TMI Blog2021 (7) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered opinion of this Court, the CCI certainly have a jurisdiction to take appropriate steps to curb the anti competitive practices and a detailed mechanism is provided under the Act itself to ensure that no anti competitive practices are undertaken. The appellants, it appears, do not want to participate at all in the proceedings initiated by the CCI and do not want the CCI to proceed ahead in accordance with law. This Court really fails to understand as to why the appellants do not want to participate in the enquiry, in which the appellants will have an opportunity to produce the material before the Director General on the basis of which, after hearing the appellants and after following the due process of law, the Director General shall be able to conduct an enquiry. In order to achieve the object of the Act of 2002, the question of interference does not arise. The appellants do have a right to participate in the proceedings and/or under an obligation to produce all the material as desired during the enquiry by the Director General. The appellants want to crush the proceedings at a preliminary stage in a similar manner like quashing of FIR as prayed in a petition filed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 26(1) of the Act of 2002 on 13.1.2021, meaning thereby after a lapse of considerable long time it has been passed and in a competitive market various agreements are executed, new practices are adopted every day and merely because some other issue has been looked into by the CCI earlier, it does not mean that on the ground of res judicata the CCI cannot look into any information subsequently against the appellants. The principle of res judicata has no application in the matter under the Act of 2002 in the peculiar facts and circumstances of the case. The market place is by its very nature a constantly evolving and dynamic space - In the considered opinion of this Court, an expert body cannot be crippled or hamstrung in their efforts by application of technical rules of procedure. In the considered opinion of this Court, by no stretch of imagination, the process of enquiry can be crushed at this stage. In case, the appellants are not at all involved in violation of any statutory provisions of Act of 2002, they should not feel shy in facing an enquiry - The writ petitions filed against the order dated 13.1.2021 and the present writ appeals are nothing but an attempt to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts alleging that the appellants are involved in alleged anti-competitive practices and conduct, such as deep discounting, preferential listing, sale of private label brands through preferential sellers and exclusive tie-ups, alleged to be in violation of Section 3(1) r/w Section 3(4) of the Act. 3.2. It has been further stated that the CCI, based upon the information received by it, has passed an order dated 13.1.2020 in case No. 40/2019 directing an investigation under Section 26(1) of the Act by the Director General. The order dated 13.1.2020 was challenged before this Court and the learned Single Judge has dismissed the writ petitions by an order dated 11.6.2021, which is under challenge in the present two writ appeals. 3.3. The appellant-Flipkart has challenged the legality and validity of the order passed by the learned Single Judge and a main ground has been raised stating that the learned Single Judge has acted contrary to the judgment of the Supreme Court of India in the case of Competition Commission of India v. Steel Authority of India Ltd. Anr., reported in (2010) 10 SCC 744, (hereinafter referred to as CCI v. SAIL) while upholding the order passed by the Compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima facie case justifying passing of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53-A of the Act. 3.6. It has been further contended that it is settled law that even where the statute requires the authority conferred with the power to order an investigation to form an opinion, the opinion must be in writing, meaning thereby it must record minimum reasons substantiating the formation of such opinion. Additionally, the order must unequivocally ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which independent third parties and sellers sell their wares. The appellant is neither the seller nor a buyer of goods. The allegations against the appellant were that: (i) There are certain sellers who are designated assured sellers (conveniently mischaracterised as preferred sellers) and such designation by the appellant violated section 3(4) of the Act; (ii) There are certain situations in which the appellant offered deep discounts to certain sellers, and (iii) in relation to mobile phones, some of the manufacturers had exclusivity agreements with the appellant, thereby violating section 3(4) of the Act. 3.11. It has been contended that the CCI failed to examine whether, assuming that the allegations were established on an investigation (their veracity was seriously in dispute), the agreements complained of would be violative of Section 3(4) of the Act. It has been further contended that another fatal flaw in the CCI Order is, the failure of the CCI to examine whether the alleged agreements are between persons are enterprises at different stages or levels of the production chain. 3.12. It has been contended that the phrase production chain would necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion under Section 26(1) of the Act. This construction by the CCI is in the teeth of Section 19 of the Act. 3.15. It has been contended that the CCI's submission that Section 19 is not required to be considered at the stage of passing an order under Section 26(1) is plainly wrong as Section 19(1) refers to an inquiry at its commencement. Section 19(1) recognises the power of inquiry of the regulator (the CCI) into any alleged contravention of Section 3 or Section 4. Section 19(1) recognises that the CCI may conduct an inquiry on receipt of any information or either on its own motion. In the event of receipt of information, the CCI cannot rely on newspaper reports (such reports having been liberally cited in defence of the CCI Order) but on information received in such manner as may be determined by the regulations. Sections 19(3) and 19(4) of the Act set out the matters which the commission shall have due regard to while engaging in a matter. The statute compels that the CCI shall give due regard to the enumerating factors. 3.16. It has been contended that the submission of the CCI that reading in the requirements of Section 19(3) of the Act at the stage of forming an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such opinion should be formed on the basis of records, including the information furnished and reference made to the Commission under the provisions of the Act, as afore referred In other words, the Commission is expected to express prima facie view in terms of Section 26(1) of the Act, without entering into any adjudicatory or determinative process and by recording minimum reasons substantiating the formation of such opinion, while all its other orders and decisions should be well reasoned. (CC, p. 44) 98. Such an approach can also be justified with reference to Regulation 20(4), which requires the Director General to record, in his report, findings on each of the allegations made by a party in the intimation or reference submitted to the Commission and sent for investigation to the Director General, as the case may be, together with all evidence and documents collected during investigation. The inevitable consequence is that the Commission is similarly expected to write appropriate reasons on every issue while passing an order under Sections 26 to 28 of the Act. (CC, p. 44) It has been stated that as per the aforesaid judgment, the Hon'ble Supreme Court has summarised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that the CCI Order is bad in law as it has changed the test for the exercise of the powers under Section 26(1) of the Act from a prima facie case of contravention of the Act to a prima facie case for investigation . In respect of the aforesaid ground, the following observations in the CCI order have been referred: a. Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation. b. Thus allegations are interconnected, and warrant a holistic investigation to examine how the vertical agreements operate, what are the key provisions of such agreements and what effect do they have on competition. c. It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the OPs are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition . d. the Commission is of the opinion that there exists a prima facie case which requires an investigation by the DG to determine whether the conduct of the Ops have resulted in 3.20. Learned Senior counsel for the appellant has stated that a perusal of the above i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative opinion; c. An order under Section 26(1) of the Act entails no civil consequences; d. The CCI is merely required to record some reasons at the 26(1) stage; e. The CCI has deliberately passed an order directing an investigation with minimal reasons, as a detailed order may influence the DG during its investigation against the appellants. 