COMPAT Law Insider

By Ayushi Budholia

Published on: August 2022 at 21:50 IST

INTRODUCTION

One of the black days which India can never forget is the economic crises of 1991. In 1991, the country landed in a situation where it was unable to make repayment of its loan to the foreign countries. Foreign exchange reserves , which we generally maintain to import petroleum and other important items, dropped to levels that were not sufficient for even a fortnight.[1]

India received loan from the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) to manage its crises. However, these agencies require India to liberalise, open its economy for globalisation, and remove restrictions over the private sectors. Therefore, the P.V. Narasimha Rao’s government in 1991 introduced the New Economic Policy (NEP).

With the advent of liberalization, privatization and globalization in India, the competition increased not only among the domestic market but also from the international companies. To avoid forming monopolies and unhealthy trade practices, the Parliament of India in 2002 enacted the Competition Act, 2002. In 2009, the Competition Commission of India was established by the Government of India under the Competition Act, 2002 for the administration, enforcement and implementation of the Act.[2]

COMPETITION APPELLATE TRIBUNAL (COMPAT)

Prior to 2007, if a party was not satisfied with the decision of the Competition Commission of India (CCI), It had to file an appeal in the Supreme Court of India, thereby increasing the pendency of cases in the Court. However, after the Competition (Amendment) Act, 2007, the Competition Appellate Tribunal (COMPAT) was established. It provided the provided the parties with a proper channel for appeal and changed the hierarchy of appeal. After the establishment of the Competition Appellate Tribunal (COMPAT), the appeal from Competition Commission of India lies in front of the Appellate Tribunal and a further appeal goes to the Supreme Court.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT)

However, the establishment of Competition Appellate Tribunal (COMPAT) was found not to be as effective as it was hoped would be. There were a number of conflicts between CCI and COMPAT related to their sharing of power.[3] The result of this conflict was that in 2017 an amendment was made through which the provision of Part XIV of Chapter VI of the Finance Act, 2017 came into operation. After such amendment the Competition Appellate Tribunal (COMPAT) ceased to exist. In place if it the National Company Law Appellate Tribunal (NCLAT) was constituted.  Accordingly, Sections 2(ba) and 53A of the Competition Act and Section 410 of the Companies Act, 2013 have been appropriately amended and various other provisions of the Competition Act dealing with the Competition Appellate Tribunal (COMPAT) have been omitted.

Previously, all appeals against specified orders of the Competition Commission of India (CCI) would lie to the Competition Appellate Tribunal (COMPAT) whereas the National Competition Law Appellate Tribunal (NCLAT) dealt with, inter alia, appeals arising out of orders of the National Company Law Tribunal (NCLT) under the Companies Act, 2013 as well as the Insolvency and Bankruptcy Board of India (IBBI) under the Insolvency and Bankruptcy Code, 2016.[4]

HOW TO FILE AN APPEAL?

The Section 53B of the Competition Act, 2002 provides for ‘Appeal to Appellate Tribunal’.

  • Clause 1 of Section 53B

Section 53B(1) states that –

“The Central Government or the State Government or a local authority or enterprise or any person, aggrieved by any direction, decision or order referred to in clause (a) of section 53A may prefer an appeal to the Appellate Tribunal.”

This clause of Section 53B provides for the persons who can file an appeal before the Appellate Tribunal. According to it, when any direction, decision or order is passed as per Section 53A of the Act, the Central Government or the State Government or a local authority or enterprise or any person, if aggrieved, can file an appeal before the Appellate Tribunal.

  • Clause 2 of Section 53B

Section 53B(2) states that –

“Every appeal under Sub-section (1) shall be filed within a period of sixty days from the date on which a copy of the direction or decision or order made by the Commission is received by the Central Government or the State Government or a local authority or enterprise or any person referred to in that sub-section and it shall be in such form and be accompanied by such fee as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of sixty days if it is satisfied that there was sufficient cause for not filing it within that period.”

This clause of Section 53B provides for the time limit within which the appeal shall be filed. According to this section, every appeal shall be filed within a period of sixty days from the date on which a copy of the direction or decision or order made by the commission is received by specified parties. It is also provided that the Appellate Tribunal if satisfied that the applicant was prevented by sufficient cause from filing the appeal shall be allowed to file the appeal after the expiry of the said period i.e., 60 (sixty) days.

