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Private Antitrust Litigation

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Anantlaw insights on Private Antitrust Litigation in India were published by Lexology.

 

How would you summarise the development of private antitrust litigation in Indian jurisdiction?


There is hardly any scope for debate on the topic that the two deterrents for successful competition law enforcement are – initiation of behavioural investigations, consequent imposition of fnes by the competition law regulator against ‘enterprises’ or ‘person’; and fling claims seeking compensation towards damages suffered as a result of the violations of competition law by the same ‘enterprises’ or ‘person’.


The entire sphere of antitrust law in India is governed by the Competition Act, 2002 (the Competition Act) and the subsidiary rules and regulations thereto. The Competition Commission of India (CCI), established under the Competition Act, is entrusted with the duty to eliminate practices that have an adverse effect on competition in India. The provisions of the Competition Act relating to behavioural matters came into force only on 20 May 2009 when the Government of India notifed the provisions pertaining to anti-competitive agreements and abuse of dominant position of the Competition Act. The 12 year competition law jurisprudence in India is not fully developed and several important issues in this sphere are presently pending adjudication before the Constitutional Courts of India including those relating to private antitrust litigation.


The Competition Act specifcally provides for private antitrust litigation by virtue of section 53N, which envisages an application claiming compensation arising from the fndings of the CCI and the National Company Law Appellate Tribunal (NCLAT). Such an application seeking compensation for loss or damage is fled before the NCLAT. The said provision envisages a broad category of claimants, which includes the government, any ‘enterprise’, and a ‘person’ to fle a claim seeking compensation for ‘loss’ or ‘harm’ suffered due to violation of provisions of the competition law. Further, section 53N of the Competition Act also contemplates the violations in respect of which a claim for compensation may be made. The provision envisages grant of compensation inter alia in respect of anti-competitive agreements, abuse of dominant position and combinations. The aforesaid provision also envisages collective action instituted by one or more persons having the ‘same interest’.


However, since the notifcation of the Competition Act, only a handful (less than 10) applications seeking compensation for damage or harm have been fled and none of these applications have been decided on merits so far. Having said the above it is pertinent to clarify that in 2020, a compensation application was preferred along with an appeal against CCI’s order not initiating investigation (and closing the case under section 26(2) of the Competition Act). By virtue of NCLAT’s order in November 2020; the appeal in the said case was dismissed and consequently a similar fate was meted out to the subject compensation application. In terms of the Competition Act compensation applications under section 53N are maintainable if CCI renders a fnding on violation of the provisions of the Competition Act and not otherwise.


Therefore, evolution and development of jurisprudence in the private antitrust litigation is relatively slow and is likely to take more time. Further, most of these applications have been kept in abeyance as the fnal appeals (in respect of violation of the Competition Act) were pending disposal before the Supreme Court of India.


In 2021, the International Subscription Agency (ISA) fled a compensation application before the NCLAT. The compensation application has been fled against Federation of Publishers’ and Booksellers’ Associations in India (FPBAI). In March 2021, CCI acted on the information fled by ISA (for cartelisation in restricting discounts to be provided to Indian subscribers of print journals and e-resources) and passed orders fnding FPBAI in violation of the provisions of the Competition Act. CCI imposed a penalty on FPBAI. On the basis of this order of the CCI, ISA approached the NCLAT and fled the compensation application under section 53N of the Competition Act.


The frst application for compensation, after the Supreme Court of India’s fnal order or judgment (in respect of violation of Competition Act), was fled before the NCLAT in early 2019 by the Food Corporation of India (FCI). This application for damages was fled subsequent to the fnal order by the Supreme Court of India in Excel Crop Care ((2017) 8 SCC 47). A development in the private antitrust litigation was NCLAT’s ruling on the preliminary issue of maintainability of the compensation application where the NCLAT observed that a compensation application fled pursuant to a fnal order of Supreme Court of India is maintainable. The compensation application was held to be maintainable in spite of the fact that the present scheme of the Competition Act (section 53N) envisages fling of compensation applications only after the fndings of the CCI or the NCLAT in respect of violations of competition law and not pursuant to fnal order of the Supreme Court. The NCLAT has kept the decision on merits on the said compensation application in abeyance as NCLAT’s decision on maintainability is under challenge before the Supreme Court of India. Therefore, the jurisprudence surrounding compensation applications shall be settled only after a more authoritative ruling is given by the Supreme Court of India while exercising its appellate jurisdiction.


Lack of provision under the Competition Act providing fling of compensation application post the fnal Supreme Court order or judgment, was also noticed by the Competition Law Review Committee (CLRC). The CLRC was formed by the Government of India. The CLRC submitted its report to the Ministry of Corporate Affairs, Government of India recommending certain amendments to the Competition Act. The CLRC Report submitted to the Ministry of Corporate Affairs (Government of India) recorded that, under the present scheme of the Competition Act (ie, section 53N), an application for compensation claims post-determination of appeal by the Supreme Court is not allowed or available. Accordingly, the committee that submitted the CLRC Report recommended that section 53N be amended to allow application for compensation to be fled after determination of an appeal by the Supreme Court.


Pursuant to this, the Ministry of Corporate Affairs introduced the draft Competition (Amendment) Bill 2020, dated 12 February 2020 (the Draft Bill 2020), inviting public comments. In the Draft Bill 2020, it has been recommended to allow applications for compensation arising from the fnal order of the Supreme Court challenging the fndings of the NCLAT. However, to date, the Draft Bill 2020 has not been passed by the Parliament of India.


Full chapter authored by AnantLaw can be downloaded from the link below.


Lexology 2021 India Private Antitrust Litigation
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