Lesser Penalty Regulations notified as Section 33 of the Competition (Amendment) Act, 2023 kicks in
Axiom5’s summary note of the CCI (Lesser Penalty) Regulations, 2024, is accessible here.
The Competition Commission of India (CCI) has revised the regulations that incentivize companies and individuals to blow the whistle on anti-competitive cartel agreements. These new regulations, titled the Competition Commission of India (Lesser Penalty) Regulations, 2024 (LPR 2024), streamline the process for granting lesser penalty (LP) and lesser penalty plus (LPP) to applicants who provide information and cooperation in cartel investigations.
The objective of LPR 2024 is to enhance the effectiveness of the CCI's cartel enforcement efforts by incentivising individuals involved in cartels to disclose information and cooperate with the investigation process. They operationalise provisions of the Competition (Amendment) Act, 2023, which introduced significant changes to the leniency regime for cartels.
LPR 2024 provide for additional reduction in penalty to applicants who have already filed a leniency application in a cartel investigation, if they subsequently provide information about a second cartel. A successful applicant will be eligible for up to a 30% additional reduction in penalty for the first cartel, and up to a 100% reduction in penalty for the second cartel.
LPR 2024 embody substantial modifications proposed by diverse stakeholders to the Draft Competition Commission of India (Lesser Penalty) Regulations, 2023 (Draft LPR) that were published by the CCI for consultation in October last year. A comprehensive summary of these modifications, along with Axiom5's observations on the Draft LPR and the LPR 2024, is accessible here. Notably, the CCI has rationalized the procedures to apply for and benefit from LP/LPP, eradicated ambiguity concerning the finality of an LP/LPP determination, instilled tenets of natural justice, and provided clarity regarding the CCI's discretion concerning relevant factors, use of evidence, and so forth.
Some of the key features of LPR 2024 include:
Procedural fairness: The clause on forfeiture has been omitted, and conditions for accepting an application for LP/LPP have been expanded to include full disclosure, not providing false evidence, and the right to be heard prior to rejection.
Resolution of Ambiguities: Specific ambiguities present in the Draft LPR have been effectively addressed and rectified. It is noteworthy that LPR 2024 establishes a clearly defined mechanism for making an 'admission' of contravention as a prerequisite to filing an application, while guaranteeing protection against self-incrimination if the application is withdrawn. The remaining information and evidence provided by the applicant may, nonetheless, be utilized by the CCI. Additionally, LPR 2024 also provide that individuals mentioned in an LP application are eligible for penalty reduction alongside the applicant. Furthermore, the introduction of a repeals and savings clause facilitates a seamless transition into the updated framework. Nonetheless, certain clauses, such as those pertaining to the time limit for filing an application, may still result in practical uncertainties.
CCI’s discretional authority: The CCI is granted substantial discretion under the LPR 2024 on various matters. Notably, when evaluating an application for LP/LPP, the CCI has the latitude to consider any other factor it deems relevant. Additionally, in relation to the confidentiality of supplementary submissions, which will now be governed by Regulation 35 of the Competition Commission of India (General) Regulations, 2009, the CCI is empowered to adjudicate on claims of confidentiality.