Cartel leniency in India: overview

A Q&A guide to cartel leniency law in India.

The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.

To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-guide.

For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/mergercontrol-guide and www.practicallaw.com/restraintsoftrade-guide.

John Handoll and Yaman Verma, Shardul Amarchand Mangaldas & Co
Contents

Regulation

1. What laws provide for a leniency programme and which regulatory authority administers it? Is there any published guidance?

Applicable laws and guidance

The Competition Act 2002 (Competition Act) provides for a leniency programme. The Competition Commission of India (CCI) can impose a "lesser penalty" on a member of an alleged cartel if such member has made a "full, true and vital disclosure" in respect of alleged violations of the Act.

On finding contravention of the provisions of the Act relating to anti-competitive agreements (including cartels), the CCI can impose on each person or enterprise party to such agreements, a penalty of not more than 10% of the average of the turnover for the last three preceding financial years. Specifically in relation to cartels, the CCI may alternatively impose on each participant in a cartel, a penalty of the higher of:

  • Up to three times its profit for each year of the duration of the agreement.

  • Up to 10% of the average annual turnover for each year of the continuance of the agreement.

The grant of leniency is governed by the Competition Commission of India (Lesser Penalty) Regulations 2009 (Lesser Penalty Regulations). The Lesser Penalty Regulations set out the:

  • Conditions to be satisfied for the grant of leniency.

  • Applicable procedure.

  • Sliding scale of leniency.

Regulatory authority

The CCI administers the leniency programme. The Director General, as the investigating arm of the CCI, conducts actual investigations and files a report with the CCI.

 

Scope of application

2. What infringements of competition law does the leniency programme cover?

The leniency programme covers infringement of section 3(3) of the Competition Act which deals with cartels. This includes, among other things:

  • Price-fixing.

  • Bid-rigging (collusive tendering).

  • The establishment of output restrictions or quotas.

  • Market sharing or market allocation.

There is no criminal liability for cartel conduct under the Act. The leniency programme only extends to the administrative liability imposed on cartel members under the Act.

 

Recent cases

3. What notable recent cases have applied the leniency programme?

To date, there has been no decided case where a member of a cartel has applied for leniency. However, press reports and public statements by Competition Commission of India (CCI) officials suggest that the CCI is currently investigating a number of cases that involve leniency applications.

 

Availability of leniency

Administrative liability

4. Is full immunity from administrative penalties available? What conditions must be met for immunity to be granted?

Full immunity from administrative penalties is available. Under the Lesser Penalty Regulations, up to a 100% reduction in administrative fines may be granted subject to certain conditions. The first applicant for leniency may be granted full immunity from administrative fines if it satisfies the following conditions:

  • The applicant makes vital disclosure by submitting evidence of a cartel enabling the Competition Commission of India (CCI) to either:

    • form a prima facie opinion regarding the existence of a cartel where the CCI did not have the evidence to form such an opinion; or

    • establish a violation of the Competition Act by providing evidence that the Director General or the CCI did not have.

  • The applicant co-operates with the CCI throughout the investigation (see Question 10).

 
5. Is there a sliding scale of available leniency from administrative penalties?

There is a sliding scale of leniency under the Lesser Penalty Regulations. Applicants after the first applicant may have their fines reduced on submitting evidence which may, in the opinion of the Competition Commission of India (CCI), provide significant added value to the evidence already in their possession (that is, evidence which enhances their ability to establish the existence of the alleged cartel). Applicants must also continuously co-operate with the CCI throughout the investigation (see Question 10).

The second and third applicants' fines can be reduced by up to 50% and 30%, respectively. The Lesser Penalty Regulations are silent on any subsequent applicants' entitlement to a fine reduction and this situation has not yet arisen in practice.

 
6. Is immunity or leniency for administrative penalties available to individuals? If so, what conditions apply?

The Competition Act makes it clear that individual directors, managers, secretaries and other officers of a company may, in certain circumstances, be guilty of breach as well as the company itself. The same may apply to a person "in charge of" a company. However, there is no specific provision in the legislation or guidance from the Competition Commission of India addressing the question of leniency for such individuals.

 

Criminal liability

7. Is immunity or leniency available for companies and/or its employees in relation to criminal prosecution? What are the implications for employees when an undertaking has been granted immunity or leniency?

Circumstances

Cartel and related offences are not subject to criminal prosecution under the Competition Act.

