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Competition Commission of India vs State of Mizoram & Ors.

Civil Appeal · 2022 INSC 64Decided 19 Jan 2022
Civil Appeal No. 1797 of 2015
Sanjay Kishan Kaul · M.M. Sundresh

Background

The State of Mizoram invited bids for appointment of distributors/selling agents to run its state lottery. A complaint was filed with the CCI alleging that the four selected bidders had quoted identical rates, amounting to bid-rigging and cartelisation in violation of the Competition Act, 2002, and separately that the State had abused its dominant position by demanding excessive security deposits from bidders. The CCI found a prima facie case and ordered an investigation by its Director General, whose report was adverse to some parties. Before the CCI could conclude proceedings, the State and the private bidders approached the Gauhati High Court, which stalled the CCI's proceedings on the reasoning that lottery is "res extra commercium" (outside normal trade) and exclusively governed by the separate Lotteries (Regulation) Act, so the Competition Act could not apply.

Decision Breakdown

The Supreme Court held that even though lotteries are a specially regulated, res extra commercium business under the Regulation Act, that does not exclude scrutiny of anti-competitive conduct (like bid-rigging in the tender process) under the Competition Act: the two statutes operate in different fields and there was no real conflict requiring reconciliation. It held that a lottery ticket, while an "actionable claim" and not "goods," still falls within the expansive, inclusive definition of "service" under Section 2(u) of the Competition Act, since a lottery purchaser is a "potential user" of that service. The Court found the High Court's intervention "extremely premature," since it should have let the CCI's investigation run its course, with any aggrieved party free to use the statutory appeal under Section 53B of the Competition Act instead of approaching the High Court midway. The High Court's judgment was set aside; the State's writ petition was directed to be treated as closed (since the CCI had already clarified it was not proceeding against the State), while the private bidders' writ petitions were dismissed, allowing the CCI investigation to continue.

Lesson Learnt

A business being specially regulated by its own statute (like lotteries) does not automatically place it beyond the reach of general competition law: anti-competitive practices such as bid-rigging can still be investigated by the CCI, and courts should let a regulatory investigation run to completion rather than intervening prematurely when a statutory appeal remedy already exists.

Official source (sci.gov.in)View Judgment (PDF)

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