The Competition Commission of India (CCI) is taking an innovative approach to tackle cartels with the introduction of Leniency Plus regulations. These regulations, featured in the new Competition (Amendment) Act, 2023, encourage companies already under investigation for one cartel to disclose other cartel activities. This marks a significant step in the fight against anti-competitive practices and seeks to unveil the clandestine world of cartels.
Under the Leniency Plus regime, a cartel member cooperating with the CCI for leniency can come forward to reveal the existence of another cartel in an unrelated market during the original leniency proceedings. In return, they stand to receive an additional reduction in their penalty. The CCI has specified that this reduction can be as high as 30 percent of the penalty imposed for the first cartel and up to 100 percent for the newly-disclosed cartel.
The level of reduction in penalties will be at the CCI’s discretion and will depend on several factors, including the quality of information provided, the timing of the disclosure, and the evidence already in possession of the commission. The goal is to encourage more cartelist members to come forward and assist in the investigations.
The draft regulations define applicants as companies or individuals who are or were involved in cartel activities. This includes not only individual enterprises but also associations and persons connected to those enterprises who participate or intend to participate in furtherance of a cartel.
This regulatory development is significant because it extends the scope of cartel investigations. Traditionally, only horizontal anti-competitive agreements between businesses engaged in identical or similar trades fell under the definition of cartels. The Amendment Act now provides a statutory basis to hold facilitators of cartels accountable, and the draft regulations extend this accountability further.
The Leniency Plus regime is a valuable tool for regulators, allowing them to gain vital insights into cartel activities. This model is recognized and has been effectively used in countries like the UK, the US, Singapore, and Brazil.
The regulations also outline the priority status of applicants for penalty reduction. The first applicant making a crucial disclosure is eligible for up to 100 percent reduction in penalties. Subsequent applicants, the second and third, are eligible for reductions of up to 50 and 30 percent, respectively.
Regulators opt for such “leniency” arrangements due to the covert nature of cartels, where obtaining evidence is extremely challenging. Cartels are often considered the most egregious violations of competition law. The difficulty in investigating and prosecuting these activities underscores the need for innovative approaches like the Leniency Plus regime.
This approach to handling cartels as recidivism, or repeat offenses, aims to strike a balance between enforcement and practicality in the realm of competition law. It recognizes the complexities of investigating and prosecuting cartels while incentivizing members to come forward and assist in the fight against anti-competitive practices.
In conclusion, CCI’s Leniency Plus regulations represent a forward-thinking approach to addressing cartels, ensuring that competition remains fair and robust within India’s business landscape.
