cartels: Careful with Cartels about competition

A parliamentary committee wants GoI to extend the settlement procedure to cartels in the competition framework. This marks a change from the Competition (Amendment) Bill 2022 that has proposed a settlement framework (except for cartels) to reduce litigation. GoI must exercise caution. Cartels are the most malicious form of anti-competitive activity. They hurt consumers. Including them in the settlement mechanism, at least in the near term, poses the risk of diluting the competition law’s deterrence. A better way is to gather evidence on the working of the settlement mechanism in non-cartel cases, ahead of taking an accommodative stance. The extant law empowers the Competition Commission of India (CCI) to grant leniency in cartel cases. Lesser penalties are imposed on persons who make a full and true disclosure, and comply with some conditions. However, the leniency regime is yet to take off in a big way.

The 2019 Competition Law Review Committee (CLRC) looked closely at the EU model where cartels are covered under settlements. It establishes an infringement and requires an admission of guilt from parties. Apparently, parties choose settlement when convinced of the strength of the European Commission‘s case following the evidence gathered. So, they may be ready to admit their participation in a cartel and accept liability for it. But the commission has the discretion to determine which cartel cases are suitable. CLRC voted against covering cartels. A possible reason is that, unlike Britain‘s, India’s competition law is yet to evolve fully.

Nevertheless, the parliamentary committee favours a US-type of cartel settlement that entails faster resolution of antitrust cases. But the US built a leniency track record first and then began building a settlement one. A similar approach makes sense for India. Another suggestion of the panel is to review the deal value of transactions every year instead of every two years. This could be unsettling for businesses. A balanced approach is needed in the overhaul of the competition law.