Flaw in Competition Act likely to make CCI orders void

NEW DELHI: A loophole in the country's competition law can make a majority of the competition watchdog's orders null and void because it cannot close a case if the Director-General of investigation points out a contravention.

The current Competition Act, 2002 does not have any provision for the Competition Commission of India ( CCI) to close a case if the Director-General's report recognises a contravention of the Act. Though surprisingly, a majority of cases have been closed by the Commission despite DG stating otherwise.

"Section 26 of the Act mentions various situations but does not provide for the case where the commission might disagree with the DG after it finds a contravention. It's as if such a situation wasn't envisaged at the time of drafting the current act," said a CCI official on the conditions of anonymity.

On receiving a case, the Commission directs the Director-General to initiate an investigation into the allegations on which the DG needs to submit a report within a specified period of time. Based on the report, the Commission starts hearing the affected parties.

Only after completing its own proceedings does the CCI pass a final order as it deems fit. However, nowhere does the Act facilitate the CCI to close a case if the DG has found a contravention in its report.

The absence of such a crucial provision leads to a situation where the affected party is left with no power to appeal with the higher authorities such as the Competition Appellate Tribunal ( COMPAT) or the Supreme Court once the case is struck down by the commission.

"The whole situation is against audi alteram partem (the right to be heard)," the official added.

As per official sources in the commission, out of the 125 cases sent to the director general for investigation by the CCI after it found prima facie contraventions, the DG has found violations against competition act on about 120 cases.

"80 cases till date have been closed by the CCI post a contravention report by the DG despite the Act not allowing it," another CCI official clarified.