Regulatory discretion upheld: CCI review succeeds in HNGIL matter

In a recent article, we had analysed the ramifications of the majority decision of the Supreme Court of India in the litigation surrounding the Insolvency and Bankruptcy Code, 2016 (“IBC”) proceedings of Hindustan National Glass and Industries Limited (“HNGIL”) on the antitrust regulator, the Competition Commission of India (“CCI”).

Both AGI and the CCI challenged the majority decision through review petitions. In the case of AGI, the Supreme Court dismissed the review petitions and permitted the successful resolution applicant to modify their plan to align with their commitments to CoC and match AGI’s original plan.

With regard to the CCI, the Supreme Court heard the matter and passed an order dated May 16, 2025. The CCI argued that the majority’s interpretation was contrary to the plain meaning of Section 29 of the Act, read with Regulations 19, 20, 22, and 25(1A) of the Competition Commission of Indian (Procedure regarding the transaction of business relation to combinations) Regulations, 2011 (“Combination Regulations”).

It was submitted that Section 29 of the Act accounts for the discretion to be exercised by the CCI. Once a response to the show cause notice (SCN) is received from the parties, the CCI may approve the combination, approve with voluntary modifications, call for a DG report under Section 29(1A) of the Act, or if AAEC (Appreciable Adverse Effect of Competition) concerns persist, form a prima facie opinion and proceed with the investigation under Section 29(2) to 29(6) of the Act.

The CCI also submitted that the majority decision would lead to prolonged investigations into combinations and has curtailed the regulator’s discretion to avoid the investigation. This also deviates from established practice and effectively voids the ability of parties to the combination to offer voluntary modifications under Regulation 25(1A) of the Combination Regulations.

The Court, sitting in review, observed that the original judgment did not consider the phases of procedure under Section 29 of the Act. It further observed that Section 29(1) uses “shall” while Section 29(1A) uses the term “may”, indicating legislative intent to confer discretion on the CCI. The term “shall” used in Section 29(1) of the Act makes it mandatory for the CCI to issue an SCN to the parties of the proposed combination and receive their response on the possible AAEC from the combination. However, Section 29(1A) does not make it mandatory for the CCI to direct the DG to cause further investigation. Therefore, the words in 29(1) and 29(1A) are mandatory and directory, respectively.

Hence, paragraphs 128-131 of the majority decision go against the literal construction of Section 29 of the Act. They curtail the jurisdiction and discretion of the CCI, despite the statute explicitly providing the same. The Court noted that the CCI, being an expert body, can decide on the course of action to be followed, and may exercise discretion to decide that escalation to the DG for investigation is unnecessary. The Court also acknowledged that Justice Bhatti’s construction of Sections 29(1) and 29(1A) of the Act in the dissenting opinion is the correct interpretation. The controversial portions of the majority decision were thus substituted with paragraphs 10 and 11 of the review order (Review Petition No. 482 of 2025 in Civil Appeal No. 4924 of 2023).

The CCI has historically approved/ rejected proposed combinations based on responses to the SCNs and modifications offered by parties or by the CCI itself. It has rarely found the need to resort to a DG investigation in respect of combinations.

The observations of the Supreme Court in the review are important to various stakeholders. The CCI can continue to exercise its statutory jurisdiction and discretion in the manner that it has historically done so. There is now no disruption or change in procedure to a competition regulation mechanism that has been regarded as fairly efficient and effective. The combination regulation regime also would not be unnecessarily prolonged, which may cause inefficiency, especially in the case of IBC resolution plans.

The review order upholds the sectoral regulator’s independence and discretionary powers conferred through the statute and maintains its status as an expert body.

About the authors: Prashanth Shivadass is a Partner and Prahalad Sriram is an Associate with Shivadass & Shivadass (Law Chambers).

The contents and comments of this document do not necessarily reflect the views/ position of Shivadass and Shivadass (Law Chambers) but remain solely of the author(s).

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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