'Confidentiality Ring' Amendment Could Make Antitrust Disputes More Opaque : Daily Current Affairs

Relevance: GS-2: Statutory, regulatory and various quasi-judicial bodies.

Key Phrases : Competition Commission of India (CCI), Amazon dispute, Sections 3, 4 or 5 of the Competition Act, Regulation 8

Why in News ?

Recently, the Competition Commission of India (CCI) has realised that disputes arising out of antitrust matters, also known as competition or cartelisation, require confidentiality.
The commission’s investigation under Sections 3, 4 or 5 of the Competition Act are subject to the suo motu powers given to the director-general of the commission, which have now extended toward establishing an confidentiality ring.
Confidentiality ring was recently used in an order, passed by the DG-CCI on the Amazon dispute, wherein Amazon (the defendant) decided to take the confidentiality route towards its submissions.

About the Competition Commission Of India:

The Competition Commission of India (CCI) was established under the Competition Act, 2002.
CCI instituted for the administration, implementation and enforcement of the Act, and was duly constituted in March 2009.
Chairman and members are appointed by the central government.
The objectives of the Commission are:
1. To prevent practices that harm the competition.
2. To promote and sustain competition in markets.
3. To protect the interests of consumers.
4. To ensure freedom of trade.
Functions of the commission:
1. Eliminate practices having adverse effects on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
2. Give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

Key Points:

In Europe, antitrust matters are largely regulated the Treaty of the European Union, which states:
1. Through confidentiality rings, DG Competition (EU) can safeguard the rights of defence while respecting the legitimate interests in the confidentiality of the information providers.
2. Confidentiality rings remove or reduce the burden of preparing non-confidential versions of documents
3. In 2015, the EU mandated the creation of a data room to respect the confidentiality of certain documents.
4. The EU has to protect this mandate to ensure that the right of defence is not prejudiced.
The CCI has taken an alternative view by vaguely replacing the intent with the regulation which states:
1. Confidentiality Ring the Commission may do so after providing a reasonable opportunity to the informant to represent its case before the Commission.This casts an onus on the informant seeking information.
2. The party seeking confidentiality has to submit reasons and the same must be rebutted by the informant, CCI or any other parties, largely driven by the CCI.

Analysis:

Two-pronged issues in CCI confidential rings:
1. First, what would happen if the informant seeks additional documents? This is more troubling for companies because the CCI has to hear the objections that the companies may have regarding the reasons for keeping information confidential. The usual ground for seeking this protection is the defendant’s reputation.
2. The second question is about the relief under Section 35 of the Act that empowers the CCI to establish a confidentiality ring including the parties in dispute to disseminate the information for which the confidentiality clause is invoked:
  - However, this is immediately caveated by Regulation 8 of the “Confidentiality Ring” Amendment, which states that the informant shall not be part of the ring.
  - This will essentially lead the CCI to gather more information surreptitiously for the determination of the case.
  - It has also effectively rejected the informant’s right to know the information, which would be necessary to establish their claim.

Issues:

Confidentiality Ring not only empowers the CCI to further its cause of suo motu investigation but also brings secrecy to cases of high-value disputes.
The reason the CCI decided to establish a confidentiality ring is the opposite of the EU directive. The EU would like to protect the information provider, but the CCI seems to want to protect the documents of the defendant.
This contradicts the CCI's objectives which aim to protect the informant and which gives unfettered rights to “parties” in the dispute to summarily drop the confidentiality card.

Conclusion:

CCI has imported the “Confidentiality Ring” from the EU but may have done so in a manner that none of the decisions can be challenged.
The protection provided to the informants, unfortunately, turns out to be to the advantage of the defendants, who are usually large multi-billion dollar entities.
It enables the CCI to ringfence its investigation creating legal immunity for “all” involved.

Source: Indian Express

Mains Question:

Q. Despite the existence of the Competition Commission of India(CCI) since the last two decades, the anti-competitive-monopolistic practices still dominate the Indian corporate sectors. In this background, discuss the existing loopholes in the functioning of CCI and suggest some suitable measures to reform it.