Referenced in this article

• Competition Act 2002
• Competition Commission of India (Lesser Penalty) Regulations 2009
• Competition Commission of India (General) Regulations 2009
• Competition (Amendment) Bill 2022

Introduction

The Competition Act 2002 (the Competition Act) regulates anticompetitive conduct in India. The Competition Commission of India (CCI) is the statutory authority in charge of competition law enforcement.^[1] The CCI is aided by its investigative arm, the Office of the Director General (DG), in achieving the objectives of the Competition Act, including preventing practices causing an appreciable adverse effect on competition (AAEC); promoting and sustaining competition in markets; protecting the interests of consumers; and ensuring freedom of trade.

Competition Act

The Competition Act regulates^[2] three types of conduct:

• anticompetitive agreements, including cartels;^[3]
• abuse of dominant position;^[4] and
• combinations (mergers, acquisitions and amalgamations).^[5]

More specifically, section 3 of the Competition Act prohibits anticompetitive agreements that cause or are likely to cause an AAEC in India. Anticompetitive agreements include agreements between or among competitors (horizontal agreements under section 3(3) of the Competition Act, including cartels)^[6] and agreements between enterprises or persons at different stages or levels of the production chain (vertical agreements).^[7]

For the first step in establishing the existence of a cartel, the CCI must show that competitors had entered into an agreement to:

• fix prices;
• limit or control supply, production, markets, technical development, investment or provision of services;
• share or allocate markets; or
• rig bids.

Recently, the Competition (Amendment) Act 2023 (the Amendment Act) has codified the illegality of hub-and-spoke arrangements. As per the Amendment Act, even a non-competing entity will be presumed to be part of a cartel, if it is established that (1) there exists a horizontal anticompetitive arrangement between the competing entities; (2) the non-competing entity has participated or has intended to participate; and (3) the non-competing entity’s participation or intention to participate was in the furtherance of the horizontal agreement.

The Competition Act defines ‘agreement’ widely and includes any formal or informal understanding between the parties. The CCI has observed that, often, direct evidence of action is not available. In such situations, the CCI has to apply the test of preponderance of probabilities to establish the existence of an agreement.^[8] The CCI (in its decisional practice) establishes preponderance of probabilities by weighing ‘a number of coincidences and indicia’ – including whether those involved in such dealings had some form of understanding and were acting in cooperation with each other^[9] – against the absence of any other plausible explanation.^[10] The CCI has expanded the scope of cartel enforcement where the exchange of commercially sensitive information, which may or may not result in an agreement, will be held to violate the cartel provisions of the Competition Act.

The CCI and the DG also have wide powers to collect evidence, including the powers to search and seize documents as well as collect evidence through dawn raids to establish the existence of anticompetitive conduct, including cartels. To date, there have been 14 search and seizure operations conducted by the CCI.^[11] The first dawn raid was conducted in September 2014 on JCB India Limited in a dominance-related case. Subsequently, there were six dawn raids conducted between 2014 and 2020. The 2021–2022 period witnessed a steep rise in the number of dawn raids being conducted by the CCI – a total of eight dawn raids were conducted in this period alone. Most recently, a dawn raid was conducted in December 2022 at offices of several steel companies across the country in a case relating to cartelisation and a horizontal anticompetitive agreement. Notably, of these 14 instances, 12 pertain to investigations of alleged cartelisation.

Once a horizontal agreement is found to exist,^[12] it is presumed to cause an AAEC unless the agreement relates to an efficiency-enhancing joint venture.^[13] This presumption is rebuttable. The CCI analyses pro-competitive and anticompetitive factors to determine whether an AAEC could arise. The anticompetitive factors that the CCI considers include:

• creating barriers to new entrants in the market;
• ousting existing competitors from the market; and
• foreclosing competition by hindering entry.
• The pro-competitive factors that the CCI considers include:
• benefits accruing to consumers;
• improvements in the production or distribution of goods or provision of services; and
• promotion of technical, scientific and economic development.