3.21.1. It is stated that the appellant made the following submissions in response to the above submissions of CCI: Regarding an order under Section 26(1) of the Act is a mere administrative order and CCI is not required to undertake any adjudicatory exercise, It has been stated that the CCI Order is an administrative order may not be of any assistance to the CCI in the present case, as the CCI Order (as has been elaborated above) is contrary to the judgment of the Hon'ble Supreme Court in CCI v. SAIL and such submission of the CCI also completely ignores the judgment of the Hon'ble Supreme Court in Bharti Airtel Ltd. v. CCI Ors., (2019) 2 SCC 521 and Barium Chemicals Ltd. v. Company Law Board, AIR 1967 SC 295. The Hon'ble Supreme Court in the Bharti Airtel Case has recognised in paragraph 118 that the test for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of an order under Section 26(1) of the Act; b. The Hon'ble Supreme Court in the Barium Chemicals case was examining the scope of judicial review of an administrative order. Even in the said case, the Hon'ble Supreme Court was not examining an adjudicatory order; c. The Hon'ble Supreme Court in the Barium Chemicals case was also considering validity of an order directing an investigation against an entity/individual. It must be noted that even an order under Section 26(1) of the Act refers the matter to the DG for investigation. d. The Hon'ble Supreme Court in the Barium Chemicals case had held that the discretion to refer the matter to investigation can only be exercised after formation of an opinion; e. In the absence of a formation of an opinion, the order can be successfully challenged by way of a writ petition. 3.21.3. Learned Senior counsel for the appellant has contended that applying the aforesaid principles to the facts of the present case, since the CCI has failed to form an opinion of a prima facie breach of Section 3(4) of the Act and record its reasons in no uncertain terms in its order, the CCI Order should be set aside. Merely becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi in Google Case, wherein the High Court was pleased to observe as under: 18(N) The Supreme Court, in Rohtas Industries (Supra) and the Calcutta High Court in New Central Jute Mills Co. Ltd. (Supra), cited by the counsel for the respondent No. 2/complainant, also has held that an investigation against a public company tends to shake its credit and adversely affect its competitive position in the business world even though in the end it may be completely exonerated and given a character certificate and that the very appointment of Inspector (in that case under Section 237 (b) of Companies Act to investigate the Company's affairs) is likely to receive much press publicity as a result of which the reputation and prospects of the Company may be adversely affected 3.21.6. It has been contended that a direction of investigation against an entity under the Act entails the following serious consequences: (a) Reputational harm/loss of goodwill; (b) Significant managerial time spent on the investigation, given that the DG can call for information and deposition(s); and, (c) Legal and other costs. 3.21.7. It has been contended by the learned Senior counsel for the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no power to record evidence on oath, DG has been vested with such a power. 3.21.10. It is stated that therefore, it may not be correct to aver that an order under Section 26(1) does not entail any civil consequences. On the contrary, an order under Section 26(1) has very serious consequences, which casts an additional responsibility on the CCI to ensure that the jurisdictional threshold are satisfied prior to referring a matter for investigation under Section 26(1) of the Act. 3.21.11. It has been contended that the CCI relied on Cadila Healthcare v CCI, (2018) 252 DLT 647(Cadila Case) to argue that there is no harm to business reputation due to an inquiry under Section 26(1) of the Act. However, the reliance on the Cadila Case is misplaced and erroneous, given that the Cadila Case has been challenged before the Hon'ble Supreme Court and the Hon'ble Supreme Court has passed an interim order that no coercive steps can be undertaken, and as such, the reliance on the Cadila Case is misplaced. It is stated that the CCI has sought to rely on the number of informations received and number of cases directed for investigation. It is further stated that the same is irrel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its prima facie opinion of contravention of the provisions of the Act in no uncertain terms and therefore, as the CCI has failed to do so in the CCI Order and on this ground alone, the CCI Order should be set aside. 3.21.14. In support of his contention, the learned Senior counsel for the appellant has placed reliance upon the following extracts from the judgment of the Hon'ble Supreme Court in CCI v. SAIL, in respect of the orders passed in an administrative proceeding. 95. The Court examined various judgments of this Court in relation to its application to administrative law and held as under: (Shukla Bros. case, [(2010) 4 SCC 785] pp. 791-92, paras 11 13-14) 11. The Supreme Court in S.N. Mukherjee v. Union of India, [(1990) 4 SCC 594] while referring to the practice adopted and insistence placed by the courts in United States, emphasised the importance of recording of reasons for decisions by the administrative authorities and tribunals. It said 'administrative process will best be vindicated by clarity in its exercise'. To enable the courts to exercise the power of review in consonance with settled principles, the authorities are advised of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court while referring to other decisions held that it is essential that administrative authorities and Tribunals should accord fair and proper hearing to the affected persons and record explicit reasons in support of the order made by them. Reliance has also been placed upon paragraphs 96 and 97 of the aforesaid judgment and the same reads as under; 96. Even in cases of supersession, it was held in Gurdial Singh Fijji v. State of Punjab, (1979) 2 SCC 368 that reasons for supersession should be essentially provided in the order of the authority. Reasons are the links between the materials on which certain conclusions are based and the actual conclusions. By practice adopted in all courts and by virtue of judge-made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and therefore, proper reasoning is foundation of a just and fair decision. Reference can be made to Alexander Machinery (Dudley) Ltd. v. Crabtree[1974 ICR 120] in this regard. 97. The above reasoning and the principles enunciated, which are consiste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue that the CCI Order failed to satisfy the existence of jurisdictional facts of contravention of the provisions of the Act, it has been contended by the appellant that the impugned order fails to consider that the CCI Order does not demonstrate the formation of a prima facie opinion on the contravention of the provisions of the Act, which by necessary implications would have involved the formation of a view on: a. the existence of an 'agreement' in contravention of the provisions of the Act; b. the agreement being between enterprises at different stages of a production chain; and, c. an appreciable adverse effect on competition ( AAEC ) being caused or likely to be caused by this agreement, having regard to the factors enumerated under Section 19(3) of the Act. 3.23. In respect of the issue that the CCI Order seeks to direct an investigation against the appellant for the alleged contravention of the provisions of Section 3(4) of the Act, the appellant has submitted that each of the three elements mentioned above paragraphs are jurisdictional facts and necessary pre-requisites for establishing a prima facie case of contravention under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the purpose of Section 3 of the Competition Act. An agreement by its very definition under the Competition Act, requires the concurrence of wills, i.e., it is a bilateral action having the concurrence of two or more parties. Furthermore, it much be noted that the only agreement that the Information identified was the Amazon Seller Agreement. No Agreement of any nature was identified by the Informant with respect to the Petitioner. (Vol. II, p. 124 at 148, 149) The CCI had in its Objection to the writ petition not denied the pleadings made by the appellant and therefore, the orders passed by the CCI and the learned Single Judge deserves to be set aside. 3.26. It has been contended that the Hon'ble Bombay High Court (Division Bench) in Star India v CCI (the Star Case), a decision that is binding on the CCI, held that while considering a contravention of Section 3(4) of the Act, the CCI ought to render a prima facie finding as to the existence of an agreement. The Bombay High Court in the said decision has held as under:- 83. In the Impugned Order, in order to hold a prima facie contravention of Section 3(4), CCI ought to have formed a prima facie view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services for the sale of such products on its platform. 3.29. It has been further contended that the appellant stands on the same footing as an entity which owns and operates a shopping mall. Similar to an entity which owns and operates a shopping mall, the appellant only provides a platform for the different sellers to sell their products to consumers that visit the shopping mall. Merely providing the platform, i.e., space in the shopping mall, does not make the appellant a part of the production chain of the products sold in the shopping mall. The owner of a shopping mall also provides several services such as parking, security, maintenance etc., however, the provision of such services does not make the owner of a shopping mall a part of the production chain of the products sold in the shopping mall. 3.30. It has been further contended that the CCI has sought to argue that a physical mall is completely distinct from the marketplace of the appellant as in the CCI's view an e-commerce marketplace is more closely involved in supply and distribution and is a stakeholder in the said process by earning commissions. This averment of the CCI fails to recognise that physical ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is completely erroneous and contrary to the principles of statutory interpretation. The same completely ignores the language used in Section 3(4) of the Act. The provision expressly refers to enterprises or persons at different stages or levels of production chain in different markets and thereafter specifically states that the agreement in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services . Therefore, whilst production chain refers to entities, supply, distribution, storage, sale or trade refers to the content of the agreements. Evidently, these two are different aspects and the CCI's submission seeks to erroneously ignore the former criteria, i.e., there must be an agreement between enterprises at different stages or levels of the 'production chain'. 