Availability of civil claims
Scope for civil claims in India
The Central Government, State Government, Local Authority, or any enterprise or person (the “Claimant”) may make an application for compensation resulting from an infringement of Chapter II 1 of the Competition Act, 2002 (the “Act”) or compensation for any loss suffered on account of contravention of any orders of the Competition Commission of India (“CCI”) or the Competition Appellate Tribunal (“COMPAT”).
Such claims are brought in reliance on Section 53N of the Act and are adjudicated by the COMPAT. 2 The claims must be based upon a finding of infringement by the CCI or on an appeal finding issued by the COMPAT. Under Sections 42A 3 and 53Q(2) 4 of the Act, a claim for compensation can also be made before the COMPAT for any losses suffered due to the failure of an enterprise to comply with the orders of the CCI or the COMPAT. Furthermore, compensation claims are mandated to follow the procedural requirement stipulated in the Competition Appellate Tribunal (Procedure for Appeals & Applications) Regulations, 2010 5 and the Competition Appellate Tribunal (Form and Fee for filing an Appeal and Fee for filing Compensation Application) Rules, 2009.
The scope of the Act is limited to anti-competitive practices that have an effect in India. If a claimant seeks to recover damages for anti-competitive practices with an effect outside India, they must first obtain a judgment in the relevant jurisdiction as to the infringement and damage suffered and then can seek recognition and enforcement of that judgment before the Indian courts.
Applicable limitation periods
The Act itself does not, either by reference or incorporation, provide for any period of limitation for the purposes of filing an application before the COMPAT to adjudicate on a claim for compensation arising from findings of the CCI or from the orders of COMPAT, or under Sections 42A or 53Q(2) of the Act.
In cases where no period of limitation is prescribed, Indian Courts generally adhere to a principle known as the “doctrine of laches,” which provides that proceedings ought to have been initiated within a “reasonable period of time” and that a failure to do so results in serious prejudice and harm to the defendant and adversely impacts the ability of the defendant to defend itself. The Supreme Court of India, in Corporation Bank & Anr. v Navin 6 has held that:
“The transactions in question took place in the years 1979 and 1981. The difficulties in realization of the amounts due from the consignee also became clear at the time when the claim was made before the Corporation and the claim had been made as early as on December 19, 1982. The petition before the Commission was filed on September 25, 1992, which is clearly a decade after a claim had been made before the Corporation. A claim could not have been filed by the respondent at this instance of time. Indeed, at the relevant time, there was no period of limitation under the Consumer Protection Act to prefer a claim before the Commission but that does not mean that the claim could be made even after unreasonably long delay. The Commission has rejected this contention by a wholly wrong approach in taking into consideration that foreign exchange payable to Reserve Bank of India was still due and, therefore, the claim is alive. The claim of the respondent is from the bank. At any rate, as stated earlier, when the claim was made for indemnifying the losses suffered from the Corporation, the futility of waiting any longer for collecting such amounts from the foreign bank was clear to the parties. In those circumstances, if the claim was to be made at all, it ought to have been made within a reasonable time thereafter. What is reasonable time to lay a claim depends upon facts of each case. In the legislative wisdom, a three-year period has been prescribed as the reasonable time under the Limitation Act to lay a claim for money. We think that period should be the appropriate standard adopted for computing reasonable time to raise a claim in a matter of this nature. For this reason, we also find the claim made by the respondent ought to have been rejected by the Commission´.
The aforementioned decision of the Supreme Court of India has been followed by the Monopolies and Restrictive Trade Practices Commission (“MRTPC”), the predecessor of the CCI, in Director General (Investigation & Registration) v Sitapur Plywood Manufacturers Ltd. and Anr 7 (2001); Triveni Borewells v Ingersoll Rand (India) Ltd 8 Director General (Investigation and Registration) and Anr. v Thermax Private Limited 9 M.S. Shoes East Limited v Indian Bank and Ors. 10 These cases related to compensation claims and the MRTPC had held that applications were filed more than three years after the cause of action accrued (the reasonable period of limitation as considered by the Supreme Court in case of Corporation Bank and Anr. v Navin) and therefore rejected the claims for compensation.
In terms of Section 53T 11 of the Act, appeals against any decision or order of the COMPAT lie before the Supreme Court of India. Such appeals, therefore, are to be filed within 60 days of the date of communication of the decision or order of the COMPAT. The Claimant may file an appeal before the Supreme Court of India within this time limit.