However, the CCI’s decisional practice indicates that this burden is onerous. In the Paper cartel case,^[14] the CCI held that, once an agreement under section 3(3) of the Competition Act is established, the same falls within the presumptive rule of AAEC. However, the parties can rebut such a statutory presumption in light of the pro-competitive factors that the CCI considers. In Paper, the CCI held that the parties failed to rebut the presumption as they failed to demonstrate any pro-competitive effects.

A violation of section 3(3) of the Competition Act may not arise if two or more entities are part of the same group and, therefore, the companies are able to demonstrate that they are a single economic entity (SEE) with common economic objectives. According to the well-recognised SEE principle, where two (or more) entities, part of the same group,^[15] are able to adequately demonstrate that they share common economic incentives^[16] and are under the common day-to-day control of either each other or a third common controlling enterprise, such entities cannot be said to compete with one another.^[17] However, in the Delhi Jal Board decision,^[18] the CCI rejected the applicability of the SEE doctrine, despite the fact that the related entities – Grasim Industries Limited and Aditya Birla Chemicals (India) Limited – both belonged to the Aditya Birla Group. The CCI drew a distinction on facts, holding that both parties represented themselves as independent decision-making centres while participating in tenders floated by the Delhi Jal Board. This CCI order is currently under appeal before the National Company Law Appellate Tribunal.

Leniency

The CCI’s leniency programme seeks to encourage cartel participants who admit to being involved in conduct that could result in contravention of the Competition Act to break rank and provide information against their fellow cartel members under the Competition Commission of India (Lesser Penalty) Regulations 2009 (the Lesser Penalty Regulations). Under the Competition Act, any member of a cartel (enterprise or individual) can file a leniency application with the CCI at any time prior to the DG submitting its investigation report to the CCI, seeking a reduction in penalty in exchange for full, true and vital disclosure of information, and evidence of substantial value (eg, regarding the existence of the cartel, its members and duration). The CCI is empowered to grant a reduction in penalty of up to 100 per cent to the first leniency applicant, up to 50 per cent to the second leniency applicant and up to 30 per cent to any subsequent leniency applicant if the applicant provides additional valuable information that was previously unknown to the CCI. Similar to other mature jurisdictions, the benefit of CCI’s leniency programme is only available for cartel violations and does not extend to abuse of dominance and vertical restraint violations.

In January 2017, the CCI issued its first order under the leniency regime in a case involving bid rigging for tenders relating to the supply of fans to Indian Railways.^[19] The CCI granted the leniency applicant a reduction in penalty of up to 75 per cent as:

• it was the first and only participant to accept the existence of a cartel;
• it was the first and only participant to submit adequate evidence to the CCI, hence revealing the modus operandi of the cartel; and
• it did so despite the application being made after the initiation of the investigation, and the CCI and the DG already being in possession of some evidence against the cartel participants.

Shortly after this decision, the CCI amended the Lesser Penalty Regulations to streamline and strengthen its leniency programme through the Competition Commission of India (Lesser Penalty) Amendment Regulations 2017. This amendment expanded the scope of the Lesser Penalty Regulations by:

• allowing individuals to approach the CCI with evidence on collusion;
• abolishing the earlier upper limit on the number of leniency applicants (three) who could benefit from the penalty waiver;
• allowing the DG to disclose confidential information from a leniency application to the other members of the cartel for the purpose of investigation (subject to approval by the leniency applicant or, where the applicant has not agreed to such disclosure, the CCI); and
• requiring the leniency applicant to furnish an estimate of the volume of affected business in India.

In February 2024,^[20] CCI notified the CCI (Lesser Penalty) Regulations 2024 (LPR 2024) comments. Pertinently, LPR 2024 has introduced the ‘lesser penalty plus’ facility wherein a leniency applicant of an existing cartel (Existing Applicant) is incentivised to disclose information about another cartel that is unknown to the CCI (Leniency Plus/ Leniency Plus Facility). The Existing Applicant availing Leniency Plus Facility will have the following benefits: (1) an additional penalty reduction of up to or equal to 30 per cent, namely a further reduction on the penalty imposed in the first cartel; and (2) being eligible for up to or equal to 100 per cent penalty reduction in the newly disclosed cartel.

