Business Laws

Supreme Court backs CCI in two cases

Harshvardhan Korada |Vasanth Rajasekaran | Updated on: Feb 20, 2022
NEW DELHI, 09/04/2013: Supreme Court of India in New Delhi on April 10, 2013. 
Photo: S. Subramanium

NEW DELHI, 09/04/2013: Supreme Court of India in New Delhi on April 10, 2013. Photo: S. Subramanium | Photo Credit: SUBRAMANIUM S

Some notes on the Apex Court’s judgment in a ‘penalty on tyre manufacturers’ and ‘CCI has jurisdiction over lotteries’

i) Penalty on tyre manufacturers:

The Competition Commission of India (CCI) in Re: Ministry of Corporate Affairs and Apollo Tyres and Ors by an order dated August 31, 2018 (CCI Order) imposed a collective penalty of ₹17.88 billion on five tyre companies and their association, i.e., Automotive Tyre Manufacturers Association (ATMA). The CCI had imposed the penalty on the tyre companies and ATMA for indulging in cartelisation, and contravening the provisions of Section 3 of the Competition Act, 2002 (the Act).

Aggrieved by the CCI Order, a writ petition was filed by MRF Ltd before the Madras High Court which came to be dismissed. The matter reached before the division bench of the High Court which on March 8, 2018 directed the CCI Order to be kept in a sealed cover till the disposal of the writ appeal.

Eventually, vide an order dated January 6, 2022, the division bench of the High Court dismissed the aforesaid appeal. Aggrieved with the decision of the division bench of High Court, the tyre companies preferred SLPs before the Supreme Court. The Apex Court refused to interfere with the CCI Order and left it open to the parties to pursue their remedies in accordance with the law.

ii) CCI has jurisdiction over lotteries:

In another recent decision (Competition Commission of India Vs State of Mizoram), the Supreme Court held that while lotteries may be regulated commodity and res extra commercium (things beyond commerce), the same would not take away the jurisdiction of Competition Commission of India (CCI) to look into allegations of anti-competitive activities in business or services related to lotteries.

The Apex Court took note of the expansive definition of ‘service’ under Section 2(u) of the Competition Act.

The word ‘service’ meant and included ‘service of any description’ which was to be made available to potential users. The Apex Court opined that purchaser of a lottery ticket to a potential user was a service made available by the selling agents in the context of the Competition Act.

The lottery business could continue to be regulated by the Lotteries (Regulation) Act, 1998. However, if in the tendering process there was an anti-competitive element which would require investigation by the CCI, that could not be prevented under the pretext of the lottery business being res extra commercium. This was more so when a government of state (State of Mizoram) decided to deal in lotteries.

Contributed by Vasanth Rajasekaran and Harshvardhan Korada, Phoenix Legal

Published on February 20, 2022
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