Amazon V. CCI: Analysis Of Whether Res Judicata Stays Applicable On Orders Passed By CCI

The issue of applicability of this doctrine is more acute now, as the government plans to introduce the Draft Competition (Amendment) Bill, 2020 which is based on the recommendations proposed by Competition Law Review Committee, chaired by Mr. Injeti Srinivas. The aforesaid bill proposes to add sub-section 2A to Section 26 of the Act, effectively bringing the idea of res judicata into competition law in India.

In light of the recent Karnataka HC judgement Amazon v. CCI (2021), this article will discuss the applicability of the idea of res judicata to CCI judgements. Further, the article deals that how the doctrine can't be applied because of the CCI's unique nature and functions.

Decision Laid Down By Karnataka High Court

The Delhi Vyapar Mahasangh ("DVM") claimed that the opposing parties have entered into exclusive vertical anti-competitive agreements with certain 'preferred' sellers on their marketplaces for the sale of various products across sectors, including the smartphone market, where the opposing parties were the exclusive launch platform for several smartphone models. CCI ordered an investigation under Section 26(1) of the Act to see whether the opposite parties' alleged exclusive arrangements, deep discounts, and preferential listing were utilized as an exclusionary technique to prevent competition in contravention of the Act's provisions.

Flipkart argued that because CCI did not launch an inquiry against them in All India Online Vendors Association v. Flipkart & Ors.(2018) ('AIOVA case'), the information presented by the DVM should be treated similarly. In AIOVA, the CCI was informed by AIOVA that Flipkart is abusing its dominant position by exclusive dealings and deep discounting/ predatory pricing in the relevant market, violating Section 4 of the Act. The CCI found no violation of the act and concluded that "looking at the structure of online marketplace platforms and current market construct in India, it does not appear that any participant in the market is commanding any dominating position at this stage of market evolution."

The HC pointed out that the concept of res judicata does not apply to CCI orders because the Act intends to ensure free and fair market competition. The HC stated that the CCI or expert body should generally not be crippled in its efforts by application of technical norms of procedure, citing Cadila Healthcare Ltd. v. CCI (2018), the issue of the doctrine's applicability to CCI has been questioned in this judgement.

It was argued on behalf of Cadila Healthcare Limited in Cadila Healthcare Ltd. v. CCI (2018) that the same individuals were using different entities in frivolous, vexatious litigation against the same group of parties. As a result, CCI was faced with successive information filed for the same activity against the same enterprise through a separate order (by essentially the same informant), which was prohibited by the doctrine.

On the issue of res judicata, the Court held that even if CCI issues a decision in a given case, it may not be conclusive of the matter in its entirety because conclusions based on a few specific complaints can't be considered determinative of an entity's behavior in the market place, which tends to cover a larger canvas, influencing many other aspects of the competition that are not mentioned in the complaint and whose negative effects are felt by the general public.

Furthermore, it was determined that the settlement or disposition of an individual case may not be determinative of the subject involving anti-competitive conduct by an entity because it affects the general public in the same way that a crime does. The Court used a comparison between the proceedings that begin with the filing of a FIR and the proceedings that begin with the filing of information with the CCI to support its decision. It was observed that preventing CCI from taking cognizance of the same information about an enterprise multiple times is equivalent to saying that a builder or other service provider who engages in widespread malpractice that amounts to defrauding investors or flat buyers and is exposed by one complaint will permit such builder or service provider to quash any other FIRs and subsequent investigations filed and initiated on a complaint by several other consumers. Because the High Court would never use its authority to quash a subsequent proceeding against an offender stemming from a different FIR, the CCI or an expert body should not be strangled or hampered in their efforts by the application of technical procedural rules.

Non-Applicability Of The Doctrine Of Res Judicata

The judicial tribunal test established in Cooper v. Wilson (1937) and reaffirmed by the Supreme Court in Bharat Bank Limited v. Employees ofBharat Bank Ltd (1950) that pre-supposes the existence of a dispute between/among the parties. However, the CCI does not act as a dispute resolution mechanism aimed at resolving a dispute between two parties, but rather as a regulatory authority, as evidenced by the fact that the CCI's quasi-judicial power is limited to finding any contravention of Chapter II of the Act by enterprise(s) and issuing orders or directions under Section 27 of the Act, rather than resolving any dispute or claim between two parties. In the present case, the informant is not a party to the dispute but rather a source of information to the CCI, which leads to an investigation. Under Sections 3 and 4 of the Act, the CCI's role is largely investigative. It also has the authority to take punitive action against any company found to be in violation of the Act's provisions.

The Cooper (Judicial Tribunal) test also requires the disputants to present their arguments. The informant, however, is not entitled to a hearing if the CCI decides not to proceed with the investigation, as established in the CCI v. Steel Authority of India & Anr. (2010). Furthermore, under Section 53N of the Act, compensation issues are left to the Appellate Tribunal i.e., National Company Law Appellate Tribunal to decide. Given these reasons, it is evident that CCI is not a dispute resolution organization. Furthermore, the DHC held in Mahindra Electricity Mobility v. CCI(2019) that the CCI is both administrative and quasi-judicial when it proceeds to issue final orders, directions, and (or) penalties, and of an expert when it performs advisory and advocacy functions. Thus, it cannot be considered a tribunal only performing judicial functions. The Raghavan Committee Report, 2000 which recommended large scale reforms to bring the antitrust law in line with the new domestic economic policies and global best practices was also relied upon by the Court to identify the true nature of the CCI.

It was stated in Dwarka Prasad Sheokaran Das v. CIT (1953) that the principle of res judicata applies to suits in which two parties appear before a court to resolve their disputes. It was held in Kamlapat Moti Lal v. CIT (1962) that because income-tax agencies are not Courts, their decisions cannot be used as res judicata. The Court held in Smt.Ujjam Bai v. State of Uttar Pradesh (1961) that the principle extends to administrative tribunals since they perform judicial functions to a large extent. As a result, the notion of res judicata only applies to bodies that perform significant judicial functions. Since, the authors have already demonstrated that the CCI does not only perform judicial functions, the obvious conclusion is that the concept cannot be applied to CCI decisions unless a clause in the Act specifically mentions its applicability.

Given the preceding discussion, it is evident that the legislature and the judiciary hold opposing viewpoints on the applicability of the res judicata to CCI decisions. The High Court's recent decision has reaffirmed the judiciary's stance on the subject. According to the aforementioned discussions, the theory could not be applied to CCI decisions because it is entrusted with a variety of responsibilities and performs a variety of activities at various phases of competition law enforcement. Furthermore, it should be highlighted that 'Competition Act operates in 'rem' and not in'personam', since it concerns public interest' meaning thereby competition law matters are viewed from a public interest perspective. Therefore, the doctrine's application would considerably limit the CCI's authority. This action would be counter-productive as markets become more volatile. As a result, it is hoped that the legislature considers these concerns before passing the Bill to ensure that the CCI's powers are preserved.

Kashish Ali is a student at Faculty of Law, Jamia Millia Islamia University, Delhi and Ravi Sharma is a student at National Law Institute University, Bhopal.Views are personal.