Competition law jurisprudence in India has evolved significantly since the Competition Act, 2002 (act), came into force. However, the private enforcement of competition law infringement is yet to take off.
Private enforcement claims can only be filed after contravention has been established by orders of the Competition Commission of India (CCI) or of the National Company Law Appellate Tribunal (NCLAT). However, in deference to the Supreme Court, the NCLAT has put compensation applications in abeyance where decisions on competition law infringement appealed to the Supreme Court are yet to be decided. While final decisions by the Supreme Court should encourage filing of private enforcement claims, a detailed framework would certainly act as a boost.
Threshold questions such as the maintainability of compensation applications, limitation periods and the stage at which such applications can be entertained remain to be definitively answered. The NCLAT did address these issues in Food Corporation of India v Excel Crop Care Ltd and Ors (Excel Crop). The tribunal observed that a single application relating to common orders of the CCI was maintainable. It further held that the limitation period of three years is reasonable as compensation applications are money claims, and the limitation period starts from the date of the Supreme Court’s decision on competition law infringement. However, this decision has been appealed to the Supreme Court.
Access to confidential information in private enforcement proceedings remains a grey area. In the absence of guidelines, it is unclear how confidential information can be protected and the risk of disclosure is high. While evidence is important in private enforcement actions, requests for access to confidential information should be necessary and proportionate, and cannot be non-specific and wide. Safeguards must be put in place to protect the rights and interests of enterprises where third parties request access to the case records of the CCI.
It is also unclear whether leniency applicants will be eligible for any benefit in private enforcement actions. The Indian leniency regime has been highly successful so far. If leniency applicants are not given protection from private enforcement claims, there will be significantly less incentive to come forward and disclose infringing actions. The damages directive of the European Commission (EC) bars disclosure of leniency statements in actions for damages, to ensure continued willingness by enterprises to voluntarily disclose infringing conduct. Similar provisions will ensure the continued success of India’s leniency regime.
Compensation applications can only be filed against an enterprise “for any loss or damage shown to have been suffered” as the result of a contravention committed by the enterprise. The CCI imposed a penalty of INR550 million (USD7.3 million) on the National Stock Exchange for abusing its dominance, and it has been reported that the informant, MCX Stock Exchange Limited, has filed for compensation of INR8.5 billion. In the Excel Crop decision, the informants in the CCI proceedings have applied to the NCLAT for compensation for actual loss, 18% interest compounded annually, litigation costs and the costs of filing the applications. It remains to be seen whether the claimants will succeed and whether the claims other than actual loss will be allowed.
The EC’s damages directive also states that harm is presumed in cartel infringements, but the infringer can rebut that presumption. This is similar to the Indian regime, which presumes appreciable adverse effect on competition (AAEC) in cases of horizontal agreement, including cartels, but the presumption can be rebutted. The CCI has, in some cases, concluded that enterprises have infringed the act by engaging in illegal information exchange and that their conduct is likely to cause AAEC. Proving actual harm in such cases would be significantly more difficult with the CCI not giving any conclusive finding that the infringing conduct caused AAEC.
Private enforcement is becoming common in many jurisdictions, and it must be only a matter of time before it takes off in India. A framework and guidelines on the broad contours of private enforcement claims will provide certainty and boost the filing of such claims.
Chandhiok & Mahajan
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