments, the Commission shall return the
reference if there is no prima facie case or proceed with the reference as a complaint if there is a prima
facie case.
(9) If the report of the Director General referred to in sub-section (2) recommends that there is
contravention of any of the provisions of this Act, and the Commission is of the opinion that further
inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this
Act
If the Commission, on receipt of a reference from the Central Government, or a State
Government, or a Statutory Authority, or on its own knowledge, or information received under
section 19, is of the opinion that there exists a prima facie case, it shall direct the Director
General to cause an investigation to be made into the matter.

The Secretary shall convey the directions of the commission within seven days to the Director
General to investigate the matter. However, if the Commission is of the opinion that there
exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems
fit and send a copy of its order to the Central Government, or the State Government, or the
Statutory Authority, or the parties concerned, as the case may be. There is no requirement to
refer the matter to Director General for investigation if no prima facie case is made out.
The Commission may call for a preliminary conference and invite the information provider and such
other person as is necessary to form an opinion whether a prima facie case exists.
There is no absolute right to claim notice under section 26(1) of the Act
 CCI v SAIL
“The jurisdiction of the Commission, to act under this provision, does not contemplate any adjudicatory function.
The Commission is not expected to give notice to the parties, i.e. the informant or the affected parties and hear
them at length, before forming its opinion. The function is of a very preliminary nature and in fact, in common
parlance, it is a departmental function. At that stage, it does not condemn any person and therefore, application
of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (Director General,
being appointed by the Central Government to assist the Commission, is one of the wings of the Commission itself)
does not amount to an adjudicatory function but is merely of administrative nature. At best, it can direct the
investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of
Section 26(2) of the Act, which order itself is not appealable before the Tribunal and only after this stage, there is
a specific right of notice and hearing available to the aggrieved/ affected party. Thus, keeping in mind the nature
of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered
view that the right of notice of hearing is not contemplated under the provisions of Section 26(1) of the Act.
However, Regulation 17(2) gives right to Commission for seeking information, or in other words,
the Commission is vested with the power of inviting such persons, as it may deem necessary, to
render required assistance or produce requisite information or documents as per the direction of the
Commission. This discretion is exclusively vested in the Commission by the legislature. The
investigation is directed with dual purpose: (a) to collect material and verify the information, as may
be, directed by the Commission; (b) to enable the Commission to examine the report upon its
submission by the Director General and to pass appropriate orders after hearing the parties
concerned. No inquiry commences prior to the direction issued to the Director General for
conducting the investigation. Therefore, even from the practical point of view, it will be required that
undue time is not spent at the preliminary stage of formation of prima facie opinion and the
matters are dealt with effectively and expeditiously.”
 Jindal Steel and Power Limited (JSPL) filed a complaint before the Competition
Commission of India alleging that SAIL had an exclusive supply agreement with Indian
Railways. JSPL alleged that SAIL was the biggest player in market of manufacture of rail
tracks; thus, enjoying dominant position in market. Indian railway was largest buyer of rail
tracks and JSPL alleged that through an exclusive supply agreement, SAIL drove other
players out of the market. JSPL by necessary implications couldn’t supply rails to them.
CCI formed a prima facie opinion that there was a case and ordered the DG to go ahead
with an inquiry. This was challenged by SAIL on the grounds that
a) SAIL was not given an opportunity to be heard;
b) No reasons were recorded for the said order.
The COMPAT ruled against the decision of the CCI while allowing the appeal against the
initial order of investigation given by the CCI. CCI appealed to the SC.
 Points of determination before the Supreme court

