19 June 2023

Competition law – CCI is not a grievance redressal forum against regulatory decisions of regulators

The Delhi High Court has held that the Competition Act, 2002 does not contemplate the Competition Commission of India (CCI) to act as an appellate court or a grievance redressal forum against decisions taken by other regulators, in exercise of their statutory powers and which are not interfaced with trade or commerce.

Setting aside the impugned decision of the CCI, the Court in Institute of Chartered Accountants of India v. Competition Commission of India [Judgement dated 2 June 2023] observed that ICAI being a statutory body and charged with taking the necessary powers to take decisions regarding the conduct of the CPE program for enrolling as a chartered accountant as well as for maintaining the standards of the profession; its decisions in this regard cannot be a subject matter of review by the CCI.

Observing that a decision in exercise of regulatory powers, is required to be taken by the regulator and its discretion to do so can only be fettered by the provisions of the statute, which clothes the regulator with such powers, the High Court held that the regulatory powers are not subject to review by the CCI.

ICAI however covered under definition of ‘enterprise’

The High Court however held that Institute of Chartered Accountants of India (ICAI) falls under the definition of ‘enterprise’ under Section 2(h) of the Competition Act, 2002 because the functions performed by ICAI, in respect of providing education to its chartered accountants or to students, cannot be termed as ‘sovereign functions’.

The High Court further in this regard observed that ICAI cannot be considered the Government and, therefore, even if it carries on regulatory functions (regulation of a profession), it is not excluded from the wide definition of the term ‘enterprise’.

The Court further found unpersuasive the contention that since ICAI does not carry on any business, it is excluded from the scope of the Competition Act. According to the Court, the fact that ICAI is not an organization for profit and its activities fall within the scope of ‘charitable purposes’ as defined under Section 2(15) of the Income Tax Act, 1961, it does not mean that ICAI does not carry out any economic activity.

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