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Competition law – Requirement of notice when directing ‘further’ investigation

16 September, 2014

Notice before directing further investigation under Section 26(7) of the Competition Act is not required to be given to the person against whom information was provided. Delhi High Court in this case decided on 3-9-2014 was of the view that reasons given by Supreme Court in the case of Steel Authority of India for holding that no notice/hearing is required to be given to the person informed against, before forming a prima facie opinion and directing investigation under Section 26(1), would also apply to the stage under Section 26(7) wherein Commission directs for further investigation after a negative report of the DG.

Reliance in this regard was also placed on various precedent decisions of the Apex Court holding that there is no right of the accused to be heard, before the Magistrate or the Sessions Judge directs further investigation, even where the investigation carried out has found him to be not guilty. It was also noticed that function of CCI under said section is not adjudicatory and that this stage is also an initial stage.

The court further upheld the single judge’s decision that legislature’s use of the words ‘parties concerned’ in Section 26(5) cannot be meant to cover person informed against. Absence of any such intention of the legislature, while amending Section 26 by Competition (Amendment) Bill, 2007 in 2009, was also noticed by the court in this regard while it laid down procedure to be followed by CCI after Section 26(1) stage i.e. when it directs investigation.
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