The Competition Commission of India

The Commission is an expert regulator rather than a court, and the distinction runs through everything it does. It forms opinions rather than framing charges, its investigative arm is part of the same institution, its procedure is its own to regulate, and its expertise is economic. The present structure, a regulator that inquires and decides with an appeal to a judicial tribunal, dates from the amendment of 2007 and was the answer to the challenge in Brahm Dutt v. Union of India, (2005) 2 SCC 431. Alongside enforcement the Commission carries a function no ordinary regulator has, that of persuading government that competition is worth having.

1. Establishment and Composition

Section 7 establishes the Commission as a body corporate with perpetual succession and a common seal, with power to acquire, hold and dispose of property and to contract and to sue and be sued, with its head office at such place as the Central Government may decide. Section 8 provides that it shall consist of a Chairperson and not less than two and not more than six other Members, appointed by the Central Government.

• Qualifications. The Chairperson and every Member must be a person of ability, integrity and standing, having special knowledge of and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which in the opinion of the Central Government may be useful to the Commission.
• Selection. Section 9 requires appointment from a panel recommended by a Selection Committee consisting of the Chief Justice of India or his nominee as Chairperson, the Secretary in the Ministry of Corporate Affairs, the Secretary in the Ministry of Law and Justice, and two experts of repute with special knowledge of the fields listed.
• Term. Section 10 provides a term of five years from the date of entering office, with eligibility for reappointment, subject to the age limit of sixty-five years.
• Resignation and removal. Section 11 permits resignation by notice in writing to the Central Government, and provides for removal on the grounds stated, which include adjudged insolvency, conviction for an offence involving moral turpitude, unfitness by reason of infirmity of mind or body, acquisition of a financial or other interest likely to affect functions prejudicially, and abuse of position rendering continuance prejudicial to the public interest. Removal on the last two grounds requires an inquiry by the Supreme Court on a reference by the Central Government.
• Meetings. Section 22 provides for meetings at such times and places and observing such rules of procedure as the Commission may provide, with the Chairperson presiding and questions decided by a majority, the presiding officer having a second or casting vote.

2. Duties, Powers and Functions

Section 18 states the duty. It is the duty of the Commission to eliminate practices having an adverse effect on competition, to promote and sustain competition, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets in India, and for that purpose the Commission may enter into memoranda or arrangements with any agency of a foreign country with the prior approval of the Central Government. The four limbs reproduce the preamble, and the concluding words are the basis of the cooperation arrangements under which the Commission works with competition authorities abroad.

• Inquiry. Section 19 into agreements and abuse; Section 20 into combinations.
• Orders. Section 27 after an inquiry into Sections 3 and 4; Section 31 on a combination; Section 28 for division of a dominant enterprise; Section 33 for interim relief.
• Procedure. Section 36(1) provides that the Commission shall not be bound by the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice, and shall subject to the other provisions of the Act and of any rules have the power to regulate its own procedure.
• Powers of a civil court. Section 36(2) gives the Commission, for the purposes of discharging its functions, the same powers as are vested in a civil court under the Code in respect of summoning and enforcing the attendance of any person and examining him on oath, requiring the discovery and production of documents, receiving evidence on affidavit, issuing commissions for the examination of witnesses or documents, and requisitioning any public record.
• Experts. Section 36(3) permits the Commission to call upon experts from the fields of economics, commerce, accountancy, international trade or any other discipline to assist it.
• Execution. Section 39 provides for the recovery of penalties, including as arrears of land revenue where the Commission's own modes fail.

3. Competition Advocacy

Section 49 is the provision that distinguishes a competition authority from an enforcement agency. The Central Government and a State Government may refer to the Commission any policy on competition for its opinion on the possible effect of that policy on competition, the Commission must give its opinion within sixty days, and the opinion is expressly not binding. Sub-section (4) imposes a free-standing duty to take suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues.

The relationship between the two is complementary. A large part of what restricts competition in India comes from licensing, procurement rules, reservation and the conduct of public enterprises, none of which enforcement can touch, since an enterprise complying with a legal requirement is not exercising the autonomy that Sections 3 and 4 presuppose. Advocacy is the only instrument the Commission has against that category, and its market studies and advisories on tender design are its principal output.

4. The Director General

Section 16 provides for the appointment of a Director General, with such number of Additional, Joint, Deputy or Assistant Directors General as may be required, for the purpose of assisting the Commission in conducting inquiry into contravention of the provisions of the Act and for performing such other functions as are or may be provided by or under the Act. After the amendment of 2023, the Director General is appointed by the Commission rather than by the Central Government, which strengthens the institutional position of the investigative arm.

• Function. To investigate when directed by the Commission under Section 26(1), and to submit a report of its findings.
• Powers. Section 41(2) confers the powers of the Commission under Section 36(2), and Section 41(3) applies the provisions of the Companies Act relating to investigation, including the power to search and seize with the authorisation of the Chief Metropolitan Magistrate, which is the basis of the dawn raid.
• No power to initiate. The Director General cannot commence an investigation of his own motion. He acts only on a direction under Section 26(1), which is why the prima facie opinion is the gateway to the whole process.
• No power to decide. The report is a recommendation. The Commission is not bound by it and may differ from it, whether by finding a contravention where the report found none or the reverse, after giving the parties an opportunity to be heard.

5. The Commission as an Expert Regulator

Three consequences of that character should be carried away. Its procedure is not that of a trial, and Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744 holds that the formation of a prima facie opinion is administrative, requires no notice or hearing and is not appealable. Its findings rest on economic analysis, so appellate review concentrates on whether the Commission applied the statutory factors and gave reasons rather than on re-doing the economics. And its output is not confined to orders: market studies, advocacy, regulations and guidelines are as much a part of its work as adjudication, which is why the Act gives it rule-making power under Section 64.

6. Related Topics and Provisions