The Competition Appellate Tribunal (COMPAT) vide its recent order dated December 11, 2015, while allowing the appeals of the 10 appellants, has set aside the order of the Competition Commission of India (CCI) dated June 20,2012 against 9 cement manufacturing companies (Lafarge, ACC, Ambuja , Ultratech, India Cements, JK Cements, Madras Cements, Binani Cements, Jaiprakash Associates) and the Cement manufacturers Association (CMA) vide which a cumulative penalty of INR 6,316.59 Crores was imposed on all the parties to the cartel, as held by CCI.
Interestingly, this order has been passed by COMPAT on a procedural violation and not on merits. The violation related to the signing of the impugned order dated June 20, 2012 of CCI by the Chairman, CCI though the Chairman was not present at the time of final hearings of the matter on the three dates (February 21, 22 and 23, 2012) on which arguments were advanced by the counsels of each party.
The Hon’ble COMPAT , after a lengthy analysis of the contentions of each side, the history of the enactment of the Competition Act,2002 (the Act) and the judicial precedents on the core issues i.e. (1) whether in exercise of its adjudicatory functions , the CCI acts as a quasi-judicial body and as such ,bound to comply with the principles of natural justice and (2) whether non-compliance of an important facet of natural justice ,namely, “only the one who hears should decide “ has the effect of rendering the impugned order a nullity” , remitted the matter to CCI and directed the CCI to pass fresh orders within a period of three months from the date of receipt of this order.
Noticeably, the Hon’ble COMPAT, agreeing with the contention of the Appellants and particularly the moot issue of violation of natural justice, held, inter-alia, that “ …the law on the issue can be summarized to the effect that the very person /officer, who accords the hearing to the objector must also submit the report/take decision on the objection and in case his successor decides the case without giving a fresh hearing, the order would stand vitiated having been passed in violation of the principles of natural justice “.
The Hon’ble COMPAT at the end also observed that “the time has come for the CCI to lay down guidelines for conducting the investigation/inquiry in consonance with the rules of natural justice “ (Source: COMPAT Order dated 11.12.2015. For full text see COMPAT website-www./compat.nic.in/)
Comment: This order of the Hon’ble COMPAT is a landmark decision which, irrespective of (1) the merits of the case i.e. whether there was a cartel of the cement manufacturers or not, and (2) whether CCI decides to challenge it in the appeal to Supreme court or not, would be remembered as one of the most significant reversal of the decision of CCI on procedural issues i.e. violation of the principles of natural justice. This, in my opinion, will pave way for the establishment of a well defined and fairer procedural regulatory structure in CCI in times to come.