Pragyan Sucheta Panda & Aryan Rawat
Takeaways from Reports and Surveys of ICN
The International Competition Network (ICN) is an informal organization which addresses various concerns regarding competition. Importantly, ICN is not a law-making body and it just recommends the best practices in competition law in various jurisdictions. Individual member countries can consider these recommendations and design to incorporate these suggestions in their legislation.
Notably, ICN’s Agency Effectiveness Working Group (AEWG) released a report in 2014 “Competition Agency Confidentiality Practices”. In this, the group surveyed member agencies to know more about the confidentiality practices in their respective jurisdiction. The aim was to aid the agencies in sharing their experiences and develop better guidelines for safeguarding sensitive information during investigations. India was not a part of ICN during this survey, it recently became a member in 2023. As per the survey, there are various definitions of confidential information in different jurisdictions. However, consensus on the delineation of confidential information focuses on commercially sensitive data like profits, prices and strategies.
Comparative Confidentiality Through ICN’s Lens
ICN has recommended practices of investigative process where it has laid down clear guidelines to ensure confidentiality of information received by agencies from the parties or any third party. Emphasis has been on balancing the commercial interest of submitters and procedural fairness during the investigation. ICN in its Report III.5.1 stated that the extent of investigative transparency should vary from case to case and the agency investigating such cases should consider the needs that arise in a particular case. The agencies have the responsibility to regulate the flow of information shared. Drawing peculiarities in cartel and merger control proceedings, on one hand, a cartel investment may require lesser transparency at the initial stage of investigation whereas a merger review may allow for more openness in the earlier stage of investigation. The European Union’s antitrust regime follows a similar structure where confidentiality practices in merger control and in cartel settlement varies based on situation and cases. Delving into the procedural aspects, in the case of merger control, access to the file is generally based on a rolling basis after a SO is issued which allows parties to view new evidence. However, in case of cartel investigation access to the file occurs before SO is issued which gives the party early access to file and help them decide settlement options. Adding to this, in merger cases parties have broader power relating to the disclosure of files, enabling them to respond effectively during various stages of investigation while in cartel investigation, access is limited to evidences that are directly relevant to the objections being considered.
The semblance can be drawn to the proceeding before CCI in cases of cartelization and combination approvals in India. Notably, CCI deals with antitrust (Sections 3 and 4 of the Act) and combination (Section 6) separately. However, there is no separate regulation to deal with confidentiality concerns that may arise during investigations and proceedings before the CCI. This practice is not in line with the recommendations of ICN and EU practices. The Act clearly states two separate branches of Competition Law in India (Antirust and Combinations) but the confidentiality concerns have not been segregated to cater to case-specific needs. There is scope for establishing a separate confidentiality framework that can foster trust and transparency for the parties involved along with a comprehensive confidentiality regime that addresses both the branches of competition law.
Focus on the Content of the Information under Scrutiny
In the same report, at VI.10.2 ICN recommended that the agencies should lay down clear rules as to what information is entitled to confidential protection suggesting that there should be an exhaustive list of information that should fall under the category of “confidential information”. The European Commission’s Guideline on protection of confidential information has followed the ICN recommendations. The courts in EU consider information as confidential based on three criteria: (i) known to limited persons, (ii) disclosure is liable to cause serious harm and (iii) information is entitled to protection or else would lead to harming business interest.
The commission has also explained the reasons stating why information which fulfils all three criteria should fall under the category of “confidential information”. One of the major factors underlined in the EU Guideline has been the potential harm it might cause to business if disclosed. Additionally, the guideline clearly suggests that data defined as “trade secrets” in Trade Secrets Directive are to be considered as confidential.
In India, the criteria under Regulation 35(2) of General Regulations are not based on the content of the information rather the emphasis has been on the availability of information in the public domain and accessibility by third parties. The standard that currently governs confidential information is not comprehensive. A situation might arise where the personal information that might not traditionally be considered as a trade secret or sensitive information would deemed to be termed as confidential if it meets the criteria mentioned in Regulation 35. The exact scenario happened while dealing with the Swiggy case. Hence, the Indian Competition authority must consider revising the present definition and standard of confidential information to ensure protection of confidential information holistically.
The situation of reluctance and flagging data as ‘confidential’ or not can be efficiently addressed with the addition of criteria of direct business harm due to disclosure of commercially sensitive information in Regulation 35(2) of General Regulations. The existing framework emphasizes majorly on availability and accessibility of the information. However, CCI must also consider establishing criteria that are based on the content of the impugned information, recognizing the significance of information with commercial, financial or strategic value. This would have dual-fold benefits as, firstly, the data/information which genuinely has the potential to harm the business, when shared publicly, will be protected by the regulatory authority and, secondly, the claims that lack justification for securing confidentiality status would be sought after effectively.
Further, had the Indian competition agency adopted ICN’s recommendation of clearly demarcating what constitutes “commercially sensitive information” within the ambit of confidential information, Swiggy would not have the latitude to refuse the disclosure of information by broadly categorizing it as commercially sensitive. An exhaustive statutory definition would eliminate all kinds of ambiguity regarding classification of such information. This would prevent parties from arbitrarily invoking claims of confidentiality and determine whether certain data qualifies as commercially sensitive is settled at the outset. Conversely, if the regulations provided for a precise definition of ‘commercially sensitive information’, it would have strengthened Swiggy’s defence in protecting its confidential data with the help of a succinct definition, balancing the business interest and ensuring information sharing in completion of the procedure.
