India: Competition Commission Can Be Lenient: Legal Scaffold vis a vis The Indian Railway Case

Last Updated: 6 February 2017
Article by Lucy Rana and Bijit Das


Adam Smith once said, "People of the same trade seldom meet together". However, if they meet, they may act together to hamper fair industry practices. The recent instance of cartelization1, bid rigging and collusive practice between M/s Pyramid Electronics (Pyramid), M/s R. Kanwar Electricals (Kanwar), and M/s Western Electric Trading Company (Western) against a tender raised by the Indian Railways and Bharat Earth Movers Limited goes on to re affirm that.

Cartels are agreements among firms in oligopolistic industries where members may agree to rig a bid or act collusively against fair market practices. The Competition Act, 2002 (Act) covers the same under anti-competitive practices under Section 3(1)2 read along with Sections 3(3)(c)3 and 3(3)(d)4 of the Act.

The Competition Commission of India (CCI) initiated a suo moto inquiry pertaining to cartelization against Pyramid, Kanwar, and Western for supply of Brushless DC Fans and other electrical goods on receiving information from CBI on April 1, 2014, the information was taken into cognizance on June 23, 2014. CBI had received information from North Eastern Railway and the Northern Railways regarding the tender bids filed by the abovementioned entities. The tender quotes given by these entities were compared and uncanny similarities in the quoted bids were found. The Directorate General also relied upon various sources such as call records and email history between Pyramid, Kanwar, and Western to conclude that their bids were rigged.

Post investigation, under Section 275 of the Act, a penalty of 1% was imposed on Pyramid and Western on the profits earned by them in the year 2012-2013. A penalty was also imposed on Kanwar that was 3% of its turnover in the year 2012-2013. CCI had also imposed a fine on certain identified office bearers of these entities that equaled to 10% of the average income of these employees in the preceding three financial years.

Availing Leniency Policy under the Act

While the investigation was ongoing, Pyramid came out as a whistleblower and became an approver. For the first time since the Act was enacted, CCI operated the leniency provisions given under CCI (Lesser Penalty) Regulations, 2009 (Leniency Regulations) when Pyramid provided information about the formation of a cartel in which they too were a party, and received a reduction of 75% in the penalty that would have been imposed upon them. Therefore, it would not be incorrect to say that leniency provisions tackle with the "Pernicious practice of cartelization"6 by bringing forth involved parties to admit to their wrongdoings and cooperate with the CCI.

In spirit, the leniency provision provided under Section 467 of the Act read with Regulation 58 of the Leniency Regulations offers an option to the persons/enterprises involved in anti-competitive practices to report their doings and deliver evidence to the CCI so as to obtain absolute immunity from any imposed penalty or a reduction of penalty which CCI would have otherwise imposed on them.

As per global practices Leniency Regulations also have a deterrent effect on cartel formation and destabilizes the operation of existing cartels as it seeds distrust and suspicion among cartel members.9 However, the participating entity in a cartel should be the first to report to the CCI of an undetected cartel and provide sufficient relevant information10 in order to claim for absolute immunity.

Therefore, going by the global standards and Indian Laws, if CCI possesses enough evidence to launch an investigation then the entity claiming relief under the Leniency Rules must provide evidence to conclusively prove the cartel infringement.11 And, an entity that requests for obtaining CCI's leniency may either receive significant reduction on fines imposed if the evidence given by them adds value to the investigation that is being conducted by the CCI.

Pyramid was the foremost and the only entity to admit to the bid rigging and cartelization that had been practiced and the evidence given by Pyramid solidified the suspicions of CCI and assisted to conclude the ongoing investigation against Pyramid, Kanwar, and Western. However, since the disclosures made by Pyramid were made at a later stage, the penalty was reduced by a margin of 75% and not absolutely as a result the imposition of a penalty of INR 6 Million (Approx.) was reduced to INR 1.5 Million (Approx.).

On the other hand, resulting from the disclosures made by Pyramid; Kanwar and Western were ordered to pay a penalty of INR 20 Million (Approx.) and INR 2 Million (Approx.) respectively.

Scale of Leniency

Principally, CCI may impose a lesser penalty or give absolute immunity to an entity that is a cartel member if it makes relevant disclosure by way of providing information or evidence adequate to establish that there has been a violation of the Act.12 The Leniency Regulations provide for a sliding scale wherein applicants may get their penalty reduced. To effect the same applicants must continue to co-operate with the CCI throughout the investigation.13 The relevant information to be provided in the leniency application may comprise of names of the parties involved, detailed description of the alleged cartel arrangement, the geographic market covered, estimated volume of business affected by the alleged cartel, names and details of all individuals who, in the knowledge of the applicant, are or have been involved in the cartel, including on behalf of the applicant.14

Key Takeaway

The Act and the Leniency Regulations did not expressly cover reduction of individual liability under its provisions. However, CCI has set a precedent in the present case wherein considering a grant of 75% reduction, CCI further decided to allow the same percentage of reduction in the penalty imposed on Pyramid's Officer in charge Mr. Sandeep Goyal wherein his penalty was reduced from INR 46,594 to INR 11,648. Therefore, an individual's liability enumerated under the Act may also be considered for granting leniency by the CCI.

Finally, the parties were ordered by CCI to deposit the penalty with the commission within sixty days of receipt of the present order.


 1 In Re: Cartelization in Respect of Tenders Floated by Indian Railways for Supply of Brushless DC Fans and other Electrical Items, January 18, 2017,

2 This section mentions that no person should enter into any agreement which causes or is likely to cause any appreciable adverse effect on competition within India.

3 The Section states that, "Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way" should be treated as an anti-competitive practice.

4 This Section states that, "Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an appreciable adverse effect on competition"

5 Section 27 (b) mentions that the CCI can by way of an order impose penalty as it may deem fit, upon each of such persons/ enterprises which are parties to such agreements causing appreciable adverse effect on competition. However, such penalty shall not be more than 10% of the average of the turnover of the last three preceding financial years.

6 Be a Cartel Whistleblower and Win: CCI; The Indian Express, New Delhi, Tuesday, July 24, 2012.

7 This Section confers upon the Competition Commission power to impose lesser penalty.

8 This Regulation marks the procedure for grant of lesser penalty.

9 European Competition Commission, Leniency,

10 European Competition Commission, Leniency,

11 Advocacy Series 8,

12 Cartel Leniency in the Asia Pacific Region, Jones' Day Commentary, May 2012,

13 PLC,

14 PLC,

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Lucy Rana
Bijit Das
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions