No notice under Section 48 of the Competition Act in the absence of any adverse material in D-G Report: Delhi HC

The Delhi High Court has held that in absence of any adverse material in the Director General’s report, the Competition Commission of India cannot arrive at a prima facie conclusion of contravention and issue notice to a party under Section 48 of the Competition Act, 2002. (National Engineering Industries Ltd vs CCI).The order was passed by a Single Judge Bench of Justice Navin Chawla while setting aside CCI order issuing notice to National Engineering Industries Ltd under Section 48 for contravention of the Competition Act..In February 2019, CCI had ordered further investigation in its Suo Moto Case concerning alleged cartelisation in the supply of Bearings (Automotive and Industrial) to the Original Equipment Manufacturers (OEMs)..In August 2019, CCI issued notice under Section 48 of the Competition Act, 2002, inter alia, against National Engineering Industries Ltd (NEI), purportedly based on the Reports submitted by the Director General..After NEI’s application seeking recall/review of the Notice was dismissed in August 2019, it moved the High Court against the issuance of notice..NEI argued that in the Main Investigation Report as well as the Supplementary Report by the Director-General, there was no adverse finding against it..It submitted that although the CCI, in its order, stated that the Director General identified NEI as one of the liable parties, a bare reading of the Reports did not substantiate any such finding..After considering the submissions and the relevant extract of the Report which was relied upon by the CCI to issue Notice, the Court observed that the report did not, in any manner, hold NEI to be guilty of violation and merely recorded that NEI had a technical relationship with NTN Corporation, Japan which supplied bearings manufactured by NEI to Nissan Factory in India..The Court thus remarked,“In view of the above, without any further material before respondent no. 1, even the prima facie conclusion could not have been reached by the respondent no. 1 that the petitioner has violated the provisions of the Act or is liable to be proceeded under Section 48 of the Act.”.It stated that where the prima facie opinion, though purportedly formed and expressed, is palpably unsustainable, the remedy of Article 226 would be available to the aggrieved party..Relying on the Court’s decision in Telefonaktiebolaget LM Ericsson (Publ) vs. Competition Commission of India and Another (2016), the Court further stated that commencement of investigation itself may cause prejudice to a party..Therefore, in view of the above, the Court opined,.“..it is clearly evident that the notice has been issued by the respondent no. 1 without properly considering the Reports of the Director General. The learned senior counsel for the respondent no. 1 has also been unable to show any observation in the said Reports which can be called adverse to the petitioner or having found any violation of the Act by the petitioner.”Delhi High Court .In view of the above, the order issuing notice against NEI, as well as the order dismssing the recall application, was set aside. .NEI was represented by Advocates Vaibhav Gaggar, Nitish Sharma, Nilesh Deep, Syed Firdaus Ali, Ishan Arora..CCI was represented by Senior Advocate Prashanto C Sen with Advocates Aakanksha Kaul, Shivank Pratap Singh, Prabudh Singh, Ved Prakash Mishra, Sanskriti Jain, Saurabh..Read the Order: