More Power To Competition Law
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Twelfth June 2013 would be remembered as a defining moment in the evolution of competition law jurisprudence in the country. In its judgement, the Supreme Court of India (SC), on this day declined to interfere with the order of the Competition Appellate Tribunal (Compat) directing the 11 cement manufacturing companies to deposit 10 per cent of the total penalty imposed on them by the Competition Commission of India (CCI), for allegations of cartelisation to fix cement prices, against which they had appealed before the Compat.
The only relief given by SC was to give time of one more week to these companies to deposit the amounts directed to be paid by the Compat.
This is not the first time that the SC has come out a winner in a dispute relating to the interpretation of competition law – be it between the two bodies below it responsible for competition law enforcement (the CCI) and competition law adjudication (the Compat), respectively or between the affected parties and the enforcer of this law, that is, the CCI.
If I recall correctly, on 9 September 2009, in the case of CCI vs SAIL, when a dispute arose between the CCI and the Compat about the issue as to whether an appeal can be filed before the Compat even if not expressly provided in the law, it was the Supreme Court which not only analysed the provisions of law very eloquently but also laid down the future boundaries of the practice of this new law in the country extremely well.
This time around, in the case of cement companies, the Compat was indicating its seriousness about an order passed by CCI so that, as it happens in other judicial proceedings in the country, the affected parties do not take the legal system for a ride to their advantage by causing delays in the judicial delivery. As the impact of distortions in the market mechanism is suffered by millions and millions of helpless consumers and customers, the violations of competition law are taken very seriously, across the world. The direction of Compat merely reflected the mood that cartelisation is a serious matter and would be accordingly dealt. From the perspective of the consumers, it was a welcome move.
It is really interesting to note that the CCI came with two orders in nearly quick succession. The first order related to the cement companies wherein allegations of cartelisation were made against these cement companies. A little after the order passed by the CCI in the case of cement companies, a new order was passed by the CCI in the case of the tyre manufacturing companies. There was widespread speculation and surprise that, despite the nature of evidence being similar, the outcome in the two cases was not really same.
In the case of cement companies, the information about the price movement was found to be in the nature of price parallelism and, coupled with some circumstantial evidence it was treated as a cartel. The evidence marshalled by the director-general (DG) did indicate possibility of collusion but did not conclusively prove that the price rise was because of any concerted practices, brought on record through collection of irrefutable evidence, by different players in the market.
On the contrary, in the order, there were numerous instances where the DG claims in the report that there was no evidence produced before him by the cement companies which proves that the price rise was happening because of demand and supply and not because of any other non economic factors. This logic can be questioned by the practitioners of the competition law across the globe. Whether it is the job of investigator to bring evidence on record about the wrongdoing alleged to have been done or the alleged party to marshal and keep in readiness evidence to prove its innocence is a moot point. This does not call for a debate at all in Indian legal jurisprudence. The differing approach of CCI in these two cases had a great potential of being exploited by the legal eagles to the advantage of their clients. This was a handle enough to confuse the bench by claiming it to be a case of price parallelism and belittle circumstantial evidence used in the case of cement companies.
However, the SC has shown great maturity as well as a deep understanding of the subject of competition law itself which is badly needed in the country at this critical juncture that this new law is taking roots in the country. With this judgement, the SC has proved that although the competition law implementation may be nascent in the country but its future is very strong. This augurs well for the economy as well. Internationally, there is a positive correlation between the implementation of the competition law and the growth of the economy in the country.
The SC has done well to steer clear of the possible legal wedges, during the course of arguments, in the implementation of the competition law on the ground by the agencies responsible for the job. The task of sorting out the legal issues in the order has been left to the Compat. What has been reaffirmed, by SC, is that the competition law is here to stay in the country and the allegations of cartelisation will be taken seriously as in other countries. The judgement shall introduce seriousness into the entire discourse. It will ensure that there is fear of competition law and SC in the mind and hearts of those who may be tempted to rob Indian consumers of their hard-earned money. Jai Ho! for the Indian consumer and the SC.
K.K. Sharma is chairman at KK Sharma Law Offices and was former Director General, Competition Commission of India