Jurisdiction - India
News
India – COMPAT Sets Aside CCI’s Decision Against BCCI-IPL And Remits Back To CCI For Fresh Disposal.

17 March, 2015

 


On February 23, 2015, the Competition Appellate tribunal (‘COMPAT’) set aside CCI’s decision against the Board of Control for Cricket in India (‘BCCI’) and Indian Premier League (‘IPL’) in which CCI found BCCI guilty of abusing its dominant position under Section 4(2)(c) of CA02 for denying market access to potential competitors.

An investigation was conducted by the Office of the Director General for Competition (‘DG’), and the ensuing report (‘DG Report’) found BCCI’s conduct in the matter of awarding various franchisee rights, media rights and other rights, to be in violation of section 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of CA02. On February 08, 2013, five members of CCI passed a majority order imposing a penalty on BCCI at 6% of the average turnover for the past three years amounting to INR 52.24 crore (‘the Impugned Order’). CCI in the Impugned Order differed from DG and defined the relevant market to be the market for “organization of private professional cricket leagues/events in India” (the DG Report defined the relevant market as “the underlying economic activities, which are ancillary for the organization of cricket in Twenty-20 format with respect to the IPL tournament”). CCI referred to clause 9.1(c)(i) of the Media Rights (‘the Impugned Clause’) and held BCCI guilty of abusing its dominant position in contravention of Section 4(2)(c).

On appeal the COMPAT examined the powers and functions of CCI under Sections 19(1), 26(1) 26 (2) to 26 (8), 27 and 36(1) of the Act and Regulations 18, 20 and 21 of the Competition Commission of India (General) Regulations, 2009 (‘Regulations’). The COMPAT held that upon a reading of these provisions, the process undertaken by CCI in the course of an investigation and finally passing an order under Section 27, is adjudicatory or quasi judicial in nature. Accordingly COMPAT held that CCI was bound to comply with the principles of natural justice when passing an adverse order and holding a person guilty of entering into anti-competitive agreements or abusing their dominant position.

On this basis the COMPAT held that CCI has failed to comply with the principles of natural justice when passing the Impugned Order for a number of reasons.

First, on the definition of relevant market, COMPAT noted that when CCI directed its Secretary to forward the DG Report to BCCI, it did not indicate that it disagreed with DG’s definition of the relevant market. BCCI’s reply was therefore restricted to the findings recorded in the DG Report and the appellant did not get any opportunity to contest the determination of the ‘relevant market’ by CCI.

COMPAT explained that if the DG Report discloses contravention of provisions of CA02, and CCI opines that further inquiry is called for, then it shall hold inquiry into such contravention. In such an eventuality, CCI is required to give notice to the Central Government or the State Government or the statutory authority or the parties concerned [Section 26(8) read with Regulation 21 (8)] and invite their objections or suggestions. This necessarily implies that while holding an inquiry under Section 26(7) or Section 26(8) of CA02, CCI is required to comply with the rule of audi alteram partem and give an effective opportunity of hearing to the person against whom a negative finding is likely to be recorded, not only to controvert the allegation made against him and the evidence/material used in support of such allegation, but also to produce evidence to show that he / she / it has not violated any provision of CA02.

COMPAT further observed that its order dated September 05, 2014 in National Stock Exchange vs. Competition Commission of India on which reliance was placed in the affidavit of Smt. Jhingran could not be treated as laying down a proposition that CCI can record finding on any particular issue different than the one recorded by DG without giving notice and opportunity of hearing to the affected party. Therefore, CCI’s finding that Organization of Private Professional Cricket League / Events in India are the ‘relevant market’ was vitiated as it had violated the rule of audi alteram partem.

Second, it was argued that CCI relied upon information / newspaper articles to arrive at this definition of the relevant market, which were neither part of the DG Report nor provided by the informant. One of the newspaper articles relied upon by CCI was published on August 4, 2012, i.e., two days after the completion of the oral hearing before CCI on August 1-2, 2012. COMPAT held that if CCI wanted to rely upon any information/ material that does not form part of the DG report, the principles of natural justice required that such information/material must be disclosed to the person concerned and an effective opportunity has to be given to him to controvert the same.

Third, on the issue of whether CCI could rely upon information that was downloaded from the internet and other similar material, COMPAT stated that: (a) the Secretary, CCI, admitted that CCI relied on this information without disclosing the same to BCCI, and (b) the information could not have been relied upon by CCI as they held no evidentiary value. To rely on this information would result in a violation of the principles of natural justice and also occasion failure of justice.

Lastly, the Impugned Order had directed BCCI to delete the Impugned Clause. COMPAT found this to be in breach of the principles of natural justice because BCCI was not given an opportunity to defend that Impugned Clause as it found no reference in CCI’s order passed under Section 26(1) of CA02, directing the DG to conduct an investigation, or the findings in the DG Report. On this basis COMPAT set aside the Impugned Order and remitted the matter to CCI to be reconsidered.

AZB  

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com

Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com

Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

Comments are closed.