CCI Order: Third Party Appeals?

Published on Sat, Apr 19,2014 | 18:15, Updated at Sat, Apr 19 at 18:15Source : CNBC-TV18 | Watch Video :

When can a third party appeal against CCI's decision? The Jet-Etihad merger became the test case for this question when former Air India Executive Director Jitendra Bhargava appealed against CCI's approval order. Last week, the Competition Appellate Tribunal dismissed Bhargava's appeal saying he is not an aggrieved party. Has the COMPAT taken a narrow view of the situation? Payaswini Upadhyay puts that question to experts.

Europe's competition regime allows for third parties such as competitors, customers and suppliers to comment on a merger transaction. In fact, the Commission is mandated to invite third parties to submit their comments. Individual or groups affected by the transaction can also appeal a regulatory approval in court. This liberal regime has facilitated successful third party interventions in the UK- one such was Ryanair's attempt to acquire Aer Lingus

Paku Khan

Partner, Khaitan & Co.

Former Case Officer, Irish Competition Authority

"Even before the notification was formally filed, the European Commission required Ryanair to provide contact information for key customers, competitors and suppliers at every affected airport. The moment the notification was filed the European Commission sent out an information request to all of those interested parties and gave them a short time period to provide their responses. And the reason for that was the European Commission wanted to have as much information as possible. They asked the interested parties what do you think about the transaction which then helped them decide what they would do next- whether they would do a more exhaustive investigation which is what they did in this case or whether they would clear it which is what they didn't do in this case."

In the United States, though the merger control guidelines do not codify the process for third party interventions, the regulators call for information as a best practice. In addition, the United States competition law- Clayton Act- permits private parties who have suffered injury as a result of any antitrust violation, or are threatened with injury, to seek equitable relief from the courts, including, injunctive relief.

Ian Conner

Partner, Kirkland & Ellis

"Typically, they do need standing or evidence that they will be aggrieved by the merger but by and large the mergers that are going to be challenged in the US by private citizens- they would typically be able to meet the standing requirement which is not that high for a merger. Here there argument would be that if prices go up on an airline ticket and they buy those airline tickets, they would be injured and since mergers are looking forward, they just need to show that there is a probability that they will be injured and not that they have been injured by the merger."

In India, the law allows for third party representation before the CCI only if the regulator initiates a phase 2 i.e. a detailed investigation against a merger. If, however, the CCI takes a prima facie view that a merger will not have an appreciable adverse effect on competition and clears it in Phase 1, third parties get no opportunity to represent their case of their own volition. The Act however provides for an appeal.

It says any person, aggrieved by any direction, decision or order of the CCI may prefer an appeal to the Appellate Tribunal. CCI's merger approval of the Jet-Etihad deal became a test case to determine who would qualify as an aggrieved person. A former Air India official approached the Competition Appellate Tribunal alleging that the merger will eliminate competition in the international air passengers market and adversely impact Air India's operations and consumers. Last week, the Tribunal dismissed Bhargava's appeal saying that he does not pass the test of an aggrieved person and the fear of increase in fares is pre mature.

Amitabh Kumar

Partner, JSA

"The way it works today is that third parties come to know of a merger only once its approved and the order has been uploaded on the website of the CCI. And in any place in the world where you don't have chance to go upfront and object to a proposed merger, post merger it becomes more difficult because courts will not like to upset something which has been done. Getting out of the merger process is a very costly thing for the corporations. So courts would normally like to put a very high standard. So it seems there is a gap in the law as it has been framed that while the law wants third parties to object if they are going to be affected but at the same time, they won't get a fair chance to object unless the matter goes to a Phase 2 investigation."

Gopal Subramanium

Senior Counsel Former Solicitor General

"The expression 'person aggrieved' has been interpreted by the Supreme Court in so many decisions. But when you look at the right of appeal under a statute, then you have to interpret the words strictly because the Tribunal is a creature of the statute whereas a court is quite different. In a court, the jurisdiction is different- a High Court has wide plenary jurisdiction. It can entertain any person, it can allow any person to implead himself, it can allow any person to intervene. Now all this is not available in respect of a Tribunal. If it were to decide that I will allow an appeal at the instance of a person when it is only Phase 1- where the public has not interposed because Phase 2 has not come- in that case the order of the Tribunal itself will be open to serious challenge and it would delay the process of genuine approvals."

That's once concern that all the experts in this story voiced to me i.e. if the expression aggrieved person is interpreted widely, it would be open to widespread abuse. At the same time, they also believed that if this appeal had been filed by a group- for instance Air Passengers Association- it would have probably passed the test of aggrieved person.