The Competition Commission of India (CCI) has been tasked with “the duty of eliminating practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants”[i] Such language highlights that this mandate, being extremely wide, comes along with extraordinarily wide jurisdictional power. Competition Act, 2002 (the Act) has been made supreme for the purposes of competition enforcement by a non-obstante provision.
In India, various sectoral regulators exist for their expertise in addition to a competition authority looking over the entire market. Legislative ambiguity or legislative omission or jurisdictional overlap has often led to conflicts of jurisdiction between the two. S. 18, 21, 21A, 60 and 62 of the Act create scope for such conflict. Before the CCI’s establishment, sectoral regulators looked after the market; therefore a similar duty fell on both.
S. 21, amended, and S. 21A, introduced, through an amendment in 2007, empowered the CCI with suo moto cognizance when it comes to references by other Statutory Authorities relating decision of such authorities in cases allegedly concerning contravention of the Act. However, many times CCI’s jurisdiction has been challenged over sectoral regulators like Reserve Bank of India, Petroleum and Natural Gas Regulatory Board, Delhi Electricity Regulatory Commission[ii] and Telecom Regulatory Authority of India[iii]. The issue of jurisdictional overlap was decided by the Apex Court, where it upheld that the jurisdiction of CCI remains barred till the time a sectoral regulator investigates and arrives at the finding of contravention of the law.[iv]
Recently, Amazon as well as Flipkart has been able to ward off CCI’s probe[v] into their business practices for anti-competitive practices of deep discounting, preferential treatment to certain sellers and private labels, cross-usage of data and more. The probe has been stayed[vi] keeping in line with the Bharti Airtel among other considerations. The e-commerce platforms stated that the Enforcement Directorate (ED), under Foreign Exchange Management Act, 1999 (FEMA) and Foreign Direct Investment Policy, is looking into the ability of these platforms to provide deep discounts. And until such investigation is completed, the CCI’s jurisdiction is barred.
This case in the author’s opinion should be considered as a cautionary tale against an approach fettering the CCI’s jurisdiction. At a time when many foreign jurisdictions are investigating into business practices of Amazon and complaints are flowing in[vii], such a stay does not seem to be in public interest. Irrespective of the findings, the global as well as national agitation against the Tech Giants merits an investigation, immediately. At present, there is no sectoral regulator for the e-commerce industry in India and the ED, under FEMA does not qualify as a sectoral regulator for the purposes of e-commerce industry. In such a case, delaying jurisdiction of a more appropriate body in favour of a body not determining a competition related issue is detrimental to the market.
A competition authority holds a unique place in an economy and therefore should be treated as such. Perhaps, India should take lessons from international experience of interaction between sectoral regulators and competition authorities.[viii] For instance, the Australian Competition and Consumer Commission has been empowered to administer industry specific rules, connected to access to market and related matters. The Commission Federal de Competencia of Mexico takes a more collaborative approach, where it decides whether the conditions of effective competition exist in the market, justifying the price regulation done by the sectoral regulator. If the conditions are justified, the sectoral regulator is entrusted with the administration of price regulation.
UK, on the other hand, has taken a concurrent approach[ix] where both the Director General of Fair Trade Authority and the sectoral regulators have jurisdiction. This approach has been followed by South Africa and the USA[x]. The approval from one agency does not guarantee approval from the other. Competition authorities are better equipped to determine issues of anti-competitive behaviour despite the industry expertise of the sectoral regulator. The competition authority has vast experience in delineation of relevant markets in various sectors unlike the sectoral regulator who look at the entire industry as a whole. Competition authorities are also equipped with significant investigative powers and economic experts aiding in making informative and sound economic analysis. Moreover, sectoral regulators often suffer from regulatory capture, incentivising them to maintain the status quo, which hampers the competition in the market.
It is suggested that sectoral regulators should actively cooperate with competition authorities by providing relevant information and expertise. While reviewing any merger or combination, they should abide by the principles of competition jurisprudence, taught to them by active competition advocacy by the competition authority. Therefore, competition authorities are better equipped to make consistent, independent and qualified determinations of anti-competitive issues.
India should learn from the same and take an approach which “maintains the comity”[xi] between the bodies. In case of interface, both the authorities should collaborate to facilitate quicker fact-finding and decision-making. Alternatively, the sectoral authority may investigate first, if necessary, in a time-bound fashion post which CCI takes over. Joint investigation or a time-bound joint commission having experts from both the authorities forms another alternative. Novel and collaborative approaches help in efficiency, cost-effectiveness and avoiding duplication of efforts. Nevertheless, CCI should decide any issue of anti-competitiveness in any sector.
The author is a former CIRC intern. The views expressed are personal.
[i] Competition Act, 2002, No. 12, Acts of Parliament, 2003, Preamble & §18.
[ii] Shri Neeraj Malhotra, Advocate vs. North Delhi Power Ltd. & Ors, Case No. 6 of 2009, Competition Commission of India.
[iii] Consumer Online Foundation v. Tata Sky Ltd. & Other Parties, Case No. 2 of 2009, Competition Commission of India.
[iv] Competition Commission of India v. Bharti Airtel Ltd. & Ors., AIR 2019 SC 113.
[v] Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited & Ors, Case No. 40 of 2019, Competition Commission of India.
[vi] Amazon Seller Services Private Limited v. CCI, W.P. 3363 of 2020, Karnataka High Court.
[vii] Supra v. See also, All India Online Vendors Association v. Flipkart India Private Limited & Ors, Case No. 20 of 2018, Competition Commission of India.
[viii] Refer for more details. Cezley Sampson & Faye Sampson, Competition and Sectoral Regulation Interface, CUTS Centre for Competition, Investment & Economic Regulation, Briefing Paper, No. 5 of 2003. Access at https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjj9Za5w__tAhWawTgGHYKsAeQQFjAMegQIHh
[ix] The Competition Act 1998 (Concurrency) Regulations, 2000 (U.K.).
[x] Refer for more details. Stuart M. Chemtob, The Role of Competition Agencies in Regulated Sectors, 5th International Symposium on Competition Policy and Law Institute of Law Chinese Academy of Social Sciences (Mau 11-12, 2007). Access at https://www.justice.gov/atr/speech/role-competition-agencies-regulated-sectors.
[xi] Supra iv.