Requirement of Notice or Hearing in a s.19 Reference in Competition Law

India– The issue was whether the Competition Commission of India was required to give notice or hearing to the person against whom an information is given or a reference is made, in terms of Section 19 of the Competition Act, 2002 before the Commission directs further investigation under Section 26(7) of the Act.
The court observed that neither sub-section (1) nor sub-section (7) provides for any opportunity of hearing to the person against whom the reference is made or information in terms of Section 19 is received, before further investigation is directed by the Commission.
The court observed that analysis of Section 26(5) clearly indicated that no notice to the person against whom a reference is made or information is provided to the Commission is envisaged, before the Commission considers the report of the Director General recommending that there was no contravention of the provisions of the Act. The expression ‘Central Government’, ‘State Government’, ‘Statutory Authority’ and ‘the parties concerned’ have been used disjunctively in the sub-section. The word ‘or’ and not the word ‘and’ has been used between the expression ‘Statutory Authority’ and ‘the parties’. Had the Legislature intended inviting objections or suggestions even from the person against whom the complaint is made, the word ‘and’ and not the word ‘or’ would have been used between the expression ‘Statutory Authority’ or ‘the parties’.
It can hardly be disputed that in case investigation is ordered on receipt of a reference from the Central Government or the State Government or a Statutory Authority and the Director General recommends that there is no contravention of provisions of the Act, the Commission will have to invite objections or suggestions from the Central Government or the State Government or the Statutory Authority, as the case may be, before it takes a view on such report. Had the intention of the Legislature been that, in such a case, besides hearing the Central Government, State Government or the Statutory Authority, as the case may be, the Commission should also hear the person against whom the reference is made, it would not have used the word ‘or’ and would have used the word ‘and’ between the expressions ‘Statutory Authority’ and ‘the parties’. Therefore, on a fair reading of sub-section (5) of Section 26, it cannot be accepted that the said sub-section envisages notice not only to informant, but also to the person against whom the information is given or reference is made. Though, the principles of natural justice do necessitates hearing the affected party before a quasi-judicial or even an administrative decision which adversely affects his interest is taken, the order directing further investigation cannot be said to be an order prejudicially affecting the person against whom information is provided or a reference is made to the Commission. An order of this nature does not visit the person against whom information is provided or a reference is made to the Commission, with any civil consequences nor does it in any manner impair any legal right of such a person. Therefore, the principles of audi alteram partem would have no application at this stage. The court found no merit in the contention that the procedure adopted by the Commission would be rendered unfair or unreasonable or arbitrary in case no notice or hearing to the affected party is given before directing further investigation under sub section (7) of section 26 of the Act. It would thus be seen that neither subsection (1) provides for any opportunity of hearing to the person against whom the reference is made or information in terms of Section 19 is received nor does sub-section (7) provides for any such hearing to such a person, before further investigation is directed by the Commission.
Please see the following judgment on this topic: South Asia LPG Company Private Limited v. Competition Commission of India (Delhi High Court, 2013)


Author: Vikrant Narayan Vasudeva
Photo by Simen Svale Skogsrud/ CC BY-NC-ND 2.0

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