BOOK: REPORT OF THE COMPETITIVE LAW

REVIEW COMMITTEE OF JULY 2019

Over the last decade or so, the Indian economy has transformed into one of the largest and fastest
growing economies in the world. This was possible due to liberalized trade, investment and economic
policies that catered to a steadily growing market-oriented economy. The pace of economic growth has
been sustained by the competitive advantages of a large market duly supported by innovation and
technology development. To reap the full benefits of a market economy and ensure economic efficiency,
optimal allocation of resources and equitable outcomes for consumers, an effective and modern
competition law regime is vital. The move to ensure competitive outcomes has been enabled by the shift
to a modern competition law regime from the “command and control” regime under the Monopolies
and Restrictive Trade Practices Act, 1969. The thrust now is to build an active competitive environment
in which businesses can thrive and innovate, keeping pace with new age developments in digital
markets. The effectiveness of competition law in accomplishing its primary functions of promoting
competitive growth and enhancing consumer welfare needs to be examined in light of the upcoming
challenges of the next decade. Based on the enforcement experience gained over the last decade,
certain issues have come to the forefront, including new and emerging challenges. For instance, our
markets have seen the growth of newer and disruptive models of businesses and practices that are not
adequately covered by the current regulatory framework. There is also a need to revisit the regulation of
combinations, in light of the growing importance of mergers and acquisitions in the country. In order to
draw from past experience and to prepare for future challenges in the enforcement of competition law
framework in India, the Competition Law Review Committee was constituted by the Ministry of
Corporate Affairs. It has been tasked with the responsibility to review and recommend a robust
competition regime, by taking the inputs of key stakeholders, and suggest changes in both the
substantive and procedural aspects of the law. Some of the key suggestions of the Committee are as
below:

(i) The Committee has sought to introduce regulatory best practices in the structure and
composition of the Competition Commission of India (CCI). The CCI is a regulator that has an
amalgam of advocacy, regulatory, investigative as well as adjudicatory functions. The
introduction of well-defined structures within the CCI to perform its diverse functions will
help achieve greater levels of efficiency and accountability. Accordingly, it has been
recommended that the CCI must have a governing board that oversees advocacy and quasi
legislative functions, leaving the performance of adjudicatory functions to the whole-time
members of the CCI. Further, the Committee has recognized that the Director General’s
office need not function as a separate body as it aids the CCI in discharging an inquisitorial
rather than adversarial mandate. Recent jurisprudence has also recognized that the Director
General’s office functions as a specialized investigative wing of the CCI. In line with the
 above understanding, the Committee has recommended that the Director General’s office
be integrated with the CCI, to bring about administrative efficiencies in the direction and
scope of investigation. Such merger should be accompanied by adherence to certain best
practices such as functional autonomy for office of the Director General and meaningful
internal division of investigation and adjudication functions.
(ii) In recognition of the fact that the effectiveness of any regulator depends greatly on its
accessibility, it has been suggested that the regulatory infrastructure of the CCI should be
boosted by opening a couple of regional offices for carrying out non-adjudicatory functions
such as investigation, advocacy, etc. Similarly, in order to ease the capacity constraint
experienced in the NCLAT vis-à-vis competition cases, it has been suggested that a dedicated
bench of the NCLAT should be set up to expeditiously hear and dispose of competition
appeals.
(iii) A significant change has been recommended in the form of a ‘Green Channel’ for
combination notifications, in recognition of the need to enable fast-paced regulatory
approvals for vast majority of mergers and acquisitions that may have no major concerns
regarding appreciable adverse effects on competition. Empirical evidence shows that most
combinations need not be subjected to standstill obligations in the first place, and hence
they may simply disclose their transaction to the CCI and proceed to consummate it. The
aim is to move to a ‘disclose and comply’ regime with strict consequences for not providing
accurate or complete information. Further, it was also recommended that combinations
arising out of the insolvency resolution process under the Insolvency and Bankruptcy Code
should be eligible for the Green Channel.
(iv) The review of competition law has also sought to address the shift in traditional market
realities, by widening the net for identification of anti-competitive conduct. It has been
suggested that express provisions be introduced to identify ‘hub and spoke’ agreements as
well as agreements that do not fit within typical horizontal or vertical anti-competitive
agreements. This would be a significant step towards covering varied business structures
and models synonymous with new age markets.
(v) Certainty in interpretation of the law and predictability of outcomes are vital to ensure
effective enforcement. It has been noted that a majority of the penalties imposed by the CCI
remain unrecovered due to litigation. Apart from addressing the capacity constraints at the
appellate stage leading to backlog of appeals regarding penalty as discussed above, it has
been proposed that the CCI must be mandated to issue guidelines on the imposition of
penalty. The twin efforts are aimed at ensuring more transparency and faster decision
making with a view to encouraging compliance by businesses.
(vi) In the interests of speedier resolution of cases of anti-competitive conduct, the Committee
has sought to incorporate additional enforcement mechanisms. These are in the form of
settlement and commitment mechanisms that may be achieved outside of an otherwise
relatively lengthy enforcement process. Such a framework will ensure procedural
efficiencies by enabling swifter resolution of cases.
(vii) When considering non-notifiable mergers, the Committee has also suggested the
introduction of additional thresholds to review combinations of business that are not
 structured traditionally– especially where they form part of digital markets. The Committee
has suggested that even if the traditional asset and turnover thresholds are not met, where
the transaction value or the deal value of a combination exceeds a certain limit, then it
could be brought within the ambit of merger review. This is a forward-looking
recommendation that seeks to take into account new age indicators of business activity.

