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regular-article-logo Thursday, 25 July 2024

Reduced penalty for ratting on cartels to Competition Commission of India

Businesses that have exposed a cartel and applied for reduced penalties can now submit a separate application, providing essential information about another cartel in which they are involved. To benefit from this leniency-plus provision, companies must ensure 'full, true, and vital disclosure'

R. Suryamurthy New Delhi Published 22.02.24, 10:24 AM
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The government will incentivise companies already under investigation for forming a cartel to report on other cartels that exist.

According to the regulations, the CCI will have the discretion to decide the reduction in penalty based upon the quality of the information.

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Under the ‘leniency plus’ concept in the Competition Act, businesses that have exposed a cartel and applied for reduced penalties can now submit a separate application, providing essential information about another cartel in which they are involved. To benefit from this leniency-plus provision, companies must ensure “full, true, and vital disclosure”.

Unnati Agrawal, partner, IndusLaw, said: “Given that the grant of ‘leniency plus’ hinges on the ‘likelihood’ of the CCI or the DG detecting the separate cartel without the ‘lesser penalty plus application’, it is probable that a multi-product conglomerate will have a higher success in availing the benefit of ‘leniency plus’.

“In such cases, there may be little similarity in terms of conduct/product/service between the first and second cartel, which will enable them to get a higher credit for disclosures made to the CCI.”

“Clarifying the scope and extent of incentives that cartel participants can avail of in exchange for qualitative disclosures and effective cooperation can provide a much-needed impetus for cartel enforcement action by the CCI in the coming months and years.

“The regime has the potential to empower the CCI to quickly identify and effectively block egregious market behaviour by cartels and cartel participants,” said Ravisekhar Nair, partner, Eco Law Practice.

The CCI had in October last year issued a draft lesser penalty regulation. The draft regulations offer leniency applications in an ongoing cartel inquiry and the incentive to disclose the details of another unrelated cartel.

By providing accurate information, these companies may be eligible for reduced monetary penalties in cases related to the disclosed cartels.

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