"A Decluttering Tool for the Competitive World"

"In this article we shall be discussing about the various negative and positive aspects which get attached along with a corporation or to a corporation to gain personal profits and authority in a particular sector, which negatively impacts the society and the healthy competition in the market, indirectly leading to the draining of resources from the primary source of distribution, accumulation and production of a service or a product.

Such practices which impacts the competition at large by forming of cartels, has to be countered by the regulators in the market, which have been assigned power by the sovereign to monitor such inappropriate activities of cartelization, balancing the ill effects of such practices and maintaining an equilibrium in the market has been taken over into consideration by introducing of a policy known as the leniency programme, which has been discussed in brief with it's remedies, updates and consequences in this article."

BACKGROUND OF CCI AND LENIENCY PROGRAMME
The Competition Commission of India (CCI) was established in 2003 under the Competition Act, 2002 with the mandate to prevent practices that have an adverse effect on competition in India and to promote and sustain competition in the country. The Leniency Program in India is a component of the CCI's competition law enforcement mechanism, that affects the competition negatively and to ensure the interests of the consumers is protected. The Competition Act, 2002 (as amended) is intended to be effectively enforced through the implementation of the 'Leniency programme'.

Leniency programmes are intended to encourage individuals or companies involved in anti-competitive practices to come forward and provide information to the authorities by offering them reduced penalties or immunity from prosecution in exchange for their cooperation. In India, the Competition Commission of India (CCI) has the power to grant immunity from penalty to a person who provides information about anti-competitive activities. This can be helpful in uncovering previously unknown anti-competitive practices and in strengthening the enforcement of competition law in India.[1]

The Leniency Program was introduced in India in 2009 through amendments to the Competition Act, 2002. The program provides immunity or reduction of penalties to parties who voluntarily report cartel conduct to the CCI. The introduction of the Leniency Program was part of the CCI's efforts to strengthen its competition law enforcement mechanisms and to align its enforcement practices with international best practices.[2]

Since its introduction, the Leniency Program in India has been successful in detecting and punishing anti-competitive practices, including cartels, and has played a significant role in promoting and sustaining competition in the Indian economy. The program has encouraged parties to come forward with information on anti-competitive practices and has contributed to the development of competition law jurisprudence in India.

The program operates on the principle of "first-in, first-out" and encourages parties to come forward early and provide full and continuous cooperation in the CCI's investigation.

The detection, investigation, and prosecution of cartel cases around the world have all been demonstrated to be successful with a transparent and predictable leniency policy. This programme works similar to a whistle-blower protection scheme, which is a formal framework for treating leniently, a cartel member who informs the Commission about the cartel.[3] The Competition authorities have created a number of leniency programmes to encourage and inspire the involved parties in such breaches to come forward, reveal any anticompetitive agreements, and cooperate with the authorities in exchange for immunity or leniency. It offers protection to people who come out and voluntarily share information, who would otherwise have to suffer harsh punishment from the Commission if the Commission were to independently discover the existence of a cartel.[4]

The leniency programme has three main components.[5]

Non concealment, destruction, manipulation or removal of the relevant documents, co-operate fully in all the investigation and the proceedings of the commission etc.

• Procedure for grant of lesser penalty.

The amount of fines that are forgone when a cartel member cooperates with the Commission by providing information about the cartel, in exchange for leniency.
Such an applicant's identity should be kept confidential and it should not be disclosed unless it is required by the law or he himself agrees to disclose his identity. It benefits both the commission as well as the cartel member who agrees to share such information with the commission.

A number of nations have passed laws or legislation to control competition in order to prevent this competition from being hostile and combative and to ensure that it keeps up its consumer-friendliness. "The Competition Act of 2002" ("the Act"), which replaced the "Monopolies and Restrictive Trade Practices Act of 1969" in India, was passed by the Indian Parliament with the goals of fostering fair competition among the market's current players, safeguarding consumer interests, and ensuring that the entry of new players is not constrained by those already in place.[6]

Companies engaging in a bid rigging cartel may be able to receive complete immunity from punishment or a reduction in penalties thanks to leniency policies within the scope of competition law, requested leniency, demonstrating the effectiveness of such policies.[7]

The relevant sections in the Competition Act, 2002 related to the leniency program are as follows:

Section 46: This section provides for immunity from penalties and legal proceedings for a person who makes a full disclosure of their involvement in anti-competitive practices and provides evidence to the competition authority.[8]

Section 46A: This section provides for reduction in penalties for a person who makes a full disclosure of their involvement in anti-competitive practices and provides evidence to the competition authority, but does not qualify for immunity under section 46.

