Private Compensation In Indian Competition Law: An Untapped Remedy

INTRODUCTION

India’s competition law framework has long recognised follow-on private compensation claims. However, nearly two decades since inception, this remedy remains largely dormant, with only 11 applications filed¹ and just one decided on merits.² Compensation applications are now moving towards substantive hearings, the Competition (Amendment) Act, 2023 (2023 Amendment) has expanded the statutory gateway, and the Competition Commission of India (CCI) is showing growing appetite for technical analysis that compensation adjudication demands.

The stakes are significant. Unlike monetary penalties imposed by the CCI, the National Company Law Appellate Tribunal (NCLAT) or the Supreme Court (SC) under the Competition Act, 2002 (Competition Act) which flow to the Consolidated Fund of India³, private compensation is the sole mechanism through which parties harmed by anti-competitive conduct can directly obtain financial redress. This adds a layer of deterrence that state-led enforcement alone cannot provide.

However, questions that go to the heart of the matter remain unanswered, including the standards for causation and quantification of private compensation. The interplay of compensation with leniency and the novel remedies of settlements and commitments also remains in uncharted waters. The operationalisation of private compensation will depend on how these questions are resolved.

REGULATORY FRAMEWORK

Indian competition law recognises private compensation only in the nature of ‘follow-on’ claims, requiring an underlying contravention to have already been established. This framework resides in Sections 53N and 42A, with Section 53N being the primary vehicle. Under Section 53N, an applicant must demonstrate ‘loss’ or ‘damage’ resulting from contraventions of Chapter II (i.e., Sections 3 (anti-competitive agreements), 4 (abuse of dominance) and 5 and 6 (merger control)) as established through the findings of the CCI, the NCLAT or the SC. Section 53N also recognises claims from settlement orders and from damage caused by contraventions, without reasonable ground, of NCLAT orders.⁴ Section 42A operates on a narrower premise, permitting compensation for losses arising out of contraventions of the CCI’s orders or directions.

All compensation applications are filed before⁵ and adjudicated by the NCLAT, whose remit under Section 53N is confined to determining eligibility and the quantum of compensation, with the underlying finding of contravention assumed to be accurate.

India’s compensation regime carries two notable features: first, it is unique in theoretically recognising claims arising from merger decisions, compared to global counterparts such as the EU and the UK. However, this remains hypothetical, since the CCI has never blocked a merger, having only issued directions or penalties under Sections 43A, 44 and 45 (gun-jumping, false statements or material omissions), and no foundational basis for compensation claims has materialised. Second, despite Section 53N envisaging the possibility of class actions, no such collective redress has been invoked to date, in striking contrast to their growing prominence globally.⁶

CASES INVOLVING COMPENSATION CLAIMS

Of the 11 compensation applications filed, two were withdrawn (DLF and Prem Prakash), one was settled (KFCC), and one was decided on merits by the NCLAT (GDA). The underlying violations reflect an almost even split between cases emanating from Sections 3(3) (horizontal agreements) and 4 (abuse of dominance), with no claims arising from Section 3(4) (vertical restraints) or merger control.

GDA, the sole case decided on merits, involved the CCI finding that GDA abused its dominant position by imposing unfair conditions and pricing on allottees of EWS housing. The claim, brought under Section 42A, alleged that GDA had contravened the CCI’s orders and directions. The NCLAT found that GDA had, in fact, complied, by depositing the monetary penalty and abiding by the cease-and-desist direction. Absent any contravention, the NCLAT held that the claim under Section 42A was untenable. The applicant also failed to adduce convincing evidence of loss, although the NCLAT did not delve into this analysis given the finding of ineligibility at the outset. This ruling carries a practical warning for future applicants to default to Section 53N rather than Section 42A unless a clear contravention of CCI orders or directions exists.

The remaining live applications have not yet been heard on merits, since they are pending final disposal of the underlying case. The exception is Excel Crop, where the underlying case has reached finality before the SC, positioning it as likely the first compensation application to be decided substantively.

WHY THE FRAMEWORK REMAINS DORMANT

Two key bottlenecks within the statutory framework explain the underutilisation of private compensation. The first concerns the appellate process. In practice, the NCLAT has admitted applications pending final appeal, but stayed the matter on merits until the underlying case attains finality. While this ensures that compensation claims can proceed with certainty once the contravention is conclusively established, the practical drawback is significant. Competition appeals in India routinely span years, sometimes over a decade, during which market dynamics may shift radically, injured parties may exit the market, and evidence may be lost, rendering the compensation claim infructuous.

The second bottleneck lies in the sparse legislative framework itself. No evidentiary standard has been prescribed to demonstrate the existence or nexus of ‘loss’ or ‘damage’, nor have quantification methodologies been fashioned. The near absence of precedent offers little guidance as to how provisions should operate in practice.

KEY UNRESOLVED QUESTIONS

As the early compensation cases begin to be heard, the NCLAT will need to address several crucial issues in determining eligibility and quantifying compensation.

First, the type of underlying case and associated theory of harm will dictate the nature of claims. In most pending cases, claimants are likely to present overcharge or excessive pricing claims. In Nair Coal and Excel Crop, claimants allegedly paid inflated prices due to bid rigging, and would seek to recover the excess. Similarly, Coal India, an exploitative abuse of dominance case, can be likened to overcharge since the applicant allegedly paid inflated prices under unfair conditions imposed by the dominant entity. By contrast, NSE and SALPG involve competitors who allegedly faced exclusionary abuse of dominance. Ostensibly, the compensation sought will be based on lost revenue or profit but for the allegedly abusive conduct.

Second, the NCLAT will have to examine the causal nexus between the loss and the contravening entity’s conduct. In Nair Coal and Excel Crop, where the claimants were direct purchasers, the nexus can be established cleanly. Exclusionary abuse cases present a thornier challenge. In NSE, NSE has previously argued that MCX’s losses were attributable to its own sub-par operations, rather than NSE’s zero pricing scheme. This will require MCX to construct a credible counterfactual, grounded in rigorous economic analysis, projecting what its revenue or profit would have been absent NSE’s allegedly abusive conduct.

Third, quantification of compensation presents a practical gap. Applicants’ approaches to date, which have been relatively elementary and largely accounting-driven, illustrate this point. In Excel Crop, applicants presented compensation as the difference between the actual price paid and the cost of production (as determined in the CCI’s order) plus 10%, along with interest and litigation costs. In NSE, the claim was reportedly revised upwards from INR 588 crore to INR 856 crore based on an independent report.⁷

These methods may suffice where the nexus between the contravention and the loss is relatively clear, as in straightforward overcharge cases. However, other contraventions would necessitate more sophisticated tools. In exclusionary abuse cases, the applicant must prove both that its loss reflects the revenue or profit that would have been earned in an undistorted market, and that such loss was attributable to the contravention, rather than its own conduct or market factors. Although the NCLAT remains the adjudicating authority, the CCI’s institutional capabilities remain relevant to bridge this gap, including its powers to appoint economists and technical experts under Section 36, and to issue guidelines on quantification under Section 64B. These powers could directly guide how applicants formulate claims and how the NCLAT assesses them. The CCI’s recent revision of the predatory pricing guidelines⁸ also signals a growing appetite for technical rigour that could, in time, inform the quantification methodologies for compensation proceedings before the NCLAT.

Fourth, the interplay of compensation with leniency (Sections 46 and 46A) and settlements presents tension. The very premise of these routes is the exchange of parties’ cooperation for quicker resolutions and reduced monetary penalties. However, if the same case can give rise to private compensation claims, the overall benefit of opting for these channels may be diluted. The two mechanisms raise distinct concerns. Section 53N is silent on leniency; yet, a leniency applicant whose cooperation catalysed the adjudication of a cartel case remains exposed to follow-on claims, raising the question of whether penalty savings will be offset by compensation liability. Settlements present a different puzzle since they form one of the foundations for compensation claims, despite such orders inherently not resulting in an express finding of contravention.⁹ It remains to be seen how the NCLAT will interpret this issue, given its significant implications for the broader settlement framework. Both leniency and settlement cases also present an opportunity for expedited adjudication of compensation claims, as they limit the scope of appeals from the underlying orders (a leniency applicant can only appeal the penalty, not the contravention finding, and the settlement process expressly bars appeals).  

