The Competition (Amendment) Bill, 2012 as introduced in the Lok Sabha on December 7, 2012 in the just-concluded winter session is a sitting duck awaiting a judicial shotgun. The Bill was drafted on suggestions made by an expert committee that, in turn, was constituted by the Government of India in June 2011 to examine and suggest modifications in the Competition Act, 2002. This was necessary in the light of experiences gained by the Competition Commission of India (CCI) in its operation and working.
The expert committee neither had a website nor otherwise held any effective consultation with stakeholders. Neither the expert committee nor the ministry of corporate affairs placed the draft proposals in the public domain to seek or elicit comments and suggestions. When the trend of modern law-making ought to be and is more participative, the entire process appears to be retrograde, if not regressive.
Putting aside amendments that are insignificant and consequential (to earlier amendments) to straighten the creases, let me focus on key problem areas and possible solutions.
Section 27(b) of the Act enables the commission to impose a penalty on persons or enterprises that are parties to anti-competitive agreements or abuse of dominant. The Act, however, does not provide these parties the opportunity of a hearing before the penalty is imposed. The general regulations framed under the Act initially provided such an opportunity before the imposition of penalty. For some unstated and indiscernible reasons, that regulation was repealed. The Bill now seeks to insert a proviso after Clause (b) of Section 27 of the Act that reads “… no such penalty shall be imposed by the commission under this section without giving an opportunity of being heard to the producer, seller, distributor, trader or service provider, as the case may be”.
This proposal is a welcome step towards ensuring natural justice. However, this proposal requires the commission to provide such an opportunity only with respect to the specified categories — that is, producer, seller, distributor, trader or service provider. The result is for non-specified categories, including trade associations, office-bearers, buyers and so on, no such hearing needs to be accorded. This renders the entire proviso vulnerable and susceptible to constitutional attack, being in contravention of the equality clause. The challenge can be obviated through a simple re-drafting, which could read “… no such penalty shall be imposed by the commission under this section without giving an opportunity of being heard to such persons or enterprises”.
Second, the concept of joint or collective dominance is proposed to be introduced in the law by amending Section 4 (1) of the Act. The proposal, if passed, would amend Section 4 (1) of the Act that reads “No enterprise or group shall abuse its dominant position” to “No enterprise or group jointly or singly shall abuse its dominant position”. The legislative proposal seeks to condemn “joint dominance” without even defining the concept of “joint dominance”. It may be pointed out that the proviso to Section 4 of the Act defines “dominant position”. This could be suitably amended to encapsulate the concept of “joint dominance”.
Third, through simultaneous and concurrent amendments to Sections 21 and 21 A of the Act, inter-regulatory references between CCI and sectoral regulators are proposed to be made mandatory by substituting the word “may” by “shall”. This is too simplistic a proposition and runs contrary to the settled canon of interpretation of statutes. It does not matter how a provision is worded, i.e. in imperative terms or in a directory manner. What matters is the consequence that flows from non-compliance of a provision. If no consequence is provided for non-compliance, the provision, however worded, is nonetheless directory. If this test is applied to this proposal, it is evident that the “mandatory” consultation is neither fish nor fowl. What would happen if no such “mandatory” reference is made by CCI to sectoral regulators and vice-versa? Should the proceedings before CCI stand vitiated owing to non-consultations with the sectoral regulator or statutory authority? The proposal is misconceived and superfluous and would cause needless delays and quibbles before the Competition Appellate Tribunal and other judicial authorities and courts.
Fourth, an innocuous-looking provision is sought to be inserted in the present law. The proposed Section 5A enables the Central government, in consultation with CCI to specify, by notification, different value of assets and turnover for any class or classes of enterprise for the purpose of Section 5 of the Act. It may be pointed out that a mandatory notification to CCI is required only in mergers and acquisitions, in which thresholds in terms of assets/turnover as provided in Section 5 of the Act are met. The proposed amendment seeks to enable the Central government to change such thresholds that require to be notified to CCI for its approval.
This proposed amendment rewrites the entire scheme and set up of the Act by taking powers from the legislature and vesting them in the executive in the matter of provision of thresholds for notifiable transactions. Such flexibility is, indeed, desired for the executive to act in an effective manner without waiting for the long-winding and politically difficult legislative process. However, this objective has to be achieved in a manner that is consistent with our constitutional scheme.
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The amendment does not provide any guidance whatsoever to the Central government on the class or classes of enterprise for which different value of assets and turnover may be notified, much less the grounds on which such notifications can be issued. It is worth noting that even the fig leaf of “public interest” is conspicuous by its absence in the proposal. The delegation of such power in an uncanalised, untrammelled and unguided manner runs contrary to the basic tenets of jurisprudence on delegated legislation. Even in cases of unfettered discretion, the legislature employs, by way of abundant caution, the defence of “public interest”. The proposal virtually gives a carte blanche to the executive and runs the risk of being declared unconstitutional on the grounds of excessive delegation. The proposal should be revisited and suitably revised to include the concept of “public interest”. To wit, Section 54 of the Act, which enables the Central government to grant exemptions from the Act, provides for specified grounds such as public interest and treaty obligations for such exemptions to be granted.
The problems outlined here are by no means exhaustive and are merely illustrative. In sum, the present legislative proposals, as piloted in the House, are poor in conception and poorer in execution. One need not, however, be despondent, since there are various checks and balances in the legislative process. If the Bill is referred to the Parliamentary Standing Committee or the government moves official amendments to the Bill during discussions in the House, the infirmities, including the ones pointed out here, could be rectified.
The writer is Assistant – Professor (Law), National Law University, Delhi. These views are personal