The Locus Standi Conundrum: NCLAT, Competition Commission, and the Supreme Court

By Devashish Srivastava, Student at National Law University Odisha

The locus to approach or file an information before the Competition Commission of India (CCI) has been unclear in recent times. It was complicated further by the National Company Law Appellate Tribunal’s (NCLAT) judgment in the matter of Samir Agrawal vs. CCI (Samir Agarwal case). Following the NCLAT’s judgment, the CCI got involved and changed the judicial stance to reflect the fundamental objective of the Competition Act, 2002 (the Act) in Harshita Chawla vs WhatsApp and Facebook (WhatsApp Case). Soon after CCI’s judgment in the WhatsApp Case, the Supreme Court settled the issue vide its order in the Samir Agrawal case in an appeal against the NCLAT’s order. The current article is a chronological study which seeks to analyse the aforesaid judgments passed by the judicial authorities.

Samir Agarwal Case (CCI’s order): November 6th, 2018

An information was filed with the CCI by Samir Agarwal, an independent law practitioner. He alleged that the cab service providers, namely Ola and Uber were in contravention of Section 3 of the Act by using algorithms which facilitates price fixing between the drivers. The CCI did not find any evidence to establish the existence of any agreement or arrangement between the cab services and their drivers. Resultantly, it concluded that no prima facie case exists and closed the matter. Aggrieved by the CCI’s decision, the informant approached the NCLAT.

Samir Agarwal Case (NCLAT’s judgment): May 29th, 2020

The NCLAT held that the appellant, Mr. Samir Agrawal had no locus standi to file the aforementioned information before the CCI. In order to file an information, the informant should be the one to have suffered an injury or invasion of his legal rights by the anti-competitive activities of the respondent. In this case, the informant, Mr. Samir Agarwal did not suffer any violation of his legal right as an individual consumer, or as a part of any trade association. Therefore, it was concluded that the information and the subsequent appeal for action against alleged violations of the Act were not maintainable.

The NCLAT failed to consider that the duty of the CCI is to eliminate malpractice in the market which could have an adverse effect on competition. The Act gives power to the CCI under section 19(1) to inquire into contraventions of the competition laws in place, either on a motion by itself or on the receipt of an information filed by any person. For the purpose of a clear understanding, section 2(l) of the Act gives a very wide scope to the definition of ‘person’, encompassing almost every citizen individually or as part of an enterprise, an HUF, a government entity, or a co-operative society, etc. The objective behind such a wide definition is to not restrict the ability of persons coming and reporting anti-competitive practices because the competition law is an economic legislation and like all such legislations, its enforcement is in rem.

In the case of Hindustan Zinc Limited v. Western Coalfields Limited and Ors the CCI held that as per the statutory power vested upon it by section 19(1) of the Act, CCI has the power to begin an investigation on its own or on the reliance of an information filed before it by an informant for the discovering any anti-competitive activity in the market. In Matrix Info Systems Private Limited v. Intel Corporation and Intel Technology India Private Limited the CCI very shrewdly observed that the informants’ background and status quo can never be considered a ground to not take cognizance against any anti-competitive act of any enterprise or individual, This is because the enforcement of the Act by the CCI is always ‘in rem’ and not ‘in personam’ and therefore such proceedings and their outcome have an impact on the market as a whole and not just the parties involved.

WhatsApp Case (CCI’s order): August 18th, 2020

Harshita Chawla, a practicing advocate filed an information before the CCI alleging an abuse of dominance by Facebook and WhatsApp in the internet-based messaging application segment. The informant stated that WhatsApp, backed by Facebook has coupled its messaging app with WhatsApp Pay, its internet-based payment application. It indicated use of dominance to penetrate into the Unified Payment Interface (UPI) enabled market of digital payments applications. It had also been alleged that by enabling an automated installation of WhatsApp Payments application along with the WhatsApp Messaging App, WhatsApp is taking an unfair advantage of the dependency of its vast user base by forcing the payments app on the users.

Both the opposite parties (WhatsApp and Facebook) made submissions challenging the locus of the informant on the grounds that the informant neither claimed any injury nor had it suffered any violation of her legal rights as a consumer. The parties placed reliance on NCLAT’s ruling in the Samir Agarwal Case to strengthen their claims. It was contented that the informant is an independent legal practitioner and has not claimed any loss or any legal injury individually as a consumer or collectively as part of any trade association as a consequence of WhatsApp’s alleged anti-competitive conduct. Therefore the informant had no locus standi to approach CCI and the information should be dismissed.

