cartelisation: CCI notifies leniency-plus scheme to curb cartelisation

The Competition Commission of India (CCI) has notified regulations governing the so-called lesser-penalty plus or, more commonly, the leniency-plus regime, which would allow companies that are under probe for cartelisation to report other cartels and get their own penalties reduced.

The regulations followed a notification by the Ministry of Corporate Affairs (MCA) that said the regime would come into force on February 20. This regime was proposed in the Competition (Amendment) Act 2023, modifying an earlier framework.

According to the new regulations, the anti-trust regulator can reduce penalty by up to an additional 30% for a company for being part of the first cartel, besides trimming it by up to 100% for its involvement in the newly-disclosed cartel, said analysts.

Akshayy S Nanda, partner at Saraf and Partners, said: “By providing additional leniency incentives, competition authorities can obtain insider information and evidence crucial for identifying and prosecuting cartels effectively.” “Additionally, such vital disclosures would help save resources of the antitrust authority and lead to expeditious detection of cartels,” he added.

“Leniency programs can lead to the dismantling of cartels from within, as participants are incentivized to cooperate and provide evidence against their co-conspirators. This would also act as a catalyst in creating more uncertainty and instability among the cartel members, instilling a fear of whistle-blowing,” Nanda said.

The amount of penalty reduction would hinge on the so-called ‘significant added value’ that the applicant provides. The ‘significant added value’ will be determined by the CCI on the basis of the evidence provided by the applicant to strengthen the regulator’s ability to prove the alleged cartel, according to the regulation.Ravisekhar Nair, partner at Economic Laws Practice, said: “By clarifying the scope of incentives which cartel participants can avail of and by setting out criteria for assessment of the cooperation and disclosures made by a party, there is good chance that the CCI’s cartel enforcement activities will receive a boost.”An application for lesser penalty can be made by any producer, seller, distributor, trader or service provider included in any cartel or by one who is not engaged in identical or similar trade, if it participates or intends to participate in the furtherance of such cartel, according to the CCI.

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