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Business News/ News / India/  CCI rolls out leniency regime to encourage cartel members to come clean
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CCI rolls out leniency regime to encourage cartel members to come clean

The scheme, which was made law last year by amending the Competition Act, adds a new dimension to the existing leniency regime, under which the CCI may waive or reduce the penalty on a cartel member in exchange for information about the cartel.

The government introduced the ‘lesser penalty plus’ regime as cartels are among the worst forms of anti-competitive practice and inherently difficult to unearth without disclosures from insiders.Premium
The government introduced the ‘lesser penalty plus’ regime as cartels are among the worst forms of anti-competitive practice and inherently difficult to unearth without disclosures from insiders.

New Delhi: The Competition Commission of India (CCI) has rolled out a new ‘lesser penalty plus’ regime to incentivise individuals and cartels already under scrutiny to provide information about other cartels that the regulator does not know about. 

The ‘lesser penalty plus regulation 2024’ was notified late on Tuesday and came into effect immediately.

The scheme, which was made law last year by amending the Competition Act, adds a new dimension to existing ‘lesser penalty’ leniency regime, under which the CCI may waive or reduce the penalty on an entity (person or company) involved in a cartel if this entity makes a full and true disclosure of alleged violations. 

If a second participant comes clean, they are eligible for a waiver of up to 50% of the penalty.

The new regime offers a further 30% reduction in the penalty to the second cartel participant to come clean if they disclose the existence of another cartel. This entity will also be eligible for a full waiver of any penalty that arises from an investigation into the newly disclosed cartel.

The government introduced the ‘lesser penalty plus’ regime as cartels are among the worst forms of anti-competitive practice and inherently difficult to unearth without disclosures from insiders. It hopes this reduction in the penalty for those who come clean, along with higher penalties (calculated as a share of the company’s global turnover) introduced in the Competition Act last year will make it easier to unearth cartels.

Neelambera Sandeepan, partner at Lakshmikumaran & Sridharan Attorneys, said, “The leniency regime in India has led to the detection of several cartels in industries such as auto parts and alcobev, allowing companies to benefit from up to a 100% waiver of their penalties. Similar provisions have resulted in increased enforcement action in other jurisdictions such as the United States, and it will be interesting to see the impact in India."

The CCI also suggested conditions for reducing penalties under the scheme. For instance, a cartel participant applying for a penalty reduction should cease to be a part of the cartel, make vital disclosures, submit all relevant information and evidence, cooperate fully, and not manipulate documents. If these conditions are not met, CCI could reject the application, use the information submitted, and initiate an inquiry into the alleged violation.

Under the new rules, the CCI has discretion in reducing the penalty, depending on the stage at which the disclosure is made, the evidence it already possesses, the quality of the information disclosed, and whether the conditions listed above have been met.

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Published: 21 Feb 2024, 02:26 PM IST
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