Hindusthan National Glass Case: CCI files appeal in SC against NCLAT order

The Competition Commission of India (CCI) has filed this appeal against the final judgment and order dated 28.07.2023, passed by the National Company Law Appellate Tribunal (NCLAT) in Competition Appeal (AT) No. 07 of 2023. The appeal is specifically focused on the Tribunal's interpretation of the word "parties" used in Section 29(1) of the Competition Act, 2002.

 

The Tribunal's interpretation clarifies that both the 'acquirer' and the 'target' in a combination through acquisition need to be issued a Show Cause Notice (SCN) on the primafacie finding of Appreciable Adverse Effect on Competition by CCI. The CCI disagrees with this interpretation and argues that the established practice has been to issue an SCN only to the 'acquirer' in such cases.

Facts of the Case

 

The case revolves around the CCI's approval of a combination through acquisition proposed by AGI Greenpac Limited (Acquirer/Respondent No. 2) of Hindustan National Glass & Industries Limited (Target/Respondent No. 3). The approval order was challenged by multiple parties, including The U.P. Glass Manufacturers Syndicate (Respondent No. 1), before the NCLAT. The NCLAT upheld the CCI's approval order but made an observation regarding the issuance of the SCN under Section 29(1) of the Act. The Tribunal stated that the statute mandates issuing the SCN to both parties involved in the combination (the acquirer and the target), not just the acquirer, as has apparently been the CCI's practice.

Grounds of the Appeal

 

The CCI's appeal is based on the following primary grounds:

• The NCLAT's interpretation of the term 'parties' under Section 29(1) is erroneous and places an undue burden on the CCI.

• The CCI argues that the obligation to issue an SCN is fulfilled once the notice is issued to the acquirer in cases of combinations through acquisition.

• The CCI contends that the NCLAT's interpretation could lead to delays in the approval process, hindering the ease of doing business and economic growth.

• The CCI emphasizes that its existing practice aligns with the intent and scheme of the Act and the Combination Regulations.

 

Parties Involved

• Appellant: Competition Commission of India

• Respondents:

o U.P. Glass Manufacturers Syndicate

o AGI Greenpac Limited (Acquirer)

o Hindustan National Glass & Industries Limited (Target)

o Independent Sugar Corporation – INSCO (second bidder)

 

Further, the appeal outlines the key questions that the CCI seeks to address through this appeal. These questions revolve around the interpretation of the term 'parties' under Section 29(1) of the Act, the obligation to issue an SCN to the target company, the necessity of a second prima facie opinion after receiving a response to the SCN, and the validity of the CCI's procedure in approving the combination.

Overall, the CCI's appeal seeks a clarification on the interpretation of 'parties' under Section 29(1) and asserts that its existing practice of issuing the SCN only to the acquirer in combinations through acquisition is valid and in line with the legislative intent.

 

Appeal filed by the Competition Commission of India (CCI) against an order by the National Company Law Appellate Tribunal (NCLAT) discusses the obligations and responsibilities of the acquirer in the context of a combination under the Competition Act, 2002, and the Combination Regulations, 2011 emphasizes that in cases of acquisition, the acquirer (which is AGI Greenpac in current case)  is the notifying party responsible for filing the notice and making declarations in Forms I and II of Schedule II of the Combination Regulations. As a result, the acquirer bears the liability for any penalties arising from:

• Non-notification: Failure to notify the CCI about the combination under Section 43A of the Act.

• False information: Providing false information in the notification under Section 44 of the Act.

• Proposed commitments: The acquirer is also responsible for proposing any commitments or modifications in response to a show-cause notice (SCN) issued by the CCI under Section 29(1) of the Act.

 

This highlights the central role of the acquirer in the combination review process and reinforces the argument that the acquirer is the primary party responsible for compliance and bears the consequences of any non-compliance. It supports the CCI's stance that the SCN should primarily be issued to the acquirer in acquisition cases.