The financial and economic policies of India went through a significant change post liberalization of the
Indian economy in 1991. Many legal reforms made at this time were directed towards deregulation of
various industries and boosting growth of private sector businesses. In this backdrop, the High Level
Committee on Competition Policy and Law (“Raghavan Committee”) was tasked with reforming the
antitrust law in operation at the time - the Monopolies and Restrictive Trade Practices Act, 1969 (“MRTP
Act”). The Raghavan Committee encapsulated its recommendations in a report released in 2000
(“Raghavan Committee Report”) which noted that the MRTP Act was inadequate for fostering
competition in the market and reducing anti competitive practices. The Raghavan Committee
recommended large scale reforms to bring the antitrust law in line with the new domestic economic
policies and global best practices. Based on these recommendations, the Competition Act, 2002
(“Competition Act/Act”) was enacted by the Parliament to “prevent practices having adverse effect on
competition, to promote and sustain competition in markets, to protect the interests of consumers and
to ensure freedom of trade carried on by other participants in markets, in India.” The rubric of the
Competition Act has four essential compartments - anti competitive agreements, abuse of dominance,
regulation of combinations, and competition advocacy. The Act marks a drastic shift from its
predecessor statute. For instance, the Act penalizes abuse of dominance instead of dominance itself;
promotes a rule of reason approach over a per se approach; involves both ex-ante and ex-post
regulation; focuses on competition issues and not on unfair trade practices; and clearly defines
violations and offences involved. The enactment of the Competition Act, also noted to be “close to
state-of-the-art” by the Organization for Economic Co-operation and Development (“OECD”), was thus
symbolic of the shift in India’s economic policies. The Act also established a comprehensive regulatory
framework including the Competition Commission of India (“CCI”), an expert body to oversee the
functioning of the Act, and the National Company Law Appellate Tribunal (“NCLAT”), a tribunal tasked
with being the appellate authority. In the years since the operation of the Act, it has contributed
immensely towards the development of competition and fair play practices in the Indian market.
However, there has been significant growth of Indian markets in the last decade and a paradigm shift in
the way businesses operate and interact with markets with the emergence of new age markets involving
technology.

