The Centre plans to vest the the power of appointment of Director General, investigation arm of CCI, in the Competition Commission of India (CCI) itself.

This proposal, which forms a part of the recently introduced Competition (amendment) Bill 2022, has created a flutter in legal circles with some experts contending that the move could impact the arms length functioning of the DG.

Currently, the DG is appointed by the Central Government. The Bill provides that CCI, with prior approval of the Centre, will appoint the DG. 

According to legal experts, this proposal in the Bill may compromise the independence of investigation and may not pass muster in judicial review, if challenged. 

Recommendation by CLRC

They also pointed out that the Competition Law Review Committee (CLRC) had recommended merger of the Office of the DG with CCI by advocating Integrated Agency Model, where the competition authority is empowered with both investigative and adjudicative functions with rights of appeal to general or specialized appellate bodies. 

However, this proposal, which was entirely efficient and non-problematic, did not get reflected in the Bill. 

Instead of incorporating the recommendation of CLRC, the Bill merely transfers power of appointment of DG from Central Government to CCI. 

This has created a situation that may potentially be perceived by stakeholders as compromising the independence of investigation, as investigations are initiated at the directions of CCI, and it is unlikely for DG (appointed by CCI) would differ from the view taken by CCI, said experts.

Experts’ opinions

While many experts feel the proposal would affect the independence of investigations carried by the DG, some are of the view that the appointment of DG should not lie in the hands of the Centre as this is not in tune with the International best practices.

Ruby Singh Ahuja, Senior Partner - Karanjawala & Co, a law firm, said:”If CCI has to perform the role of an independent regulator for the market, then the appointment of DG cannot lie in the hands of the Central Government. It is not in accordance with the International best practices. It does create a situation of interference by the government, which sometimes, keeps investors at bay from looking at Indian market”.

Currently, Section 16 of the Competition Act, 2002 empowers the Central Government to appoint the DG to assist the CCI in conducting inquiry into contravention of provisions of the Act. The  extant legislative framework envisages a scenario wherein the DG is appointed by the Central Government and is accountable directly to the Centre and not to the CCI.

Anisha Chand, Partner, Khaitan & Co, said the arms length functioning of the DG maybe impacted in proposed regime. And CCI could have the power to control the decision making and investigation process entirely, she added.

Harman Singh Sandhu, Partner, Shardul Amarchand Mangaldas & Co, said the legislative proposal will lead to involvement of the CCI in such appointment and the reason for this proposed change is unclear. 

“Having said that I don’t believe that merely the appointment of DG by the CCI will lead to erosion of independence. It would be premature to assume that merely because of the change in mechanism, in which the DG is being appointed, will lead to erosion of independence. It would be ideal that Central Government builds in additional checks and balances, especially when it comes to performance appraisals, to alleviate any potential concerns”.

Unnati Agrawal, Partner, IndusLaw, said it is pertinent to note that the Bill does not give the CCI an unfettered right to appoint the DG.

“While the Bill proposes to empower the CCI to appoint the DG, such appointment will be done with the prior approval of the Central Government. However, time will tell whether the role of the Central Government will be to merely endorse the nomination of the CCI or whether it will actively deliberate/ block on such appointments”, Agrawal said..