CCI’s new penalty recovery regime kicks in from Thursday

New Delhi: Individuals and enterprises breaching competition law face a stricter penalty recovery regime with the Competition Commission of India (CCI) replacing its 14-year-old penalty recovery regulation with a new set of norms.

As per the CCI (manner of recovery of monetary penalty) regulations, 2025, notified with effect from Thursday, 27 February, the rate of interest on penalty has been lowered to 1% simple interest for each month of default in paying the penalty, from 1.5% earlier. 

However, as opposed to the earlier practice of issuing a demand notice after serving the adjudication order, from now on, the two will be issued at the same time, leading to levy of interest on unpaid penalty from an earlier date. 

This is a major departure from the earlier regime in which recovery efforts started after expiry of a period mentioned in CCI’s adjudicatory order penalising an erring enterprise. That allowed erring parties to move appellate tribunals or courts and secure stay orders, which came in the way of CCI issuing demand recovery notices.

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Mint reported on Monday that the CCI had cleared stricter penalty recovery rules to prevent parties from delaying payments by filing frivolous appeals and that in the new regime, penalty demand notice would be issued alongside the adjudication order.

In order to soften the blow of the early levy of interest, CCI decided to give at least 60 days from the date of issuing the demand notice, to make the payment without any interest. The earlier regulation had stipulated a time window of 30 days.

The new regulation also defines a ‘person in default’, in addition to an ‘enterprise in default.’ 

The new set of regulations marks a significant shift in how penalties are enforced, bringing a much-needed rigour and accountability to competition law compliance, said Sonam Chandwani, managing partner at law firm KS Legal & Associates. Earlier, businesses could delay or even evade penalty payments due to a lack of stringent recovery mechanisms, but now, with the introduction of a more structured recovery processes, non-compliance will carry serious financial and legal consequences, said Chandwani.

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Rahul Rai, partner and co-founder, of Axiom5 Law Chambers LLP. explained that in the new regime, demand notice can be issued immediately after an order imposing penalty is issued, preventing situations where the CCI is unable to issue a demand notice before a stay by the appellate body.

Also, there is provision for the CCI to extend the timeline for paying the penalty and to offer an instalment mechanism, Rai said. 

“This would allow more flexibility for enterprises to pay the penalty. Interest calculation will now be clearer if CCI issues its demand notice immediately and it will not be impacted by stays. The computation of interest has been made less onerous by reducing it from 1.5% to 1% simple interest per month,” said Rai. Rai also explained that now parties will get 60 days from the date of the demand notice to make the payment, instead of 30 days earlier. This is also aligned with the timeline for appealing to the National Company Law Appellate Tribunal, said Rai.

Rai also explained that the key challenges with penalty recovery has been the inability of companies to pay in one go, inability of companies to comply with the short timelines for paying the penalty, lack of clarity regarding interest payments on penalty and that CCI could issue a demand notice only after the expiry of a period mentioned in the order imposing penalty.

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Chandwani of KS Legal & Associates said the changes will force businesses to be more proactive in compliance and dispute resolution rather than taking a wait and watch approach. “While this move strengthens India’s regulatory credibility in competition law enforcement, businesses might feel the added financial burden and administrative stress, especially if they find themselves in prolonged legal battles,” said Chandwani.