The nature of the CCI has undergone significant changes since the enactment of the Competition Act.
When it was passed, the Act established the CCI as the authority for dealing with disputes under the Act.
However, due to some contradictory positions in the Act at the time, it was unclear if the CCI was a
judicial body or an expert regulatory body. Following the decision of the Supreme Court in Brahm Dutt v.
Union of India, the Parliament amended the Competition Act to clarify that the CCI is an expert body
established as a regulator. This position of the CCI being an expert body has also recently been echoed
by the Delhi High Court in the Mahindra case wherein it affirmed that CCI is a regulator, and noted - “CCI
is structured and set up as an expert regulatory body performing the role of independent
regulator/watchdog for the economy in the same mould as Securities and Exchange Board of India
(hereinafter referred to as "SEBI") performs qua the Securities market. In the course of its functioning
CCI undertakes "executive adjudication" in juxtaposition to judicial adjudication in respect of all aspects
entrusted under the Competition Act. Therefore merely because CCI also performs adjudicatory
functions it does not acquire the character of judicial tribunal or Court.” While the judgment of the Delhi
High Court has been appealed before the Supreme Court, the Committee has taken note of the law laid
down by the Delhi High Court and inter alia discussed that certain regulatory best practices may be
incorporated in the Competition Act by analyzing practices followed by other regulators in India.

As per Section 8 of the Competition Act, the CCI shall consist of a Chairperson and not less than two and
not more than six other members who will be appointed by the Central Government. The Chairperson
and members of the CCI are required to have special knowledge and professional experience of not less
than 15 years in, inter alia, economics, law, commerce, finance, competition matters, including
competition law and policy. The Chairperson and members are whole time members (“WTMs”). The
Supreme Court of India has observed that the CCI is a regulator vested with inquisitorial, investigative,
regulatory, adjudicatory and advisory jurisdiction under the scheme of the Competition Act. The Delhi
High Court recently in the Mahindra case examined the powers and functions of the CCI to determine if
it is a tribunal (as alleged by the petitioners) or an expert body partly exercising adjudicatory functions.
After a detailed study of the powers and functions of the CCI as envisaged under the Competition Act
and mapping such powers and functions against existing regulators in India, the Court held that the CCI
is a “body that is in parts, administrative, expert (having regard to its advisory and advocacy roles) and
quasi judicial.” The Committee took note that under the Competition Act, the CCI has been entrusted
with multifarious functions that extend to directing or overseeing investigation, conducting inquiry,
imposing penalties, issuing regulations, advising Government on competition policy and promoting
competition advocacy. In light of the multifaceted role being performed by CCI, the Committee
deliberated on the need to introduce a governing board with part-time members (“PTMs”) (including ex-
officio members) in the CCI to bring in an external perspective, objectivity and more transparency in the
functioning of the CCI.

The CCI has been effectively discharging its functions under the Competition Act since its inception.
However, it was felt that with the evolution of Indian markets, the role of the CCI will become more
critical. Accordingly, this is an opportune moment to revisit the regulatory design of the CCI to
incorporate best practices in its structure and functioning so that it is better equipped to respond to
competition concerns of the Indian economy. While tracing the evolution of different regulators in India,
the Delhi High Court observed that there is “no one size fits all” approach for regulatory design and that
the design of regulatory institutions must respond to the dynamics of a rapidly changing economy with
the imperatives of global trade and its interface with technology.

The introduction of a governing board with PTMs will ensure a more robust governance structure for the
CCI by bringing in an external perspective as well as strengthening the democratic legitimacy and
accountability of the CCI. While the CCI will continue to perform its adjudicatory functions without any
interference of the governing board, the presence of PTMs and ex-officio members will better equip the
CCI to perform other functions, particularly advocacy and quasi-legislative functions, by bringing in more
rigor and objectivity in decision making.

