Director General cannot investigate on the issue not raised in the information

Appellate Tribunal (CompAT): CompAT, in want of material evidence,
set aside an order by the Competition Commission of India (CCI) against Andhra Pradesh Film Chamber of Commerce (APFCC) for contravention of S. 3 of the Competition Act, 2002 (e.g.
entering into anti-competitive agreements and cartels). CCI had imposed a
penalty of Rs.12.89 lacs on APFCC for restricting exhibition of film produced
by particular producer, for forcing its member to abide by its unfair rules and
dictates. Rules 4(ii)(j) and 52(a)(ii) read with Rule 52(b) framed by APFCC
were found by CCI in violation of S. 3 as they limit and restrict the producers
for a period of three years from the date of obtaining Censor Certificate to
distribute movies to TV channels and electronic media to telecast.

The informant had filed information alleging against certain claim
settlement letters/circulars by APFCC, which had directed the informant to
settle a money claim by one of the members of the association. The claim was
regarding repayment of advance paid by the claimant to the informant for
distribution of movie “Runn”. The letter had made a request to settle the
matter to avoid any inconvenience
with exhibition of movie “Mausam” produced the informant producer. However, the
informant had not questioned the rules and issue relating to validity thereof
was not been referred to by the CCI to the DG for investigation under Section
26(1) of the Act.

According the CompAT, there was no evidence produced by the informant  to prove that APFCC had prevented or
obstructed the release of film ‘Mausam’ on the scheduled date. Appellate
Tribunal observed that CCI which was expected to objectively and independently
analyse the facts and evidence collected by the DG during the course of
investigation abdicated its duty and mechanically approved the findings
recorded by the DG. It set aside the CCI order based on assumptions and not on

Further, CompAT declared the finding of DG on that DG
on the validity of Rules 4(ii)(j) and 52(a)(ii) read with Rule 52(b) framed by APFCC
as nullity and set it aside. Tribunal was of the view that the exercise undertaken by the  DG to go into the validity of Rules 4(ii)(j)
and 52(a) and (b) was per se without jurisdiction because the informant had not
questioned the rules on the ground that the same are anti-competitive and thus ultra vires the provisions of the
Competition Act. Tribunal did not approve of CCI’s compounding the jurisdictional
error by approving the view expressed by the DG in relation to the particular
rules. [Andhra Pradesh Film Chamber of Commerce v. Cinergy Independent Film
Service, decided on 14.10.2015]
Source: Legal news India

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