"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.
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.
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
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. 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.
The leniency programme has three main components.
Non concealment, destruction, manipulation or removal of the relevant documents,
co-operate fully in all the investigation and the proceedings of the commission
- 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.
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.
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
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
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.
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
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."
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.
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
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
- Cooperation with the CCI: Competitors are required to cooperate with the
CCI during investigations, including providing relevant information and
- 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,
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
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
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.
While the Leniency Program in India has several benefits, there are also some
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.
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.
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.
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
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
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
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.
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
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
Written By: Ratan Rath, C.S. Pratiti Nayak
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Ph no: 9599901049, Email: [email protected]
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Award Winning Article Is Written By: Mr.Ratan Rath
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