Section 8 of the Competition Act should be amended to provide for a governing board consisting of a
Chairperson, six WTMs and six PTMs (which will also include ex-officio members). Based on a review of
the composition of other regulators in India, it was agreed that four ‘eminent persons’ and two ex-
officio members (one representative from the MCA, which is the nodal ministry for implementation of
the Competition Act, and a representative of the Department of Economic Affairs, Ministry of Finance)
should be included as PTMs in the governing board of the CCI. Further, qualifications for members of the
CCI as provided in Section 8 (2) of the Act may be retained and additional qualifications such as ability
and knowledge in relation to ‘administration’ and ‘technology’ may be inserted. Given that the CCI
currently performs multiple functions, including administrative, quasi-legislative and adjudicatory
functions, the Committee agreed that the functions of the governing board should be clearly delineated.
With a view to maintaining a clear separation between the exercise of executive, quasi legislative and
adjudicatory functions of the CCI, the Committee recommended that while the governing board will
perform quasi-legislative functions, drive policy decisions and perform a supervisory role, it should not
be involved in the discharge of the adjudicatory functions of the CCI.

The Competition Act should enable sharing of responsibility among members and delegation of powers
to different functionaries in the organization. Based on this, it was agreed that the CCI should be
permitted to delegate certain functions to its members and officers.

Section 16 of the Competition Act empowers the Central Government to appoint the DG to assist the CCI
in conducting inquiry into contravention of provisions of the Act. The manner of appointment of other
officers and staff in the DG office, their salary, allowance and other terms and conditions of service are
prescribed in the CCI (DG) Recruitment Rules, 2009 and CCI (Number of Additional, Joint, Deputy or
Assistant Director-General other officers and employees, their manner of appointment, qualification,
salary, allowances and other terms and conditions of service) Rules, 2009 (“DG Office Rules”) framed
under Section 16 of the Act. Presently the legislative framework envisages a scenario wherein the DG is
appointed by the Central Government and is accountable directly to the Central Government and not to
the CCI. For example, in addition to appointment of the DG, the Central Government has been provided
a key role in the Departmental Promotion Committee constituted under the DG Office Rules for
appraisal of the DG and its other officers. These Rules also provide the Central Government the power to
govern other matters related to human resources for the office of the DG.

Though the office of the DG is institutionally under the Central Government as per existing statutory
framework, this was not the case in practice. Once the DG was appointed, it was in fact the CCI that
monitored the activities as well as administrative matters of the office of the DG. This position has also
been recognized by courts of law which have dealt with the institutional framework under the
Competition Act. For example, the Supreme Court in the SAIL judgement has noted, “The Director
General appointed under Section 16 (1) of the Act is a specialized investigating wing of the Commission.”
This position was recently reiterated by the Delhi High Court in the Mahindra case. The Committee
noted that there is a need to align the divergence in the de jure and de facto position here.
The DG even presently is not a separate body, and is de facto, a part of the CCI. Merging the DG’s office
with the CCI may also result in improvement in domain expertise of the DG as this model may lead to
appointment of DG through means other than deputation. It was highlighted that since currently
appointment of the DG is through deputation, at times it can result in lack of domain expertise and
institutional memory. Moreover, competition regulators in several developed jurisdictions such as EU,
UK, US (FTC) and developing countries such as Brazil have successfully relied on the integrated agency
model. The office of the DG should be formally folded into the CCI as an ‘Investigation Division’.
However, the Committee was mindful that integration of the office of the DG within CCI would need to
be accompanied by certain best practices to ensure adherence to due process. These include:

 Functional autonomy for the office of the DG. The DG should report directly to the Chairperson
of CCI;
 Meaningful internal division of investigation and adjudication functions (appointment of
different personnel and maintenance of firewalls);
 Adequate right of representation to parties and the right to examine evidence;
 Strong appellate forum, staffed with persons with relevant expertise;
 Issuance of guidance on issues like imposition of penalty to ensure certainty and reduce
discretion.