1) Whether the directions passed by the Commission in exercise of its powers under Section 26(1) of the
Act forming a prima facie opinion would be appealable in terms of Section 53A(1) of the Act?
In terms of Section 53A(1)(a) of the Act appeal shall lie only against such directions, decisions or orders
passed by the Commission before the Tribunal which have been specifically stated under the provisions
of Section 53A(1)(a). The orders, which have not been specifically made appealable, cannot be treated
appealable by implication. For example taking a prima facie view and issuing a direction to the Director
General for investigation would not be an order appealable under Section 53A.
2) What is the ambit and scope of power vested with the Commission under Section 26(1) of the Act and
whether the parties, including the informant or the affected party, are entitled to notice or hearing, as a
matter of right, at the preliminary stage of formulating an opinion as to the existence of the prima facie case?
Neither any statutory duty is cast on the Commission to issue notice or grant hearing, nor any party can
claim, as a matter of right, notice and/or hearing at the stage of formation of opinion by the Commission, in
terms of Section 26(1) of the Act that a prima facie case exists for  issuance of a direction to the Director
General to cause an investigation to be made into the matter.
However, the Commission, being a statutory body exercising, inter alia, regulatory jurisdiction, even at that
stage, in its discretion and in appropriate cases may call upon the concerned party(s) to render required
assistance or produce requisite information, as per its directive. The Commission is expected to form such
prima facie view without entering upon any adjudicatory or determinative process. The Commission is
entitled to form its opinion without any assistance from any quarter or even with assistance of experts or
others. The Commission has the power in terms of Regulation 17 (2) of the Regulations to invite not only
the information provider but even `such other person' which would include all persons, even the affected
parties, as it may deem necessary. In that event it shall be `preliminary conference', for whose conduct of
business the Commission is entitled to evolve its own procedure.
he power under Section 26(1) of the Act is regulatory and inquisitorial, i.e. the its administrative power  and
not adjudicatory power of commission. Its only a step taken by commission to prepare for future case i.e.
collection of data and hence at this stage right of notice of hearing is not required to be issued.
3) Whether the Commission would be a necessary, or at least a proper, party in the
proceedings before the Tribunal in an appeal preferred by any party?
The Commission, in cases where the inquiry has been initiated by the Commission suo
moto, shall be a necessary party and in all other cases the Commission shall be a proper
party in the proceedings before the Competition Tribunal. The presence of the Commission
before the Tribunal would help in complete adjudication and effective and expeditious
disposal of matters. Being an expert body, its views would be of appropriate assistance to
the Tribunal. Thus, the Commission in the proceedings before the Tribunal would be a
necessary or a proper party, as the case may be.
4) At what stage and in what manner the Commission can exercise powers vested in it under Section
33 of the Act to pass temporary restraint orders?
During an inquiry and where the Commission is satisfied that the act is in contravention of the
provisions stated in Section 33 of the Act, it may issue an order temporarily restraining the party from
carrying on such act, until the conclusion of such inquiry or until further orders without giving notice
to such party, where it deems it necessary.
This power has to be exercised sparingly under compelling and exceptional circumstances. It has to
(a)record its satisfaction (which has to be of much higher degree than formation of a prima facie view
under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has
been committed and continues to be committed or is about to be committed; (b) It is necessary to issue
order of restraint and (c) from the record before the Commission, it is apparent that there is every
likelihood of the party to the lis, suffering irreparable and irretrievable damage or there is definite
apprehension that it would have adverse effect on competition in the market.
Inquiry by the Commission

Where after inquiry the Commission finds that any agreement referred to in Section 3 or action of an
enterprise in dominant position is in contravention of Section 3 or Section 4, as the case may be, it
may pass all or any or the orders as specified in Section 27 of the Act.
Apart from the powers of a Civil Court for certain purposes, the Commission also has powers to issue
interim orders under section 33 of the Act.

The Commission has the power to issue interim orders when, during an inquiry, it is satisfied that an act
in contravention of sub-section (1) of section 3 [Anti-competitive Agreement] or sub-section (1) of
section 4 [Abuse of dominance] or section 6 [Regulation of Combinations] has been committed and
continues to be committed or that such act is about to be committed. The Commission may, by order,
temporarily restrain any party from carrying on such act until the conclusion of such inquiry or until
further orders, without giving notice to such party, where it deems it necessary. The word ‘inquiry’ has
not been defined in the Act. Till the time final order is passed by the Commission in accordance with law,
the inquiry under the Act continues.

SAIL Judgment- Essentials to pass an interim order

Final Order:

Where after inquiry the Commission finds that any agreement referred to in section 3 (anti-competitive
agreement) or action of an enterprise in a dominant position is in contravention of section 4 (abuse of
dominance), as the case may be, it may pass all or any of the following orders:

a. Cease and desist: The Commission can direct any enterprise, or association of enterprises, or person,
or association of persons, as the case may be, involved in such agreement, or abuse of dominant position,
to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the
case may be;
b. Penalty: Impose such penalty, as it may deem fit which shall be not more than ten percent of
the average of the turnover for the last three preceding financial years, upon each of such
person or enterprises which are parties to such agreements or abuse. In case any agreement referred
to in section 3 has been entered into by a cartel, the Commission may impose upon each producer,
seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of
its profit for each year of the continuance of such agreement or ten percent of its turnover for
each year of the continuance of such agreement, whichever is higher. The imposition of penalty
would depend on the aggravating and mitigating factors. Penalty is imposed to cause deterrence in
future among erring entities engaged in such action. Thus, degree of punishment is scaled to the
severity of the violation.
For instance, in Re Bengal Chemists and Druggists Association, it was argued that since BCDA
voluntarily complied with the requirement of section 27(a) of the Act, no penalty should be imposed
by the Commission under section 27(b) of the Act. If at all circumstances warrant imposition of
penalty, mitigating factors like voluntary compliance and undertaking by BCDA, acting under bona
fide belief, ignorance of law etc. be considered by the Commission.
The Commission rejected the argument on the following grounds
a) Need to cause deterrence in future among erring entities- the degree of punishment must be scaled
to the severity of the violation;
b) No mitigating factor- a few office bearers failed to even submit their financial statements.
Re: M/s Maharashtra State Power Generation Company Ltd. Vs. M/s Mahanadi Coalfields Ltd. And M/s
Coal India Ltd.
In terms of the provisions contained in section 27(b) of the Act, the Commission may impose such
penalty upon the contravening parties, as it may deem fit which shall be not more than ten per cent of the
average of the turnover for the last three preceding financial years, upon each of such person or
enterprises which are parties to such agreements or abuse.
The twin objectives behind imposition of penalties are: to impose penalties on infringing undertakings
which reflect the seriousness of the infringement; and to ensure that the threat of penalties will deter both
the infringing undertakings and other undertakings that may be considering anti-competitive activities
from engaging in them. The imposition of penalty would depend on mitigating and aggravating factors.
CIL did have and functional independence in carrying out its commercial and contractual affairs and
enjoy undisputed dominance in the market. However, in quantification of the penalty, the CCI noted that
the fact that CIL’s behaviour is constrained by various factors, including countervailing power exercised
by other stakeholders including the Presidential Directives, significant social costs and obligations, its
inability to choose its customers and quantum of coal to be supplied to these customers, pressures faced
to roll back price increases etc. cannot be ignored.
Therefore, the Commission imposed a penalty of 3% of average annual turnover for the past three years.
 Excel Crop Care Ltd and Ors. V CCI & Ors.
Food Corporation of India wrote to the Competition Commission of India complaining of an anti-competitive
agreement purportedly arrived at between M/s. Excel Crop Care Limited, M/s. United Phosphorous Limited (for
short, ‘UPL’), M/s. Sandhya Organics Chemicals (P) Ltd. and Agrosynth Chemicals Limited, in relation to tenders
issued by the FCI for Aluminium Phosphide Tablets (for short, ‘APT’) between the years 2007 and 2009.

