CCI reviews leniency rules for companies that blow the whistle on cartels
NEW DELHI: India’s fair trade regulator is reviewing the provisions related to leniency to encourage more whistle-blowers to report cartelisation. Smita Jhingran, secretary with the Competition Commission of India (CCI), said a draft of the proposed regulations will be put soon in the public domain for comments. Cartelisation is difficult to prove and antitrust regulators across the world offer lesser penalties to those who cooperate with the authorities. “We are having a relook of our lesser penalty provisions,” Jhingran said at an event organized by the Indian Law Institute and CCI.
“The commission has formed a view about these and, very shortly, we would be putting up our proposed changes in these regulations on our website for public comment.” India’s competition law prescribes stiff penalties for those involved in price manipulation, as seen recently in the multi-crore rupee fines imposed on the cement and automobile industries. The fines ranged from Rs 206 crore on cement companies for alleged bid-rigging to Rs 2,500 crore on car makers for allegedly colluding in the spare parts market.
The Competition Act of 2002 gives the CCI powers to impose ‘lesser penalty’ if a member of a cartel makes a full disclosure about alleged violations and cooperates with the subsequent investigations. In line with the Act, the Competition Commission of India (Lesser Penalty) Regulations were framed and enforced from 2009. The ‘lesser penalty regulations’ offer penalty reduction of up to 100 per cent, with a staggered reduction of up to 75 per cent, 50 per cent and so forth, depending on the timing of the disclosure and the value that added to the evidence available with the Competition Commission during investigation.
The provisions for stronger confidentiality, removal of ambiguity with respect to the meaning ‘vital disclosures’ and ensuring a proper 'marker system' or queue so that there is no confusion in case multiple people from the same cartel approach the commission are some of the ideas.
Recently, whistle-blowers were granted a 75 per cent reduction in penalty in a case relating to alleged collusion and rigging of tenders floated by Indian Railways and Bharat Earth Movers Ltd. This was the first instance where the CCI received applications under its leniency regulations. “We had enforcement from 2009 but we found no applications till 2013, which is when we got our first leniency application… and then they continued to trickle in,” said Jhingran.
“The commission has formed a view about these and, very shortly, we would be putting up our proposed changes in these regulations on our website for public comment.” India’s competition law prescribes stiff penalties for those involved in price manipulation, as seen recently in the multi-crore rupee fines imposed on the cement and automobile industries. The fines ranged from Rs 206 crore on cement companies for alleged bid-rigging to Rs 2,500 crore on car makers for allegedly colluding in the spare parts market.
The Competition Act of 2002 gives the CCI powers to impose ‘lesser penalty’ if a member of a cartel makes a full disclosure about alleged violations and cooperates with the subsequent investigations. In line with the Act, the Competition Commission of India (Lesser Penalty) Regulations were framed and enforced from 2009. The ‘lesser penalty regulations’ offer penalty reduction of up to 100 per cent, with a staggered reduction of up to 75 per cent, 50 per cent and so forth, depending on the timing of the disclosure and the value that added to the evidence available with the Competition Commission during investigation.
The provisions for stronger confidentiality, removal of ambiguity with respect to the meaning ‘vital disclosures’ and ensuring a proper 'marker system' or queue so that there is no confusion in case multiple people from the same cartel approach the commission are some of the ideas.
Recently, whistle-blowers were granted a 75 per cent reduction in penalty in a case relating to alleged collusion and rigging of tenders floated by Indian Railways and Bharat Earth Movers Ltd. This was the first instance where the CCI received applications under its leniency regulations. “We had enforcement from 2009 but we found no applications till 2013, which is when we got our first leniency application… and then they continued to trickle in,” said Jhingran.