Availability of class actions for infringement of competition law and/or damages in India
Section 53N(4) 12 of the Act provides that, where any loss or damage is caused to numerous persons having the same interest, one or more of such persons may, with the permission of the COMPAT, make an application to adjudicate on a claim for compensation, for and on behalf of, or for the benefit of, the persons so interested. In such cases, the provisions of rule 8 of Order 1 of the Code of Civil Procedure, 1908 shall apply. 13 If a person has opted out of the joint claim, such person will not be bound by the COMPAT’s decision on the claim.
Conduct of proceedings and costs
Burden of proof
The Claimant will need to demonstrate the loss or damage suffered as a result of a contravention of the provisions of Chapter II of the Act or disobedience of an order/direction passed by the CCI and/or COMPAT. Therefore, a Claimant will have to discharge the burden of showing causation and the loss or damage suffered by it in order to recover compensation.
The Act is silent on the standard of proof required in these cases. However, for civil claims such as these, the standard applied should be “on the balance of probabilities.”
Joint and several liability of cartel participants
The Act does not recognize joint and several liability of cartel participants. Under the Act, a claim for compensation requires the applicant to demonstrate the loss or damage suffered by it on account of an enterprise contravening Chapter II.
Section 52N(3) is clear that the COMPAT may direct an enterprise to compensate the applicant for the loss or damage caused to the applicant as “a result of any contravention of the provisions of Chapter II having been committed by such enterprise” (emphasis added).
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
Any person filing an application before the COMPAT to adjudicate on a claim under Section 53N will need to show the loss or damage suffered as a result of a contravention of the provisions of Chapter II or on account of any contravention of an order of the CCI or the COMPAT (as the case may be).
Consequently, a claimant must produce evidence in support of its claim for compensation including, relevant documents/witnesses, etc.
There is no duty of disclosure upon infringers but, in the event that a claimant intends to rely on a particular document that is in the possession of the defendant or any third party, it may apply to the COMPAT and seek an order for disclosure of such document. It may be noted that in terms of Section 53O(2), the COMPAT has, for the purposes of discharging its functions, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 for the following matters: (i) summoning and enforcing the attendance of any person and examining him on oath; (ii) requiring the discovery and production of documents; (iii) receiving evidence on affidavit; and (iv) requisitioning any public record or document, or copy of such record or document, from any office.
The Act does not provide for any pre-action disclosure.
Average length of time from issue of claim to judgment in India
The Act does not provide a specific period of time within which the COMPAT shall adjudicate and pass an order/decision in respect of an application for adjudication of a claim for compensation.
At the time of writing, the COMPAT has not finally adjudicated upon any claim for compensation; therefore, it is difficult to predict the length of such proceedings. However, it is worth noting the following: (i) in the event that an entity has filed an appeal against a CCI decision holding it guilty of infringing a provision of the Act, the claim for compensation can only be filed against such entity after the COMPAT has decided the appeal (if a claim is filed after the CCI decision but before an appeal has been filed, then upon the filing of such appeal, the claim for compensation shall be kept in abeyance till the disposal of the appeal); and (ii) the speed of disposal depends largely upon the COMPAT and the parties.
Average cost from issue of claim to judgment in India
The legal costs involved in bringing or defending an action either before the CCI or COMPAT are difficult to estimate, especially with varying solicitor charges and senior counsels charging anything from INR100,000 to INR2.2 million per hearing.
The Competition Appellate Tribunal (form and fee for filing an appeal and fee for filing compensation applications) Rules 2009 prescribe the fees for filing applications under Section 53N as INR1,000 for claims of less than INR100,000. For claims over INR100,000, the fee is INR1,000 with additional increments of INR1,000 for every additional INR100,000 of compensation claimed or fraction thereof, subject to a maximum of INR300,000
The Act does not make any provision for third party funding.
Alternative methods of dispute resolution
While the Act does not prescribe any alternative dispute resolution mechanisms in respect of claims for compensation, it is theoretically possible for parties, during the pendency of an application under Section 53N, to explore alternative methods of claim resolution, including negotiations, mediation, conciliation or even arbitration. Neither the CCI nor the COMPAT have any statutory powers to direct parties to use alternative methods of dispute resolution. However, in a recent judgment of the Madras High Court, 14 it was held that the scheme of the Act allows parties to enter into a compromise or settlement, which shall be subject to scrutiny by the CCI who will examine whether public interest would continue to suffer and whether the object of inquiry would stand defeated by acceptance of a compromise.
