Delhi High Court upholds CCI’s decision to let Builders’ Association participate in cement cartel probe against Ultratech and other manufacturers

Multiple complaints were received by the Competition Commission of India (“CCI”) between December 2018 and May 2019 alleging cartelisation and anti-competitive conduct by grey-cement manufacturers, including a complaint by the Builders’ Association of India (“BAI”) alleging abnormal increases in cement prices.

The CCI initiated suo motu proceedings under Section 26(1) of the Competition Act, 2002 and directed the Director General (“DG”) to investigate.

BAI’s first application for impleadment, filed while the DG investigation was pending, was rejected by the CCI on 29 December 2021.

The DG subsequently completed the investigation and submitted its report on 1 July 2022.

In proceedings challenging the rejection, the learned Single Judge permitted BAI to apply afresh under Regulation 25 of the Competition Commission of India (General) Regulations, 2009 (“2009 Regulations”) for permission to make submissions and seek access to the investigation report.

BAI accordingly filed a fresh application on 27 September 2022.

The CCI allowed it by order dated 5 July 2023, holding that BAI had substantial interest in the proceedings and permitting it to participate, inspect non-confidential records, and file its opinion on the DG’s report.

Ultratech challenged that order in a writ petition, which was dismissed by the learned Single Judge on 18 December 2023.

The present Letters Patent Appeal challenged both the CCI’s order and the Single Judge’s judgment.

During the appeal, the Supreme Court recorded BAI’s statement that it would not seek inspection of documents marked confidential.

Whether the CCI’s order dated 5 July 2023 permitting BAI to participate in the proceedings under Regulation 25 of the 2009 Regulations was non-speaking and legally unsustainable for failure to disclose adequate reasons?

Whether the CCI’s fresh permission to BAI amounted to an impermissible review or recall of its earlier order dated 29 December 2021 rejecting BAI’s impleadment application?

Whether the CCI violated the principles of natural justice by permitting BAI’s participation without affording Ultratech a separate opportunity of hearing on BAI’s application?

Whether BAI’s participation and access to non-confidential material caused prejudice to Ultratech, particularly in view of the protection afforded to confidential documents?

Whether the appeal required further adjudication in light of the Supreme Court’s order dated 26 February 2024 in Dalmia Cement (Bharat) Ltd. v. Competition Commission of India & Ors.?

The Court applied Section 26(1) of the Competition Act, 2002, under which the CCI may direct the DG to investigate suspected anti-competitive conduct.

Sections 18 and 19 require the CCI to prevent practices having an adverse effect on competition, promote and sustain competition, protect consumer interests, and conduct inquiries in the public interest.

Regulation 25(1) of the 2009 Regulations empowers the CCI, on a written application, to permit a person or enterprise with substantial interest in the outcome of proceedings to present its opinion and participate in further proceedings where such participation is necessary in the public interest.

Regulation 37(1) permits access to non-confidential records.

The Court applied the principles of natural justice and reasoned decision-making, including the requirement that quasi-judicial orders disclose reasons, while distinguishing the principles governing a fresh application at a materially different procedural stage from an impermissible review.

It also considered Ujjam Bai v. State of Uttar Pradesh, Assistant Commissioner, Commercial Tax Department v. M/s Shukla & Brothers, Union of India v. Mohan Lal Capoor, Competition Commission of India v. Steel Authority of India Ltd., and Eaton Power Quality Pvt. Ltd. v. Competition Commission of India.

The Court further treated the Supreme Court’s order in Dalmia Cement as controlling the result insofar as BAI’s access to confidential documents was concerned, while recognising that the question of law had been left open.

The Court held that the CCI’s order was not non-speaking because it expressly recorded its satisfaction that BAI had substantial interest in the proceedings and that permitting it to present its opinion was necessary for a meaningful inquiry, after considering BAI’s status as an all-India builders’ association and major consumer of cement.

The earlier rejection of BAI’s application was not an impermissible review: it had been made while the DG investigation was pending, whereas the subsequent application was filed after the investigation report had been submitted and pursuant to the liberty granted by the Single Judge under Regulation 25.

Natural justice was not violated because Ultratech had knowledge, through the CCI’s order dated 6 October 2022, that BAI had been provided the non-confidential DG report and permitted to submit its opinion; the later order of 5 July 2023 substantially formalised that participation.

Given the rights-in-rem and public-interest character of competition proceedings, BAI’s participation was intended to assist the CCI in reaching an informed decision and did not amount to an adjudication of any substantive right of either party.

Finally, the Supreme Court’s recorded assurance that BAI would not seek inspection of confidential documents removed Ultratech’s principal apprehension of prejudice.

It held that the order was reasoned, did not impermissibly review the earlier rejection, and did not violate natural justice.

The appeal and pending applications were disposed of, with no order as to costs.