Consider two rival manufacturers involved in a design infringement suit. A court refers them to mediation, where they reach a settlement. The defendant agrees to stop selling its products in three southern states and to avoid the plaintiff's distributors. Both parties withdraw their respective complaints, including the defendant's complaint before the Competition Commission of India (CCI), alleging sham litigation by the plaintiff. Both parties are satisfied with the outcome. However, the buyers in those three states, who have thereby lost a supplier in the market, were never a party to the settlement.

Indian law currently has no clear mechanism to deal with the situation. Courts have treated private settlements as the end of the CCI's inquiry without examining the terms of the settlement. As court-annexed mediation becomes a common mode of dispute resolution in commercial cases, this gap is likely to grow.

Two Courts, Two Answers

The first answer comes from the Madras. In Tamil Nadu Film Exhibitors Association v. CCI (AIR 2015 Mad 106), a dispute over the screening of Viswaroopam resulted in a compromise with the withdrawal of the producer's complaint before the CCI. The High Court accepted and held that the parties could settle their disputes within the framework of the Competition Act. However, that the CCI could examine whether the compromise was a cover for anti-competitive conduct and prevent an inquiry were possible.

A boycott by exhibitors is an example of horizontal anti-competitive activity. The Supreme Court upheld the penalties imposed on Kerala Film Exhibitors Federation by CCI due to threats made to distributors dealing with a competing theatre in September 2025.

The Delhi High Court took a contrary view in the case of JCB India Ltd. v. CCI (August 2024). JCB and Bull Machines have settled the design litigation that has been going on for over a decade through mediation directed by the Supreme Court. Bull later withdrew its complaint of sham litigation and abuse of dominance by JCB. The High Court quashed the CCI's investigation and the related search orders and warned that continuing it would leave a sword of Damocles hanging over the parting parties. The Supreme Court dismissed the CCI's appeal in December 2024.

In 2011, JCB filed suits against Bull for infringement of their registered designs in a backhoe loader. In 2013 Bull approached the CCI to claim that the suits were frivolous and were being brought to keep the competitor product out of the market. An investigation was ordered by the CCI in 2014. A reference was made by the Supreme Court to the Civil Dispute Resolution Process in 2019 and the parties reached a settlement in 2021. The High Court clarified that the CCI must respect the results of mediation and settlements reached by the parties.

In September 2025, the Supreme Court dismissed the CCI's appeals against the Delhi High Court's Ericsson ruling. The ruling in Ericsson held that “once the informant and the opposite party settle, the very substratum of the proceedings by CCI is lost”. The Supreme Court reserved, however, whether these words applied to the facts at hand. Thus, the result is two dismissals, but without a ruling on the legal position.

The High Court has also found that the Patents Act overrides the Competition Act when a patentee is relying on its patent rights. However, on appeal to the Supreme Court, they have not interfered with this finding due to the settlement agreements and have left the matter open.

What the Courts Haven't Asked About

In both JCB and Ericsson, what the courts reason about is unilateral conduct, using litigation as an abuse of dominance and licencing terms. In each case, the settlement has effectively removed the complainant from the dispute. The courts held that without a complainant there was nothing left to investigate. It is as if a CCI proceeding was a private dispute between two parties.

The issue is, however, that proceedings before the CCI are not a private suit. In Samir Agrawal v. CCI , the Supreme Court held that proceedings before the CCI are for the public interest and that an informant does not need to be personally aggrieved by the conduct in question. Section 19 also gives the CCI the power to act on its own motion. Therefore, an informant's withdrawal should impact how the CCI is collecting evidence, but not its authority to investigate.

The Court observed that the view of the Tribunal that there should be a loss suffered by the informant was not correct since CCI has an inquisitorial role in this matter. The informant only initiates a probe and cannot claim ownership or control over it.

