New arsenal. Strengthening whistleblowers’ hands

The Competition Commission of India (CCI) has notified the Competition Commission of India (Lesser Penalty) Regulations, 2024, introducing the “lesser penalty plus” regime. The regime incentivises whistleblowers to come forward and disclose full, true and vital information to the CCI about the existence of another cartel in the ecosystem, which is unknown to the CCI.

The ‘leniency policy’ is key to combat anti-competitive forces. The existing “lesser penalty” provisions under Section 46 of the Competition Act, 2002, encourages the enterprises which are part of cartel to voluntarily come forward and disclose information to aid the CCI in identifying potential cartel conduct.

The first ‘lesser penalty’ applicant who provides CCI with evidence will have his penalties lowered by up to 100 per cent. The second and the third applicant will get up to 50 per cent and 30 per cent reduction in penalties. The current leniency policy has not been effective. Between 2009 and 2021, only seven distinct cartels were identified through leniency applications though there are numerous cartel cases. During the period, the CCI uncovered around 32 organisations which were involved in the cartel cases. Also, leniency applications did not result in penalties imposed by the CCI in six out of seven cases.

After the enactment of the 2024 regulation, the applicant irrespective of their earlier priority status will be entitled to an additional reduction in penalty of up to 30 per cent in relation to the first cartel.

Writing in Mondaq, lawyers Rupin Chopra and Apalka Bareja of the law firm SS Rana & Co Advocates, observed that by incentivising whistleblowers to report illegal activities, the CCI will have access to valuable insider information. This addition to the regulatory framework not only serves as a deterrent to cartel formation but also strengthens enforcement measures. “As we move forward, it is essential to continuously improve the whistleblower frameworks to guarantee they remain effective in protecting the public interest and to maintain an environment of integrity within organisations and society at large,” they say.

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