Context
Amazon (the defendant) decided to take the confidentiality route towards its submissions in an order dated March 7 passed by the DG-CCI on the Amazon dispute.
Relevance
GS-III: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Dimensions of the Article
- About the Confidentiality Ring
- Adoption of Confidentiality ring by CCI
- Issues with the CCI adoption of the Confidentiality Ring
- Way Forward
About the Confidentiality Ring
- In 2015, the EU mandated the creation of a data room to respect the confidentiality of certain documents.
- The EU has to protect this mandate to ensure that the right of defence is not prejudiced.
- Articles 101 and 102 of the Treaty of the European Union, which states: “Through confidentiality rings, DG Competition (EU) can safeguard the rights of defence while respecting the legitimate interests in the confidentiality of the information providers.
- In addition, confidentiality rings remove or reduce the burden of preparing non-confidential versions of documents.”
Adoption of Confidentiality ring by CCI
- CCI’s investigation under Sections 3, 4 or 5 of the Competition Act are related to the suo motu powers given to the director-general of the commission, which have now extended toward establishing a confidentiality ring.
- The CCI has taken an alternative view by vaguely replacing the intent with the regulation.
- The commission may provide the Confidentiality ring after providing a reasonable opportunity to the informant to represent its case before the Commission.
- This casts an onus on the informant.
- Turning to the provider of confidential information, the party seeking confidentiality has to submit reasons and the same must be rebutted by the informant, CCI or any other parties, largely driven by the CCI.
Issues with the CCI adoption of the Confidentiality Ring
Indiscriminate use of defendant’s reputation ground
- What would happen if the informant seeks additional documents so that the agency is not prejudiced?
- By hearing parties out, through redacted information the CCI is bound to be questioned as to the reasons for deciding in a certain manner and worse, could stifle the process at the start.
- This is likely because the CCI has to hear the objections that the informant may have regarding the reasons for keeping information confidential.
- The usual ground for seeking this protection is the defendant’s reputation.
- However, this defense can be used to indiscriminately to subdue any counter that may arise from the informant, who may not possess the intricate details of how a cartel works.
Rejection of informant’s right to know the information
- The second question is about the relief under Section 35 of the Act that empowers the CCI to establish a confidentiality ring including the parties in dispute to disseminate the information for which the confidentiality clause is invoked.
- However, this is immediately caveated by Regulation 8 of the “Confidentiality Ring” Amendment of April 8, which states that the informant shall not be part of the ring.
- This will essentially lead the CCI to gather more information surreptitiously for the determination of the case.
- Void the informant’s right to know information: It has also effectively rejected the informant’s right to know the information, which would be necessary to establish their claim.
- Brings secrecy: This not only empowers the CCI to further its cause of suo motu investigation but also brings secrecy to cases of high-value disputes.
It protects the defendant
- The reason the CCI decided to establish a confidentiality ring is the opposite of the EU directive.
- The EU would like to protect the information provider, but the CCI seems to want to protect the documents of the defendant.
- This contradicts the intent in regulation 1 wherein the CCI intends to protect the informant and regulation 2, which gives unfettered rights to “parties” in the dispute to summarily drop the confidentiality card which, according to any reasonable person, includes the defendant.
Way Forward
The protection provided to the informants, unfortunately, turns out to be to the advantage of the defendants, who are usually large multi-billion dollar entities. It enables the CCI to ringfence its investigation creating legal immunity for “all” involved.
Source – The Indian Express
