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Breaking: SC curtails COMPAT power to challenge CCI in SAIL v Jindal

Competition
Competition
The Competition Commission of India’s (CCI) appellate tribunal does not have the power to second-guess the CCI’s decisions to investigate anti-competitive behaviour, the Supreme Court held today in an “emphatic victory” for the CCI and Jindal Steel and their lawyers Amarchand Mangaldas, Economic Laws Practice (ELP) and counsel Harish Salve and Gopal Subramanium.

The Supreme Court also held that it was necessary for the CCI to be a party to all appeals of its decisions.

It also held that the CCI did not have to invite parties when making decisions under section 26(1) of section 53A of the Competition Act 2002, which allows the CCI to make investigations and inquiries into anti-competitive agreements and dominant positions of enterprises under section 19 of the Act.

The CCI legal team was led by ELP partner Tarul Gulati and competition partner Samir Gandhi who instructed solicitor general Gopal Subrmanium to argue the case.

Amarchand Mangaldas partner Pallavi Shroff led for Jindal with principal associate Ruchi Mahajan, principal associate (designate) Shweta Shroff Chopra and senior associate (designate) Harman Singh Sandhu, and instructed senior counsel Harish Salve. SAIL (the Steel Authority of India Limited) had instructed senior counsel Rohinton Nariman.

ELP partner Gandhi summarised the Supreme Court’s decision and said that:

  • “Orders passed by the CCI under Section 26(1) cannot be appealed to the Compat under Section 53A.
  • Parties to an investigation cannot claim a right to be heard by the CCI at the time of a prima facie determination under Section 26(1). The CCI may invite parties for a hearing at its discretion
  • The CCI shall record some reasons while arriving at a prima facie view under Section 26(1)
  • The CCI is a necessary party in all appeals before the COMPAT where the investigation was taken up suo moto. In all other cases, the CCI is a proper party before the COMPAT.
  • The CCI may pass interim orders under Section 33 without giving notice, but such powers are to be exercised sparingly.”

Shroff commented: “This is the first matter that has gone up to the Supreme Court from the competition tribunal. It establishes the boundaries of the powers of the appellate court and how it should happen.”

She said that the decision was important for the CCI and its ability to investigate speedily. If the Supreme Court’s appeal had not been successful it “would mean that any order that was passed [by the CCI] you could appeal against and no progress was made in cases before the commission”, she said.

Gandhi said it was an “emphatic victory” for the CCI. He also added that the full written judgment, which would be available later today, would contain directions on timelines in which the CCI should carry out its investigations.

The bench consisted of Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar.

The case entered the Supreme Court in April of this year, after the the COMPAT heard an appeal by SAIL against the CCI’s prima facie decision to investigate an allegedly anti-competitive supply of railway equipment between the Indian Railways and SAIL, which was alleged to be in abuse of its dominant position.

Update 10 September 2010: The judgment has just been uploaded.

Photo by Mark Strozier

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