Though the Competition Act allows the CCI to have its offices in multiple locations, the CCI currently only
operates from Delhi. A centralized place of operations may be prudent in the nascent years of a
regulator to maintain consistency and coherence. However, limited local presence may also hinder
accessibility, reach and awareness of the regulator. To overcome this, the CCI undertakes many
advocacy and awareness activities like releasing advocacy booklets, organizing interactive discussions,
holding video-exhibitions, and conducting road shows in various parts of the country.

The advocacy activities undertaken by the CCI have gone a long way in creating awareness of the CCI’s
functions in various parts of the country. However, the Committee discussed that given the wide
jurisdiction of the CCI in terms of geography and subject matter, local presence may be essential for the
CCI to continue being a proactive regulator. Such local presence may help increase accessibility, which
will allow more informants to reach the CCI and reduce costs for parties involved in proceedings.

The CCI should have offices at multiple locations. This will facilitate advocacy and awareness activities,
improve accessibility, increase efficiency of investigations, and boost interaction with sectoral
regulators, State Governments and local-self Governments. The Committee also discussed that the CCI
may exercise most of its functions like investigation, accepting filings, advocacy, etc. through these new
offices. Additionally, it was agreed that the CCI may also develop capacity and use technology to ease
accessibility, for instance, through video conferencing and e-filing mechanisms.

The incorporation of mechanisms for accountability and performance review of agencies and regulatory
authorities helps document as well as assess the impact of their efforts. This in turn enables such
authorities to remain agile and make appropriate changes as and when required. Since its formation, the
CCI has put in significant efforts that have served to improve competition compliance as well as
awareness. The CCI has also played an efficient and responsive role in the regulation and approval of
combinations. The CCI’s current arrangements to ensure accountability have also been well
implemented by it. Currently, under Section 52 of the Competition Act, the CCI is mandated to prepare
an annual statement of accounts. Rules have been formulated under this section to mandate the CCI to
prepare financial statements along with necessary schedules, etc. in accordance with the notes and
instructions for compilation of financial statements prescribed by the Government of India, Ministry of
Finance, Controller-General of Accounts. The CCI is also mandated to prepare an annual report giving an
account of its activities in the form prescribed in the rules.

In the interest of further strengthening the mechanisms for accountability and performance review of
the CCI, the CCI may submit a more structured annual report with performance targets and other data
as may be prescribed in rules in addition to financials disclosures required. This would serve as a metric
to measure and review the CCI’s effectiveness and performance. The annual report may be divided into
two parts, one dealing with financial aspects and the other with non financial aspects. A quarterly
progress report must also be placed before the governing board in addition to the annual report.

The CCI, as a regulator and watch dog of anticompetitive conduct, must have adequate capability and
resources to perform its functions efficiently. Such financial independence allows a regulator to “have
the required flexibility and human resources that are more difficult to achieve within a traditional
government setup.” A regulators’ independence on financial matters also allows it the “freedom to
allocate the resources in the manner that it considers most appropriate to meet its regulatory
objectives.”

While sectoral regulators are often able to ensure financial independence by levying fee on regulated
entities, the CCI does not have a ready base of regulated entities. The CCI only collects fees from filings
in relation to combinations. Till date, the CCI has charged fees at a flat rate for its combination related
filings. It was noted that some Indian regulators charge an ad valorem fee. For example, the SEBI
charges a fee based on offer size in the case of open offers. In other jurisdictions such as Singapore and
the US, fee on merger filings is graded on turnover and the size of the transaction, respectively.

The CCI should also have a one-time corpus fund contributed by the government in order to secure its
financial independence. Going forward, financial independence of the CCI may be bolstered with
revenues from fee earnings. The Committee kept in mind that a balance must be struck between the
need to bolster the CCI’s funding and the total cost incurred by businesses for combination filings.
Accordingly, the Committee recommended that CCI may be granted a one-time corpus fund. The
Committee also recommended that CCI be empowered to charge an ad valorem fee for combination
filings, with specification of slabs with upper limits. It was also discussed that since the ad valorem fee
may have a significant impact on businesses, the Board of the CCI must ensure that an adequate
cost/benefit analysis is conducted while formulating details of the proposed fee.