Section 47: This section provides for the procedure for making an application for leniency under sections 46 and 46A, and the criteria for granting such an application.

It's important to note that the leniency program in India is subject to certain conditions and requirements, and not all cases of anti-competitive practices will be eligible for leniency. Companies must meet the criteria set out in the Competition Act, 2002, and provide full and truthful information and evidence to the competition authority in order to be considered for leniency.[9]

BRIEF INTRODUCTION TO CARTELIZATION IN INDIA
Cartelization is illegal in India and is considered a violation of competition laws. The Competition Act of 2002 prohibits anti-competitive agreements, including cartels, that have the purpose or effect of limiting competition or causing harm to consumers. The Competition Commission of India (CCI) is the agency responsible for enforcing competition laws in the country and has the power to investigate and punish firms that engage in cartelization.

Despite the legal prohibition, cartelization still occurs in some industries in India, particularly in sectors where a small number of firms dominate the market. For example, there have been instances of cartelization in the cement, steel, and pharmaceutical industries, among others. In these cases, the CCI has imposed fines and taken other enforcement actions to discourage cartel behaviour and promote fair competition.

The Indian government is committed to promoting a competitive business environment and protecting consumers from anti-competitive practices such as cartelization.

In India, the Competition Act of 2002 is the primary law that governs cartelization and other anti-competitive practices. The act defines a cartel as "an association of producers, sellers, distributors, traders or service providers who, by agreement among themselves, limit, control or attempt to control the production, distribution, sale or price of, or trade in goods or provision of services."[10]

Under the Competition Act, anti-competitive agreements, including cartels, are prohibited and can lead to significant penalties. The Competition Commission of India (CCI) has the authority to investigate and penalize firms that engage in cartelization. The CCI can impose fines of up to 10% of a firm's average turnover for the preceding three financial years, and it can also order the dissolution of the cartel.[11]

In addition to the Competition Act, other laws and regulations in India also play a role in preventing cartelization. For example, the Consumer Protection Act of 1986 provides consumers with legal recourse against anti-competitive practices, and the Monopolies and Restrictive Trade Practices Act of 1969 governs monopolistic and restrictive trade practices.

The laws and regulations related to cartelization in India are designed to promote competition and protect consumers from the harmful effects of anti-competitive practices.

DUTIES OF COMPETITORS IN INDIA
The duties of competitors in India with respect to the Competition Commission of India (CCI) include the following:

• Compliance with Competition Laws: Competitors must comply with the provisions of the Competition Act, 2002 and the rules and regulations issued by the CCI.
• Prohibitions against Anti-competitive Agreements: Competitors are prohibited from entering into agreements that restrict competition, such as price fixing, market sharing, or bid rigging.
• Reporting of Anti-competitive practices: Competitors are required to report any anti-competitive practices, such as abuse of dominance, to the CCI.
• Cooperation with the CCI: Competitors are required to cooperate with the CCI during investigations, including providing relevant information and attending hearings.
• Maintenance of Records: Competitors are required to maintain records related to their business activities for a period of 5 years to assist the CCI in investigations.
• These duties aim to promote fair competition in the market and prevent anti-competitive practices that may harm consumers.

COMPARISON OF INDIA WITH WESTERN WORLD
The Leniency Program in India is similar to programs in western countries, such as the United States and the European Union, in terms of its purpose and structure. It provides immunity or reduction of penalties to parties who voluntarily report cartel conduct, and operates on the principle of "first-in, first-out."

However, there are some differences between the leniency program in India and those in western countries. For example, the CCI's leniency program in India does not provide immunity from criminal prosecution, which is a feature of some leniency programs in other countries. Additionally, the CCI's program in India requires parties to provide continuous cooperation throughout the investigation, which may be more stringent than in other countries.

Overall, the Leniency Program in India serves as an important tool for the CCI to detect, investigate, and deter anti-competitive practices, and its similarities with western countries' programs reflect the international trend towards effective competition law enforcement.

BENEFITS OF LENIENCY PROGRAMME
There are several benefits of having a Leniency Program in India:
Detection of cartel conduct: The Leniency Program encourages parties to come forward and report cartel conduct, which helps the Competition Commission of India (CCI) detect anti-competitive practices that may otherwise go undetected.

