Competition Commission Of India Has Jurisdiction To Probe Anti-Competitive Conduct In Liquor Trade Despite State Regulatory Framework: Madhya Pradesh High Court

"CCI is an expert body created to eliminate practices having adverse effect on competition, protect the interest of consumers and ensure freedom of trade; it operates in a different field from the state excise authorities." Madhya Pradesh High Court, in a significant ruling dated 17 September 2026, held that the Competition Commission of India (CCI) possesses the jurisdictional competence to investigate anti-competitive practices, such as bid-rigging and cartelization, within the liquor trade, notwithstanding the extensive regulatory framework of the State Excise Act.

A division bench of Justice Vivek Rusia and Justice Pradeep Mittal observed that the regulatory oversight of the State Excise Department and the market-corrective mandate of the Competition Act, 2002, operate in distinct spheres.

The petitioners, several distilleries operating in Madhya Pradesh, challenged the CCI’s initiation of a suo motu inquiry (Case No. 05/2020) based on observations in a Comptroller and Auditor General (CAG) report regarding alleged bid-rigging in liquor tenders. The distilleries contended that since the State holds exclusive legislative competence over intoxicating liquor under Entry 8 and Entry 51 of the State List, and given the state-administered pricing and licensing mechanism, the CCI could not intervene. They argued that the inquiry was void ab initio and that the CCI had usurped the role of the State Excise Department.

The primary question before the court was whether the Competition Act, 2002, is constitutionally ousted by the State Legislature’s plenary power over intoxicating liquor. The court was further called upon to determine if the CCI could initiate an inquiry based on an un-tabled CAG report and whether the existence of an excise-sector regulator precludes the CCI from acting as the market regulator.

CCI’s Mandate and Market Regulation

The court rejected the petitioners' contention that the CCI’s jurisdiction is ousted in sectors where the State maintains strict control. It held that the Competition Act is a specialized central enactment designed to curb market distortions. While the State Excise Act regulates the manufacturing and sale of liquor through licenses for public health and revenue purposes, it lacks the machinery or the mandate to address anti-competitive conduct or protect consumer interests from cartelization.

Upholding the Commission's Investigative Power

The bench clarified that the CCI is not encroaching upon the State's power to grant licenses or set tax policies. Instead, it is performing a quasi-judicial function to ensure that market participants do not engage in "appreciable adverse effect on competition." The court emphasized that even in regulated sectors, the CCI retains the authority to investigate allegations of cartelization, as the market regulator is better equipped to handle structural remedies that promote long-term competition.

CAG Report as Informational Trigger

Addressing the challenge to the initiation of the suo motu probe, the court noted that the CCI is empowered under Section 19 of the Competition Act to act upon "own knowledge or information received." The court held that the CAG report, while not a conclusive finding of guilt, served as a valid "informational trigger" to form a prima facie opinion. It clarified that an order under Section 26(1) is purely administrative and inquisitorial, intended only to direct the Director General to investigate, and not to determine the rights of parties.

Exhaustion of Statutory Remedies

The court expressed disapproval of the petitioners' strategy to stall the inquiry through repeated writ petitions. It emphasized that the CCI has not yet reached a final determination under Section 27 of the Competition Act. Since the Act provides for an appeal before the National Company Law Appellate Tribunal (NCLAT) against final orders, the court held that the petition was premature and that the petitioners must participate in the ongoing inquiry before the Commission.

In view of the maintainability of the CCI’s proceedings, the bench dismissed the batch of writ petitions and vacated the interim stay previously granted to the petitioners. The court explicitly directed the CCI to conclude the inquiry and proceed in accordance with the provisions of the Competition Act, ensuring that the investigative process is brought to its logical conclusion.

Date of Decision: 17 September 2026