Interim Measures in Indian Antitrust Cases: Past, Present and Future

Introduction

Interim measures, providing temporary relief pending the outcome of a case, are a potent tool to preserve competition during ongoing anti-trust investigations as well as to improve the effectiveness of the ultimate enforcement decision. Thus, their objective is twofold, protective and corrective. While interim measures have been in the arsenal of many anti-trust authorities for decades, they have recently sparked interesting discussions on their optimal use, keeping in mind the effectiveness of anti-trust enforcement and the length of investigations – especially in dynamic markets. This article discusses: (a) the interim relief powers of the Indian competition agency, the Competition Commission of India (CCI); (b) the use of interim relief powers by the CCI, so far; and (c) the outlook on such use, going forward.

CCI’s powers

Section 33 of the Competition Act, 2002 (Competition Act) specifies that where, during an inquiry, the CCI is satisfied that an act in contravention of substantive provisions of the Competition Act (broadly, anti-competitive agreements, abuse of dominant position and regulation of combinations) has been committed and continues to be committed or that such act is about to be committed, the CCI may, by order, temporarily restrain any party from carrying on such act until the conclusion of such inquiry or until further orders, without giving notice to such party, where it deems it necessary. Further, the law presumes that an “inquiry” is commenced when the CCI, in exercise of its powers under Section 26(1) of the Competition Act, issues a direction to the Director General (the investigative arm of the CCI)¹. Till the time a final order is passed by the CCI in accordance with law, the inquiry under the Competition Act continues. A bare reading of Section 33 of the Competition Act implies that the CCI: (a) has to record its satisfaction on contravention of the provisions of the Competition Act (either through a past, continuing or imminent act/conduct); (b) can restrain any party (not necessarily a named opposite party) from carrying out an act of contravention; and (c) does not have to grant such a party an opportunity of being heard before passing an interim relief order.

Principles and safeguards applicable

The principles for deciding the interim relief application under Section 33 of the Competition Act were laid down by the Supreme Court of India (Supreme Court) in CCI v. SAIL² where the Court mandated that, while recording a reasoned order under Section 33 of the Competition Act, the CCI should, inter alia, ensure fulfilment of the following conditions: (a) record its satisfaction (which has to be of much higher degree than formation of a prima facie view under Section 26(1) of the Competition Act) in clear terms that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed; (b) it is necessary to issue an order of restraint; and (c) from the record before the CCI, there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have an adverse effect on competition in the market. Further, the court cautioned that this power must be exercised by the CCI sparingly and only under compelling and exceptional circumstances. The CCI has followed this directive of the Supreme Court in letter and spirit, as can be seen from the statistics. Of more than a thousand enforcement matters taken note of by the CCI, 480 investigations have been ordered³. Of these, contravention has been found only in 172 cases (i.e. cases closed through orders passed under Section 27 of the Competition Act).

Therefore, to date, the CCI theoretically has had the opportunity to grant interim relief in 480 instances. However, based on publicly available information, this power has been exercised by the CCI in only 9 cases so far. Given the far-reaching consequences of interim relief orders (keeping in mind that in India investigations may take years to complete), there are certain procedural safeguards in place for parties if an interim relief is granted by the CCI, specifically if the relief is granted ex parte⁴. First, the CCI must pass a separate order in relation to the grant of an interim relief recording its reasons. Second, wherever the CCI has passed an interim order ex parte, it is mandated to hear the parties against whom such an order has been made “as soon as possible”. Third, in cases where an interim order has been passed, the CCI is required to pass a final order, as far as possible, within ninety days from the date of the interim order (although, given the broad wording of the regulation, this time period has not been strictly observed by the CCI).

