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IN THE GAUHATI HIGH COURT AT GUWAHATI (THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) PRINCIPAL SEAT AT GUWAHATI
SANDEEP MEHTA, C.J., SUSMITA PHUKAN KHAUND, J.
Dalmia Cement (Bharat) Ltd. – Appellant
Versus
The Union Of India And 3 Ors. – Respondent
WA 281 of 2023
Decided on : 19-10-2023
COMPETITION LAW - CARTELISATION AND INVESTIGATION - Competition Act, 2002: Sections 19(1)(a), 26(1), 3(1), 3(3)(a), 3(3)(b), 3(3)(c), 3(3)(d) - The court discussed the provisions of the Competition Act, particularly focusing on Sections 19 and 26, which govern the initiation of investigations into anti-competitive practices. The court highlighted that a prima facie case for investigation was established based on allegations of cartelisation among cement companies during tender processes. The interpretation of these sections emphasized the need for a thorough investigation when there are indications of collusion, thereby influencing the court's decision to uphold the Commission's order for investigation.
Fact of the Case:
Dalmia Cement (Bharat) Limited appealed against a decision by the Competition Commission of India (CCI) which found prima facie evidence of cartelisation in four tenders for Oil Well Cement floated by ONGC between 2013 and 2018. The CCI directed an investigation under Section 26(1) of the Competition Act, 2002, based on allegations that Dalmia Cement and other companies colluded to fix prices and allocate markets.
Finding of the Court:
The court found that the CCI's order was well-reasoned and that the investigation was justified based on the prima facie evidence of collusion. The court concluded that the appellant's claims regarding the lack of due process and the alleged violation of natural justice were unfounded, as the CCI had acted within its jurisdiction and authority.
Issues: The main issues included whether the CCI's order to investigate was justified, whether the appellant was denied natural justice by not receiving certain documents, and whether the investigation was barred by limitation.
Ratio Decidendi: The court held that the CCI's formation of a prima facie opinion under Section 26(1) was sufficient to warrant an investigation. It emphasized that the mere existence of parallel pricing among a limited number of suppliers could indicate collusion, and that the principles of natural justice were not violated as the appellant was given opportunities to inspect records and respond to allegations.
Final Decision: The appeal was dismissed, affirming the CCI's order for investigation and the learned Single Judge's decision, with the court ordering that the appellant be provided access to the complete set of documents relied upon by the CCI, excluding privileged documents.
JUDGMENT :
(S.P. Khaund, J)
1. This intra-court writ appeal is preferred against the judgment and final order dated 28.06.2023 passed by the learned Single Judge in connection with Writ Petition (Civil) 76/2022. The appellant in this case is Dalmia Cement (Bharat) Limited. The Union of India [Ministry of Corporate Affairs], the Competition Commission of India, Director General of Competition Commission of India and Oil & Natural Gas Corporation Limited [ONGC for short] are arrayed as Respondent Nos. 1, 2, 3 and 4 respectively, and will hereinafter also be referred to as respondent Nos. 1, 2, 3 and 4, for brevity.
2. Brief facts of this case are that an information u/s 19[1][a] of the Competition Commission Act, 2002 (the Competition Act for short) was filed before the respondent No. 2 by the respondent No. 4 [ONGC] on 31.07.2020 alleging cartelisation during the bidding process of four tenders floated by ONGC for the purchase of Oil Well Cement [hereinafter referred to as OWC] in the years 2013, 2015, 2017 and 2018. The aforesaid information was registered and numbered as Case No. 35/2020 against Shree Digvijay Cement Co. Ltd, Dalmia Cement Bharat Ltd (appellant herein) and India Cements Ltd as opposite parties No, 1, 2 and 3. The respondent No. 2, thereafter vide order dated 18.11.2020 in the purported exercise of powers u/s 26(1) of the Act formed a prima facie opinion that the appellant and some other cement manufacturing companies rigged through collusion /cartelisation four tenders for the supply of OWC to ONGC for the aforementioned years and fixed prices and allocated various consignees amongst themselves. It was observed by the respondent No. 2 that the appellant and some other cement manufacturing companies have prima facie violated provisions of Sections 3[3][a], 3[3][b], 3[3][c] and 3[3][d] read with Section 3[1] of the Act. The Respondent No. 2 (also referred to as the CCI or the Commission for brevity) vide order dated 18.11.2020 u/s 26 of the Act directed the respondent No. 3 to investigate into the matter and submit report within a period of 60 days from the date of receipt of the order. It was also further directed that if during investigation, involvement of any other entities could be unearthed then the respondent No. 2 shall also ascertain the role, if any of the person/persons who are in charge of the affairs of such entities or with whose consent or connivance, the alleged conduct of the opposite-parties took place. It is stated that a year after the order u/s 26[1] of the Act was passed, the respondent No. 3 issued notice dated 08.11.2021 u/s 36[2] read with Section 41 of the Act directing the appellant to furnish information as was enumerated in the notice. The copy of the order dated 18.11.2020 was not annexed with the notice. The appellants were directed to furnish the information by 19.11.2021.
3. It is contended that the appellant was unaware of the investigation initiated under the direction of respondent No. 2 vide order dated 18.11.2020 till the receipt of notice dated 08.11.2021. Thereafter, an application for inspection of record was filed by the appellant on 15.11.2021 and the appellant was allowed to examine the records vide order dated 24.11.2021. Although the appellant company filed an application for certified copies of records on 25.11.2021, it was not provided with the full set of documents filed by the ONGC [Respondent No.4] as certain excerpts of opinion as well as minutes of the meeting of the tender committee were treated as confidential. After a second request for documents the appellant received an oral communication from the office of the respondent No. 2, CCI, on 28.11.2021 denying appellant’s request, on the grounds of confidentiality.
4. On perusal of the documents received on 30.11.2021 the appellant realised that the notice dated 08.11.2021 does not satisfy the standard of legality and is liable to be set aside, being beyond the period of limitation and for indulging in a roving an
AI
The court established that a prima facie case of cartelisation can be inferred from parallel pricing among a limited number of suppliers, and that the CCI has the authority to initiate investigations....
The Competition Commission of India must establish a prima facie case before ordering an investigation; failure to do so renders its orders void.
The judgment establishes that the CCI must have a principled prima facie basis to initiate an investigation under the Competition Act, failing which such directives lack jurisdiction and can be quash....
Receipt of incriminating cartel emails without protest constitutes tacit participation; Section 48 penalties on individuals' income mirror firm turnover proportion under Section 27; Section 3(3) cart....
An order under Section 26(1) of the Competition Act is administrative, only initiating an investigation without affecting parties' rights.
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