The more difficult situation, which no Indian court has yet considered, is one where the settlement itself causes the harm. A settlement qualifies is an “agreement” within the meaning of Section 2(b) of the Competition Act. Its terms, which divide territories or customers, or require one competitor to withdraw from the market, would fall within Section 3(3), under which an appreciable adverse effect is presumed. Calling the arrangement a mediated settlement does not change its effect on the market. The reasoning used in the Ericsson ruling, that the “substratum” of the proceedings has disappeared cannot be relied upon as it is the arrangement that has disappeared (not the one that is causing the problem). The settlement itself creates the problem.

This gives IP owners some degree of flexibility under section 3(5). An agreement not to enter three States, or not to approach competitors' distributors is not required to ensure protection of design rights. This can be seen to be outside the scope of the right and can therefore fall foul of competition legislation.

A Statute that Points the Other Way

The amendments to the Competition Act that were made in 2023 strengthen the argument. Sections 48A and 48B, which came into force in March 2024, add formal procedures for settlement and commitment. It is worth noting that these procedures are for alleged violations of Section 3(4) and Section 4, dealing with vertical agreements and abuse of dominant position. Parliament deliberately excluded horizontal agreements, including cartels, from such procedures. Where settlement is permitted, the CCI must approve its terms and can revoke the order if the parties fail to comply. In contrast, the approach taken in JCB allows two competitors unable to settle a cartel case with the regulator to, in effect, settle it with each other. Such a settlement requires no regulatory approval and leaves no order for the CCI to revoke. The private route becomes stronger than the statutory route set by Parliament.

The new Mediation Act, 2023 adds another complication. Its First Schedule lists any investigation, inquiry or proceeding under the Competition Act as “unsuitable for mediation”. Thus, the CCI inquiry itself cannot be mediated. However, in JCB, the mediation of the civil suit underlying it indirectly produces the same result.

The Confidentiality Problem

Even the approach taken by the Madras High Court becomes hard to apply under the new mediation framework. Section 22 of the Mediation Act requires the parties and mediators to keep communications confidential. Section 23 prevents the forced disclosure of anything said or done during mediation before a court, tribunal or other adjudicatory proceeding. The only exceptions cover a mediator's professional misconduct, threats to commit an offence, domestic violence, child abuse and imminent threats to public health or safety. None of these exceptions covers harm to competition. As is revealed by the Explanation to Section 22, the settlement agreement can be disclosed for registration, enforcement and challenge, not for review by regulators.

A regulator cannot examine whether a settlement hides anti-competitive conduct, if it is not allowed to review the settlement itself. The solution can be limited. The settlement agreement, in contrast to the confidentiality of the discussions between the parties that result in it, should be disclosed to the CCI upon request. Mediation confidentiality is to protect open communication during negotiations. It was never intended to protect the final outcome from legal scrutiny.

Reading the Settlement, Not Just Its Existence

Other jurisdictions have already had to deal with this issue. In FTC v. Actavis (2013), the US Supreme Court refused to treat patent settlements as exempt from antitrust law just because they ended litigation. A payment by the brand manufacturer to a generic competitor to keep away from the market had to be treated by its effect on competition. The European Commission and EU courts have treated pay-for-delay agreements in similar lines (Lundbeck and Servier). In both cases, the objective of encouraging settlements came up against competition law rather than being allowed to overcome it.

India can adopt a practical approach based on this experience. Settlements should be treated as final where the dispute is genuinely between the parties and the terms of the settlement do not go beyond settling that dispute (e.g. to settle damages, a licence, or an undertaking within the scope of the intellectual property right). However, the CCI's jurisdiction should continue where the parties are actual or potential competitors and the settlement restricts output, territories or customers or market entry beyond the scope of the underlying right. The CCI's jurisdiction should also continue where one party receives value in return for agreeing to stay out of the market. In such cases, the CCI should be permitted to examine the settlement agreement and assess it under Section 3, irrespective of whether the informant wishes to continue with the complaint.

This approach does not undermine the mediation process. A settlement that survives competition law scrutiny is more secure, and mediators can work with a clearer boundary when seeking an agreement. The Supreme Court has left this question unanswered twice. When it comes up again, the answer should depend on how the settlement impacts the market rather on simply on the fact that the parties have stopped fighting.

Views are personal.