Abstract

This research paper evaluates the effectiveness of the leniency provisions of the Competition Commission of India (CCI) in uncovering and deterring cartel activity. It investigates the theoretical and empirical frameworks surrounding cartel behaviour and leniency policies, with a focus on the Indian context. It studies the trends in the imposition of lesser penalties under Section 46, and examines the challenges of the leniency programme since its inception in 2009. An analysis of global antitrust frameworks helps to understand the potential improvements for India’s antitrust framework. The findings suggest that the effectiveness of the leniency programme has been underwhelming; addressing inefficiencies in procedures and increasing awareness among enterprises could help with the same.

Keywords: Leniency, Cartels, Antitrust legislation, CCI

Introduction

The Competition Act of 2002 in India was designed to regulate anti-competitive behaviour. The responsibility to enforce this law rests with the Competition Commission of India (CCI), which works with the support of the Office of Director General (DG). The primary goal of the Act is to deter practices which adversely impact competition, to promote fair competition, to protect consumer interests, and to ensure freedom of trade. 

The Act targets three main areas – anti-competitive agreements (including cartels), abuse of dominant positions, and combinations like mergers and acquisitions. Under Section 2(C), ‘cartels’ refer to those agreements between producers, sellers, distributors, or service providers, which have the purpose of controlling production, distribution, sale, or price control, some or it is presumed that these aspects have an appreciable adverse effect on competition (AAEC).

It is not easy to detect cartels, which are an extreme and harmful example of anti-competitive behaviour, since these activities are of a secretive nature. Still, the threat of large penalties under the leniency programme pushes cartel members to disclose their activities in some cases. This programme is outlined in the Competition Act and is detailed in the Lesser Penalty Regulations of 2009 and amended regulations of 2017. It gives incentives for disclosure, such as whistleblower protection and penalty reductions.

The CCI introduced Lesser Penalty Regulations in 2009, in which individuals involved in cartels can apply for leniency. The first applicant can get penalty reduction of upto 100%, while subsequent applicants are eligible for lesser reductions in penalty. These penalty reductions were further defined in the 2017 amendments. 

However, despite these provisions, India’s leniency programme has not been as successful as those of the USA and Australia. It is plagued by issues such as procedural delays, resource constraints, and limited transparency and predictability. India’s competition regime is still young as compared to the well-established anti-competitive policies in the EU and the USA. The CCI is continuously evolving its approaches so as to better combat cartels and promote fair competition.

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