In line with the codification of hub-and-spokes cartels, LPR 2024 has also enabled non-competing entities participating in hub-and spokes cartels to apply for leniency and the Leniency Plus Facility.

To avail the benefits of the Leniency Plus Facility, the following conditions must be satisfied by the Existing Applicant, they must:

• cease to further participate in the new cartel from the time of disclosure (unless otherwise directed by the CCI);
• co-operate genuinely, fully, continuously throughout the investigation and proceedings before the CCI;
• provide full, true, vital disclosures sufficient for the CCI to form a prima facie view about the existence of the new cartel;
• justify that the new cartel is different from the first cartel;
• make an application for availing the Leniency Plus Facility anytime before the DG Report of the first cartel is submitted to the CCI;
• not conceal, destroy, manipulate or remove any relevant document in any manner; and
• not give any false evidence or omit to submit any material information knowing it to be material. However, while considering such applications will consider the likelihood of detection of the new cartel in the absence of the disclosures by the applicant.

Individuals can also apply for the Leniency Plus Facility, provided that they are part of both the existing as well as the new cartel.

LPR 2024 clarifies that Leniency Plus benefits will be granted only to the first applicant unless their application is rejected by the CCI. The CCI will however, prior to rejection grant an opportunity of hearing.

LPR 2024 has also introduced the option for leniency or Leniency Plus applicants to withdraw their applications before the DG submits the investigation report to the CCI. However, the information and evidence submitted by the applicant (except the admission of guilt by the applicant) before withdrawing, can be used by the DG and CCI in the proceedings.

LPR 2024 requires all leniency and Leniency Plus applications to be made in writing earlier, as opposed to oral applications, which were permitted earlier.

Decisions

The leniency regime appears to have been a success, given that the CCI has investigated and passed a number of orders pursuant to leniency applications. Further, the CCI decisions under the leniency regime provide additional clarity on how the CCI determines reduction of penalty. For instance, in a case involving bid rigging between two broadcasting companies – Globecast and Essel Shyam Communications Ltd (ESCL) – the CCI found that the parties had contravened section 3(3)(d) of the Competition Act by exchanging sensitive information related to bids for broadcasting of various sporting events such as cricket, Formula One and hockey. Importantly, the CCI granted a 100 per cent reduction in penalty to Globecast for submitting evidence that enabled the CCI to form a prima facie opinion regarding the existence of the cartel, including email correspondence in relation to the submission of bids in a concerted manner, sharing sensitive price information, and a forensic report containing mirror images of confiscated laptops and mobiles. While ESCL also furnished certain additional information to the CCI in its leniency application, it was granted only a 30 per cent reduction in penalty as its application was received after the initiation of the investigation.

The CCI has granted a reduction in penalty even in cases where it already had some evidence regarding the existence of a cartel where the additional information or evidence submitted by the leniency applicant provided a significant value addition regarding the modus operandi of the cartel.^[21] The CCI granted 100 per cent immunity to Panasonic in three cases involving cartel conduct in the dry-cell batteries market in India.^[22] Similarly, in the Beer cartel case, the CCI granted Anheuser Busch InBev SA/NV a 100 per cent reduction in penalty.^[23] The CCI was of the view that the company’s genuine, full, continuous and expeditious cooperation enabled the DG to conduct search and seizure operations at the premises of the parties and also helped the CCI to establish a contravention of the Competition Act. Additionally, even though the DG was in possession of the bulk of the evidence on the basis of which the cartelisation was established, the CCI granted the second applicant, United Breweries Limited, a 40 per cent reduction in penalty because the evidence submitted was used by the CCI to complete the trail evidencing anticompetitive conduct, especially in relation to the purchase of old or used beer bottles. The CCI also granted Carlsberg India Private Limited a 20 per cent reduction for furnishing data that assisted the CCI in completing its investigation.

