Is There a Period of Limitation Governing CCI Filings?

[Shreya Kapoor is a 2nd year B.A.LL.B. (Hons.) student at National Law University Odisha]

In its order dated 4 May 2021 in Neha Gupta v. Tata Motors, the Competition Commission of India (CCI) was presented with allegations of anti-competitive behaviour and abuse of dominance under sections 3 and 4 of the Competition Act (Act). More pertinently, before deciding to order an inquiry into the alleged misconduct, the CCI clarified whether the information filed and subsequent inquiry is governed by any period of limitation. The order is significant because, the CCI has for the first time addressed the applicability of a limitation period or the relevance of delays in filing of information before it. This post seeks to analyse the ruling with respect to the same in order to break down the rationale of the CCI.

Factual Background

Neha Gupta, in her independent capacity, filed an information before CCI against Tata Motors Ltd., Tata Capital Financial Services Limited and Tata Motors Finance Ltd. (Tata and its entities) alleging the contravention of sections 3 and 4 of the Act. Dealership agreements with the concerned dealers, Varanasi Auto Sales Pvt. Ltd. (VASPL) and Kanchan Motors, were in effect from 11 October 2011 to 24 August 2017 and from 01 April 2016 to 31 March 2021 respectively.

The allegations inter alia claimed: discretionary restrictions on finance facilities and inclusion of onerous obligations contrary to section 4 of the Act in the dealership agreements between authorised dealers and Tata and its entities; manifestation of cartelisation contrary to section 3(3) of the Act and anti-competitive arrangements between Tata and its entities pertaining to resale price maintenance, tie-in arrangements and exclusive agreements, contrary to section 3(4) of the Act causing caused an appreciable adverse effect on competition.

Analysis of the Decision

On the merits, CCI found Tata and its entities to be in contravention of sections 3(4) and 4 of the Act, thereby directing the Director General to investigate the matter under section 26(1) of the Act. However, before the foregoing rulings, the CCI addressed the preliminary concerns raised by Tata and its entities pertaining to the jurisdiction of the CCI. They contended that the information in the present case had been filed “with severe laches and delay” and should consequently, be out rightly dismissed.

Nature of disputes: in rem versus in personam

It becomes pertinent to highlight that Chapter IV of the Act which describes the “duties, powers and functions” of the CCI, is silent on any temporal restriction on the CCI’s powers to investigate an alleged abuse of dominance or anti-competitive conduct. Similarly, there is no such period of limitation mentioned in the Act which an informant must adhere to in filing a case before the CCI. The only limitation which finds mention in the Act pertains to an appeal from the order or decision of the CCI before the National Company Law Appellate Tribunal (NCLAT) under section 53(B)(2) of the Act. As recognised recently in Maj. Pankaj Rai v. Secretary, Competition Commission of India, the appeal must be filed within a period of 60 days from the date of such order being received by the aggrieved person, but the limitation period may be extended if there is “sufficient cause” for delay.

In the present case, while dealing with the contention pertaining to “alleged laches and delays” in approaching the CCI to file information, it was noted that the Act does not “envisage or provide any period of limitation”. This stems from the reason that the inquiries conducted by the CCI are in rem in nature and do not aim at deciding in personam disputes. Although not in the context of a period of limitation, the CCI previously in Indian Motion Picture Producers’ Association v. Federation of Western India Cine Employees and In Re: XYZ and Indian Oil Corporation clarified that its orders are in rem and not in personam. More recently, in Harshita Chawla v. WhatsApp and Facebook, the CCI observed that it is more than a “mere arbiter to ascertain facts and determine rights in personam arising out of rival claims between parties”. Additionally, even if a lis between two parties prima facie seems to be in personam, it is still submerged within the larger framework of market distortion. Hence, any person can file an information against anti-competitive behaviour under the scheme of the Act. Consequently, it can be deduced that merely because an informant is not personally aggrieved, the case does not lose its in rem character involving issues of free and competitive markets.

Further, antitrust inquiries operate out of markets which are dynamic by nature and continuously evolving. As a result, applying a limitation period to antitrust inquiries is “wholly irrelevant and ill-suited” simply because in an evolving market scenario it cannot be exactly determined “when an anti-competitive behaviour commenced or morphed into another type of behaviour” and when such conduct was concluded. The CCI also reasoned that the Act has been envisaged so as to empower the CCI to perform an inquisitorial function in public interest as opposed to adjudicatory or adversarial functions. Thus, application of the principles of delay or limitation in the institution of an inquiry based on the information filed by the informants is misplaced.

Non applicability of locus standi requirement in competition matters

To further elucidate the non-applicability of limitation, the CCI relied on the Supreme Court’s relaxation of the locus standi requirement in Samir Agrawal v. Competition Commission of India. It categorically laid down that the requirement of locus standi is not a sine qua non for filing information of anti-trust misconduct. However, this decision by itself does not imply that the informant becomes the dominus litis or the ‘master of the suit’. The role of the informant continues to be different from that of a complainant, and the former’s assistance will be confined to the statutory mechanism in terms of investigation by the CCI.

At the same time, the absence of any period of limitation does not accord a blanket power to file causes belatedly. The CCI is still completely entitled to holistically examine the reasons for belated filings and only then it may proceed with the inquiry or dismissal. While the Act does provide sufficient penalties under section 45 for adverse or mala fide filings, this additional step of justifying late filings is another safeguard to eliminate adverse practices. The assessment has to be carried out on a case-to-case basis to balance consumer interests against competition in a free market. Significantly, this finding pre-empts and addresses concerns of opening the floodgates to allow any and every person to file information by condoning delays or rejecting any period of limitation. It will also help to prevent the wastage of public resources in cases that only seek to ferret out information from rivals with intangible outcomes.

Consequently, on the basis of the aforementioned reasoning, the CCI rejected the contention by Tata and its entities concerning delays or laches in filing of the information and “lack of personal knowledge of the matter” on part of the informant.

Concluding Remarks

By rejecting the applicability of limitation in information filings, the CCI has clarified the Indian position along the lines of European antitrust law (see article 25), wherein there is no limitation requirement for the investigation and prosecution of anti-competitive conduct, but only for the imposition of penalties. Balancing the limitation relaxation with appropriate safeguards will also help the CCI to perform its duty as enshrined in the preamble of the Act, i.e., to prevent practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade. The only clarifications that remain to be sought concern the maximum period of delay that can be condoned and what reasons are sufficient to excuse such delay in approaching the CCI.

Shreya Kapoor

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