If the Competition Commission of India is the adjudicator of antitrust disputes, the Director General (DG) is its eyes and ears. Sections 16 and 17 of the Competition Act, 2002 sit in Chapter III and create the investigative establishment of the Commission - the office of the Director General and the supporting cadre of officers, experts and professionals. Although the appointment provisions read like dry administrative law, they have been the battleground for some of the most consequential litigation in Indian competition jurisprudence, because the reach of the DG's fact-finding determines how far an antitrust inquiry can travel. This chapter unpacks the text of Sections 16 and 17, situates them against the DG's operative power to investigate under Section 41, and traces how the Supreme Court in CCI v. Steel Authority of India and Excel Crop Care, and the Delhi High Court in Grasim Industries and Cadila Healthcare, have shaped the boundaries of the investigation.
Where Sections 16-17 Fit in the Scheme of the Act
Chapter III of the Competition Act, 2002 (Sections 7 to 17) establishes the Competition Commission of India and its support machinery. Sections 7 to 15 deal with the Commission itself - its constitution, composition, the terms of the Chairperson and Members, and the validity of its proceedings. Sections 16 and 17 then create the two limbs of the Commission's staff. Section 16 establishes the office of the Director General, the investigative wing; Section 17 provides for the appointment of the Secretary, experts, professionals, officers and other employees who form the Commission's secretariat and advisory pool. It is important to read these provisions alongside the substantive scheme: the prohibitions on anti-competitive agreements under Section 3 and on abuse of dominant position under Section 4 are enforced through an inquiry process in which the DG's investigation is the crucial fact-gathering stage.
A common examination trap is to assume that Section 16 itself confers the power to investigate. It does not. Section 16 only creates and staffs the office of the Director General. The operative power to investigate is conferred by Section 41, read with the procedure in Section 26. Sections 16 and 17 are therefore best understood as the institutional foundation on which the investigative powers in Section 41 are built. For the broader context of the Commission's establishment and design, see our chapter on the introduction to the Competition Act.
Section 16: Appointment of the Director General
Section 16(1), as originally enacted and as amended, provides for the appointment of a Director General "for the purposes of assisting the Commission in conducting inquiry into contravention of any of the provisions of this Act and for performing such other functions as are, or may be, provided by or under this Act." The phrase "assisting the Commission" is deliberate and litigated: the DG is an arm of the Commission, not an independent prosecuting authority, and the DG's report is not a final adjudication but material placed before the Commission for its consideration.
Section 16(1A) provides that the number of Additional, Joint, Deputy or Assistant Directors General, and other officers and employees in the office of the Director General, and the manner of their appointment, shall be such as may be prescribed. Section 16(2) provides that every such Additional, Joint, Deputy and Assistant Director General, and the other officers and employees, shall exercise their powers and discharge their functions subject to the general control, supervision and direction of the Director General. Section 16(4) prescribes the qualifications: the DG and the subordinate officers shall be appointed from amongst "persons of integrity and outstanding ability" who have experience in investigation and knowledge of accountancy, management, business, public administration, international trade, law or economics, and such other qualifications as may be prescribed. The salaries, allowances and conditions of service are governed by Section 16(3) and the rules framed thereunder.
Who Appoints the DG: The 2023 Shift in the Appointing Authority
The single most important recent change to Section 16 concerns the appointing authority. As originally enacted, Section 16(1) provided that the "Central Government may, by notification, appoint a Director General." The Competition (Amendment) Act, 2023 substituted the appointing authority: the words "Central Government may, by notification" were replaced with "Commission may, with the prior approval of the Central Government." The amended Section 16(1) therefore vests the power of appointment in the Competition Commission of India, subject to the prior approval of the Central Government.
This is a meaningful institutional reform. Earlier, the DG was appointed directly by the executive, which created an arguable distance between the investigative wing and the adjudicatory Commission it was meant to assist. By relocating the appointment power to the Commission (with executive approval retained as a check), the 2023 amendment aligns the DG's office more closely with the Commission it serves, reinforcing the textual position that the DG "assists" the Commission. Examination candidates should be precise here: post the 2023 amendment, the appointing authority is the Commission with the prior approval of the Central Government - not the Central Government simpliciter.
Section 17: Secretary, Experts, Professionals and Other Employees
Section 17 complements Section 16 by providing for the appointment of the Commission's own staff, distinct from the investigative office of the DG. Section 17(1) empowers the Commission to appoint a Secretary and such officers and other employees as it considers necessary for the efficient performance of its functions under the Act. Section 17(2) permits the Commission to engage, in accordance with prescribed procedure, such number of experts and professionals of integrity and outstanding ability who have special knowledge of, and experience in, economics, law, business or such other disciplines related to competition, as it deems necessary to assist it in the discharge of its functions. Section 17(3) leaves the salaries, allowances and other terms of these personnel to be prescribed by rules.