In Dry Cell (No. 1),^[24] the CCI found the evidence provided by Panasonic in its leniency application to be crucial in identifying the names, locations and email accounts of key persons involved in the cartel. This information enabled the CCI to conduct a dawn raid at the premises of three alleged cartel participants, where it found incriminating evidence regarding the existence of the cartel. The CCI granted a 30 per cent reduction in penalty to Eveready for providing evidence indicating the involvement of Geep Industries and the Association of Indian Dry Cell Manufacturers in the cartel. Additionally, the CCI granted a 20 per cent reduction to the penalty imposed on the third cartel participant for cooperating and admitting its involvement in the cartel. The CCI also penalised the individuals who played an active role in aiding the cartel, granting each of them a penalty reduction proportionate to that granted to their respective companies.

In Dry Cell (No. 2),^[25] the CCI granted 100 per cent immunity to Panasonic as the evidence provided by Panasonic enabled the CCI to order an investigation and establish a contravention of section 3(3) of the Competition Act. Similarly, in Dry Cell (No. 3),^[26] the CCI granted 100 per cent immunity to Panasonic for similar reasons. Notably, the CCI considers the evidentiary value of the contents of the leniency applications while determining the penalty, among other factors.

In another decision under the leniency regime concerning the electric power steering market,^[27] the CCI granted a 100 per cent reduction in penalty to NSK Limited Japan and its Indian subsidiary Rane NSK Steering Systems Ltd as well its individual employees for being the first to approach the CCI and providing complete evidence. The CCI further reduced the penalty of the second applicant for leniency, JTEKT Corporation Japan (JTEKT), and its Indian subsidiary JTEKT Sona Automotive India Ltd, including its individual employees, by 50 per cent for providing a significant value addition.

In the Shipping Lines case,^[28] a leniency application was filed jointly by the parent company and its subsidiary under the pretext that the subsidiary (being a group company) should also be entitled to all benefits that the parent company may receive in terms of immunity or reduction in fine. However, the CCI established that the concept of ‘group’^[29] (recognised in the Competition Act in the context of mergers and acquisitions) did not apply to proceedings in relation to horizontal anticompetitive agreements and leniency. Based on this, the CCI concluded that a joint application of leniency (even by group companies) would not be permissible.

Recent decisions have also clarified that the CCI will review effects in India when the parties involved and the information exchange are outside India. For instance, the CCI decided to close a case based on a leniency application regarding a cartel between suppliers of automotive components for the supply of anti-vibration rubber products and automotive hoses. The grounds to close the case were that the involved companies did not sell the cartelised products in India and the information exchange took place prior to the enforcement of the relevant provisions of the Competition Act.^[30]

In 2022, the CCI had passed 14 orders finding a contravention of section 27 of the Competition Act. Of these, four cases^[31] involved successful leniency applications^[32] and the CCI did not impose any monetary penalty in two of these cases.^[33]

Competition (Amendment) Act 2023

As stated in the introductory section above, the Amendment Act expands the scope of cartels.^[34] Under the previous legal framework only an agreement between competitors was presumed to have an adverse appreciable effect on competition in India. This now extends to non-competing entities facilitating the cartel, which might be operated through suppliers or distributors at different levels of the vertical chain, if they participate or intend to participate in the cartel agreement.

The Amendment Act has inter alia broadened the scope of the powers of the DG.^[35] The Amendment Act allows the DG to retain documents, information, books, papers, etc. requisitioned by the DG during the investigation for up to 360 days (split in two equal tranches of 180 days). Apart from summoning and examining officers, employees, etc. of a company under investigation on oath, the Amendment Act allows the DG to examine ‘agents’ on oath. As per the Amendment Act, ‘agents’ includes bankers, and only those auditors and legal advisers employed by a company under investigation.

If the DG has reason to believe that information, books, papers, etc, may be destroyed, mutilated, etc, the DG may make an application to the Chief Metropolitan Magistrate, Delhi for an order for seizure of such books, information etc. Further, the DG may also seek the assistance of a police officer (or any officer of the Central Government) for conducting dawn raids.

