[Editorial] The adoption of the Confidentiality Ring – Issues and the way forward

Context: The Competition Commission of India (CCI) has realised that disputes arising out of antitrust matters, also known as competition or cartelisation, require confidentiality. This was recently used in an order, passed by the DG-CCI on the Amazon dispute, wherein Amazon (the defendant) decided to take the confidentiality route towards its submissions.

Quick revision mind map

The concept of 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.
  • In Europe, antitrust matters are largely regulated under the guidance note for 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.

Why has the CCI decided to adopt the Confidentiality Ring?

  • The Competition Commission of India (CCI) has realised that disputes arising out of antitrust matters, also known as competition or cartelisation, require confidentiality.
  • The problems that arise in the commission’s investigation under Sections 3, 4 or 5 of the Competition Act are germane to the suo motu powers given to the director-general of the commission, which have now extended toward establishing an opaque confidentiality ring.
  • The CCI has taken an alternative view by vaguely replacing the intent with the regulation. 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.

The concerns associated with the adoption of it

Defendant’s reputation ground can be used indiscriminately to subdue any counter:

  • 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 defence can be used indiscriminately to subdue any counter that may arise from the informant, who may not possess the intricate details of how a cartel works.

Rejected the informant’s right to know the information:

  • The relief under Section 35 of the Act empowers the CCI to establish a confidentiality ring including the parties in dispute to disseminate the information for which the confidentiality clause is invoked, which raises questions.
  • However, this is immediately caveated by Regulation 8 of the “Confidentiality Ring” Amendment (the recent), 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. It has also effectively rejected the informant’s right to know the information, which would be necessary to establish their claim.
  • This not only empowers the CCI to further its cause of suo motu investigation but also brings secrecy to cases of high-value disputes.

Favours 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.

Conclusion

  • We have imported the “Confidentiality Ring” from the EU but we may have done it in a manner that none of the decisions can be challenged.
  • 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.

Practice Question for Mains

  1. Unlike the EU, which established rules for a confidentiality ring to protect the information provider, the Competition Commission of India seems to want to protect the defendant, which is usually a large, multimillion-dollar entity. Comment. (250 Words, 15 Marks)
Referred Sources

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