India: The CCI Amends Competition Commission Of India (Lesser Penalty) Amendment Regulations, 2017

Last Updated: 20 September 2017
Article by S.S. Rana & Co. Advocates

The Competition Commission of India, vide its Notification dated August 22, 2017 has amended the Competition Commission of India (Lesser Penalty) Regulations, 2009 ("Leniency Regulations"). The Competition Commission of India (Lesser Penalty) Amendment Regulations, 2017 ("hereinafter referred to as the new regulations/ amended regulations") provide for lesser penalty not only to the first three applicants, but also to subsequent applicants.

Introduction: The leniency policies adopted by Competition Commission of India and its counter parts all over the world, act as the most effective tools to detect, investigate and break cartels and restore healthy and free competition in the market. The amended Regulations have ensured more transparency and efficiency within the existing leniency laws.

Hard-core cartels constitute very serious violations of competition rules. They are often very difficult to detect and investigate without the cooperation of an insider. Leniency programmes are designed to give incentives to cartel members to take the initiative to approach the competition authority, confess their participation in a cartel and aid the competition law enforcers. The aim is to drive a wedge at the heart of a cartel through its trust and mutual benefit. 1

Cartels: Cartel formation is an arrangement by way of which the competitors in the market decide to 'cooperate' instead of competing. Together by market sharing, price fixing or bid rigging etc., they freeze market competition and discourage other players from entering into the market or increasing their profitability. Hardcore cartels were defined in the OECD Recommendation of the Council Concerning Effective Action against Hard Core Cartels, 1998 as "...anticompetitive concerted practice(or arrangement), by competitors to fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories or lines of commerce."

A cartel is the most draconian form of anti-competitive arrangement, not only because it is very difficult to detect or because it freezes the competition in the market, but because it heavily contributes to sky-high inflations levels subsequently leading to low living standards and a recessive economy. It is this very mischief of not being detected, that has given rise to the lesser penalty regimes all over the world. Once an application for lesser penalty is made by a member of the cartel the cartel can be investigated and broken.

The gravity of cartelization can be put into accurate perspective upon a bare perusal of Section 27 of the Competition Act, 2002 ("hereinafter referred to as "the Act"), which provides for a penalty of more than three times of the amount of profits made out of such agreement by the cartel or 10% of the average of the turnover of the cartel for the last preceding 3 financial years, whichever is higher.

These new Regulations have introduced many positive changes to the existing leniency regime which are discussed below:

1. Definition of Applicant: Under the new Regulations, the definition of an Applicant includes individuals also. According to Section 2(b) of the Regulations an "applicant" means an enterprise, as defined in clause (h) of section 2 of the Act, who is or was a member of a cartel and includes an individual who has been involved in the cartel on behalf of an enterprise, and submits an application for lesser penalty to the Commission. The Applicant no more needs to be an enterprise only, even an individual connected with the enterprise can be the Applicant.

2. A Party for or against whom inquiry or proceeding can be instituted shall include an enterprise or person or the Central Government, any State Government or any statutory authority and shall also include any person permitted to join the proceedings. This brings more entities within the ambit of parties who can be connected with the proceedings.

3. According to Rule 3 of the Regulations provides for various conditions which the applicant has to satisfy for being eligible for lesser penalties. Another condition has been added to the existing criteria that is that where the applicant is an enterprise, is shall provide the names of individuals who have been involved in the cartel and for whom the lesser penalty is sought.

4. Leniency for the First Applicant: The first applicant making vital disclosure by submitting evidence of a cartel shall be granted reduction of penalty by 100% However, such information or disclosure shall be of such nature so as to enable the Commission to form a prima-facie opinion regarding the existence of a cartel which is alleged to have contravened the provisions of section 3 of the Act and the Commission did not, at the time of application, have sufficient evidence to form such an opinion. Also, vital information can be disclosed to the Commission which can aid in establishing contravention of Section 3 of the Act, even in matters under investigation for which sufficient evidence was not available with the Commission before.

5. Applicants may also be granted benefit of reduction in penalty on making a disclosure by submitting evidence, which in the opinion of the Commission, may provide significant added value to the evidence already in possession of the Commission or the Director General.

6. No limitation on number of applicants: Under the old regulation, the first applicant would be granted up to 100% reduction in penalty and the second applicant up to 50% while the third applicant would be granted up to 30% reduction in penalty. Unlike the erstwhile regulations, where the reduction of penalty was granted only to the first three applicants, the amended rules do not provide for this restriction.

It is notable that the erstwhile regulations were strict, in the sense that the concerned cartel members were forced to file an application of a lesser penalty on a priority basis-at the earliest hour, so as not to miss out on the penalty condonation by virtue of not being amongst the first three applicants. This deterrence will cease to exist, now that applications can be filed 'at will'. On the brighter side though, now the applicants will not be discouraged to file the application 'sooner or later' as they will no more carry the risk of being the fourth applicant and lose out on the penalty condonation!

7. Confidentiality: According to the amended Rule 6 the following information received under the Competition Commission of India (General) Regulations, 2009 by the Commission or the Director General shall treat as confidential:

  • the identity of the applicant;
  • the information, documents and evidence furnished by the applicant under Regulation

This information may be disclosed only when:

  • such disclosure is required by law, or
  • the applicant agrees in writing or
  • the applicant himself discloses.

8. Recordal of Reasons before disclosure: Further, according to Section 6A, if the applicant does not agree to the disclosure of the documents and evidence brought to the Commission through his application, the Director General cannot disclose the same without recording reasons for such disclosure in writing and the seeking approval of the Commission. Further, the Director General must disclose such information only when it is in furtherance of an investigation. An additional provision for the inspection of documents has also been added to regulate the inspection of documents disclosing confidential information in a nonconfidential version.

Footnote

1  UNCTAD/DITC/CLP/2016/3. http://unctad.org/en/PublicationsLibrary/ditcclp2016d3_en.pdf

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 Mondaq.com.

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

Authors
S.S. Rana & Co. Advocates
Similar Articles
Relevancy Powered by MondaqAI
Chandhiok & Associates
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Chandhiok & Associates
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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