What Is This Act / Rule About?
Finance Act 2017: The Finance Act, 2017 is an extensive law that is mainly passed in order to bring into practice the Union Budget of 2017-18. Other than tax related provisions, the Act also introduced some structural and institutional adjustments in different laws. Competition law was one of such areas.
The Competition Act, 2002, especially with regards to the appellate regime of the Act was amended by the Finance Act, 2017. These amendments reorganized the manner in which appeals against orders of Competition Commission of India (CCI) are heard and which is the forum that has an appellate jurisdiction. These amendments particularly bear an important role in the determination of the current role of the National Company Law Appellate tribunal (NCLAT) in competition law issues.
What Is The Rationale behind the introduction of this Act / Rule?
The amendments came along with the wider policy that the Government had of rationalising and streamlining the tribunal system in India. Until 2017, there were several sector-specific appellate tribunals which commonly resulted in:
● Overlapping jurisdictions
● Administrative inefficiencies
● Delay in adjudication
● Increased cost of compliance and litigation.
The Finance Act, 2017 aimed at unifying some of its tribunals and providing similarity in the mechanisms of appeal. Under the Competition law, the aim was to shift the Competition Appellate Tribunal (COMPAT) appellate powers, into a more unified and sustainable setting, that is the NCLAT which was already operating as an appellate body under the company and insolvency legislation.
Who Does It Apply To?
Some of the stakeholders that are influenced by the amendments include:
● Competition Commission of India (CCI) – the order of which can be appealed.
● Business and corporations engaging in anti-competitive practices or combinations.
● Those who are fined by the Competition Act.
● Competition law Appellants and respondents.
● The appellate authority is National Company Law Appellate Tribunal (NCLAT).
● Lawyers and corporate counsels that deal with competition lawsuits.
What Are the Key Provisions?
Some significant changes to the Competition Act, 2002 were made in the Finance Act, 2017. The key changes include:
● Replacement of the definition of the term Appellate Tribunal.
The Competition Act changed the term Appellate Tribunal to be interpreted as the National Company Law Appellate Tribunal (NCLAT), rather than Competition Appellate Tribunal.
● The omission of the provisions in respect of COMPAT.
Articles that concerned the constitution, make-up and operation of the Competition Appellate Tribunal were left out because the tribunal was scrapped.
● Amendments to Chapter VIIIA (Appeals).
The clauses that dealt with the appeals against CCI orders were changed accordingly to meet with the physical structure of the NCLAT, both in terms of procedure and references to the forums.
● Transfer of pending cases
Any pending proceedings and appeals before COMPAT were transferred to the NCLAT.
● Organisational congruence with tribunals of law companies.
The tribunal that was established to address corporate and commercial disputes was incorporated into the larger ecosystem of competition law appeals.
How Does It Work in Practice?
Following such amendments, any individual who has grievances on any order, direction, or decision made by the CCI should submit an appeal before NCLAT. Such appeals are governed by the procedural rules that are applicable to NCLAT, and are subject to the Competition Act.
It implies that the competition law disputes are now subject to the same appeal procedure as the company law and insolvency cases, which results in the increased consistency of the procedure. NCLAT decisions may also be appealed by the Supreme Court of India on any law issue.
What Implication Does This Have on Companies or Individuals?
To the companies and individuals, these amendments have pragmatic implications:
● One, centralised place of appeal of larger corporate and competition challenges.
● More predictability over appellate processes.
● Quicker decision making since there is a well-developed tribunal infrastructure.
● Require legal counselors conversant with the practice and procedure of NCLAT.
Under compliance, enterprises should be aware of the fact that the competition law appeals are no longer carried out in a single competition tribunal.
Example (Simple Scenario)
An example of this is where the CCI fines a manufacturing firm on the account of cartelisation. The company would have appealed prior to 2017 to the Competition Appellate Tribunal (COMPAT).
Under the amendments of the Finance Act, 2017, the same company has to submit its appeal to the NCLAT within the specified limit of time. Any appeal that was pending before COMPAT would automatically be transferred to the NCLAT.
The Significance of This Act / Rule in Cases in NCLT / NCLAT.
These amendments are very important in the jurisprudence of NCLAT as they gave the tribunal a broader jurisdiction beyond the company and insolvency law and a jurisdiction in the competition law. This has:
● Made NCLAT a more important commercial tribunal of appeal.
● Enhanced the number and the complexity of cases presented to NCLAT.
● Established a single system of appeal over corporations.
● To practitioners before NCLAT, it has become more important to have knowledge of the provisions of competition law.
Frequently Asked Questions (FAQ)
Q1. What did the Competition Act change in the Finance Act, 2017?
It also discussed the appellate structure to provide NCLAT in place of COMPAT as the appellate tribunal and omit redundant provisions.
Q2. Who listens to competition law appeals now?
Appeals of orders made by CCI are heard by National Company Law Appellate Tribunal (NCLAT).
Q3. What became of the Competition Appellate Tribunal?
The COMPAT was abolished and all its powers and cases in hand passed over to the NCLAT.
Q4. Have such changes impacted upon the right to appeal?
No, the right to appeal is not affected, but only the appellate structure and forum is modified.
Q5. When were these amendments enforced?
The provisions in question became applicable when the Finance Act, 2017, as defined by the Central Government, was announced.
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