Tracing USA’s Take on Confidentiality in Competition Cases
To analyse the confidentiality regime in India, there are lessons that an emerging jurisdiction like India can take from a mature antitrust jurisdiction hereby USA. Glancing over the legislative framework prevailing in USA, the umbrella legislation governing the USA’s competition law is called the Sherman Act, 1890. To establish a robust legislative framework to deter unfair practices, Federal Trade Commission Act, 1914 (FTC Act) and the Clayton Act, 1914 were subsequently promulgated.
i) FTC’s Approach to Protect Confidentiality
The Federal Trade Commission (FTC) has several provisions dealing with confidentiality for protection of sensitive information collected during investigation. As per Section 6(f), the FTC cannot disclose any trade secrets or commercial information which is privileged publicly. However, such information can be shared with federal or state law enforcement agencies for official purposes only. Section 21(b) of the Federal Trade Commission Act ensures that any documents, testimony, or other materials accessed through compulsory means are kept confidential and only accessible by authorized persons. Like India, USA’s confidentiality regime has Section 21(c) which allows parties to self-certify information as confidential. The FTC has an obligation to provide the parties with a disclaimer before making the information public so that the parties can contest the same.
In case FTC intends to make such information public, it must notify the provider of the same, who in turn can seek a court order to prevent the disclosure. Section 21(f) exempts certain documents that are related to the investigation from public disclosure under Freedom of Information Act.
ii) DOJ’S Strict Regime to Safeguard Confidentiality
Similarly, the Division of Justice (DoJ) follows strict confidentiality practices[8] to protect sensitive information. The investigation generally begins with voluntary requests for information through ‘access letters’ or through mandatory filings under the Hart-Scott-Rodino (HSR) Act for mergers. If any additional enquiry is required, the DoJ can issue Civil Investigative Demands (CIDs) to gather relevant testimony and documents. The Antitrust Civil Process Act (ACPA) mandates that all the information obtained through CIDs is kept confidential, with few exceptions such as use in court, grand jury proceedings, or other federal investigations. For criminal antitrust cases, like those involving price fixing, bid rigging, the DoJ uses grand juries to issue subpoenas for documents and testimony. For mergers both the FTC and DoJ are prohibited from publicly disclosing any information submitted under the HSR Act, except in judicial or administrative actions.
iii) Need for Regulatory Clarity to Define Confidentiality
An overview of the USA’s legislation shows that it has clearly defined confidential information as the one which fall under the heads of “Trade Secrets” or “Commercial Information” and disclosure of the same may be detrimental to the business. In the case of Kewanee Oil Co. (1974), the U.S. Supreme Court upheld the decision of the District Court, by noting that an information can be a trade secret if; (i) information is used for business purposes, (ii) not in public, thereby, secret and (iii) should provide a competitive advantage. It has also laid specific legislation for merger and acquisition. India, as discussed above, fails to provide the criteria based on competitive harm to business while the classification of information as ‘confidential’ under General Regulation.
Additionally, Regulation 20 of the CCI General Regulation stipulates that where necessary the DG may submit report in two parts to maintain the confidentiality of “commercially sensitive information”. This provision merely serves as a procedural guideline for the DG when submitting the investigation report but is not a part of the Regulation 35(2) which defines what constitutes ‘Confidential Information’. The part of General regulation that guides parties to self-certify information as confidential and establishes confidentiality ring lacks to mention competitive harm to business or prohibition to disclose a trade secret. The law of competition is tryst with the aim of regulating fair market practices and ensuring competitiveness. In a practical scenario, a lacuna in regulation which does not comprehensively protect commercially sensitive information during an investigation conducted by the fair market regulator is unexplainable in the Indian confidentiality regime.
In contrast, the framework in the USA provides explicit protection by categorically prohibiting agencies from disclosing any “trade secret” which has potential to cause harm to business commercially. Through this provision, the USA confidentiality framework is mitigating the risk of ambiguity and providing a law that protects competition by taking practical implications on involved businesses in antitrust cases. In a scenario where a party shows reluctance to provide data after the formation of a confidentiality ring, the clearly stated provision about ‘trade secret’ can be applied to adjudicate on the disclosure or protection of information.
Way Forward
The existing Confidentiality Regime in India is marked by both opportunities and challenges. As the Indian Legislature has proclaimed the path of aligning the Indian Competition law with the global best practices, numerous learning and lessons can lead to more efficient enforcement and effective adjudication in competition cases. The CCI’s stance about treatment of information shared with DG for investigation and furbished in Lesser Penalty proceedings has been clear and it thereby provides practical clarity to the stakeholders. On similar lines, there is a need to demarcate separate regulations for regulating confidentially concerns in cartels and combination control. A step towards clarity, consistency and a tailor-made mechanism will enhance the trust of involved parties and promote competition.
As seen in the Swiggy case, after the decision of CCI and the order of Karnataka HC vide dated June 26, 2024, the food delivery app has been reluctant to share information in the confidentiality rings points towards the need for broadening the criteria and clearly stating the impact on business due to sharing of such ‘confidential’ information. The inspiration can be drawn from the USA to construe the information which would constitute as ‘confidential’. The aim should be to protect the information that has the potential to harm the business based on the content criterion to promote competition and deter anti-competitive practices. The well-developed EU antitrust framework has been seen as a beacon of hope for strengthening the confidentiality regime in India. However, India has not adapted the negotiated disclosure agreement arrangement that is a paradigm for the creation of Confidentiality rings in the EU. Through the establishment of contractual obligations and clearly defined criteria for protecting commercially sensitive information, CCI can effectively address the reluctance posed by parties to share information in a confidentiality ring. Therefore, the alignment with global best practices and incorporating the lessons learnt from mature jurisdiction, associated implications and a comprehensive confidentiality regime can be established in India.
This blog is the second part of a two – part blog series. The authors are both fourth – year law students at the National Law University, Odisha.
NUALS Law Journal 