Procedure of Investigation under Competition Law5 min read

BY- GURRASHMEET 

Introduction

Competition is the law used to regulate, govern and control the market competition by regulating the anti-competitive conduct by the companies, multinationals, etc.  The competition law is governed under the Competition Act, 2002 in India, and the Competition Commission of India (CCI) was established under it to investigate any cases and/or complaints that come before the law. The Director-General is appointed by the Central Government to conduct the inquiries and investigations in contravention with any provisions or violate any section of the Act. The investigation starts when any receipt of a reference or its knowledge or information is received by either Section 19 for anti-competitive agreements, abuse of dominance, or Section 20 for combinations. When the commission comes to a prima facie opinion and concludes that a case exists, then the commission directs the Director General (DG) to look into the matter and conduct an investigation.

Investigation into Anti-Competitive Agreements and Abuse of Dominance

  • Section 19 deals with investigations and inquiries related to the anti-competitive agreements and abuse of dominance.
  • Upon receiving the receipt of reference or its knowledge or information by Section 19 of the Competition Act, the CCI has to come to a prima facie opinion and conclude that a case exists and then shall DG conduct an inquiry into the matter.
  • If the Commission does not find a prima facie case, then it will close the case and pass the order and direct the order to concerned authorities.
  • The DG has to submit a report of his investigation to the CCI within the specific period of time as specified by the order of the CCI:
  • If DG reports that there is no violation of the anti-competitive agreement of abuse of dominance and there is no contravention of the provisions of the Act, then the Commission shall invite the objections and suggestions from the concerned parties or authorities. If the CCI agrees with DG, then it shall close the case and look into other matters and if they both didn’t agree on the same thing, then the investigation ordered the DG to proceed further in the investigation or may even conduct the investigation, itself.
  • If the DG recommends in the report that there is a violation of certain sections of the Act and CCI thinks that further investigation needs to be conducted, then it shall investigate into such contravention.

Investigation into Combination by Competition Commission of India-

  • Section 20 of the Competition Act empowers the Commission to inquire investigation into whether a combination hurts competition in the Indian market. The commission can initiate inquiry upon its knowledge, on information received, or a reference received from the central government, state government, or statutory authority.
  • The law provides for several filters before the Commission can commence an inquiry against a proposed transaction of combination:
  • If the result breaches the statutory thresholds;
  • Prima facie causation of appreciable adverse effect on competition in the relevant product and geographic market within India. Factors relating to ascertaining malpractices in the market that affect fair competition have been statutorily provided in the law, thereby, minimizing arbitrariness.
  • Local nexus or “de minimis” thresholds have been provided under the law for overseas transactions having an adverse effect in India. Cross-border transactions which do not exceed the statutory “de minimis” thresholds shall be exempted from being inquired into by the Commission.
  • Government-aided enterprises are not exempted from being scrutinized thereby ensuring a level-playing field between private and public sector competing enterprises.
  • Section 20(4) casts an obligation to have due regard for all or any of the factors mentioned in the said provision while determining whether a combination has an adverse effect on competition in the relevant market or not. On coming to a prima facie opinion that the combination is likely to cause or has caused an adverse effect on competition within the market:
  • The commission shall issue a show-cause notice to parties to the combination calling upon them to show cause within 30 days of receipt as to why the investigation of such combination should not be conducted.
  • After the receipt of the response from the parties, the commission may call for a report from the DG in the time as may be specified.
  • After receipt of the response and the report of the DG, if the commission is of the prima-facie opinion that the combination has or is likely cause an appreciable adverse effect on competition, it may direct the parties to publish the details of such combination within 10 days of such direction for the knowledge of general public and the persons affected or likely to get affected by such combination.
  • The public or the affected parties are required to file their objections/suggestions, if any, with 15 days of such publication.
  • Within 15 days of the aforementioned period of 15 days, the commission may call additional information from the parties to the combination.
  • The parties are required to submit the additional information 15 days after the expiry of 15 days during which the information was sort.
  • The Commission is mandated to proceed with the matter within 45 days of the expiry of the 15 days provided for furnishing the additional information.
  • Hence, the Commission initiates under Section 19, an inquiry upon its own knowledge, on information received or on a reference received from Central Government, State government, or a Statutory body, into whether a combination has opposed a healthy and fair competition in the market in India or not. Upon forming a prima facie opinion that the combination is likely to cause or has caused an adverse effect, the Commission will investigate the matter further in accordance with Section 29 of the Competition Act.

Conclusion-

These investigations and inquiries are done to maintain the law and order in the market so that the dominators or big dogs do not exploit the inferiors or small business companies by performing malpractices and forming cartels. The CCI has been ensured with the power to maintain healthy, free, and fair competition in the market of India. The DG is the main man in the investigation and the whole investigation is done under his/her steady gaze. The reports are submitted by him/her to the CCI in accordance with the Act.

READ ALSO- ORIGIN AND BACKGROUND OF THE COMPETITION LAW IN INDIA