Finally, Section 53N is silent on the ‘passing on’ defence. This arises where a purchaser, subject to overcharge due to anti-competitive conduct, passes it on to end consumers by increasing prices downstream. A contravening party may argue that the purchaser has not ultimately borne the loss, and should be precluded from claiming compensation. The success of this defence will depend on the facts of each case. In Excel Crop, for instance, if it can be established that the aluminium phosphide tablets procured through the rigged tender process were purely for captive use, the defence would find little purchase since there was no downstream customer to whom the overcharge could have been passed on. However, if the tablets were instead used as an input in any of FCI’s products sold onwards, the infringer could invoke the defence based on FCI recovering the overcharge through downstream sales.

CONCLUSION

Nearly two decades since inception, the private compensation regime has produced only one substantive ruling, which lacks substantive analysis given the threshold ineligibility of the claim. Sparse legislative guidance on causation and quantification, limited precedent, and lengthy appellate timelines have collectively kept the regime dormant.

Excel Crop stands as the bellwether for the future trajectory of compensation applications. With the underlying case finally determined by the SC and the maintainability question settled, it is procedurally ripe for a decision on the merits and involves a relatively straightforward claim of overcharge.

Beyond Excel Crop, the NCLAT will need to calibrate its approach to the theory of harm and causation across different categories of cases, possibly drawing on more sophisticated quantification methodologies, to address foundational questions that remain unanswered. The compensation regime would benefit from the CCI’s growing appetite for technical rigour, which will hopefully inform and bolster the NCLAT proceedings.

The interplay of settlements and leniency with exposure to compensation claims will add further complexity. These developments will shape whether private compensation evolves into a credible second pillar of Indian competition enforcement or remains a paper tiger.

Footnotes

^{1 Wasan Exports Private Limited v. Canara Bank (Compensation Application No. 150 of 1999); Metropolitan Stock Exchange of India Limited v. National Stock Exchange of India (Compensation Application No. 1 of 2014) (NSE); Amit Jain v. DLF Limited (Compensation Application No. 1 of 2015) (DLF); Sai Wardha Power Limited v. Coal India Limited (Old Compensation Application No. 2 of 2015 / Compensation Application No. 1 of 2017) (Coal India); Satyendra Singh v. Ghaziabad Development Authority (Compensation Application No. 1 of 2018) (judgement dated 18.12.2024) (GDA); Maharashtra State Power Generation Co. Ltd. v. Nair Coal Services (Compensation Application No. 2 of 2018) (Nair Coal); Food Corporation of India v. Excel Crop Care (Compensation Application No. 1 of 2019) (Excel Crop); G. Krishna Murthy v.  Karnataka Film Chamber of Commerce (Compensation Application No. 2 of 2019 (KFCC)); East India Petroleum v. South Asia LPG Co. Private Limited (Compensation Application No. 1 of 2020) (SALPG); International Subscription Agency v. CCI (Compensation Application No. 1 of 2021) (ISA); Prem Prakash v. CCI (Compensation Application No. 1 of 2022) (Prem Prakash).}

^{2 GDA.}

^{3 Section 47, Competition Act.}

^{4 Sections 53N(1) and 48A, Competition Act. The 2023 Amendment extended the application of Section 53N to contravention orders issued by the Supreme Court, and to settlement orders issued under the newly introduced settlement regime.}

^{5 Filing fees have been specified under the Competition Appellate Tribunal (Form and Fee for Filing an Appeal and Fee for Filing Compensation Applications) Rules, 2009.}

^{6 Illustratively, available at: https://www.bbc.com/news/technology-64210531 ; https://digital-client-solutions.hoganlovells.com/resources/global-class-actions/area-of-focus/antitrust-and-competition/us.}

^{7 Available at: https://www.thehindubusinessline.com/markets/stock-markets/nclat-to-hear-856cr-predatory-pricing-case-against-nse-on-oct-10/article9874459.ece ; https://www.livemint.com/Money/5R5peScNEEdd1qcKJJbtbO/MCXSX-plans-to-claim-damages-of-nearly-Rs800-crore-from-NSE.html.}

^{8 CCI (Determination of Cost of Production) Regulations, 2025.}

^{9 Regulation 7(1), CCI (Settlement) Regulations, 2024.}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.