Cartels 2022 Comparisons

The Competition Act, 2002 (Act) regulates anti-competitive conduct in India. Public enforcement actions regarding cartels in India are governed by Section 3 of the Act, which deals with anti-competitive agreements. Section 3(3) of the Act specifically deals with anti-competitive horizontal agreements, including cartels. 

The Competition Commission of India (CCI) is the nodal agency for enforcement of cartel prohibition in India, aided by its investigative arm, the Office of the Director General (DG). 

The CCI can conduct cartel investigations:

• upon receipt of information through a complaint; or
• upon receipt of information through a leniency application; or
• by the initiation of suo motu action; or
• upon receipt of a reference from government or statutory authorities.

The CCI directs the DG to commence an investigation if it is of the view that there exists a prima facie case warranting an inquiry. The DG is mandated to conduct a detailed investigation and submit an investigation report to the CCI. Thereafter, the CCI can call upon the parties to make written and oral pleadings. On reaching a positive finding of the existence of a cartel, the CCI may impose a penalty and/or pass any other order that it deems fit. 

The CCI’s orders can be appealed against before the appellate tribunal, ie, National Company Law Appellate Tribunal (NCLAT). An NCLAT order is finally appealable before the Supreme Court of India (Supreme Court).

In India, the public enforcement agency responsible for cartel prohibition is the CCI, aided by its investigative arm, the DG. 

CCI’s Powers to Impose Sanctions

Under section 27 of the Competition Act, in the case of a cartel, the CCI can impose a penalty of up to three times the profit or 10% of the (relevant) turnover of each participating company for each year of the continuance of a cartel agreement, whichever is higher. The relevant turnover means turnover derived from the sales of goods or services, found to be the subject of the contravention.

In addition to the imposition of penalties, the CCI may pass orders, inter alia, directing the parties to terminate the agreement and refrain from re-entering such an agreement (cease-and-desist order), or modify the terms of the agreement.

The CCI also has powers to impose penalties on the officials of an infringing company who were in charge of and responsible for the conduct of the business of the company at the time of contravention of the Act.  The quantum of the penalty imposed may extend to up to 10% of the average total income derived by the individual in the previous three financial years.

In India, there are no criminal sanctions for cartelisation, but non-compliance with the orders of the CCI may attract criminal liability. 

Upcoming Changes

In February 2020, the Government of India released the draft Competition (Amendment) Bill, 2020 (Bill), proposing amendments to the Act. The Bill is currently pending before parliament. Key amendments proposed in the Bill concerning cartels are:

• Leniency plus – the Bill proposes introducing a leniency plus policy, such that a company that files for leniency pertaining to one cartel and assists in exposing another cartel, will be eligible for a reduction in penalties in relation to both cartels. 
• Buyers cartel – the current provision of the Act only covers manufacturers, dealers, traders, and service providers and does not include buyers. The proposal in the Bill to include buyer’s cartels is to curb the severe threat these cartels pose to competition in India.
• Other agreements – at present, only horizontal and vertical agreements are expressly covered under Section 3 of the Act. It is proposed to include “other agreements” that will be subject to a rule of reason analysis. “Hub and spoke” cartels, involving players at different levels of the supply chain, are also addressed - to cover non-competitors in such a scenario who will be liable where they actively participate in the furtherance of an anticompetitive agreement between competitors.

Section 53N of the Act provides a right to file for compensation for loss or damage suffered by any person or government or company or local authority due to contravention of the provisions of the Act. Such compensation claims must be filed before the NCLAT. 

As per the Act, such compensation claims for damages can only be made after the CCI arrives at a finding of contravention of the Act or the NCLAT arrives at a finding (if the CCI decision is appealed). 

While a few compensation applications are pending before the NCLAT for final adjudication, it is yet to pass a final order.

The term “cartel‟ is defined under Section 3 of the Act to include “an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or trade in goods or provision of services‟. Accordingly, the existence of an agreement must be first proved to establish the existence of a cartel. 

Section 3(3) specifically provides those horizontal agreements, including cartels, that presumably have an appreciable adverse effect on competition (AAEC) in India. Thus, the burden of proof shifts to the incumbent to rebut the presumption. 

