Introduction
The Karnataka High Court recently in the case of Swiggy v. CCI remanded the matter back to the Competition Commission of India (‘Commission’) for fresh reconsideration. This matter, though was mainly remanded on the basis of joint submissions made by parties, does raise intriguing aspects of Confidentiality and Principles of Natural Justice. The case involved a challenge to the order of the Commission which included National Restaurant Association of India (‘NRAI’) in the confidentiality ring of Swiggy, wherein Swiggy argued against the inclusion of NRAI in the ring as it would violate the provisions of the Act under Section 57 of the Competition Act, 2002 (‘the Act’). This article will delineate the interplay between the Act and The Competition Commission of India (General) Regulations, 2009 (‘Regulations’). It further tries to show, through the provisions, the integral intent of the legislature to give powers to the commission to fulfil the purpose of the Act.
The Existing Interplay
The Act since its inception underlines the essence of confidentiality under Section 57. This specific provision specifically restricts the regulatory authority i.e., the Commission or the Appellate tribunal to disclose the information of an enterprise. This disclosure can be done only in exceptional circumstances i.e., firstly, when previous written permission is given by the enterprise to disclose and secondly, if such disclosure is necessary for compliance of any provision of the Act or to fulfill the purpose of the Act. It is pertinent note here that the usage of the word ‘otherwise’ separates the two exceptions and makes it disjunctive. This means that under Section 57 of the Act, the Commission has been given unilateral powers to disclose information without previous permission of the enterprise to comply with any provision or fulfill the purpose of the Act.
At this juncture, it is pertinent to look at the regulations, wherein Regulation 35 stipulates for the procedure that the commission has to follow regarding confidentiality ring. Regulation 35 was introduced by the Competition Commission of India (General) Amendment Regulations, 2022. A bare reading of the amending act will indicate that this amendment was enacted by the legislature in exercise of its powers conferred under Section(s) 36, 57, 64 of the Act. This shows that the regulations were brought into force keeping in mind Section 57 of the Act which stipulates for disclosing of information.
The commission exercising its discretion can create a confidentiality ring under Regulation 35(6). This confidentiality ring would contain all the necessary confidential information redacted by the party seeking confidentiality. Regulation 35(8) stipulates that an Informant i.e., a party seeking confidential information cannot be made a part of the confidentiality ring and cannot have the access to confidential information. However, the proviso to Regulation 35(8) states that the Commission can exercise its discretion to give access to confidential information to informant only if it deems it necessary or expedient for an effective inquiry.
The difference
The purpose of Regulation 35 is to uphold confidentiality of an enterprise and the underlying purpose of the Act. It is often stated that Section 57 of the Act delineates a similar purpose as that of Regulation 35(8) i.e., upholding confidentiality. However, Regulation 35 including Regulation 35(8) deviates from Section 57 the Act. Section 57 stipulates for ‘disclosure of information’ and Regulation 35 stipulates for ‘access for confidential information’. There is a stark difference in usage of the words as –
Firstly, disclosure is not same as that of granting access. The words ‘access’ and ‘disclosure’ cannot be used interchangeably. The very nature of ‘access’ gives the control over the information which is made accessible. It is at the discretion of the person giving access to withdraw the access over the information provided. However, disclosing doesn’t give any control over the information being disclosed. No information once disclosed can be taken back.
Due to the usage of word ‘disclose’ under Section 57 of the Act and the nature of the provision, the Commission does not have control over the information it is disclosing. Disclosure warrants for making something known or releasing it to another person. This information once disclosed goes out of the control of the commission and therefore, the Commission cannot control the transmission of any information after the disclosure. The provision also doesn’t state the extent of disclosure or provides for a control of extent of disclosure to the commission.
However, under Regulation 35(8) the commission due to the word ‘grant access’ has substantial control over the information being given. The extent of access can also be at the volition of the commission as stipulated under the proviso to Regulation 35(6). The power to regulate the confidentiality ring is with the Commission. It is also an obligation cast on the party seeking information to keep the information within the confidentiality ring under Regulation 35(7) which shows that the commission has an oversight over the confidential information. The Commission can also withdraw access if it deems just. Therefore, it can be said that the usage of Regulation 35 and Section 57 is completely different. The regulations stipulate for a more regulatory framework for the commission. The intent of the legislature under Regulation 35 is to give powers to the commission and regulate the existing market in order to fulfill the purpose of the Act. Due to the peculiar different language used in the Act and Regulations there cannot be a reasonable conclusion that Section 57 has to be read together with Regulation 35. In order to imply the principles of confidentiality the legislature had to derive powers under Section 57 to formulate Regulation 35.
Secondly, it is also important to state that under Section 57 it is ‘information’ which is broad in nature. Regulation 35(8) only states ‘confidential information’. The regulation is more specific in nature. This implies that under Section 57 can disclose any information including confidential and non-confidential information. This broadens the scope of Section 57 even more which gives widened powers to the Commission provided the disclosure comes under the exceptions enumerated under Section 57.
Therefore, it cannot be said that the Commission is restricted from giving information to a third party under the proviso to Regulation 35(8) due to the existence of Section 57 of the Act. This also implies that proviso to Regulation 35(8) is not ultra vires to Section 57 of the Act as the principles of confidentiality are upheld in the regulations as well.
Literal Conducive Interpretation
A perusal of proviso to Regulation 35(8) indicates that the grant of access is only when the Commission thinks it necessary and expedient for an effective inquiry. The usage of the word ‘inquiry’ indicates the entire regulatory framework of the Commission. ‘Inquiry’ in the Act starts from the investigation initiated under Section 26 to the order of the commission. This means to say that the commission has the power to include a third party in the ring at any stage to increase efficiency. It is pertinent to note here that the word ‘inquiry’ does not indicate the inquisitorial process of investigation of Director General under Section 26 of the Act. This inclusion can be at the stage of investigation or post the stage of investigation. The proviso to Regulation 35(8) then creates an ambiguity as to whether the party whose confidential information is being given should be heard or not. The Regulations does not create any obligation on the Commission to hear the parties before the inclusion. This now brings us to Section 57, where there is a requirement of previous prior permission. This should be seen from another angle. As discussed earlier, Section 57 has to be read disjunctively w.r.t Regulation 35(8). Since the word ‘otherwise’ is used there cannot be an interpretation that Section 57 mandates for a prior written permission. The words ‘previous written permission’ is only to carve out an exception and not create any obligation on the commission. This shows that following Section 57 of the Act may not be the case to follow Principles of Natural Justice.
The regulations as stated have been formulated using the powers under Section 36 of the Act. Section 36 enumerates for following of Principles of Natural Justice. The provision also states that the power still lies with the Commission to regulate its own procedure. The second part of the provision which talks about regulating its own procedure should be taken into consideration when construing the regulations. Therefore, when the legislature exercised its powers under Section 36 to formulate the regulations the intent behind it was the power of regulating the Commission procedure by the Commission itself. Therefore, due to lack to any express provision which states that grant of access under proviso to Regulation 35(8) should be guided by principles of natural justice, it cannot be concluded that a party whose confidential information is being given access to should be heard before the grant of access.
Conclusion
It is time that we recognize the intent behind giving powers to the Commission under the regulations and the Act. The unilateral nature of the powers of the commission is in furtherance with the purpose of the Act. The unregulated and unpredictable markets which has numerous roadblocks in anti-competitive practices it is necessary to recognize the power of the commission in upholding the true spirit of the Competition Act.