CCI to try lenience to encourage biz to come clean on cartelization

The Competition (Amendment) Bill proposes to revamp the leniency provisions by introducing two major changes—allowing withdrawal of a hurriedly-filed leniency petition and dealing with disclosure of multiple cartels, showed the Bill.

A person familiar with the discussions in the government explained that there is often the hurry among cartelizing businesses to be the first to disclose it to the regulator to get full relief from penalty. The second to come clean on the cartelizing behaviour only gets 50% waiver on penalty. Often entities file a lesser penalty petition and later realize that either there was no cartel at all or they were unable to make further disclosures. Such petitions in haste will now be allowed to be withdrawn. However, CCI’s investigating arm will be able to use the evidences submitted in the petition, barring the admission of cartelizing behaviour.

The idea is to encourage businesses to come clean on cartelizing behaviour. If there is no provision to withdraw a lesser penalty petition, there will be some reluctance to come to the regulator with a disclosure in the first place, said the person, who spoke on condition of anonymity. The other new provision proposed relates to multiple cartels. An entity which is currently cooperating with an ongoing cartel investigation can make disclosures about existence of another cartel and get benefit of lesser penalty in both the cases. For example, an entity which is eligible for 50% waiver of penalty in an ongoing probe for being the second party to make disclosures about that cartel, can get more than 50% waiver, say 70%, in that particular case and also get full penalty waiver in a newly disclosed cartel, the person said. This is called a ‘leniency plus’ provision.

Experts said this is in line with global best practices. “In line with mature competition jurisdictions such as US, the UK etc, the Bill proposes to introduce a ‘leniency plus’ mechanism. The leniency plus mechanism incentivizes parties who have already applied for leniency for participation in one cartel, to disclose the existence of another cartel, in lieu of penalty reduction for both the existing as well as the newly exposed cartels,” said Neelambera Sandeepan, partner at law firm Lakshmikumaran & Sridharan Attorneys.

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