General introduction to the legislative framework for private antitrust enforcement
Private antitrust actions are governed by the Competition Act and the regulations framed therein. The provisions of the Competition Act do not bar the application of any other law. However, the Competition Act expressly bars the civil courts from accepting any suits or proceedings in respect of any matter that the CCI or NCLAT is empowered to determine, which, in the case of NCLAT, includes compensation applications by aggrieved parties.
Section 19(1) read with Section 26(1) of the Competition Act empowers the CCI to initiate inquiries (through investigation by the DG) into anticompetitive agreements or abuse of dominant position of an enterprise either on its own motion or upon receipt of information from any person, consumer or their associations or trade association or on reference from central or state government or a statutory authority.
Although there is no legislative no provision in this regard, the High Court of Delhi by way of a decision has held that the CCI has an inherent power to recall or review (based on certain specified grounds) an order passed by the CCI under Section 26(1) of the Competition Act initiating an investigation.
The Competition Act empowers the DG to investigate contraventions when directed by the CCI upon formation of a prima facie view. In this regard, the Competition Act grants the DG with certain powers such as summoning and enforcing attendance if any person and examining him on oath, requiring discovery or production of documents, receiving evidence on affidavit, issuing commissions for the examination of witnesses or documents, carrying out search and seizure operations (or dawn raids). However, DG's powers, though wide are supposed to be exercised with caution. In 2016, COMPAT set aside the order of the CCI observing that the DG as well as CCI should not be blinded by the statement made by parties during investigation and veracity of such statements must be independently tested by DG and CCI.
At the conclusion of an inquiry, the CCI can pass an order under Section 27 of the Competition Act, inter alia, imposing a penalty on the contravening enterprise. In the interim, Section 33 of the Competition Act empowers the CCI to pass interim orders restraining alleged anticompetitive conduct until the inquiry is concluded or further orders are issued. As per a leading decision of the Supreme Court interpreting Section 33, this power has to be exercised by the CCI 'sparingly and under compelling and exceptional circumstances'. Additionally, the CCI, while recording a reasoned order in this regard, inter alia:
- should record its satisfaction (which has to be of a much higher degree than the formation of a prima facie view under Section 26(1) of the Competition Act) in clear terms that an act in contravention of the stated provisions has been committed, and continues to be committed or is about to be committed;
- should, as a necessity, issue an order of restraint; and
- from the record before the CCI, show that it is apparent that there is every likelihood of the party to the lis suffering irreparable and irretrievable damage, or there is a definite apprehension that it would have adverse effect on competition in the market.
The CCI also has the power to impose a lesser penalty, in enforcement proceedings, where 'full, true and vital disclosures' are made by a person cooperating with a cartel investigation.
An application for compensation (arising from findings of CCI or findings of NCLAT) can be made before NCLAT under Section 53N of the Competition Act. Furthermore, an application can be made to NCLAT under Sections 42A and 53Q(2) for recovery of compensation from any enterprise for any loss or damage shown to have been suffered as a result of the contravention of the orders of the CCI or NCLAT.
At present, NCLAT has five compensation applications pending before it that have been filed by parties under Section 53N of the Competition Act. However, NCLAT is yet to render a final view on those applications.
The limitation period for an appeal before NCLAT is prescribed by the Competition Act. Section 53B provides that any person aggrieved by a CCI order can file an appeal before NCLAT within 60 days of the communication of the order's issuance. Further, an appeal can be made to the Supreme Court of India against the orders passed by NCLAT within 60 days of the communication of the order passed by NCLAT. Since the Competition Act is silent on the limitation period applicable to filing of an application for compensation, the doctrine of laches would prohibit the parties from bringing an action after an unjustifiable and unreasonable delay. However, if the information filed by the informant is in the nature of a continuing violation, the limitation period would not bar the filing of such information.