CCI’s decisional practice

The first ever decision of the CCI in relation to interim relief came in September 2015 when the CCI denied granting interim relief to Fast Track Call Cab in the market related to radio taxi services in Bengaluru⁵. Fast Track primarily prayed for an order directing ANI (a cab aggregator which uses the brand name Ola in the market) to refrain from indulging in the alleged practice of predatory pricing for taxi services. The CCI in this case did grant the parties a hearing before deciding on the interim relief application. The CCI noted in its majority order that the simple fact that Fast Track had a prima facie case, would by itself not entitle it to the grant of interim relief, unless it was satisfied that there was irreparable loss and injury and that the balance of convenience also lay in its favour, which was not satisfied in this case. One CCI member disagreed with the CCI’s majority order and wrote a dissenting order. The dissenting member considered that the strategy of pricing below average variable cost by Ola necessitated interim measures given the structure and the characteristics of the relevant market, and ordered that Ola organise its pricing system in the relevant market in such a way that the incentives paid to the cab operators/drivers together with the share of the passenger revenue passed on to the cab operators and other variable costs, did not exceed the passenger revenue collected by it.

The decision of the CCI was challenged by Fast Track before the then Appellate Tribunal, the Competition Appellate Tribunal (COMPAT)⁶. The COMPAT held that the CCI’s order did not suffer from “any patent legal infirmity, which may justify interference by the Tribunal in exercise of its appellate power”. The COMPAT also specifically noted that, if the CCI was to pass an order along the lines suggested by the dissenting member and ultimately it was held that no case of violation was made out, there would be no mechanism to compensate the public. This investigation was closed by the CCI nearly two years later in July 2017. As can be seen, such an interim relief granted for almost 2 years could have had far-reaching consequences on Ola’s pricing strategy, especially given that the CCI finally did not find it guilty of predatory pricing. The CCI’s caution and restraint in exercising powers under Section 33 was thus rightly directed to be used sparingly. Within a year of the Fast Track decision, the CCI passed its first decision granting interim relief, in a case against Monsanto⁷. Nuziveedu Seeds essentially prayed that Monsanto be restrained from terminating the sub-licence agreements entered into with it and its group companies, till the disposal of the matter. The CCI in this case again granted the parties a hearing before deciding on the interim relief application. The CCI was satisfied that thresholds laid above were met in this case. The CCI specifically relied on the fact that the process of development of the BT cotton seeds entailed various stages and spans (over 5 to 7 years). Therefore, if the seeds, parent lines and germplasm containing the technology of Monsanto were destroyed as per the post-termination obligations imposed, it might not be possible to restore the same at a later point of time. The CCI, while noting that it should exercise these powers very sparingly, found the facts of this case to be exceptional in nature and that intervention was merited. The CCI thus restricted Monsanto from enforcing the post-termination obligations till the final disposal of the proceedings. Given the ongoing litigation and other orders passed by the Delhi High Court in these matters, certain ancillary directions were also passed by the CCI. The CCI also directed Nuziveedu Seeds to adhere to the requirements of maintenance of records, inspection, reporting, audit, etc. as were stipulated in the sub-licence agreements. Interestingly, the CCI also directed the seed companies to extend their full cooperation to Monsanto to protect its intellectual property rights (IPR) and to furnish undertakings in this regard. Given the various proceedings at different fora in this case, this order remains operative till date, again showcasing the potency and far-reaching consequences of such orders.

The CCI’s next order in relation to interim relief came only in June 2018 in a case involving ONGC (a public sector enterprise)⁸. This was the first time that the CCI did not grant a hearing to the parties before granting interim relief. The facts of the case were peculiar. Shipowners had complained that ONGC had abused its agreement with them, especially in relation to a unilateral termination right. To prevent further invocation of the relevant clause, which was apparently abusive, the CCI had directed ONGC (through an order dated 8-5-2018) to furnish an undertaking to the effect that it would not invoke the clause in any manner against the shipowners until the date of preliminary hearing scheduled in the matter (17-5-2018). The undertaking was provided by ONGC. The order of the CCI is not available in the public domain and it is therefore unclear under which powers the order was passed by the CCI [given that the CCI had not even found a prima facie case under Section 26(1) of the Competition Act by then]. The CCI passed the prima facie order on 12-6-2018 and passed the interim relief order 3 days after. The CCI in its interim relief order dated 15-6-2018 referred to its detailed prima facie order which brought out how use of certain clauses of the special contract conditions of the agreement in issue prima facie amounted to an abuse of dominant position. The CCI was of the opinion that interim relief was warranted in this case. However, it did not grant any interim relief on account of its order dated 8-5-2018, noting that the order would address the concerns and only directed that the undertaking provided earlier would remain operative till further orders. The CCI ultimately found no abuse in this case (order dated 2-8-2019) and closed the matter. However, in an interesting turn of events, in an appeal filed by the shipowners before the National Company Law Appellate Tribunal (NCLAT) against the CCI’s closure of the case, the NCLAT granted the same interim relief till the final decision on appeal. Since NCLAT proceedings can take anywhere between one and four years, it looks like ONGC is stuck with the interim order for some time.

