How CCI wants to break up hard-core cartels via the new “Clemence plus” regime


India plans to introduce a ‘leniency plus’ program – a new cartel detection tool – which would encourage companies already under investigation for a cartel to report other cartels unknown to the competition regulator .

This proposed ‘leniency plus’ scheme is part of the recent Competition (Amendment) Bill 2022 introduced in the Lok Sabha during the just-concluded monsoon session, said Ashok Kumar Gupta, India’s competition chairman. (CCI). Activity area.

“Our experience of applying the leniency regime has been encouraging so far and has helped CCI to uncover cartels through this route. The proposed plus leniency framework would provide greater incentive for applicants to disclose information regarding multiple cartels, thereby saving CCI time and resources on cartel investigations. This will lead to faster market corrections,” Gupta said.

This “leniency plus” regime is already recognized in jurisdictions such as the United Kingdom, the United States, Singapore and Brazil.

What is Clemence Plus

The current Competition Act 2002 already provides for a leniency programme, which allows companies that provide sufficient information about a cartel in which they participated to benefit from partial immunity from penalties. Such a program helps competition authorities uncover secret cartels and obtain insider evidence of infringement.

Under the current leniency framework (lesser sentence rule), CCI can impose a lesser sentence on a person involved in a cartel if that person has made a full and truthful disclosure regarding the alleged violations and if that disclosure is vital.

Today, the Indian authorities are going even further by proposing the introduction of the “Clemency Plus” program.

Under “Leniency Plus”, a cartelist cooperating with CCI for leniency can reveal the existence of another cartel in an unrelated market during the initial leniency process in exchange for a further reduction in sadness.

Leniency Plus is a proactive antitrust strategy aimed at attracting leniency applications by encouraging companies already under investigation for a cartel to report other cartels unknown to the competition regulator.

The benefit that would flow from such disclosure is the reduction of the penalty in the first cartel for the person disclosing the information, without prejudice to the company obtaining a lesser penalty with respect to the newly disclosed cartel.

Leniency programs play a vital role in helping competition authorities detect, investigate and prosecute hard core cartels.

Cartels are recognized as the most egregious violation of competition law and, therefore, they have been at the center of competition law enforcement. It is indisputable that competition authorities face significant obstacles in detecting and prosecuting cartels since they operate under the cloak of secrecy. In order to deal with these challenges, most jurisdictions have developed leniency programs. Although the Competition Act provides a framework for CCI to deal with applications for leniency/lesser punishment, it does not currently recognize leniency more.

Anisha Chand, Partner, Khaitan &Co, said: “So far the ICC has worked well with the existing framework of the leniency regime, which is probably why leniency plus was considered to provide an incentive and an increased impetus to cartel members to actively disclose cartel. That said, given that clemency does not provide protection against third-party damages claims, it remains to be seen whether clemency plus will remain as attractive once the private damages regime is fully developed”.

Another major reform introduced in the Competition (Amendment) Bill is to allow leniency applicants to withdraw applications for lesser penalties. Under the current lesser penalties framework of the Competition Act, there is no provision for the withdrawal of a request for lesser penalties. It may happen that some companies request an application of the lesser sentence at the beginning of the discovery of internal documents, but following a detailed internal investigation, the company can learn that there was no violation. to the law.

Published on

August 15, 2022

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