Competition Act allows compromise or settlement between parties subject to scrutiny of CCI

Competition Act, 2002: Scheme of the Competition Act, 2002 allows the parties to enter into a compromise or settlement, but the same shall be subject to a scrutiny by the Commission, for examining whether public interest would continue to suffer and whether the object of the inquiry would stand defeated by the acceptance of the compromise.

Fact 

The appellant herein is the Tamil Nadu Film Exhibitors Association. It is registered as a society under the Tamil Nadu Societies Registration Act.

The second respondent herein is a producer of feature films. On 8.1.2013, the second respondent filed a complaint before the Competition Commission of India (which is the first respondent herein), alleging that by a resolution dated 20.12.2012, the Tamil Nadu Theatre Owners Association decided to ban the screening of films which are released via DTH. It was claimed by the second respondent herein that the resolution would tantamount to an anti-competitive practice, violating Section 3(3)(b) of the Competition Act, 2002.

After examining the said complaint, the Competition Commission of India, passed an order on 16.01.2013 in terms of Section 26(1) of the Competition Act, 2002, holding that there existed a prima facie case requiring an investigation by the Director General of the Competition Commission.

Simultaneously, the appellant herein also lodged a complaint dated 13.4.2013, with the Commissioner of Police, alleging that the complaint filed by the second respondent before the Competition Commission of India was on the basis of a forged document, namely the alleged resolution dated 20.12.2012.

The appellant as well as the second respondent arrived at a settlement, in and by which, the appellant agreed to withdraw the police complaint made against the second respondent and the second respondent agreed to withdraw the complaint before the Competition Commission. Thereafter, the parties filed a memo praying for the recording of the compromise memo and the disposal of the writ appeals in accordance with the memo.

Issue:

• Whether it is possible, in the context of the scheme of the Competition Act, 2002, for two adversaries to reach a settlement, thereby closing the doors for an investigation or inquiry?

The High Court held as under:

• The only question that the Competition Commission may perhaps be obliged to look into, in cases where the parties arrive at a settlement, is to see whether the compromise or settlement is a cover up, so as to prevent an investigation being made into the Anti-Competitive practices or abuse of dominant position.

• Therefore, we are of the considered view that the Scheme of the Competition Act, 2002 allows the parties to enter into a compromise or settlement, but the same shall be subject to a scrutiny by the Commission, for examining whether public interest would continue to suffer and whether the object of the inquiry would stand defeated by the acceptance of the compromise.