The governing body of CCI is currently comprised of only WTMs and the Chairperson. Decisions related
to discharge of the functions of the CCI, including adjudication, are taken by them in meetings. Certain
key functions of the CCI should be exercised by a governing board (not including adjudication and
investigation). The Committee discussed that decisions in relation to these functions may be taken by
the governing board in its meetings. Such meetings should be called by giving adequate notice and the
relevant agenda to all the members. Decisions taken in these meetings should be taken by majority of
the members present and voting. While key provisions on procedure for meetings of the governing
board should be provided in the Act, a detailed procedure may be provided in subordinate legislation.
The Act should provide the quorum for such meetings, which shall be two-third of the strength of the
governing board.

Appropriate safeguards may be provided to ensure accountability. In this regard, it was mentioned that
to promote transparency, minutes of the meetings of the governing board should be maintained. The
Committee took note that though it is not a statutory requirement, some regulators in India routinely
put out the agenda of, and the respective decisions taken in, the meetings of their governing bodies. It
was suggested that the CCI may also consider publishing a summary of the agenda and appropriate
decisions of the meetings of its governing board.

Currently, the CCI is empowered to issue regulations for discharging its functions under the Competition
Act. The Committee noted that recent practices in India and other jurisdictions indicate that there is a
growing need to have a procedural framework to guide the issuance of such subordinate legislation.
Such a framework should ensure transparency and accountability in the issuance of regulations which is
done after fairly and equitably balancing various considerations. The Supreme Court in the Cellular
Operators Case emphasized the need for following transparent processes including stakeholder
consultations while formulating subordinate legislation. The Court recommended that the Parliament
should introduce an overarching law like the Administrative Procedures Act, 1946 (“APA”) of the US,
which provides for the manner of drafting and issuance of all kinds of subordinate legislation.

While the Committee was apprised that CCI issues draft regulations for public consultation, in light of
the aforesaid discussion and in line with best practices, the Committee recommended adoption of a
formal framework incorporating transparency and accountability in the issuance of regulations by the
CCI. This includes provisions to publish draft regulations for public consultations and review of such
subordinate legislation every few years. It was also agreed that certain exceptions from the requirement
to conduct stakeholder consultation would be carved out, such as regulations that govern purely
internal matters, in cases of emergency and for reasons of public interest.

The CCI, as an expert and regulatory body is expected to function with consistency and transparency in
the application of the law. This requirement also assumes significance in its function of issuance and
drafting of subordinate legislation. At present, the CCI issues subordinate legislation by way of
regulations, and has also issued certain frequently asked questions (“FAQs”) and a guidance note. The
Committee felt that to ensure that the CCI’s quasi-legislative powers are exercised uniformly and with
the same regulatory rigor, the CCI should continue to issue only one type of subordinate legal
instrument in the form of regulations, which are binding and have the force of law. The Committee
agreed that this will ensure predictability, transparency and consistency in the discharge of quasi-
legislative functions of CCI. The Committee agreed that the aforesaid recommendation should not be
interpreted as a restriction on the CCI’s power to issue non-binding guidance or FAQs. The Committee
noted that the Raghavan Committee Report recommended “publication of enforcement guidelines
articulating how the CCI will interpret and apply the law.” Similarly, the Eleventh Five Year Plan (2007-
12) while reviewing the role of CCI in creating awareness on the benefits of competition law observed
that it “should formulate, publish and post in the public domain, guidelines covering various dimensions
related to competition law for enhancing public awareness. Such guidelines will help enterprises by
bringing greater clarity about the provisions of the competition law and the manner of its enforcement”.
The Supreme Court has also highlighted the need for such guidance in the case of Excel Crop Care v. CCI
while dealing with the lack of clarity in the manner of determining ‘turnover’ for imposition of penalty
under the Competition Act.

