CCI balances need for confidentiality, disclosure

On 20 November 2019, the Competition Commission of India (CCI) introduced the CCI (General) Amendment Regulations, 2019. The amendment to the CCI (General) Regulations, 2009 (general regulations), allows for the disclosure of an informant’s identity for the purposes of the Competition Act, 2002, and disclosure of pending litigation or disputes between an informant and other/opposite parties in respect of the subject matter of the information.

Disclosure of informant’s identity

The act and its underlying regulations provide for the granting of confidentiality in respect of the disclosure of information. Where parties divulge information in regard to the existence of, or participation in a cartel in exchange for a reduction in penalty, the CCI (Lesser Penalty) Regulations, 2009, provides for the benefit of confidentiality. In other cases, the CCI may grant confidentiality under section 57 of the act read with regulation 35 of the general regulations. Confidentiality under the general regulations is usually granted for commercially sensitive information of the parties and the identity of informants, if requested by them.

The protection of confidential information may prevent a party not only from accessing case records and relevant material that the CCI may rely on, but also from identifying the informant for cross-examination purposes. Access to evidence, both exculpatory and inculpatory, is fundamental to the right of defence of the parties. Confidentiality may also hinder the investigation by preventing the antitrust agency from confronting a party with confidential information. Thus, the competition law framework must balance the conflicting objectives of protection of confidentiality and the right of defence.

Antitrust agencies of the EU and the US have sought a balanced approach to confidentiality. While article 339 of the Treaty on the Functioning of the European Union (TFEU) restricts institutions and officials of the EU from disclosing confidential information, legislation such as the Commission Notice on the Rules for Access to the Commission File permit disclosure of necessary information (i) to prove infringement of articles 101 and 102 of the TFEU, or (ii) to safeguard the right of defence of the parties. In the US, the Freedom of Information Act (5 USC § 552) permits any person to access federal agency records except certain confidential or privileged information, including, in some cases, the identity of a source.

Disclosure of dispute/litigation details

The amendment requires informants to disclose details of pending litigation and disputes with the parties. This will assist the CCI to determine the litigious nature of information revealed by informants and also to sift genuine cases from those that are merely tactical in response to other events or disputes. Requiring informants to disclose pending litigation will strengthen the right of defence of the parties. A duty of disclosure on the informant is thus likely to curb frivolous litigation and forum shopping.

While the amendment is a step in the right direction, it only envisages disclosure of pending litigation and disputes between the informant and other parties. The language of the amendment does not seem to require a comprehensive disclosure including all proceedings or litigation before any statutory authority or judicial body. The amendment also uses the word pending, which may lead to parties withholding details of decided or settled disputes, or of potential disputes.

Comprehensive disclosure may be particularly useful where matters against either party are being dealt with by a sectoral authority or judicial body. In case no. 47 of 2018, the CCI closed the matter under section 26(2) of the act as it was already being adjudicated by the Securities and Exchange Board of India.

The Supreme Court in the case of Competition Commission of India v Bharti Airtel Limited and Ors (Bharti decision) stressed the importance of comity and hierarchy among institutions, including the CCI. In line with this observation of the Supreme Court, the amendment may settle long-standing jurisdictional disputes among sectoral authorities. Complete disclosure will also enable the CCI to rely on decided facts and issues. For example, in cases of apparent or alleged sham litigation, it may be appropriate for the CCI to follow the Bharti decision and let the court or tribunal already seized of the matter decide on issues of false or frivolous litigation. Otherwise, situations may arise where civil courts or tribunals and the CCI arrive at contrary findings on the same facts and issues. The amendment is likely to pave the way for the CCI to acknowledge such situations and await the outcome of pending proceedings before a court or tribunal before deciding to initiate an investigation.

Vikram Sobti is a partner and Shruthi Rao is an associate at Chandhiok & Mahajan.

Chandhiok & Mahajan
C-524, Defence Colony
New Delhi – 110 024
India

Mumbai | Bengaluru
Contact details
Tel: +91 11 4163 0033
Fax: +91 11 2433 9075
Email: office@chandhiok.com