Locus Standi Under the Competition Act, 2002
Updated: Aug 31, 2020
Author: Mr. Basu Chandola
The author is a research associate at Jindal Initiative on Research in IP and Competition (JIRICO)
Section 19 of the Competition Act, 2002 (‘Act’) provides the Competition Commission of India (‘Commission’) with the power to inquire any alleged contravention of the act in three instances i.e. first on its own motion, second on receipt of an information from any person, consumer or their association or trade association, and third on a reference made to it by the Central Government or a State Government or a statutory authority. Coupled with the duty of the Commission to ‘eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India’, one would assume that the term ‘any person’ would be broadly interpreted and no strict rule of locus standi would be implemented for filing an Information before the Commission.
II. Decisional Practice
The practice of the Commission in the last decade also suggests that a broad interpretation has to be given to the term ‘any person’ and that the Information can be filed by any person irrespective of the fact whether any harm has been faced by him as a result of anti-competitive conduct. The same was upheld by the erstwhile Competition Appellate Tribunal (‘COMAT’) in Shri Surendra Prasad v. Competition Commission of India wherein the COMPAT observed that the ‘Parliament has neither prescribed any qualification for the person who wants to file an Information under Section 19(1)(a) nor prescribed any condition which must be fulfilled before information can be filed under that section.’ The COMPAT further observed that the language of Section 18 and 19 did not suggest that the Commission has the power to reject the prayer for an investigation into the allegations involving the violation of Sections 3 and 4 only on the ground that the informant does not have a personal interest in the matter. Even the order of the COMPAT in Dr. L.H. Hiranandani Hospital v. Competition Commission of India suggests that the Act does not prescribe any qualification to identify the locus of an informant.
III. Samir Agarwal Case
The National Company Law Appellate Tribunal (NCLAT) in the Samir Agarwal v. Competition Commission of India (‘Samir Agarwal case’) had drastically changed this notion and has ruled in favour of a stronger locus standi for competition cases. In this case, the NCLAT had to decide whether a ‘person’ in Section 19(1) would mean any natural person irrespective of he being a consumer who has suffered the invasion of his legal rights or a person whose legal rights have been or are likely to be jeopardised by the alleged anti-competitive agreement or abuse of dominant position. The NCLAT observed that the receipt of any information from any person in section 19(1) (a) of the Act has necessarily to be construed as a reference to a person who has suffered the invasion of his legal rights as a consumer or beneficiary of healthy competitive practices. Any other interpretation would make room for unscrupulous people to rake issues of anti-competitive agreements or abuse of dominant position targeting some enterprises with oblique motives. In this case, the NCLAT held that the Appellant did not have locus standi to maintain an action under the Act.
IV. WhatsApp Case
In Harshita Chawla v. WhatsApp Inc., the Opposite Parties challenged the locus standi of the Informant on the basis of the decision of the NCLAT in the Samir Agarwal case. The Opposite Parties submitted that he Informant does not have a locus standi to approach the Commission because neither she had not claimed any injury nor had suffered an invasion of her legal rights as a consumer.
The Commission observed that the objection raised by the OP was misconceived in light of the scheme of the Act. The Commission referred to the preamble of the act and observed that the Act had been conceived to follow an inquisitorial system wherein the Commission is expected to investigate cases involving competition issues in rem rather than acting as a mere arbiter to ascertain facts and determine rights in personam arising out of rival claims between parties.
The Commission further observed that even though a case filed by an aggrieved party may appear to be a case in personam, underlying it is a larger question of market distortion. The mere fact that a case has been filed by an aggrieved party under the Competition Act, does not take away its character of being a case in rem involving a larger question of fair and competitive markets.
The Commission also referred to the changes made in Section 19(1)(a) by the Competition (Amendment) Act, 2007, where the words “receipt of a complaint” were substituted with “receipt of any information”. The Commission observed that this amendment clearly reflected the legislative intention of emphasizing the inquisitorial nature of the proceedings of the Commission.
The Commission also relied on its earlier decisions which held that the Commission is more concerned with the facts and allegations highlighted in the information rather than the locus of the person who provided such information. The Commission also relied on the Surendra Prasad case (discussed above) to conclude that the only limitation on the exercise of power under Section 19(1) is that the Commission should feel prima facie satisfied that there must exist a prima facie case for ordering into the allegation of violation of Sections 3(1) or 4(1) of the Act.
The Commission concluded that the Informant need not necessarily be an aggrieved party to file a case before the Commission. Notably, the Commission acknowledged that the NCLAT had reached a different conclusion in Samir Agarwal case and observed that in light of divergent decisions of the Hon’ble Appellate authorities, it was inappropriate for the Opposite Parties to challenge the maintainability of the information solely on the basis of one case.
V. Current Dilemma on Locus Standi
It is important to note that while the NCLAT has clearly altered the position on locus standi in competition cases, the Commission relies on an earlier decision of the COMPAT in 2015 to back its position up. This creates a rather difficult scenario where the Commission is dismissing the understanding of the appellate body. While the reasoning of the Commission may be more appropriate, blatant disregard to the precedents of the appellate body creates a situation of confusion and uncertainty for the litigants. To invoke confidence in parties, there should be a consistency of judgments and precedents must be followed. In case the judgment in Samir Sharma is flawed, it is for the Hon’ble Supreme Court to ascertain the position of law. Bypassing the observations of the Appellate Authority would not make much sense as the decision is most likely to be overturned by the NCLAT during the appeal. The need of the hour is for the Supreme Court to settle this uncertainty and to rule for once on the need for locus standi in competition cases.
 Case No. 15 of 2020