These horizontal/cartel agreements include agreements that:

• directly or indirectly determine purchase or sale prices;
• limit or control production, supply, markets, technical development, investment or provision of services;
• share the market or source of production, or provision of services by way of allocation of the geographical market area, or type of goods or services, or number of customers in the market, or any other similar way; or
• directly or indirectly result in bid rigging or collusive bidding.

Exemptions

The Act provides an exemption to export cartels and efficiency-enhancing joint ventures.

Export Cartel: The restrictions relating to anti-competitive agreements, including cartels, do not apply to the right of any person to export goods from India to the extent that agreements relate exclusively to production, supply, distribution or control of goods or provision of services. Export cartels, ie, cartels having an effect in markets outside India, are exempt. 

Joint venture: while certain horizontal agreements have been presumed to harm competition, an exemption from this presumption is available to an efficiency-enhancing joint venture. The burden of demonstrating qualifying efficiencies lies with the enterprise seeking the exemption. If the efficiency gain is shown to exceed the harm to competition, the party is unlikely to be held to be engaging in anti-competitive behaviour on application of the rule of reason.

Other Legislation

Certain other statutes in India indirectly prevent anti-competitive conduct, including the operation of cartels, such as:

• Petroleum and Natural Gas Regulatory Board Act, 2006;
• Electricity Act, 2003; and
• Telecom Regulatory Authority of India Act, 1997.

Neither the Act nor the (Indian) Limitation Act, 1963 (Limitation Act), which is the general limitation statute, provide a limitation period for proceedings under the Act. 

The provisions relating to cartels and abuse of dominance came into effect on 20 May 2009. The CCI can, therefore, only adjudicate agreements that: 

• came into force post 20 May 2009; or 
• were entered into prior to 20 May 2009 but had a continuing effect post that. 

Under Section 32 of the Act, any conduct occurring outside India having or likely to have an AAEC in the relevant market in India may be the subject of an inquiry by the CCI. In the auto parts cartel investigation, the CCI has exercised extraterritorial jurisdiction where alleged cartels operated outside India but affected the Indian market. 

The principles of comity are not formally established or applied in India. 

In April 2020, the CCI, like several of its counterparts, issued an advisory to companies, considering the COVID-19 pandemic. Taking cognisance of disruptions in the supply chain caused by the pandemic, especially in healthcare and essential products/services, the CCI acknowledged that there is a legitimate reason for businesses to collaborate and co-ordinate to ensure the supply and fair distribution of essential products/services, including the formation of efficiency-enhancing joint ventures to cope with the pandemic and address technical and economic challenges. 

The advisory clarified that such activities might include:

• sharing data on stock levels; 
• timings of operation; 
• sharing of distribution network and infrastructure; and 
• transport logistics, R&D, production, etc. 

Without committing formally to any specific relaxations or providing additional safe harbours, the CCI emphasised that the Act has in-built safeguards to protect companies from sanctions of certain co-ordinated activities, provided that such arrangements result in increasing efficiencies, which the CCI will take into consideration. Further, the CCI will only provide safe harbours to co-ordinated activity that is necessary and proportionate to address concerns arising from COVID-19 and companies cannot indulge in any anti-competitive activity under the garb of this advisory. 

The initial investigatory steps taken by the CCI and the DG are as follows. 

Step 1: Inquiry Into Alleged Cartelisation

The CCI has the power to inquire into any alleged cartel arrangement: 

• upon receipt of information filed by any person, consumer or their association or trade association; 
• on reference by the Central Government or the State Government or statutory authority; 
• suo moto or on its own; or 
• upon receipt of a leniency application. 

Step 2: CCI’s Prima Facie Order

Upon receipt of the information, the CCI forms a prima facie view on the matter and passes either of the following orders: 

• Section 26(2) order – if the CCI is of the opinion that there exists no prima facie violation of the Act, it shall close the matter and pass an order under Section 26(2) of the Act. 
• Section 26(1) order – if the CCI is of the opinion that there exists a prima facie violation of the Act, it shall direct the DG to investigate the matter and pass an order under Section 26(1) of the Act. 