In order to foster certainty in the interpretation of the Competition Act, the CCI must endeavor to
provide non-binding guidance on certain key issues.

The CCI currently takes decisions in relation to adjudication of matters before it during its meetings, in
which parties may be present. These decisions are taken by the WTMs and the Chairperson. Though
Section 22 of the Act provides that the quorum for such meetings is three members, in practice the CCI
takes quasi-judicial decisions with all members present. Taking note of this, the Committee deliberated
on the appropriate quorum for meetings in relation to adjudication.

A balance should be struck between efficient distribution of work and plurality of views. The
Chairperson and WTMs may sit in panels of three for meetings in relation to adjudication. The
composition of the panel may be determined by the Chairperson to ensure that the best equipped set of
members is appointed to dispose of a matter. The attention of the Committee was drawn to the decision
of the Delhi High Court in the Mahindra case, where the Honorable Court held that the CCI shall ensure
that at all times, during the final hearing a judicial member is present and participates in the hearing. In
this regard, necessary action may be considered by the Central Government.

The Competition Act currently gives the Chairperson a casting vote in matters of adjudication. A casting
vote should not be provided for decisions related to adjudication of matters before the CCI. This view
has also recently been expressed by the Delhi High Court in the Mahindra case.

The Competition Act allows any person having information about any contravention of the Competition
Act to provide such information to the CCI. As a part of this process, the informant provides all details,
including evidence that is within its possession that may be relevant for CCI to establish a prima facie
case. The CCI is also empowered by way of regulations to call such an informant and such other person
as is necessary, to conduct a ‘preliminary conference’ to obtain any further information or assistance it
may require to form an opinion on whether a prima facie case exists. Given that unlike courts, CCI does
not decide a traditional lis which is premised on adversarial proceedings (also observed by the judgment
of the Delhi High Court); proceedings before the CCI are more inquisitorial in nature. The informant
should not be burdened with substantiating allegations. Instead the CCI should review the information
submitted by the informant on merits without mandating her presence.

Unlike other sectoral regulators in India that regulate a more definite and fixed constituency of persons,
CCI exercises its mandate over a wide range of stakeholders. To be specific, the CCI has to look at
competition issues that cut across multiple sectors, markets and industries and hence, it does not have
any prior or fixed sources of information. Therefore, it was agreed that preliminary conferences do serve
an important function and should not be disallowed. Such preliminary conferences do not change the
nature of proceedings before CCI from inquisitorial to adversarial it suggested that such preliminary
conferences be conducted in a time-bound manner in order to combat any possible delays.

In line with the inquisitorial functions of the CCI, involvement of the informant should be at its own
discretion. It was pointed out that though informants are often willing to participate, involvement of
multiple parties may result in increasing the time taken for proceedings.

The Committee looked into the use and potential for inter-regulatory consultation between the CCI and
other regulators under Sections 21 and 21A of the Competition Act. Such inter-regulatory references
gain significance owing to the fact that the CCI as a cross-cutting competition regulator must interact
with various sectoral regulators, especially when their functions can impact the broader scope and
objectives of competition policy. For example, the TRAI is empowered to ‘facilitate competition’ in the
telecommunications sector. Sections 21 and 21A of the Competition Act, 2002 provide for references
between sectoral regulators and the CCI. The Committee noted that there has been sparse use of these
provisions and deliberated whether the standard for references should be lowered and the grounds for
inter-regulatory consultation be widened. Presently, under Sections 21 and 21A of the Competition Act,
a reference lies only when a potential or past decision of the CCI or a sectoral regulator contradicts with
the other’s governing statute. However, in several cases, the CCI or sectoral regulators may want to
consider and refer issues that are pending for consideration even otherwise. The need to wait till the
time the regulator reaches or is about to reach a final decision only increases uncertainty. It was also
suggested that the scope of such consultation be broadened so that it refers not just to a proceeding but
includes any inquiry or investigation for which such reference may be required. It was also agreed that
the scope for inter-regulatory consultations can be bolstered by allowing regulators to enter into
Memorandums of Understanding with each other. Having considered the above, the Committee
recommended that necessary revisions may be made to Sections 21 and 21A of the Competition Act so
that the CCI and sectoral regulators may make references whenever an issue of competition law or
other relevant matter is raised before each other, and not only in respect of a proceeding. Such a
reference should be allowed even in the absence of any contradiction or conflict between the ambit of
the CCI and the sectoral regulators.

