With the emergence of new concepts such as globalization, liberalization and
new market players, it was obligatory for the introduction of a law which was
much advantageous for the new market conditions. Due to growing needs of the
current market conditions, the Parliament introduced the Competition Act, 2002
which replaced the Monopolies and Restrictive Trade Practices Act, 1969. Under
the Competition Act, 2002, the competition commission of India (CCI) was
established to prevent the activities that have an adverse effect on competition
in India. Adverse effect on competition means any market activties which harm
the competition of a market. Basically, Adverse effect on competition is caused
by anti-competitive agreement, abuse of dominant position by enterprises and/or
‘combinations and merger’ which tends to cause disturbance in the market.
The main aim to introduce Competition Act, 2002 was not only to protect the
consumers from all sorts of market abuses but also to create consumers by
increasing the purchasing power of the people living in poverty. In this article
I will concentrate on Leniency regulations implemented by CCI (The Competition
Commission of India ) to reduce cartels and new amendments to Leniency
regulation. Before Anti-competitive Agreement and Cartels
Anti – Competitive agreement
Healthy competition is very necessary to take care of the market conditions. One
of the vital objectives of the Competition Act 2002 is to prevent adverse effect
on competition.[i] Any agreement between persons or enterprises which causes
harmful effect to the competition and consumers is said to be anti-competitive
Under section 3(1) of the competition act, anti-competitive agreement is
defined as No enterprise or associations of enterprises or person or
association of persons shall enter into any agreement in respect of production,
supply, distribution, storage, acquisition or control of goods or provisions of
services, which causes or is likely to cause an appreciable adverse effect on
competition within India.
[ii] In simple words, anti competitive agreement
means two or more individuals or two or more companies being competitors in the
market enter into an agreement to fix prices, control supply or any activity
which limits the competition in the market.
There are many types of anti-competitive agreements such as tie-in-agreement,
Cartelization is one of the horizontal agreements that shall be presumed to have
appreciable adverse effect on competition under section 3 of the Act.
[iii] Section 2(c) of The Competition Act, 2002 defines cartel,
that “cartel includes 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, sale in goods or provision. [iv]
In simple words caretels includes group of producers, sellers, distributors, etc
who enter with each other in an agreement to control production, distrubution ,
price of commodities and services, etc to limit the competition in a particular
Cartel formation not only disturbs the market competition but also causes harm
to society at large. To reduce cartels in the market leniency programme was
introduced. A transparent and predictable leniency program has been proven to be
an effective tool to detect, investigate and combat cartels cases worldwide. [v]
What is leniency regulation?
Leninency regulation is explained in Section 46 of the Competition Law, 2002.
Leniency program was introduced so that the cartel formation can be reduced and
the members forming cartel can be granted leniency in the penalty if they choose
to share and disclose the information with the commission. Cartel formation is
an offence in the eyes of law and if a person or enterprise is included in
cartel then a penalty of up to 3 times of its profit each year of the
continuance of such agreement or 10% of its turnover for each year of
continuance of such agreement, whichever is higher [vi] is charged.
Section 46 of the Act [vii] provides for such leniency provision which states
that if the commission is satisfied that any producer, seller, distributor,
trader or service providers, etc on violating the Section 3 of the Competition
act, 2002 has made true disclosure in respect of the alleged violation then
lesser penalty will be provided to the producer, seller, distributor, trader or
service provides, etc than the actual penalty of such violation.
Amendment to Leniency Regulations (Lesser Penalty)
The competition Commission of India (CCI) recently on August 22, 2017 released
to amend Competition Commission of India (Lesser Penalty) regulations, 2009. The
leniency Regulations supplement Section 46 of the Competition Act, 2002, which
sets out the provision for grant of leniency in the matters involving cartels
and enables parties to ‘blow the whistle’ on cartel arrangements and avail up to
100% reduction in penalties. [viii]
Earlier, the leniency regime previously recognised the provision of markers to
only three leniency applicants, in the order of priority. The first leniency
applicant could receive up to 100% immunity from penalty, the second leniency
applicant up to 50% reduction in penalty and the third leniency applicant up to
30% reduction in penalty.[ix] Almost after 7 years of introduction of the
Leniency regime,[x] Re: Cartelization in respect of tenders floated by Indian
Railway for supply of Brushless DC Fans and other electrical items[xi] was the
very first cartel case to get leniency upto 75% in penalty.
The recent Amendments to the Leniency Regulation are as follows:
· No restrictions on number of markers-
Earlier, the lesser penalty regulation was extended up to 3 markers only on the
basis of information submitted, that is the first leniency applicant would
receive 100% reduction in penalty, the second leniency applicant would receive
reduction up to 50% and the third leniency applicant would receive 30% reduction
in penalty. This is a positive step as prior to the amendment the individuals
or the enterprise hesitated to reveal about their cartel involvement as they
were unclear that their leniency applicant is in first 3 markers list or if they
will get the benefit of lesser penalty or not.With the introduction of this
amendment any number of markers can apply for leniency application and openly
come forward without having the fear of not being in first three markers list.
Also this amendment can help CCI to bust cartels in future.
· Individual to seek benefits from lesser penalty regulation
Earlier, the lesser penalty regulation allowed only an enterprise to file
leniency application. But now the scope of filing the leniency application is
extended to individuals as well. The individuals who are involved in cartels can
come forward and file for grant of leniency in their penalty.This will encourage
individuals in organization which are part of a cartel to come forward in their
individual capacity and receive immunity or reduction in penalty for their
involvement in the cartels, based on the marker[xii]
· Volume of business affected
The amendment has made it clear that the applicant has to give details of volume
of business affected in India due to cartelization.