Availability of damages and quantification
As discussed above, in terms of Section 53N of the Act, a claimant may make an application to the COMPAT to adjudicate on a claim for compensation. While the term “compensation” is not defined under the Act, it is linked, under Section 53N(3) of the Act, to the amount determined by the COMPAT as realizable from the enterprise for the loss or damage caused to the Claimant as a result of any contravention of the provisions of Chapter II of the Act. Since the key provisions of the Act only came into force in 2009, there are, as of yet, no decisions/orders by the COMPAT on any application for adjudication of a claim for compensation. Given the provisions of Section 53N(3) discussed above, it is likely that the term “compensation” will be interpreted in its most general sense as referring to anything given to make amends for loss caused.
As regards quantification, a claim for “compensation” for the purposes of an application under Section 53N(1) will have to be supported by documentary or oral evidence or both. Such evidence must demonstrate the loss or damage that such a party should have suffered as a result of any contravention of the provisions of Chapter II of the Act or of order of CCI or COMPAT, having been committed by an enterprise.
Claimants may include any “person” or “consumer,” both of which have been widely defined in the Act. A consumer includes a purchaser (direct or indirect) irrespective of whether the purchase is for personal use, commercial purpose or resale. Given the lack of jurisprudence, it is not known whether the COMPAT or the Supreme Court of India will accept the passing-on defense under Indian competition law. However, general principles governing the law of damages will recognize circumstances that have reduced or negated the Claimant’s loss.
Punitive and exemplary damages
There is no specific provision in the Act granting powers to the COMPAT to award punitive or exemplary damages.
Availability of interim or final injunctions in respect of an alleged competition law infringement
Under Section 33 of the Act, where during the course of an inquiry the CCI is satisfied that any conduct in contravention of the Act has been committed and continues to be committed or that such act is about to be committed, the CCI may temporarily restrain any party from carrying on such acts until the conclusion of such inquiry or until the issuance of further orders, without giving notice to such party, where it deems necessary.
The Supreme Court of India, in Competition Commission of India v Steel Authority of India Ltd., [2010 COMPLR 0061 (Supreme Court)], set out the following conditions that are required to be satisfied prior to grant of an interim relief under Section 33 of the Act:
i) the CCI must be satisfied (which requires a much higher degree of proof than the formation of a prima facie view under Section 26(1) of the Act) that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed;
ii) it is necessary to issue the order of restraint; and
iii) from the record before the CCI, there is every likelihood that irreparable and irretrievable damage would be suffered by the applicant, or the continuation of the activity would have an adverse effect on competition in the market.
After the conclusion of an inquiry, the CCI may, in terms of Section 27(a) of the Act, pass an order directing an enterprise indulging in anti-competitive agreements to permanently discontinue and never repeat any infringing act (“cease-and-desist” order); and permanently restrain abusive behavior by dominant enterprises.
Similarly, the COMPAT has wide powers in respect of the parties before it. It can pass “any order as it deems fit” 15 so long as such orders are within the law and its powers.
Other types of relief
In addition to passing “cease-and-desist” orders in respect of anti-competitive agreements, the CCI under Section 27 of the Act is also empowered to pass orders containing the following:
i) imposing a penalty of up to 10% of the average of the turnover for the last three preceding financial years upon each person/enterprise who is found to have infringed the provisions of the Act;
ii) imposing upon each participant in a cartel a penalty of up to three times its profit for each year of the continuance of such cartel or 10% of the turnover for each year of the continuance of such cartel, whichever is higher;
iii) directing modification of agreements that are found to be anti-competitive under Section 3 of the Act; and
iv) issuing such other orders/directions as the CCI may deem fit.
With respect to infringement(s) of the provisions of Section 4(1) of the Act that prohibit abuse of a dominant position, the CCI may restrain the enterprise from continuing with its abusive conduct and may impose a penalty of up to 10% of the average of the turnover for the last three preceding financial years on such enterprise. In addition, the CCI may direct the manner in which the infringing enterprise will modify its conduct and, under Section 28 of the Act, may pass orders directing the division of a dominant enterprise to ensure that such enterprise does not abuse its dominant position.