The CCI’s next grant of interim relief came two months later, in August 2018⁹. In this case against a State Government Department of Town and Country Planning and the relevant development authority (HUDA), various developers prayed that HUDA should be restrained from invoking the bank guarantee against the developers and the collection of various pending dues should be restrained as well. It was noted that the Supreme Court in connected proceedings had already restrained HUDA from encashing the bank guarantees submitted by the developers, on account of non-payment of certain charges, but this was limited to certain developers. The CCI noted the conduct of HUDA before and after the passing of its prima facie order and concluded that the alleged anti-competitive conduct was continuing to be committed and the consumers continued to be adversely affected by such conduct. Thus, the CCI restrained the opposite parties from taking any coercive steps with respect to the payment of remaining instalments of deposit from those developers who had paid 10% of the deposit and deposited 25% in the form of bank guarantee. It also said that no interest or penal interest should be charged on the remaining instalments from such developers. It clarified that no coercive action would be taken by the opposite parties with respect to the licences granted to the developers and the status quo should be maintained. However, the opposite parties were given liberty to approach the CCI for variation of the order if they undertook certain steps. It also instructed the developers that any amount collected by the developers from consumers towards the deposit should be deposited with the government department. The final order in this case is still pending and therefore the interim relief has been in operation for over 4 years now.

The CCI’s next interim relief was granted in March 2021¹⁰ in a case concerning hotel aggregators and franchisees (the first interim relief case in a digital market). The CCI directed investigation of MMT-Go (a major online hotel booking player) for allegations of violating Sections 3(4) and 4 of the Competition Act, and OYO (a notable budget hotel provider) for violating Section 3(4) of the Competition Act. It was alleged amongst other matters that MMT-Go had under an agreement with OYO delisted the hotel properties of FabHotels and Treebo from its portals. The CCI noted that, if the CCI reached a definite expression of satisfaction at the prima facie stage itself, it was not required to apply an even higher standard under Section 33 of the Competition Act. In the context of the SAIL¹¹ judgment, this interpretation adopted by the CCI should give it some breathing room to grant interim relief based on its prima facie orders, without having to justify satisfaction of a higher threshold every time. The CCI passed an order directing MMT-Go to relist all the hotel properties of FabHotels and Treebo on MMT-Go’s portals. This interim relief order was challenged by OYO before the Gujarat High Court on account of it not being given an opportunity to be heard before the proceeding. The Gujarat High Court set aside the interim relief order and remanded the matter to the CCI. Pursuant to the High Court’s direction, the CCI called the parties for a fresh hearing. During the hearing, OYO submitted that it had no objection to the relisting of FabHotels and Treebo on MMT-Go’s portals. MMT-Go also consented to relist FabHotels and Treebo within a period of three to four weeks from the date of the hearing. In view of these submissions, the CCI, with the consent of the parties, decided to dispose of the interim relief applications. The final order of the CCI was published on 19-10-2022 where MMT-Go was, amongst other matters, directed to provide access to its platform on a fair, transparent, and non-discriminatory basis, by formulating the platforms’ listing terms and conditions in an objective manner, and to provide transparent disclosures on its platform as regarded the properties not available on its platform.