In light of existing precedents and in the interest of procedural efficiencies associated with settlement
mechanisms, the Committee recommended that the Competition Act should be amended to expressly
enable CCI to accept settlements from parties and provide for a settlement mechanism. The settlement
framework should be applicable for alleged contraventions of agreements under Section 3 (4) and the
abuse of dominance under Section 4 of the Competition Act. The Competition Act should empower CCI
to pass settlement orders subject to certain conditions which may include settlement amount and/or
non-monetary terms. With regard to timelines for submission of an application for settlement, it was
agreed that the application may be filed only after receipt of the DG Report and within such time before
the passing of a final order by the CCI, as may be specified by subordinate legislation. The Committee
also agreed that an order granting or rejecting a settlement application should not be made appealable
to the Appellate Tribunal. Detailed procedure for the settlement mechanism should be set out in
subordinate legislation.

The Competition Act should be amended to empower the CCI to accept commitments from parties
alleged to have contravened the provisions of Section 3 (4) and Section 4 of the Competition Act. With
regard to timelines for submission of an application for commitment, it was agreed that it should be
submitted after an order under Section 26 (1) of the Competition Act has been passed so that the parties
are aware of the proceedings. It was further agreed that such application can be submitted within such
period prior to the submission of the DG report as may be specified in subordinate legislation. The
Committee also recommended that the CCI should have the discretion to accept or reject the application
for commitments. Further, it was agreed that the law should enable the CCI to review its decision to
accept commitments in certain circumstances, including where the concerned party has acted contrary
to the terms of commitment, when there is a material change in facts on the basis of which the
commitment decision was passed or where the commitment decision was based on false, misleading or
incomplete information provided by the concerned party.

Section 42 (2) of the Competition Act empowers the CCI to impose penalty for non-compliance with its
orders or directions issued under Section 27 (Orders by Commission after inquiry into agreements or
abuse of dominant position), Section 28 (Division of enterprise enjoying dominant position), Section 31
(Orders of Commission on certain combinations), Section 32 (Acts taking place outside India but having
an effect on competition in India), Section 33 (Power to issue interim orders), Section 42A
(Compensation in case of contravention of orders of Commission) and Section 43A (Power to impose
penalty for non-furnishing of information on combinations) of the Competition Act. Section 42 (3) sets
out criminal sanctions for non-compliance with the orders or directions or failure to pay the fine under
Section 42 (2). Such a violation is punishable with imprisonment for a period which may extend to three
years or with fine which may extend to INR 250000000, or with both, as the Chief Metropolitan
Magistrate may deem fit.

Section 42 (2) does not refer to non-compliance with orders / directions passed under Section 43
(Penalty for failure to comply with directions of Commission and Director-General), Section 44 (Penalty
for making false statement or omission to furnish material information) and Section 45 (Penalty for
offences in relation to furnishing of information) of the Competition Act. Further, while criminal
sanctions have been envisaged for non-compliance with payment of fine under Section 42 (2), there is
no provision for breach of orders passed by the CCI under Section 43, Section 44 and Section 45 of the
Competition Act. In light of this and in the interest of furthering the deterrent effect of the provisions
discussed above, the Committee recommended that Section 42 (2) of the Competition Act should be
amended to refer to Section 43, Section 44 and Section 45.