3.33. It has been contended that the words occurring in the latter half of the Section 3(4) would colour the phrase production chain is plainly wrong for two reasons: (i) A reading of Section 3(4) makes it clear that it focuses upon the nature of the entities and their relationship, and not the subject matter of the agreement. The agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be established at the prima facie stage. Further. the reference made in paragraph 21 of this judgment to the supply side is wholly unrelated to vertical agreements that are in question here, and was instead a discussion regarding how competition law seeks to regulate enterprises selling goods to consumers, for the benefit of said consumers. This does not, in any manner, take away from the statutory requirement under Section 3(4) of the Act to establish an agreement between persons at different levels of the 'production chain'. 3.35. It has been contended that in response to the submission of the appellant that Section 3(4) of the Act is not applicable to the facts of the present case, it has been submitted by the CCI that it can proceed against the appellant under Section 3(1) of the Act which as per the CCI is wider in scope. In this regard, it has been stated that the scope of the present proceedings before this Hon'ble Court is to examine if the CCI Order meets the jurisdictional threshold for initiating an inquiry under Section 3(4) of the Act. In the event that the appellant is able to demonstrate that the CCI Order does not satisfy such jurisdictional t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition. Therefore, the CCI in order to arrive at a finding on AAEC is required to consider both adverse and positive impact of the agreement. The CCI cannot ignore the legislative guidance provided in terms of Section 19(3) as to what constitutes AAEC. It has been further contended that the CCI Order fails to undertake any analysis (leave alone recording any prima facie opinion) if any alleged agreement to which the appellant is party, causes or is likely to cause an appreciable adverse effect on competition in India . Therefore, the CCI Order deserves to be set aside on this ground alone. 3.38. It is contended that the Hon'ble Bombay High Court in the Star Case, i.e., Star India v CCI, held that CCI must undertake an analysis under Section 19(3) of the Act at the stage of forming a prima facie opinion. 80. Another aspect that leads us to hold that the Impugned Order cannot be sustained is that the Petitioners as also CCI were ad idem as to the onus cast upon CCI under Section 26(1) of the Act. This meant that a prima facie finding AAEC would be an essential and mandatory finding before CCI could direct investigation. However, the Impugned Order lacks this necessary fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o analyse factors mention in Section 19(3) at the stage of Section 26(1) of the Act. 3.41. It has been stated that in this regard, the relevant extract of the affidavit filed by the CCI before the learned Single Judge reads as under: 33. On the issue of assessment of AAEC at the time passing an order under Section 26(1), it is respectfully submitted that there is no necessity of such a 'prima facie' finding at that stage. 35. It is respectfully submitted that the very nature of factors enumerated above require detailed analysis not only of the facts surrounding the impugned conduct but also aspects of economics and law. Therefore, it would be contrary to the legislative scheme and the very nature of an order passed under Section 26(1) of the Act, if the requirement of prima facie determination of AAEC is read into it. Moreover, the Petitioner is wrong in suggesting that the rule of reason in determining AAEC is required to be applied in totality at the prima facie stage, when no investigation into the alleged actions/conduct has yet been carried out by the Respondent Commission. As stated above, the exercise of assessing AAEC requires going into facts and evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 3(4) - at the stage of Section 26(1) of the Act as opposed to other stages of the proceedings before the CCI. (d) Such a submission of the CCI does not have any statutory support in as much there is no provision in the Act which provides that the test for contravention of Section 3(4) of the Act is different at the stage of Section 26(1) as against other stages of proceedings before the CCI; (e) If the submission of the CCI is accepted, it will result in giving unbridled powers to the CCI, as the CCI will be permitted to conclude that an agreement is or is not in violation of the provisions of Section 3(4) of the Act without considering the factors provided under Section 19(3) of the Act. It is submitted that the factors as provided under Section 19(3) of the Act, are guiding principles for the CCI to determine whether or not an agreement causes AAEC. Such guiding principles must necessarily be considered and analysed by the CCI, irrespective of the stage of proceedings. (f) The submission of the CCI is also contrary to provisions of Section 19(1) of the Act. As per Section 19(1) of the Act, the inquiry is undertaken by the CCI on receipt of Information. Pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein it has examined AAEC. The relevant extracts of Para 23 and 26 are produced below: 23 Thus, exclusive launch coupled with preferential treatment to a few sellers and the discounting practices create an ecosystem that may lead to an appreciable adverse effect on competition. 26. It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the Ops are being used as exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Section 3(1) read with Section 3(4) of the Act It has been stated that a perusal of the above extract makes it evident that: g. There is no analysis or finding of AAEC in both the above paragraphs, reliance on which has been placed by the CCI. In one instance, the CCI is speculating and in the other, the CCI is merely stating that it needs to be investigated if there is any AAEC; h. The CCI has not examined the factors as provided under Section 19(3) of the Act to determine whether prima facie the agreements cause or are likely to cause an AAEC in India. Therefore, it is contended that reliance on Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly a case of over-reach. In order to justify this, the CCI has sought to aver that if the submissions of appellant is accepted, the CCI would have no recourse under Act. This again shows that the CCI seems to widen its power to investigate even though there is no express provision enabling it to do so. The same is not permissible under the Act. 3.48. It has been further stated that no case of contravention of Section 3(4) of the Act has been made out. In respect of issue of Preferred Sellers, it has been contended that the CCI Order while directing an investigation appears to have erred into coming to a conclusion that the appellant's online marketplace platform has certain preferred sellers. It is stated that there are no structural links (shareholding, control, common directors, common offices) between the appellant and any seller on its online marketplace platform. Therefore, the question of preferred sellers does not arise. 3.49. It has been contended that as noted by the CCI in the AIOVA v. Flipkart (an order involving the appellant), the link between appellant and WS Retail was severed as of 2012. In fact, WS Retail ceased to be a seller on the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een Omnitech and WS Retail in 2016 is irrelevant and cannot be even prima facie considered to constitute a link with the appellant, as the CCI has incorrectly noted. It is stated that in its submissions, the CCI has sought to assign various reasons to justify a complete deviation from its AIOVA Order. It is submitted that none of the reasons now given by the CCI merit any consideration by this Hon'ble Court, as no such reasons were given in the CCI Order. Pertinently, as stated above, the AIOVA Order does not even find a mention in the CCI Order, leave alone any reasons for not following the same. Additionally, one of the reasons given by the CCI for not following AIOVA Order is that e-commerce market is an evolving market. It is submitted that the CCI has failed to state facts in support of these submissions. Additionally, the CCI has also failed to provide factual details in its submissions before this Hon'ble Court, justifying a complete deviation from AIOVA Order. 3.52. It has been contended that the notion of preferred sellers is the cornerstone of the entire edifice on which the CCI Order is based. The CCI alleges preferential treatment and listing for preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of which the observations were made by the assessing officer was Flipkart India Private Limited, who is not even party to the present proceedings. Therefore, the ITAT Order cannot be seen as evidence of the appellant's business model. b. In any case, the observations relied upon are observations of an assessing officer, whose decision was eventually overturned by the ITAT. c. Moreover, the reliance on the ITAT order by the NCLAT in the AIOVA Case has been stayed by the Hon'ble Supreme Court. d. Even if true, and applicable to the appellant, the allegations in the ITAT order go to discounting, which is not prohibited under Section 3(4) of the Act. 3.55. In respect of the issue regarding preferential listing, it has been contended that the appellant influences search results in favour of certain preferred sellers who are listed at the top of the page and the non-preferred sellers are pushed out. In this regard, it is stated that it is crucially important to note that there are no preferred sellers since the appellant has no structural links (by way of any shareholding, board representation, common employees or offices) with any seller on its marketplace platfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to be heard on the merits of the case nor is the party entitled to any relief. As the Informant is simply a front of CAIT, this is a relevant factor to weigh the credibility of the allegations and the material placed by such Informant. To establish a nexus of the informant with CAIT, the following reasoning was provided by the appellant:- a. the Informant is a member of CAIT, an important fact that the Informant neglected to mention before the CCI, but admitted before the learned Single Judge; b. the Informant's President and authorized signatory serves as the Delhi Secretary General of CAIT; and c. the demand draft submitted by the Informant towards 'filing fees' for filing the Information with the CCI has been furnished by CAIT. (Vol. IV. P. 471). 