Proceedings against employees

Not applicable (see above, Circumstances).

Employees' interests

As seen above, there is no specific provision extending leniency to individual directors or managers who may be liable for breach. The Lesser Penalty Regulations require continuing co-operation on the part of a company. Therefore, the failure of an employee to co-operate may jeopardise the company's application for leniency.

 

Application proceedings

8. When should an application for leniency be made?

The application for leniency must be made at the earliest possible point. Although the Lesser Penalty Regulations specifically provide that leniency applications can be made after the investigation has started, they do require that any application be made before the Competition Commission of India receives an investigation report from the Director General.

 
9. What are the procedural rules for leniency applications?

Relevant authority

An application for leniency is made to the Competition Commission of India (CCI), through the "designated authority". The designated authority is currently the Secretary of the CCI.

Applicant

The application for leniency must be made by the enterprise itself or its authorised representative.

Informal/confidential guidance

There is currently no system for obtaining informal guidance.

Form of application

An application must be made in writing, containing the information listed in the Schedule to the Lesser Penalty Regulations (Schedule).

Markers

Where an application, or contact (oral or through e-mail or fax), is made, the CCI must, within three working days, mark the priority status of the applicant. In the case of a contact, it must direct the applicant to submit a written application containing all the material information as specified in the Schedule within a period not exceeding 15 days. During this period, the applicant's position in the leniency queue is secured. If the written application is not provided within this period, the position may be forfeited.

Information/evidence

The information to be provided in the leniency application is set out in the Schedule. This comprises:

  • Relevant names and addresses.

  • A detailed description of the alleged cartel arrangement.

  • The goods or services involved.

  • The geographic market covered.

  • Commencement date and duration of the cartel.

  • The estimated volume of business affected by the alleged cartel.

  • Names and details of all individuals who, in the knowledge of the applicant, are or have been involved in the cartel, including on behalf of the applicant.

  • Details of other competition authorities, forums or courts, if any, approached or intended to be approached in relation to the alleged cartel.

  • A descriptive list of evidence provided in support of the application.

  • Any other material information as may be directed by the CCI.

Oral statements

Initial contact can be made orally. However, the applicant must submit a written application within a period not exceeding 15 days (see above, Markers).

Short-form applications

Not applicable.

 
10. What are the applicable procedures and timetable?

When the "designated authority" receives an application, or contact is made, it must forward the matter to the Competition Commission of India (CCI). The CCI must mark the priority status of the applicant, and the date and time of receipt by the "designated authority". The priority status must be notified to the applicant. The CCI then evaluates the evidence submitted. The Lesser Penalty Regulations do not provide any specific time limit within which the CCI must evaluate evidence submitted or decide on the application as a whole.

Until the evidence submitted by the first applicant has been evaluated, the CCI cannot consider the next application (unfortunately, the legislation is silent on the position for subsequent applications, though the same reasoning should apply).

The actual grant of leniency, which is conditional on continued co-operation, is only made known when the final order is passed.

 

Withdrawal of leniency

11. In what circumstances and at what stage of the proceedings can leniency be withdrawn? What implications does the withdrawal of leniency from one company have for other applicants?

A grant of leniency remains subject to the applicant fulfilling certain conditions based on the principle of maintaining continuous and complete co-operation.

The Competition Commission of India (CCI) can withdraw leniency if:

  • The applicant fails to co-operate.

  • The applicant does not comply with the conditions imposed.

  • The applicant gives false evidence.

  • Disclosure does not prove to be vital in establishing the cartel.

If leniency for a given applicant is withdrawn by the CCI, the subsequent applicants can move up in rank.

 

Scope of protection

12. What is the scope of leniency protection after it has been granted?

The scope of leniency is decided on a case-by-case basis and there is no guidance in this regard. The language of the Lesser Penalty Regulations suggests that leniency is limited to the cartel in relation to which information is provided.

 
13. Does the competition authority offer any further reduction in fines for an undertaking's activities in one market if it is the first to disclose restrictive agreements and practices in another market (leniency plus)?

The Competition Act and the Lesser Penalty Regulations do not address the concept of leniency plus. 

 
14. Does the grant of leniency affect a third party's ability to bring a follow-on damages action against a leniency applicant?

The Competition Act and the Lesser Penalty Regulations are silent on a third party's ability to bring a follow-on damages action against a leniency applicant, and do not provide any specific protection in this regard. It appears that the application for or grant of leniency would not affect follow-on damages actions brought by a third party against that member of a cartel, under Section 53N of the Competition Act, and such actions can still be brought.

