Leniency Plus: CCI Draft Regulations Incentivise Cartel Disclosures

The Competition Commission of India (CCI) has come out with the draft CCI (Lesser Penalty) Regulations, 2023, to incentivise additional cartel disclosures by existing leniency applicants. Upon finalisation of the draft, the same would replace the 2009 regulations.

According to Section 2(c) of the Competition Act, 2002, a cartel includes “an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”. The said Act empowers the Commission to impose a lesser penalty for disclosures in respect of any cartel entering into an anti-competitive agreement, in violation of Section 3 of the Act.

In April of this year, the “leniency plus” or “lesser penalty plus” mechanism was introduced under Section 46(4) vide an amendment, the Competition (Amendment) Act, 2023, providing for additional leniency for disclosures made regarding other cartels during the course of the investigation into the first cartel. The draft regulations elaborate on this mechanism.

As per Regulation 5 of the draft regulations, if the existing leniency applicant makes a “full, true and vital disclosure” with respect to the existence of another cartel, the Commission may grant him an additional reduction in monetary penalty of up to 30% with respect to the first cartel. When it comes to the second cartel (i.e., the newly disclosed cartel), such an applicant will be eligible for a reduction in penalty of up to 100%.

Regulation 7 lays down the procedure for the grant of lesser penalty plus and specifies that the application has to be made before the receipt of the Director General’s investigation report by the Commission under Section 26 of the Act. Further, Regulation 10 allows the applicants to withdraw their applications for the grant of lesser penalty under Regulation 6, or the grant of lesser penalty plus under Regulation 7.

The stakeholders may share their comments on the draft regulations by November 6, 2023.