As stated above, the Leniency Plus Facility has been introduced in the Amendment Act,^[36] pursuant to which LPR 2024 was notified.

The Amendment Act has introduced the requirement that an appeal can be preferred against an order of the CCI before the National Company Law Appellate Tribunal (NCLAT) only after 25 per cent of the penalty imposed by the CCI has been deposited with the NCLAT.^[37]

Developments related to bid rigging and price fixing

Bid rigging

The term ‘bid rigging’ refers to agreements between competitors or enterprises engaged in identical or similar production or trading of goods or provision of services that have the effect of eliminating or reducing competition for bids, or adversely affecting or manipulating the process for bidding.^[38] Bid rigging is prohibited under the Competition Act and is presumed to cause an AAEC.^[39] In fact, section 3(3)(d) of the Competition Act is applicable to all existing and prospective bidders with respect to any tender, regardless of whether they were engaged in the business of manufacture or sale of the purported infringing product at the time of bidding.^[40] However, the allegation of an agreement to rig bids cannot be sustained in the absence of any evidence of collusion among participating bidders and non-participating companies or that participating bidders had prior knowledge regarding non-participation of other companies.^[41]

The CCI has been proactive in examining bid-rigging cases, especially those involving public procurement. This is evident from the fact that the CCI has initiated investigations into potential bid rigging of its own volition in multiple instances.^[42] Of the 14 final orders (finding contravention) passed in 2022, six orders were pertaining to allegations concerning bid rigging. The CCI may rely on smoking-gun or circumstantial evidence to establish bid rigging, as direct evidence of bid rigging is not always easily traceable. For instance, in concluding the existence of bid rigging with respect to the operation and management of solid waste in Pune,^[43] the CCI relied on the existence of proxy bidders as well as technical and price bids that were scanned and uploaded from the same IP address. The circumstantial evidence that the CCI has relied on in its past decisional practice includes:

• the quoting of unusually higher rates than previous tenders;^[44]
• a heightened frequency of calls and SMS messages exchanged between bidders prior to the bid;^[45]
• the exchange of sensitive information prior to the bid;^[46]
• common mistakes in tender forms such as typographical errors;^[47]
• a common pattern in the bidders’ price increment despite different costs of production, taxes and others;^[48]
• consecutive serial numbers for demand drafts;^[49]
• the quoting of identical freight charges;
• the total quantity tendered matching the total quantity collectively bid for by the bidders;^[50] and
• similarity in documentation submitted for the bids along with call detail records and screenshots of messages, among others.^[51]

Further, the CCI dismissed a complaint alleging bid rigging by bidders circulating price information related to previous successful bids via a WhatsApp group.^[52] The CCI held that the mere circulation of price information, otherwise publicly available, cannot per se be considered an exchange of price-sensitive information unless:

• the circulation affects free play of the market forces with respect to prices; and
• there is a meeting of minds among the parties being investigated to achieve such an effect.

However, in the Beer cartel case, the CCI noted that the mere exchange of commercially sensitive pricing information compromised the integrity of the bidding process, therefore likely stifling competition.^[53]

Price fixing

The term ‘price fixing’ refers to an agreement between market participants to collectively raise, lower or stabilise prices to control supply and demand. Price fixing is prohibited under the Competition Act and is presumed to cause an AAEC. Similar to bid rigging, the allegation of an agreement to fix prices among competitors cannot be sustained in the absence of any evidence of collusion among them.

