The Competition Commission faces a new challenge after being stopped from investigating alleged anti-competitive practices in aviation fuel supply by the Delhi High Court at the behest of state-owned oil marketing companies.
Mukesh Ambani, owner of Reliance Industries Ltd, filed a complaint with the commission alleging that certain oil companies - Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd - had formed a cartel to supply aviation turbine fuel to Air India, after his company lost a tender to do so. While the case was being investigated by the commission, the oil companies approached the Delhi High Court challenging the commission's jurisdiction, stating that the case fell under the remit of the Petroleum and Natural Gas Regulatory Board.
On December 8 2010 the court stayed the commission's investigation and deleted the commission as a party to the proceedings. The High Court was due next to hear the case on March 15 2011.
The dispute is the second that has arisen over jurisdiction, testing the framework of competition law as overseen by the nascent regulator. The Petroleum and Natural Gas Regulatory Board Act mandates the regulator "to protect the interests of consumers by fostering fair trade and competition among the entities" operating in this sector, which could be interpreted to mean that the board has a duty to deal with anti-competitive practices.
The questions of law before the single-judge bench of the High Court included whether the commission has jurisdiction over a section of the market for which there exists a specialised statutory regulator and whether the court should remove the commission as a respondent in the case.(1)
The interim order passed by the Delhi High Court is odd because the Competition Commission (not the Petroleum and Natural Gas Regulatory Board) is naturally the expert body best equipped to examine alleged cartelisation. The commission has the jurisdiction to examine the alleged anti-competitive practices among the oil companies and this cannot be taken away by a mere coincidental mentioning of the words "competition among the entities" in the preamble of the Petroleum and Natural Gas Regulatory Board Act.
Moreover, the focus of the complaint pending before the Petroleum and Natural Gas Regulatory Board is certainly not related to the effect on competition and, therefore, the High Court's interim order will unnecessarily prolong a decision by the commission on a competition issue and cannot be seen as a progressive order.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525), fax (+91 11 2332 0484) or email ([email protected]).