The Madras High Court has dismissed a writ petition filed by Agni Steel against a probe initiated by the Competition Commission of India (CCI), clearing the path for the probe into cartelisation by steel companies, the fair trade watchdog. 

The Coimbatore Corporation Contractors’ Welfare Association, in a complaint filed in 2021, had alleged that steel companies had indulged in anti-competitive activities and collectively sought to control the supply of steel,  creating artificial scarcity in the market. 

The Madras High Court, taking cognisance of the complaint, directed CCI to take necessary and appropriate action on the complaint. Accordingly, the Director-General initiated an investigation into the matter.

The investigation was, however, challenged by one of the companies under investigation i.e. Agni Steel, on the ground that the Director-General (DG) was investigating the matter in  the absence of any prima facie order passed by CCI as mandated under the law and, thus, the investigation was illegal and beyond the scheme contemplated under the Competition Act, 2002. 

A  Division Bench of the Madras High Court comprising Chief Justice  S.V. Gangapurwala and Justice D. Bharatha Chakravarthy dismissed the challenge to the probe on Friday. 

Agni Steel argued before the High Court that CCI should have formed a prima facie opinion as required under the Competition Act, once the complaint and consequent direction of the Madras High Court were forwarded to CCI. The High Court disagreed with the contention and held: “In the peculiar facts and circumstances of this case, where this Court directed to ‘proceed further and take necessary and appropriate action’, we find that the Commission’s expression of its satisfaction in other words, and not expressly using ‘that it finds a prima facie case’ as appropriate in the context. Therefore, we answer the question that the direction to investigate and the subsequent investigation in the instant case are not in violation of Section 26(1) of the Act”.

“As regards the question as to Cherry Picking, when the investigation is in progress, merely because some of the companies were not questioned and some companies who are not named have been chosen, the same will not be ground for interference at this stage. It would be premature and interdiction in the investigation to conduct an inquiry with regard to this contention at this stage. Thus, we answer the question that the question as to arbitrariness or malice or discriminatory treatment is premature at the stage of inquiry and investigation and we find it not to be a ground to interfere at this stage, leaving it open for the writ petitioner to agitate the same, if made out at the relevant point of time,” noted the Court while dismissing the petition. 

The steel company was represented by Vijay Narayanan, Senior Counsel, and CCI was represented by N. Venkatraman, Additional Solicitor-General of India.

Related Topics
comment COMMENT NOW