· Access to non-confidential documents
Earlier the parties had the right to get access to the non- confidential
document or evidence during the investigation process and even before receiving
the report from Director General. With the introduction of the amendment, the
parties has the right to obtain copies of non- confidential document or evidence
only after the Director General has investigated and the CCI has forwarded the
report to the Director General.
Prior to the notification, an obligation was imposed on CCI to maintain the
confidentiality on the name of the applicant and the information disclosed by
the applicant until specifically waived by the leniency applicant or the
disclosure is required by law. [xiii] [xiv] The amendment permits the Director
General to disclose information to the third party (party who have been
impleaded in leniency proceedings), even if the approval of applicant is not
there. If the Director General is of the opinion that disclosure is necessary
for the investigation then with the approval of the CCI the information or
evidence or documents can be disclosed even if the applicant does not give a
waiver. In such cases reason for disclosure of the information must be given in
writing by the Director General to CCI.
· Timing of the applicant
The Lesser Penalties Regulations require an applicant to apply before the CCI
for the marker.[xv] Prior to the amendment, the applicant had to submit the
detailed application within 15 days from the date of requesting the marker but
now CCI has enforced strict deadline of 15 days and the application should be
submitted within 15 days from the date on which the marker status is
communicated to the applicant by the CCI. Therefore the applicant should be well
advanced in the collection of evidence and information to meet the deadline.
Cartel formation is one of the most harmful anti-competitive agreements which
cause damage to market in many ways. It can force community, consumers,
businesses and even government to pay higher prices for goods and service and
the consumers may also face scarcity of goods. Cartels also distort economic
markets and leads to slow innovations. Therefore for the development of any
economy it is very important for a country to fight cartels.
According to me, Competition Commission of India has taken a very good step by
amending the Lesser Penalty Regulation, 2009. Prior to the amendment, Cartels
cases was not coming forward that easily and effectively as the persons and
enterprises had several fears. Most common fear was there was no whistle blow
protection for all the applicants. After the amendment CCI has granted four
orders in less than two years. On 19 April 2018, CCI has given 100% reduction in
penalty to the leniency applicant, Panasonic Energy India Co. Ltd in a case
involving a hard- core cartel in respect of zinc carbon dry batteries in India.
[xvi] On 11 July 2018, CCI again awarded 100% reduction in penalty to the
leniency applicants Globecast India Private Limited (GI) and Globecast Asia
Private Limited (GA). It also awarded 30% reduction to Essel Shyam, Commucation
The amendment has turned out to have a very positive impact as more and more
cartel formation disclosure is being made and CCI is taking every possible step
to grant leniency to the applicants. This will not only remove formation of
cartels in near future but also give benefits to the society at large that is
there will be no exploitation of customers and economy of the country will also
take a good shape.
[i] Abir Roy & Jayant Kumar, Competition Law in India, 53( 2nd edition,2004).
[ii] Abir Roy & Jayant Kumar, Competition law in India, 54,(2nd edition 2004).
[iii] Advocacy series 2, Provisions related to Cartels The Competition
Commission of India,https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/cartelbook.
[iv] Advocacy series 2, Provisions related to Cartels The Competition Commission
[v] Advocacy series, Leniency Programme the Competition Commission of India,
[vi] Advocacy series Leniency Programme the Competition Commission of India,
[vii]Competition Law 2002 Bare Act , https://www.cci.gov.in/sites/default/files/cci_pdf/competitionact2012.pdf
[viii] Anshuman Sakle & Bharat budholia, Leniency Regulation Amended, https://competition.cyrilamarchandblogs.com/2017/08/leniency-regulations-amended/
[ix] CCI amends lesser penalty regulation, Trilegal, https://www.trilegal.com/pdf/create.php?publication_id=14&publication_title=cci-amends-lesser-penalty-regulations.
[x] Competition Commission of India’s First order granting leniency, Cyril
amarchand mangaldas , http://www.cyrilshroff.com/wp-content/uploads/2018/03/Insight-Alert-%E2%80%93-CCI%E2%80%99s-First-Order-Granting-Leniency.pdf.
[xi] In Re: Cartelization in respect of tenders floated by Indian Railway for
supply of Brushless DC Fans and other electrical items, Suo Moto Case No. 03 of
2014 18.01.2017, http://
[xii] Nisha Kaur Uberoi, CCI’s Amended Lesser Penalty Regulations Provide
Clarity, BloombergQuintOpinion, (September 06 2017, 12:48PM), https://www.bloombergquint.com/opinion/2017/09/06/ccis-amended-lesser-penalty-regulations-provide-clarity.
[xiii] Regulations 6(a) and 6(b), Lesser Penalty Regulations.
[xiv] C&A eAlert – India’s leniency program 2.0, https://www.chandhiok.com/amendments-to-india-s-leniency-progam.
[xv] Regulations 5(1), Lesser Penalty Regulations.
[xvi] MM Sharma, CCI Penalizes Battery Manufacturers’ Admitted Cartel- Decides
Its Second Leniency Case, mondaq, http://www.mondaq.com/india/x/696076/Cartels+Monopolies/CCI+Penalizes+Battery+Manufacturers+Admitted+Cartel+Decides+Its+Second+Leniency+Case.
[xvii] Bharat Budholia, Dhruv Rajain & Ruchi Verma, Fourth Order in Less than
Two years: The CCI’s Leniency Regime Gathers Momentum, Competition law a Cyril
Amarchand Mangaldas Blog.