Alleged- four manufactures of APT had formed a cartel by entering into an anti-competitive agreement amongst
themselves and on that basis they had been submitting their bids for last eight years by quoting identical rates in
the tenders invited by the FCI for the purchase of APT.

The main market of APT in India was that of the institutional sales and a majority of buyers were Government
agencies. The number of private buyers was insignificant.- Oligopsony

 CCI and COMPAT held against Excel corp and others. CCI imposed penalty of 9% of average annual total
turnover for the last 3 years. COMPAT- penalty at 9% on relevant turnover
 Contentions
■ Since Sections 3 and 4 of the Act were activated and brought into force only with effect from May 20,
2009, tenders prior to this date could not be the subject matter of inquiry for ascertaining whether
there was any violation of Section 3 of the Act or not. Qua March 2009 tender, it was contended that
last date of submission of tender was May 08, 2009 and the bids were submitted by the appellants on
that date, i.e., before the enforcement of Section 3, which came into operation on May 20, 2009. No
doubt, the tender was evaluated and awarded only after May 20, 2009, but insofar as role of the
appellants is concerned, that came to an end on the submission of the tender and, therefore, tender of
March, 2009 could not be the subject matter of enquiry.
■ Increase in the price over a period of time, particularly between years 2009 and 2011, was sought to
be justified on the ground that the ‘price of yellow phosphorous, which was to be procured from
China, had increased’. It was further submitted that merely because there was identity of prices
quoted by the appellants, it would not mean that there was any bid rigging or formation of cartel by
the appellants. Submission in this behalf was that the market forces brought the situation where the
prices became so competitive and it had led to the aforesaid trend. According to them, as a practice,
the Central Warehousing Corporation finalised the tender in the beginning of a particular year which
used to be considered as the benchmark for other tenders for that year resulting in likelihood of
identical pricing.
Issues
■ Whether the dispute regarding violation of Section 3 of the Act by the appellants could not be
gone into in respect of tender of March, 2009, as Section 3 was operationalised only by
notification dated 20th May, 2009?
■ Whether, on the facts of the case, conclusion of CCI that the appellants had entered into an
agreement/arrangement and pursuant thereto indulged in collusive bidding by forming a cartel,
resulting into contravention of Section 3(3)(a), 3(3)(b) and 3(3)(d) read with Section 3(1) of the
Act, is justified?
■ Whether penalty under Section 27(b) of the Act has to be on total/entire turnover of the
offending company or it can be only on “relevant turnover”, i.e., relating to the product in
question?
 On Issue 3
Section 27 of the Act stipulates nature of the orders which the CCI can pass after enquiry into agreements or
abuse of dominant position. This Section empowers CCI to pass various kinds of orders the nature whereof is
spelt out in clauses (a), (b), (d) and (g) 57 (clauses (c) and (f) stand omitted). As per clause (b), CCI is empowered
to inflict monetary penalties, the upper limit whereof is 10% “of the average of turnover for the last three
preceding financial years”.
27. Orders by Commission after inquiry into agreements or abuse of dominant position.—Where after inquiry the
Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is
in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders,
namely:
—(a) direct any enterprise or association of enterprises or person or association of persons, as the case may be,
involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or
discontinue such abuse of dominant position, as the case may be;
(b) impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the
turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to
such agreements or abuse: Provided that in case any agreement referred to in section 3 has been entered into by
any cartel, the Commission shall impose upon each producer, seller, distributor, trader or service provider
included in that cartel, a penalty equivalent to three times of the amount of profits made out of such agreement by
the cartel or ten per cent. of the average of the turnover of the cartel for the last preceding three financial years,
whichever is higher;
(c) award compensation to parties in accordance with the provisions contained in section
34;
(d) direct that the agreements shall stand modified to the extent and in the manner as may
be specified in the order by the Commission;
(e) direct the enterprises concerned to abide by such other orders as the Commission may
pass and comply with the directions, including payment of costs, if any;
(f) recommend to the Central Government for the division of an enterprise enjoying
dominant position;
(g) pass such other order as it may deem fit.

