Non-regulatory activities of ICAI would fall within the definition of ‘enterprise’ as organizing of CPE seminars cannot be understood as sovereign function attracting exemption under the definition of ‘enterprise’. #CompetitionAct
Information was filed against The Institute of Chartered Accountants of India (ICAI), a Statutory Body established under the Chartered Accountants Act, 1949 (CA Act) for the regulation of the profession of Chartered Accountants in India, alleging it of abuse of dominant position under Section 4 of the Competition Act, 2002 (Act) by way of imposing unfair and discriminatory conditions with respect to its Continuing Professional Education (“CPE”) scheme of ICAI.
ICAI had introduced the concept of CPE for its members to maintain high standards of excellence in the professional activities, accordingly to which, the CAs in practice have to annually attain 20 hours of structured CPE credits and 10 hours of un-structured CPE credits. CAs not holding certificate of practice, have to attain 15 hours of unstructured CPE credits annually. It is stated by the informant that the structured CPE credits can be attained by attending seminar/conferences/workshops organized by any of the ICAI organs, or being a faculty at the seminar organized by ICAI organs or by writing an article for the ICAI Journal. The unstructured CPE credits can be obtained by reading professional journals, business literature, attending internal training programs of CA firms with 7 or more partners, etc. The Informant alleging the CPE policy as discriminatory questioned the same for not allowing any other organization to provide the service of organizing CPE seminars other than ICAI’s recognized Program Organising Unit (POU).
Commission deciding on the first question as to whether ICAI is an ‘enterprise’ within the meaning of Section 2(h) of the Act, and if yes, whether it is rendering ‘service’ of any description in terms of Section 2(u) of the Act, held that ICAI exercises a regulatory function and also carries out other commercial/ economic activities like conducting professional courses including the CPE programs and publication of books relating to CA profession apart from conducting the examinations for CAs. These economic activities held as differentiable from the regulatory activity of regulating the CA profession in terms of prescribing educational qualification, maintenance of status and standard of professional qualifications of members of institute etc. and ICAI due to its non-regulatory activities would fall within the definition of ‘enterprise’ as organizing of CPE seminars cannot be understood as sovereign function attracting exemption under the definition of ‘enterprise’.
On the second aspect, Commission held that the restriction put in by ICAI in not allowing any other organization to conduct the CPE seminars for CPE credits, created an entry barrier for the other players in the relevant market. The choice of the consumer (members of ICAI) was made limited as they had no option, but to attend the seminars organized by ICAI (whatever be the quality of seminars) to get the requisite CPE credits. The restrictions imposed held to be as not meeting the objectives sought to be achieved by the policy and hence the restriction imposed was held as unreasonable and accordingly the investigation was directed to be carried out by Director General (DG) as per the Act.
[Arun Anandagiri vs. The Institute of Chartered Accountants of India (ICAI)]