LANDMARK CASES

  • Brahm Dutt v. Union of India[5]

Establishment of the Competition Appellate Tribunal (COMPAT)

This judgement resulted in the establishment of the Competition Appellate Tribunal (COMPAT) through an amendment under the Competition Act, 2002. In this case, the issue was brought upon whether the Competition Commission of India (CCI) was acting in contravention of the rule of separation of powers. Truly, the Competition Commission of India (CCI) has multiple roles – advisory, regulatory, and adjudicatory. Thus, it was considered that while Competition Commission of India (CCI) is an expert body which should continue fulfilling all of these roles, there was a need for a separate appellate body which will perform primarily judicial functions. It will keep a check on the judicial functions of Competition Commission of India (CCI), and can ensure that a fair and justified ruling is provided by the Competition Commission of India (CCI) in all cases.[6]

  • Competition Commission of India vs. Steel Authority of India Ltd.[7]

Conflict between Competition Commission of India (CCI) and Competition Appellate Tribunal (COMPAT) regarding sharing of power

In this case, a complaint was filed to the CCI by Jindal against SAIL and Indian Railways, accusing them of abuse of dominance and anti-competitive agreements. CCI referred the matter to the Director General, waiting for his enquiry. However, before the Director General could even start his investigation, SAIL filed an appeal in COMPAT, accusing CCI of violating the rules of natural justice. An interim order was passed by the COMPAT, staying the investigation, which was appealed by the CCI to the Supreme Court. The Supreme Court contended that not all of the orders that were passed by the CCI were subject to appeal to the COMPAT. As the case was still in the stage of an investigation by the CCI, it did not violate any rule of natural justice by not granting hearing to the parties, which was the gist of the accusation of SAIL. Thus, it was held that the appeal to COMPAT, in this case, was unauthorized.[8]

  • Ambuja Cements Limited v. Competition Commission of India[9]

The first case decided by NCLAT

This case came up in appeal for a second time. In the prior appeal, the COMPAT had remanded the case for re-hearing by the CCI on the grounds of violation of principles of natural justice by the CCI. The NCLAT upheld the second order of the CCI finding 11 cement companies to have entered into anti-competitive agreement and fixed cement prices, limited and controlled the production and supply in the market. The NCLAT also indorsed the highest ever, cumulative penalty in India of INR 6300 crore in this case. The NCLAT analysed the price, production and dispatch data of the cement companies while affirming the CCI’s decision.[10]

  • Hyundai Motors Ltd. v. Competition Commission of India & Ors[11]

In this case the CCI found Hyundai in violation of Section 3 (4)7 of the Competition Act for its resale price maintenance policy and tie-in arrangement, vis a vis its dealers. The NCLAT however set aside the order and directed a refund of the penalty as the CCI had based its decision only on the opinion expressed by the Director General (DG) in his report – which is merely an investigation report and had not undertaken any analysis of the evidence to arrive at its finding of contravention. As such, the NCLAT emphasized that the CCI is required to apply its mind when arriving at a finding, however the impugned order lacked evidence as well as analysis.[12]

CONCLUSION

After the introduction of the Liberalization, Privatization and Globalization (LPG) by the then government of India, the competition in the Indian markets increased. In order to prevent unhealthy trade practices and formation of monopolies, the parliament of India enacted the Competition Act, 2002. This Act replaced the already existing Monopolies and Restrictive Trade Practices Act, 1969. Soon in 2009, the Competition Commission of India (CCI) was established. Later on, in order to reduce the pendency of competition cases in the Supreme Court, the Competition Appellate Tribunal (COMPAT) was created. Soon it was found that COMPAT is not as effective as it hoped to be, and there were a number of conflicts between CCI and COMPAT related to their sharing of power. This results in the creation of National Competition Law Appellate Tribunal (NCLAT) by replacing COMPAT. The Section 53B of the Competition Act, 2002. The right to file for an appeal before NCLAT is same as it was before COMPAT.

ABOUT THE AUTHOR

Ayushi Budholia is a third-year, B.A.LL.B Student of Lloyd Law College, Greater Noida.

REFERNCES:

  1. NCERT, “Liberalisation, Privatisation & Globalisation”: An Appraisal
  2. Ministry of Corporate Affairs, “Competition Commission of India”
  3. COMPAT & NCLAT: History, Establishment, Powers – Functions and Aftereffects 
  4. Compat No More: NCLAT Marches On
  5. Brahm Dutt v. Union of India, AIR 2005 SC 730
  6. COMPAT & NCLAT: History, Establishment, Powers – Functions And Aftereffects
  7. CCI vs. Steel Authority of India Ltd., (2010) 10 SCC 744
  8. COMPAT & NCLAT: History, Establishment, Powers
  9. Ambuja Cements Limited v. CCI TA(AT) (Compt) No.22 of 2017
  10. Competition Law at the NCLAT: A Three Year Round – up
  11. Hyundai Motors Ltd. v. CCI & Ors. Competition Appeal (AT) No. 06 of 2017
  12. Competition Law at the NCLAT: A Three Year Round – up

Related Post