Recent search and seizure operations carried by investigation arm of CCI i.e  the Office of Director General (DG) on steel and cement companies have raised eyebrows in the industry and stakeholders. 

There has been a perceptible uptrend in such actions in recent past, especially in the last two years, which are being described as “too intrusive and drastic” and expose the commercially sensitive and personal information of corportaes and their executives getting exposed, said industry sources.

Moreover, increasing tendency to use criminal investigation tools in anti-trust inquiries have irked corporates and the law firms that represent them.

In the last two years, DG has conducted dawn raids — which is usually wielded sparingly as they are intrusive – in as many as 8-10 industry segments such as country liquor, tyres, tarpaulin, pulses, cement, beer, vegetable and steel.

Prior to 2019, there were hardly few cases (one or two big ones at the most) over the last five years.

Industry associations have also objected to the powers proposed to be vested in the DG under the Competition Amendment Bill 2022 whereby it can even examine the legal advisors of companies on oath during investigation.

 The House Panel examining the Bill took serious exception to the proposal and in a rare move even summoned Law Secretary to ensure safeguards in the Bill from this power being misused by DG and imperilling client-attorney privilege communications safeguarded under Evidence Act.

“Such dawn raids hardly result in anything incriminating as competition law is now over 13 years old and corporates are not naive to keep details of anti-competitive arrangements in their systems. If one were to audit and do a cost benefit analysis,   it would become apparent that DG hardly gets any incriminating documents in any of the raids,” said a competition law expert, on condition of anonymity, who represented one of the parties in pulse cartel case. 

This expert pointed out that if one were to examine CCI order in pulse cartel case where dawn raids were carried out on agro-commodities traders, it would become obvious that not an iota of evidence could be collected by DG from raids leading to eventual closure of the case by CCI.  The matter remained under investigation for many years as lot of time was wasted in analysing the data gathered in raids, added the lawyer. 

HEADLINE GRABBING GIMMICKS?

“These are headline grabbing gimmicks by investigating officers. They should use more forensic tools in this day and age than using archaic method of mounting dawn raids, which was more appropriate in the last century when technology did not evolve to this level”, added another expert.

Competition Law Bar has also flagged the procedure adopted by the DG during examination of witnesses. Earlier, lawyers were allowed to remain present during depositions of witnesses from seeing distance, however, subsequently even this practice was also stopped. On strong objections made by the Bar, CCI was forced to direct DG to allow lawyers to remain present during depositions from a safe distance. 

TWEET TROUBLE

Recently, in one of a rare and first ever instance, CCI even tweeted from its official handle about the ongoing search operations in steel cartel case.

“This was a bizzare and irresponsible move by the regulator as such operations by very nature are kept secretive and it was egregious to publicize such move particularly when search operations were on, and data collected was yet to be analysed which could have exposed involvement of more participants in the cartel and a subsequent need for another round of raids. An overzealous regulator can cause more damage to the reputation of businesses besides compromising its own processes,” lamented a senior member of the Competition Law Bar. 

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