The present research work on the topic of "Private enforcement of competition
law" is both explorative and analytical. It sought to construct, throughout the
analysis of secondary data. Since, the present topic was purely academic it was
inevitable and inherently mandatory that only secondary sources be made use of.
Therefore, I have made use of journal articles, leading books and of course the
source of knowledge for students: Internet.
The nature of the project is purely doctrinal/non empirical. It is purely based
on data collected from books, acts, journals and web sources. The methodology
also includes data collected both from the primary and secondary sources, but
mainly from secondary sources.
Private Enforcement of Competition Law
Abstract: The role of private enforcement of competition/antitrust laws has been
the subject of long-standing and vigorous debates in many jurisdictions
throughout the industrialized world. In the recent times, competition law claims
have been on a rise, but are all parties adequately compensated or just the
illegal activity/practice is being curbed.
The need of the hour is not
restricted to creating awareness by punishing the entities involved in
anti-competitive activity or abusing their dominant position in the market but
to make good the losses to the injured party. This leads to the requirement of
private enforcement of competition law claims but to what extent is it
necessarily needs to be tested.
Introduction: The concept of private enforcement in India is one of the most
unexplored, yet one of the more prominent areas of competition law which demands
litigation or alternative dispute resolution mechanisms as a measure for
resolving competition disputes.
Before delving into the intricacies of private enforcement, let us understand
the concept with respect to competition law jurisprudence. The primary principle
of private enforcement is that of compensation claims, wherein an injured party,
out of the established anti-competitive practices, imposes a claim for
compensation upon the infringing party to make good the loss and the loss in
profits suffered as a result of such anti-competitive practice.
On the whole private enforcement can be defined as:
"litigation initiated by an
individual, a legal entity, an organisation, or a public entity to have a court
establish an antitrust infringement and order the recovery of damages suffered
and impose injunctive reliefs".
This is secondary to the public enforcement
mechanism, which spearheaded by the Competition Commission of India ("CCI"),
establishes and subsequently penalizes anti-competitive behaviour of
The objective of the public enforcement mechanism is to protect the
market from unfair competition and its adverse effects whereas the objective of
private enforcement is to seek compensation for losses occurred due to another's
anti-competitive acts. Private enforcement is, therefore, a second stage
proceeding that comes after competition violation is established by the relevant
courts. These can also be understood as follow-on claims.
Section 53N of the Competition Act, 2002 ("the Act") provides an avenue to any
person or enterprise to approach the Competition Appellate Tribunal ("COMPAT") -
now National Company Law Appellate Tribunal ("NCLAT"), by way of application
under the said section for recovery of compensation from the enterprise whose
infringing conduct has caused the loss or damage.
Under this section, the applicant has the burden to show existence of three
- competition violation established by the CCI or COMPAT under the Act
- loss or damage suffered and
- that loss resulted from acts that were in violation of the Act i.e., a
causal relation between infringement and effects.
Till today there have been about six compensation applications under Section 53N
that have survived, however, there is yet to be a final order on any of these
applications. Many like the Amit Jain v. DLF Ltd. were filed but subsequently
withdrawn before order on compensation was passed. From the ones that did
MCX Stock Exchange Ltd v. National Stock Exchange of India Ltd,
Sai Wardha Power Ltd v. Coal India Ltd & Ors and Maharashtra State Power
Generation Company Ltd v. Nair Coal Services Pvt Ltd & Ors are stuck on the
first step of establishing violation as appeals to the COMPAT decision are filed
before the Supreme Court. Other applications such as Food Corporation of India
v. Excel Corp Care Ltd & Ors
, Wasan Exports Pvt. Ltd. v. Canara Bank &
Orsṣ and Satyendra Singh & Ors. v. Ghaziabad Development Authority are
either still on admission stage or are drowning in a sea of adjournments and
delayed procedures. With this as the state of compensation applications, a
concrete jurisprudence on private enforcement of competition law is yet to be
established in India.