Three months after the hotel aggregators case, the CCI granted interim relief in June 2021 in a sports association case¹² (‘baseball case’). The CCI in its prima facie order had held that the Amateur Baseball Federation of India (ABFI), by issuing communications to its affiliated State Baseball Associations requesting them not to entertain unrecognised bodies and by requesting them not to allow their respective State players to participate in any of the tournaments organised by such unrecognised bodies, had violated the provisions of Section 4(2)(c) of the Competition Act. The informant (a private league) sought interim relief by way of a direction to ABFI to withdraw steps taken in restraining players, officials, clubs and State Baseball Associations from participating in private leagues or seeking issuance of no-objection certificates (NOCs) from players/officials/clubs and State Baseball Associations who were interested in participating in any capacity in the informant’s event (which was rescheduled because of ABFI’s alleged anti-competitive directions). The CCI held that “all the ingredients for grant of interim injunction are overwhelmingly present in the instant case”. It restrained ABFI from issuing any communication to its affiliated State associations dissuading them, in any manner whatsoever, from allowing their players to participate in tournaments organised by the associations which were purportedly not “recognised” by ABFI. ABFI was further directed not to threaten the players who wanted to participate in such events. An investigation is currently ongoing in this case.

Later in the year, in December 2021, the CCI passed a very short order¹³ which counts as the CCI’s second denial of grant of interim relief. The case was related to an automotive dealership agreement, and the CCI found it unnecessary to examine the application in any detail, given the facts of the case and the significant delay in filing for the interim relief. An investigation is currently ongoing in this case. On the same day, the CCI passed another order¹⁴ with better news for the informants. Like the baseball case, the CCI had directed investigation as the informant had been denied access to utilise the services of table tennis (TT) players because of a notice posted by the secretary of the opposite party as well as certain clauses of India’s TT Federation’s memorandum of association. Similar to the baseball case, the CCI held that “all the ingredients for the grant of interim injunction are overwhelmingly present in the instant case”. Thus, the CCI restrained the TT Association from issuing any communication to players/parents/coaches/clubs restricting or dissuading them, in any manner whatsoever, from joining or participating in tournaments organised by associations unrecognised by the TT Association. The TT Association was further directed not to threaten players who wanted to participate in such events. Going a step further than the baseball case, to ensure strict compliance, the CCI also noted that in case of failure to comply with the directions, the TT Association would render itself liable to be proceeded in terms of Sections 42(2) and (3) of the Competition Act. An investigation is currently ongoing in this case.

The final order on grant of interim relief by the CCI so far, and the only decision in 2022, relates to the broadcasting market¹⁵. The informant (a regional multi system operator) had essentially alleged abuse of dominant position by the opposite parties (broadcasters of satellite-based TV channels) by discriminating against the informant in not extending it discounts which were offered to its competitors. The CCI was of the opinion that the facts of this case did not fulfil any of the criteria for the grant of interim protection. An investigation is currently ongoing in this case.

The way forward

The increasing call for use of interim relief powers by competition authorities across the world should bolster the CCI’s way forward in these markets. The European Commission finally broke its 18-year hiatus on interim measures and adopted interim measures against Broadcom in October 2019¹⁶. Following the imposition of interim measures, Broadcom offered commitments to address the European Commission’s concerns and thus the case was closed. In fact, Commissioner Vestager specifically noted that “interim measures are one way to tackle the challenge of enforcing our competition rules in a fast and effective manner and … whenever necessary, I am therefore committed to making the best possible use of this important tool”¹⁷. Authorities in other European Union Member States such as France and Belgium frequently use this tool.

