Delhi High Court Holds DG Report not Binding on CCI

On October 10, 2019, the Delhi High Court (‘DHC’) ruled that the CCI is not bound by the Director General’s (‘DG’) report and that the Act does not bind CCI to accept the DG’s recommendations.[1]

SRMB Srijan Ltd. (‘SRMB’) entered into a Gas Sale Purchase Agreement (‘GSPA’) with Great Eastern Energy Corporation Ltd. (‘GEECL’). The petitioner, i.e., Saurabh Tripathy (an employee of SRMB) filed information before the CCI on September 16, 2019 alleging abuse of dominant position by GEECL for imposing unfair and discriminatory conditions for supply of Coalbed Methane Gas (‘CBM’). After forming a prima facie opinion that GEECL is dominant in the relevant market and that the terms of the GSPA appeared to be in favor of the GEECL and against SRMB, the CCI directed the DG by way of order dated December 29, 2014 to conduct a detailed investigation into the matter. The DG, in its investigation report, concluded that there was in fact abuse of dominance since the clauses in the GSPA were unfair and discriminatory. However, ultimately the CCI decided that GEECL had not abused its dominant position in the relevant market. An appeal was filed against the impugned order before the Competition Appellate Tribunal, which rejected it the ground that it was not maintainable. The petitioner, thereafter, approached the DHC.

At the outset, the DHC observed that in the event that CCI is of the view that no further inquiry is required, it is not necessary for the CCI to conduct any further inquiry or issue any such directions for the DG to conduct the same. The DHC also noted that there is no provision in the Act which mandates that the CCI must accept the recommendations made in the DG report. In other words, the DG report is not binding on the CCI and the opinion of CCI can differ with the findings of the DG. Separately, the DHC also analysed the clauses of the GSPA and concurred with the CCI decision of exonerating GEECL of allegations on abuse of dominance in the ‘market for supply of coal bed methane gas in the Asansol-Raniganj-Durgapur industrial area’. Finally, the DHC also held that the petition amounted to abuse of process of law, as Saurabh Tripathy, who is an employee of SRMB, was not authorized by SRMB to advocate its cause (but it appeared that the petitioner had been put up by SRMB to pursue the proceedings before the CCI and the DHC). The DHC, while dismissing the petition, imposed a cost of INR 50,000 (approx. USD 700) on the petitioner to be paid to each of CCI and GEECL for abusing the process of law.

[1] W.P (c) 2079 of 2018, Judgement dated October 10, 2019

Published In:Inter Alia Special Edition- Competition Law - January 2020 [ English
Date: January 17, 2020