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Mint Explainer: CCI’s anti-trust case settlement and its impact on businesses

NEW DELHI: The Competition Commission of India (CCI) earlier this week came out with two schemes meant to facilitate early market correction in cases of anti-competitive practices which will also help to reduce litigation. While one scheme allows for the settlement of cases of anti-competitive practices where investigations are complete, the second one allows CCI to accept commitments for behavioural changes by businesses in return for dropping a probe. Mint takes a look at what these schemes strive to achieve and what it means for businesses:

What are the two schemes CCI is planning to roll out?

The two schemes–settlement and commitment–were introduced in the Competition Act by the Parliament earlier this year. The regulator wants to consult stakeholders in framing the regulations before implementing the schemes so that businesses have confidence in them, opt for them in appropriate cases and help in reducing litigation, while achieving early market correction. The two schemes are in line with global best practices.

Under the commitment scheme, a party facing an investigation can commit to change its market behaviour and if the offer is accepted by the regulator, a probe will be dropped. This helps by way of achieving early market correction given that imposing penalties and protracted litigation can often mean that the anti-competitive practice in the market may persist till the time the case reaches its logical conclusion.

The second scheme–settlement – is for business or any other party against which an investigation for anti-competitive behaviour is complete. The parties can offer to settle the case and pay an amount to the government as determined by CCI.

The two schemes are meant to improve ease of doing business and to make the competition regulation regime world class.

What all will be covered under commitment and settlement?

The two schemes are available for those facing or have faced investigations for abuse of dominance or for entering into anti-competitive agreements other than cartels. These anti-competitive agreements could be among enterprises or persons at different stages of the production chain. Examples include tie-in arrangement, exclusive supply or distribution agreements, refusal to deal or resale price maintenance. Cartels are seen as very serious offences and are not covered under the two schemes.

What are the highlights of the settlement scheme?

An entity seeking settlement has to apply for it within 45 days of receiving the report of investigation by the Director General of investigation. CCI can give a 30-day grace period in certain cases. The application has to have details of the settlement proposal including as to how the settlement will address the breaches and the competition concerns. CCI will decide on the application after weighing the nature, gravity and impact of the alleged contraventions.

The settlement amount computed by CCI will be final and any application seeking revision of the same will not be entertained by the Commission, as per the draft settlement scheme. The applicant has 15 days to accept the offer of settlement made by CCI and 30 days from then to make the payment, failing which the settlement application will be rejected. The applicant has the freedom to withdraw the settlement proposal at any time before CCI comes up with its order.

How will the commitment scheme work?

CCI may accept a commitment proposal from a party facing a probe based on certain factors including whether the commitment terms proposed would address the identified competition concerns, alleged contraventions, and whether the same can be implemented effectively and quickly and be monitored easily. The two schemes are designed to improve the ease of doing business. The draft schemes that have been released by the regulator are likely to see some changes based on feedback from public consultation. 

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