 

Confidentiality and disclosure

15. What are the rules relating to confidentiality during a leniency application?

Identity disclosure

The identity of the applicant as well as the information it submits to the Competition Commission of India (CCI) must be treated as confidential and cannot be disclosed except in any of the following circumstances:

  • Disclosure is required by law.

  • The applicant has agreed to such disclosure in writing.

  • The applicant has publicly disclosed the relevant information.

Information disclosure

Information provided by a leniency applicant is confidential (see above, Identity disclosure).

Confidentiality requests

No specific provision is made for this. However, making confidentiality requests is unnecessary as the Lesser Penalty Regulations already grant confidentiality to all information submitted by a leniency applicant.

 
16. What are the rules concerning disclosure of statements made in support of a leniency application?

Domestic submissions and domestic discovery

The Competition Act and the Lesser Penalty Regulations are silent in relation to disclosure by way of discovery of statements made in support of a leniency application.

Domestic submissions and foreign discovery

See above, Domestic submissions and domestic discovery.

Foreign submissions and domestic discovery

See above, Domestic submissions and domestic discovery.

 

Inter-agency co-operation

17. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities from other jurisdictions in relation to leniency? If so, what is the legal basis for and extent of co-operation?

Section 18 of the Competition Act provides for co-operation between the Competition Commission of India (CCI) and competition authorities from other jurisdictions. The CCI has entered into co-operation arrangements with the US Federal Trade Commission (FTC) and Department of Justice (DOJ), the Russian Federal Antimonoply Service, the Australia Competition and Consumer Commission (ACCC), Commissioner of Competition, Competition Bureau Canada (CB) and DG Competition of the European Commission. It is also entering into co-operation arrangements with competition authorities of the BRICS (Brazil, Russia, India, China and South Africa) countries. It is not known whether the CCI has co-operated with any of the above in relation to leniency. Mention should also be made of the CCI's involvement in the International Competition Network (ICN).

 

Proposals for reform

18. Are there any proposals for reform?

There are currently no proposals to reform the leniency programme.

 

Online resources

Competition Commission of India (CCI)

W www.cci.gov.in

Description. The website is maintained by the CCI. It contains official information and is often relied on for the latest developments such as orders of the CCI and regulatory amendments.



The regulatory authority

Competition Commission of India (CCI)

Head. D.K. Sikri (Chairman)
Secretary (designated authority). Smita Jhingran
Contact details. The Hindustan Times House, 18-20 Kasturba Gandhi Marg, New Delhi – 110001 India
T +91 11 2370 4651
F +91 11 2370 4652
E secy@cci.gov.in
W www.cci.gov.in

Responsibilities. The CCI is mandated to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade carried on by other participants, in markets in India.

Person/department to apply to. The application must be made to the Secretary of the CCI as the "designated authority" at the address provided above.

Procedure for obtaining application documents. There are no application documents as such.



Contributor profiles

John Handoll, Senior Advisor, European and Competition Law

Shardul Amarchand Mangaldas & Co

T +91 11 2692 0500 (ext. 6025)
F +91 11 2692 4900
E john.handoll@AMSShardul.com

Professional qualifications. LLB Degree (Hons.), Manchester University; Diploma in European Integration, Amsterdam University; qualified as a barrister (Inner Temple), 1981; Solicitor (England and Wales), 1991; Solicitor (Ireland), 1997

Areas of practice. Competition law.

Recent transactions

  • Acting for a wide range of international clients in a wide spectrum of economic activity.
  • Acting for a number of India merger filings, anti-trust cases (including cartel investigations) and abuse of dominance cases.
  • Advised on compliance programmes and on preparing for dawn raids.

Languages. English

Yaman Verma, Senior Associate, Competition Law

Shardul Amarchand Mangaldas & Co

T +91 11 2692 0500 (ext. 6025)
F +91 11 2692 4900
E yaman.verma@AMSShardul.com

Professional qualifications. LLB (Hons.), National Law School of India University, Bangalore.

Areas of practice. Competition law.

Recent transactions. A wide range of international and domestic clients, across merger control, cartel investigations, and abuse of dominance cases; most recently advising Microsoft (IT); Apollo Tyres (auto-motives) and Coal India (natural resources).

Languages. English

Professional associations/memberships. Bar Council of India, 2010


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