Case: COMPETITION COMMISSION OF INDIA &amp; ORS Vs. STATE OF MIZORAM &amp; ORS

the first part of the definition clause. 35. Lastly it was contended that lottery business is res extra commercium and strictly regulated by State. Therefore, it could not have been the intent of the legislature to promote or sustain competition in lottery business. The Competition Act will thus not apply as there was a special act promulgated for conduct of lotteries. Our View: 36. In the conspectus of the arguments, we find that a simple aspect of anti-competitive practices and cartelisation has got dragged on for almost ten years in what appears to be a mis-application by the High Court of the interplay of the two Acts, i.e., the Competition Act and the Regulation Act. We have already observed that respondent No. 1 seems to have played a very non-appreciable role in our opinion. What ought to have weighed with respondent No.1/State is what is sought to contend now, i.e., it is a victim of cartelisation and it is in its interests to cooperate with the CCI. 37. The complaint of respondent No.4 may have been also under Section 4 of the Competition Act but it had not even referred that aspect to the DG and had decided not to proceed against the State. That should have been the end of the matter so far as the State is concerned. Yet the State, in our view, under a misconception, approached the High Court, possibly in an endeavour to defend one of its officers, respondent No. 2, whose conduct has not been very favourably commented on by the DG. Even if the State felt that these comments of the DG were not sustainable, such an aspect could have been pleaded with the CCI in pursuance of its notice and possibly the matter would have been closed at that stage. In fact, the CCI had opined, both before and after the filing of the writ petition, that it was not proceeding against respondent No.1/State under Section 4 of the Competition Act. The aforesaid gave an opportunity to respondent Nos. 5 & 6 also to approach the Court and interdict the proceedings which ought to have been concluded a long time ago. It would, in our view, have been beneficial even to the State to have come to a conclusion one way or the other. The interdict post the investigation report by the DG and prohibiting the CCI from carrying out its mandate under the Competition Act is unsustainable. 38. We are in agreement with the line of arguments advanced by Mr. Rajshekhar Rao, learned senior counsel for the CCI where he has succinctly sought to point out that the concern of the CCI was not at all with the carrying out, regulation or prohibition of the lottery business as was governed by the Regulation Act. Rather, the concern was limited to the role assigned to the CCI under the Competition Act, and in the context of the EoI was limited to examining any perceived bid rigging in the tendering process for appointment of selling agents and distributors for the lottery business. There was no conflict in the interplay of the two Acts that even needed reconciliation or prohibition against either one, as the limited scrutiny was to examine the mandate of Section 3(1) read with Section 3(3) of the Competition Act. Lotteries may be a regulated commodity and may even be res extra commercium. That would not take away the aspect of something which is anti-competition in the context of the business related to lotteries. 39. We must take note of the expansive definition of Service under Section 2(u) of the Competition Act. It means service of any description, which is to be made available to potential users. The purchaser of a lottery ticket is a potential user and a service is being made available by the selling agents in the context of the Competition Act. Suffice for us to say the inclusive mentioning does not inhibit the larger expansive definition. The lottery business can continue to be regulated by the Regulation Act. However, if in the tendering process there is an element of anti-competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries. 40. We would like to say that the intervention by the High Court was extremely premature. It ought to have waited for the CCI to come to a conclusion but on the other hand what has happened is that the CCI proceedings have been brought to a standstill while the High Court opined on the basis of some aspects which may or may not arise. 41. We are, thus, of the view that there was really no need for the High Court to proceed in the manner and in the direction it sought to proceed. The correct approach, more so once the statement was made on behalf of the CCI, would have been to close the proceedings filed by the State Government and let the private parties face the ultimate decision of the CCI. If they were aggrieved by any adverse decision of the CCI they were entitled to avail of the appellate remedy under Section 53B of the Competition Act. 42. The complaint having been made by respondent No.4 under Section 19 of the Competition Act, which provides that the Commission may inquire into certain agreements and dominant position of enterprise as envisaged under sub-section (1) of Section 3 and sub- section (1) of Section 4 of the Competition Act. The CCI found out a prima facie case for investigation by the DG under Section 3(1) of the Competition Act, the DG opined adversely, and the CCI issued notice giving an opportunity to the affected parties to place their stand before it. This process ought to have been permitted to conclude with the right available to the affected parties to avail of the appellate remedy under Section 53B of the Competition Act. Conclusion:

