THE ISSUE OF LOCUS STANDI BEFORE THE CCI? HON’BLE SUPREME COURT DISPELS THE AMBIGUITY IN A LONG AWAITED JUDGMENT OF:

SAMIR AGARWAL Vs. CCI (Cab Aggregators Case) 

(2021) 3 SCC 136

Senguttuvan K-Partner

Kshithija Prakashan-Associate

I. INTRODUCTION

The Hon’ble Supreme Court vide a significant and a very recent landmark judgment, rendered an entirely different interpretation and ruling on a much long debatable issue of “Locus Standi”, i.e., on the question “Who can Approach the CCI?”, thereby dispelling the ambiguity. This very issue of who has the locus standi to approach the Competition Commission of India (CCI) against the anti-competitive practices of an enterprise, being violative of the provisions of the Competition Act, 2002, has been addressed in this case. This issue has been the most sought after and challenging issue that has arisen in litigation under the Act, making it very obvious and trite. What becomes an important point for consideration before the CCI in cases like these, is often on the question as to whether which kind of persons or entity can approach the CCI against any anti-competitive practices. Is it that only a person or an entity that has actually suffered some kind of harm owing to the anti-competitive practices, are at a better position having proximate cause to approach the CCI, or is that any individual or entity, having the mere knowledge of such anti-competitive practices (such as an Informant, Whistleblower, etc.), stands in a better position to approach the Commission?

Through this landmark decision and one of its kind ruling, the Hon’ble Supreme Court cleared this long debatable issue of “Locus Standi” with respect to such cases falling under the purview of the Competition Act, 2002. Though, initially a different interpretation was observed and delivered by the Hon’ble NCLAT on this case, however when it came for appeal before the Hon’ble Supreme Court, the stance taken by the Court was very different to what duly observed by the NCLAT.

II. BRIEF BACKGROUND

In the instant case, Samir Agarwal (“the Informant”), who is an independent legal practitioner, had filed on 13th August, 2018 an information (“the Information”) before the Competition Commission of India, seeking to initiate an inquiry, under Section 26(2) of the Competition Act, 2002, into the alleged anti-competitive conduct of renowned cab aggregators like Ola, Uber, etc. Basing the Information filed by the Informant, it was alleged that cab aggregators like Ola, Uber, etc. which provide radio taxi services, essentially operate as platforms through mobile applications allowing riders and drivers to interact, thus making it a two-sides of the platform for interaction. It was argued that a trip’s fare is calculated by an Algorithm (the “Pricing Algorithm”), which essentially takes away the freedom of riders and drivers to choose the best price on the basis of competition, as both have to accept the price set by the pricing algorithm. Owing to this kind of pricing by the cab aggregators, neither are riders in a position to negotiate the fares with individual drivers for rides that are booked through the apps, nor are the drivers able to offer any kinds of discounts. The Information was particularly alleged against price-fixing agreements being entered into by the individual cab drivers and cab aggregators, in contravention of Section 3(1) read with Section 3(3)(a) of the Act, and also engaging in resale price maintenance in contravention of Section 3(1) read with Section 3(4) (e) of the Act. In relevance to Section 3 of the Competition Act, 2002, it was alleged by the Informant that, despite the individual cab drivers are independent entities who are not employees or agents of Ola or Uber, the drivers are however, bound to accept the trip fare reflected in the app at the end of the trip, based on the agreed terms and conditions between them and the cab aggregators. Though, the individual cab drivers receive their share of the fare only after the deduction of a commission by Ola and Uber for the services offered to the rider, such pricing algorithm used by Ola and Uber artificially manipulates supply and demand. Thus, the cooperation between the drivers and the Ola and Uber, results in a concerted action under Section 3(3)(a) read with Section 3(1) of the Act.

