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2 November, 2017
Antitrust investigations in India are steadily on the rise and many enterprises, both Indian and multinationals, are facing enhanced scrutiny from India’s antitrust regulator, the Competition Commission of India (‘CCI ’). Investigations are typically intrusive, with CCI and its investigative wing, the Director General (‘DG ’) requiring enterprises under investigation to produce a considerable number of documents that often contain commercially sensitive information. Anticipating concerns surrounding the sensitivity of commercial documents, the Government of India provided for legislative safeguards under the Competition Act, 2002 (‘Competition Act ’) and subsequently CCI issued the CCI (General) Regulations, 2009 (‘General Regulations ’) and the CCI (Lesser Penalty) Regulations, 2009 (as amended) (‘Leniency Regulations ’). Nevertheless, with the increase in the number and scope of such investigations, enterprises are increasingly facing concerns arising from the treatment of confidential information submitted to CCI .
In light of the above, we examine some of the key issues on confidentiality in antitrust cases before CCI.
Legislative Framework on Confidentiality in Antitrust Investigations
To start with, the absence of a statutory appeal from an order on confidentiality by CCI raises concerns. While an order of DG with respect to confidentiality may be appealed before CCI ,1 once CCI takes a view on confidentiality, no further right to appeal is available to parties. The erstwhile Competition Appellate Tribunal (‘COMPAT ’) held that it had the jurisdiction to hear and decide appeals only against orders passed by CCI under Section 53A (1)(a) of the Competition Act. Since Section 57 of the Competition Act and Regulations 35(8) or (10) of the General Regulations (i.e. , confidentiality provisions) do not find mention as appealable provisions under Section 53A (1)(a), orders on confidentiality are not subject to appeal to the appellate tribunal.2
As a result, enterprises have no choice but to approach the relevant high court(s) under writ jurisdiction, should they are aggrieved by an adverse CCI order on confidentiality. Under the Competition Act and the General Regulations, an enterprise cannot claim confidentiality over each piece of information submitted to CCI or DG . Section 57 of the Competition Act provides that no information relating to any enterprise obtained by CCI shall be disclosed without the prior permission of the enterprise in writing, otherwise than in compliance with or for the purposes of the Competition Act or any other law for the time being in force. While the language appears to confer a broad protection to confidential information, the limiting criteria set out above confines the treatment of confidentiality to a large extent.3
The General Regulations4 further narrow down the scope of protection granted under Section 57 of the Competition Act, clarifying that only in cases where public disclosure would: (a) result in the disclosure of trade secrets; (b) result in the destruction or appreciable diminution of commercial value of such information; or (c) reasonably be expected to cause serious injury, confidentiality would be granted. The General Regulations further provide a set of factors that CCI and DG may consider at the time of deciding a request for confidentiality, namely: (a) the extent to which information is known to the outside public; (b) the extent to which information is known to employees, suppliers, distributors and others involved in the party’s business; (c) measures taken by the party to guard the secrecy of the information; and (d) the ease or difficulty with which the information may be acquired or duplicated by others.
On the other hand, the protection of confidential information under the Leniency Regulations is much wider. The recently amended Leniency Regulations now extend confidentiality not only to the identity of the leniency applicant and the information provided by it, but equally to documents and evidence submitted by the applicant. This information may only be disclosed if: (a) disclosure is required by law; (b) the applicant has agreed to such disclosure in writing; or (c) there has been a public disclosure by the applicant. Thus, the confidentiality provisions under the Leniency Regulations allow CCI to grant confidentiality over any information submitted by the leniency applicant, while the General Regulations limit the grant of confidentiality only to information deemed commercially sensitive.
Impact of the Amended Leniency Regulations
While the amended Leniency Regulations has increased the scope of information that may be treated as confidential, it equally enables DG, where it considers necessary, to disclose information, documents and evidence submitted by the leniency applicant to another cartel participant for the purposes of investigation. As long as DG takes prior permission from CCI and records its reasons in writing, such disclosure may take place over an objection by the leniency applicant against such disclosure. The Leniency Regulations now appear to allow other cartel participants being investigated to inspect the ‘public version’ of information and documents, once DG submits its report to CCI.
