In the modern economic framework, competition law serves as a cornerstone for promoting fair and efficient markets. Institutions such as the Competition Commission of India (CCI) and the Federal Trade Commission (FTC) in the United States play a central role in ensuring that enterprises do not engage in practices that distort market dynamics. These bodies not only investigate anti-competitive behavior but also enforce sanctions and shape market policies. However, as powerful as these authorities are, their decisions are not immune to scrutiny. Judicial review serves as a crucial check, ensuring that these agencies act within the boundaries of law and fairness.
This article explores the dual focus of competition enforcement: the proactive role of competition commissions in promoting market health and the essential oversight role of judicial review in upholding due process, transparency, and legal accountability.
Competition Commissions
A. Objectives and Mandates
Competition commissions are statutory bodies created to regulate market practices, prevent monopolies, and ensure a level playing field for businesses. While different jurisdictions have different structures, their goals align broadly:
- Prevent anti-competitive agreements.
- Curb abuse of dominance.
- Review mergers and acquisitions to avoid market concentration.
- Promote consumer welfare.
In India, the CCI was established under the Competition Act, 2002, replacing the erstwhile Monopolies and Restrictive Trade Practices Commission (MRTPC). In the United States, the FTC was created through the Federal Trade Commission Act of 1914, functioning alongside the Department of Justice (DOJ) in enforcing antitrust laws.
B. Powers and Functions
Both the CCI and FTC are empowered with wide-ranging investigative and enforcement authority. Their functions typically include
- Investigations and inquiries: These bodies can initiate investigations suo motu or upon receipt of complaints.
- Imposing penalties: They can fine companies for collusive behavior, abuse of dominance, or failure to comply with regulations.
- Merger control: Mergers and acquisitions above a certain threshold must be notified to these authorities for approval.
- Market studies: They conduct research to understand evolving market trends and preempt anti-competitive practices.
For example, in recent years, the CCI has investigated major tech companies like Google and Amazon for their marketplace dominance and potential anti-competitive conduct. Similarly, the FTC has been pursuing investigations into Meta (Facebook), Apple, and other Big Tech firms for practices that potentially stifle competition.
C. Challenges in Enforcement
Despite their authority, competition commissions face numerous challenges:
- Globalization of markets makes enforcement complex, especially for cross-border mergers and cartels.
- Digital markets present novel challenges like algorithmic pricing and data monopolies.
- Lengthy investigations can reduce the impact of enforcement actions, especially in fast-moving industries.
Moreover, ensuring that their actions are proportionate, reasoned, and consistent with principles of natural justice is a continuing requirement. This brings us to the vital role of judicial review.
Judicial Review Against Administrative Overreach
A. What is Judicial Review?
Judicial review refers to the power of the judiciary to review the legality and procedural fairness of decisions made by public authorities. In the context of competition law, courts evaluate whether:
- The competition authority acted ultra vires (beyond its legal powers).
- There was a violation of natural justice.
- The decision was irrational or arbitrary.
- The investigation was procedurally flawed or biased.
It does not typically involve reevaluating the economic merits of the decision but focuses on the legal and procedural aspects.
B. Judicial Review in India: CCI and the Courts
In India, decisions of the CCI can be appealed before the National Company Law Appellate Tribunal (NCLAT) and subsequently to the Supreme Court of India.
Several landmark rulings have shaped the contours of judicial oversight in Indian competition law. For instance:
- Excel Crop Care Ltd. v. CCI (2017): The Supreme Court clarified how penalties should be calculated, emphasizing fairness and proportionality.
- Sundaram Finance v. CCI (2015): The Court stressed the need for the CCI to adhere to principles of natural justice, particularly giving parties the right to be heard.
These decisions underscore that while the CCI has significant autonomy, it must exercise its powers with procedural integrity.
C. Judicial Review in the U.S.: FTC Under Scrutiny
In the U.S., decisions of the FTC can be challenged in federal courts. Notably, judicial review plays a more prominent role in checking the administrative state in the U.S., often involving deep constitutional scrutiny.
A landmark development came in 2023 with the U.S. Supreme Court’s ruling in Axon Enterprise, Inc. v. FTC, which allowed companies to challenge the FTC’s structure and procedures in federal court before the commission’s proceedings were complete. This case reflects growing judicial concern over administrative overreach and due process.
Moreover, courts often examine whether the FTC has overstepped its “unfair methods of competition” mandate, particularly when dealing with novel antitrust theories in digital markets.
Balancing Independence and Accountability
A. The Tension
There’s an inherent tension between the need for competition authorities to act swiftly and independently and the requirement for oversight to prevent misuse of power. If judicial review becomes too intrusive, it may paralyze enforcement. Conversely, if courts adopt a hands-off approach, it could lead to unchecked administrative power.
B. Deference to Expertise
Courts often apply the principle of “deference to expert bodies”, acknowledging that competition commissions have technical and economic expertise. For example, in India, courts have noted that economic analysis is best left to the CCI, and judicial review should not convert appellate courts into economic regulators.
However, this difference is not absolute. Courts have intervened in cases of:
- Lack of reasoning in decisions,
- Procedural lapses,
- Excessive fines,
- Conflict of interest or bias.
C. Procedural Fairness and Transparency
Ultimately, the credibility of competition enforcement hinges on due process. Judicial review compels authorities to:
- Record reasons for their findings.
- Follow proper hearing procedures.
- Avoid arbitrary or inconsistent interpretations.
- Be transparent in investigative methods.
This enhances business confidence and ensures that competition law does not become a tool of harassment or political influence.
The Way Forward
As markets evolve, so must the institutions that regulate them. Both competition commissions and judicial bodies need to adapt to changing business realities.
A. Strengthening Institutions
- Capacity building: Investing in human capital and economic tools for competition authorities.
- Digital enforcement: Developing tools to detect algorithmic collusion and digital abuse.
- Cross-border cooperation: For better handling of multinational cases.
B. Reforming Review Mechanisms
- Time-bound appeals: To avoid delays in enforcement.
- Specialized benches: Judges with training in economic and competition law.
- Clarity in standards: Developing jurisprudence on the scope of review—balancing expertise with accountability.
Conclusion
Competition commissions like the CCI and FTC are vital actors in preserving the competitive fabric of modern economies. Their role extends beyond punishment to proactive market shaping and consumer protection. However, with great power comes the need for checks. Judicial review ensures that these bodies stay within their legal bounds, respect due process, and act transparently. As the world navigates increasingly complex economic landscapes, particularly in the digital and data-driven sectors, the interaction between regulatory autonomy and judicial oversight will continue to define the future of competition law enforcement. A symbiotic relationship between these institutions is essential to uphold both market fairness and the rule of law.
Contributed By – Kajal Rawat (Intern)