The document discusses emerging trends in India's competition law, based on a survey conducted by EY. Some key points:
- There is a low awareness of competition law among Indian enterprises, with over 80% unaware of the law and its implications. Multi-national corporations are generally more aware and compliant.
- Dawn raids by the investigating authority are expected to increase in the coming year, increasing the need for e-discovery capabilities to examine electronic records.
- Data available for economic analyses in antitrust cases is often unstructured and widespread, hindering effective market analyses.
- Guidelines are needed for determining appropriate penalties, as penalties levied so far have varied without clear reasons. Over 90% of
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Calibrating the Pulse of Competition Law in India
1. An EY Fraud Investigation & Dispute
Services report
Calibrating the pulse of
Competition Law in India
2. 2 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Contents
Executive summary 5
Competition Law in India 6
Emerging trends in India’s Competition Law 10
►► Need to sensitize organizations on importance of complying with 10
Competition Law
►► e-Discovery in Competition Law-related investigations 12
►► Dawn raids — a reality this year 13
►► Unstructured and widespread data hindering economic analyses 14
►► Penalty guidelines — need of the hour 15
►► Lukewarm response to “Leniency” applications 16
►► Concerns about data-sharing at Trade Association meetings 17
3. 3Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Foreword
With the increasing impact of competition-related regulations in recent years in India,
including rising levels of fines, many large companies have been accused of cartelization or
of abusing their dominant positions in their markets. This has led to considerable time and
money being spent on dealing with investigations by the Competition Commission of India
(the Commission or the CCI) in addition to battles fought through the appellate tribunal and
courts, and mandated changes enforced in companies’ operations.
There are concerns about the penalties imposed by the Commission, the effectiveness of the
competition-compliance programs of Indian and multi-national companies in the country and
the lack of general awareness of competition laws among Indian companies.
In light of these evolving trends, we have conducted a survey to elicit the views of leading
competition law jurists and practitioners in India and abroad on the areas mentioned above as
well as about competition economics, e-Discovery, dawn raids, competition risk management,
leniency, the role of trade associations, etc., vis-à-vis practice of competition law in India. We
are pleased to share the findings of our study in this report.
We would like to express our appreciation of the people and organizations that contributed to
our research. Our report would not have had the same value without their support and that of
all the others who made the survey successful.
We hope you find this report relevant and insightful.
Arpinder Singh
Partner and National Leader
Fraud Investigation & Dispute Services
Ernst & Young LLP
4. 4 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
5. 5Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Executive summary
• Rise in complaints filed to CCI: Although relatively young in terms of its life span, the CCI has
received more than 500 complaints alleging violations of the Competition Act 2002 so far. These
relate to “anti-competitive” agreements and organizations abusing their dominant position in
domains as diverse as stock exchanges, travel, real estate, pharmaceuticals, mining, technology
and entertainment in the private and public sectors. The number of complaints filed is increasing
exponentially.
• Low awareness of need to comply with Competition Law among Indian corporates: EY’s survey
indicates that more than 80% of Indian enterprises are unaware about Competition Law, the effect
it seeks to achieve and the likely consequences of contravening it. In the case of multi-national
corporations (MNC’s), most of them are aware about the law, and have adopted mechanisims to
comply with its mandates. Inadequate programs and training are conducted by Indian corporate
organizations on the law.
• Dawn raids — a reality this year: Under the Competition Act, the Director General — Investigations
(DG), the investigating authority of the Commission in India, is empowered to conduct searches
and seizures. There is a general perception in the market that industry may see many more dawn
raids in the coming year. Accordingly, the need for e-Discovery will increase to enable examination
of electronic records in such investigations and subsequent disputes.
• Unstructured and widespread data hindering economic market analyses: Our survey indicates
that there is inadequate data available for conducting clear and viable economic analyses in anti-
trust situations. There is a huge demand for efficient data management for effective analyses of
the market.
