In a significant move, the Centre has implemented a key provision of the Competition (amendment) Act 2023 that vests power of appointment of Director General (Investigation) in the Competition Commission of India (CCI).

So far, the power to appoint DG was vested in the Central Government. 

Besides implementing this key provision, the Centre has also now concurrently modified existing recruitment rules —Competition  Commission of India (Director General) Recruitment Rules, 2009 —to change the composition of the Search-cum-Selection Committee for appointment of DG. 

Earlier, the Search-cum-Selection Committee was headed by Secretary, Ministry of Corporate Affairs (MCA). 

However, consequent upon the vesting of power in CCI, the Search-cum-Selection Committee will now be headed by Chairperson CCI and will have two Members, one each to be nominated by MCA and Central Government (expert-person of eminence)

Under the new dispensation, the DG would be appointed by CCI out of the Panel (upto three names) recommended by the search-cum-selection committee after obtaining prior approval of the Central Government.

The amendment in the Competition Act, 2002 was made pursuant to the recommendation of the Competition Law Review Committee (CLRC) which observed that “Presently the legislative framework envisages a scenario wherein the DG is appointed by the Central Government and is accountable directly to the Central Government and not to the CCI”.

The CLRC was apprised that  such separation  between  the investigative and other functions of  a regulator  in an inquisitorial system was not prevalent in certain international competition regulators such as the  European Commission as well as in other domestic regulatory bodies such as SEBI, IRDAI, PFRDA, etc. 

“Moreover, it emerged that though the office of the DG is institutionally under the Central Government as per existing statutory framework, this was not the case in practice. 

Once the DG was appointed, it was in fact the CCI that monitored the activities as well as administrative matters of the office of the DG. This position has also been recognised by courts of law which have dealt with the institutional framework  under  the Competition Act”, the CLRC report noted.

Infact, the CLRC had recommended merger of 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 Competition (amendment) Bill 2022, which later got enacted into law.

Instead of incorporating the recommendation of CLRC of merger, the Competition (amendment) Bill 2022 had merely transferred the power of appointment of DG from Central Government to CCI. 

It maybe recalled that the proposal to vest the power to appoint DG with the CCI had created a lot of chatter in legal circles with some experts contending that the move could impact the arms length functioning of the DG.

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