The much-debated issue with respect to private enforcement and competition law,
is that of "who can be the claimant for a compensation claim?". Going by the
words of Section 53N of the Act, "Central Government or a State Government or a
local authority or any enterprise or any person may make an application to the
Appellate Tribunal to adjudicate on a claim for compensation".
Thus, as per the
literary rule of interpretation, a state or central government, a local
authority or an enterprise or any person can act as a claimant for a
compensation claim upon an established anticompetitive practice.
It is important to note that, only when a particular alleged contravention
against an infringing party is established by an order by the Competition
Commission of India (herein "CCI") mandating the same, can a claim for
compensation for loss or loss in profits be made before the NCLAT.
One of the primary issues often discussed when deciding upon who can be a
claimant to a compensation claim is that, whether a final consumer or an end-use
customer can be a claimant to such compensation claim.
In the European Union (herein "EU"), the principle with respect to the right to
claim compensation is that there should be a "causal relationship" between the
loss and the anti-competitive behaviour. This was held by the EU Court of
Justice in the case of Otis GmbH & Ors. v. Land Ober�sterreich & Ors
In the US, however, parties who are indirectly affected are not allowed to claim
compensation. This view was reiterated by the US Courts in the Illinois Brick
Co. v. Illinois case
. The three reasons stated by the Court for not permitting
indirect consumers to claim compensation were - facilitation of more effective
enforcement of antitrust laws, avoidance of complicated damage calculations and
eliminating duplicative damages against antitrust defendants.
However, the view
over the years gradually evolved when in Apple Inc. v. In The Pepper case, the
Court allowed app purchasers to claim compensation from Apple because Apple was
regarded to be a distributor and app purchasers were regarded to be "direct"
customers of Apple. Thus, although the Courts did not overrule the principle
laid down in the Illinois case, it took a more robust view in determining the
relation between the claimants and the infringing company.
Quantification of damages
Another major issue which often turns out to be a major bone of contention after
deliberating upon the locus standi of a prospective claimant to compensation is
that of quantifying the damages suffered as a result of the established
Section 53N of the Act mandates that the NCLAT can award compensation depending
upon the loss or damage suffered by the claimant as a result of the established
anti-competitive practice. Thus, the quantification of damages would depend upon
- The loss or damage is shown to have been suffered by the claimant.
- The loss or damage ought to have been suffered as a result of the established
- It is important to note that the loss or damage suffered should be within the
reasonable foresight of the infringing activity. If the loss or damage suffered
is not within reasonable foresight of the infringing activity, such claim would
not hold veracity.
Another issue, which is often contended while calculating the loss or damage
suffered is, whether a loss in profits would also fall under the category of
loss and whether it can be made part of the compensation claim.
In India, since till date, there has not been any decree passed with respect to
private enforcement and competition law, it cannot be ascertained with utmost
surety whether the loss in profits would be computed within the meaning of loss
or damage suffered as a result of the established contravention. However, in the
UK, loss in profits is also computed for the purpose of a compensation claim.
"Passing on" defence
Passing on in simple words would mean, "passing on" of the loss suffered to the
following / next customer in line. Thus, an indirect customer would incur the
damage or loss as a result of the infringing act because the direct customer
"passed on" the damage or loss to the indirect customer. Let us take an
illustration to understand "passing on" and whether the final consumer or the
end-user can be a claimant to a compensation claim.
"ABC Ltd.", a manufacturer sells a particular product "P" at an increased price
to "XYZ Ltd.", a distributor. Now, XYZ Ltd. sells P to a customer "M" at a price
inclusive of the increased price. If ABC Ltd., is now guilty of contravention,
M, although not a direct consumer of ABC Ltd. may make a claim for compensation
from ABC Ltd., as the increased price or loss suffered, was passed on by XYZ
Ltd. from itself to M, thereby holding up the locus standi of M with respect to
the compensation claim. In this case, the claimant will only be sued by M and
not XYZ Ltd., because it "passed on" the loss or damage to M.