• Penalty guidelines —need of the hour and personal liability: The Commission has levied
penalties, penalizing individuals for their role in the anti-competitive conduct of Indian companies.
In many cases, it has not provided reasons for imposing different levels of penalties. In more
than 90% of the cases, the enterprises have appealed before the Competition Appellate
Tribunal (COMPAT).
• Lukewarm response to leniency applications: So far, only two leniency applications have
been filed before the CCI. Our survey indicates that companies are still adopting the wait and
watch approach and are not opting for leniency, in contrast with what happens in some mature
jurisdictions.
• Concerns on data-sharing at Trade Association meetings: Our report indicates that trade
associations constitute the collective voice of the industry and need to be educated on
competition law. There is a perception in the market that trade associations often play an
important role in various possible anti-competitive activities. They should not ask for or share
data that can be used to abuse their position or act in an anti-competitive manner.
6. 6 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Competition Law in India
The first competition law in India was the Monopolies and
Restrictive Trade Practices Act of 1969. This was based on
the command and control economic architecture prevalent
at that time. It was a direct instrument for moderating the
growth of big business and had no provision for regulation of
combinations and to impose fines for violation of the law.
To introduce the post-liberalisation philosophy of promoting
competition rather than curbing monopolies, The Competition
Act (Competition Act) was passed in 2002. In 2009, the
Commission was established under the Act as an autonomous
body with a Chairperson and six members. Furthermore, an
appellate body, COMPAT, was set up in 2009, with the final
appeal lying with the Supreme Court of India.
Salient features of competition law in India:
• Ban anti-competitive agreements
• Prohibit enterprises from abusing their
dominant positions
• Regulate combinations (acquisitions, and
acquisition of control and mergers) that have
or are likely to have an adverse effect on
competition in India
Operations under the Competition Act
It has been more than five years since provisions relating
to anti-competitive behavior and companies abusing their
dominant position came into effect. Mergers and acquisitions
have been operational for about three years. Though
relatively young terms of its life span, the CCI has received
more than 500 complaints alleging violations of Sections 3
(anti-competitive behavior) and 4 (abuse of dominance in the
market) of the Act relating to anti-competitive agreements and
abuse of dominance in domains as diverse as stock exchanges,
travel, real estate, pharmaceuticals, mining, technology and
entertainment in the public and private sectors.
While administering the Competition Act, the CCI has imposed
severe penalties on various enterprises, the most notable
of these being its penalty ofINR17.73 billion on Coal India;
INR3.17 billion on United Phosphorus, Excel Crop Care and
Sandhya Organics; INR63 billion on cement companies in the
cement cartel case; and INR6.3 billion against one of the largest
real estate players in India and INR550 million against one of
the largest stock exchanges in India, in abuse of dominance
cases (upheld by the COMPAT). The Commission has also
received some leniency applications for reduced penalties in a
couple of cartel cases. With regard to mergers and acquisitions,
around 200 proposals have been decided so far.
“There are lots of hopes and expectation from the
CCI. From here onwards, it can either become a
well-respected regulator of the country or become a
defunct organisation like MRTPC.”
Rahul Singh
Research Associate, University of Oxford and
Assistant Professor of Law & Director (Law),
Centre for Competition and Regulation,
National Law School of India University, Bangalore
7. 7Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Particulars of
information filed
2009–10 2010–11 2011–12 2012–13 2013–14
2014–15
(until Aug’14)
Total
Information filed by private
parties
32 71 89 86 90 55 423
Suo moto cognizance by
CCI
0 5 0 6 6 4 21
Matters referred by
Central/State Government
0 0 4 2 7 7 20
Matters referred from the
MRTPC
50 0 0 0 0 0 50
Total 82 76 93 94 103 66 514*
Anti-competitive activity 2010 2011 2012 2013
2014 (till
August)
Total
Cartel 1 13 3 1 2 20
Bid rigging - 1 3 2 1 7
Anti-competitive agreements/
arrangements
* 6 12 10 3 31
Abuse of dominant position 2 9 7 22 9 49
Combination - - - - - -
Total^ 3 29 25 35 15 107
*Total information filed and available on the CCI website www.cci.gov.in
^Source: www.cci.gov.in
Chart 2: Cases referred by CCI for Investigation and inquiry to the Director General
Chart 1: Information filed with the CCI
“For the year 2014, competition law jurisprudence
is going to develop in two key areas, first, industry
specific things will emerge specifically in telecom
sector and second issues concerning intellectual
property rights vis-à-vis competition law
will emerge.”
