Enquiry and study

2016 CLD 1688 ISLAMABAD Judicial Precedent

S. 37Enquiry and studyNotice, issuance ofRequirements

Notice issued under S. 37(1) or S. 37(2) of Competition Act, 2010 ought to disclose the sufficient facts or the prima facie evidence on the basis of which an inquiry is initiated.

2016 CLD 1688 ISLAMABAD Judicial Precedent

S. 37Enquiry and studyInitiation of inquiry

Competition Commission had issued notices pursuant to consumer's complaint through the National Accountability Bureau, alleging that the Poultry Feed Mill owners had formed cartels and were purchasing ingredients at a low price

Validity

Complaint contained vague and indefinite information

Impugned notices referred to mere concerns raised before the Commission to the effect that despite a decrease in price of poultry feed inputs, the price of feed had consistently been increasing

Said allegations were vague and devoid of sufficient facts, nor any prima facie evidence had been disclosed requiring initiation of an inquiry relating to the prohibitions mentioned in Chapter II of the Act

Impugned notice, at best, could be treated as forming basis for initiating a study, rather than an inquiry under S. 37 of the Act

Nothing had been placed on record to justify initiating an inquiry

Commission had acted in mechanical manner

Impugned notices and complaint were in the nature of roving inquiry

Impugned notices might be treated as forming basis of conducting a study under S. 37 of the Act

If the Commission, after concluding the study, was of the opinion that there were sufficient facts and the complaint was substantiated by prima facie evidence alleging contraventions of the provisions of Chapter II of the Act, then the Commission might issue notices to the petitioners regarding the initiation of inquiry and the sufficient facts or prima facie evidence on the basis of which the opinion was formed would also be disclosed therein

Impugned notices were, therefore, declared as not having been issued under S. 37(1) or S.37(2) of the Act

Notices in question were directed to be treated as forming the basis of conducting a study under S. 37 of the Act

Constitutional petition was allowed accordingly.

2016 CLD 1688 ISLAMABAD Judicial Precedent

Ss. 36 & 37Enquiry and studyModes and preconditionsDistinction existed between 'inquiries' and 'studies' referred to in S. 37 of the Act

Inquiry can be initiated by the Commission, firstly on its own, secondly, upon a reference made to it by the Federal Government, and thirdly, on receiving a complaint in writing from an undertaking or a registered association of consumers

Language of S. 37(2) of the Act is instructive of the legislative intent that are the obligations of the Commission or the preconditions for initiating an inquiry alleging contravention of the provisions of Chapter II of the Act

Section 37 of the Act explicitly provides that the Commission, before initiating an inquiry, is under an obligation to form an opinion that the application/written complaint, is not frivolous or vexatious nor is the same based on insufficient facts or that the same is substantiated by prima facie evidence

Existence of said preconditions, however, are not contemplated for the purposes of carrying out a study.

2016 CLD 1688 ISLAMABAD Judicial Precedent

Ss. 37(1) & 37(2)Enquiry and studyScope, purpose and effectObligation of Competition CommissionLegislative intent was obvious when Ss. 37(1) & 37(2) of Competition Act, 2010 are read together

Initiating an inquiry for an alleged contravention of the provisions of Chapter II is an adverse action for an undertaking

Inquiry proceedings, besides undermining the repute of a commercial entity in the market, entailed inconvenience and intrusive proceedings

Commission, therefore, had a statutory duty to exercise powers vested for the purposes of conducting an inquiry in a just, fair manner, particularly on the basis of sufficient facts and when the complaint or allegations had been substantiated by prima facie evidence

Commission may gather sufficient facts or prima facie evidence on the basis of a study conducted under S. 37 of the Act and then initiate an inquiry on its own.

2016 CLD 1688 ISLAMABAD Judicial Precedent

Ss. 36 & 37Enquiry and studyScopeScope of Ss. 36 & 37 of Competition Act, 2010 is essentially restricted to the purposes of the Act

Commission would be justified in seeking information from an undertaking under S. 36 of the Act, if the same is in relation to abuse of dominant position, prohibited agreements, approval of mergers or promoting competition through advocacy

Scope of the inquiry contemplated under S. 37 of the Act also cannot go beyond the purposes of the Act.