1. Mahyco Monsanto Biotech (India) Private Ltd. & Anr. V.
CCI
Facts of the Case
• Parties Involved: Monsanto Holdings Pvt. Ltd. and its subsidiaries vs.
Competition Commission of India (CCI).
• Background: CCI initiated an investigation against Monsanto regarding
alleged anti-competitive practices in licensing its Bt. cotton technology.
Monsanto had licensed its technology to seed manufacturers in India with
specific conditions on trait fees and contract terms, which raised concerns of
unfair practices.
• Dispute: Monsanto argued that CCI overstepped by investigating beyond its
initial mandate and contended that the Competition Act does not authorize
penalties on individual officers under Section 48 for corporate misconduct.
Key Issues
1. Jurisdiction of CCI and Director General’s Scope: Could the CCI’s Director
General (DG) investigate potential violations beyond what was initially
mandated by CCI’s order?
2. Liability Under Section 48: Does Section 48 allow CCI to penalize individual
directors and officers of a company in cases of corporate violations under
Sections 3 and 4 of the Competition Act?
3. Applicability of Vicarious Liability: Can individuals be held liable for the
company’s anti-competitive conduct without a separate finding of wrongdoing
against them?
Arguments
Monsanto’s Arguments:
1. Limited Scope of Investigation: Monsanto argued that the DG exceeded its
authority by investigating issues not explicitly included in CCI’s mandate,
specifically violations under Section 4.
2. Vicarious Liability: Monsanto contended that Section 48 of the Competition
Act does not impose vicarious liability on individuals unless CCI explicitly
finds that these individuals played a direct role in anti-competitive activities.
3. Corporate Shield: Monsanto claimed that the Act penalizes corporate entities,
not individual directors, suggesting that penalizing individuals would be
legally baseless and contrary to the Act’s intended framework.
CCI’s Arguments:
1. Broad Investigative Powers: CCI argued that the DG’s role includes
investigating all potential violations discovered during a mandated inquiry.
Thus, any anti-competitive conduct uncovered could be included in the
investigation, regardless of initial scope.
2. Vicarious Liability of Officers: CCI maintained that Section 48 allows penal
action against corporate officers if the corporate entity is found guilty, aligning
with the principle that individuals responsible for company policy can be liable
for corporate misconduct.
3. Statutory Interpretation: CCI asserted that the language of Section 48,
especially its inclusion of “any provisions of this Act,” implies that directors or
officers of companies can be held accountable when they oversee the actions
leading to contraventions.
Court’s Analysis
1. Director General’s Investigative Authority: The court sided with CCI, holding
that the DG’s authority to investigate is broad and encompasses additional
findings of anti-competitive behavior beyond the initial mandate. The court
noted that restricting the DG’s scope would limit CCI’s effectiveness in curbing
anti-competitive practices.
2. Interpretation of Section 48: The court found that Section 48 does apply to
individual officers and directors of a company if they are in positions of
responsibility when the anti-competitive practices occur. The court emphasized
a purposive interpretation, noting that the language of Section 48 includes
provisions that hold key individuals accountable for violations of Sections 3
and 4.
3. Vicarious Liability and Enforcement Mechanism: The court clarified that
individual liability under Section 48 was in line with similar statutes imposing
corporate accountability, reinforcing that corporate directors and officers can
be deemed guilty based on their roles in the organization’s conduct.
Judgment
The court dismissed Monsanto's appeal, affirming CCI’s authority to:
• Investigate all facets of anti-competitive behavior discovered during an
inquiry, even if not initially specified in the mandate.
• Hold directors and officers liable under Section 48 if they were responsible for
corporate policies that led to anti-competitive practices.
2. Cadila Healthcare Ltd.Vs. CCI
Facts of the Case
Cadila, a pharmaceutical company, appealed against the Competition Commission of
India (CCI)'s orders rejecting its review applications. The case revolves around
complaints filed by different entities alleging that Cadila and others were involved in
anti-competitive practices in Gujarat. These entities claimed they were denied
medicine supplies due to directives from the Federation of Gujarat State Chemist and
Druggists Association. CCI directed its Director General (DG) to investigate, leading
to Cadila's involvement.
Key Issues
1. Whether CCI's order directing the DG to investigate Cadila without a specific
prima facie opinion was valid.
