Libertatem Magazine

Executives And Directors Can Now Be Investigated By The Competition Commission Of India

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Case Name: Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Competition Commission of India & Ors. 

Delhi High Court gave a new set of teeth to Competition Commission of India. This will allow it to investigate the Directors and Executives of a company for their involvement in any anti-competitive conduct.

Facts of the Case

Agriculture Ministry and National Seeds Association of India (NSAI) along with certain other organizations had moved to the Competition Commission of India in 2016 highlighting various incidents of anti-competitive conduct performed by US-based giant in the seed market in India. Convinced by the Information provided by Informant that there is enough evidence for a detailed investigation against Mahyco Monsanto Biotech (India), Competition Commission of India (CCI) ordered a detailed investigation and came to the conclusion that indeed Mahyco Monsanto Biotech (India) violated the Competition law norms in India. While passing this order Competition Commission also ordered probe against the directors or officers of the company under section 27 of the Competition Act,2002.

Aggrieved by this decision, Mahyco Monsanto Biotech (India) appealed to the Delhi High Court. Learned Single Judge of the High Court dismissed the Monsanto’s appeal. Monsanto appealed against the same order by way of a Letters a Patent Appeal before the Division Bench of Delhi High Court.

The main Contention of Mohanto raised by the appellant before the Division Bench was that penalty was to be imposed on the ‘turnover’ which would not apply to an individual, who has been proceeded against, imposing a penalty.

Verdict of the Case

Division Bench of Delhi High Court consisting of Chief Justice Rajendra Menon and Justice V.K Rao rejected the contention of the Appellant and dismissed their letters patent appeal. Moreover, it was clearly held that Officers or Directors of a company can be probed by the Competition Commission of India, and can also be held liable if they were the “key persons who were Incharge and responsible” for anti-competitive conduct of the company. The bench further said that 

“Turnover, in the context of officers/directors has to be interpreted as the income of the officers/directors from the company, as there cannot be an income of an officer/director from an infringing product.”

Furthermore, Bench also observed that

 “section 27 of the Competition Act, 2002, makes it clear that if CCI finds any contravention of the provisions, it “can pass orders against an ‘enterprise’ and a ‘person’ i.e. an individual, who has been proceeded against, imposing penalty.”

Author’s Opinion

This judgment is a welcome decision as this will give Competition Commission of India more power to punish those individual natural persons who are responsible for violating free competition in the market. This decision will also deter business-men in India from entering into anti-competitive practices such as bid-rigging, anti-competitive contracts, abuse of dominant position etc.

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