Step 3: DG’s Investigation

Upon receiving directions from the CCI, the DG (being the investigative arm of the CCI), reviews all the information on record with the CCI and collects further information and evidence from the parties involved as well as third parties. Further, the DG has the power to summon parties and examine them on oath, require the discovery and production of documents, receive evidence on affidavit, issue commissions for the examination of witnesses or documents, requisition public record/document or copy of the same from any office in accordance with the prevailing law. Thereafter, the DG prepares and submits its report to the CCI (DG Report). The DG Report contains the allegations and the DG’s findings on the allegations, supported by necessary evidence, including all documents and statements of various stakeholders collected during the investigation. The DG can come to one of two conclusions in the DG Report: 

• there exists a contravention of the Act;
• there exists no contravention of the Act. 

Step 4: CCI’s Inquiry Subsequent to the DG Report

Once the DG submits the DG Report to the CCI, the CCI evaluates the findings, provides an opportunity for parties to provide written objections to the DG Report, and an oral hearing for the parties to present their case before the CCI.

If there exists a contravention of the Act per the DG Report, the CCI can:

• agree with the DG’s findings and pass the final order under Section 27 of the Act; or
• direct further inquiry into the matter before arriving at a conclusion.

If there exists no contravention of the Act per the DG Report, the CCI can:

• agree with the DG’s findings and close the matter; or
• disagree with the DG’s findings and direct the DG to investigate further or itself inquire into the matter. 

Dawn raids are becoming increasingly common in India and are conducted by the personnel of the DG’s office at the premises of target companies suspected of having violated the Act. Based on public information, the DG has conducted 11 dawn raids in India so far. 

Procedural Requirements

The preconditions for conducting a dawn raid are:

• the DG applies to the Chief Metropolitan Magistrate of New Delhi for the issue of a search warrant before conducting the dawn raid;
• the application is made to search the premises where the DG believes evidence of a target company that is necessary for the investigation may be destroyed, altered or hidden;
• prior to commencing the search, the DG must ensure that two independent witnesses are present during the search.

A dawn raid generally starts in the morning and may last the whole day or even continue into the following day. The DG has the power to search the premises of a target company and an individual.

As part of the dawn raid, the DG can seize any evidence necessary for the investigation, except legally privileged material. Such evidence includes physical and electronic documents, emails and other correspondence, agendas and minutes of board meetings, meeting notes, internal brochures and memoranda, travel information, and storage devices.

The DG even has the power to interview witnesses and take their statements (on oath) during a dawn raid. 

Obligations of a Company and an Individual Under Investigation

During a dawn raid, the target company and individual under investigation are obliged to:

• assist the DG with the investigation, including responding to queries of the DG;
• produce all physical and electronic evidence, including books, papers, documents, emails, etc relating to the target company in its custody;
• not conceal, destroy or hide any material information or documents; and
• not furnish any information knowing it to be false.

The target company or individual have the right to request to be provided with a search warrant from the DG, obtain a list of all material (physical and electronic) seized during the raid, which is signed by the DG and the two witnesses; make and retain copies of all material seized by the DG, ensure the presence of two witnesses before the search begins, etc.

Refusal to Co-operate by the Target Company

During a dawn raid, a target company must extend its full co-operation to the DG and answer questions pertaining to itself and its employees, but it is not bound to provide voluntary information. In fact, it is advisable for the target company not to answer any leading questions or sign any documents at the investigator’s request. 

Any person who fails to comply with the directions of the DG or the CCI (including obstructing the investigation) may be penalised under Section 43 of the Act. Such penalty can extend up to INR0.1 million (USD1,307) for each day such failure continues, subject to a maximum fine of INR10 million (USD130,698). 

Role of External Counsel

During a dawn raid, the target company can request the DG to await the internal/external legal counsel to arrive, but the DG’s investigating team is not obliged to wait for the arrival of the legal counsel. The external legal counsel can provide an immediate, structured and comprehensive response to the dawn raid and ensure that the rights of the company are protected. For example, the legal counsel can ask the DG to provide a copy of the search warrant before commencing the dawn raid.

The Act cast an obligation on the person under the investigation not to make a false statement, furnish a false document, omit to state a material fact, alter, suppress or destroy a document. In case of violation, the CCI can levy a penalty of INR10 million (USD130,698) on such person or pass any other order as it deems fit. 

