An Analysis of the Requirement of Locus Standi under Indian Competition Law
Author: Ishika Rout
Associate at S&R Associates (New Delhi)
Though the concept of locus standi is not new to the jurisprudence of the Competition Commission of India (the “Commission”), it has recently received much traction post the contradictory rulings passed by the National Company Law Appellate Tribunal (the “NCLAT”) in Samir Agrawal v. Competition Commission of India (Competition Appeal (AT) No. 11 of 2019), and by the Commission in Harshita Chawla v. WhatsApp Inc. (Case No. 15 of 2020). The Supreme Court’s partial overruling of the appellate tribunal’s judgment mentioned above appears to have finally settled the law in this regard. This article analyses the treatment of the principle of locus standi under Indian competition law and its evolution (both in respect of contraventions under Sections 3 and 4 of the Competition Act, 2002, as well as in the context of combinations) under the larger aegis of the Constitution and the framework of civil and criminal laws in India. This legal analysis brings out how the credentials of a party approaching the Commission or the NCLAT is generally subservient to the fair functioning of markets in India.
- The concept of locus standi under Indian jurisprudence
The principle of locus standi is the right or capacity to bring an action or to appear in a court. The maintainability of an action before a court of law is generally also determined from whether the party seeking relief has any locus/nexus with respect to the cause of action.
Locus standi is a necessity, barring a few exceptions (as discussed in the ensuing paragraphs), to bring an action both under civil as well as criminal law in India (i.e., the person bringing the action must show that his/her legal rights have been impaired or any harm/injury has been caused and that he/she has the right to seek redressal).
In the case of Amanullah v. State of Bihar, the Supreme Court held that “the traditional view of “locus standi” has been that the person who is aggrieved or affected has the standing before the court that is to say he only has a right to move the court for seeking Justice. Later, this Court, with justice-oriented approach, relaxed the strict rule with regard to “locus standi”, allowing any person from the society not related to the cause of action to approach the court seeking justice for those who could not approach themselves.” In this regard, in certain matters, the law recognizes representative suits or the right of third parties (who may not have a direct nexus with the injury caused) to bring an action, thereby also relaxing the doctrine of privity of contract. Further, constitutional courts under their extraordinary writ jurisdiction (under Article 32 in the case of the Supreme Court and Article 226 in the case of High Courts) relax the requirement of locus in cases of public interest litigations to provide necessary relief.
Further, in the specific instance of cognizable offences under the Indian Penal Code, 1860, the State is duty-bound to initiate an investigation and conduct prosecution against accused persons, since such offences are considered to be a wrong committed against the society (i.e., offences in rem). This is akin to the principle underlying the duty of the Competition Commission of India (the “CCI” or the “Commission”) under the Competition Act, 2002 (the “Competition Act”).
- In the context of the Competition Act
- A requirement under Section 19(1) of the Competition Act?
The Competition Act is a beneficial piece of legislation that is civil (and not criminal) in character. Section 19(1) of the Competition Act states that “the Commission may inquire into any alleged contravention of the provisions contained in subsection (1) of section 3 or sub-section (1) of section 4 either on its own motion or on — (a) receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or (b) a reference made to it by the Central Government or a State Government or a statutory authority.” (emphasis supplied)
Needless to say, Section 19(1)(a) of the Competition Act clearly uses the term “any”, which in effect means that any entity (i.e., the “Informant”) could approach the Commission with information (“Information”, in the format prescribed the CCI) against an enterprise or person in relation to an alleged contravention of the Competition Act.
Further, it may also be noted that the Commission itself can suo moto order an investigation under Section 26(1) of the Competition Act if it is of the prima facie opinion that an enterprise is involved in anti-competitive or abusive practices – the basis for such opinion could range from emails, to newspaper reports/articles, to information provided by a whistleblower (which is often seen in cartel matters, for the purpose of lesser penalty) (i.e., basically any data which is not in the prescribed format for filing an Information under Section 19(1) of the Competition Act). Moreover, the CCI can also order investigations in matters where the Informants prefer to be anonymous (Regulation 35(1) of the Competition Commission of India (General) Regulations, 2009 (the “General Regulations”) provides that “the Commission shall maintain the confidentiality of the identity of an informant on a request made to it in writing”). This is in line with Section 18 of the Competition Act, which clearly and unequivocally states the mandate of the CCI as follows: “it shall be the duty of the Commission to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India”.
