Dec 31, 2021

CCI Dismisses Allegations of Manipulating Tender Process against Nanded Waghala City Municipal Corporation

On September 7, 2021, CCI issued an order under Section 26(2) of the Act rejecting allegations that the Nanded Waghala City Municipal Corporation (‘NWCMC’) had favoured Sanman Buildcon Limited (‘Sanman’) in the tender process for redeveloping the Mahatma Phule Market.[1]

The Informant (identity kept confidential) ran a mobile handset repair shop within the old structure of Mahatma Phule Market, which was to be redeveloped. The Informant alleged that NWCMC favoured Sanman in obtaining the tender for the redevelopment of the Mahatma Phule Market by tweaking conditions such as the tender amount (that was lowered to Rs 13,10,00,000 from Rs 42,00,00,000) and granting an illegal lease of 90 years (municipal rules permitted a maximum lease of 30 years). The Informant alleged that this was a contravention of Section 3(3)(d) of the Act. Additionally, Sanman also refused to rehabilitate the Informant by denying allotment of a newly constructed shop in the redeveloped market.

CCI found that the tender bids were invited through an e-tendering system from eligible and reputed developers in a transparent manner. CCI held that the issues raised by the Informant such as breach of municipal by-laws, non-allotment of a shop in the redeveloped market were beyond the purview of the Act. The Informant was further unable to adduce any evidence to establish a prima facie case of bid rigging. Therefore, CCI decided to close this case under Section 26(2) of the Act.

Delhi High Court Clarifies CCI’s Power to Review its Orders

On September 10, 2021, the High Court of Delhi (‘DHC’) reversed the decision of CCI dated August 11, 2020, recalling its earlier direction to include Eaton Power Quality Private Limited (‘Eaton’) in the ‘white labelling process’ initiated by Larsen and Toubro Limited (‘L&T) and Schneider Electric India Private Limited (‘Schneider’).[2]

Proceedings before CCI    

On April 18, 2019, CCI had granted approval for the acquisition of the electrical and automation business (‘E&A Business’) of L&T by Schneider, subject to certain modifications (‘Approval Order’), since CCI was of the prima facie opinion that Schneider and L&T are the topmost market share holders in the E&A Business, and the combination was likely to have an AAEC in the low voltage switchgear business. Under the Approval Order, Moore Singhi Advisors LLP was appointed as a Monitoring Agency (‘MA’) as per Regulation 27 of Competition Commission of India (Procedure in regard to the Transaction of Business relating to Combinations) Regulations, 2011 to monitor the timely implementation of the modifications to the combination. The Approval Order had proposed various remedies to reduce AAEC. The process of implementation of two of these remedies was questioned before the DHC, in the context of: (i) white labelling remedy; and (ii) ‘non-exclusive technology transfer’ licences.

Pursuant to the Approval Order, an invitation for Expression of Interest (‘EOI’) was published, and several entities filed their registrations on a particular portal that was provided for availing of the remedies. Eaton was one of these entities, however, due to the non-submission of requisite supporting documentation by the deadline (due to ‘technical issues’), Eaton was disqualified from availing of the white labelling remedy. Eaton requested to submit the requisite documents over e-mail much later. Aggrieved by the disqualification, Eaton filed an application before CCI for its inclusion in the while labelling process, and CCI in its decision dated January 7, 2020, directed Schneider to include Eaton in the white labelling process, and the MA to take appropriate measures to ensure that all the applicants including Eaton’s are treated at par in a fair and transparent manner (‘7 January Order’). CCI permitted Eaton’s inclusion based on two broad grounds: (i) to enable wider participation; and (ii) in the interest of competition. CCI took this decision merely on a written representation of the parties and the recommendation of the MA.

