The Supreme Court has ruled that the Competition Commission of India (CCI) has the authority to direct investigation pertaining to fair trade practices, but its directions cannot be challenged before the Competition Appellate Tribunal (COMPAT).

The Bench comprised of Chief Justice of India S.H. Kapadia and Justices K.S. Radhakrishnan and Swatanter Kumar.

Speaking with Bar & Bench, Solicitor General of India Gopal Subramanium said, “Its a tremendous judgment and success on part of the Competition Commission of India”.

Speaking with Bar & Bench, Competition Law Partner, Samir Gandhi said, “The Supreme Court has in its judgment today, vindicated the stand taken by the Competition Commission of India and has found in its favour on several key issues”. 

“The Supreme Court delivered judgment on the CCI's appeal in the SAIL vs. Jindal matter today morning. CCI's appeal was allowed partially and most of its contentions were accepted by the Supreme Court. The final decision will be circulated late this afternoon by the Supreme Court, but some of the key findings are: 

- Orders passed by the CCI under Section 26(1) cannot be appealed to the COMPAT under Section 53A.

- Parties to an investigation cannot claim a right to be heard by the CCI at the time of a prima facie determination under Section 26(1). The CCI may invite parties for a hearing at its discretion.

- The CCI shall record some reasons while arriving at a prima facie view under Section 26(1).

- The CCI is a necessary party in all appeals before the COMPAT where the investigation was taken up suo moto. In all other cases, the CCI is a proper party before the COMPAT.

- The CCI may pass interim orders under Section 33 without giving notice, but such powers are to be exercised sparingly”. 

Samir added on to say, “The Court has indicated that its judgement has laid down certain timelines so that the entire process of investigation is conducted in a time bound manner”.

Speaking to Bar & Bench, Senior Partner Pallavi Shroff said, “Today this important judgment has come out in the Supreme Court, the first in Competition law. It’s an appeal filed by the CCI against the Steel Authority and the Jindals were also a party to it. We appeared for the Jindals. The issue was that Jindal had filed a complaint or information before the CCI, saying that SAIL is a dominant player in the market for the manufacture of rail tracks. Indian Railways is the largest purchaser of rail tracks and they have signed an exclusive agreement that the Steel Authority will supply and the Indian Railways will buy all their requirements from the Steel Authority. This would mean that Jindal, who also have a steel plant for rails, cannot supply even when they are manufacturing, to the Indian Railways. The rest of the market is very nominal and the biggest market is Indian Railways. So this agreement was anti-competitive and it’s keeping other players out of the market i.e. denial of access to others. After hearing me initially, the CCI passed an order directing that investigations should be conducted. Against that order, the Steel Authority went up in appeal to the COMPAT. The COMPAT held that they could come up in appeal and any order of the CCI could be appealed before the Appellate Tibunal. The CCI also said we need to be heard and be a party to this appeal and the Appellate Tribunal said it wasn't necessary. Then CCI appealed to the Supreme Court and that appeal was heard because it’s an important issue which delineates the power of the Appellate Tribunal and interpretation of the sections”.

Shroff added on to say, “Today the judgment came out and they have held that you cannot appeal to the Appellate Tribunal against any order or any direction and only those orders which are specified under Section 53A can be appealed against, in the Supreme Court. So it’s not a very wide power, it’s a restrictive right of appeal to the Appellate Tribunal. They have also held that the CCI would be a necessary party to those proceedings before the Appellate Tribunal and they should be heard. Finally they said that the CCI need not hear parties as a matter of right, before taking a prima facie view that the matter should be referred for investigation or not. If they feel its necessary, they can hear, but there is no right in any company who is proposed to be investigated that they must be heard before referring the matter. These are very important interpretations of the Competition Act and a very important decision”.

Economic Law Practice represented the Competition Commission of India. ELP Competition Partners Suhail Nathani and Samir Gandhi instructed the Solicitor General, Gopal Subramanium who was the counsel for the CCI in this matter along with litigation team comprising of Partner Tarun Gulati and Senior Associate Neil Hildreth.

Amarchand & Mangaldas represented Jindal Steels and instructed Senior Advocate Harish Salve. Amarchand team was led by Partner Pallavi Shroff assisted by Senior Associate Harman Singh Sandhu along with Principal Associates Shweta Shroff Chopra and Ruchi Mahajan. The Steel Authority of India Limited was represented by Senior Advocate Rohinton Nariman.

Bar & Bench had reported in April that the spat between the Competition Commission of India and Competition Appellate Tribunal had reached the Supreme Court in the SAIL vs. Jindal case.