In addition to this, any government body may also bring a case before the Commission requesting the latter to direct investigation against any acts allegedly contravening the Competition Act. Such duty of the State finds its roots in Article 19(1)(g) of the Constitution, which guarantees the right “to practice any profession or to carry on any occupation, trade or business” to all citizens of India, and the principle underlying such reference may also be equated to the State’s duty to maintain peace and security in the context of cognizable offenses in criminal jurisprudence. Accordingly, the State, in general, has a role as a guarantor of free and fair competition in markets in India (in addition to the specific role assigned to the Commission).
Accordingly, a plain reading clarifies that ‘locus’ does not form an ingredient of Section 19(1) of the Competition Act and both private and government bodies who may not have any direct ‘locus’ to the case are entitled to bring an action. Thus, the Competition Act also provides a relaxation from the otherwise mandatory requirement of ‘locus’ to bring an action (as discussed in Part A above).
- A comparison between the Consumer Protection Act, 2019 and the Competition Act, 2002
It may be noted that the Consumer Protection Act, 2019 (the “CP Act”) uses the terms ‘Complaint’ and ‘Complainant’, whereas the Competition Act inter-alia uses the terms ‘Information’, ‘Reference’ and ‘Person’. Accordingly, the CP Act inherently recognizes direct ‘injury’ and ‘harm’ (which are also defined under the CP Act).
However, in contrast, the concept of ‘aggrieved party’ does not exist under the Competition Act, which is evident from the wording of Section 19(1) (as discussed above). Sections 42A, 53N and 53Q of the Competition Act are the only provisions for award of ‘compensation’ – it is in these scenarios that the concept of a party being ‘aggrieved’ may come in. All other forms of payments under the Competition Act are generally ‘penalties’.
Accordingly, although ‘consumer welfare’ is the shared goal between both legislations, it is clear that the scope of the CP Act is in personam whereas the scope of the Competition Act is in rem.
- In the context of challenging prospective combinations
In case of provisions with respect to combinations under the Competition Act, the law regarding challenging prospective combinations appears to be still evolving. During a Phase-I review of a transaction notified to the CCI, before the CCI arrives at a prima facie view (on whether the combination is likely to cause an appreciable adverse effect on competition (“AAEC”) in India), it can request third parties for information regarding the combination under Regulation 19(3) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (the “Combination Regulations”). In case the CCI is of the prima facie view that an AAEC is likely to be caused, the matter proceeds to a Phase-II review. Under Sections 29(2) and 29(3) of the Competition Act and Regulation 22 of the CombinationRegulations, the CCI then requires parties to furnish details of the combination in Form IV, to be published in all-India newspapers, on the CCI’s website and on the parties’ own websites in order to invite written objections from the public. Form IV clearly states that the invitation of “comments/objections/suggestions” is “from any person(s) adversely affected or likely to be affected by the combination”, and that such person is also required to provide supporting documents on “how such a person(s) is adversely affected or is likely to be affected by the combination”. Form IV also states that “the Commission is not likely to consider unsubstantiated objections”.
Accordingly, it is to be noted that there is no provision under the Competition Act or the Combination Regulations for third party objections in Phase-I, and that third party objections in Phase-II are considered by the CCI only when such objecting party can prove a locus to the prospective combination.
Under Section 53A of the Competition Act, an appeal lies to the NCLAT against an order passed by the CCI under Section 31(1) of the Competition Act (i.e., approval orders passed by the CCI in combination matters). Though the Competition Act does not specify who the appeal may be filed by, it is to be noted that appeals to the NCLAT in case of combinations have generally been filed by the parties to the combination. However, in the case of the Walmart/Flipkart combination, the Confederation of All India Traders (“CAIT”) appealed to the National Company Law Appellate Tribunal (the “NCLAT”) against the CCI’s approval dated 8 August 2018 of such combination – CAIT inter alia contended that the combination could lead to anti-competitive effects and that the CCI did not provide it with an opportunity for an oral hearing in this regard. Walmart inter alia submitted that CAIT had no locus standi to challenge the approval order since it was not aggrieved by such order. Though the CCI in its submission before the NCLAT, and NCLAT in its judgment (dated 12 March 2020), made no observation regarding CAIT’s locus standi, the NCLAT dismissed CAIT’s appeal stating inter alia that in the absence of a prima facie opinion of AAEC, the CCI was not required to follow the procedure under Sections 29 and 30 of the Competition Act (i.e., since the matter did not move to Phase-II, there was no occasion for the CCI to consider any third party objections). However, it is interesting to note that the CCI did take note of objections from trade associations, traders, retailers etc. while it was assessing the combination.
