Amnesty regime under competition law: Is it the dawn of a new era?

There is a difference between mechanics and semantics of the law, and the CCI might have to tackle this.

The Competition Commission of India (CCI) had busy hours last week. Throughout a couple of days, the Commission published the CCI (Commitment) Regulations, 2024, Settlement Regulations, 2024 and Monetary Penalty Guidelines, 2024 under the amended Competition Act. Recently, it also finalised the Lesser Penalty Regulations, 2024 which saw the addition of ‘leniency plus’ scheme under the law. All of these Regulations and Guidelines are part of the amnesty stack available under competition law.

Competition Law ensures free and fair markets for all and promotes the ‘consumer welfare standard’ in the economy.

Role of competition law and amnesty scheme

Competition Law ensures free and fair markets for all and promotes the ‘consumer welfare standard’ in the economy. Unlike its predecessor, the purpose of the Competition Act is to promote competition in the market and not necessarily curtail dominance. The Commission is given due autonomy in determining its procedure under the law so that it can implement the actionable provisions and course-correct the market in a timely manner. In case of a violation, the regulator is duly empowered to take penal action against the contravening entities and impose a fine on an economic basis.

The amnesty regime lies at the heart of the economic analysis of the law. The purpose of various amnesty schemes is common, which is to put an early end to the lengthy proceedings at the CCI and free its scarce resources so that more violations could be detected to ensure economic growth. The process brings economically efficient outcomes for the respondent entities as well since they have to spend less resources in the litigation process and simultaneously claim some form of concession either in the fine to be paid at the CCI, or admitting contravention of the law. Amnesty regime, by its very definition, also means accepting some trade offs for the government as the purpose of the law is to ensure optimum utilisation of the available resources, rather than focusing on the procedural aspects. Though, there is a slight difference between various forms of amnesty. For instance, the leniency application could only be filed in cartelisation cases, while the commitment and settlement are only available for vertical agreements and abuse of dominance cases. Similarly, in commitment the respondent entity is absolved from issuing any follow up damages to the adversaries, however this may not be the case in leniency and settlement schemes.

Workload at the CCI

The CCI on an average receives 80 cases of antitrust violations in a year. The median time taken by the CCI to dispose of a case is approximately two years wherever a DG investigation is ordered. The annual funding of the Commission hinges around INR 77 crore with an average of (minus) -5% Y-o-Y growth in the budget allocation on a sector-agnostic basis. The prime question which may arise at this point of time is whether the CCI is sufficiently equipped to implement the enacted amnesty schemes? This question is important because there is often a delay in the submission of the DG report where legal officers of the litigating parties keep asking for extension on procedural grounds. The implementation of commitment and settlement schemes might hit a roadblock as timeline is of essence here. Even for leniency, the past experience hasn't been very encouraging where the CCI has received just a dozen of applications in around one and a half decade of its implementation.

Is it the dawn of a new era?

An equally important question is whether the recently notified amnesty schemes herald the beginning of a new era at the CCI? The answer lies in the affirmative. It is suggested that the government is undertaking new age reforms where it is repealing redundant laws and enacting forward-looking legislation on a light-touch principle basis. This results in the creation of a pro-reform governing framework. The enactment of the Competition Amendment Act, 2023 was one such initiative where the government has recently notified the increased merger thresholds for the target entity to be applicable at the CCI. The Commission may utilise the same to shed its past, and mark the beginning of CCI 2.0. The other avoided possibility could be for the Commission to put up with the existing processes and maintain the status quo to conduct the business.

Conclusion

There is a difference between the mechanics and semantics of the law, and the CCI might have to tackle this. The need of the hour may be to build upon the existing work of the Commission and further rely on external expertise available in the market for better enforcement of the law. The appointment of recently appointed Commissioners at the body may further facilitate this process. The working of the competition authority is, ultimately, second to none. In an increasingly changing world, it is suggested that the CCI is duly placed to propel India’s growth engine. The onus is now on the government to increase the budgetary fund allocations to the CCI and ensure that there is no jurisdictional overlap between sector-agnostic and sector-specific regulators. This would serve the goals of the economic policy and earn India its dutiful position as the leader of the democratic world.

Sumit Jain and Siddharth Mishra are Directors at the Centre for Competition Law and Economics (CCLE).