3.59. It has been contended that in light of the aforesaid, it was imperative for the Informant to disclose that CAIT has pursued vexatious litigation against the appellant by approaching several judicial for a, directly and through its sister entities, raising exactly the same baseless allegations against the appellant. 3.60. Learned Senior counsel for the appellant in support of his submission relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CCI against the appellant were qualitatively different from those relating to Amazon. In fact, Flipkart and Amazon are fierce competitors, a fact which seems to have been lost sight of by the CCI as well as the learned Single Judge. This is all the more essential since the CCI Order, at paragraph 15, has specifically noted that there could have been no violation of Section 4 of the Act ('Abuse of Dominant Position ) by the two marketplace platforms, as the Act does not provide for inquiry into or investigation into the case of joint/collective dominance . Having rejected the allegation of joint dominance against the appellant and Amazon, the only logical step for the CCI was to consider the allegations individually (based on separate factual matrix of the appellant and Amazon) and come to specific prima facie opinions separately with respect to the appellant on the one hand and Amazon on the other. The learned Single Judge erred in failing to appreciate the lack of such consideration in the CCI Order. This is more so, in view of the peculiar factual differences of the two entities which came to be also highlighted during the course of the hearing before the learned Single J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horitative judgment in CCI v. SAIL. It has been further contended that the scope of interference in a writ petition against an order under Section 26(1) of the Act of 2002 is extremely narrow. It is not a case where mala fides are alleged against the Regulator, nor is there any jurisdictional infirmity made out in the peculiar facts and circumstances of the case. It is further contended that the order of the CCI meets with the parameters of Wednesbury reasonableness as held by the learned Single Judge and there is no ground for interference. In fact, it is a sheer abuse of process and the appellant is deliberately delaying the investigation which is imperative in the public interest. 4.1. It has been contended by the learned Additional Solicitor General that the scope of interference in respect of an order under Section 26(1) of the Act of 2002 is quite limited, as held by the Hon'ble Supreme Court in the case of CCI v. SAIL, which is an order under Section 26(1) and this order can neither be in adjudication nor determinative, but merely an inquisitorial, departmental proceedings in the nature of a direction to the Director General to make an investigation. It is neither a j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that the proceedings are time bound only with an object that the market forces can move swiftly and therefore, if anti-practices are not curtailed in time, the damage to the economy can be irreparable. She has further contended that the order passed under Section 26(1) of the Act of 2002 is not an appealable order in contradistinction with the order passed under Section 26(2), 26(6) and 27 of the Act of 2002, which constitutes the determination as held by the Hon'ble Supreme Court in the case of CCI v. SAIL. 4.4. Learned Additional Solicitor General for the CCI has argued before this Court that the appellant/Flipkart has committed a fundamental mistake by treating the order passed under Section 26(1) as an adjudicatory order followed by an adjudicatory process. The learned counsel has argued that Section 26(1) does not set into motion an unstoppable process that necessarily culminates into an adjudication against the entity against whom an enquiry is initiated. On the contrary, if Section 26 is read as a whole, it discloses a comprehensively and thoughtfully construed, stepwise scheme which contemplates not only a fair hearing to the concerned parties at the appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly applied its mind in all cases and especially in the case in hand. 4.6. Learned Additional Solicitor General has placed reliance upon the following judgment; i) Cadila Healthcare Ltd., v. CCI, reported in (2018) 252 DLT 647 (DB) (Delhi High Court) (paras 38, 43-44, P.2632, 2635-2637, Vol. 13, Flipkart's Writ Appeal) ii) North East Petroleum Dealers Association v. Competition Commission of India, reported in 2016 Comp LR 71 (Comp AT) (para 9, p.3337, Vol. 16, Flipkart's Writ Appeal) iii) Karnataka Film Chamber of Commerce v. Kannada Grahakara Koota, W.P. No. 19000/2013 (para 9, P.2578, Vol. 13, Flipkart's Writ Appeal). iv) CCI v. Grasim Industries, (para 30-35, page 3373-3375; Vol. 17, Flipkart's Writ Appeal) v) Kingfisher Airlines Ltd. V. CCI, reported in (2010) 4 Comp LJ 557 (Bom) (para 6, p.278-293, List of Cases - Vol. I, filed by CCI) vi) It has also been endorsed in CCI v. Bharti Airtel, reported in (2019) 2 SCC 521 (paras 116-118, p. 1897-1898, Vol. 9, Flipkart's Writ Appeal). vii) Whatsapp LLC v. CCI, W.P.(C) No. 4378/2021, Delhi High Court, decided on 22.4.2021. 5. In the connected matter i.e., WA. No. 563/2021 filed by Amazo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 filed by Telecom Watchdog before the Delhi High Court on 28.7.2018 and the appellant was made a party. It has been further stated that the High Court was informed that a similar issue was pending and therefore, vide order dated 18.3.2019 the Delhi High Court disposed of the writ petition. 5.5. It has been further stated that the CAIT has filed another writ petition before the Rajasthan High Court i.e., W.P. No. 14400/2019 and one more writ petition was filed before the Rajasthan High Court i.e., W.P. No. 15570/2019 by the Marwar Chamber of Commerce and Industry and the same issue was agitated before the Rajasthan High Court. Therefore, the contention of the appellant is that the CAIT and various affiliated disgruntled trader lobbies were taking recourse to the legal process before the High Courts as well as the CCI by invoking their jurisdiction simultaneously on substantially identical assertions inter alia issues of deep discounting practices, influencing the pricing of goods and preferential treatment by the appellant's online market place. 5.6. It has been stated that based upon an information submitted by CAIT, without granting a single opportunity to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the CCI did not concede that ever since 16.1.2013 it was publicizing the orders passed under Section 26(1) of the Act of 2002, as a consequence of which the basis of the said decision, itself was displaced. 5.9. Another ground raised before this Court is that the learned Single Judge has failed to appreciate the true effect and purport of the judgment of the Hon'ble Supreme Court in the case of Competition Commission of India v. Bharti Airtel Limited, reported in (2019) 2 SCC 521. It has been further contended that the learned Single Judge has failed to appreciate that the prima facie order of the CCI did not disclose any application of mind in relation to: (a) ensuring consumer wellbeing; (b) ensuring adequate and affordable choices for consumers; (c) noticing that a level playing field in fact existed; and (d) noticing that the marketplace protected competition. It has been further contended that the CCI was unable to adduce any material before the learned Single Judge that any of these factors were disturbed. 5.10. It has been further contended that the learned Single Judge has failed to appreciate that if a marketplace allowed functioning without any form of discri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a prima facie view was in the nature of an essential and mandatory findings before CCI could direct investigation and its absence vitiated the prima facie order. It has been further contended that the CCI before passing an order under Section 26(1) of the Act of 2002 could not arrive at a conclusion that a prima facie case exists keeping in view Section 19(3) of the Act (AAEC). It has been further contended that the learned Single Judge has failed to appreciate the jurisdictional aspect of the matter and the jurisdiction of the CCI in passing the order in the absence of cogent material before it. It has been further contended that the learned Single Judge has failed to appreciate that the CCI fell into serious error when it concluded that there was a prima facie evidence of deep discounting on smartphones when in fact the e-mail related to gym equipments . 