Section 35 of the Act, read with Regulation 46 and Regulation 46A of the General Regulations, provides that any person or company may either appear themselves in person or appoint a legal practitioner/counsel or chartered accountant or cost accountant or company secretary or any of the person’s or company’s officers to present his or its case before the CCI.

The legal counsel can accompany a person summoned by the DG (ie, a witness) for deposition after making a written request for the same to the DG. However, the legal counsel cannot sit in front of or within hearing distance of the witness and cannot interact, consult, confer, or communicate with the witness during the deposition. 

Typically, the principal initial steps that defence counsel should undertake during the initial phase of an investigation are to:

• promptly assess whether the target company should apply for leniency or defend its case before the CCI. This decision determines the future course of action of the target company. Irrespective, legal counsel will have to engage in extensive internal fact-finding to ensure a sound basis for any decisions and prepare the best strategic approach. 
• In case of a dawn raid, the counsel should put in place a pre-arranged policy so that employees of the target company are aware of their rights and duties during a dawn raid.

Section 36 and Section 41 of the Act read with Regulations 44 and 45 of the General Regulations, empower the CCI and the DG with the powers vested in a civil court under the (Indian) Code of Civil Procedure, 1908, including: 

• summoning and enforcing the attendance of a person to examine him on oath;
• requiring the discovery and production of documents; 
• receiving evidence on affidavit; 
• issuing commissions for examining witnesses and documents; and
• requisitioning public record/ document or copy of the same from any office in accordance with the prevailing law. 

The CCI can also call upon experts in certain fields to assist it in inquiries. 

The DG is empowered to conduct dawn raids at offices and residential premises as part of its investigation. 

Further, under Regulation 41 of the General Regulations, the CCI and the DG also have the powers to, inter alia:

• determine the manner in which evidence is to be adduced;
• admit evidence in the form of verifiable transcripts of tape recordings, unedited video recordings, emails, and telephone records, including authenticated mobile phone records, written statements and answers to questionnaires, interviews, comments, expert analysis of market studies; 
• admit entries of books of accounts, including electronic versions; 
• admit opinion of handwriting and fingerprint experts; and
• admit any other document, including electronic records relevant to the proceedings. 

Any company or individual, if directed by the CCI and/or the DG to submit a document or evidence, is required to do so regardless of where the document or evidence is located. Further, the Act does not differentiate between documents within or outside India.

The Act contains no provisions on attorney-client privilege.

In India, the attorney-client privilege is governed by the Indian Evidence Act, 1872, which recognises privilege for legal advice provided only by external lawyers qualified to practise in India and not by in-house counsel or foreign lawyers. Attorney-client privilege does not extend to any communications made in furtherance of any illegal purpose.

Individuals and companies do not commonly resist initial requests for information. Resistance to providing information can attract a liability. 

Any person who fails to comply with the directions of the DG or the CCI (including obstructing the investigation) can be penalised under Section 43 of the Act. Such penalty can extend up to INR0.1 million (USD1,307) for each day such failure continues, subject to a maximum fine of INR10 million (USD130,698). 

Any person who fails to comply with the orders of the CCI can be penalised under Section 42 of the Act. Such penalty can extend up to INR0.1 million (USD1,307) for each day such failure continues, subject to a maximum fine of INR100 million (USD1,306,979). 

The CCI has imposed a fine of INR10 million (USD130,698) on Google and  INR15 million (USD196,047) on Monsanto for its failure to comply with the directions given by the DG seeking information and documents. Further, in a recent case, the CCI imposed a penalty on an individual for non-co-operation with the DG’s investigation. The NCLAT, however, set aside the penalty after the individual apologised.

As per Section 57 of the Act, no information relating to any target company, being information obtained for purposes of the Act, can be disclosed without prior permission in writing from the target company.

Regulation 35 of the General Regulations provides that the CCI will maintain confidentiality over the identity of the informant or any document or information submitted by any party to the investigation to the CCI or the DG upon a written request. Confidentiality can be sought over information if the publication of such information will result in the disclosure of trade secrets, lead to the deterioration of commercial value of the target company, or can be reasonably expected to cause serious injury to the target company.