In light of this, it is also to be noted that the All India Association of Online Vendors has recently approached the CCI regarding the proposed acquisition of Walmart India’s loss-making wholesale business by Flipkart. How the CCI treats this objection is yet to be seen (this is also likely to depend on whether the matter proceeds to a Phase-II review).
- Divergent viewpoints in light of the Samir Agrawal case
- NCLAT’s judgment in the Samir Agrawal case
In Samir Agrawal v. ANI Technologies (the “Samir Agrawal case”), the Informant alleged contravention of Section 3 of the Competition Act by Ola and Uber (the “Cab Apps”). He was an independent law practitioner and a consumer of the services provided by the Cab Apps. The CCI in its order dated 6 November 2018 under Section 26(2) of the Competition Act dismissed all allegations against the Cab Apps. Consequently, the Informant approached the NCLAT, which dismissed the appeal on 29 May 2020 inter alia stating that ‘person’ under Section 19(1)(a) of the Competition Act would mean a person who is aggrieved, i.e., “who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices”. The NCLAT went on to state that “any other interpretation would make room for unscrupulous people to rake issues of anti-competitive agreements or abuse of dominant position targeting some enterprises with oblique motives”. Accordingly, the NCLAT held that the Informant did not have any locus standi to approach the Commission as he could not prove any injury.
The NCLAT’s judgment has received strict criticism, inter alia on the grounds that the requirement of locus standi would violate the fundamentals of the Competition Act, and would hinder the ability of the Commission to fulfill its mandate under Section 18 of the Competition Act (since the duty entrusted on the Commission under Section 18 is in rem and not in personam).
- The CCI’s digression from the NCLAT’s ruling
In Harshita Chawla v. WhatsApp Inc. (order passed by the CCI on 18 August 2020),the Informant (an advocate) filed an Information against WhatsApp and Facebook (the “Apps”) alleging contravention of Section 4 of the Competition Act. Both Apps alleged that the Informant did not have the locus to approach the CCI because “neither she has claimed any injury nor has suffered an invasion of her legal rights as a consumer…a lawyer, such as an Informant, who has not even claimed any legal injury as a consumer or as a member of any consumer or trade association as a result of WhatsApp’s conduct, does not have locus standi to approach the Commission, and the information deserves to be dismissed under the Act.” Both Apps relied on the NCLAT’s judgment in the Samir Agrawal case.
The CCI was in disagreement with the arguments of the Apps in relation to the locus of the Informant. The CCI observed the nature of the mandate assigned to it under the Competition Act i.e., “to investigate cases involving competition issues in rem, rather than acting as a mere arbiter to ascertain facts and determine rights in personam arising out of rival claims between parties”. Importantly, the CCI blurred the distinction between cases in rem and in personam in so far as the Competition Act was concerned, and in this regard held that all cases investigated by the Commission were matters in rem, even if they were initiated by an ‘aggrieved’ party.
The CCI also noted the inquisitorial (and not adversarial) nature of the Competition Act, which is also evident from the powers of Commission to direct investigation even against entities who are not party to an Information – to illustrate, in its orders under Section 26(1) of the Competition Act, while directing the Director General (“DG”) to commence an investigation into any matter concerning contravention of Sections 3 or 4 of the Competition Act, the CCI generally notes that in the event “the DG comes across anti-competitive conduct of any other entity/person in addition to those mentioned in the information, the DG shall be at liberty to investigate the same”. Further, the proviso to sub-section (g) of Section 27 of the Competition Act (which deals with orders of the CCI in matters concerning Sections 3 and 4 of the Competition Act) states that: “while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group”.
Further, the CCI specifically referred to the judgment of the erstwhile Competition Appellate Tribunal (“COMPAT”) dated 15 September 2015 in Shri Surendra Prasad v. Competition Commission of India, and noted that the “Parliament has neither prescribed any qualification for the person who wants to file an information under Section 19(1)(a) nor prescribed any condition which must be fulfilled before an information can be filed under that section.” Accordingly, the CCI went on to hold that since the erstwhile COMPAT and the present NCLAT had divergent views on the issue, it would not be appropriate to solely follow the NCLAT’s ruling in the Samir Agarwal case.
