Competition Commission of India: Losing grip on procedures?

The fair market regulator in India, the Competition Commission of India (CCI), despite its excellent track record in regulation of merger control, has been lately found wanting in the other core area of its function - the enforcement of the competition law.  

2024 has seen the CCI in a challenging position, as some of its ongoing investigations have been significantly stalled. This delay is largely due to parties raising concerns about breaches of sensitive confidential data shared with the CCI and various procedural errors in the investigations being conducted. Compared to advanced jurisdictions like the European Union (EU) and the United States (US), where similar antitrust investigations are concluded swiftly, the CCI’s probes often extend to several years. In some cases, these delays can be attributed to judicial scrutiny during the investigation due to procedural irregularities.

Timely investigations are essential in antitrust proceedings because markets are dynamic. As entities often adopt anti-competitive tactics to gain an unfair advantage, it becomes imperative for the CCI to conduct thorough, yet swift investigations to mitigate potential harm to the market. However, the recent incidents of parties halting CCI investigations through judicial interventions have raised serious questions about the effectiveness of India’s antitrust watchdog. Some recent instances are highlighted below.

In April 2022, the National Restaurant Association of India (NRAI) filed a complaint against food delivery platforms Swiggy and Zomato, alleging anti-competitive agreements. The CCI formed a prima facie opinion and ordered an investigation. However, in May 2024, Swiggy challenged the CCI’s decision before the Karnataka High Court. In July 2024, the High Court ruled in favour of Swiggy, finding that the CCI had improperly allowed NRAI representatives access to sensitive data of Swiggy’s mobile application. The Court set aside the CCI’s order and remanded the matter back for reconsideration. In this case, it was argued that the statutory mandate under Regulation 35 (8) of the CCI (General) Regulations, 2009 was ignored. This provision clearly states that the informant should not ordinarily be included in the confidentiality ring and should only have access to non-confidential records, unless its inclusion is considered necessary or expedient for effective inquiry. Despite this, the CCI allowed the NRAI as an informant to be part of the confidentiality ring, leading to judicial scrutiny.

In another instance, in July 2024, the Director General (DG) of the CCI submitted an investigation report in an investigation initiated against Apple Inc, which had been ongoing since 2021. In 2021, the CCI prima facie observed Apple to have abused its dominant position and directed the DG to investigate. After nearly two years, the DG concluded the investigation and found that Apple had violated certain provisions of the Competition Act., 2002. However, Apple subsequently raised concerns about the breach of its confidential commercial sensitive information, which was included in the non-confidential report. This led the CCI to order all parties to return the reports, as the DG had ignored regulatory mandates inappropriately including confidential information in the non-confidential version.

In September 2024, during an investigation against Indian e-commerce giants Amazon and Flipkart, three Amazon sellers - Appario, Darshita and Rocket Commerce - who were third parties in the case, after the supply of the investigation report, filed a writ petition before the Karnataka High Court. They argued that the DG improperly included these third parties as opposite parties in the investigation report without obtaining the necessary approval from the CCI. The petitioners asserted that the DG exceeded his authority and breached the procedural safeguards established by the Competition Act. The High Court on September 27 granted interim relief to these resellers, temporarily halting the CCI’s proceedings against Amazon and Flipkart. After this order, six other resellers - Green Mobiles, Xanique, Cigfil, Wishery, Savex and Adilaxmi - who were also made opposite parties by the DG, filed a writ petition before High Court praying for similar relief as was granted to the other resellers. The Court, maintaining parity, granted similar relief to the other six resellers as well.  

In April 2024, the Madras High Court in the case of MRF v. CCI, had observed that any third party to the investigation, before its inclusion/impleadment as a contesting party/opposite party, must be put on notice by the CCI. The Court emphasised that the CCI must provide an opportunity for third parties to respond before changing their status from “third person” to “contesting party.” Ignoring this judicial precedent, the DG erroneously, without putting the third parties to notice, included them as opposite parties. It is anticipated that this procedural ignorance may invite similar observations by the Court as well which may possibly halt the investigation process. 

In light of the Karnataka High Court's interim order dated September 27, the associated resellers of Amazon and Flipkart filed writ petitions in the High Courts of Karnataka, Punjab and Haryana, Delhi, Madras, Allahabad and Telangana, challenging different aspects of the CCI's investigation. The CCI, through its transfer petition in the Supreme Court, sought to consolidate these cases to prevent multiplicity of proceedings and delays. However, on December 13, 2024, the Supreme Court refused to transfer 24 writ petitions filed in various High Courts by the sellers of Amazon and Flipkart to a division bench of Karnataka High Court in a transfer petition filed by the CCI. The Supreme Court suggested that it was ready to send the cases to the Karnataka High Court if both parties agreed. However, with no consensus reached, the matter was deferred.

As the writ petitions in the above cases are pending, it will not be proper to pass any comments on the final outcome. Yet, at least prima facie, both the DG and the CCI itself seem to be losing grip on procedural aspects. Such frequent procedural errors not only prolong investigations, but also cast doubts on the effectiveness of the CCI as the sole fair market watchdog and send wrong signals to the prospective investors in India’s growth story.

The frequent judicial interventions by higher courts due to avoidable procedural lapses within the CCI establishment not only delay the conclusion of the inquiry process, but also undermine the credibility and effectiveness of the investigations conducted by the CCI.

Such procedural errors also create opportunities for belligerent entities to manipulate market perceptions in their favour during the pendency of the case, potentially leading to significant undue profits. This can hamper the CCI’s efforts to effectively enforce competition laws. Let’s hope the CCI can overcome these lapses in the new year.

MM Sharma is the Head of Competition Law and Policy at Vaish Associates Advocates.

Ankit Singh Rajput is an Associate (Competition Law) at the firm.

Views are personal.