2. Whether Cadila was denied natural justice due to CCI's rejection of its request
for cross-examination of witnesses.
3. Whether CCI's approach in investigating and holding Cadila’s executives liable
under Section 48 of the Competition Act was lawful.
Arguments from Both Sides
❖ Cadila's Arguments:
• Claimed that CCI's investigation orders lacked a clear prima facie
finding against it.
• Asserted that CCI’s refusal to allow cross-examination of witnesses
violated natural justice.
• Argued that initiating proceedings against its executives under Section
48 was premature.
❖ CCI’s Arguments:
• Maintained that the DG was empowered to investigate any parties
involved in anti-competitive behavior.
• Argued that cross-examination was unnecessary as the case was at a
preliminary stage.
o Asserted that investigating executives was within its jurisdiction.
Court’s Analysis
The court examined whether CCI had erred in its prima facie order and whether
Cadila’s due process rights were respected. It referred to prior judgments establishing
that CCI need not have detailed reasons at the initial investigation stage and upheld
the DG’s broad investigatory powers.
Judgment
The court upheld CCI’s decision, finding that the investigation by the DG into Cadila
was within legal limits and that Cadila’s rights were not significantly compromised
by the procedural decisions.
3. CCI vs M/s Oriental Rubber Industries Pvt. Ltd.
Facts of the Case
1. CCI received information about a potential bid-rigging cartel in the Conveyor
Belt Sector in India.
2. On 06.11.2013, CCI found a prima facie case of contravention of Section 3 of
the Competition Act, 2002.
3. The Director General (DG) issued a notice to Oriental Rubber Industries for
investigation.
4. Oriental Rubber requested inspection of records multiple times, which was
denied citing confidentiality.
5. DG issued summons under Section 41(2) read with Section 36(2) of the Act.
6. Oriental Rubber filed a writ petition seeking:
o Permission to inspect documents
o Right to cross-examine witnesses
o Permission for legal counsel during statements under oath
7. While CCI agreed to provide documents and allow cross-examination, they
refused to allow advocates during DG's recording of statements.
Key Issues
1. Whether a person summoned for investigation has the right to be represented
by an advocate when the investigating authority is empowered to take
evidence.
2. Whether the Competition Act implicitly prohibits legal representation during
DG investigations.
Arguments from Both Sides
CCI's Arguments
1. Right to practice under Section 30 of Advocates Act is not absolute and can be
restricted by law.
2. Competition Act implicitly prohibits advocates from appearing before DG as
Section 35 only provides for legal representation before Commission.
3. DG's stage is investigation, not inquiry, and no person is indicted at this stage.
4. Presence of counsel may hinder investigation and not be conducive to public
interest.
5. Cited Poolpandi case to argue that during investigations, presence of lawyer
cannot be claimed as a right.
Oriental Rubber's Arguments
1. DG records evidence that becomes part of subsequent proceedings, making
legal representation crucial.
2. No express prohibition in Competition Act against counsel presence during
investigation.
3. DG's investigation is equivalent to trial/inquiry commencement.
4. International practice (US, UK, EU) allows legal representation during
antitrust investigations.
5. Right to cross-examination exists under Regulation 41(5), implying right to
legal representation.
Court's Analysis
1. Right to legal representation is well-entrenched and provided under Section
30 of Advocates Act.
2. Any restriction on this right must be expressly stated in legislation, not
implied.
3. DG falls under Section 30(ii) of Advocates Act as being authorized to take
evidence.
4. Competition Act contains no express restriction on advocates appearing
before DG.
5. International practice supports right to legal representation during
investigations.
6. Given DG's sweeping powers and drastic consequences of investigation, legal
representation is necessary.
Judgment
1. Appeal dismissed - Court upheld right to legal representation during DG
investigations.
2. However, the Court added conditions:
o Commission/DG may prescribe appropriate procedures for counsel's
presence
o Counsel cannot sit in front of witness
o Witness should not be able to confer with counsel during questioning
o Commission may formulate detailed procedures and incorporate them
in regulations
3. Until formal procedures are established, DG can make appropriate procedural
orders.
The judgment effectively balanced the right to legal representation with the need for
effective investigations in competition law matters.