5.13. It has been further contended that the learned Single Judge has failed to appreciate that Cloudtail Private Limited and Appario Retail Private Limited were not related to the appellant/Amazon in any manner, either through common share holding or Directors. Hence, the order passed by the CCI deserves to be set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants/Flipkart and Amazon want to crush the proceedings at the threshold and they are not permitting the CCI to proceed ahead in the matter on some pretext or the other. It has been further contended that the principles of natural justice and fair play will certainly be observed and followed as argued by the learned Additional Solicitor General of India on behalf of CCI while conducting an enquiry and the appellants should not feel shy in producing the material i.e., various agreements executed with various parties during the course of the enquiry. It has been further contended that no prejudice has been caused to the appellants and the appellants in fact do not want to cooperate with the enquiry and the same frustrates the object of the Act of 2002. 7. Learned counsel for respondent No. 4/Confederation of All India Traders has also supported the arguments canvassed by the learned Additional Solicitor General of India and a prayer has been made to dismiss the writ appeals with costs. 8. Heard the learned counsel for the parties at length and perused the record. The matter is being disposed of with the consent of the learned counsel for the parties at admission stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. *** (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which-- (a) directly or indirectly determines purchase or sale prices; *** (4) Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including-- *** (e) resale price maintenance, *** 18. Duties of Commission.--Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation.--For the purposes of this section-- (a) chartered accountant means a chartered accountant as defined in clause (b) of sub-section (1) of Section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; (b) company secretary means a company secretary as defined in clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; (c) cost accountant means a cost accountant as defined in clause (b) of sub-section (1) of Section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; (d) legal practitioner means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice. *** 45. Penalty for offences in relation to furnishing of information.--(1) Without prejudice to the provisions of Section 44, if a person, who furnishes or is required to furnish under this Act any particulars, documents or any information-- (a) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at may arise from the findings of the Commission or the orders of the Appellate Tribunal in an appeal against any findings of the Commission or under Section 42-A or under sub-section (2) of Section 53-Q of the Act, and to pass an order for the recovery of compensation from any enterprise for any loss or damage shown to have been suffered, by the Central Government or a State Government or a local authority or any enterprise or any person as a result of any contravention of the provisions of Chapter II, having been committed by enterprise. (2) Every application made under sub-section (1) shall be accompanied by the findings of the Commission, if any, and also be accompanied with such fees as may be prescribed. (3) The Appellate Tribunal may, after an inquiry made into the allegations mentioned in the application made under sub-section (1), pass an order directing the enterprise to make payment to the applicant, of the amount determined by it as realisable from the enterprise as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II having been committed by such enterprise: Provided that the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to them: Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed after the expiry of the said period of sixty days. (emphasis supplied) The relevant regulations that are contained in the Competition Commission of India (General) Regulations, 2009 ( the 2009 Regulations ) are set out as under: 2. Definitions.--(1) In these Regulations, unless the context otherwise requires-- * * * (i) Party includes a consumer or an enterprise or a person defined in clauses (f), (h) and (l) of Section 2 of the Act respectively, or an information provider, or a consumer association or a trade association or the Director General defined in clause (g) of Section 2 of the Act, or the Central Government or any State Government or any statutory authority, as the case may be, and shall include an enterprise against whom any inquiry or proceeding is instituted and shall also include any person permitted to join the proceedings or an intervener; * * * 10. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the CCI dated 13.1.2020 is reproduced as under; Directions for investigation under Section 26(1) of the Competition Act, 2002 1. The present information has been filed by Delhi Vyapar Mahasangh (hereinafter, referred to as 'Informant'/'DVM'), a society registered under the Societies Registration Act, 1860 under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the 'Act') alleging contravention, of the relevant provisions of Section 3(4) read with Section 3(1) and Section 4(2) read with Section 4 of the Act, by Flipkart Internet Services Pvt. Ltd. (hereinafter, 'Flipkart/Flipkart marketplace') and Amazon Seller Services Pvt. Ltd. (hereinafter, 'Amazon/Amazon marketplace'). Flipkart and Amazon are, hereinafter, collectively referred to as 'Opposite Parties/'OPs' Facts and Allegations, as stated in the Information 2. As stated, the Informant's members comprise many Micro, Small and Medium Enterprises ('MSME') traders which rely on trade of smartphones and related accessories. It is stated that many such traders regularly list their smart phones for sale on online marketplaces to take the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers (such as Omnitech Retail) on its platform which adversely impacts non-preferred sellers such as members of the Informant from competing with such sellers on Flipkart's online platform. The Informant alleged that there is evidence in the form of communications from Flipkart to its sellers stating that it would incur a part of the cost during the Big Billion Days (BBD) sales or Diwali sales etc. However, no such opportunity is available to other sellers who are, thus, unable to compete with such preferred sellers. 7.1.2. Amazon has preferred sellers on its platform namely Cloudtail India (a joint venture between Amazon and Catamaran Ventures) and Appario Retail (a wholly owned subsidiary of a joint venture between Amazon and Mr. Ashok Patni which received a round of investment from Frontizo Business Services Ltd.) which are related to Amazon. Similar allegations of deep discounts by Amazon to the detriment of non-preferred sellers have been levelled. Further, the fact that Amazon and these preferred sellers have the same contact details are also evidence of linkage between them. Moreover, Amazon has its own private label brands which are sold only through these preferred s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market. Resultantly, the existing sellers find it difficult to launch their own portals or marketplaces in order to compete with the OPs. 9. The Informant averred that the OPs have the ability to unilaterally terminate their agreements with non-preferred sellers without assigning any reason as a result of which non-preferred sellers have no option but to comply with their mandates (Clause 3 of Amazon Seller Agreement). Thus, unreasonable vertical restraints are created. Sections 4(2)(a)(ii); 4(2)(b)(ii) and 4(2)(c) allegations 10. Both Flipkart and Amazon are alleged to be jointly dominant in the relevant market and are stated to be abusing their dominance in the present case. 10.1. Both OPs individually and jointly have extremely high market shares in the relevant market. Flipkart itself held more than 53% of the market shares in the relevant market in the first quarter of 2019 and Amazon held 36% of the market shares in the relevant market in the first quarter of 2019. Market shares, while not the only source of dominance, can be categorized as an important factor for determining dominance. 10.2. Due to deep pockets, OPs are able to facilitate their sellers' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Commission need not deliberate further on allegations on account of joint dominance as the same being untenable under the Act. 16. The Commission notes that Flipkart marketplace and Amazon marketplace are e-commerce entities, following a marketplace based model of e-commerce. They essentially provide online intermediation services to sellers on one side and consumers on the other. These platforms/marketplaces and the sellers selling on these platforms operate at different stages of the vertical/supply chain. Thus, any agreement between the platforms and sellers selling through these platforms can be examined under section 3(4) of the Act, which deals with agreements amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services. For the sake of convenience, the section is reproduced herein below: 3(4) Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has provided a list of phones which were exclusively launched on the platforms. The Informant has provided the following evidence in the form of text messages, as shown below, to indicate that due to partnership between mobile manufacturer (VivoZ1x and Vivo U10 models) and platforms (Flipkart and Amazon), offline retailers are forced to purchase smartphones either from manufacturers' e-stores or from the platforms e-portals. Vivo Vivo Hi Harshit, thank you for showing your interest in vivo handsets. The handset vivo Zix will be available on our online Estore and Flipkart.com portal only. The safe will be started from 13th September 19. For further information kindly check our official E-store: https://shop.vivo.com/in/product/10073? skuld=1027| Hi Harshit, thank you for showing your interest in vivo handset. We would like to inform you that you may purchase our Unstoppable U10 handset from our official E-Store: https://shop.vivo.com/in/product/10 0077?Skuld=10283 and Amazon as it will be available online only. The first sale will be on 29th of September 2018. Online shopping site fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent 'proxy' entities blessed with the support of these marketplaces. The Commission perused the prices for different smartphone brands sold through Flipkart and Amazon, i.e. original price and discounted price. It was observed that certain smartphone brands/models are available at significantly discounted price on these platforms and are sold largely through the sellers identified, by the Informant, as the platforms' 'preferred sellers'. Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation. 25. The issue of preferential listing should also be viewed in conjunction with the foregoing. Competition on the platforms may get influenced in favour of the exclusive brands and sellers, through higher discounts and preferential listing. Thus, the allegations are interconnected, and warrant a holistic investigation to examine how the vertical agreements operate, what are the key provisions of such agreements and what effects do they have on competition. Given that both the major platforms are stated to follow the same mechanics in terms of their exclusive tie ups and preferential terms with brands/sellers, competit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case: A. What is the nature of the impugned order passed under Section 26(1) of the Act? B. Whether a prior notice and opportunity of hearing is mandatory at the stage of issuing direction to the Director General to hold inquiry under Section 26(1) of the Act? C. Whether impugned order calls for interference? Re. Points A B 13. Both points A B are inter-connected and hence they are dealt together. 14. The preamble of the Act states that, keeping in view the economic development of the Country, Competition Act has been brought for establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in the markets, to protect the interests of consumers and to ensure 'freedom of trade' carried on by other participants in the market in India. 15. Under Section 19 of the Act, the Commission may inquire into allegation of contravention of provisions of the Act either on its own motion or on receipt of any information accompanied by such fee as may be determined by the Regulations or upon a reference made by the Central Government or a State Government or a Statutory Authority. 16. Delhi Vyapar Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ech Retail' is owned by Consulting Rooms Pvt. Ltd., whose Director Ajay Sachdeva was also a Director of WS Retail till September 2016. Preferential Listing 23. It is alleged that Amazon perpetuates the practice of listing its preferred sellers in the first few pages of the search results, thereby creating a search bias. In number of search results, the products are sold by preferred sellers such as 'Appario Retail' and 'Cloudtail' and they dominate the first few pages, whereas, products with same ratings, which are sold by non-preferred sellers are listed in later pages. 24. Flipkart lends the words 'assured' to the products sold by its preferential sellers. Exclusive Tie-ups 25. It is alleged that petitioners herein have several exclusive tie-ups and private labels, which get more preference in terms of sales. 26. It is further alleged that providing discounts and preferential listing to preferential sellers creates defacto exclusivity to the detriment of other sellers. 27. Thus, in substance, informant's case is, though petitioners claim that 'any person' can sell his product in their market place, in fact, petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred sellers. It is further denied that there is a common director between the petitioner and either Cloudtail India or Appario Retail. (Emphasis supplied) 30. He contended that, obviously, Frontizo and Amazon Retail India Pvt. Ltd., shall have common business interest and this is fortified by the fact that both companies have a common Director namely, Sameer Kshetrapal. 31. Shri. Abhir Roy further submitted that on Flipkart Market Place, Omnitech Retail is the preferred and favoured seller. The said Trademark is registered in the name of 'Consulting Rooms Pvt. Ltd.', of which Ajay Sachdeva is one of the Directors. Earlier, he was a Director on the board of WS Retail. He submitted that Flipkart also practices selling its own inventory at discounted prices to its preferred sellers. Flipkart also indulges in 'loss funding' in case of preferred sellers as recorded in Flipkart India Pvt. Ltd. Vs. Assistant Commissioner of Income Tax in ITA No. 202 693/Bang/2018 (Annexure-10 to the informant's Statement of Objections). 32. On the aspect of 'cash burning', Smt. Madhavi Diwan, Learned Addl. Solicitor General, adverting to paragraph No. 7 of orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. xxx 71. The intimation received by the Commission from any specific person complaining of violation of Section 3(4) read with Section 19 of the Act, sets into motion, the mechanism stated under Section 26 of the Act. Section 26(1), as already noticed, requires the Commission to form an opinion whether or not there exists a prima facie case for issuance of direction to the Director General to conduct an investigation. This section does not mention about issuance of any notice to any party before or at the time of formation of an opinion by the Commission on the basis of a reference or information received by it. Language of Sections 3(4) and 19 and for that matter, any other provision of the Act does not suggest that notice to the informant or any other person is required to be issued at this stage. In contradistinction to this, when the Commission receives the report from the Director General and if it has not already taken a decision to close the case under Section 26(2), the Commission is not only expected to forward the copy of the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly concerned with the High Court dismissing the appeals without recording any reasons. The Court also examined the practice and requirement of providing reasons for conclusions, orders and directions given by the quasi-judicial and administrative bodies. xxx 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commission is required to form an opinion whether or not there exists a prima facie case. 39. The informant has alleged violation of Sections 3(1) read with 3(4) and Sections 4(1) read with 4(2) of the Act, by the petitioners. In the impugned order, Commission has recorded that the Act does not provide for inquiry into the cases of Joint/Collective dominance and proceeded further to deal with the violation under Section 3 of the Act. 40. Perusal of the impugned order from paragraph No. 20, shows that the Commission has examined the material produced by the informant. It has analyzed the information under various heads such as exclusive launch of mobile phones, preferred sellers on the market places, deep discounting, and preferential listing of private labels. It has recorded that mobile manufacturing Companies like One plus, Oppo and Samsung have exclusively launched several of their models on Amazon and Vivo, Realme, Xiomi etc., have exclusively launched several of their models on the Flipkart. Commission has noticed that Flipkart has launched 67 mobile phones and Amazon has launched 45 mobile phones exclusively on their platforms. Commission has recorded (in paragraph 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was contended by Shri. Gopal Subramanium, Shri. Udaya Holla, Shri. Dhyan Chinnappa, learned Senior Advocates that the informant had not approached with clean hands and acted as a front-man for CAIT which has filed writ petitions in High Courts of Delhi and Rajasthan and failed to get any favourable order. They pointed out that the Demand Draft for Rs. 50,000/- tendered along with the information was obtained by CAIT and argued that informant has not approached the Commission with clean hands. 49. Countering this argument, Smt. Madhavi Diwan, submitted that so far as Commission is concerned, what is relevant is the 'information'. With regard to CAIT approaching through Delhi Vyapar Mahasangh, placing reliance on following passage in Swaraj Infrastructure (P) Ltd. Vs. Kotak Mahindra Bank Ltd., reported in (2019) 3 SCC 620, she submitted that when a citizen/litigant is driven to wall, he blows hot and hotter. 29. When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not blow hot and cold , but they blow hot and hotter. ... 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that ED is not a regulator but a quasi-judicial body. Placing reliance on Lafarge Umiam Mining Pvt. Ltd. Vs. Union of India and others, reported in (2011) 7 SCC 338 (paragraph No. 122) he submitted that the regulator is a pro-active body with power to frame statutory Rules and Regulations. Regulatory mechanism warrants open discussion, public participation, and circulation of draft paper inviting suggestions. ED is not clothed with those powers and does not have other attributes. Therefore, ED is not a regulator. 54. It was next contended by learned Senior Advocates for petitioners that the Commission has substantially altered the decision in CCI Vs. SAIL with regard to confidentiality and Web-hosting of the impugned order which adversely affects petitioners' business reputation. 55. In reply, Smt. Madhavi Diwan, submitted that decision in CCI Vs. SAIL does not mandate any blanket confidentiality. She argued that paragraphs No. 38 and 135(e) of the said judgment, state that confidentiality is to be maintained only in terms of provisions of Section 57 read with Regulation 35. She rightly contended that Section 57 merely protects the confidentiality of the information be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the light of Cadila's contentions; all rights available to it, to argue on the merits are open. (Emphasis supplied) 56. In response to petitioner's contention that CCI could not have taken a contrary stand to the one taken in AIOVA case, Smt. Madhavi Diwan submitted that there is no res judicata in the case of orders passed by CCI because, Competition Act relates to preservation of competitive forces in the market place. She submitted that the Hon'ble Supreme Court of India has held in Samir Agrawal Vs. Competition Commission of India that Competition Act operates in 'rem' and not in 'personam', since it concerns public interest. Placing reliance on Cadila Healthcare Limited and Anr Vs. CCI (paragraph 59) she submitted that the CCI or an expert body should ordinarily not be crippled or hamstrung in their efforts by application of technical rules of procedure. 