On June 2, 2023, the Delhi High Court (‘DHC’) allowed the writ petition filed by the Institute of Chartered Accountants of India (‘ICAI’) against the order of the CCI dated February 28, 2014 (‘Prima Facie Order’) under Section 26(1) of the Competition Act wherein the CCI had directed the Director General (‘DG’) to cause an investigation into the allegations against ICAI. ^[1]

Proceedings before CCI

Informant’s Allegations: The informant, a qualified chartered accountant (‘Informant’), approached the CCI against ICAI’s policy regarding its continuous professional development program (Continuous Professional Education program – ‘CPE Program’). In line with its international federation (i.e., International Federation of Accountants), ICAI has made it mandatory for its members to acquire the stipulated minimum number of CPE credits (30 hours of CPE credits of which 20 are structured CPE hours). A member can acquire the structured credits by attending or being a faculty member at seminars/conferences/workshops organised by ICAI or its organs. The Informant’s grievance stems from the structured CPE program being conducted only by ICAI or its organs (instead of other entities such as non-profit organisations). The Informant alleged that the ICAI’s insistence on these structured CPE hours deprived its members from participating in other conferences and seminars organized by various other associations and professional bodies. Therefore, it was alleged that ICAI is abusing its dominant position under Section 4 of the Competition Act by restricting other organizations in the same relevant market (i.e., the market for conducting the Continuous Professional Education (‘CPE’) in India), from offering similar service.

CCI’s Prima Facie Order: Though the ICAI is a statutory body, the CCI held that it was an enterprise under the Competition Act as it also carried out commercial/ economic activities (like conducting CPE programs and publishing books for chartered accountants) that can be differentiated from its regulatory functions. Accordingly, ICAI is an ‘enterprise’ within the purview of the CCI’s jurisdiction. The CCI also held that ICAI was dominant in the “market for organising recognized CPE seminars/ workshops/ conferences”. The CCI formed its prima facie opinion that ICAI’s conduct amounted to an unreasonable restraint in arbitrary exercise of its powers in contravention of Section 4 of the Competition Act.

Proceedings Before Delhi HC

ICAI then challenged the CCI’s Prima Facie Order arguing that it is a statutory body and carries out statutory functions under the Chartered Accountants Act, 1949 (‘CA Act’). The alleged activities do not come under the purview of commercial activity and lie outside the ambit of an ‘enterprise’ under the Competition Act. The CCI argued that the petition is not maintainable because an order under Section 26(1) of the Competition Act was merely an administrative/ interdepartmental order and ICAI had not exhausted all its remedies – it was necessary for ICAI to raise the jurisdictional issue before the CCI itself. They also submitted that ICAI is an enterprise within the meaning of Section 2(h) of the Competition Act as the test for an enterprise (being a commercial activity) should be widely interpreted with the only exception being the entity carrying out sovereign functions. The CCI also relied on a decision of the European Court of Justice (‘ECJ’)^[2] where the regulation introduced by the Order of Chartered Accountants (‘OTOC’) for compulsory training was held to be a restriction on competition.

DHC’s Findings: The DHC observed that the preamble of the CA Act was enacted to make provision for regulation of the profession of the chartered accountant. The DHC observed that the services rendered by the ICAI in the field of education clearly falls under the ambit of ‘services’ under Section 2(u) of the Competition Act and ICAI is a ‘person’ within the meaning of Section 2(l) of the Competition Act. Accordingly, the DHC concluded that it is an ‘enterprise’ under Section 2(h) of the Competition Act. As the CPE program adds value to the field of accountancy, it cannot be stated that ICAI does not carry out any economic activity.

In relation to the issue on ICAI’s alleged abuse of dominance, the DHC observed that the CCI has erred in its reasoning that the Informant grievances are stemming from ICAI’s non-regulatory functions. The decision of ICAI mandating its members to attend the CPE program should be considered as its regulatory function (as the Informant’s grievance does not relate to the seminars’ deficiency in service or exorbitant charges but the decision itself). Accordingly, the grievance of the Informant does not fall within the ambit of Competition Act.

The DHC observed that the CCI does not have the power to review decisions taken by other regulators in discharge of their regulatory functions and exercise of their statutory powers. The DHC observed that a regulator (e.g., Controller of Patents) exercises statutory powers and discharges its statutory functions of regulating the specialized field for which it is so empowered – this power can be exercised only by the said statutory authority. Particularly, the DHC noted that “it would be erroneous to assume that if any activity falls within the broad definition of economic activity, it would be necessary to create an open market for the same”. The DHC also distinguished the present case from the decision of the ECJ by observing that OTOC was not the only professional body in the European market but in contrast, there is only one institution (ICAI) providing verifiable training in India.

The DHC also noted that in terms of Section 62 of the Competition Act, the powers of the CCI are in addition and not in derogation of other statutes (in this case, the CA Act).

The DHC concluded that the decision of ICAI to frame the CPE Program for maintenance of professional standards cannot be considered as abuse of its dominant position. Accordingly, the DHC allowed ICAI’s petition.

^[1]       Institute of Chartered Accountants of India v. Competition Commission of India & Ors., W.P.(C) 2815/2014.

^[2]       Ordem Dos Tecnicos Oficiais De Contas v. Autoridade Da Concorrencia, Case C-1/12, available here.