The CCI while looking into the objections made by the opposite parties against the locus of the complainant, referred to a similar objection that was raised in Reliance Agency vs. Druggists Association of Baroda. CCI held that proceedings before it are inquisitorial in nature, and therefore the locus of the complainant or informant is irrelevant in deciding whether or not the information filed before the CCI should be entertained. The CCI is mandated to proceed with the matter and investigate whenever an information is filed or reported to it, as long as the matter reported involves an anti-competitive conduct under the ambit of the Act.

CCI further referred to the case XYZ vs. Indian Oil Corporation Ltd. and Ors (informant’s name kept confidential) highlighting that any action or order by the CCI is in rem intended towards achieving market stability through market correction. The orders passed by the CCI not only affect the informant or the opposite party but the market in general. Placing reliance on COMPAT’s judgment in Surendra Prasad v. CCI, the CCI noted that the Act does not prescribe any qualification for the person filing the information under Section 19(1)(a). Further, nowhere in Sections 18 and 19 is it given that the CCI has the power to reject an information on the grounds that the informant does not have any personal interest or is acting on behalf of someone else.

Additionally, CCI referred to its observations in Vedant Bioscience vs Chemists and Druggists Association of Baroda in which it stated that the locus or motive of an informant would be subservient to the duty of the CCI to ensure fair and just regulation of the market. The CCI also made reference to the order passed in Madhya Pradesh Chemists and Distributors Federation vs Madhya Pradesh Chemists and Druggists Association which stated that as long as the allegations made in an information are established by the DG during the investigation, the locus or the credentials of the informant are irrelevant.

Samir Agarwal Case (Supreme Court’s judgment): December 15th, 2020

An appeal was made by Mr. Samir Agrawal before the Supreme Court against the order of NCLAT. The bench comprising of Justices R.F. Nariman, Krishna Murari, and K.M. Joseph upheld the CCI’s and NCLAT’s order in December of 2020, stating that there are no grounds to prove that the activities of cab providers Ola and Uber tantamount to cartelization or anti-competitive agreements with the drivers. However, the bench set aside the NCLAT’s finding on the locus of Mr. Samir Agrawal to file an information before the CCI.

The bench considered the contentions of Mr, Agrawal regarding the amendments made by The Competition (Amendment) Act, 2007 in sections 19 and 35 of the Act. The amendment act of 2007 substituted the words “receipt of any information in such manner” for the originally provided expression “receipt of a complaint” in section 19(1). The bench considered this substitution of great significance, stating that a complaint could only be filed by a person who was aggrieved by an anti-competitive action in market. Whereas, an information can be filed by any person irrespective of whether the concerned person has been adversely affected due to the said anti-competitive conduct. The rationale behind this reasoning of the bench was that the proceedings before the CCI are in rem and directly affect the public interest.

The bench then looked into the amendment brought about in section 35 of the Act, wherein the phrase “complainant or defendant” was substituted by “person or an enterprise” which clearly set out that an information can be filed before the CCI by a person in individual capacity or through one or more agents as a collective enterprise. This amendment removed the restriction on appearing before the CCI which was limited to complainant and defendants, and enlarged the scope to all individuals, either personally or collectively.

The bench stated that the NCLAT’s interpretation of section 19 of the Act was very narrow and restrictive. The CCI can entertain an information filed by any person and not only from a person who has been affected by the anti-competitive conduct in question, and subsequently act upon it. It was held that “When 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 higher public purpose of the Act.”

Current Position: A Summarized Review

The CCI in the WhatsApp case passed a profound order based on sound reasoning and relevant precedents regarding the locus to file an information before the CCI, giving due consideration to the fact that proceedings before the CCI are ‘in rem’ and its orders are enforceable on the market as whole. The locus to approach the CCI is no longer limited only to the aggrieved, but to all persons in individual or collective capacity irrespective of the fact that whether they have suffered a loss or a legal injury due to the anti-competitive activity in question. The idea was to promote diligent reporting of violations of the competition laws in India and not put any restrictions on the informants.

This order of the CCI was further strengthened by the Supreme Court’s judgment in the Samir Agrawal case, overruling the NCLAT judgment. The rationale and objective behind the Supreme Court’s judgment was same as CCI’s in the WhatsApp case. The Supreme Court’s judgment at present seems like a settled position based on a sound understanding and interpretation of the relevant provisions and objective of the Act.

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