Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

Start by selecting your Topic of interest below. Then choose your Regions and finally refine the exact Subjects you are seeking clarity on to view detailed analysis provided by our carefully selected internationally recognised experts.

4. Results: Answers
Cartels
2.
Definitions and scope of application
2.1
How is a ‘cartel’ defined in the cartel legislation?
India

Answer ... ‘Cartel’ is defined to include an association of enterprises which limits, controls or attempts to control the production, distribution, sale or price of, or trade in, goods or the provision of services.

Section 3(3) of the Competition Act does not distinguish between a horizontal agreement and a cartel (as defined in the act). Any horizontal agreement (including a cartel) relating to price fixing, limiting or controlling the production or supply of goods or the provision of services, market sharing or bid rigging raises a rebuttable presumption of an appreciable adverse effect on competition.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.2
What specific offences are defined in the cartel legislation?
India

Answer ... Section 3(3) of the Competition Act lists certain agreements between competitors which are presumed to have an appreciable adverse effect on competition (AAEC). These relate to the following:

  • directly or indirectly determining purchase or sale prices;
  • limiting or controlling production, supply, markets, technical development, investment or provision of services;
  • sharing the market or source of production or provision of services by way of allocation of geographical areas of the market, types of goods or services or number of customers in the market, or in any other similar way; or
  • directly or indirectly resulting in bid rigging or collusive bidding.

Any other agreement which is likely to cause an AAEC but is not covered under Section 3(3) of the act can be examined by the Competition Commission under Section 3(1) of the act. However, in such circumstances, the onus to prove an AAEC is on the commission. This was clarified in Madhya Pradesh Chemists and Distributors Federation v Madhya Pradesh Chemists and Druggist Association (Case 64/2014).

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.3
Is liability under the cartel legislation civil, criminal or both?
India

Answer ... Liability for a violation of Section 3 of the Competition Act is civil. Each enterprise involved in a cartel can be penalised with a fine of up to three times its profits or 10% of its turnover, whichever is higher, for each year of the continuance of the cartel.

The act contemplates the initiation of criminal proceedings in the following cases only:

  • Non-compliance with certain orders/directions of the commission: Under Section 42(3) of the act, the commission may file a criminal complaint with the chief metropolitan magistrate of Delhi, who may impose a punishment of imprisonment for up to three years, a fine of up to INR 250 million or both.
  • Contravention of an order of the National Company Law Appellate Tribunal (NCLAT) without reasonable grounds: Under Section 53Q of the act, the NCLAT may file a criminal complaint with the chief metropolitan magistrate of Delhi, who may impose a punishment of imprisonment for up to three years, a fine of up to INR 10 million or both.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.4
Can both individuals and companies be prosecuted under the cartel legislation?
India

Answer ... Yes, both companies and individuals can be prosecuted under the Competition Act.

Under Section 27 of the act, the Competition Commission can pass the following orders against a company that is found to be in contravention of Section 3 of the act:

  • to cease and desist from the anti-competitive conduct;
  • to pay a penalty of up to three times its profits or 10% of its turnover, whichever is higher, for each year of the continuance of such agreement;
  • to modify agreements; and/ or
  • to abide by any other orders or directions;

Individuals can be prosecuted under Section 48 of the act. Each person who was in charge of, and responsible to the company for, the conduct of its business is deemed to be guilty, unless that person can prove that the contravention was committed without his or her knowledge or that he or she exercised all due diligence to prevent such contravention.

When a contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, a director, manager, secretary or other officer of the company, such person is also deemed to be guilty.

No separate provision in the act sets out the penalties for individuals. The commission generally imposes penalties on individuals under Section 27 of the act. Based on the commission’s practice, the maximum penalty that can be imposed on an individual is 10% of his or her average income in the last three preceding financial years.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.5
Can foreign companies be prosecuted under the cartel legislation?
India

Answer ... Yes, foreign companies can be prosecuted under Section 32 of the Competition Act if they enter into an agreement which causes or is likely to cause an appreciable adverse effect on competition in India.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.6
Does the cartel legislation have extraterritorial reach?
India

Answer ... Yes. Section 32 of the Competition Act, read with Section 19(1) of the act, empowers the Competition Commission to inquire into:

  • any agreement referred to in Section 3 of the act entered into outside India; or
  • any party to such agreement which is outside India whose conduct causes or is likely to cause an AAEC.

The commission may pass any orders against a party outside India which it can otherwise pass under the act against any party in India.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
2.7
What is the statute of limitations to prosecute cartel offences in your jurisdiction?
India

Answer ... The Competition Act does not prescribe a limitation period to prosecute cartel offences in India. Nor does the Limitation Act, 1963, which is the general limitation statute in India, specify a limitation period for proceedings under the act. For proceedings which do not attract a specific limitation period, the Limitation Act prescribes a general limitation period of three years. Accordingly, the general three-year limitation period should apply to proceedings under the act. Although there is no guidance on the computation of this three-year period, in our view, the limitation period should start to run from the date on which the effects of the alleged cartel cease to exist (and not from the date of the end of the agreement).

In Excel Crop Care v Competition Commission of India (Civil Appeal 2480/2014), the Supreme Court held that the Competition Commission was empowered to take cognisance of agreements which were entered into prior to 20 May 2009 (the date of enforcement of the act), provided that the effects of the agreement continued post that date.

To appeal an order or decision of the commission or the National Company Law Appellate Tribunal, the act prescribes a period of 60 days from the date of receipt of the impugned order.

For more information about this answer please contact: Vivek Agarwal from DMD® ADVOCATES
Contributors
Topic
Cartels