57. With regard to the market study aspect, Smt. Diwan submitted that market study was undertaken as a part of the 'Advocacy mandate' under Section 49 of the Act and market study is in no manner inconsistent with the impugned order. 58. Petitioners have pleaded in extenso a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, or excess has resulted in manifest injustice. However extensive the jurisdiction may be, it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made. 60. In T.C. Basappa Vs. T. Nagappa and Another, reported in AIR 1954 SC 440, it is held that a tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be a manifest error apparent on the face of the proceedings, e.g. when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision. Quoting Morris J, it is held as follows: 10. The essential features of the remedy by way of certiorari have been stated with remarkable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratepayers. Unless and until a statute provides otherwise, or it is established that the Secretary of State has abused his power, these are matters of political judgment for him and for the House of Commons. They are not for the judges or your Lordships' House in its judicial capacity. For myself, I refuse in this case to examine the detail of the guidance or its consequences. My reasons are these. Such an examination by a court would be justified only if a prima facie case were to be shown for holding that the Secretary of State had acted in bad faith, or for an improper motive, or that the consequences of his guidance were so absurd that he must have taken leave of his senses . (Emphasis supplied) 62. Noted jurist, Shri. V. Sudhish Pai, in his Article 'Is Wednesbury on the Terminal decline?, reported in (2008) 2 SCC J-15, has opined that the Wednesbury test, long established as ground of judicial review will be applicable in examining the validity of the exercise of administrative discretion. After analyzing the law with regard to Constitutional review in UK and the cases involving human rights, he has stated that it is quite inappropriate to speak of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompetitive practices are undertaken. 16. In the case of Rajasthan Cylinders and Containers Ltd., v. Union of India, reported in (2020) 16 SCC 615, the Hon'ble Supreme Court in paragraph 73 has held as under; 73. It follows from the above that whereas on the one hand the economic policy of the nation has ushered in the era of liberalisation and globalisation thereby giving free play to the private sector in the manner of conducting business, at the same time, in public interest and in the interest of consumers, a regime of regulators has also been brought to ensure certain checks and balances. Since competition among the enterprises or businessmen is treated as service for a public purpose and, therefore, there is a need to curb anticompetitive practices, CCI is given the task (as a regulator) to ensure that no such anti-competitive practices are undertaken. In fact, Section 18 of the Act casts a specific and positive obligation on CCI to eliminate anti-competitive practices and promote competition, interest of the consumer and free trade. 17. In the considered opinion of this Court, the CCI certainly have a jurisdiction to take appropriate steps to curb the anti co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciency, in both a static and a dynamic sense, by disciplining firms to produce at the lowest possible cost and pass these cost savings on to consumers, and motivating firms to undertake research and development to meet customer needs. 2.2.1.2. Economic growth and development: Economic growth--the increase in the value of goods and services produced by an economy--is a key indicator of economic development. Economic development refers to a broader definition of an economy's well-being, including employment growth, literacy and mortality rates and other measures of quality of life. Competition may bring about greater economic growth and development through improvements in economic efficiency and the reduction of wastage in the production of goods and services. The market is therefore able to more rapidly reallocate resources, improve productivity and attain a higher level of economic growth. Over time, sustained economic growth tends to lead to an enhanced quality of life and greater economic development. 2.2.1.3. Consumer Welfare: Competition policy contributes to economic growth to the ultimate benefit of consumers, in terms of better choice (new products), better qualit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion policy can also increase investor confidence and prevent the benefits of trade from being lost through anti-competitive practices. In this way, competition policy can be an important factor in enhancing the attractiveness of an economy to foreign direct investment, and in maximising the benefits of foreign investment. 23. In fact, there is broad empirical evidence supporting the proposition that competition is beneficial for the economy. Economists agree that it has an important role to play in improving productivity and, therefore, the growth prospects of an economy. It is achieved in the following manner: International Competition Network -- Economic Growth and Productivity Competition contributes to increased productivity through: Pressure on firms to control costs--In a competitive environment, firms must constantly strive to lower their production costs so that they can charge competitive prices, and they must also improve their goods and services so that they correspond to consumer demands. Easy market entry and exit--Entry and exit of firms reallocates resources from less to more efficient firms. Overall productivity increases when an entrant is more effic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices has direct visible effects in terms of reduced prices in the market and this is also supported by various empirical studies. 27. Keeping in view the aforesaid objectives that need to be achieved, Indian Parliament enacted the Competition Act, 2002. Need to have such a law became all the more important in the wake of liberalisation and privatisation as it was found that the law prevailing at that time, namely, Monopolies and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspects of the Indian economy. The law enforcement agencies, which include CCI and COMPAT, have to ensure that these objectives are fulfilled by curbing anticompetitive agreements. 28. Once the aforesaid purpose sought to be achieved is kept in mind, and the same is applied to the facts of this case after finding that the anti-competitive conduct of the appellants continued after coming into force of provisions of Section 3 of the Act as well, the argument predicated on retrospectivity pales into insignificance. 29. One has to keep in mind the aforesaid objective which the legislation in question attempts to subserve and the mischief which it seeks t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure fair trade carried out by other participants in the market in India and for matters connected therewith or incidental thereto. 9. The various provisions of the Act deal with the establishment, powers and functions as well as discharge of adjudicatory functions by the Commission. Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act. In exercise of the powers vested in it under Section 64, the Commission has framed regulations called the Competition Commission of India (General) Regulations, 2009 (for short the Regulations ). 10. The Act and the Regulations framed thereunder clearly indicate the legislative intent of dealing with the matters related to contravention of the Act, expeditiously and even in a time-bound programme. Keeping in view the nature of the controversies arising under the provisions of the Act and larger public interest, the matters should be dealt with and taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect on the competition. Therefore, at this stage, in the considered opinion of this Court, the issues and grounds raised in respect of anticompetitive practices as argued by the learned counsel for the appellants does not arise. The appellants are certainly entitled for opportunity of hearing as provided under the Statute and the present petitions/appeals are certainly premature. 20. The Hon'ble Supreme Court in the same case of Excel Crop Care Ltd.,(supra), in paragraph 108 has held as under; 108. It is well settled that the Competition Act, 2002 is a regulatory legislation enacted to maintain free market so that the Adam Smith's concept of invincible hands operate unhindered in the background. [CCI v. SAIL, (2010) 10 SCC 744] Further, it is clear from the Statement of Objects and Reasons that this law was foreseen as a tool against concentration of unjust monopolistic powers at the hands of private individuals which might be detrimental for freedom of trade. Competition law in India aims to achieve highest sustainable levels of economic growth, entrepreneurship, employment, higher standards of living for citizens, protect economic rights for just, equitable, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter. 22. The Hon'ble Supreme Court in the aforesaid case has held that unless and until the show cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r even with assistance of experts or others. The Commission has the power in terms of Regulation 17(2) of the Regulations to invite not only the information provider but even such other person which would include all persons, even the affected parties, as it may deem necessary. In that event it shall be preliminary conference , for whose conduct of business the Commission is entitled to evolve its own procedure. (3) The Commission, in cases where the inquiry has been initiated by the Commission suo motu, shall be a necessary party and in all other cases the Commission shall be a proper party in the proceedings before the Competition Tribunal. The presence of the Commission before the Tribunal would help in complete adjudication and effective and expeditious disposal of matters. Being an expert body, its views would be of appropriate assistance to the Tribunal. Thus, the Commission in the proceedings before the Tribunal would be a necessary or a proper party, as the case may be. (4) During an inquiry and where the Commission is satisfied that the act is in contravention of the provisions stated in Section 33 of the Act, it may issue an order temporarily restraining the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. 87. Now, let us examine what kind of function the Commission is called upon to discharge while forming an opinion under Section 26(1) of the Act. At the face of it, this is an inquisitorial and regulatory power. A Constitution Bench of this Court in Krishna Swami v. Union of India [(1992) 4 SCC 605] explained the expression inquisitorial . The Court held that the investigating power granted to the administrative agencies normally is inquisitorial in nature. The scope of such investigation has to be examined with reference to the statutory powers. In that case the Court found that the proceedings, before the High-Power Judicial Committee constituted, were neither civil nor criminal but sui generis. 91. The jurisdiction of the Commission, to act under this provision, does not contemplate any adjudicatory function. The Commission is not expected to give notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made and therefore, the Statute has provided a safeguard for holding an enquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing while holding an enquiry in the matter. Therefore, the petitions filed by the appellants before the learned Single Judge were certainly premature petitions and without permitting the Director General of the CCI to look into various agreements executed by the appellants with the other persons, the appellants want this Court to hold that the appellants have not committed breach of the statutory provisions as contained under the Act of 2002. In the considered opinion of this Court, unless and until a detailed enquiry is conducted by the CCI, the question of giving a finding in respect of the violation of the statutory provisions, does not arise. 26. The Hon'ble Supreme Court in the case of CCI Vs. Bharthi Airtel Ltd., reported in (2019) 2 SCC 521, in paragraph 121 has held as under; 121. Once we hold that the order under Section 26(1) of the Competition Act is administrative in nature and further that it was merely a prima facie opinion directing the Director General t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement is, whether a prima facie case exists or not. Hence, at this stage, the question of granting of an opportunity as vehemently argued before this Court does not arise. Once the CCI based upon the material has arrived at a conclusion that the matter warrants an investigation, the question of interference by this Court does not arise as the enquiry is yet to take place for determination of the issues involved. 30. The Hon'ble Supreme Court in the case of CCI v. SAIL has held that the threshold requirement for establishing a prima facie case under Section 26(1) is a low threshold and what constitutes a prima facie case at the stage of Section 26(1) must be gleaned from the stand point of setting the process into motion and not from point of view of granting any interim measure or adjudicating the matter. 31. In the light of the aforesaid, it is apparent from a reading of the CCI order dated 13.1.2020 that the prima facie case was in existence and keeping in view the prima facie case, an enquiry has been ordered by passing an order under Section 26(1) of the Act of 2002 by the CCI. In the considered opinion of this Court, the learned Single Judge was justified in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Also, Regulation 25 shows that public interest must be foremost in the consideration of CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. What is also extremely important is Regulation 35, by which CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such informant be free from harassment by persons involved in contravening the Act. 20. It must immediately be pointed out that this provision of the Advocates Act, 1961 is in the context of a particular advocate being penalised for professional or other misconduct, which concerned itself with an action in personam, unlike the present case, which is concerned with an action in rem. In this context, it is useful to refer to the judgment in A. Subash Babu v. State of A.P. [A. Subash Babu v. State of A.P., (2011) 7 SCC 616 : (2011) 3 SCC (Civ) 851 : (2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by such person personally affected or not. The CCI Act also provides that the CCI may enquire into any alleged contravention of the provisions of the Act of 2002 on its own motion and even while exercising suo motu powers the CCI may receive information from any person and not merely from a person, who is aggrieved by the conduct that is alleged to have occurred. 36. Regulation 10 of the Regulations 2009 also provides that the informant is not required to state as to how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Therefore, in the considered opinion of this Court, the CCI was justified in directing an enquiry based upon the complaint made by respondent No. 2 in the matter for forming a prima facie opinion. The order passed under Section 26(1) of the Act of 2002 is an administrative order and no adjudication has been done at this stage and therefore, in the considered opinion of this Court, the question of interference as prayed by the learned counsel for the appellants does not arise. 37. The issue relating to deep discounting, prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing but it is always open to the Commission to call any such person , for rendering assistance or produce such records, as the Commission may consider appropriate. In the considered opinion of this Court, merely because an opportunity of hearing was not given to the appellants, it does not vitiate the order passed by the CCI. 39. Learned Senior counsel for the appellants have also placed reliance upon a judgment delivered by the Delhi High Court in the case of Google Inc v. CCI, reported in 2015 (150) DRJ 192. The limited question before the High Court in the aforesaid case was whether there exists a power to recall/review notwithstanding the repeal of Section 37 of the Act of 2002, which specifically provides for a power of review and the learned Single Judge of Delhi High Court had no occasion to pass sweeping observations in respect of the powers of Director General, that too, in a manner which is significant departure from the binding judgment of the Hon'ble Supreme Court in the case of CCI v. SAIL (supra). The Hon'ble Supreme Court has in detail gone through Section 26 of the Act of 2002 and by no stretch of imagination the law laid down by the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CCI. 43. In the case of Cadila Healthcare v. CCI, reported in (2018) 252 DLT 647, the Hon'ble Supreme Court has held as under; 59. The last point on this issue is the question of res judicata. Here, the court notices that Grasim Industries was a case where the court had ruled that even though there might be an infirmity in the CCI's approach regarding the initiation of proceedings, the material gathered by DG can be treated as information. Therefore, that in a given case, a decision is rendered may not be conclusive of the matter in entirety; complaints and grievances regarding abuse of dominance have an inherently anti-competitive effect, which pervade the marketplace and tend to stifle competition or create barriers to a free trade in goods and services. Conclusions of one or two specific complaints may not always be determinative of an entity's behaviour in the market place; they tend to cover a larger canvas, influencing the outcomes in terms of price, access to articles goods and services, within the commercial stream and their deleterious effects are felt by the general public. Settlement or disposal of individual or some cases might not be determinativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulatory dispute. As stated by Justice Brennan, natural justice in such instances should not--unlock the gate which shuts the court out of review on the merits. (in this case, preclude or chill the exercise of jurisdiction by the DG into a potential abuse of dominant position of a commercial entity). Therefore, this court finds no merit in the argument that the procedure adopted by the DG in going ahead with the inquiry and investigating into the market behaviour of Cadila in anyway affects it so prejudicially as to tarnish its reputation. The CCI has not as yet examined the investigation report in the light of Cadila's contentions; all rights available to it, to argue on the merits are open. In light of the aforesaid, it can be safely gathered that by no stretch of imagination the order passed by the CCI under Section 26(1) is going to cause harm to the business reputation of the appellants. 47. In the light of the aforesaid, in the considered opinion of this Court, by no stretch of imagination, the process of enquiry can be crushed at this stage. In case, the appellants are not at all involved in violation of any statutory provisions of Act of 2002, they should not fe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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