"Abortive Attempt To Scuttle Innocuous Statutory Proceedings": Karnataka HC Rejects Intel's Plea Against CCI Probe With ₹10 Lakh Cost

The Karnataka High Court has dismissed a petition filed by Intel Technology assailing a 2019 CCI order directing a probe into its warranty policy with Rs. 10 lakh cost.The agenda of CCI's probe is to see whether Intel's policy has resulted in denial of market access to parallel importers & re-sellers of Boxed Micro-processors for Desktop and Laptop PCs. It will also assess the risk of higher pricing for the said articles in India. A single judge bench of Justice Krishna S Dixit said, "This Writ Petition, besides being premature and absolutely devoid of merits, is an abortive attempt by the petitioners to scuttle the innocuous statutory proceedings of the Commission." Matrix Info Systems had approached the Commission under Section 19(1)(a) of the 2002 Act alleging that Intel's 'warranty policy' is in contravention of Section 3 & 4 of the 2002 Act in as much as they were refusing to provide the warranty in India for boxed microprocessors which are imported from authorised sources abroad but not those sourced from the Intel authorised dealers in India. On a preliminary inquiry under Section 26(1) of 2002 Act, the Commission found a prima facie case against the company and instructed the Director General to cause an investigation into the matter within 150 days. Intel assailed this order as being violative of principles of natural justice. It was alleged that an investigation of this kind has serious consequences and implications on the business reputation and therefore, could not have been casually directed by invoking draconian provisions of the 2002 Act. The Commission on the other hand contended that the warranty policy prima facie involves abuse of dominance and matters of this kind do not merit deeper examination at the hands of Writ Courts, there being no coercive action, impugned order being more administrative in nature. Findings: Firstly the bench said, "The Commission being a statutory expert body takes institutional decisions. Regard, being to high stature of the Commission and the qualification & expertise of its constituent members, a strong presumption as to regularity of its proceedings arises; the persons assailing the same have an onerous task of rebuttal." It added, "Courts exercising writ jurisdiction under Articles 226 & 227 of the Constitution ordinarily do not have the expertise in matters like this and therefore, should loathe to interfere, subject to all just exceptions." Then it said, "The purpose of filing information before the Commission is only to set the ball rolling as per the provisions of 2002 Act. The scheme of section 26 envisages layered proceedings and the impugned order is only a step in aid of that. The scope of inquiry is much broader and not restricted to the material placed on record by the parties only. The directions issued by the Commission in its order under section 26(1) of the Act are not parties specific but address the alleged 'anti – competitive practices' in the industry in general, the punitive or corrective action being confined only to the parties, notwithstanding." The court dismissed the contention of the petitioners that they had reframed their warranty service policy based on Delhi High Court's decision in Ashish Ahuja Vs. Snapdeal (2014) and and Kapil Wadhwa v. Samsung Electronics, that operate as res judicata. It said, "In matters like this, that too at the preliminary stage, the doctrine of res judicata or of precedent, cannot be invoked, no 'case' having been decided by the Commission in virtue of impugned order." As regards the contention that the investigation now ordered under section 26(1) of the 2002 Act may have a 'detrimental effect' on the business reputation of the petitioners, the bench said, "The investigation to be undertaken by the Director General in terms of order under section 26(1) of the 2002 Act, (which he termed 'draconian law') involves an intrusive and free ranging inquiry into every aspect of his clients' business." Referring to the Delhi High Court judgment in the case of Google vs. CCI, it said, "Although did not use the word 'draconian' observed that the powers of Director General to investigate under section 26(2) are far wider than the powers of the police under the Code of Criminal Procedure, 1973, is also true." It then observed, "The aim of 2002 enactment is: preventing practices which have an 'adverse effect' on the competition; promoting & sustaining competition in the markets, in order to protect the interest of the consumers; and ensuring that freedom of trade is maintained in the given 'relevant market'. By extension, this freedom of trade also holds within it the freedom of choice, i.e., lower switching costs and proper information systems for the consumers to make the right choice." Further it said, "There may be damage to person, property or reputation but there is no legal injury to complain of. If petitioners' ...

"Abortive Attempt To Scuttle Innocuous Statutory Proceedings": Karnataka HC Rejects Intel's Plea Against CCI Probe With ₹10 Lakh Cost

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