Court Rules Competition Commission of India's Investigation into Distilleries' Tender Practices Valid, Distinguishing Its Role From State Excise Regulatory Authority
In a significant judgment dated September 17, 2026, the Madhya Pradesh High Court (Division Bench, Jabalpur) dismissed a batch of writ petitions filed by several distilleries challenging the jurisdiction of the Competition Commission of India (CCI) to investigate allegations of bid-rigging and anti-competitive practices in tenders conducted by the State Excise Department under the Madhya Pradesh Excise Act, 1915.
The petitions were filed by Associated Alcohols and Breweries Limited and others, who operate within Madhya Pradesh's closed and heavily regulated country liquor market. The petitioners contended that the CCI's suo motu initiation of an inquiry on August 4, 2020, under Section 26(1) of the Competition Act, 2002, based on a Comptroller and Auditor General (CAG) audit report, was unconstitutional and beyond its jurisdiction. They argued that the State Legislature had exclusive legislative competence over intoxicating liquor under Entries 8 and 51 of List II (State List) of the Seventh Schedule to the Constitution, and that the excise framework, including licensing, pricing, and tender allocations, was tightly regulated by the State government, leaving no room for market competition or anti-competitive practices.
The petitioners also challenged the confidentiality measures adopted by the Director General during the investigation and contended that the CAG report had not been tabled before the State Legislature as mandated by Article 151(2) of the Constitution, thereby rendering it an inadmissible basis for initiating an inquiry. They relied heavily on Supreme Court precedents, including the recent nine-Judge Constitution Bench ruling in State of U.P. v. Lalta Prasad Vaish (2024), which underscored Parliament's lack of legislative competence over potable alcohol under Entry 52 of List I, and the judgment in Competition Commission of India v. Bharti Airtel Ltd. (2019), emphasizing the primacy of sectoral regulators.
The CCI, represented by the Additional Solicitor General, defended its jurisdiction, clarifying that its role was limited to investigating anti-competitive agreements and cartelization under Entry 21 of List III (Concurrent List) and did not interfere with the State's excise policy or taxation powers. The CCI argued that once the State permits private parties to manufacture and sell liquor under licenses, such activity constitutes "trade or commerce" subject to competition law. The CAG report was only a trigger for suo motu inquiry; the Director General's independent investigation uncovered extensive documentary and electronic evidence, including emails and WhatsApp communications indicating collusive bidding and market sharing among distilleries.
The State government also supported the CCI's position, emphasizing the need to balance excise revenue and public health with market fairness, and submitted that the tender conditions and pricing policy were cabinet-approved and strictly monitored.
The High Court, after detailed consideration of the facts, statutory framework, and judicial precedents, held:
1. The Competition Act, 2002, enacted under Entry 21 of the Concurrent List, coexists with the State's exclusive powers under Entries 8 and 51 of List II. There is no legislative conflict or encroachment since the Competition Act targets anti-competitive practices in the market and does not regulate excise policies or licensing.
2. The CCI has jurisdiction to initiate suo motu inquiries based on information received, including a CAG report, under Section 19(1) and Section 26(1) of the Competition Act. The CAG report, though not tabled in the Legislature at the time, served as a legitimate informational trigger, with the Director General conducting a full-fledged independent investigation.
3. The State Excise Department's regulatory role and the CCI's market regulatory role are distinct and complementary. The presence of a sectoral regulator does not oust the CCI's jurisdiction over cartelization and bid-rigging allegations.
4. The confidentiality measures adopted by the Director General were consistent with the Competition Commission's regulations. Petitioners have statutory remedies under Regulation 35 to access confidential information under appropriate safeguards.
5. Orders under Section 26(1) of the Competition Act are administrative and do not decide civil rights or impose penalties; hence, writ petitions challenging such orders are premature. The statutory appeal mechanism under Section 53A before the National Company Law Appellate Tribunal provides an efficacious remedy.
6. The absence of a judicial member in the CCI at the time of proceedings, as raised by petitioners, does not invalidate the ongoing investigation, pending Supreme Court's decision on related issues.
The Court directed the CCI to complete the inquiry expeditiously and pass a final order under Section 27 of the Competition Act. The interim protection granted to the petitioners was vacated.
This judgment clarifies the interplay between State excise laws and the Competition Act, affirming the CCI's authority to investigate and curb anti-competitive practices even in sectors under exclusive State legislative control, provided the investigation does not impinge upon the State's regulatory or excise policy domain.
Bottom Line:
Competition Commission of India (CCI) has jurisdiction to investigate bid-rigging and anti-competitive practices under the Competition Act, 2002, even in matters governed by State Excise frameworks. CCI's powers do not encroach upon the exclusive domain of State legislation under List II of the Seventh Schedule of the Constitution.
Statutory provision(s):
Article 226 Constitution of India, Madhya Pradesh Excise Act, 1915, Competition Act, 2002 Sections 19, 26, 27, 53A, Regulation 35 of the Competition Commission of India (General) Regulations, 2009
