CCI Closed Complaint Against IRDAI And IIISLA, Citing Regulatory Nature Of Functions

The Commission held that since the functions performed by IRDAI and IIISLA are regulatory in nature, the alleged anti-competitive conduct does not fall within the scope of the provisions of the Competition Act, 2002 (Act).

Brief Facts:

The Informant’s license as a Surveyor and Loss Assessor needs to be renewed every 5 years until 05^th December 2019. He applied for renewal in November 2019, but the renewal was withheld by IRDAI as he was not a member of IIISLA. Membership with IIISLA is a mandatory requirement for license renewal, as per IRDAI's regulations.

Initially, the Informant was a member of IIISLA but stopped paying the annual membership fee since the financial year 2008-09, expressing dissatisfaction with the institute's progress in achieving its objectives. In August 2021, the Informant attempted to re-apply for membership online, but IIISLA did not take any action on the application, despite the statutory requirement to grant membership within 15 days of application receipt. The Informant filed an appeal with IRDAI, which was unilaterally closed, and the Informant was informed that their membership application was blocked due to non-payment of subscription fees for three years. IRDAI also closed the Informant's application for license renewal.

IIISLA added additional requirements for membership in a piecemeal manner, including submitting FORM 26AS from 2019 to the present and the Informant's current employment status. The Informant fulfilled these requirements under protest as the membership application was already significantly delayed. The Informant filed a complaint against IIISLA before IRDAI alleging undue delay and arbitrary discretion in dealing with the membership application, but IRDAI did not resolve the complaint despite reminders.

Contentions of the Informant:

The Informant alleged that IIISLA has abused its dominant position, granted by IRDAI, by engaging in unfair and restrictive trade practices, contravening provisions Section 4(2)(a)(ii), Section 4(2)(b)(i), Section 4(2)(b)(ii) and Section 4(2)(c) of the Act. He claimed that IRDAI has created a monopoly in favor of IIISLA by making membership with them a statutory requirement for obtaining a license. He contended that IIISLA did not process his application properly, raising irrelevant queries, seeking recovery of subscription dues, and threatening disciplinary proceedings, thereby abusing its dominant position.

Additionally, he submitted that IRDAI strengthened IIISLA's position by mandating membership as an eligibility criterion for a Surveyor and Loss Assessor license, and by reducing the license period from 5 years to 3 years through IRDAI (Insurance Surveyors and Loss Assessors) Regulations 2015. The Informant sought interim relief under Section 33 of the Act, requesting IRDAI to approve their applications for license renewal as a Surveyor and Loss Assessor.

Observations of the Commission:

The CCI observed that the primary purpose of IRDAI is to establish an Authority that protects the interests of insurance policyholders, regulates and promotes the orderly growth of the insurance industry, and deals with related matters. IIISLA, on the other hand, is responsible for promoting and regulating professional organizations associated with the insurance and reinsurance business.

The CCI, considering a recent Delhi High Court case of Institute of Chartered Accountants of India v. Competition Commission of India & Ors, concluded that the current matter falls outside its jurisdiction. It stated that IRDAI is a statutory body, and the requirement of IIISLA membership for obtaining and renewing licenses for Surveyors and Loss Assessors is mandated by IRDAI itself. These functions are regulatory in nature and are not directly under the purview of the Competition Commission.

Case Title: Shrikant Ishwar Mendke vs Insurance Regulatory and Development Authority of India

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