On August 30, 2024, the Gauhati High Court (‘GHC’) passed a judgment allowing the writ petitions filed by Star Cement Ltd. (‘Petitioner’) against the Orders passed by the CCI, quashing the CCI’s investigation order, terminating the CCI proceedings, and setting aside penalties imposed on Star Cement, following the challenge regarding the CCI’s findings of cartelization and anti-competitive practices. ^[1]

Proceedings before CCI

The Petitioner was accused of engaging in cartelization in cement pricing in Assam. Pursuant to this, the CCI initiated an investigation under Section 26(1) of the Act. The CCI found a prima facie case of anticompetitive practices and passed an Order directing its Director General (‘DG’) to conduct an inquiry (‘Impugned Order’).

The Joint DG issued a Notice requesting information from the Petitioner, which had not received the original Order despite it being referenced. The Petitioner requested additional details and an extension for submission but was subsequently served with the Impugned Order directing the DG to investigate. Through another Order, the CCI also imposed a penalty of INR 5 lakhs (approx. USD 6,000) for non-compliance with the DG’s direction. In response, the Petitioner filed for review and recall of the Impugned Order, which was rejected by the CCI.

Proceedings before GHC

Aggrieved by this, the Petitioner filed the present writ petitions challenging: (i) the Impugned Order; (ii) the CCI’s rejection of the review and recall application; and (iii) the CCI’s penalty imposition of INR 5 lakhs (approx. USD 6,000). The Petitioner contended that the CCI had initiated the investigation without establishing a prima facie case of cartelization, thus rendering the Orders illegal and without jurisdiction.

Reasoning and Final Judgment of GHC

The GHC, without adjudicating on merits, decided: (i) to quash the CCI’s Order as the test of prima facie opinion is to take the information received at face value and examine whether there was a prima facie violation, which the CCI had failed to do; (ii) to set aside the CCI’s dismissal of the Petitioner’s application for review and recall of the Order, finding the rejection to be based on erroneous conclusions without sufficient evidence; (iii) to terminate proceedings before the CCI, as the initial investigation Order was quashed, and set aside the penalty imposed on the Petitioner; (iv) to direct the CCI to return any materials seized during the investigation as the inquiry was deemed invalid; and (v) to clarify that while the present inquiry was quashed, the CCI retained the power to initiate fresh investigations in the future, if warranted.

[1] Star Cement Ltd. v. Competition Commission of India and 4 Ors., WP(C)/6343/2018.