In a decision involving fabric companies, the CCI observed that price parallelism between the fabric companies in their bid quotations did not in itself indicate collusion. Accordingly, in the absence of any evidence indicating a meeting of minds or an agreement, the CCI closed the complaint.^[54] Likewise, in a price-fixing allegation against five domestic airlines, the CCI noted that, in the absence of any element of information exchange among the airlines, mere parallel conduct could not be sufficient to establish collusion.^[55] The CCI has dismissed several similar complaints due to lack of evidence submitted by the complainants.^[56]

Notably, the CCI has examined allegations of collusion by way of algorithms deployed by various airlines. The CCI dismissed allegations of cartelisation, noting that various airlines used different software for pricing tickets, algorithms differed since the inputs provided varied across airlines and the final call was taken by the airlines’ own analysts.^[57] This is consistent with the CCI’s past decisions where it noted that, while price parallelism by itself is insufficient to establish collusion, unexplained price parallelism and plus factors (as identified above) together are helpful in establishing collusive and concerted arrangements.^[58]

No requirement to show implementation of an anticompetitive agreement

In a previous decision under the leniency regime, the CCI clarified that it does not consider mere exchange of commercially sensitive information between competitors to be sufficient to establish a contravention of section 3 of the Competition Act in the absence of an agreement and its implementation.^[59] That said, in a decision involving five bearings manufacturers,^[60] the CCI adopted a different approach. The CCI found that the manufacturers met to decide prices quoted to original equipment manufacturers in the automotive bearings market. However, there was no evidence of any implementation of the exchanged information. The fact that the bearings manufacturers met to decide prices was considered sufficient by the CCI to establish a cartel violation. The CCI’s view was that the information exchange compromised the parties’ independence to quote rates that they would have quoted absent the coordination. While the CCI acknowledged that it was possible for the cartel not to have led to a collusive outcome, it did not consider implementation of the arrangement to be necessary to establish the contravention. Therefore, the decision clarifies that the establishment of an anticompetitive agreement (without its implementation) would be sufficient to establish a cartel contravention under the Competition Act.

The CCI took a similar approach in the Paper cartel case, noting that competitors meeting and discussing prices is likely to cause an AAEC.^[61] Also, in the Beer cartel case, the CCI noted that implementation of an anticompetitive agreement is not absolutely necessary to establish a contravention.^[62]

Changes to the confidentiality regime

On 8 April 2022, the CCI announced key changes to the regulations concerning the treatment of confidential information.^[63] Previously, the regulations required the parties to file an application seeking confidential treatment over information and documents, which was then granted or rejected by the CCI. Through the amendment, parties now have to self-certify the information over which they claim confidentiality to meet the parameters in the regulation. This self-certification would automatically grant confidentiality over information claimed as confidential. If a false undertaking is submitted, the CCI is empowered to take action against individuals under the provisions of the Competition Act.

Apart from this, the CCI introduced the concept of the confidentiality ring, which the CCI may set up at its discretion, comprising representatives of the parties. Confidential information available would also include the confidential version of the DG’s report, documents obtained during search and seizure, and the complete version of the CCI’s orders. Notably, the complainant will only be part of the confidentiality ring if the CCI considers it necessary.

Penalties

Collective penalties

Section 27 of the Competition Act empowers the CCI to impose penalties in cartel cases using one of the following metrics:

• up to 10 per cent of the average turnover of the enterprise for the preceding three financial years; or
• up to the higher of three times the profits or 10 per cent of the turnover for each year of the continuation of the cartel.

While the CCI has not yet issued any guidance on the calculation of penalties, the Supreme Court’s decision in Excel Crop Care has provided some clarity on the turnover to be considered while imposing a penalty.^[64] The Supreme Court clarified that there has to be a link between the damage caused and the profits that accrue from the cartel activity (ie, imposition of penalties under section 27(b) of the Competition Act should be based on the relevant turnover of the company). The Supreme Court defined ‘relevant turnover’ as the ‘entity’s turnover pertaining to products and services that have been affected by such contravention’ and has set out guidelines on the steps to be followed to determine relevant turnover, which are:

• looking at the entity’s audited financial statements or any other reliable records reflecting the entity’s relevant turnover, or estimating the relevant turnover based on available information;
• considering the facts and circumstances of a particular case to calculate the relevant turnover as and when it is seized with such matter; and
• once an initial determination of relevant turnover is done, calculating the appropriate percentage after considering the mitigating factors, such as:
• the nature, gravity and extent of the contravention;
• the role played by the infringer (ie, ringleader or follower);
• the duration of participation;
• the intensity of participation;
• loss or damage suffered as a result of such a contravention;
• market circumstances in which the contravention took place;
• the nature of the product;
• the market share of the entity;
• barriers to entry in the market;
• the nature of involvement of the company;
• the bona fides of the company; and
• the profit derived from the contravention.

