Does allowing filing of interlocutory applications go against the nature of the CCI?

The Competition Commission of India (CCI) recently introduced a draft version to amend the CCI (General) Regulations, 2009 to allow parties to file interlocutory applications (IAs) before it.

The said concept would apparently assist the Commission in tracking various applications filed before it for various reasons like seeking adjournment, extension, cross examination etc, as mentioned by the parties.

Nature of the CCI

Prior to getting into the nuances, it may be prudent to look into the mandate of the CCI to get a holistic understanding of the functioning of the law. The CCI, by incorporation, is an independent statutory body entrusted to promote competition in the market. Through relevant provisions of the parent statute - the Competition Act, 2002 - the CCI, unlike courts, is duly empowered to initiate suo motu inquiry into violation of the law and determine its own procedure while conducting the investigation. Once a matter is reported to the CCI, the same cannot be withdrawn even by the informant (complainant). Apart from performing regulatory functions, the CCI is also mandated to advocate the application of competition law across the country.

Sufficiency of the current process

As per accepted economic principles, assessing competition is a dynamic process. The CCI undertakes varied activities from commissioning market studies, conducting in-house research, holding special lectures and so on to better understand market dynamics. Most of the time, there is empirical data involved to understand any theory of harm which may be associated with the conduct of market players. As per its decisional practice, the CCI gives due opportunity to parties to respond wherever allegations are made against them before a Director General (DG) investigation is ordered. Once the investigation is ordered and completed, the Commission further forwards the DG report to the involved parties and requests them to submit their comments and counter-comments before the due date. Throughout the process, the Commission is guided by the principles of natural justice. The parties are free to make additional submissions. However, the same may be taken on record on a case-to-case basis. The parties further have an option to rely on the submissions made during the time of hearing of the arguments and file an additional written statement as they deem fit.

Is there a need for IAs?

The background note as issued by the CCI suggests that it will help the CCI to better track the various applications filed by parties. This may mean addition of another level of filing. The note doesn't discuss the economic justification of the additional layer. While there is a perception that such a concept may make the CCI procedurally efficient, the administrative and bureaucratic costs in maintenance need to be considered. It is plausible that filing and subsequent maintenance of a separate IA roster may not only exhaust the scarce resources of the CCI, but may further increase the adjudicatory burden on it. While it is important to balance the rights of opposing parties at the CCI, such exercise may not have to be at odds with taking timely course-correction of the market.

What may be the residue here is an assertion on the purpose of regulation. It may reasonably be suggested that the purpose of enacting any subordinate legislation is to facilitate the functioning of the parent statute. Thus, the autonomy given to the CCI vide the Competition Act in terms of determining its own procedure is fully compatible with its current mandate.

The Commission also recently incorporated a Digital Market Unit (DMU). It wouldn't be fully out of context to suggest that such markets require a light-touch approach, both from a qualitative and a quantitative standpoint, to intervene. The need of the hour may be to equip the CCI with additional regulatory tools to facilitate action in the market rather than increasing the administrative burden on the existing ones. This is in line with what has preceded in developed competition jurisdictions. The Indian Competition Commission is currently looking into at least ten cases where the parties involved are digital marketing companies. This may suggest that the response by the CCI may not only have to be timely, but also discerning in nature. The decisions as passed may not only have to stand the test of the internal appellate process, but also speak well to international competition authorities as a rejuvenated and confident nation.

It cannot be gainsaid that the CCI is an economic regulator. It is imperative that value-agnostic data becomes the fulcrum of its decision-making rather than century-old lengthy bureaucratic processes which are, sometimes, supplemented with bulky filings. The CCI speaks to a $3.5 trillion national economy which boasts of a robust startup culture. In such a case, it is bound by nothing but the procedure it sets for itself.

Conclusion

The mandate of the CCI is to ensure competitive markets. This may require a combination of regulatory, inquisitorial, adjudicatory and advocacy powers. Given the evolving nature of competition jurisprudence, the requirement of light-touch regulatory tools is more than ever. This is more so in the case of digital markets. The need of the hour may be to conduct an economic analysis of the law before enactment. There may be merit in taking inspiration from the motto of the government: 'minimum government, maximum governance'. The IA seems unknown to all this. After all, one may not fix something which isn't broken in the first place.

Sumit Jain is Founding Director of the Centre for Competition Law and Economics (CCLE) and Dr Nandita S Jha is an Assistant Professor at Chanakya National Law University, Patna.