The defence of "passing on" is therefore particularly designed such that the
actual person who has suffered the damage or loss has the right to claim, and
the person or entity which has passed on the loss or damage cannot unduly take
advantage and be overcompensated.
The US and EU have opposing principles while dealing with this defence of
In the Hanover Shoe, Inc. v. United Shoe Machinery Corp
., case, the US Supreme
Court rejected the plea of passing on and opined that it would be too difficult
to compute "actual loss". However, it is pertinent to note that in US indirect
consumers are not allowed to claim compensation thereby ruling out the
possibility of a multiplicity of claims.
In the EU, the defence of passing on is permitted under Article 12, which
mandates EU member states to lay down rules such that claimants are not
overcompensated. Recently, however, in the truck cartel case in Spain, it was
decreed by the Court that the defence of passing on would be limited to only the
"supply chain", i.e. with respect to the vertical market of the infringing
product or service.
In India, therefore we have to see how the courts interpret this defence of
passing on and to what extent would such defence be permitted, in order to
determine the extent of damages or loss that may be claimed.
Private Enforcement of Competition Law Issues:
Infringement of competition law
affects public interest as it has direct repercussions on both structural and
proper functioning of market economy and consequently on economic activity of
all operators and participants in it. Competition law as a matter of public
policy does not generally deal with providing compensation to private parties
adversely affected by an infringement but with the investigation and punishment
of infringements so as to deter such behaviour in future.
The main objective
of the law is to encourage healthy competition in trade and business and help
stop unscrupulous business activities that, in most cases, are aimed at cheating
the consumers and controlling markets through means -- fair or foul.
However, with the rise in anti-competitive agreements and exclusive arrangements
entered between parties, the need to protect the private rights of the parties
assumes significance in today's times.
The primary means of enforcing competition law is done exclusively through
competition law authorities established in various jurisdictions. Private
enforcement of competition law issues is an established, well-developed and
vibrant mode of enforcement in United States constituting the preponderance of
Department of Justice ("DOJ") and Federal Trade Commission (FTC). Whereas
in United Kingdom and European Union, traditionally though competition law
enforcement was within the exclusive domain of administrative authorities, the
European Commission and Office of Fair Trading, with the passage of Competition
Act, 1998 and Enterprise Act, 2002, private enforcement of competition law
disputes has been encouraged.
In the recent past, damages actions for antitrust infringements in Europe were
on the increase: national courts were regularly asked to rule on claims in
follow-on actions once the European Commission or national competition authority
has issued an infringement decision. Compensation for damages constitutes
the greatest incentive and most useful instrument with respect to private
enforcement of competition law.
In India, the Competition Act, 2002 (Act) based on the report of a High-Level
Committee on Competition Law and Policy set up by the Government was drafted to
suit the needs of the ever-changing economic scenario, adopting a global
approach as well as to address the concerns of the competition law regime in
India. The very intent of the Act is to promote and sustain competition in
markets, to protect the interests of consumers and to ensure freedom of trade
carried on by other participants in markets in India.
In furtherance of this objective, the Act empowers the Competition Commission of
India (CCI) with multifarious penal powers to ensure compliance with the legal
regime. However, such provisions are predominantly directed towards penalising
the violators rather than compensating the parties affected by the
anti-competitive behaviour of one or more market players. To ensure that the
victims of anti-competitive behaviour receive their dues, the Act also lays down
a mechanism for such parties to seek compensation for the losses that they may
have suffered due to the anti-competitive behaviour.
The private damages regime under the Indian competition law, which came into
force in 2009, lays down the legislative foundation for consumers and
competitors to sue for compensation in relation to the damages suffered as a
result of the anti-competitive behaviour. Considering that the Competition Law
is still in nascent stages in India, there has been no ruling pronounced in this
space until date.
