The Ministry of Corporate Affairs on Tuesday notified the leniency plus regime under the Competition (Amendment) Act 2023 in a move that will incentivise companies already under investigation for one cartel to report other cartels.
Under Leniency Plus, a cartelist cooperating with the Competition Commission of India (CCI) for leniency can disclose the existence of another cartel in an unrelated market during the original leniency proceedings, in exchange for an additional reduction in penalty.
“Leniency has been an effective tool for regulators worldwide. This development will benefit the regulator in gathering evidence necessary for busting anti-competitive cartels. One can be certain that as soon as the regulations are published, the CCI will get down to enforcement of the law,” said Avaantika Kakkar, Partner, Cyril Amarchand Mangaldas.
According to the proposed regulations, the CCI will have the discretion to decide the reduction in penalty based upon the quality of the information, the stage at which the applicant comes forward, whether the Commission already is in possession of the evidence, and overall facts and circumstances of the case.
The applicants for this process, as per the draft regulations, refers to a company or an individual who is or was a member of a cartel including enterprise as well as associations of enterprise or persons who participate or intend to participate in furtherance of a cartel.
The CCI may grant an additional reduction in monetary penalty up to thirty per cent of the penalty imposed with regard to the first cartel besides reduction in penalty up to one hundred percent to a cartelist for a newly disclosed cartel.
The current Act already contains a leniency provision. The Leniency Plus model, providing the regulator with inside information about cartels, is recognised in countries such as the UK, US, Singapore, and Brazil.
The regulations also mention the priority status of each applicant for the reduction in penalty amount. If the applicant is the first to make a vital disclosure, then they are eligible for up to 100 per cent reduction in penalty. Thereafter, the second and third applicants are eligible for up to 50 and 30 per cent reduction respectively.
Regulators opt for such “leniency” arrangements due to the extremely secret nature of cartels where it is very difficult to get evidence. It is considered to be a pragmatic approach to tackle cartels, which is regarded as the most egregious violation of competition law.
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