Cadila Healthcare Limited v. Competition Commission of India

On March 9, 2018, the Delhi High Court (‘DHC’) dismissed a writ petition filed by Cadila Health Care Limited (‘Cadila’/ ‘Petitioners’) and refused to interfere in a pending inquiry after the submission of the DG investigation report.[1] The writ petition filed by Cadila challenged the order under Section 26(1) of the Competition Act (‘Prima Facie Order’) passed by CCI dismissing the review/recall application preferred by Petitioner insofar as the Prima Facie Order extends to the Petitioners. The information was filed by Alis Medical Agency, Ahmedabad, Stockwell Pharma, Surat and Apna Dawa Bazar, Vadodara, alleging that when they approached certain pharmaceutical companies or their clearing and forwarding agents for supply of medicines, they were allegedly denied the same on the alleged directions of Federation of Gujarat State Chemist & Druggists Association in the State of Gujarat.

The Petitioners had submitted that they can approach the DHC for review/recall of the order under Section 26(1) of the Competition Act (on the basis of the legal position set out in Google v. CCI[2]).The Petitioners had further submitted that the question of jurisdiction or matters which goes to the root of jurisdiction and where CCI has acted beyond the provisions of the Competition Act cannot be decided by CCI at the time of final arguments or later by the appellate court and as such, has to be seen by the DHC.

Key Observations of the DHC    

In relation to the issue of whether the Prima Facie Order can be reviewed/recalled, the DHC distinguished the case from Google v. CCI[3] by reasoning that in that case, it was held that person/enterprise would have a right to apply for review/recall of that order but such a power has to be exercised on the well-recognized parameters of the power of review/recall and without lengthy arguments and without the investigation already ordered being stalled indefinitely. In that case it was also noted that the investigation was still underway, when the application for recall was filed and also when the petition was filed in the court. In the present case, the recall application was filed after the report had been submitted by the DG to CCI. The conclusion in Google v. CCI needs to be read to mean a recall/review application can be filed during investigation and not after the submission of the report by the DG.

The DHC observed that once a DG report is submitted, the case is out of the realm of Section 26(1) or 26(2) of the Competition Act and the only remedy for the parties is to challenge the report before CCI and not the order under Section 26(1). With regard to the issue of whether CCI should have formed a prima facie opinion specifically against the Petitioners under Section 26(1) of the Competition Act and a general direction to the DG to investigate would not suffice, the DHC quoted the Supreme Court decision in Excel Crop Care Limited v. Competition Commission of India[4] to hold that even if CCI has not formed prima facie opinion against the Petitioners in the Prima Facie Order, the DG would still be within its power to investigate them if the investigation revealed facts that the Petitioners have indulged in anti-competitive conduct. The DHC further noted that the Petitioners had also filed a review/recall application before CCI, whereby CCI considered the objections and applied its mind fresh on the Prima Facie Order and this additionally supported the reasoning of the DHC to restrain itself from interfering with it.

On the assertions made by the Petitioners that they were of the assumption until the issuance of the DG report that the notices issued by the DG to them were only to elicit information in general course and not as opposite parties did not find favour with the DHC either. The DHC held that this could not be a ground to challenge the Prima Facie Order once the DG report has been submitted and more so when the Petitioners never challenged the authority of the DG to issue notices under Section 36(2) read with Section 41(2) of the Competition Act.

Further, as far as issues on merits like malafides/ suppression of facts amounting to fraud, lack of vertical and horizontal relationships between the Petitioners and the Federation, proceedings being barred by res judicata, premature initiation of proceedings under Section 48 of the Competition Act were concerned, the DHC noted that the Petitioners could argue these matters before CCI while rebutting the evidence collected by the DG during investigation.

[1] W.P.(C) 2106/2018.
[2] LPA No. 733/2014.
[3] Ibid
[4] (2017) 8 SCC 47.

Published In:Inter Alia Special Edition Competition Law June 2018 [ English
Date: June 7, 2018