Also, check section 53N.

 Arguments on Issue 3- CCI and Ors.
■ The language of a statute being plain and clear, the Court ought not to add words to limit or alter the
meaning of the statute. The expression ‘turnover’ is not limited or restricted in any manner and
introduction of concept of ‘relevant turnover’ amounts to adding words to the statute.

■ A plain reading of Section 27 as a whole, which includes Section 27(a) as well, makes it clear that
the target of the penalty is the ‘person’ or ‘enterprise’ that has acted in violation of the Act, and not
the ‘product’ or the ‘service’ alone which is made the subject of the violation. As such, the
expression ‘turnover’ must necessarily mean the turnover of the ‘person’ or the ‘enterprise’ which is
party to the anti-competitive agreement or abuse of dominance.

■ The interpretation given by the COMPAT would render the proviso after Section 27 redundant, as the
said proviso specifically provides for situations where more than one member of a group (each may
be producing different products/services) is part of the anti-competitive conduct.
■ Even if purposive interpretation is to be given to the provisions of Section 27(b) of the Act, the
purpose of deterrence cannot be lost sight of. The current case is a clear example of hardcore
cartelisation and is extremely injurious to all.
■ Worldwide, the cap is on ‘total turnover’ and not ‘relevant turnover’
Arguments- Excel Crop Care and Ors.
■ This provision being a penal provision, has to be strictly construed.
■ Where identical infringement is alleged in respect of several enterprises, some of which
may be ‘single product companies’ and others may be ‘multi-product companies’
(which was the position in the instant case itself), there would be no justification for
prescribing the maximum penalty based on the total turnover of the enterprise, as it
would result in prescribing a higher maximum penalty for multi-product companies, as
against the single product companies, thereby bringing very inequitable results.
■ Since it was a provision relating to penalty which was to be imposed on ‘turnover’, the
said ‘turnover’ was necessarily relatable to the offending product only. Cannot be the
intention of the Legislature to punish an unblemished product.
■ The doctrine of proportionality lays down that the punishment must be proportioned to
the offence or ought to be of universal application.
■ Other jurisdictions specific guidelines were issued which formed the basis of exercising
the discretion to determine the penalty in an objective manner. In contra-distinction, no
guidelines are prescribed under the Act in India and it was submitted that a perusal of
the guidelines issued by the European Union as well as the Office of Fair Trading in the
United Kingdom would show that for determining the appropriate quantum of penalty,
the ‘relevant turnover’, i.e. the turnover of the infringing product, is taken into
consideration.
 Judgment
■ Section 2(y) which defines ‘turnover’ does not provide any clarity to the aforesaid issue. It only mentions
that turnover includes value of goods or services. There is, thus, absence of certainty as to what precise
meaning should be ascribed to the expression ‘turnover’.
■ Adopting the criteria of ‘relevant turnover’ for the purpose of imposition of penalty will be more in tune
with ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties.
Under Section 27(b) of the Act, penalty can be imposed under two contingencies, namely, where an agreement
referred to in Section 3 is anti-competitive or where an enterprise which enjoys a dominant position misuses
the said dominant position thereby contravening the provisions of Section 4. An agreement under section 3
may relate to a particular product between persons or enterprises even when such persons or enterprises
produce more than one product. There may be a situation, which is precisely in the instant case, that some of
such enterprises may be multi-product companies and some may be single product in respect of which the
agreement is arrived at. If the concept of total turnover is introduced it may bring out very inequitable results.
When the agreement leading to contravention of Section 3 involves one product, there seems to be no
justification for including other products of an enterprise for the purpose of imposing penalty. Any
interpretation that brings put inequitable results has to be avoided.
■ Doctrine of ‘proportionality’ -No doubt, the aim of the penal provision is also to ensure that it acts as
deterrent for others. At the same time, such a position cannot be countenanced which would deviate from
‘teaching a lesson’ to the violators and lead to the ‘death of the entity’ itself.
 Penalties other than section 27
As per Section 42 of the Competition Act, the Commission may cause an inquiry as to the compliance
of its orders or directions. This section provides that if any person has contravened or failed to comply
with any order or direction of the Commission issued under sections 27, 28, 31, 32, 33, 42A and 43A
of the Act, and has no reasonable cause to justify the same, he shall be punishable with fine extending
up to Rs. 1 lakh for each day during which such non-compliance occurs, subject to a maximum fine of
Rs. 10 crore.
Further, the section also provides that if any person fails to comply with the orders or directions of the
Commission or fails to pay the fine imposed by the Commission for non-compliance of the orders of
the Commission, he shall be punishable with imprisonment up to 3 years, or with fine up to Rs. 25
crore, or with both, as the Chief Metropolitan Magistrate, Delhi may deem fit. The Chief Metropolitan
Magistrate, Delhi, however, cannot take cognizance of any offence under this section other than on a
complaint filed by the Commission or any of its officers authorised by it
■ Under Section 42 A of the Act, any person may make an application to the Appellate Tribunal for
an order for the recovery of compensation from any enterprise for any loss or damage shown to
have been suffered, by such person as a result of the said enterprise violating directions issued by
the Commission or contravening, without any reasonable ground, any decision or order of the
Commission issued under Section 27, 28, 31, 32 and 33 or any condition or restriction subject to
which any approval, sanction, direction or exemption in relation to any matter has been accorded,
given, made or granted under the Act or delaying in carrying out such orders or directions of the
Commission.
■ Failure to comply with any direction issued by the Commission in pursuance of its exercise of
powers under Section 36(2) or 36(4) or directions issued by the Director General under Section
41(2) of the Act, without reasonable cause, will attract penalty under Section 43, which may extend
to rupees one lakh for each day during which such failure continues subject to a maximum of
rupees one crore, as may be determined by the Commission.
 Power to impose a lesser penalty- section 46