Accordingly, through this order, the CCI has sought to favour the erstwhile COMPAT’s judgment on the issue and reverse in spirit the judicial activism undertaken by the NCLAT in the Samir Agrawal case. The CCI has watered down the concept of locus and provided a liberal interpretation to both the concept of ‘Informant’ as well as ‘Appellant’ under the Competition Act.
- Supreme Court settles its stand in the Samir Agrawal case
The interpretation of the law on this point as far as Indian competition law is concerned recently attained finality when the Supreme Court partially overruled the NCLAT’s judgment in the Samir Agrawal case on 15 December 2020. Though the Supreme Court dismissed all allegations against Ola and Uber, the culmination of this protracted debate over whether an Informant really needs a ‘locus’ while bringing a case before the CCI involved the Supreme Court finally holding that there was no such requirement under the Competition Act. The Informant inter alia argued that once having approached the CCI, he/she would automatically be an ‘aggrieved person’, even on a conservative interpretation of the term ‘aggrieved’. While Ola argued that such information could be mala fide and could have a detrimental impact on defending parties, including reputational losses, the CCI was of the opinion that though there was no case against Ola and Uber, the Informant reserved its right to approach it.
The Supreme Court agreed with the Informant’s submissions and inter alia held that pursuant to the 2007 amendment to the Competition Act, the term ‘complaint’ was substituted by ‘information’ – the reason being that while a ‘complaint’ could be filed only by a person who was aggrieved by a particular action, ‘information’ could be received from any person, irrespective of whether such person was personally affected. The Supreme Court also stated that the General Regulations did not require the informant to state how he was personally affected and that any ulterior motives by reckless informants could be addressed by Section 45 of the Competition Act. The Supreme Court accordingly held that the NCLAT had narrowly construed Section 19 of the Competition Act.
This judgment has helped provide clarity and alleviate the ambiguity existing hitherto due to contradictory judgments and would help facilitate all concerned stakeholders in approaching the Commission without any hindrance, thereby enabling the CCI to fulfill its mandate under Section 18 of the Competition Act.
 Amanullah v. State of Bihar, (2016) 6 SCC 699 (India).
 How to File Information, Competition Commission of India, https://cci.gov.in/sites/default/files/cci_pdf/HowToFileInformation.pdf.
 Section 2(h) of the Competition Act.
 Section 2(l) of the Competition Act.
 In Re: Alleged anticompetitive conduct by Maruti Suzuki India Limited (MSIL) in implementing discount control policy vis-à-vis dealers, Suo Moto Case No. 01 of 2019 (India).
 In Re: Anticompetitive practices prevailing in banking sector, Suo Moto Case No. 01 of 2015 (India).
 In Re: Anticompetitive conduct in the dry cell batteries market in India, Suo Moto Case No. 03 of 2017 (India).
 XYZ v. Association of Man Made Fibre Industry of India, Case No. 62 of 2016 (India).
 In Re: Delhi Jal Board v. Grasim Industries Ltd., Ref Case Nos. 03 & 04 of 2013 (India).
 Form IV, Competition Commission of India, http://www.cci.gov.in/sites/default/files/cci_pdf/Form_IV.docx.
 WalMart International Holdings Inc./Flipkart Private Limited, Combination Registration No. C-2018/05/571 (India).
 Confederation of All India Traders v. Competition Commission of India, Competition Appeal (AT) No. 62 of 2018 (India).
 Alnoor Peermohamed, Online sellers’ lobby urges CCI to block Flipkart’s acquisition of Walmart India, The Economic Times Tech (Jul. 28, 2020, 09:45 AM), https://economictimes.indiatimes.com/corporate/online-sellers-lobby-urges-cci-to-block-flipkarts-acquisition-of-walmart-india/articleshow/77203430.cms.
 Samir Agrawal v. ANI Technologies,Case No. 37 of 2018 (India).
 Samir Agrawal v. Competition Commission of India, Competition Appeal (AT) No. 11 of 2019 (India).
 Vinod Dhall, NCLAT judgment: CCI can’t be made hostage to locus standi, Financial Express (Jun. 12, 2020, 5:45 AM), https://www.financialexpress.com/opinion/nclat-judgment-cci-cant-be-made-hostage-to-locus-standi/1988913/.
 Harshita Chawla v. WhatsApp Inc., Case No. 15 of 2020 (India).
 Shri Surendra Prasad v. Competition Commission of India,Appeal No. 43 of 2014 (India).
 Samir Agrawal v. Competition Commission of India, Civil Appeal No. 3100 of 2020 (India).