The drafting reflects a deliberate division of labour. The DG's office (Section 16) is the investigative engine; the secretariat and expert pool (Section 17) supply the Commission with in-house economic and legal expertise to evaluate the DG's findings and the parties' submissions. This matters because competition adjudication is fact and economics intensive - assessing whether an agreement is appreciably anti-competitive, or whether an enterprise is dominant in a relevant market, requires economic analysis that the Section 17 experts are designed to supply.
The Operative Power to Investigate: Section 41
Because Sections 16-17 only create the office, the DG's actual investigative authority lives in Section 41. Section 41(1) provides that the Director General shall, when so directed by the Commission, assist the Commission in investigating into any contravention of the provisions of the Act or any rules or regulations made thereunder. Section 41(2) (as it stood prior to the 2023 amendment) provided that the DG shall have all the powers conferred upon the Commission under Section 36(2) - that is, the powers of a civil court under the Code of Civil Procedure, 1908 in respect of summoning and enforcing the attendance of persons and examining them on oath, requiring the discovery and production of documents, receiving evidence on affidavit, issuing commissions for the examination of witnesses or documents, and requisitioning public records.
Section 41(3), in its pre-2023 form, applied Sections 240 and 240A of the Companies Act, 1956 to investigations by the DG, conferring powers of inspection, examination and seizure of books and papers. The Competition (Amendment) Act, 2023 substantially recast Section 41 to codify the DG's investigative powers directly within the Competition Act rather than borrowing them from companies legislation, and to strengthen the duty of parties under investigation to preserve and produce documents. The thrust of the case law below, however, was developed under the pre-amendment text and continues to govern the scope of investigation. For the substantive prohibitions the DG investigates, see horizontal agreements and the rule of reason applicable to vertical restraints.
CCI v. Steel Authority of India: The Foundational Authority
The locus classicus on the DG's place in the inquiry process is Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744. The Supreme Court was confronted with the question of what procedural protections attach to a direction by the Commission under Section 26(1) to the DG to investigate. SAIL had argued before the erstwhile Competition Appellate Tribunal (COMPAT) that it was entitled to be heard before such a direction was issued, and that the absence of reasons rendered the direction bad in law.
The Court held that a direction under Section 26(1) directing the DG to investigate is "an administrative direction" and not an adjudicatory or quasi-judicial order. At the stage of forming a prima facie opinion and directing investigation, the Commission is not required to issue notice or grant a hearing to the parties, because no determination of rights takes place at that point - the direction merely sets the fact-finding machinery in motion. The investigation is preliminary; civil consequences attach, if at all, only at later stages. This is why a party under investigation cannot ordinarily stall an inquiry at the threshold by demanding a pre-investigation hearing.
SAIL: Reasons, the Commission as a Party, and Time-Bound Inquiry
SAIL laid down several propositions that remain bedrock competition law. First, although a Section 26(1) direction is administrative and requires no pre-decisional hearing, the Commission must nonetheless record "at least some reason" to demonstrate application of mind to the existence of a prima facie case - the Court held that a reasoned order is an essential safeguard, even if the reasons may be brief. Second, on the procedural question of who may be heard in appeal, the Court held that the Commission is a necessary and proper party in proceedings before the appellate tribunal, given its expert and regulatory role, even though the lis is between the informant and the opposite party.
Third, and of direct relevance to the DG's office, the Court emphasised the need for expedition. It directed that investigations and inquiries under the Act be conducted in a time-bound manner, observing that the Commission should ordinarily form its prima facie opinion within a reasonable period and that the DG's investigation should be completed promptly - the Court indicated an outer framework measured in weeks rather than open-ended timelines, to prevent investigations from becoming instruments of harassment. The decision thus balances the administrative, non-adversarial character of the investigation stage against the procedural discipline that protects parties from indefinite probes.
The Status of the DG's Report: Recommendatory, Not Binding
A recurring examination and practice question is the legal weight of the DG's investigation report. The settled position, flowing from the scheme of Sections 16, 26 and 41 and confirmed in the case law, is that the DG's report is recommendatory. After the DG submits findings under Section 26(3), the Commission is not bound by them. If the DG recommends that there is no contravention, the Commission may nonetheless, after giving the informant a hearing, direct further investigation or proceed with an inquiry (Section 26(5), (7) and (8)). Conversely, if the DG finds a contravention, the Commission must still conduct its own inquiry, give the parties an opportunity to be heard, and reach an independent conclusion before any penalty under Section 27 is imposed.
This recommendatory character is the logical corollary of the DG being an office that "assists" the Commission under Section 16(1). The DG investigates and reports; the Commission adjudicates. A party aggrieved by an adverse DG report cannot treat it as a final order and appeal it directly - the report ripens into a binding determination only when the Commission adopts it after its own inquiry. This separation between investigation and adjudication is also what answered the natural-justice objection in SAIL: the parties get their full hearing at the Commission's inquiry stage, not at the DG-direction stage.