Confidentiality Ring

In April 2022, the CCI amended the General Regulations and introduced the concept of a “Confidentiality Ring‟ in line with global best practices.

The CCI can create a confidentiality ring that would comprise authorised representatives of the parties who may access confidential information of the other parties, including information contained in the confidential version of the DG report. If the CCI deems it necessary, the complainant may be included as part of the confidentiality ring. 

The CCI will be empowered to decide the extent of information and the number of members included in the confidentiality ring.

Representatives of the parties forming part of the confidentiality ring need to execute undertakings confirming that they will not disclose the information they are privy to by being in the confidentiality ring to any party outside it. Such information will not even be shared with other employees of the party (and its subsidiaries, joint ventures, etc). A breach of these undertakings can result in proceedings under the Act.

Confidentiality Under the Leniency Regulations

The CCI (Lesser Penalty) Regulations, 2009 (Leniency Regulations) mandate that the CCI treat the identity and all information received from the applicant as confidential. The CCI may subsequently, during the investigation process, request the applicant to waive confidentiality over relevant evidence to enable it to approach other companies which form part of the cartel. 

The DG may disclose information in a leniency application if the applicant consents to the disclosure in writing, the disclosure is required by law, or the applicant has publicly disclosed the information. Further, if the DG deems it necessary, it may disclose information in the leniency application without the applicant’s consent after recording reasons in writing for such disclosure and obtaining prior approval from the CCI. 

The Leniency Regulations also provide access to the case files to leniency applicants and non-leniency applicants (including third parties/private litigants) who have been impleaded in leniency proceedings. 

Third parties, which are not parties to the proceedings, may be granted the right to access the non-confidential version of the file on application to the CCI. The Leniency Regulations grant those who have the right of access to file, the right to obtain copies of the non-confidential version of the evidence and information submitted by leniency applicants after the DG’s investigation report has been forwarded to parties involved in any investigations by the CCI.

It is common for a defence counsel for the target company to raise legal and factual arguments when submitting written objections to the DG Report. Subsequently, during the oral hearing before the CCI, the defence counsel is provided with an opportunity to make oral submissions prior to the CCI arriving at a final finding. 

There is a leniency regime in India governed by Section 46 of the Act and the Leniency Regulation. 

Under Section 46 of the Act, the CCI may impose a lesser penalty if a company which participated in a cartel makes a full and true disclosure to establish a contravention of Section 3(3) of the Act. However, leniency cannot be granted when the leniency application is made after the DG Report is submitted to the CCI. 

Ringleader

The Leniency Regulations are silent on the treatment of ringleaders. In some cases, the CCI has granted a lesser penalty to applicants even though they orchestrated the cartels. CCI is not likely to disregard the leniency application of a ringleader or orchestrator of a cartel, provided they co-operate fully with the investigation.

Marker System

The leniency regime also provides for a marker system for applicants. An applicant can approach the CCI with a marker application in relation to the evidence it has regarding a cartel on a no-name basis. The CCI issues a priority status to the applicant based on the time of the initial contact by the applicant. 

The first applicant to contact the CCI (orally or in writing) is granted the status of first applicant. If the initial contact is oral, the applicant needs to ensure that the documentary evidence is provided to the CCI within 15 calendar days from granting priority status by the CCI. Failure to comply with this condition will result in the loss of the priority status of the applicant.

Conditions for Grant of Leniency

The essential conditions to qualify for a lesser penalty are as follows:

• stopping participation in the cartel unless otherwise directed by the CCI;
• providing vital disclosure;
• providing all evidence required by the CCI;
• co-operating fully, continuously and expeditiously with the CCI; and
• not concealing or manipulating any evidence.

The CCI may grant a penalty reduction of up to 100% to the first leniency applicant that makes a “vital disclosure‟ by submitting evidence that helps establish a contravention of the Act. Subsequent applicants that provide “significant added value‟ to the evidence are granted penalty reductions of up to 50% (second applicant) and 30% (third and subsequent applicants).

The CCI will consider the following factors when deciding on the reduction:

• the stage at which the leniency application is filed;
• the evidence already in possession of the CCI;
• the quality of the information provided (added value); and
• the entire facts and circumstances of the case.

Irrespective of whether a company is a ringleader of the cartel or not, it can seek leniency from the CCI.