Enhanced enforcement efforts: By encouraging parties to come forward and provide evidence of cartel conduct, the Leniency Program enhances the CCI's enforcement efforts and enables it to take action against anti-competitive practices more effectively.

Deterrent effect: The Leniency Program acts as a deterrent against cartel conduct by increasing the risk of detection and enforcement action. This can help to reduce the incidence of anti-competitive practices in India.

Encouragement of cooperation: The Leniency Program incentivizes parties to cooperate with the CCI's investigation and enforcement efforts, which can lead to a more efficient and effective resolution of cases.

Development of competition law jurisprudence: The Leniency Program can contribute to the development of competition law jurisprudence in India by providing guidance on the interpretation and application of competition law provisions.

Overall, the Leniency Program in India serves as an important tool for promoting and protecting competition in the Indian economy and for ensuring that anti-competitive practices are effectively addressed.

DISADVANTAGES
While the Leniency Program in India has several benefits, there are also some potential disadvantages:

Difficulty in proving cartel conduct: Leniency applicants may face difficulty in proving the existence of a cartel and demonstrating their own involvement in the conduct. This can result in the CCI declining to grant leniency and instead pursuing enforcement action against the party.

Limited applicability: The Leniency Program may only be applicable in limited circumstances, such as cases involving cartel conduct. This means that parties involved in other types of anti-competitive practices may not be able to take advantage of the program.

Reduced incentives for self-correction: By offering leniency to parties who report cartel conduct, the Leniency Program may reduce the incentives for companies to self-correct and take steps to cease the anti-competitive conduct on their own.

Concerns over fairness: Some parties may argue that the Leniency Program is not fair, as it may result in certain parties receiving reduced penalties while others face the full penalties prescribed under the Competition Act, 2002.

Risk of false or misleading information: Parties seeking leniency may be incentivized to provide false or misleading information in order to secure leniency, which can undermine the CCI's enforcement efforts and the integrity of the Leniency Program.

While the Leniency Program in India serves as an important tool for promoting and protecting competition in the Indian economy, it is important for the CCI to carefully consider the potential disadvantages and to ensure that the program is implemented in a fair and transparent manner.

Ministry of Corporate Affairs General Introduction and their Role with regard to this Programme:
The Ministry of Corporate Affairs is responsible for overseeing the functioning of companies in India and ensuring that they comply with the Companies Act, 2013 and other applicable laws and regulations. While the Leniency Program is not directly administered by the Ministry of Corporate Affairs, the CCI may take into account the actions of companies and their compliance with the Companies Act, 2013 and other laws and regulations when considering applications for leniency.

In general, the Leniency Program and the Ministry of Corporate Affairs operate in distinct areas of regulation, with the Leniency Program focused on promoting and protecting competition in the Indian economy and the Ministry of Corporate Affairs focused on overseeing the functioning of companies and ensuring their compliance with applicable laws and regulations.

The Ministry of Corporate Affairs (MCA) does not have any direct operations related to the Leniency Program in India. The Leniency Program is administered by the Competition Commission of India (CCI), which is an independent statutory body established under the Competition Act, 2002 with the mandate to enforce competition law in India.

The MCA is responsible for overseeing the functioning of companies in India and ensuring that they comply with the Companies Act, 2013 and other applicable laws and regulations. While the MCA may be involved in enforcement action against companies for non-compliance with the Companies Act, 2013 and other laws and regulations, it does not have any direct involvement in the Leniency Program. With the Leniency Program focused on promoting and protecting competition in the Indian economy and the MCA focused on overseeing the functioning of companies and ensuring their compliance with applicable laws and regulations.

FUTURE OF LENIENCY PROGRAMME
The future of the Leniency Program in India is likely to be shaped by several factors, including the effectiveness of the program in promoting and protecting competition, changes to the competition law regime in India, and the evolving needs and expectations of businesses operating in the Indian market.[12]

It is expected that the Leniency Program will continue to play an important role in promoting and protecting competition in India. The program serves as an important tool for the Competition Commission of India (CCI) to enforce competition law and to encourage parties to report anti-competitive conduct.[13]

In the future, it is likely that the CCI will continue to refine and improve the Leniency Program to ensure that it remains an effective tool for promoting and protecting competition in the Indian market. This may involve updating the guidelines and procedures for the program to reflect changes in the competition law regime and to address the evolving needs and expectations of businesses operating in India.