■ The Commission if satisfied that any producer, seller, distributor, trader or service provider
included in any cartel, which is alleged to have violated section 3, has made a full and true
disclosure in respect of the alleged violations and such disclosure is vital, impose upon such
producer, seller, distributor, trader or service provider a lesser penalty as it may deem fit, than
leviable under this Act or the rules or the regulations.

■ Lesser penalty shall not be imposed by the Commission in cases where the report of investigation
directed under section 26 has been received before making of such disclosure. Timing of disclosure
is an essential determinant.
■ Lesser penalty shall not be imposed by the Commission if the person making the disclosure does not
continue to co-operate with the Commission till the completion of the proceedings before the
Commission.

In case the Commission is satisfied that such producer, seller, distributor, trader or service provider included
in the cartel had in the course of proceedings, -

a) not complied with the condition on which the lesser penalty was imposed by the Commission; or

b) had given false evidence; or

c) the disclosure made is not vital,

such producer, seller, distributor, trader or service provider may be tried for the offence with respect to
which the lesser penalty was imposed and shall also be liable to the imposition of penalty to which such
person has been liable, had lesser penalty not been imposed.
CCI (Imposition of Lesser Penalty) Regulations, 2009.

The 2009 Regulations lays down the following:-

1. An applicant, seeking the benefit of lesser penalty under section 46 of the Act, shall -

a. cease to have further participation in the cartel from the time of its disclosure unless otherwise
directed by the Commission;

b. provide vital disclosure in respect of [contravention of the provisions] of section 3 of the Act;

c. provide all relevant information, documents and evidence as may be required by the Commission;
d. co-operate genuinely, fully, continuously and expeditiously throughout the investigation and other
proceedings before the Commission; and

e. not conceal, destroy, manipulate or remove the relevant documents in any manner that may
contribute to the establishment of a cartel.
■ The discretion of the Commission, in regard to reduction in monetary penalty under these
regulations, shall be exercised having due regard to:
a. the stage at which the applicant comes forward with the disclosure;
b. the evidence already in possession of the Commission;
c. the quality of the information provided by the applicant; and
d. the entire facts and circumstances of the case.
 How much ‘lesser’?
The Commission in cases of lesser penalty applications may decide, in the following manner:

(a) The applicant and individual may be granted benefit of reduction in penalty up to or equal to one
hundred percent, if the applicant is the first to make a vital disclosure by submitting evidence of a
cartel, enabling the Commission to form a prima-facie opinion regarding the existence of a cartel
which is alleged to have contravened the provisions of section 3 of the Act and the Commission
did not, at the time of application, have sufficient evidence to form such an opinion.
(b) The applicants who are subsequent to the first applicant may also be granted benefit of
reduction in penalty on making a disclosure by submitting evidence, which in the opinion of
the Commission, may provide significant added value to the evidence already in possession
of the Commission or the Director General, as the case may be, to establish the existence of
the cartel, which is alleged to have contravened the provisions of section 3 of the Act.

c) The reduction in monetary penalty shall be in the following order

a.the applicant and individual marked as second in the priority status may be granted
reduction of monetary penalty up to or equal to fifty percent of the full penalty leviable; and

b. the applicant and individual marked as third or subsequent in the priority status may be
granted reduction of penalty up to or equal to thirty percent of the full penalty leviable
Re:Cartelization in respect of tenders floated by Indian Railways for supply of Brushless DC Fans and other
electrical items3, wherein the CCI penalized three companies i.e., M/s Pyramid Electronics (Pyramid), M/s R.
Kanwar Electricals (Kanwar) and M/s Western Electric Trading Company (Western) including its office bearers
for bid rigging. The CCI granted Pyramid (and its office bearers) a seventy five percent reduction in the total
leviable penalty for breaking ranks and turning into an approver. Though Pyramid was the 1st applicant, the CCI
did not give complete reduction in penalty due to the stage at which Pyramid had approached the CCI, i.e., after
the investigation had commenced.