Notably, under the Amendment Act, penalties inter alia for anticompetitive agreements can be imposed on up to 10 per cent of the average of the global turnover or income of the enterprise for each year of continuance of the Agreement.^[65] This provision has not been enforced yet, as per the Amendment Act^[66] the CCI will publish guidelines in this regard.

In terms of practical implementation, the CCI has levied lesser penalties on enterprises on account of their not being in a position to influence and dictate the terms of the anticompetitive agreement or due to having insignificant market shares in the relevant market in contrast with other competitors.^[67] In the absence of any guidance on penalties, such decisions have paved the way to understanding the CCI’s rationale when formulating penalties. For instance, in Matrimony.com v Google,^[68] the CCI applied the criteria of relevant turnover from the decision in Excel Crop Care and imposed the penalty on Google on its relevant turnover generated in India, not its global turnover. In contrast, in the MMT case,^[69] the CCI considered the entire turnover rather than the relevant turnover because, in the case of digital marketing platforms, restricting revenue to just one segment would not appropriately capture the interdependent and integrated nature of the ecosystem wherein one product or service reinforces multiple other products or services.

The CCI had exhibited restraint in imposing penalties on account of the covid-19 pandemic. For instance, in a contravention decision involving a cartel in the supply of composite brake blocks (CBBs) to Indian Railways,^[70] the CCI did not impose a penalty despite finding a contravention due to several factors, including the effect of covid-19 during 2019 on the credit needs and liquidity of micro, small and medium-sized enterprises. Other factors that the CCI considered were:

• the continued cooperation of the CBB manufacturers during the investigation;
• the fact that the CBB manufacturers confessed to the cartel arrangement, which led to an expedited inquiry; and
• the low turnover of most CBB manufacturers in this market segment.

Recently, in the Paper cartel case, the CCI imposed only a symbolic (or nominal) penalty of 5 million rupees on each of the cartelising paper manufacturers and 2.5 million rupees on their trade association. This took into account the severe impact of the pandemic on the paper business.^[71] The CCI has imposed reduced or symbolic penalties considering the severe impact of covid-19 on the market, including, but not limited to, small and medium-sized entities in various other cases.^[72]

In 2022, of the 14 cases where the CCI concluded a contravention of the Competition Act, it considered the impact of the pandemic on the companies while imposing penalties in two cases. The CCI considered that, if the penalty were imposed on these firms, it may render them economically unviable and some of these firms may even exit the market, which would further reduce competition in the market. Apart from this, the CCI also did not impose a penalty in four other cases in which it found a contravention of the Competition Act on account of successful leniency applications filed by involved parties.

In 2023, the CCI^[73] and NCLAT^[74] considered mitigating factors while not imposing or reducing penalties despite finding the parties to have contravened section 3(3) of the Act. Such mitigating factors included the parties being first time offenders, associations working for the welfare of its members without charging them, lack of funds, immediate rectification of impugned conduct.

Individual penalties

Section 48 of the Competition Act empowers the CCI to impose penalties on the officials of an infringing enterprise. Penalties can be imposed on individuals in two circumstances:

• where the individual was in charge of, and responsible for, the conduct of the business of the company at the time of contravention of the Competition Act;^[75] and
• where an infringement occurs with the consent, connivance or negligence of any director, manager, secretary or other officer of such a company.^[76]

Therefore, an official may be held liable for the anticompetitive conduct of an enterprise on account of either the position held by such an official or participation in the alleged anticompetitive conduct.^[77]