Record of the CCI in Granting Leniency

There have been 19 cases where parties have approached the CCI with a leniency/lesser penalty application. In most of the cases, the CCI has granted the benefit of lesser penalty to applicants; however, there have been at least two cases where the CCI has decided not to grant any reduction in penalties to some applicants as they did not provide any value addition in establishing the existence of the cartel. The CCI did, however, grant reductions to other applicants in the same case, as the applicants extended their co-operation to the investigation and provided value addition in establishing the cartel and their role played in the cartel. In an unusual case, parties filed leniency applications, but the CCI did not find any contravention of the Act and did not impose any penalties. 

There is no amnesty regime applicable in India. 

The DG has wide powers of investigation under the Act, including seeking information directly from the employees of a target company under investigation. Typically, the DG issues a notice under Section 41 listing the information required for its investigation, and the period within which the information needs to be provided. Non-compliance with the notice may result in monetary fines.

The DG has wide powers of investigation under the Act, including seeking documentary evidence directly from the target company under investigation and third parties. Typically, the DG issues a notice under Section 41 specifying the list of information required for its investigation and the period within which the information needs to be provided. Non-compliance with the notice can result in monetary fines.

The DG can issue a notice under Section 41 of the Act to companies or individuals outside India to seek information required for the investigation. Typically, the said notice is sent via e-mail or by post to the registered office of the company.

The government of India issued a notification that allowed the income tax department to share “relevant and precise‟ information considered necessary by the CCI and the DG to perform their functions under the Act. This information must be kept confidential by the CCI and the DG.

Section 18 of the Act permits the CCI (upon prior approval of the central government) to enter into any memorandum or arrangement with any agency of any other country for the purpose of discharging its duties or performing its functions under the Act. The CCI has executed such memoranda of understanding on co-operation with several global competition agencies, such as those of Mauritius (February 2022), Japan (August 2021), Brazil (June 2021), BRICS nations (May 2016), Canada (December 2014), the EU (November 2013), Australia (June 2013), the US (September 2012) and Russia (December 2011), to set up a framework for co-operation and exchange of information. 

The CCI can also share information or documents with other jurisdictions with the consent of the concerned parties.

India’s competition law is modelled mainly on EU competition law. The CCI has taken guidance from and relied on EU case law and guidelines while deciding issues before it. Inter-agency co-operation and co-ordination at the international level will strengthen a developing competition jurisdiction like India by aligning its jurisprudence with mature competition jurisdictions like the EU. Such co-operation will, inter alia, ensure that competition law is effectively and efficiently enforced, consistency of approach is maintained, and effective compliance is achieved.

In India, there are no criminal sanctions for cartelisation.

All competition law complaints (including cartel cases) are brought before the CCI in the first instance and litigated before the CCI. There is no separate civil action that can be brought before any other court for competition complaints. 

Upon receiving directions from the CCI, the DG (being the investigative arm of the CCI) reviews all the information on record with the CCI and collects further information and evidence. All evidence is produced before the CCI. 

Under Section 57 of the Act, read with Regulation 37 and 50 of the General Regulations, parties to any proceedings can make an application in writing (on payment of certain fees) to the CCI to inspect or obtain copies of documents or records submitted by the parties to the CCI during the proceedings. Pursuant to the submission of the DG Report to the CCI, parties can similarly make an application in writing to the DG to inspect the DG records. 

There is no provision for parties to access information in the hands of third parties. 

Regulation 61 of the General Regulations lays down that no civil court will have jurisdiction to entertain any suit proceeding regarding any matter that the CCI or NCLAT is empowered to determine under the Act. A civil court may not grant an injunction in relation to any action taken/to be taken pursuant to a power conferred under the Act. 

Typically, the CCI proceeds against multiple parties who have engaged in a cartel in a single proceeding itself. There is no provision in the Act which allows parties to have individual and separate proceedings.

Section 3 of the Act prohibits all anti-competitive agreements (including cartels) which cause or are likely to cause an AAEC in India. 

Once an anti-competitive horizontal agreement, including cartels, is established, it is presumed to have an AAEC in India. The burden of proof shifts to the accused to rebut the presumption based on the factors set out in Section 19(3) of the Act.