Re: Cartelization by broadcasting service providers by rigging the bids submitted in response to the tenders
floated by Sports Broadcasters, the CCI extended the benefit of lenient treatment to both the parties involved in
the cartel. The 1st applicant received a benefit of 100% reduction, whereas the 2nd applicant received a benefit
of only 30%. Even though the order records that the 2nd applicant added value to the investigation, made vital
disclosures and there are references which reek of 'not complete' cooperation by the 1st applicant, the CCI still
granted only 30 % to the 2nd applicant. The CCI held that the 1st applicant ought to get 100%, if he provides
sufficient material for the CCI to formulate a prima facie opinion.
■ One of the primary aspects looked into by the CCI is the 'stage' at which the party has applied for
leniency coupled with the disclosures made by the party. In most cases, the CCI appears to grant a
higher degree of lesser penalty, if the existence of a cartel is made known to the CCI, before it
forms a prima facie opinion. For instance in re: Cartelization by broadcasting service providers
by rigging the bids submitted in response to the tenders floated by Sports Broadcasters, re:
Cartelization in respect of zinc carbon dry cell batteries market in India, Re: Anticompetitive
conduct in the dry-cell batteries market in India, the Commission granted a 100% reduction in
penalty to the 1st applicant, as they had approached the CCI before the CCI could form a prima
facie opinion. However, in cases where the CCI had already taken cognizance and parties had
subsequently approached the CCI, the reduction in penalty was much lower.

■ Next, the Commission also gives vital importance to the concept of 'significant added value' that
is provided by each applicant while deciding the quantum of reduction.
Maintaining confidentiality: Section 57 of the Act provides for restriction on disclosure of
information. No information relating to any enterprise, without the previous permission in writing
of the enterprise, can be disclosed otherwise than in compliance with or for the purposes of the Act
or any other law being in force.

On the request made by the informant in writing, the Commission shall maintain confidentiality of
the identity of an informant.

Further, any party may submit a request in writing to the Commission or the Director General, as
the case may be, that a document or documents, or a part or parts thereof, be treated confidential.
Such application will however be entertained only if making the document, or documents, or a part
or parts thereof public will result in disclosure of trade secrets, or destruction, or appreciable
diminution of the commercial value of any information or can be reasonably expected to cause
serious injury.
Factors taken into account while arriving at a decision regarding confidentiality The
Commission or the Director General, as the case may be, may consider the following while
arriving at a decision regarding confidentiality:
a) the extent to which the information is known to outside public;
b) the extent to which the information is known to the employees, suppliers, distributors
and others involved in the party’s business
c) the measures taken by the party to guard the secrecy of the information
d) the ease or difficulty with which the information could be acquired or duplicated by
others.
 Consultation with sectoral regulators

If in the course of a proceeding before the Commission, an issue is raised by any party that any decision
which, the Commission has taken during such proceeding or proposes to take, is or would be contrary to
any provision of the Act, whose implementation is entrusted to a statutory authority, the Commission
may make a reference in respect of such issue to the statutory authority. – Section 21-A

The Commission, may also, suo-motu, make such a reference to the statutory authority.

On receipt of such reference, the statutory authority shall give its opinion, within sixty days of receipt of
such reference to the Commission. The Commission shall consider the opinion of the statutory authority,
and thereafter give its findings recording reasons therefor on the issues referred to in the said opinion.
■ A sectoral regulator may also consult the Commission if in the course of a proceeding
before any statutory authority, an issue is raised by any party that any decision which
such statutory authority has taken or proposes to take is or would be, contrary to any of
the provisions of the Act. In such a case, such statutory authority may make a reference
in respect of such issue to the Commission- Section 21

■ A statutory authority may also suo-motu make a reference to the Commission. On

receipt of a reference, the Commission shall give its opinion to such statutory authority,
which shall consider the opinion of the Commission and thereafter give its findings
recording reasons therefore on the issues referred to in the said opinion. The
Commission shall give its opinion within sixty days of receipt of such reference.
 CCI v Bharti Airtel and Others

