Proposed Changes to CCI Rules on Confidentiality
A detailed clause-by-clause review of the amendments is available here.
Context
On 26 February 2024, the Competition Commission of India (CCI) published draft amendments to Regulations 35, 37, and 50 of the Competition Commission of India (General) Regulations 2009 (General Regulations) (Draft Amendments), along with a background note.
In 2022, the CCI had modified its General Regulations to establish ‘confidentiality rings’. This allowed parties involved in inquiry proceedings before the CCI to access confidential information and documents from other parties to preserve their rights to self defence.
The Draft Amendments now aim to address certain challenges and optimise the process related to submitting confidential information, establishing confidentiality rings, and accessing confidential information of other parties. This is a welcome move and a positive step towards expeditious resolution of cases.
In this blog post, we will explore the details of the Draft Amendments and their potential impact on parties.
Comments by the stakeholders on the Draft Amendment may be submitted to the CCI by 27 March 2024.
Draft Amendments
1. What are the proposed amendments to the procedure for requesting confidentiality over information submitted to the CCI?
In line with existing practices, any party seeking confidentiality over information/documents is required to explain why such treatment is required in terms of Regulation 35 (2) of the General Regulations.
Current practice requires parties to self-certify when seeking confidentiality, that making information, a document, or parts thereof public would reveal trade secrets, cause substantial harm, or lower the commercial value of any information.
The Draft Amendments propose that undertakings submitted by parties for self-certifying confidentiality claims be made in the form of an affidavit.
Axiom5 Comment: The CCI’s background note lacks a clear explanation for its deviation from its current practice. The background note does not address why the previous self-certification mechanism was inadequate and how the proposed introduction of filing an affidavit will remedy this shortcoming.
An affidavit serves as a sworn declaration or statement. Its primary objective is to verify the authenticity and legitimacy of specific factual information relevant to the case. A person signing an affidavit makes a solemn declaration that the information contained therein is truthful and correct. Submitting a false affidavit in a judicial proceeding would be a breach of Section 191 of the Indian Penal Code, 1860 which is punishable with imprisonment that may extend to seven years and a fine.
However, even without an affidavit, under Section 42 of the Competition Act, 2002 read with Proviso 2 to Regulation 35(7), the CCI already has the authority to impose penalties on a party in case of a breach of an undertaking. Further, the remedy under the Competition Act can be enforced by the CCI without recourse to lengthy criminal proceedings for misstatements in an affidavit, which will require approaching a criminal court.
The obligation to provide self-certification on affidavits within tight deadlines can be burdensome for some parties, particularly foreign nationals, as obtaining notarization or apostille from a foreign jurisdiction can be time-consuming and challenging to fulfil within the specified timeframe.
2. What changes are proposed to the application process of confidentiality rings?
The Draft Amendments now permit a party who is interested in obtaining confidential information to request the CCI to establish a confidentiality ring within seven days of receiving the DG’s investigation report. The CCI may in its discretion consider such requests within an additional seven days (Regulation 35(6A).
The Draft Amendments require that parties who would like to be included in the confidentiality ring must also submit an undertaking in the form of an affidavit within seven days of receiving the order establishing the confidentiality ring. The Competition Commission of India (CCI) may, at its discretion, extend this deadline by an additional three days (Regulation 35(7A).
Axiom5 Comment: The CCI previously had the discretion to establish Confidentiality Rings, if necessary. However, under the Draft Amendments, parties are now granted the opportunity to request the establishment of Confidentiality Rings within a specified timeframe.
This is a welcome development, since parties may seek inclusion in a confidentiality ring, rather than depending on the CCI’s decision to do so. The introduction of clear timelines also ensures that the process is time-bound. However, it's unclear why such an application must be made as an affidavit, which needlessly adds time and cost to the process.
3. What is the proposed procedure for inspection of documents for parties included in the confidentiality ring?
The Draft Amendments permit parties who are included within the Confidentiality Ring to submit applications for inspection within seven days of submitting their undertakings. The process of inspection allows a party to access confidential case file documents that are submitted in the course of proceedings and are required to be completed within three weeks of the application's approval. However, the Secretary of the CCI may extend this period by seven days, based on their discretion (Regulation 37, read together with Regulation 50).
Within one week after the inspection, the parties can submit applications for certified copies in accordance with Regulation 37 and 50. Upon receiving an application for certified copies, they shall be provided within two weeks.
Axiom5 Comment: Setting timelines and streamlining the process for accessing case files is welcome and will help reduce administrative delays. However, it's worth noting that case files are often voluminous, and inspecting them can be time-intensive. The CCI must ensure that parties have sufficient time to conduct file inspections, particularly because as a practical matter, parties are often allotted insufficient time to complete the inspection process. The CCI should grant parties with at least 6 hours in a single day for file inspection.
4. Can the CCI, at its discretion, extend the timelines prescribed under Reg. 35?
The CCI has the authority to extend prescribed timelines in specific circumstances. This provision allows the CCI to extend these timelines in exceptional circumstances, with reasons duly recorded in writing (Regulation 35(10).
5. What are the prescribed fees for inspection charges and copying charges?
To access records pertaining to their case, parties may be required to pay an inspection fee of Rs. 2,500 per day, per case. Additionally, a copying charge of Rs. 20 per page may be levied for providing certified copies to the parties involved in the proceedings.
Axiom5 Comment: The inspection fee has increased significantly by 150% at Rs. 2,500/- per day per case. This increment may be excessive and place an undue burden on individuals, non-governmental organizations, and consumer associations, potentially leading to challenges and hardships.
In accordance with Regulation 49 of the General Regulations, we suggest implementing a differential fee system. This fee structure would involve charging different categories of individuals varying amounts.