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]36. In the conspectus of the arguments, we find that a simple aspect of anti-competitive practices and cartelisation has got dragged on for almost ten years in what appears to be a mis-application by the High Court of the interplay of the two Acts, i.e., the Competition Act and the Regulation Act. We have already observed that respondent No. 1 seems to have played a very non-appreciable role in our opinion. What ought to have weighed with respondent No.1/State is what is sought to contend now, i.e., it is a victim of cartelisation and it is in its interests to cooperate with the CCI.37. The complaint of respondent No.4 may have been also under Section 4 of the Competition Act but it had not even referred that aspect to the DG and had decided not to proceed against the State. That should have been the end of the matter so far as the State is concerned. Yet the State, in our view, under a misconception, approached the High Court, possibly in an endeavour to defend one of its officers, respondent No. 2, whose conduct has not been very favourably commented on by the DG. Even if the State felt that these comments of the DG were not sustainable, such an aspect could have been pleaded with the CCI in pursuance of its notice and possibly the matter would have been closed at that stage. In fact, the CCI had opined, both before and after the filing of the writ petition, that it was not proceeding against respondent No.1/State under Section 4 of the Competition Act. The aforesaid gave an opportunity to respondent Nos. 5 & 6 also to approach the Court and interdict the proceedings which ought to have been concluded a long time ago. It would, in our view, have been beneficial even to the State to have come to a conclusion one way or the other. The interdict post the investigation report by the DG and prohibiting the CCI from carrying out its mandate under the Competition Act is unsustainable.38. We are in agreement with the line of arguments advanced by Mr. Rajshekhar Rao, learned senior counsel for the CCI where he has succinctly sought to point out that the concern of the CCI was not at all with the carrying out, regulation or prohibition of the lottery business as was governed by the Regulation Act. Rather, the concern was limited to the role assigned to the CCI under the Competition Act, and in the context of the EoI was limited to examining any perceived bid rigging in the tendering process for appointment of selling agents and distributors for the lottery business. There was no conflict in the interplay of the two Acts that even needed reconciliation or prohibition against either one, as the limited scrutiny was to examine the mandate of Section 3(1) read with Section 3(3) of the Competition Act. Lotteries may be a regulated commodity and may even be res extra commercium. That would not take away the aspect of something which is anti-competition in the context of the business related to lotteries.39. We must take note of the expansive definition of Service under Section 2(u) of the Competition Act. It means service of any description, which is to be made available to potential users. The purchaser of a lottery ticket is a potential user and a service is being made available by the selling agents in the context of the Competition Act. Suffice for us to say the inclusive mentioning does not inhibit the larger expansive definition. The lottery business can continue to be regulated by the Regulation Act. However, if in the tendering process there is an element of anti-competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries.40. We would like to say that the intervention by the High Court was extremely premature. It ought to have waited for the CCI to come to a conclusion but on the other hand what has happened is that the CCI proceedings have been brought to a standstill while the High Court opined on the basis of some aspects which may or may not arise.41. We are, thus, of the view that there was really no need for the High Court to proceed in the manner and in the direction it sought to proceed. The correct approach, more so once the statement was made on behalf of the CCI, would have been to close the proceedings filed by the State Government and let the private parties face the ultimate decision of the CCI. If they were aggrieved by any adverse decision of the CCI they were entitled to avail of the appellate remedy under Section 53B of the Competition Act.42. The complaint having been made by respondent No.4 under Section 19 of the Competition Act, which provides that the Commission may inquire into certain agreements and dominant position of enterprise as envisaged under sub-section (1) of Section 3 and sub- section (1) of Section 4 of the Competition Act. The CCI found out a prima facie case for investigation by the DG under Section 3(1) of the Competition Act, the DG opined adversely, and the CCI issued notice giving an opportunity to the affected parties to place their stand before it. This process ought to have been permitted to conclude with the right available to the affected parties to avail of the appellate remedy under Section 53B of the Competition Act.