While the process is not entirely clear yet, the Leniency Regulations now allow for nonconfidential versions of the documents, information and evidence submitted by the leniency applicant/informant and may form part of DG report to CCI, to also be made available to other cartel participants. In such a case, the extensive confidential protection available to a leniency applicant during DG proceedings would become meaningless once the DG report is submitted to CCI. Unless the leniency applicant has also made out a case and sought confidentiality under the General Regulations, i.e., established the information as being commercially sensitive, the information submitted by the leniency applicant(s) thus far may be made available to other cartel participants in the same investigation, purportedly in aid of their right to defense. This information may also include price sensitive information (for instance pricing history of an enterprise for the past 10 years, business strategies, segment audits, employment information, commercial documents, etc.). Therefore, enterprises must adopt a cautious approach while submitting information to DG/CCI even during leniency proceedings. That said, CCI would equally need to adopt a balanced approach, in that, it would have to weigh the need for maintaining confidentiality in leniency applications in order to preserve the efficacy of the leniency process against a party’s right of defense.
Taking a Cue from Other Jurisdictions
In a cartel case involving a leniency application, the General Court of the European Union held5 that at the time of deciding a confidentiality request, the individual albeit legitimate interests opposing the disclosure of information must be weighed against public interest that requires the actions of institutions like the EC to be as transparent as possible. In a recent case (Hydrogen Peroxide Cartel),6 the European Commission (‘EC’) clarified that while the contents of a leniency
application itself cannot be published verbatim, supporting evidence of communication, agreement, etc. provided by the applicant may be published. Given CCI’s predisposition towards adopting the EC’s practices, a similar approach may be expected from CCI, going forward.
The treatment of confidential documents in the United States (U.S.) is no different. The Federal Code of Civil Procedure provides for the discovery of any non-privileged document, except those in the nature of a trade secret or other confidential research, development, or commercial information.7 While U.S. Courts have not given trade secrets automatic or complete immunity against disclosure, they have, in each case, weighed an applicant’s claim to privacy against the need for disclosure. In several cases, trade secrets have been afforded limited protection,8 because of which the practice on confidentiality in antitrust investigations in the United States remains case specific.
Conclusion and Way Forward
The need for confidentiality continues to gain importance as writ courts, often the only judicial recourse available for enterprises in the absence of an appeal mechanism, are often reluctant to entertain challenges on confidentiality. Confidentiality requests, by their very nature, are case specific and any decision on granting confidential treatment would need to consider the unique and peculiar characteristics of the information submitted to DG/CCI during an investigation.
While the writ jurisdiction continues to remain available in respect of confidentiality decisions by CCI, businesses must remain cognizant of the fact that courts everywhere, are generally reluctant to interfere with an investigating authority’s decision on confidentiality, unless shown to be manifestly unjust and arbitrary. Additionally, third parties/informants must be aware that confidential information that they submit to DG/CCI may be disclosed to all parties to the investigation.
1 Regulation 35(10) of the General Regulations.
2 TPM Consultants Pvt. Ltd. v. Competition Commission of India, Appeal No. 35 of 2016
3 Criteria (b) and (c) gives CCI flexibility to waive confidentiality if it intends to use the information for compliance or purposes of the Competition Act
4 Regulation 35(3) of the General Regulations.
5 Hydrogen Peroxide Damages Claims Case, Case T-345/12.
6 COMP/F/C.38.620
7 Federal Rule of Civil Procedure 26.
8 Covey Oil Co. v. Continental Oil Co., 340 F.2d 993 (10th Cir. 1965); Julius M. Ames Co. v. Bostitch, Inc., 235 F.Supp., 856 (S.D.N.Y. 1964)
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