The Competition Commission of India by its Order dated 6th November, 2018 under Section 26(2) of the Act, discussed the Information provided by the Informant and held that, “no agreement, understanding or arrangement appeared to exist either between the cab aggregators and their respective drivers or between the drivers inter se. Therefore, no prima facie case for contravention of Section 3 of the Act had been made out to order an investigation by the Director General and the matter was subject to disposal.” Thus, aggrieved by the order of the CCI, the Informant preferred an appeal before the NCLAT.

III. RULING OF THE NCLAT [1]

The NCLAT rendered a narrow interpretation on the issue of “Locus Standi”, under Section 19(1)(a) of the Act. In the appeal before the NCLAT, cab aggregators challenged the locus standi of the Informant, alleging that the Informant was not a “person aggrieved” and had failed to present cogent evidence of a legal injury, arising as a result of the alleged anti-competitive conduct. With regards to Section 19 of the Act, the NCLAT observed that “the concept of locus standi has been diluted to some extent by allowing public interest litigation, class action and actions initiated at the hands of consumer and trade associations. Even the whistle-blowers have been clothed with the right to seek redressal of grievances affecting public interest by enacting a proper legal framework. However, the fact remains that when a statute like the Competition Act specifically provides for the mode of taking cognizance of allegations regarding contravention of provisions relating to certain anti-competitive agreement and abuse of dominant position by an enterprise in a particular manner and at the instance of a person apart from other modes viz. suo moto or upon a reference from the competitive government or authority, reference to receipt of any information from any person in Section 19(1)(a) of the Act, has necessarily to be construed as a reference to a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices.” [2]

In consequence, the order passed by the NCLAT necessitated a direct nexus between the person filing the information and the violation of legal rights under the Act, in the absence of which a third party would not have locus standi to approach the CCI. Accordingly, the Appeal was dismissed.

IV. RULING OF THE SUPREME COURT: DISPELLING THE AMBIGUITY

A three-judge Bench of the Hon’ble Supreme Court consisting of Judges RF Nariman, KM Joseph and Krishna Murari, in the instant case set aside the NCLAT’s ruling, affirming the argument of the Cab Aggregators, that the Informant did not have the locus standi, to approach the CCI, while refusing to interfere with the orders of the CCI and the NCLAT, upholding that the cab aggregators do not facilitate cartelization or anti-competitive practices violative of the provisions of the Act. The Hon’ble Supreme Court observed that the Competition (Amendment) Act, 2007 and in particular, substitution of terms “receipt of a complaint” under Section 19(1) with the expression, “receipt of any information in such manner”. The Bench was of the opinion that, though a “Complaint” could be filed by an aggrieved person, “Information” on the other hand, may be received by any person irrespective of whether such person has been personally affected by the alleged anti-competitive conduct. Further, the Court also elaborated that the proceedings under the Act are “proceedings in rem”, which affect the public interest and that the, Commission may exercise suo moto powers as laid down in Section 19(1) of the Act. The Bench was of the view that, even while exercising suo moto powers, the CCI may receive information from any person and not merely, from an aggrieved person. This observation of the Apex Court was based on Section 35 of the Act, in which the expression “Complainant or Defendant” has been substituted with “person or an enterprise” and permits the Informant to appear either in person or through its agents, before the CCI.[3] 

IV. CONCLUSION

This landmark and significant judgment has indeed, cleared the ambiguity on a much long debatable issue of “Who can approach the CCI?” or the very issue of “Locus Standi”, before the Competition Commission of India. The ruling of the Hon’ble Supreme Court comes as a ray of hope to all such Informants and Whistleblowers, who can now access and approach the forum of CCI, without the necessity of being personally aggrieved by any such anti-competitive conducts of enterprises, being violative of certain provisions under the Competition Act, 2002.

 

[1] Competition Appeal (AT) No. 11 OF 2019

[2] https://main.sci.gov.in/supremecourt/2020/16963/16963_2020_33_1502_25089_Judgement_15-Dec-2020.pdf

[3] https://www.lexology.com/library/detail.aspx?g=3e91f233-c6a6-435f-a6f5-3b996ed9d20c

 

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