Under Section 48 of the Act, the CCI is empowered to proceed against and punish a person who, at the time a contravention was committed, was in charge of and responsible to the company (which is found to have infringed the provisions of the Act) for the business of the company. Although Section 48 empowers the CCI to punish such a person, the scope of such punishment has not been spelt out in the Act, but jurisprudence suggests that the same is limited to only monetary penalties.
The first order of the CCI imposing a monetary penalty was issued in June 2011. Since then, there have been several orders of the CCI imposing monetary penalties. The notable ones include:
i) the INR2.58 billion penalty on three airline companies for anti-competitive practices in fixing fuel surcharges;
ii) the INR6.71 billion penalty on four public sector insurance companies for rigging a tender floated by a state government;
iii) the INR25 billion penalty on 14 OEMs/car manufacturers for abusing their dominant position and indulging in anti-competitive practices (Spare Parts matter);
iv) the INR63 billion penalty on 11 cement manufactures for price-fixing and limiting the supply and production of cement;
v) the INR6.3 billion penalty on DLF for abuse of dominant position;
vi) the INR555 million penalty on the National Stock Exchange for abuse of dominant position;
vii) the INR1.12 billion penalty on 46 manufacturers of LPG cylinders for bid rigging;
viii) the INR56.6 million penalty on Schott Glass India Pvt. Ltd. for abuse of dominance;
ix) the INR1.7 million penalty on the Karnataka Films Chamber of Commerce (KFCC) for cartel behavior;
x) the INR100,000 penalty on each of the 27 producers/distributors of Hindi Motion Picture Films for cartel-like behavior; and
xi) the INR53 million penalty on the Board of Control for Cricket in India for abusing its dominant position.
It may be noted that some of the abovementioned penalty orders of the CCI have been upheld/reduced/modified by the COMPAT while the others are in appeal before the COMPAT. To date, no applications under Section 53N of the Act have been adjudicated by COMPAT.
1 Chapter II of the Act contains the substantive provisions of law dealing with anti-competitive agreements, abuse of dominance and merger control (regulation of combinations).
2 The Act specifically excludes the jurisdiction of civil courts to deal with matters which the CCI or the COMPAT are empowered by or under the Act to determine.
3 Compensation in case of contravention of orders of Commission 42A. Without prejudice to the provisions of this Act, any person may make an application to the Appellate Tribunal for an order for the recovery of compensation from any enterprise for any loss or damage shown to have been suffered, by such person as a result of the said enterprise violating directions issued by the Commission or contravening, without any reasonable ground, any decision or order of the Commission issued under Sections 27, 28, 31, 32 and 33 or any condition or restriction subject to which any approval, sanction, direction or exemption in relation to any matter has been accorded, given, made or granted under this Act or delaying in carrying out such orders or directions of the Commission.
4 Contravention of orders of Appellate Tribunal 53Q. (2) Without prejudice to the provisions of this Act, any person may make an application to the Appellate Tribunal for an order for the recovery of compensation from any enterprise for any loss or damage shown to have been suffered, by such person as a result of the said enterprise contravening, without any reasonable ground, any order of the Appellate Tribunal or delaying in carrying out such orders of the Appellate Tribunal.
5 Read with Competition Appellate Tribunal (Procedure) Regulations, 2011.
6 AIR 2000 SC 761.
11 Appeal to Supreme Court 53T. The Central Government or any State Government or the Commission or any statutory authority or any local authority or any enterprise or any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the Supreme Court within 60 days from the date of communication of the decision or order of the Appellate Tribunal to them;
12 Awarding compensation 53N. (4) Where any loss or damage referred to in sub-section (1) is caused to numerous persons having the same interest, one or more of such persons may, with the permission of the Appellate Tribunal, make an application under that sub-section for and on behalf of, or for the benefit of, the persons so interested, and thereupon, the provisions of rule 8 of Order 1 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to the application before the Appellate Tribunal and the order of the Appellate Tribunal thereon.
13 One person may sue or defend on behalf of all in the same interest.
14 The Tamil Nadu Film Exhibitors Association v CCI & Ors  CompLR 0420.
15 Section 53B(3) of the Act.