Complaints procedure for private parties

Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

Yes. The Competition Commission of India (CCI) can enquire into allegations of behavioural contraventions (ie, cartels, vertical foreclosure or abuse of dominance) on its own, on receipt of ‘information’ from any person, consumer or their association or trade association, or by way of a reference made to it by government (informant). Broadly, the following procedure and timelines are followed:

  • the filing of information: after the filing of information, the CCI scrutinises the information for any procedural deficiencies within 15 days. The informant remedies the defects within the prescribed timelines. The CCI has now revised filing fees for the filing of information;
  • formation of a prima facie view by the CCI and initiation of investigation: the CCI endeavours to conclude its preliminary assessment within 60 days – at times after hearing the parties (which, in practice, takes longer than this). If the CCI finds prima facie contravention, it directs the Director General to carry out a detailed investigation. Otherwise, it closes the matter;
  • investigation by the Director General: the Director General is required to submit its investigation report to the CCI within 60 days. This may be extended by the CCI up to a ‘reasonable period’ on the Director General’s request. In practice, the Director General routinely requests multiple extensions from the CCI, and its investigation could take any time between a few months to two to three years; and
  • CCI’s review of the report of the Director General and final order: parties provide their comments to the Director General’s report typically within 30 days of receiving the report. Parties are then heard. As far as possible, the CCI is required to pass its final order within 21 working days of the date of conclusion of the hearings. This process also typically takes much longer than 21 working days.
Regulatory enforcement

How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

A vast majority of the Competition Commission of India (CCI)’s decisions to date relate to cartels and abuse of dominance. In all the infringement decisions issued by the CCI, we estimate that less than 5 per cent of the cases relate to vertical restraints.

What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

Vertical restrictions that cause, or are likely to cause, an appreciable adverse effect on competition in India are prohibited and considered void. That said, a vertical restriction found to be anticompetitive by the CCI in an otherwise valid contract is unlikely to render the entire contract unenforceable. In the context of contract law, the Supreme Court of India has recognised that if one part of a contract is rendered unenforceable, lawful parts may still be enforced, provided they are severable (Shin Satellite Public Co Ltd v Jain Studios Ltd (2006) 2 SCC 628)).

May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The CCI has the authority to directly penalise erring enterprises and does not need to approach a court for enforcement of its decisions. For anticompetitive vertical restrictions, the CCI can levy a penalty of up to 10 per cent per cent of the average relevant turnover for three preceding financial years (from the date of the CCI’s decision) of the contravening enterprise. Equally, the CCI may direct the erring enterprise to cease and desist from carrying on with the anticompetitive vertical restraint and change their business practices. Notably, the CCI can also penalise the individual office bearers responsible for the conduct of the business of the enterprise found guilty of contravening the provisions of the Competition Act.

Investigative powers of the authority

What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

The Competition Commission of India (CCI) and the Director General have powers of a civil court for the purpose of discharging their functions under the Competition Act in respect of the following matters:

  • summoning and enforcing the attendance of any person and examining them on oath;
  • requiring the discovery and production of documents;
  • receiving evidence on affidavit;
  • issuing requests for examination of witnesses or documents; and
  • requisitioning public records or documents from any office.

The CCI may also call upon experts from disciplines such as economics, commerce, accountancy and international trade to assist in its inquiry. The Director General also has the power to conduct dawn raids. The CCI and the Director General can, and often do, investigate enterprises domiciled outside India. In fact, the CCI is also empowered to investigate and restrain anticompetitive acts or agreements taking place outside India but having an appreciable adverse effect on competition in India.

Private enforcement

To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

Competition law enforcement in India is not adversarial. Accordingly, declaratory judgments or injunctions and claims for damages in the traditional sense are not possible in India. However, as a regulator, the Competition Commission of India (CCI) is duty bound to examine any information provided by any person or government body to assess whether it warrants a detailed examination. Such information can be provided by parties to the agreements themselves. Also, while doing so, if an informant can establish that the alleged anticompetitive conduct is likely to be established upon detailed investigation and continuation of such conduct pending CCI’s investigation could cause irreparable harm, the CCI may also grant an interim injunction against such anticompetitive conduct.

Once the CCI has reached a finding of infringement, any person aggrieved by the anticompetitive conduct of the infringing firm may approach the appellate authority, the National Company Appellate Tribunal, seeking compensation for the loss suffered owing to the anticompetitive conduct. In practice though, such claims are rare and usually not processed until the infringing firm has exhausted its appellate remedies.