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CCI: CLAT convenors immune from anti-trust scrutiny for unilateral fee-hikes

CLAT monopoly: Free pass
CLAT monopoly: Free pass

The Competition Commission of India (CCI) has rejected a petition seeking strictures against the core Common Law Admissions Test (CLAT) committee for abusing its dominant position, because the regulator lacks jurisdiction.

The informant, an NGO called iJustice – A Public Interest Law Initiative of Centre for Civil Society, alleged that the 14 law schools that jointly hold the annual CLAT admissions test to national law schools, was able to “consistently [increase] examination fees” from Rs 3,000 to Rs 4,000, and hike the “pre-admission advance deposit” pending admission from Rs 50,000 to Rs 1 lakh - two complaints against CLAT that Legally India has reported on in the past. iJustice was represented by advocates Sai Krishna Rajgopal, Shri Prashant Narang and Ankur Sood.

The CLAT committee was able to unilaterally increase fees “without consideration of the candidates’ financial statuses”, “by virtue of inherent dominance that the CLAT Committee and participating NLUs enjoy in the legal education market”, said iJustice according to the CCI’s order dated August but first published today.

However, the CCI decided it was unable to investigate the allegation because the CLAT core committee was not an “enterprise” under section 2(h) of the Competition Act but merely a memorandum of understanding (MOU), contractual agreement or “merely an arrangement” between the 14 colleges, which was not sufficient to constitute a “person” within the meaning of the Act.

The CCI held in its order [download PDF 188KB]:

6. As per section 2(h) of the Act, “Enterprise” means a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space. Explanation-For the purposes of this clause-
(a) “activity” includes profession or occupation;
(b) “article” includes a new article and “service” includes a new service;
(c) “unit” or “division”, in relation to an enterprise, includes—
(i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods;
(ii) any branch or office established for the provision of any service;

7. A bare perusal of the definition reveals that for an entity to be an enterprise, the following conditions need to be fulfilled:
(i) it must be a person or department of the Government;
(ii) it must be engaged in the specified economic activities; and
(iii) such activity must not be a sovereign activity.

8. The term ‘person’ has been defined in section 2(l) of the Act and the same is quoted below: section 2(l): “person” includes-
(i) an individual;
(ii) a Hindu undivided family;
(iii) a company;
(iv) a firm;
(v) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(vi) any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617of the Companies Act, 1956 (1 of 1956);
(vii) anybody corporate incorporated by or under the laws of a country outside India;
(viii) a co-operative society registered under any law relating to cooperative societies;
(ix) a local authority;
(x) every artificial juridical person, not falling within any of the preceding sub-clauses

9. It is observed that as per the direction of the Hon’ble Supreme Court of India in the case of Varun Bhagat v. Union of India & Ors., W.P. (Civil) No. 68 of 2006, under a Memorandum of Understanding (MoU) between seven National Law Universities, the first CLAT was conducted in 2008 by the National Law School of India University, Bangalore for admission to the under-graduate and post-graduate programmes for National Law Universities. Now 14 NLUs are part of CLAT. It does not appear that the participating NLUs have constituted a separate body/association for this purpose. The MoU stipulates that the NLUs shall conduct CLAT and also handle the counselling for the law programmes on a rotational basis each year. Thus, the MoU merely appears to be an ‘agreement’ and the same per se cannot be said to have created or constituted a person within the meaning of the term as noticed supra. The Informant has also not placed any material on record which can indicate that CLAT Committee is an association or body created or constituted under the said MoU. In these circumstances, it appears that conducting CLAT is merely an arrangement between the participating NLUs for the purpose of conducting CLAT and facilitating and streamlining the admission process of NLUs. 

10. In view of the above discussion CLAT is not an ‘enterprise’ under section 2(h) of the Act, and no case of contravention of the provisions of section 4 of the Act is made out against the Opposite Party and the information is ordered to be closed forthwith in terms of the provisions contained in section 26(2) of the Act.

The CCI did not discuss in its order Section 3(3) of the Competition Act, which states:

Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which—

(a) directly or indirectly determines purchase or sale prices;

(b) limits or controls production, supply, markets, technical development, investment or provision of services; […]

Photo by Chris Potter

Full order

CCI order on CLAT committee by legallyindia

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