CCI expands leniency norms to individuals

The Competition Commission of India (CCI) has expanded leniency norms for individuals, making them eligible for waivers or lower penalties.

The CCI has amended rules for leniency for this purpose. Prior to this, only companies were eligible to apply for leniency. Competition lawyers said the CCI was trying to strengthen leniency provisions to bust more cartels in the country.

Section 46 of the CCI Act has a provision called a leniency programme. This allows the waiving of or imposing of lower penalty on parties to a cartel that inform about it.

From the inception of the CCI over 100 leniency applications have been filed, but the commission has used this provision sparingly. “The CCI uses a great deal of discretion in considering evidence provided to it under the leniency provisions,” an expert said.

According to the leniency programme, the first applicant to inform the CCI receives an up to 100 per cent waiver on penalty. The second and third informants receive up to 50 per cent and 30 per cent off, respectively. The CCI has the final word, the clause requiring the informant to “cooperate” with it. Without this, one does not qualify for immunity.

For the first time, the CCI had used this provision for its inquiry, on the basis of information from the Central Bureau of Investigation (CBI) regarding alleged cartelisation with respect to tenders floated by the railways and BEML for supply of brushless DC fans and other electrical items. 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 to 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 the US in 1993, followed by the EU. Japan and India followed their footsteps.