CCI may include individuals under leniency scheme
The Competition Commission of India (CCI) is considering bringing individuals within the ambit of its leniency norms, which give the watchdog discretionary powers in awarding punishment to an offender.
Currently, only companies are eligible to be covered under these norms.
Competition lawyers say that the CCI is trying to strengthen the leniency provisions to bust more cartels in the country. Section 46 of the CCI Act has a provision called the “leniency programme”, sparingly used by the watchdog so far. This allows waiving or imposing lesser penalty on parties that tip off the watchdog about activities of cartels.
From the time of the inception of the Commission, more than 100 leniency applications have been filed. The CCI uses discretion in considering evidence provided to it under the leniency provisions, say experts. The CCI used this provision for the first time regarding alleged cartelisation with respect to tenders floated by the Railways and BEML (Bharat Earth Movers), also a government-owned entity, for supplying electrical items.
This was on the basis of information given by the Central Bureau of Investigation. In this case, the CCI had granted a reduction of penalty to an enterprise, based on the latter’s application under Section 46. The regulator reduced 75 per cent of the penalty amount in the case of the first informant.
In another recent case, the CCI granted a waiver of penalty of almost ~1,200 crore to Coal India. The initial fine was ~1,773 crore, and it was brought down to ~591 crore. A similar provision was introduced in America in 1993, and the European Union followed. Japan and India followed these advanced markets with the aim of breaking cartels. The leniency provisions aim to encourage natural revelation, taking advantage of the inherent weaknesses of their (cartels’) structure and members. Among other benefits, this section could help lead to mutual suspicion among a cartel’s members, a possible deterrent to anti-competitive activity. According to the leniency programme, the first applicant to tip off the CCI gets a waiver of the penalty. The second and third informants get up to 50 per cent and 30 per cent off, respectively.
The provision reads: “The Commission may, if it is satisfied that any producer, seller, distributor, trader or service provider included in any cartel, which is alleged to have violated Section 3 (relating to cartelisation), has made a full and true disclosure in respect of the alleged violations and such disclosure is vital, impose upon such producer, seller, distributor, trader or service provider a lesser penalty as it may deem fit, than leviable under this Act or the rules or the regulations.”
The competition watchdog uses the word ‘may’ in the definition to ensure that the provision is not abused by entities involved in cartels.
A lawyer Business Standard spoke to said, “A number of companies in the automotive sector want to avail of these facilities.”