Reliance Jio Infocomm Limited filed information under Section 19(1) of the Competition Act, 2002
before the Competition Commission of India (for short, 'CCI') alleging anti- competitive
agreement/cartel having been formed by three major telecom operators, namely, Bharti Airtel Limited,
Vodafone India Limited and Idea Cellular Limited (Incumbent Dominant Operators) (hereinafter
referred to as the ‘IDOs’).
Accordingly, the CCI directed the Director General to cause investigation in the case.
Four writ petitions came to be filed by the Bharti Airtel Limited, Vodafone India Limited,
Idea Cellular Limited and COAI respectively. The prayed for quashing of the aforesaid
order and consequential action/proceedings on the ground that the CCI did not have any
jurisdiction to deal with such a matter.
The High Court has allowed these writ petitions and quashed/set aside the order dated April
21, 2017 passed by the CCI and consequently notices issued by the Director General of the
CCI have also been quashed
A Special Leave Petition was filed.
CCI contended that the said judgment is contrary to law on the following grounds:Jurisdiction of the
CCI: The CCI has jurisdiction in the present case and it need not wait till the conclusion of
proceedings under the TRAI Act to conclude.
The High Court had failed to appreciate that issues before the CCI are altogether different than the
issues before the TRAI and they necessarily be treated differently. The CCI and TRAI operate in
entirely different fields, which is discernible from the Preambles of the respective legislations. The
TRAI Act was supposed to enable it to regulate the telecommunication services, adjudicate dispute,
dispose of appeals and protect the interests of service providers and consumers of the telecom sector,
to promote and ensure orderly growth of the telecom sector. The CCI, on the other hand, is a body
that has been established to prevent practices having an adverse effect on competition, to promote and
sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade
carried on by other participants in markets, in India.
TRAI has the responsibility/obligation to determine whether Quality of Service regulations and
interconnection norms on the levels of congestion at the points of interconnection are complied with
it not. But apart from that, none of the other issues as envisaged under Section 3 of the Act are looked
into by TRAI.
Specifically, TRAI cannot arrive at a determination as to whether the ITOs have colluded and
cartelized to deny POIs to the detriment of RJIL in violation of Section 3(3) read with Section 3(1) of
the Act
TRAI does not have the power to penalize for past conduct which was of anti-competitive
nature. It was further submitted that while competition law seeks to promote efficient
allocation and utilization of resources by inter alia lowering the entry barriers in the market,
the primary objective of the sectoral regulators like the TRAI is development of their
respective sector. However, what is important to bear in mind is that the promotion of
competition and prevention of competitive behaviour may not be high on the agenda of a
sectoral regulator which makes it prone to ‘regulatory capture’.
Cited the Report of the Working Group on Competition Policy, Planning Commission of India,
Government of India, February 2007 which states as follows:

"The objective of a sectoral regulator is to provide good quality service at affordable rates, but the
promotion of competition and prevention of anti-competitive behaviour may not be high on its
agenda or the laws governing the regulator may be silent on this aspect. It is not uncommon for
sectoral regulators to be more closely aligned with the interest of the firms being regulated, which is
also known as ‘regulatory capture’. Besides, a sectoral regulator may not have an overall view of the
economy as a whole and may tend to apply yardsticks which are different from the ones used by the
other sectoral regulators. In other words, there is a possibility of the lack of consistency across
sectors. On the other hand, CCI will be able to apply uniform competition principles across all
sectors of economy.”
Also cited the The National Competition Policy 2011:
“The CCI, which is expected to have developed the core competence, expertise and
capacity in competition related issues, will be able to apply uniform competition principles
across all sectors of economy. Besides, enforcement and penalizing violations of
Competition Act is the exclusive area of the CCI. Even otherwise, the general principle for
economic efficiency would be, whoever can do a thing in best and most professional
manner should do it.” “
 Judgment
The SC first examined the roles of TRAI and CCI. It concluded that:
TRAI is constituted as an expert regulatory body which specifically governs the telecom sector.
Therefore, the aforesaid aspects of the disputes are to be decided by the TRAI in the first instance.
These are jurisdictional aspects. Unless the TRAI finds fault with the IDOs on the aforesaid aspects, the
matter cannot be taken further even if we proceed on the assumption that the CCI has the jurisdiction to
deal with the complaints/information filed before it.
It needs to be reiterated that RJIL has approached the DoT in relation to its alleged grievance of
augmentation of POIs which in turn had informed RJIL vide letter dated September 06, 2016 that the
matter related to inter-connectivity between service providers is within the purview of TRAI. RJIL
thereafter approached TRAI; TRAI intervened and issued show-cause notice dated September 27, 2016;
and post issuance of show-cause notice and directions, TRAI issued recommendations dated October
21, 2016 on the issue of inter-connection and provisioning of POIs to RJIL. The sectoral authorities are,
therefore, seized of the matter.
.
The Competition Act and the TRAI Act are independent statutes. The statutory authorities under the respective Acts are to
discharge their power and jurisdiction in the light of the object, for which they are established. There is no conflict of the
jurisdiction to be exercised by them. But the Competition Act itself is not sufficient to decide and deal with the issues, arising out of
the provisions of the TRAI Act and the contract conditions, under the Regulations.