Balbir Singh
Partner, DSK Legal
8. 8 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Cases referred by International Antitrust Authorities for Investigation are
provided below:
Chart 3: US Department of Justice —Antitrust Division & Other Federal Agencies
(investigation cases)
Anti-competitive activity 2010 2011 2012 2013 Total
Sherman Act Section 1— restraint on trade 46 47 31 25 149
Sherman Act Section 2 — monopoly 2 2 2 2 8
Others* 7 3 1 0 11
Total 55 52 34 27 168
* This category includes investigations of potential violations of the Clayton Antitrust Act, 1914, and the Robinson-Patman Act, 1936, among other statutes.
Anti-competitive activity 2010 2011 2012 2013 Total
Total number of investigations of cases about which
the European Commission has been informed*
169 163 112 121 565
Cases in which an envisaged decision has been
submitted by the National Competition Authority
(NCA) during the period indicated**
94 88 91 60 333
Total 263 251 203 181 898
*Investigations conducted on cases by the NCA or the Commission
** Cases reaching the envisaged “decision” stage — only submissions from the NCA under Article 11(4) of Council Regulation (EC) No 1/2003 of 16 December 2002 on
implementation of its rules on competition, laid down in Articles 101 and 102 TFEU.
Chart 4: European Competition Commission (investigations)
Year
Number of mergers filed before
US Antitrust Authorities — DoJ
and Federal Trade Commission
Number of mergers filed
before European Competition
Commission
Number of combinations filed
before Australian Competition
and Consumer Commission
2010 1166 274 118
2011 1450 309 87
2012 1429 283 62
2013 1326 277 53
Total 5371 1143 320
9. 9Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Chart 5: Cases before COMPAT
“The regulatory trends revealed by this
survey reflect what we have seen more
generally around Europe. In particular,
incentives for market participants to report
aberrant conduct, an increasingly proactive
and sophisticated regulatory approach
and the severity of penalties imposed on
corporates and individuals means that
directors and other corporate officers in
market sensitive positions ignore competition
regulations at their peril. In this context, it is
surprising and concerning that an estimated
80% of India enterprises appear to be under
informed and hence under prepared in this
important area of compliance.”
Richard Indge
Partner,
Fraud Investigation & Dispute Services,
Ernst & Young, London
Source: CCI Annual Reports for the years 2010, 2011, 2012, 2013 and 2014
*11 appeals pending at end of 2011
** 14 appeals pending at end of 2012
***118 appeals pending at the end of 2013
Appeals filed with
COMPAT
CCI orders upheld by
COMPAT/Appeal
disallowed
2010
2011
2012
2013
2014
(till October)
17
1
36
142
2010
2011
2012
2013
2014
(till October)
NA
8*
0
7**
21***
60
10. 10 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Emerging trends in India
Need to sensitize organizations
on importance of complying with
Competition Law
EY’s survey indicates that more than 80% of Indian enterprises
are unaware of Competition Law, what it seeks to achieve and
likely consequences of their contravening it.
The survey also reveals that most multi-national corporations
(MNC’s) in India are aware of the country’s Competition Law and
have adopted mechanisms to comply with it.
Most MNCs use the compliance frameworks of their parent
companies abroad. They have “Indianized” and tailored these to
comply with India’s Competition Law.
