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Business News/ News / India/  Govt may empower CCI for negotiated case settlements

Govt may empower CCI for negotiated case settlements

At present, CCI can show leniency and give full exemption from penalty for early disclosures

The likelihood of negotiated settlement gives a more structured expression to the already existing powers with the CCI. mintPremium
The likelihood of negotiated settlement gives a more structured expression to the already existing powers with the CCI. mint

Businesses accused of anti-competitive practices, including abuse of their dominant positions, will soon be able to settle cases by negotiating with the Competition Commission of India (CCI) if the competition amendment bill to be tabled in Parliament is passed.

The central government proposes to add features of negotiated ‘settlements and commitments’, which are allowed in the EU, Japan and the US, to quickly resolve cases through financial or non-monetary provisions to reduce litigation, said a person privy to discussions, seeking anonymity.

The Securities and Exchange Board of India (Sebi) and the income tax department have offered settlements under different schemes.

At present, the CCI is empowered to show leniency and give full exemption from penalty to a member of a cartel who makes vital disclosures about the existence of the cartel and cooperates with investigations, but negotiated settlements are not part of the rule book.

Commitment is a remedial measure in a case of anti-competitive practice not requiring admission of an infringement by an entity facing investigation, while settlement requires the company to admit it and this is often allowed in cases of cartelization. In countries where these provisions are allowed, regulators are able to facilitate resolutions over concerns relating to anti-competitive behaviour and bring in the required changes in corporate conduct without pursuing long-drawn procedures or litigation.

“Settlements and commitments will help to avoid extensive procedures, cut down litigation, make enforcement more effective while improving investment climate for businesses by reducing uncertainty," the person said.

The existing law has enough elbow room to impose anything, from nil to maximum fine, but the request for leniency under present regulations is possible only before the submission of the investigation report, experts said.

The proposed negotiating settlement effectively extends the option for request for leniency even after the submission of the investigation report by the director general, said K.K. Sharma, chairman, KK Sharma Law Offices, and a former CCI director general.

“The likelihood of negotiated settlement gives a more structured expression to the already existing powers with the CCI. It will open options for course correction by deviant businesses by saving precious energy from being frittered away on avoidable litigation. This will be a soft exit window for newly deviant, uninformed or ill-informed businesses on the wrong side of the law, and enhance the number of cases admitted. On the whole, it is a good idea," Sharma said.

It is an important amendment and has the potential to cut both ways, said Avaantika Kakkar, partner and head, competition, at Cyril Amarchand Mangaldas,—for the respondent or defendant companies, the benefit will be early resolution and possibly no penalties. “For the complainants, however, does the right to claim damages fall away or get fettered? The settlement may not be a public document and will have limited value as a precedent," she said.

According to the official schedule for legislative business in the current session of Parliament, the Competition Amendment Bill, 2022, seeks to bring changes to substantive provisions to address the needs for new-age markets, besides carrying out certain essential changes in the governing structure of CCI. The regulator at present has two members in addition to chairperson Ashok Kumar Gupta, though the law allows up to six members.

An email query to the spokesperson of the corporate affairs ministry and to the CCI on Monday seeking comments for the story remained unanswered at the time of publishing.

The proposed amendments are also expected to bring in clearer provisions in the regulation of the digital economy. The practices in digital economy firms is in the spotlight with many conventional traders alleging that they are involved in anti-competitive practices.

However, there is no lack of teeth for the competition regulator even under existing laws for competition regulation in the digital economy, said a second person privy to discussions, also seeking anonymity.

Although a digital economy company can be a big player, digital may only be a small part of the total market for the sector and the ability of a digital economy firm to distort markets may be limited, he added.

The existing Act has not been found wanting in dealing with alleged bad practices in the digital economy, said Pallavi Shroff, managing partner, Shardul Amarchand Mangaldas.

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Published: 19 Jul 2022, 10:27 PM IST
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