Defining limits of competition bodies

Apr 17 2014, 02:37 IST
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SummaryThe issues raised by KEL could throw up interesting answers

The Competition Act, 2002, has run into rough weather even after the legislation was passed 12 years ago. A writ petition has been filed by a Bangalore-based explosives companyKeltech Energies Ltds (KEL)challenging certain provisions relating to the quasi-judicial functions of the Competition Commission of India (CCI) and the constitution of the Competition Appellate Tribunal (COMPAT). The Supreme Court has sought the Centres views on KELs petition challenging the legality of the Act on the ground that in the absence of a judicial member, the anti-trust watchdog acted arbitrarily in its case.

The petition comes in the wake of CCI in 2012 asking 10 companies, including KEL, to pay penalties equalling 3% of the average of their three-year turnovers for forming a cartel to bid for supply to Coal India. The companies controlled 75% of the explosives supplies. The tribunal upheld CCIs order, slapping a R3.12 crore penalty on KEL for allegedly not participating in a reverse auction in 2010, but reduced the penalty by 10%. According to advocate Sameer Parekh, who represented KEL, these provisions are clearly beyond the legislative competence of Parliament, contrary to the requirements of separation of powers and contrary to the provisions of the Constitution of India including Article 14 thereof and failure to comply with the requirements of natural justice.

The jurisdiction of CCI covers anti-competitive agreements (cartels, abuse of dominance, unfair or discriminatory pricing, etc). The law provides for investigation, inquiry and adjudication by CCI and contains provisions for penalties and also for non-compliance with its orders. CCI is also responsible for competition advocacy, public awareness and training.

Going through various judgments and commentaries on the tribunalisation of justice, the Supreme Court had laid down the parameters that must be complied with by the government to validly constitute a tribunal. It emphasised that there should be no bureaucratisation of tribunals, which should have an equal number of judicial members and the adjudicatory functions must be separate from the regulatory or administrative or advisory functions.

All these issues came up in the matter of Brahm Dutt before the Supreme Court where the Centre sought to amend the Act. However, the situation was made worse after the amendment. The Act, prior to 2007 Amendment Act, had expressly provided for judicial members on CCI for the purpose of discharging the adjudicatory functions. While the Competition (Amendment) Act, 2007, omitted the relevant provisions, providing for the Benches of Commission as well as

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