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Adherence of Competition Act, 2002 to Part III of Indian Constitution

Introduction

The Constitution of India is the prime law of the land, which governs the rights of the people. It ensures that every person living in India has basic opportunities and they live their life in a dignified manner. Although the Indian Constitution is considered to be the largest, its main essence is contained in its basic structure, which includes the Fundamental rights as well. Moreover, under Article 13, the state is prohibited from making any law that may abridge the Fundamental Rights, and hence any law/enactment needs to abide by these rights. It is a very well-known premise that the Competition Act was framed keeping in mind the Articles 38 and 39 [Directive Principles of the State Policy] of the Constitution of India, which provides that there must be policies to reduce inequalities in income, possession/control of material assets are dispersed so that they may benefit everyone, and the monetary framework does not lead to the grouping of riches. However, there has been very less discussion on these provisions’ relationship with the Fundamental Rights. In the case of Minerva Mills, The Court said that:

“Three Articles of our Constitution, and only three, stand between the heaven of freedom into which Tagore wanted his country to awake and the abyss of unrestrained power. They are Articles 14, 19, and 21.”

Hence, in the present article, the author analyses various provisions of the Competition Act, 2002, and how they are directly in consonance with these three articles of the Constitution. These rights together also form the Golden Triangle; however, the author shall deal with them separately in this article.

Competition Act was introduced in 2002, to regulate markets in such a way that no particular enterprise can exert influence in their favor. The main objective of the Competition Act was that business enterprises work in an open market, i.e., which is competitive enough. It is important that firms are competing with each other in a market, as it ensures that the ultimate consumers get the best product at the best price, which is not possible in a non-competitive market. Competition Act of 2002 governs two major aspects, i.e. establishment and functioning of The Competition Commission of India [hereinafter “CCI”], and the tools used by CCI to prevent certain anti-competitive practices, such as regulations to prevent “Appreciable Adverse Effects on Competition [AAEC]”, to check if any enterprise is abusing its position of dominance, and also to regulate the combinations.

Article 14

Article 14 of the Constitution of India states that every person must be treated equally in the country. Sections 3, 4, and 19 of the Act give effect to this fundamental right, as under Section 4(2)(a), the policy of differential discounting and pricing is discouraged, which means that every enterprise at the same level, must be given same level of discounts, and any deviation from the same will result in the contravention this section.

Section 4(2)(c) of the Act denies the practice of denying market access, which means the enterprises cannot refuse to deal with a particular firm, without giving any reason. In its jurisdictional practice as well, the Competition Commission of India (“CCI”) has adopted the same practice.

In the case of Shamsher Kataria v. Honda Siel Cars India Ltd., it was observed that a refusal to deal causes denial of market access and hence abuse of dominant position[1]. In the case of HT Media Ltd v. Super Cassettes Ltd, it was held by the Commission that the imposition of high pricing by an enterprise will be deemed to be an abuse of dominance. As under the Constitution of India, various policies are enacted, in form of reservations, to ensure equality. Similarly, section 3 of the Act imposes conditions by the virtue of which, it can be identified if an enterprise or group of enterprises have entered into a cartel, which will lead to an appreciable adverse effect on competition, ultimately leading to inequality in the economy.

Artice 19

Article 19(1)(g) of the Constitution of India ensures that every person must have the freedom to trade and Profession in the Country, i.e. they must be able to practice their choice of work, without any reasonable restriction imposed on it.[2] The Competition Act in its preamble also states that it seeks to ensure freedom of trade, and vide its various provisions, it is propagating the principle enshrined in Article 19(1)(g) of the Constitution of India.  For example, Section 19(4)(h) of the Act states that any firm that creates entry barriers is in a dominant position, and abuse of the same is prohibited under the act. The Competition Commission of India, in its decisional practice of abuse of dominance, has also placed great importance on entry barriers while determining whether an entity is dominant or not. On similar lines, Section 4(2)(c) of the Act entails the provision, under which a firm will be held for abuse of dominance if it denies market access to the firms. And Also, under Section 4(2)(d), any firm which seeks information that is not relevant to the case, and makes it the ground for entering into a contract, can also be held liable for the abuse of the dominant position

Article 21

Article 21 of the Constitution of India guarantees the right of life and personal liberty, and by the judicial interpretation, the scope of this right has been widened leaps and bounds, to also include the right to privacy, and it has also been held that even the state cannot violate such a right. The Competition Act, through its various provisions, is also in consonance with this right, as by the virtue of Section 57 of the Act, the information sought by the Commission or the appellate tribunal, cannot be disclosed without prior permission of the parties. Moreover, according to Regulation 35 of the CCI (General Regulations), 2009 lays down a way by which the parties can claim confidentiality over the information disclosed during the proceedings, in which Regulation 35(3) explicitly states that such confidentiality must only be sought when there is a risk that trade secrets if made public, can cause harm to the business enterprise, and under 35(8), the Director-General can accept or reject the request. However, the parties can approach the Commission in case the request is rejected, within thirty days [35(10)] and since this procedure is appealable, sometimes, the disposal of cases can become time-consuming, as in the case of Meru Travel Solutions Private Limited v. Uber India Systems Private Limited. And hence, to provide a solution to this problem of time consumption, the Competition Commission of India in its recent amendment, introduced the concept of Confidentiality Ring, which will expedite this process.

Conclusion

The Competition Commission of India, through its jurisdictional practices, has adopted this approach, wherein it takes in cognizance of these fundamental rights mentioned in the article. Moreover, by the virtue of Section 36 of the Act, the Commission also gives due importance to the Principles of Natural Justice. Since fundamental rights are a part of the basic structure of the constitution, and any act or rule which is made in contravention of it is regarded as opposed to the public policy, it is imperative to see that Competition Act, 2002 adheres to these rights, through its provisions. In this article, the author has analyzed which provisions of the Competition Act resonate directly with the Constitution of India.

[1] See also: Jindal Steel & Power Ltd. v. Steel Authority of India, [2012] 111 SCL382 (Competition Commission of India)

[2] The Constitution of India, 1950, Art. 19(6).

This article has been authored by Vanshika Agrawal, 4th Year student at Hidayatullah National Law University.

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