While the case involving the National Stock Exchange (NSE) and
the MCX Stock Exchange (MCX- SX) remains the sole case to utilise the
private enforcement provisions of the Act, the matter remains sub judice.
Curiously, in the celebrated case involving DLF, while private damages
litigation was drawn up against DLF, it was consequently withdrawn.
Background to the private damage's litigation in India
Before diving into the details of the NSE case, by way of back- ground, the
private damages regime is largely encased within Chapters VI and VIII-A of the
Post the recent amendment to the law, where the powers of the Competition
Appellate Tribunal (COMPAT) stand transferred to the National Company Law
Appellate Tribunal (NCLAT), the NCLAT now has original jurisdiction to hear
applications from the Central or State Government or any person or enterprise
who has suffered any loss or damage as a result of any contravention of Sections
3, 4, 5 and 6 of the Act, which has been established as a violation by the CCI
or the COMPAT.
The private litigation regime makes it mandatory that any claim can only arise
after a finding of the violation of the substantive provisions of the Act has
been established by the regulator or the appellate authority. Additionally, the
enactment also provides for a application to be filed against enterprises when
any damage is suffered by the applicant as a con- sequence of the enterprise
violating any order or direction of the CCI or the appellate authority for
The Act, as drafted and amended, is significantly forward looking and provides
for remedial actions, such as class action suits, which are at par with global
best practices. In a situation where a group of persons have the same claim
against the defaulter of the substantive provisions of the Act, a class action
suit can be instituted to seek remedy. Although the Act allows one or more
persons to file the application on behalf of all interested parties, this is
subject to the Civil Procedure Code, 1908.
On the procedural front, though the Act does not stipulate the time period
within which an application is to be filed for private compensation, guidance
may be sought from the erstwhile monopolies and restrictive trade practices (MRTP)
In Director General (Investigation and Registration) v. Thermax (P)
. and M.S. Shoes East Ltd. v. Indian Bank
, the MRTP Commission
referred to the Supreme Court case of Corporation Bank v. Navin J. Shah
which lays down the "doctrine of laches" i.e., if a claim is to be made, the
same must be done within a reasonable time period. Although the scope of
"reasonable time" is a matter of factual consideration, in the above- mentioned
precedents of the MRTP, the private compensation claims were rejected since they
were brought after a delay of more than 5 years.
Background to the NSE case:
In the 9 years of the Act being in force, several landmark CCI decisions are
pending in appeal before the Supreme Court of India for final adjudication. The
NSE case was one of the first major abuse of dominance cases examined in the
country and though the violation of the Act was upheld by the CCI and the COMPAT,
it is presently sub judice before the Supreme Court
However, since the violation was upheld by the CCI and the COMPAT, under the
scheme of the Act, a private damages claim was permissible to be brought before
the COMPAT and the same was done by MCX-SX.
By way of context, MCX-SX had filed an application against the NSE, alleging
that NSE had abused its dominance in the market by engaging in predatory pricing
to drive MCX-SX out of the market in the currency derivative (CD) segment. The
CCI noted that NSE was dominant in the CD market and accordingly ordered NSE to
modify its zero price policy in the relevant market and to cease and desist from
its unfair pricing, exclusionary con- duct and unfairly using its dominant
position in the other market(s) to protect its own CD market with immediate
effect. Additionally, a penalty of INR 55.5 crore was also imposed on NSE.
In the appeal, the COMPAT upheld the CCI's finding that NSE had abused its
dominant position, as well as the penalty and directions given by the CCI.
Private enforcement claim based out of the NSE case:
Consequent to the findings of the CCI and the COMPAT, MCX-SX filed an
application with the COMPAT for compensation to the tune of INR 588.65 crore
from NSE for the damages suffered as a result of the abusive conduct of NSE.
Accordingly, when the matter came up for hearing, the same was adjourned as
MCX-SX wanted to make amendments to the amount of compensation claimed from the
Subsequently, MCX-SX filed a compensation claim for a monetary sum of INR
856 crore based on the evaluation done by the industry experts. Media report
suggests that the revised compensation amount was submitted pursuant to an
independent report by a chartered accountant validating the claims and
calculating the compensation amount based on that.