In conclusion, the Leniency Program in India is likely to remain an important tool for promoting and protecting competition in the Indian market and will continue to play a key role in the CCI's enforcement efforts.[14]

HOW CAN IT BE REFINED AND UPDATED
The Leniency Program in India can be refined and updated in several ways to ensure that it remains an effective tool for promoting and protecting competition in the Indian market. Some potential steps that could be taken to refine and update the program include:

Reviewing and updating the guidelines:
The CCI may review and update the guidelines for the Leniency Program to ensure that they are clear, concise, and in line with the latest developments in competition law and practice. This may involve making changes to the eligibility criteria, the application process, and the benefits and obligations of applicants.

Improving transparency and predictability: The CCI may work to improve the transparency and predictability of the Leniency Program by providing clear guidance on how applications will be evaluated, the factors that will be taken into account, and the procedures for challenging decisions.

Encouraging early reporting: The CCI may consider measures to encourage early reporting of anti-competitive conduct, such as providing additional benefits for the first applicant to come forward or reducing the penalties for subsequent applicants.

Enhancing cooperation with other enforcement agencies: The CCI may enhance its cooperation with other enforcement agencies, such as the Ministry of Corporate Affairs, to ensure that the Leniency Program is aligned with other enforcement efforts and to avoid duplication of efforts.

Monitoring and evaluating the program: The CCI may regularly monitor and evaluate the Leniency Program to assess its effectiveness and to identify areas for improvement.
By taking these and other steps, the CCI can refine and update the Leniency Program to ensure that it remains an effective tool for promoting and protecting competition in the Indian market.

SUGGESTIONS:
Awareness: There is a need to increase awareness about the Leniency Programme among businesses and the general public to encourage more firms to come forward and confess their involvement in anti-competitive practices.

Transparency: The guidelines for the Leniency Programme should be transparent and easily accessible to all businesses to ensure fair and equal treatment of all applicants.
Timing: Firms should be encouraged to come forward as soon as possible to avail the benefits of the Leniency Programme. The earlier the confession, the greater the reduction in fines that may be available.

Cooperation: Firms that come forward under the Leniency Programme should be expected to fully cooperate with the Competition Commission of India (CCI) in its investigation and enforcement proceedings.

Fairness: The Leniency Programme should be implemented fairly and equitably, without any bias or discrimination.

Evaluation: The Leniency Programme should be periodically reviewed and evaluated to determine its effectiveness and to make any necessary changes to ensure its continued usefulness in promoting compliance with competition law in India.

In conclusion, the Leniency Programme in India is a useful tool for promoting compliance with competition law and encouraging firms to confess their involvement in anti-competitive practices. However, it is important to ensure that the programme is transparent, fair, and effective in order to achieve its intended goals.

End-Notes:

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3. Nakul Kaul, Competition amendment bill, 2022 Legal Service India - Law, Lawyers and Legal Resources (2022), https://www.legalserviceindia.com/legal/article-9512-competition-amendment-bill-2022.html (last visited Jan 20, 2023).
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6. Arshnit Sandhu, Amendment to leniency regulation, Competition Law 2002 Legal Service India - Law, Lawyers and Legal Resources, https://www.legalserviceindia.com/legal/article-502-amendment-to-leniency-regulation-competition-law-2002.html (last visited Jan 22, 2023).
7. Sarah Schoenmaekers, Self-cleaning and leniency: Comparable objectives but different levels of success?, 13 European Procurement & Public Private Partnership Law Review 3�17 (2018).
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9. Antitrust and competition > india, The Legal 500 Rankings, https://www.legal500.com/c/india/antitrust-and-competition/ (last visited Feb 24, 2023).
10. Cartel, Encyclop�dia Britannica (2023), https://www.britannica.com/topic/cartel (last visited Feb 24, 2023).
11. Gautam Shahi & Sudhanshu Kumar, Taxmann's indian competition law: A comprehensive section-wise commentary on Competition Act 2002 (2021).
12. Versha Vahini, Indian Competition Law (2016).
13. Avtar Singh & Harpreet Kaur, Competition law (2012).
14. the Premerger Notification Office Staff & Stephanie T. Nguyen, Guide to antitrust laws Federal Trade Commission (2022), https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws (last visited Feb 24, 2023).

Written By: Ratan Rath, C.S. Pratiti Nayak - Kalinga Institute of Industrial Technology (School of Law), Patia, Bhubaneswar, Odisha Ph no: 9599901049, Email: [email protected]/ [email protected]

Award Winning Article Is Written By: Mr.Ratan Rath

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