Regulations introducing Settlements & Commitments regime notified
On the 5th of March, 2024, the Government of India notified the Competition Commission of India (Settlement) Regulations, 2024 (Settlement Regulations) as well as the Competition Commission of India (Commitment) Regulations, 2024 (Commitment Regulations). The Settlement Regulations and the Commitment Regulations were both made available by the Competition Commission of India (CCI) on its website, along with accompanying general statements (General Statement).
Draft versions of both the Settlement Regulations (Draft Settlement Regulations) and the Commitment Regulations (Draft Commitment Regulations) (collectively “the S&C Regulations”) were circulated for public consultation in August 2023, and the CCI received comments from 41 stakeholders which were considered before the publication of the final regulations.
We discuss the key features of the S&C Regulations, along with our in-depth analysis, in our detailed notes here (on Settlement Regulations) and here (on Commitment Regulations).
In sum, the S&C Regulations contain several valuable additions, as much as they are notable for significant omissions and novel provisions. The CCI must be applauded for having undertaken an extensive consultation exercise and for highlighting their consideration of several suggestions in their General Statements accompanying the S&C Regulations. Some of the key inclusions and omissions are:
No grandfathering or transitional clause - The CCI had received numerous requests to extend the benefits of the S&C Regulations to ongoing investigations, but the S&C Regulations do not include a "grandfathering" clause. This would have allowed parties to offer settlements or commitments in all investigations that were not concluded between the time of the enactment of the Competition Amendment Act, 2023, and the publication of these S&C Regulations. This is a missed opportunity. The CCI has justified this exclusion due to logistical difficulties, potential confusion, and the desire to avoid extending benefits to cases in their final stages.
Limitation on the use of information submitted in a settlement or commitment application: The S&C Regulations no longer permit the CCI to use the information submitted by a settlement or commitment applicant as evidence against it. Such information can now only be used against the applicants in the very limited instance where a settlement or commitment order is revoked and withdrawn by the CCI. This is a positive development and will remove one of the biggest hurdles contained in the draft version of the S&C Regulations.
Undertakings & waivers are required from a settlement & commitment applicant - The S&C Regulations require applicants to provide undertakings and waivers that go beyond the requirements of Sections 48A and 48B of the Competition Act. Applicants must waive their right to initiate legal proceedings, appeal to the NCLAT or approach High Courts in constitutional challenges, and waive any claims of limitation. These requirements are likely to be challenged in constitutional courts.
Interim relief: The Settlement Regulations have introduced a provision that allows the CCI to issue interim orders during settlement proceedings. The introduction of this provision is unnecessary, since Section 33 of the Act empowers the CCI to issue interim orders at any stage of the inquiry, including soon after its initiation. However, some stakeholders interpreted the section literally and claimed that the CCI cannot issue interim relief during settlement proceedings since the inquiry is held in abeyance. The CCI has introduced a new provision to avoid confusion.
Partial Settlement: The Draft Settlement Regulations previously allowed Settlement Applications to be made in respect of select contraventions contained in the DG Report, while the CCI's inquiry into the remaining contraventions continued. However, this provision has been deleted in the Settlement Regulations, discouraging applicants from offering “partial” settlements, especially when they disagree with some contraventions in the DG Report. The CCI explained the change was made based on stakeholder feedback but provided no further reasoning. In contrast, a similar provision allowing “partial commitments” in the Commitment Regulations has been retained without any modifications. The “all or nothing” approach taken in the Settlement Regulations is likely to discourage settlement applicants.
Admission of facts: The S&C Regulations now contain a new clause that deems facts or admissions made in legal proceedings within or outside India as admissions in the ongoing settlement or commitment proceedings. Stakeholders argue that such admissions may have been made in a different context, court, or jurisdiction and are often made "without prejudice." This will effectively dissuade applicants since facts admitted in other jurisdictions cannot ordinarily be relied on by the CCI. Interestingly, a similarly worded “deeming” clause exists in the SEBI (Settlement Proceedings) Regulations, 2018 but with an important difference: the deeming clause does not permit SEBI, unlike the CCI, to rely on such “admissions” if the applicant chooses to withdraw from the proceedings, or if the application is rejected.
There are a number of other notable changes that we discuss in our detailed notes here (on Settlement Regulations) and here (on Commitment Regulations).