Almost 70% of the respondents believed that Indian enterprises
do not have in place control mechanisms and their documents
(vendor contracts, supply and distribution agreements, etc.) are
not verified at the grass-root level for their compliance with the
regulations of Competition Law. There is therefore an urgent
need to train the employees of such organizations and instill in
them the importance of complying with the mandates of the Law.
The fines levied by the CCI and the advocacy measures taken
by it indicate the immediate need for companies to review their
existing business practices for compliance under the Act.
At various forums and meetings, the Commission has been
asking companies to put in place compliance programs in order
to ensure that their business practices do not violate the Law’s
regulations.
According to the CCI, the creation of a compliance system will
enable organizations to detect violations early and help them
take the requisite preventive steps.
Incentivizing existent compliance programs
and practices
Creation of such a system by the CCI will help companies avoid
fines or mitigate their severity, pre-empt the possibility of their
concluding potentially void agreements, and reduce the costs
and negative effects of litigation and regulatory intervention.
11. 11Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Elements of a Competition compliance program
A well-formulated and streamlined compliance program should
address the business realities faced by enterprises.
Advantages of maintaining a competition
compliance program
Broadly, a competition compliance program offers the following
advantages:
• It helps to reduce costs and the negative aspects of
litigation and connected matters.
• It enables enterprises to detect potential violations (if any)
at an early stage and take remedial measures, and thereby
provides them with a competitive advantage.
• It helps companies enhance their reputation and build
goodwill.
• It inculcates a culture of compliance throughout
organizations.
• It realizes the severity of the punishment that may be
meted out for violation and that enterprises contravening
the provisions of the Act may suffer damage to their
reputation, thereby nullifing years of careful marketing and
brand development.
“Compliance Programmes will have to be
custom-made for each enterprise and an “off
the shelf’ programme is very unlikely to serve
the purpose and should be modelled on the
competition law jurisprudence of India.”
Karan S. Chandhiok
Partner, Chandhiok & Associates
“A Compliance Programme should be
implemented to ensure that it is of practical
use on a day-to-day basis. A sophisticated legal
treatise may not be the appropriate document
for the employees who look after the work on a
day to day basis and may not be legally trained.”
Vyapak Desai
Partner, Nishith Desai & Associates
12. 12 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Major costs of non-compliance
While having compliance programs in place may be beneficial
for organizations, non-compliance, if detected, may prove to be
costly for them. The CCI is invested with the power to conduct
investigations and dawn raids, and take decisions. Therefore,
the possibility of their being convicted is high for non-compliant
enterprises. The consequent results may be one or more of the
following:
• Heavy fines for non-compliance: In the case of anti-
competitive agreements and abuse of dominance, a 10%
fine levied on the company’s average turnover for the
preceding 3 years of violation. In the case of a cartel, the
penalty can be up to three times of its profit for each year
of its violation of regulations or 10% of its turnover for
each year of its violation, whichever is higher. The CCI can
also divide an enterprise for abuse of dominance.
• Parties approaching the COMPAT for compensation may
need to deposit large amounts, depending on the type of
violation.
• It could include legal and other costs involved in handling
cases of infringement of Competition Law.
“We would commend a Competition Compliance
programme… We would also suggest a high-level
Competition Compliance Committee to drive the
agenda in your organizations. Last, but by no
means least, the compliance programme should
receive not only your attention but should also be
put up for periodic review by the Board of Directors.
On our part, we are thinking of requesting SEBI to
include effective competition compliance in their
listing guidelines under Clause 49.
Mr. Ashok Chawla
Chairperson, Competition Commission of India,
Roundtable on “Competition Compliance for
Good Corporate Governance” - Welcome Address,
January 24, 2013
e-Discovery in Competition
Law-related investigations
More than 90% of information is stored in the form of
electronic documents today. Currently, the amount of
electronically stored information is at an all-time high. It is
evident that business is increasingly relying on electronic
documents. However, while organizations have years of
experience in formulating and implementing strategies
to manage paper documents, management of electronic
documents is a relatively modern phenomenon.
of the respondents stated that
the use of e-discovery tools
will be useful in Competition-
related cases and disputes.
