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30 October 2019

Competition – DG’s report finding contravention of provisions is not binding on CCI

The Delhi High Court has rejected the contention that if the report of the Director General (DG) recommends that there are contraventions of provisions of Competion Act, the Competition Commission of India (CCI) cannot close the case straightway. It observed that there is no provision in the Competition Act which mandates that the CCI must accept the report of the DG recommending that there are contraventions of the provisions of the Act.

Terming the contentions of violation of Section 26 and 27 by the CCI, as without any merit, the High Court was of the view that DG’s report is recommendatory and not binding on the CCI, and that the Commission can differ with the DG’s findings and reject the same. Earlier, the CCI had not accepted the DG’s report and after hearing the parties had decided to close the case.

The Court in the case Saurabh Tripathy v. CCI hence also rejected the plea that it was incumbent upon CCI to pass an order directing further inquiry under Section 26(8) of the Competition Act in the event it did not agree with the report submitted by the DG.

The High Court also noted that the impugned order passed by CCI was final and no appeal is provided under the Competition Act against such an order. It also noted that the contention that the impugned order was an order under Section 27 was also rejected by the COMPAT earlier and that the petitioner had accepted the order.

Further, upholding the CCI order on merits, the Court examined various clauses of the contract and held that the entire approach of the DG in expressing its subjective opinion on various clauses was flawed.

It observed that in order for any term or condition of a contract to be considered as unfair, as contemplated under Section 4(2)(a)(i) of the Competition Act, it must be established to be patently unfair and one that no party, who has any negotiating ability, would accept the same.

The Court was of the view that clauses which are commonly used and are found in various commercial contracts, would not fall within the scope of Section 4(2)(a)(i).