Judicial Dichotomy

The recent judicial pronouncement of the Supreme Court in the case of Excel Crop Care Ltd. vs. Competition Commission of India (CCI) & Ors., embarked upon the issues relating to anti-competitive practices by the formation of a cartel in the tender allotment by the Food Corporation of India (FCI). The Apex Court upheld the decision of the Competition Appellate Tribunal (Compat) that the penalties imposed by the Competition Commission of India (CCI) on the companies- Excel Crop, United Phosphorus and Sandhya Organic Chemicals; should only be on the ‘relevant turnover’ pertaining to the dispute and not subject to their overall turnover.

The decision was rendered pertaining to imposition of penalty under Section 27 of the Competition Act, 2002 for anti-trust violations, which the Court considered ought to be reasonable. The Bench comprising of Hon’ble Justice A.K Siri and Hon’ble Justice N.V. Ramana heard the appeal against the Compat order which found three Aluminium Phosphide Tablet manufacturing companies charged guilty of bid rigging in the tender allotment by FCI. The rationale provided by the Bench comprises that the penal provision entailed in the Competition Act is for tightening the noose on the companies indulge in such anti-competitive agreements and not to invalidate the corporations altogether.

The Apex Court pondered upon the contention of the companies that they are multi-product entities and the decision by CCI based on the imposition of penalty on overall turnover was unjustifiable which was precisely reflected in the decision of Compat. The judgment strictly adhered to the proposition that inculcating the turnover of other manufactured products not forming part of anti-competitive practice would bring about disarray in the decision-making process. The determination of relevant turnover was also endowed upon by the Court that ought to be based on the aggravating and mitigating circumstances arising in the matter.

Although another issue which needs to be pondered upon is with respect to the decided cases where the questions pertaining to the penalty was raised and the recent orders passed against the cement and automobile companies which are appealed in Compat, would certainly confer this precedent which would have bearing on further orders passed by the Authorities. The retrospective applicability of the law is though not allowed the parties indulged in such anti-competitive agreements post the notification of the inclusion of provisions regulating cartelization would be dealt with strictly, which was also discussed in the present case.

The role of CCI has indulgently been enhanced in sectors where the market strategies reflect upon the economic aspect. The earlier MRTP (Monopolies and Restrictive Trade Practices) Act, 1970, has limited the scope of judicial authorities to regulate such practices, which led to the introduction of Competition (Amendment) Act, 2007, where the role was extended to promote perfect competition and restrict the abuse of dominance. The objective behind the insertion of such restriction on the monopolistic trade practices was to curb the concentration of the powers through structural implementation. There subsists responsibility on the State to safeguard the interest of the consumers by securing a social order whereby social, economic and political justice would be directed to prevent concentration of wealth. The new law is punitive in nature, rather than being reformative; it is proactive, rather than reactive which also ensures that the authority created under it performs its functions well as under the provisions of the act.

Our Comments:

The Court though should devise a mechanism where the culminated amount of the penalty imposed be used for the purposes of the legal fraternity in confirmation to the objectives of the welfare state. The judicial process provides for such discretion on part of the Court to endorse such amount rationally to the activities which would only facilitate the process of delivering justice. The schemes governing regularization of welfare norms to the lower strata of the society also needs to be considered while disbursing such amount. If the society is empowered and informed about their rights then such practices would reduce consequently leading to being a part of a civilized society free of disruptive practices.