Gujarat Industries Power Company Limited v. Competition Commission of India and Ors. - (Competition Appellate Tribunal) (28 Nov 2016)

Pendency of arbitral proceedings cannot be used as a tool to prevent Appellant from invoking provisions of Competition Act

MANU/TA/0056/2016

MRTP/ Competition Laws

Appellant-Gujarat Industries Power Company Limited has filed this appeal for setting aside order passed by Competition Commission of India under Section 26(2) of Arbitration And Conciliation Act, 1996, whereby Cases No. 55 and 56 of 2015 registered on basis of an information's filed by Appellant and Gujarat State Fertilizers and Chemicals Limited under Section 19(1)(a) of Competition Act, 2002 alleging contravention of Section 4 of Act, 2002 by Respondent No. 2 - GAIL (India) Ltd. were closed.

Section 26(1) of Act, 1996 provides that at the stage of forming an opinion that there exists a prima facie case which requires investigation, Commission is required to consider contents of reference made by Central Government or State Government or statutory authority or an information filed under Section 19(1)(a) of Act, 2002 and documents, if any, received with reference or information. This exercise constitutes a condition precedent for issue of a direction to Director General to cause an investigation to be made into the matter necessarily implies that while exercising power under Section 26(1) of Act, 1996, Commission cannot adjudicate upon merits and de-merits of reference made by Central Government or State Government or statutory authority or averments/allegations contained in information. If after examining the contents of the reference or information, the Commission finds that the material produced along with it is not sufficient for forming an opinion about the existence or otherwise of a prima facie case or it wants some clarification on any particular aspect of the matter/issue, then it can call for a preliminary conference and invite the information provider and such other person as is considered necessary for the preliminary conference (Regulation 17).

Instead of examining the allegations contained in information and documents filed by Appellant from point of view of forming an opinion about existence or otherwise of a prima facie case, Commission assumed the role of an investigator and an adjudicator and unequivocally pronounced that, decision taken by Respondent No. 2 to invoke 'Take or Pay' clause contained in GSA dated 26.12.2008 cannot be termed as arbitrary or abuse of dominant position as envisaged in Section 4(2) of Act, 2002. Commission opined that, provisions of Act would not be applicable to GSAs dated 26.12.2008 executed between Appellant and Gujarat State Fertilizers and Chemicals Limited and Respondent No. 2 because Section 4 of Act, 2002 was brought into force with effect from 20.05.2009. Exercise undertaken by Commission to determine issues like relevant market, dominant position enjoyed by Respondent No. 2 in relevant market and its conclusion that Respondent No. 2 cannot be held to have abused its dominant position was clearly beyond scope of power required to be exercised under Section 26(1) of Act, 2002.

Questions whether Respondent No. 2 is in a dominant position in relevant market and whether it has abused that position and acted in contravention of Section 4 of Act could not have been decided by High Courts of Gujarat or Delhi in two proceedings filed by Appellant. Likewise, pendency of arbitral proceedings cannot be used as a tool to prevent the appellant from invoking the provisions of the Act. Appellant succeeded in making out a prima facie case of violation of Section 4 of Act, 2002 which needs to be investigated. Therefore, DG is directed to conduct an investigation into allegations contained in information filed by Appellant and submit a report to Commission.

Relevant : Section 26(1), Arbitration And Conciliation Act, 1996, Sections 19(1)(a), 4 of Competition Act, 2002

Tags : CONTRAVENTION INVESTIGATION CLOSURE