The DG, being the investigative arm of the CCI, is the finder of fact. Pursuant to the investigation, the DG presents its findings on facts and applies the law to the facts in the DG Report, then submitted to the CCI for its consideration. 

The CCI evaluates the findings of the DG and ascertains whether the DG has correctly applied the law. The DG Report is only recommendatory in nature, and the CCI can either agree or disagree with the DG’s findings.

Evidence in one proceeding can be used in another proceeding by the CCI and the DG. Further, the evidence proffered by an applicant for leniency or evidence from another jurisdiction will be admissible before the CCI if the evidence suggests that the cartel arrangement will have an AAEC in India.

Section 36 and Section 41 of the Act read with Regulations 44 and 45 of the General Regulations, empower the CCI and the DG with the powers vested in a civil court under the (Indian) Code of Civil Procedure, 1908, including: 

• summoning and enforcing the attendance of a person to examine him on oath;
• requiring the discovery and production of documents; 
• receiving evidence on affidavit; 
• issuing commissions for examining witnesses and documents; and
• requisitioning public record/ document or copy of the same from any office in accordance with the prevailing law. 

The CCI can also call upon experts in certain fields to assist it in inquiries, and the DG is empowered to conduct dawn raids. 

Further, Regulation 41 of the General Regulations provides that the CCI and the DG may determine how evidence may be presented in the proceedings before them, but also admit various material as evidence as part of the investigation. 

Section 36(3) of the Act empowers the CCI to call upon experts from economics, commerce, accountancy, international trade or any other field to assist the CCI in its inquiry. Such experts can materially contribute to the decision-making process of the CCI and provide relevant inputs on technical matters that the CCI would otherwise not be independently equipped to decide. 

Regulation 41 of the General Regulations allows the CCI or DG to admit the opinion of handwriting experts, fingerprint experts, and persons skilled in the interpretation of foreign law, science or art as part of the investigation.

Although the Act does not provide for any privilege, the Indian Evidence Act, 1872 provides that communications between an external attorney and client are privileged.

It is possible to have multiple or simultaneous enforcement proceedings involving the same or related facts if different points of law are involved and different regulators have jurisdiction to adjudicate on such points of law. 

In India, there have been cases where different regulators have had overlapping jurisdiction over an issue arising from the same or related facts. The Supreme Court, in the CCI v Bharti Airtel & Ors, decided on the overlapping jurisdiction of the CCI and the telecom sector regulator. In that case, the issue before the Supreme Court was whether some telecom operators cartelised by denying points of interconnection to a new telecom operator in accordance with the relevant telecom regulations.

The Supreme Court held that since the telecom regulator was the specialised sectoral body, it was better suited to adjudicate the case in the first case. Only if the telecom regulator returned prima facie findings, which led to anti-competitive conduct by the telecom companies, could the CCI’s jurisdiction be activated.

The DG does not have any powers to start an investigation on its own, nor can it impose sanctions directly on the target company and/or individuals for cartel conduct. It is the CCI that can impose sanctions on target companies and individuals if found guilty of cartelisation.

The Act does not contain any provision for plea bargaining or settlement. Although there is a proposal in the Bill to provide for plea bargaining/settlement, that provision is limited to vertical agreements and abuse of dominant position. 

Under Section 48 of the Act, if a company is found guilty of contravening the provisions of the Act (including engaging in cartel conduct), then the persons in charge of the company will also be presumed to be guilty of such contravention unless such persons can prove that the contravention was without their knowledge, or that they exercised due diligence to prevent it. 

Under Section 48 of the Act, directors or officials of a company who are guilty are also liable to be fined up to 10% of their average personal income for the last three preceding financial years. Additionally, individual liability for cartel conduct extends to lateral effects under Schedule V of the Companies Act 2013, such as if a person has been sentenced to imprisonment for any period or to a fine exceeding INR1000 (USD13.07) for the conviction of an offence under the Act, he shall not be eligible for appointment as a managing or whole-time director or a manager of a company.

The Act does not contain any provision for plea bargaining or settlement, and therefore, these effects cannot be avoided or mitigated. 

In India, there are no criminal sanctions for cartelisation, but non-compliance with the directions of the DG and CCI and orders of the CCI or the NCLAT may attract criminal liability.