Future course of action
As the matter is pending consideration, keen eyes from across the industry will
be awaiting a few key observations of the NCLAT, including in relation to the
issue of damages under the Act. It remains to be seen what standard will be
adopted by the NCLAT to determine the amount of compensation that can be
legitimately granted to or claimed by MCX-SX.
Although the Act does not provide
for punitive damages, it will be interesting to see whether the NCLAT makes any
observation on the "passing-on" defence. "Passing-on" defence stipulates that if
the person suffering losses from the anti-competitive concerns has passed on the
losses to its consumers or other downstream stakeholders, then he is not
entitled to claim the amount of losses which he has passed on.
Further, considering that punitive claims are not specifically envisaged under
the scheme of the Act, it remains to be seen whether the compensation provided
under the Act makes this remedy a viable one compared to the costs incurred (in
terms of time and money for achieving so); or whether this provision will remain
a paper tiger in the statute book. In either scenario, the NSE case will
continue to remain under sharp scrutiny and will lay the road map for the
efficiency and mobility of the private damage's regime in India.
Private enforcement is becoming common in many jurisdictions, and it must be
only a matter of time before it takes off in India. A framework and guidelines
on the broad contours of private enforcement claims will provide certainty and
boost the filing of such claims.
As the Indian competition regime awaits the practical introduction of a new
horizon of competition litigation under the garb of private enforcement, a lot
of procedural and standardisation clarity with respect to the issue is the
imminent need of the hour.
Although the competition paradigm of India awaits a certain number of
path-breaking decisions with respect to private enforcement, a set of rules
addressing the probable discrepancies towards its enforcement will definitely
facilitate coordination among the various competition instruments and avoid
- Competition law needs framework for private enforcement | India Business Law
- S.C. Tripathi, The Competititon Law
- Finance Act, 2017, s 171
- Compensation Application No. 01/2015
- Compensation Application No. 01/2014
- Compensation Application No. 02/2015
- Compensation Application No. 02/2018
- Compensation Application No. 01/2019
- Compensation Application No. 150/1999
- Compensation Application No. 1/2018
- Why competition matters, A Guide for Policy matters, Office of Fair Trading
- Arbitrating Competition Law Disputes: a matter of Policy, Francesca Richmond & Sarah West, Baker & Mckenzie
- Competition Law to relieve consumers of unhealthy business practice, Shafique
- S Calkins, "Perspectives on Trade and Federal Anti-Trust Enforcement, (2003) 53 Duke L. J. 673, 699-700
- Professor Barry Rodger, Competition Law-Litigation in the UK Courts-Cases 2005-2008, Part I,  G.C.L.R
- The Current Climate in Anti-Trust Damages Action in the UK and Europe, Douglas Lahnborg
- MCX Stock Exchange Ltd. v. National Stock Exchange of India Ltd., 2011 SCC Online CCI 52
- Belaire Owner's Assn. v. DLF Ltd., Case No. 19 of 2010
- 2011 SCC Online CCI 52
- Sections 53-N, 53-Q and 42-A of the Act
- With effect from 26-5-2017, the appellate authority for all matter relating to the Act is the NCLAT. Originally, this power was vested in the COMPAT.
- Sections 42-A and 53-Q (2) of the Act.
- Rule 8 of Order 1 of the First Schedule
- (2003) 1 CPJ 158 (MRTP)
- (2003) 1 CPJ 131 (MRTP).
- (2000) 2 SCC 628: (2000) 2 CPR 13
- 2011 SCC Online CCI 52
- MCX-SX has since been renamed as Metropolitan Stock Exchange of India
- 2011 SCC Online CCI 52.
- Abhineet Kumar, LL.M
(Oriental University, Indore)
- Saniya Durrani,
(The ICFAI University, Dehradun)