The penalty that the CCI may impose extends to up to 10 per cent of the average total income derived by the individual in the prior three financial years.^[78] However, the CCI penalises individuals who hold designations at more than one of the accused enterprises only once and generally at the same rate where there is more than one individual guilty of a contravention under the Competition Act.^[79] Further, where the CCI grants leniency-related penalty reductions to enterprises, it also extends the same percentage of leniency to accused individuals.^[80]

As per the Amendment Act, in cartel cases, the CCI can impose on individuals a penalty not exceeding 10 per cent of the income^[81] for each year of continuance of the agreement.^[82]

Industry trend towards balancing the jurisdiction of the CCI and other sectoral regulators

In 2018, the Supreme Court set out the law on balancing CCI’s jurisdiction with respect to other sectoral regulators, such as the Telecom Regulatory Authority of India (TRAI) in CCI v Bharti Airtel.^[83] In this case, a complaint was filed by telecommunications services provider Reliance Jio Infocomm Limited (Jio) alleging that other competing telecommunications services providers had agreed to deny Jio access to adequate points of interconnection, which are crucial for call connectivity. Based on this complaint, the CCI initiated an investigation into the incumbent operators’ alleged conduct. The High Court of Bombay held that the powers of the CCI are not sufficient to deal with the technical aspects associated with the telecommunications sector that solely arise out of the TRAI Act. On appeal, the Supreme Court upheld the High Court of Bombay’s order. According to the Supreme Court, the CCI can only exercise its jurisdiction after the TRAI determines the jurisdictional facts arising from the TRAI Act and reaches a prima facie conclusion that the incumbent operators have engaged in anticompetitive practices.

The structure of the Competition Act is such that a preliminary direction to investigate (under section 26(1)) cannot be appealed against. The only recourse to challenge such directions (in limited circumstances) is before the relevant high court for judicial review. However, recently, the high courts have been consistently reducing judicial intervention in preliminary enquiries ordered by the CCI (under section 26(1) of the Competition Act). The high courts have refrained from interfering with the power of the CCI to look into the merits of the allegations as the original adjudicating authority. Interference at this stage would only amount to usurping the original jurisdiction of the CCI.^[84]

Furthermore, through a notification issued in November 2022 by the Ministry of Finance, the government aims to increase cooperation between the authorities. The notification allowed the Enforcement Directorate to share information about economic offenders with 25 agencies, including the CCI.^[85] Unlike the Enforcement Directorate, the CCI is empowered to conduct unannounced search and seizure operations at office premises, homes or any other premises and seize all materials, including books, digital data, laptops and mobile phones, among others. Given the difference in scope between information collection powers, this notification is instrumental for these agencies to work hand in hand.

Notably in this regard, the Supreme Court in 2023 dismissed a petition filed by Coal India.^[86] Coal India contended that it is not within the purview of the Competition Act, since its dominance was established by the Coal Nationalisation Act 1973. The Supreme Court inter alia held that the Competition Act was applicable to Coal India and only its sovereign functions will be excluded.

Conclusion

The CCI continues to be extremely proactive in creating a culture of compliance by undertaking various advocacy initiatives with respect to bid rigging and public procurement.^[87] The CCI also published the findings of its market studies on the pharmaceutical sector,^[88] the cab aggregator industry^[89] and the film distribution chain in India. These market studies make various suggestions to address concerns relating to collusion on trade margins, information asymmetry, differential pricing, anticompetitive conduct and the role of trade associations. Concurrently, the enactment of the Competition Amendment Act 2023 has introduced various provisions, including those codifying the illegality hub and spokes, penalties based on global turnover, expanding the DG’s investigative powers for tackling cartelisation. Furthermore, the CCI has proactively undertaken the publication of several regulations, inviting public comments on the proposed measures, including the LPR 2024 which has been notified.

The trends over the past couple of years have suggested an uptick in the enforcement priorities of the CCI and its investigative arm – the DG. Nevertheless, the CCI also continues to show restraint in imposing penalties, particularly on small and medium-sized companies and associations acting for the welfare of its members.

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