In an effort to strengthen its enforcement framework and enhance penalty recovery rates, the Competition Commission of India (CCI) has issued draft amendments to the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011, inviting public feedback.
This move is seen as a crucial step in addressing longstanding challenges in the collection of fines imposed on entities violating competition laws.
The proposed amendments aim to close gaps in the recovery process, strengthen compliance, and ensure that penalties act as a credible deterrent against anti-competitive practices.
The CCI has invited stakeholders to submit their feedback on the draft amendments by December 6, 2024. The consultation process seeks to incorporate public and industry input to ensure that the updated recovery regulations are both effective and pragmatic, balancing deterrence with operational flexibility.
The CCI, empowered by Section 39 of the Competition Act, 2002, has historically faced challenges in executing monetary penalties. With recovery rates for imposed fines remaining low, the CCI has found it necessary to revisit the regulatory framework governing the collection process. The draft, which reflects insights gained from more than a decade of experience, follows two previous amendments in 2014 and 2021. Yet, persistent inefficiencies in recovery prompted the need for a more robust, transparent, and streamlined approach.
Key changes in the draft amendments introduce more precise definitions, including terms like “enterprise in default” and “person in default,” which are designed to simplify the identification of defaulters and enhance accountability. The amendments also propose a more structured process for issuing demand notices, with specific timelines for penalty payments and automatic accrual of interest at a rate of 1.5 per cent per month on overdue amounts. This clarity aims to eliminate ambiguities around payment deadlines and strengthen the penalty’s enforceability.
The regulations propose a central role for the recovery officer, who will be responsible for monitoring compliance, issuing recovery certificates, and executing recovery actions in cases of default. These actions can now include attachment and sale of both movable and immovable assets. In cases where penalties remain unpaid, the CCI may initiate proceedings to secure recovery by attaching the assets of the defaulting enterprise or individual, including those located abroad, through collaboration with international authorities where reciprocal agreements exist.
Additionally, the draft amendments introduce a dedicated penalty recovery register, designed to track recovery progress and record enforcement actions systematically. This register, maintained by the recovery officer, will serve as an institutional record, aiding transparency and allowing for more rigorous monitoring by the CCI.
The amendments also enhance cross-agency cooperation. Under the new rules, unpaid penalties may be referred to Income Tax authorities, with the defaulter treated as an “assessee in default” under the Income Tax Act, 1961. This mechanism is expected to expedite recovery by granting the CCI access to the established tax recovery infrastructure, ensuring defaulters are pursued under both competition and tax laws.
The draft includes provisions to prevent evasion tactics. Any transfer or disposal of assets by a defaulter after the imposition of a penalty will be voided, except in cases where it is done for adequate consideration and without knowledge of pending proceedings or with prior CCI permission. Enterprises facing penalties can request an extension or instalment-based payment structure. However, defaults on such instalments would result in immediate enforcement actions, with the entire outstanding penalty amount becoming due.