The Competition Commission of India (CCI) has released the draft of revised lesser penalty regulations that provides for introduction of a “leniency plus” programme, a new cartel detecting tool, and sheds light on how the competition watchdog intends to operationalise it.
The draft lesser penalty regulations 2023 would among other things encourage companies already under investigation for one cartel to report other cartels unknown to the competition regulator.
The “Leniency Plus” regime was part of the Competition (Amendment) Act 2023, which received Presidential assent in April this year.
A leniency plus regime is expected to further incentivise applicants to come forward with disclosures regarding multiple cartels, thereby enabling the CCI to save time and resources on cartels investigation.
This will result in faster market corrections, experts said. This “leniency plus” regime is already recognised in jurisdictions like the UK, US, Singapore and Brazil.
LENIENCY PLUS
The current Competition Act 2002 already has a leniency programme, which allows companies that provide sufficient information about a cartel in which they have participated to receive partial immunity from penalty. Such a programme helps competition authorities to discover secret cartels and to obtain insider evidence of the infringement.
Under the existing leniency (lesser penalty rule) framework, CCI may impose a lesser penalty on a person involved in a cartel if such person has made a full and true disclosure in respect of alleged violations and such disclosure is vital.
Under ‘Leniency Plus’, a cartelist who is cooperating with CCI for leniency, can disclose the existence of another cartel in an unrelated market in the course of original leniency proceedings in exchange for an additional reduction in penalty.
Leniency Plus is a proactive antitrust enforcement strategy aimed at attracting leniency applications by encouraging companies already under investigation for one cartel to report other cartels unknown to the competition regulator.
The benefit that would entail from such disclosure is reduction of penalty in the first cartel to the person disclosing the information, without prejudice to the company obtaining lesser penalty regarding the newly disclosed cartel.
EXPERTS’ TAKE
Anshuman Sakle, Partner, Khaitan & Co said that the most significant change which the draft regulation seeks to introduce is that a leniency applicant can now get an additional reduction in monetary penalty up to thirty per cent of the penalty imposed with regard to the first cartel besides obtaining benefit of reduction in penalty up to or equal to one hundred percent in respect of newly disclosed cartel.
This could allow an enterprise to secure a significant additional reduction in penalty and enable the CCI to bust cartels in multiple markets, he said.
Harman Singh Sandhu, Partner, Shardul Amarchand Mangaldas & Co, said “We welcome the consultation process and hope a pragmatic regime is eventually implemented.
Interestingly, while assessing whether an entity is entitled to a reduced penalty under the leniency plus regime, the CCI is entitled to consider the likelihood of how the newly disclosed cartel would have been detected without the leniency plus application. We hope that the final regulations do not lose sight of the primary aim of the leniency plus regime - to incentivise the disclosure of additional cartels.”
Samir Gandhi, Partner & Co-founder, Axiom5 Law Chambers said that the CCI’s revised Leniency and Leniency Plus Regulations are a welcome step towards further strengthening the CCI’s leniency program.
Whistle blowers will now be rewarded additionally if they self-report another cartel in return for a further reduction in their penalties, he said.
“Coupled with an increase in overall penalties that the CCI can now levy on global turnover and an attractive settlements & commitments mechanism, the CCI will now have all the tools that are available globally to competition regulators to ensure quick and effective market correction”, Gandhi said.