90%
“Enterprises that have entered into agreements
or are in the process of negotiating agreements,
especially agreements with competitors, should
take precautions to ensure that they remain on
the correct side of law.”
Samir R. Gandhi
Partner, AZB & Partners
13. 13Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
“In the event the amendment in the Competition
Act is passed, the investigation process will
become very challenging for the CCI and
the office of the DG, especially in relation to
procedural aspects of law. e-Discovery services
may also witness a flurry of activity in relation to
collection of primary and secondary evidences.”
Manas Kumar Chaudhri
Partner, Khaitan & Co.
“Under the Competition Act, the CCI has all the
powers to conduct search and seizures (dawn
raids). The amendment to the Competition Act is
not an answer. It is really up to the will, approach
and the courage of the CCI to conduct the dawn
raid operations and exercise its powers under the
Competition Act.”
Dushyant A. Dave
Senior Advocate, Supreme Court of India
According to 90% of the respondents, there is a need for
organizations to use e-Discovery solutions to examine their
electronic records in anti-competitive cases (e.g., in response to
requests from the Commission or to search for anti-competitive
activity to help them formulate leniency applications).
e-Discovery technology enables enterprises efficiently and
cost-effectively assess the breadth of their data, identify
responsive information and cull non-responsive Electronically
Stored Information (ESI), and thereby reduce the cost and time
required for review.
Enterprises from all industries are appreciating the need
for them to maintain strong record- management systems.
e-Discovery services are helpful when an adjudicating authority
is in the process of evaluating evidence and passing orders.
Although e-Discovery services are at a nascent stage in India,
they are becoming popular, particularly due to the rise of
corporate litigation.
There is a need for specialist agencies to dig out relevant data
to respond to the investigation questionnaire circulated by the
DG — Investigations.
After the DG circulating the investigation questionnaire to the
entity, the entities require services to use techniques such
as filtering of keywords, clustering of concepts, analyses of
domains and de-duplication. This can significantly shrink the
size of a responsive data set.
Dawn raid: a reality this year
The shock is always enormous when a competition authority
raids companies anywhere in the world. Under the Competition
Act, the DG is empowered to conduct searches and seizures.
Pursuant to these provisions, the DG needs to procure an order
from the CMM, Delhi, to undertake a search and/or seizure.
As on date, there has been no case before the CCI where
any search and seizure order has been obtained by the DG.
Therefore, the effectiveness of the existing provision
is untested.
The respondents were asked about the efficiency of existing
legal provisions relating to the DG’s power to search and
make seizures. They were also questioned on the proposed
amendment in the Competition Act, whereby the chairperson of
the CCI will be able to pass an order to the DG to conduct dawn
raids.
According to 75% of the respondents, dawn raids will increase
the level of compliance to a great extent.
14. 14 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Need for empirical survey and analysis
It is important for companies to take a decision on how they
will present data in ways that best reflect their business and
operational structures.
An effort should be made to systematize relevant data from the
Competition point of view to facilitate assessment of exposure
to anti-competitive practices and resultant risks.
Gathering, reviewing and benchmarking data to support an
objective evaluation of whether a company’s antitrust program
is appropriate to prevent, detect and respond to anti-trust
violations is essential.
Accurate data can be used to measure whether a company’s
anti-trust compliance program processes and related controls
are appropriately designed and are being applied consistently
and adequately throughout its operations. It can be used to
evaluate the effectiveness of these controls and improve them
where required.
Minimal qualitative data is generally maintained by companies.
This is particularly true in the unorganized sector. Authenticity
of data is questionable in this sector, and therefore, the option
of relying on it is dubious.
“Enterprises should be encouraged to proactively
maintain accurate records of data. The CCI should
be more pro-active in asking for data/ studies from
the parties involved so as to form a sound analysis
on a case to case basis.”