Under Section 27 of the Act, where cartel conduct is established, the CCI has the power to impose a penalty of up to 10% of the average (relevant) turnover of each participating company for the preceding three financial years. 

In cases of cartels, the CCI can impose a penalty of up to three times the (relevant) profit or 10% of the (relevant) turnover of each participating company for each year of the continuance of a cartel agreement whichever is greater. 

In addition to the imposition of penalties, the CCI may pass orders, inter alia, directing the parties to terminate the agreement and refrain from re-entering such an agreement (cease-and-desist order) or modify the terms of the agreement.

Under Section 48 of the Act, directors or officials of a company who are guilty are liable to be fined up to 10% of their average personal income for the last three preceding financial years. 

There are no criminal sanctions for cartelisation, but non-compliance with the directions of the CCI or the DG and orders of the CCI or the NCLAT may attract criminal liability. 

While computing and applying penalties, the CCI considers aggravating and mitigating factors. Aggravating factors include playing an active role in a cartel, repeat offending, etc. Mitigating factors include termination of anti-competitive activities, small size and/or low revenue of a company, the existence of compliance programmes, extenuating circumstances such as the prevalence of the COVID-19 pandemic, etc.

The CCI considers an “effective compliance programme” as a mitigating factor while imposing sanctions and penalties. 

The Act does not provide for mandatory consumer redress.

Orders passed by the CCI can be appealed against before the NCLAT. Sections 53A and 53B of the Act provide that any person aggrieved by a CCI order may appeal to the NCLAT within 60 days from the date of communication of such order to the aggrieved party. 

The Act does not provide a statutory appeal against all orders of the CCI before the NCLAT. For example, a prima facie order of the CCI passed under Section 26(1) of the Act, which directs the DG to conduct an investigation, is not appealable. However, such an order may be challenged before a (Writ) High Court under the provisions of general administrative and constitutional law. An appeal against an order of the High Court can be filed before the Supreme Court.

Under Section 53O of the Act, all proceedings before the NCLAT are deemed judicial proceedings, wherein the NCLAT has the same powers as a civil court. 

Under Section 53T of the Act, an NCLAT order is finally appealable before the Supreme Court within 60 days from the date of communication of such order to the aggrieved party.

Section 53N of the Act provides a right to file for compensation for loss or damage suffered by any person or government or company, or local authority due to contravention of the provisions of the Act. Such compensation claims must be filed before the NCLAT, being the court of first instance to hear compensation claims. 

The NCLAT can adjudicate upon a claim for civil damages in cases of cartel conduct arising from: 

• findings of the CCI; 
• orders of the NCLAT in an appeal from the findings of the CCI; or 
• the contravention of orders of the CCI and the NCLAT.

The Act does not contain any provisions for “stand-alone” action and only provides for “follow-on” actions.

Section 53N(4) of the Act provides for filing a claim for loss or damages caused to numerous persons having the same interest. In such case, one or more such persons may file a claim before the NCLAT. Such a claim can only be made once the CCI arrives at a finding of contravention of the Act or the NCLAT arrives at a finding (if the CCI decision is appealed). 

Since the NCLAT is yet to decide a case on compensation claims, it is to be seen how questions of indirect purchasers or passing-on defences will be handled.

Regulation 41 of the General Regulations (which provides the kind of evidence that can be admitted) is wide enough to include the admission of evidence from government proceedings as well as private investigations.

There is no provision for settlement under the Act.

Typically, the time taken by the CCI from the initiation of the investigation to the passing of the final order is approximately three to five years. 

There is no provision in the Act that provides compensation for successful attorneys.

There is no provision in the Act which provides for payment of defence costs and/or attorneys’ fees by unsuccessful claimants. 

An appeal from the NCLAT’s decisions may be filed before the Supreme Court, which is the final court of appeal. 

Apart from the information stated above, there is no other information or material pertinent to understanding the process, scope and adjudication of claims involving alleged cartel conduct.

The CCI has published advocacy booklets on various aspects of the Indian competition law.  Handbooks relevant to cartel conduct are: 

• Provisions relating to cartels;
• Provisions relating to bid rigging; and
• Leniency Programme.