Who has the locus standi to approach the Competition Commission of India (“CCI”) against the anti-competitive practice of an enterprise that is violative of provisions of the Competition Act, 2002 (“the Act”)? The issue that has often arisen in litigation under the Act is whether only a person or an entity that has suffered some harm on account of the anti-competitive practice have a proximate cause to approach the CCI or can any individual or entity with the knowledge of such an anti-competitive practice approach the Commission as a whistle-blower informant.

The lack of locus standi on the part of the informant has often been raised as a preliminary defence by the accused parties in anti-competition cases in an attempt to have the complaint dismissed at the threshold. The Hon’ble Supreme Court in its judgement dated December15 2020 in Samir Agarwal vs Competition Commission of India & Ors. [Civil Appeal No.3100 of 2020] (“Samir Agarwal Case”) has finally dispelled the ambiguity.

Brief Background:

Samir Agarwal (“the Informant”), an independent legal practitioner, filed information before the CCI alleging contravention of Section 3 of the Act by cab aggregator brands namely Ola and Uber. The Informant alleged that the algorithm used by cab aggregators for price fixing facilitated their collusion with drivers, and among drivers as well, thus violating Section 3 of the Act.

Simply put, the Informant alleged that due to algorithmic pricing, neither the riders were able to negotiate fares with individual drivers for rides booked through the mobile applications of the cab aggregators, nor were the drivers able to offer any discounts.

The CCI passed an order dated November 6, 2018 [Case No. 37 of 2018] in which it took the view that no agreement, understanding or arrangement appeared to exist either between the cab aggregators and their respective drivers or between the drivers inter se. The CCI therefore ruled that no prima facie case for contravention of Section 3 of the Act had been made out to order an investigation by the Director General and the matter was disposed of. Aggrieved by the order of the CCI, the Informant assailed the same before the National Company Law Appellate Tribunal (“NCLAT”).

NCLAT Ruling: Narrow Interpretation of Locus Standi under Section 19(1)(a) of the Act

In the appeal before the NCLAT, cab aggregators challenged the locus standi of the Informant alleging that the Informant was not a “person aggrieved” and had failed to present cogent evidence of a legal injury arising as a result of the alleged conduct.

The NCLAT, before delving into the merits of the appeal, outrightly rejected the Informant’s locus standi to initiate and maintain an action against the cab aggregators. The NCLAT while adjudicating on the Informant’s right to approach the CCI, referred to Section 19(1) of the Act and noted that this provision stipulates three ways in which the CCI can take cognizance of an alleged contravention of the Act: (i) on its own motion; (ii) through information from any person, a consumer or a consumers’ association or a trade association; (iii) through a reference made to the CCI by the appropriate Government or statutory authority.

While interpreting the term “any person” under this provision, the NCLAT opined that “it has necessarily to be construed as a reference to a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices”. The NCLAT while justifying this interpretation reasoned that the concept of locus standi has been carefully diluted for public interest litigations, class action lawsuits and whistle blower complaints.

The NCLAT further observed that “When a statute like the Competition Act specifically provides for the mode of taking cognizance of allegations regarding contravention of provisions relating to certain anti-competitive agreement and abuse of dominant position by an enterprise in a particular manner and at the instance of a person apart from other modes viz. suo motu or upon a reference from the competitive government or authority, reference to receipt of any information from any person in section 19(1) (a) of the Act has necessarily to be construed as a reference to a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices.”  It expressed the concern that “Any other interpretation would make room for unscrupulous people to rake issues of anti-competitive agreements or abuse of dominant position targeting some enterprises with oblique motives.”

In consequence, the order passed by the NCLAT necessitated a direct nexus between the person filing the information and the violation of legal rights under the Act, in the absence of which a third party would not have locus standi to approach the CCI.

The NCLAT thus took a conservative approach in interpreting the locus standi of whistle blower informants under Section 19(1) of the Act and its rationale resultantly circumscribed opportunities to unravel alleged violations of the Act at the instance of individuals who are not personally affected by a breach of the provisions of the Act.  

Interestingly, the NCLAT’s predecessor, the Competition Appellate Tribunal (“COMPAT”) while dealing with an identical issue of locus standi to approach the CCI had taken a strikingly different view. In the case of Shri Surendra Prasad v. Competition Commission of India and others [Appeal No. 43 of 2014], the COMPAT upon analysing the legislative intent underlying the relevant provisions of the Act was of the view that there is no specific qualification or condition which needs to be fulfilled by any person in order to file an information under Section 19(1)(a) of the Act.

Pursuant to the NCLAT’s decision, the CCI sought to clarify its stance on locus standi. In the case of Harshita Chawla vs WhatsApp Inc. & Facebook Inc. [Case No. 15 of 2020], relying on the NCLAT’s observation in the Samir Agarwal case, WhatsApp Inc., an opposite party, challenged the Informant’s locus to lodge a complaint before the CCI in the absence of invasion of its legal rights as a consumer. The CCI dismissed the challenge raised by the opposite parties on the following grounds: (i) the CCI is bound to address instances of market distortion regardless of whether the remedy is sought by the Informant in rem or in personam and follows an inquisitorial system as upheld by the Hon’ble Supreme Court; (ii) the substance of the information carries greater significance than the identity of the informant. The CCI further noted that this view was supported by the amendment to the Act (“Competition (Amendment) Act, 2007”) that widened the scope from a ‘complaint’ to ‘information’. Diverging with the opinion given by the COMPAT, the CCI held that an informant need not necessarily be an ‘aggrieved party’ having suffered injury by the alleged conduct to bring the same to the CCI’s notice.

Supreme Court Order: Dispelling the ambiguity

A three-judge bench of the Supreme Court in the Samir Agarwal case set aside the NCLAT’s finding that the Informant did not have locus to approach the CCI, while refusing to interfere with the orders of the CCI and the NCLAT upholding that the cab aggregators do not facilitate cartelisation or anti-competitive practices violative of the provisions of the Act.

The Supreme Court in its judgement took note of the Competition (Amendment) Act, 2007 and, in particular, substitution of “receipt of a complaint” under Section 19(1) with the expression “receipt of any information in such manner” as introduced by 2007 Amendment. The Bench was of the view that whereas a complaint could be filed by an aggrieved person, information, on the other hand, may be received by any person irrespective of whether such person has been personally affected by the alleged anti-competitive act. The Court in its reasoning stated that the proceedings under the Act are proceedings in rem which affect public interest and the Commission may exercise suo moto powers as laid down in Section 19(1) of the Act. The Bench was of the opinion that even while exercising suo moto powers, the CCI may receive information from any person and not merely from an aggrieved person. The three-judge Bench supported its argument by placing reliance on Section 35 of the Act in which the expression “complainant or defendant” has been substituted with “person or an enterprise” and permits the informant to appear either in person or through its agents before the CCI.

Thus, the Apex Court has finally cleared the air over the much-debated question of locus standi, holding that the "CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act."

This judgement of the Supreme Court is likely to deeply impact one of the star defences of parties accused of anti-competitive conduct since the Apex Court has widened the CCI’s authority by allowing it to receive information either on its own motion or from a member of the public – who may be a person aggrieved or a whistle blower. The Supreme Court’s decision further clarifies that the CCI’s functions are not just adjudicatory but inquisitorial and regulatory as well.

The Supreme Court’s clarification is also likely to impact pending competition matters that got derailed due to the ambiguity on this issue. The order will also encourage a more competitive market environment since a complainant would not need to go through the rigour of proving a personal injury caused to her/him due to a trade practice alleged to be anti-competitive.