Ramji Srinivas
Senior Advocate, Supreme Court of India
“There should be creation of several state
competition commissions for spreading the
awareness of benefits of competition laws
and for helping the local traders and people
understand (at the grass root level) about the
impact and reach of competition law.”
R. Prasad
Former Member,
Competition Commission of India
Unstructured and widespread data hindering economic analyses
According to 75% of the respondents, there is no
comprehensive data available for conducting a clear
and viable economic analysis in an anti-trust situation
due to the lack of qualitative data available for reasoned
economic analyses.
According to 25% of the respondents, the problem arises
due to the lack of qualitative data available for reasoned
economic analyses.
Merger cases referred to the competition authorities are mentioned below:
2011
15 96
2012
52
2013
35
2014
(till October)
total
combination filings
198
No. of
combination filings
Chart 6: Pre-merger combination filings before CCI
15. 15Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
“It was held that being multi-product companies,
only the ‘relevant turnover’ ought to be considered
while imposing the penalty i.e. the turnover
generated from the product under investigation,
rather than the overall turnover of the enterprise. “
Rahul Goel
Partner, Dhir & Dhir
“Since the penalties imposed by the CCI are very
huge, it will be prudent to have something like
informal guidance mechanism to understand or take
a view of CCI about an activity on which could be
categorised as an anti-competitive activity.”
Shashivansh Bahadur
Partner, Dua Associates
Penalty guidelines — need of
the hour
Penal provisions under the Competition Act are fundamental
for enforcement of the law. They are essential for deterring
acts prohibited by the law. The issue, “Can a penalty be so
large as to endanger the very existence of a company?”, was
repeatedly highlighted by all the respondents during our survey.
Penalties imposed under the Competition Act on enterprises
are typically financial in nature. In some cases, the CCI imposes
penalties on some senior officials in enterprises.
So far, penalties have been imposed by the CCI, but in most
of the cases (more than 90%), enterprises have not paid the
fines levied and have appealed to the COMPAT. Therefore, the
effect of the penalty is yet to be gauged. However, the COMPAT
has upheld the decision of the CCI on imposition of a penalty
of INR6.3 billion against one of the largest real estate players
in India and INR550 million against one of the largest stock
exchanges in India. Both have appealed to the Supreme Court.
Method of calculating penalties and the need
for guidelines on penalties
So far, the Commission has not been inconsistent in levying
penalties. For example, in the cement cartel case, it imposed
a penalty amounting to 0.5% of the profit made by cartelizing
cement companies, of 5% of its average turnover in the NSE
case, of 7% in the DLF case and of 6% of its average turnover in
the BCCI case. In the Assam Drugs Dealers Association case, it
imposed a penalty at the maximum rate of 10% of its average
turnover. In the Bengal Chemist and Druggist Association case,
the penalty imposed was 10% of its average turnover for the
Association and its officer bearers and of 7% for its Executive
Committee members. The Commission has not provided reasons
for levying different levels of penalties and most of these have
been appealed against to the COMPAT on these grounds.
Relevant turnover
In a recent appeal against the decision of the CCI in the
Aluminium Phosphide Tablet case , the COMPAT, by its decision
of 29 October 2013, introduced the concept of “relevant
turnover” in Indian Competition Law jurisprudence.
The critical issue in the appeal was that of calculation and
imposition of penalties. The COMPAT reiterated the doctrine of
proportionality while imposing penalties, emphasizing that the
CCI must not only give reasons while imposing these, but must
also consider all relevant factors, including the financial health
of a company and the likelihood of it being forced to close
down on account of the harsh penalty. However, the matter is
sub-judice before the Supreme Court at present. It is important
to see how the Supreme Court interprets the word “turnover”
under the Competition Act.