In April 2022, the UK Government also announced amendments to the UK competition and consumer law regimes which include revised interim measures that will change the standard of appeal against interim measures to judicial review principles and restrict access to the competition and markets authority’s (CMA) case files¹⁸. Appeals against decisions imposing interim measures will no longer involve a merits-based review, but an assessment that meets the judicial review standard, which means that, an interim decision can only be set aside on grounds of illegality, procedural defects, or irrationality. This change will make it difficult to challenge an interim measure decision of the CMA. Thus, in the last few years, there have been increasing calls for more frequent and faster use of interim measures across the globe, especially in digital markets, as part of a broader clamour for “ex ante” regulation of these markets. While the lure for such a call may seem obvious [it is relatively easier to meet the condition of urgency considering the nature of markets, the asymmetry of the magnitude of the two potential harms (to competition and to the investigated party) and the ease of showing irreparability of the harm], it has to be kept in mind that digital markets are subject to fast technological (and business) changes, adding complexity and increasing asymmetries of information between investigated parties and authorities contemplating interim measures. Further, there can be no doubts regarding the intrusiveness and possible harm (short-term as well as long-term) that may be caused by such measures. The fast-moving nature of these markets also exacerbates the effects of interim measures, thereby increasing the need to be circumspect in their application. By their nature, interim orders are issued before a complete assessment of the market and any potential anti-competitive conduct has been carried out and, therefore, there is a grave danger of false positives if the regulator does not act with restraint when issuing interim orders. Having said that, and as seen from the CCI’s journey so far, it appears that interim measures are being employed sparingly.

It should be noted that the Indian anti-trust law has included settlement and commitments mechanisms recently¹⁹. The settlement and commitments mechanisms allow parties to apply to the CCI to settle/make commitments in cases of anti-competitive vertical agreements and abuse of dominance cases. While the details on the working of these mechanisms will be fleshed out through regulations, they are likely to have a major impact on the way cases are addressed before the CCI. Commitments will be considered between the commencement of an investigation and its completion (marked by the issuance of the investigation report), whereas settlements will be considered after the report is submitted but before a final order is issued by the CCI. Therefore, interim measures and commitments can be seen as complementary tools in anti-trust investigations, especially in the digital space. The Indian Government has also ordered setting up of a committee that will review that, whether existing anti-trust laws in the country are equipped to deal with the challenges that have emerged from the digital economy²⁰. It will also examine the need for an ex-ante regulatory mechanism for digital markets through legislation and study the practices of “systemically important digital intermediaries” which “limit or have the potential to cause harm in digital markets”. Therefore, the focus on digital markets is going to be the way forward in India and interim measures (whether part of current law or under separate digital market legislation) will be an important tool for ex-ante regulation in these markets. While the next phase for the CCI’s use of interim relief powers is sure to be interesting, specifically given the increase in anti-trust investigations in the fast-moving digital sector, the way forward will have to be carefully paved on a case-to-case basis.

Conclusion

Interim orders are a powerful tool for market correction, allowing the CCI to intervene in a timely and effective manner. The scope of the CCI’s power is also broad, and the range of potential interim orders allows the necessary intervention in all kinds of cases. However, there is scope for overregulation when it comes to interim measures, especially because the analysis of the market and potential anti-competitive conduct is incomplete when these are ordered (and, in most cases, the CCI does not have sight of any investigative report when interim orders are issued). Therefore, the use of interim measures is likely to be meticulously considered on the merits of each individual case. The timelines for interim measures are also an important aspect to be kept in mind. It is important for any investigating authority to consider the length of imposition of interim relief and to revisit both its terms and monitoring, as required. Further, certain investigations may require the imposition of interim measures at well-advanced stages and such possibilities cannot be excluded as the dynamics of industries might change throughout the course of (multi-year) investigations. It is also to be kept in mind that interim measures may produce their effects beyond a single jurisdiction and international cooperation may therefore be necessary to be balanced in such cases. The flexibility to modify the interim relief has been hinted in one of the CCI’s cases but has not been meaningfully applied so far. The CCI’s journey forward is also impacted by the way the legal tests and conditions for grant of interim relief are interpreted by judicial bodies (keeping in mind the respective evidentiary standards), including intervention by courts. The balance between harm (to parties as well as consumers) and due process rights must be carefully maintained by the CCI. Finally, as the CCI looks at increasing cases in the digital space, its interim relief measures will have to be tailored to these fast-moving markets and will also have to work together with the proposed legislative changes being enacted for this space.