Gujarat High Court declines to intervene with CCI’s investigation order against suspected cartel of paper mills

J.K. Paper Ltd. v. Competition Commissioner of India – [2023]

The Competition Commission of India (CCI) issued an investigative order in the present case under Section 26 of the Competition Act, 2002, and the J.K. Paper Ltd. filed a writ suit to challenge it. The business claimed that the order had no bearing on its legal rights and responsibilities because it was just administrative in nature, reflected only a preliminary opinion.

According to the Director General’s report, the petitioner participated in a cartel of paper mills that met regularly to raise prices, in violation of Sections 3 (Anti-competitive Agreements) and 4 (Abuse of Dominant Position) of the Competition Act of 2002.

The ruling u/S.26(1), according to the High Court, merely directs an investigation. It has no bearing on the petitioner’s obligations or rights. The CCI is tasked with determining whether the accusations that the petitioner’s actions are anti-competitive are true. The petition is undoubtedly flawed because the petitioner had a chance to submit its ideas and objections to the Director General’s (DG) report.

It was noted that Section 26 of the Act states that upon receipt of a Reference from the Central Government or a State Government or an information received u/s 19 (inquiry into certain agreements and dominant position), the Commission shall direct an investigation to be made in the matter if it is of the opinion that there exists a prima facie case.

The Supreme Court’s ruling in Competition Commission of India v. Steel Authority of India, which established that the CCI’s exercise of its authority under Section 26(1) of the Act is not adjudicatory in nature and that the creation of a prima facie opinion is only an administrative process without any civil repercussions, was cited by the Court.

The High Court added that reading investigative reports and orders issued according to Section 26 of the Act would suggest that the order is an administrative order that only establishes a prima facie case.

Additionally, the petitioner was given the chance to present evidence to the DG during the course of the inquiry, and as a result of the orders in question, the DG has requested that the petitioner submit any objections or suggestions to the investigation report. Therefore, it cannot be argued that the petitioners’ doors are shut.

When the petitioner’s request for witness cross-examination was denied and the CCI gave the petitioner permission to file affidavits in rebuttal to contest the conclusions reached by the DG based on the depositions, etc., the High Court held that it was inappropriate to discuss the report’s merits and shortcomings.