Chart 7: Cases in which penalties were imposed
20112010
3
6.86
-
-
12
72.16
2012
3
18.32
2013
10
26.65
2014
(till October)
No. of cases
Amount of penalty
(in billion)
28
Total cases
124
Total amount of
penalty
16. 16 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Lukewarm response to Leniency
applications
The Leniency program is used by the Competition authorities as
a key tool to detect infringements by cartels by providing total
immunity from fines or less than full immunity to participants in
cartels in return for their informing Competition authority about
the existence of the cartel.
The Competition Act and the Competition Commission of
India (Lesser Penalty) Regulations 2009 (Lesser Penalty
Regulations) has set out the Leniency policy. Under Lesser
Penalty Regulations, Leniency provisions cover undertakings
(or persons) that have been members of a cartel and are willing
to provide information to the Commission and cooperate
with it in terminating the cartel’s activities. Under the Act,
cartel activities include agreements of any kind entered by
undertakings and/or associations of undertakings, which are
engaged in identical or similar trade of goods or provision of
services.
The respondents were asked about the efficiency of existing
legal provisions relating to the Leniency policy in the
Competition Act. According to 80%, the CCI needs to instil more
confidence in corporate organizations to elicit more leniency
applications.
According to 90% of the respondents, industry is concerned
about issues relating to confidentiality and the discretionary
power of the CCI.
According to 70% of the respondents, there is a problem with
the manner in which penalty provisions are drafted under
the Competition Act, and there is a lack to clear guidelines/
procedures for parties approaching the CCI for leniency.
“The leniency application process is very porous
and will have to be monitored carefully for proper
enforcement. The problem lies in the way the
lesser penalty provisions are worded. The provision
empowers the Commission to impose lesser penalty
if it ‘may’ deem fit, in contrast to the US anti-trust
provisions, which mandates the Department of
Justice to necessarily (the word used in the US laws
is ‘shall’) grant the immunity from penalties.”
Amitabh Kumar
Partner, JSA
17. 17Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report |
Concerns on data-sharing at Trade
Association meetings
Trade associations are unique forums at which competitors
from the same industry or sector meet to discuss issues of
common interest, find common solutions and further their
common commercial/professional interests. Their activities
have, however, been subject to close scrutiny by the CCI.
Despite their many pro-competitive aspects, trade associations
continue to be cautious about stepping outside the boundaries
mandated by the Competition Law. This is because by
definition, trade associations offer opportunities for repeated
contact between direct competitors and involve cooperation
among them in the same trade. Casual discussions of prices,
quantities, customers, territories and market shares, terms of
sales, advertising restrictions and future business strategies,
can lead to agreements or an informal understanding. This
could easily spill over into illegal coordination, so called
cartelization or formation of anti-competitive agreements.
The respondents were asked about the role of the trade association in cartel
cases. All of them (100%) felt that there is no doubt that trade associations add
value to the industries/sectors in which they operate, but they may also facilitate
anti-competitive conduct — inadvertently or deliberately.
100%
All the respondents (100%) suggested that the Commission should encourage
all associations and their members to put in place Competition-compliance
programs, and that associations can also try to develop guidelines on best
practices for their members in order to create awareness of acceptable and
unacceptable behavior under the Act.
100%
According to 80% of the respondents, they are the collective voice of industry and
need to be educated on the nuances of the Competition Law. Trade associations are
not only at risk of violating the Law, but can also benefit from it. They need to be
aware of how they can take advantage of opportunities offered by the Act to benefit
the industry. They can identify marketplace-related issues and can often help to
resolve these by liaising between the CCI and industry. They may draw the attention
of the Commission to anti-competitive practices emanating from government laws/
policies and urge it to take up this issue with the Government as part of its advocacy.
80%
18. 18 | Calibrating the pulse of Competition Law in India - An EY Fraud Investigation & Dispute Services report
Methodology
For this study, EY conducted in-depth
interviews with former members of the
CCI, senior advocates, leading lawyers
and senior legal professionals for their
views on competition laws in India.