The Competition Act governs the anti-competitive agreements and its effect – the issues about “abuse of dominant position and
combinations”. It cannot be used and utilized to interpret the contract conditions/policies of telecom Sector/Industry/Market,
arising out of the Telegraph Act and the TRAI Act. The Authority under the Competition Act has no jurisdiction to decide and deal
with the various statutory agreements, contracts, including the rival rights/obligations, of its own. Every aspects of development of
telecommunication market are to be regulated and controlled by the concerned Department/ Government, based upon the
policy so declared from time to time, keeping in mind the need and the technology, under the TRAI Act. it is held that insofar
as contracts, etc. which are regulated by the TRAI Act are concerned, in the first instance, it is the authority under the TRAI
Act which has to decide these questions. Once there is a determination of the respective rights and obligations under these
licenses by the authority under the TRAI Act, which provided an information to the effect that the particular act appears to be
anticompetitive, only thereafter the CCI gets jurisdiction to go into the question of such anti-competitive practice.
TRAI, being a specialised sectoral regulator and also armed with sufficient power to ensure fair, non-discriminatory and competitive
market in the telecom sector, is better suited to decide the aforesaid issues. After all, RJIL’s grievance is that inter- connectivity is not
provided by the IDOs in terms of the licenses granted to them. TRAI Act and Regulations framed thereunder make detailed provisions
dealing with intense obligations of the service providers for providing POIS.

The High Court is right in concluding that till the jurisdictional issues are straightened and answered by the TRAI which would bring on
record findings on the aforesaid aspects, the CCI is ill-equipped to proceed in the matter. Having regard to the aforesaid nature of
jurisdiction conferred upon an expert regulator pertaining to this specific sector, the High Court is right in concluding that the concepts
of “subscriber”, “test period”, “reasonable demand”, “test phase and commercial phase rights and obligations”, “reciprocal obligations
of service providers” or “breaches of any contract and/or practice”, arising out of TRAI Act and the policy so declared, are the matters
within the jurisdiction of the Authority/TDSAT under the TRAI Act only. Only when the jurisdictional facts in the present matter as
mentioned in this judgment particularly in paras 56 and 82 above are determined by the TRAI against the IDOs, the next question would
arise as to whether it was a result of any concerted agreement between the IDOs and COAI supported the IDOs in that endeavour. It
would be at that stage the CCI can go into the question as to whether violation of the provisions of TRAI Act amounts to ‘abuse of
dominance’ or ‘anti-competitive agreements’. That also follows from the reading of Sections 21 and 21A of the Competition Act, as
argued by the respondents.
The issue can be examined from another angle as well. If the CCI is allowed to intervene at
this juncture, it will have to necessarily undertake an exercise of returning the findings on
the aforesaid issues/aspects which are mentioned in paragraph 82 above. Not only TRAI is
better equipped as a sectoral regulator to deal with these jurisdictional aspects, there may be
a possibility that the two authorities, namely, TRAI on the one hand and the CCI on the
other, arrive at a conflicting views. Such a situation needs to be avoided. This analysis also
leads to the same conclusion, namely, in the first instance it is the TRAI which should
decide these jurisdictional issues, which come within the domain of the TRAI Act as they
not only arise out of the telecom licenses granted to the service providers, the service
providers are governed by the TRAI Act and are supposed to follow various regulations and
directions issued by the TRAI itself
Whether TRAI has the exclusive jurisdiction to deal with matters involving anti- competitive practices
to the exclusion of CCI altogether because of the reason that the matter pertains to telecom sector?
The IDOs have argued that not only TRAI is an expert body which can deal with these issues and has
been assigned this function specifically under the TRAI Act, even the anti-competitive aspects of
telecom sector are specifically assigned to the TRAI in the TRAI Act itself. On that premise the
submission is that the TRAI Act is a special legislation which prevails over the provisions of the
Competition Act as the Competition Act is general in nature. It is also argued that even if the
Competition Act is treated as a special statute, between the two special statutes the TRAI Act would
prevail as it is a complete code.
Even if TRAI also returns a finding that a particular activity was anti-competitive, its powers
would be limited to the action that can be taken under the TRAI Act alone. It is only the CCI
which is empowered to deal with the same anti-competitive act from the lens of the Competition
Act. If such activities offend the provisions of the Competition Act as well, the consequences
under that Act would also follow. Therefore, contention of the IDOs that the jurisdiction of the
CCI stands totally ousted cannot be accepted.
Insofar as the nuanced exercise from the stand point of Competition Act is concerned, the CCI is
the experienced body in conducting competition analysis. Further, the CCI is more likely to opt for
structural remedies which would lead the sector to evolve a point where sufficient new entry is
induced thereby promoting genuine competition. This specific and important role assigned to the
CCI cannot be completely wished away and the ‘comity’ between the sectoral regulator (i.e.
TRAI) and the market regulator (i.e. the CCI) is to be maintained.
Therefore, since the matter pertains to the telecom sector which is specifically regulated by
the TRAI Act, balance is maintained by permitting TRAI in the first instance to deal with
and decide the jurisdictional aspects which can be more competently handled by it. Once
that exercise is done and there are findings returned by the TRAI which lead to the prima
facie conclusion that the IDOs have indulged in anti-competitive practices, the CCI can be
activated to investigate the matter going by the criteria laid down in the relevant provisions
of the Competition Act and take it to its logical conclusion.