Excel Crop Care: How Far Back and How Wide May the DG Look?
In Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47 : AIR 2017 SC 2734, the Supreme Court addressed the temporal and factual reach of a DG investigation. The matter arose from a complaint by the Food Corporation of India alleging bid-rigging in tenders for Aluminium Phosphide tablets by Excel Crop Care, United Phosphorus and Sandhya Organic Chemicals - a classic cartel scenario. The Commission directed investigation, and in the course of investigating the conduct flagged in the information, the DG also examined an earlier 2009 tender that revealed the same concerted pattern.
The appellants contended that the DG could only investigate the specific tender referred to in the Section 26(1) order and had no jurisdiction to travel to other tenders. The Supreme Court rejected this narrow reading. It held that once the Commission directs investigation into an alleged contravention, the DG is duty-bound to investigate all aspects necessary to determine whether the alleged anti-competitive conduct exists, including connected transactions that come to light during the probe and shed light on the same course of concerted action. To restrict the DG strictly to the four corners of the information would defeat the purpose of the investigation and allow cartels to escape scrutiny on technicalities. The case is equally famous for holding that penalties under Section 27 must be computed on "relevant turnover" and not total turnover, but for the purposes of this chapter its enduring contribution is the liberal construction of the DG's investigative ambit.
Grasim and Cadila: Can the DG Go Beyond the Prima Facie Order?
The Delhi High Court refined the Excel Crop Care principle in two related Division Bench decisions delivered in 2018-2019. In Cadila Healthcare Ltd. v. Competition Commission of India (Delhi High Court, Division Bench, decided 12 September 2018), the Court held that a DG investigation is not vitiated merely because the Commission's prima facie order under Section 26(1) did not specifically name a particular party or specifically identify a contravention of a particular section. The Court reasoned that the inquiry at the Section 26(1) stage is concerned with market conduct caught by Sections 3 and 4, not with named individuals; the DG may therefore investigate parties and conduct that emerge during the probe as connected to the conduct under examination.
This was reinforced in Grasim Industries Ltd. v. Competition Commission of India (Delhi High Court, Division Bench, decided 12 September 2019). The Commission had directed the DG to investigate an alleged contravention of Section 3(3), but the DG's report also found a contravention of Section 4 (abuse of dominance). A learned Single Judge had earlier held (in the 2013 Grasim ruling) that the DG could not travel beyond the section invoked in the prima facie order. The Division Bench overruled that view, holding that the DG has broad investigative powers and is not strait-jacketed by the precise statutory provision named in the Section 26(1) direction; the DG may report on related contraventions disclosed by the facts investigated. Together, Cadila and Grasim confirm that the prima facie order opens the door to a fact-driven investigation, not a narrowly pleaded one.
Procedure Before the DG: Summons, Evidence and Cross-Examination
Because Section 41 vests the DG with civil-court powers (via Section 36(2)), the investigation follows a quasi-judicial procedure in important respects, even though the direction to investigate is administrative. The DG may summon and examine persons on oath, require the production of documents, record statements, and conduct search and seizure in accordance with the applicable provisions. The Competition Commission of India (General) Regulations, 2009 supply the procedural detail: a person summoned by the DG is entitled to be accompanied by a legal practitioner, though the lawyer's role during examination is limited, and the Regulations provide for the leading of evidence and, in appropriate cases, cross-examination.
The courts have repeatedly stressed that while the parties are not entitled to a hearing before the investigation is ordered (the SAIL principle), the principles of natural justice apply to the conduct of the investigation and, more fully, to the Commission's inquiry on the DG's report. Where the DG relies on the statements of witnesses or third parties to fasten liability, fairness may require that the party under investigation be granted an opportunity to cross-examine those witnesses, particularly where their evidence is central to the finding of contravention. The DG's discretion in granting or refusing cross-examination is therefore not unfettered and is subject to the overarching requirement of a fair procedure.
Confidentiality, Leniency and the DG's Investigation
The DG's investigation often turns on sensitive commercial information and, in cartel cases, on disclosures by leniency applicants. The Act and the Regulations protect confidentiality: parties may claim confidential treatment for information furnished during the investigation, and the DG and the Commission are obliged to safeguard such information subject to the requirements of a fair inquiry. In cartel investigations, the leniency framework under Section 46 (and the Lesser Penalty Regulations) interacts directly with the DG's work - a member of a cartel who makes a full and true disclosure may secure a reduced penalty, and the information so furnished frequently forms the backbone of the DG's report. The DG's duty to investigate "all aspects", as affirmed in Excel Crop Care, must therefore be balanced against the confidentiality protections that incentivise leniency applicants to come forward.
The tension between thorough investigation and protection of confidential information is a live theme in competition practice. Excessive disclosure can deter whistle-blowers and leniency applicants; excessive secrecy can compromise the right of the party under investigation to know and rebut the case against it. The Commission, advised by its Section 17 experts and bound by the natural-justice principles distilled in SAIL, must calibrate this balance in each inquiry.
The Institutional Backdrop: Brahm Dutt and the Commission's Character
The design of the Commission's investigative and adjudicatory wings cannot be divorced from the constitutional debate over the Commission's character. In Brahm Dutt v. Union of India, (2005) 2 SCC 431, a practising advocate challenged the rules for selecting the Chairperson and Members of the Commission on the ground that an essentially adjudicatory body ought to be headed by judicial personnel. The Supreme Court declined to strike down the scheme, observing that the CCI was conceived as having both advisory/regulatory and adjudicatory functions, and recorded the Union's indication that the Act would be amended to bifurcate these roles - a process that ultimately led to the creation of an appellate tribunal.
The relevance to Sections 16-17 is structural. By placing the investigative office (Section 16) and the expert secretariat (Section 17) under the Commission, the Act keeps fact-finding institutionally distinct from final adjudication, mitigating concerns of the kind raised in Brahm Dutt. The investigator gathers facts; the Commission, aided by its experts and constrained by natural justice, decides. For a fuller treatment of how the Commission's powers fit the larger enforcement architecture, see the Competition Act notes hub and our chapter on the introduction to the Act.
Examination Takeaways and Common Errors
For judiciary and CLAT-PG aspirants, the high-yield points are: (1) Section 16 creates the office of the Director General and provides for appointment, qualifications and supervision; Section 17 provides for the Secretary, experts and other employees - neither section confers the power to investigate, which lies in Section 41 read with Section 26. (2) After the Competition (Amendment) Act, 2023, the DG is appointed by the Commission with the prior approval of the Central Government, reversing the earlier position where the Central Government appointed the DG directly. (3) A direction to investigate under Section 26(1) is administrative, requires no pre-investigation hearing, but must record at least brief reasons - CCI v. SAIL, (2010) 10 SCC 744.
(4) The DG's report is recommendatory, not binding; the Commission conducts its own inquiry with full natural justice before deciding. (5) The DG's investigative scope is broad - it extends to connected transactions and contraventions disclosed during the probe (Excel Crop Care, (2017) 8 SCC 47) and is not confined to the precise section or parties named in the prima facie order (Cadila and Grasim, Delhi HC). The most common error is to treat the DG as an independent prosecutor or to treat the DG's report as a final, appealable order - both are wrong. The DG assists; the Commission adjudicates.
Frequently asked questions
Does Section 16 of the Competition Act give the Director General the power to investigate?
No. Section 16 only creates and staffs the office of the Director General and prescribes qualifications and supervision. The operative power to investigate is conferred by Section 41 (which vests civil-court powers via Section 36(2)) and is triggered by a direction from the Commission under Section 26(1).
Who appoints the Director General after the Competition (Amendment) Act, 2023?
After the 2023 amendment, the Director General is appointed by the Competition Commission of India with the prior approval of the Central Government. Earlier, Section 16(1) provided that the Central Government appointed the DG directly. The 2023 amendment substituted the appointing authority to align the office more closely with the Commission it assists.
Is a direction to investigate under Section 26(1) a judicial order requiring a prior hearing?
No. In CCI v. Steel Authority of India, (2010) 10 SCC 744, the Supreme Court held that a Section 26(1) direction is administrative, not adjudicatory, and requires no pre-investigation notice or hearing. The Commission must, however, record at least brief reasons showing application of mind to the existence of a prima facie case.
Is the Director General's investigation report binding on the Commission?
No. The DG's report is recommendatory. Under Section 26, even if the DG finds no contravention the Commission may, after hearing the informant, order further investigation or proceed with an inquiry; and a finding of contravention by the DG ripens into a binding determination only after the Commission conducts its own inquiry with full natural justice.
Can the Director General investigate matters not specifically mentioned in the Commission's prima facie order?
Yes, within limits. In Excel Crop Care, (2017) 8 SCC 47, the Supreme Court held the DG must investigate all aspects necessary to determine the alleged conduct, including connected transactions discovered during the probe. The Delhi High Court in Cadila (2018) and Grasim (2019) confirmed the DG is not confined to the precise section or parties named in the prima facie order.
Does a party under investigation have a right to cross-examine witnesses before the DG?
Not as an absolute right at every stage, but fairness may require it. While no hearing is owed before investigation is ordered (the SAIL principle), the conduct of the investigation and the Commission's inquiry attract natural justice. Where the DG relies on witness statements to establish a contravention, cross-examination may be necessary to ensure a fair procedure under the CCI (General) Regulations, 2009.