Schneider challenged the 7 January Order, on the grounds that it was not provided an opportunity to be heard prior to the decision being made, and also the fact that Eaton’s EOI was non-compliant or non-responsive. It sought a ‘review’ of the 7 January Order. CCI heard the parties and issued an order dated August 24, 2020, recalling the direction to include Eaton in the white labelling process (‘24 August Order’). The primary reason for recalling the 7 January Order was that the negotiations with the eligible participants were actively underway qua the white labelling arrangements, and this was being supervised by the MA. Allowing Eaton to enter at that stage, would further delay the implementation of the white labelling arrangements. CCI held that Schneider should proceed without Eaton at this stage, and if the capacity reserved for white labelling process is not fully utilised, then third parties will again be invited, and Eaton would be at liberty to participate at that stage.

 Determination of Issues

i.    Can CCI review its orders? Section 37 of the Act that included an express power of review was repealed by the Competition (Amendment) Act of 2007. The repealed Section 37 provided that any aggrieved person, who did not avail of the remedy of an appeal, could have sought a ‘review’ of CCI’s order before CCI. CCI had to, then, compulsorily provide a hearing and decide as it makes fit. However, this provision has been expressly repealed. The DHC considered the judgments in (i) Google Inc. and Others CCI and Another[3]; (ii) CCI v. Steel Authority of India Limited[4]; and (iii) Cadila Healthcare Limited v. CCI[5], and concluded that the power to review/recall an administrative order exists with CCI but has to be exercised sparingly. Review/recall applications can be filed, however, only if an egregious fraud or a mistake which is covered by Section 38 (mistake apparent from the record) exists. Apart from these circumstances power to review/recall does not exist with CCI.

ii.   Was the 7 January Order legal? CCI did not inform either of the parties that it was considering the representation of Eaton and did not issue any notice to parties or call upon either parties to either file written submissions, or afford any opportunity for oral hearing, at the first stage of its consideration. CCI, after receiving the MA’s recommendation, directed Eaton’s inclusion in the white labelling process. The inclusion of Eaton was not merely an administrative direction, but also had an adjudicatory or quasi-judicial colour to it, as it was deciding the rights and liabilities of parties. The decision substantially affected the rights of both Schneider and Eaton. This is because CCI’s decision affected the entire timelines and the process of negotiations in respect of the white labelling remedy. Accordingly, CCI ought to have informed both parties that it was considering the representation of Eaton and granted an opportunity to the parties to make written or oral submissions. Therefore, the 7 January Order was procedurally faulty.

iii.  Was the 24 August Order legal? CCI lacked jurisdiction to issue this order as the statutory power of review was expressly taken away by the legislature in the Competition (Amendment) Act of 2007. Further, its action could not have been termed as a rectification under Section 38 of the Act, as it substantively affected the rights of the parties concerned. The order was not merely administrative in nature, but an adjudicatory order, for which the power of review could have not been exercised.

Relief Ordered by the DHC

i.    Schneider will continue its ongoing negotiations with the parties, and execute the white labelling agreements, in terms of the Approval Order, on or before September 30, 2021.

ii.   After September 30, 2021, the second round of issuance of EOI will commence for the balance capacities, based upon the quantities in respect of which the first round of white labelling arrangements has been concluded. In such a second round, Eaton would be free to participate, in accordance with the terms and conditions.

iii.  If the first round of the white labelling agreements is not concluded by September 30, 2021, Eaton will be allowed to participate in the first round itself, since all the supporting documents are now submitted by Eaton. Thereafter, the MA and CCI will ensure that the white labelling agreements are concluded on or before December 31, 2021, to give effect to the Approval Order.


[1] Informant (confidential) v. Commissioner, Nanded Waghala City Municipal Corporation, Nanded and Another, Case No. 21 of 2021, Order dated September 7, 2021.

[2] Eaton Power Quality Private Limited v. Competition Commission of India and Others, W.P. (C) 6797/2020, Order dated September 10, 2021.

[3] (2015) 150 DRJ 192 (DB).

[4] (2010) 10 SCC 744.

[5] (2018) 252 DLT 647 (DB).




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