In a huge relief to industry, the Centre has accepted the recommendation of Parliamentary Standing Committee on Finance to include cartels within the scope of settlement mechanism proposed under the Competition (Amendment) Bill 2022. 

 The Competition (Amendment) Bill was introduced on August 5 in Lok Sabha and was sent to House Panel for examination and Report. The Centre is widely expected to move amendments to this Bill next week and such inclusion will form part of the amendments moved to the Bill, sources said.

The proposed inclusion of cartels within the scope of settlement mechanism is likely to provide a huge relief to the industry as monetary penalties for cartelisation are extremely high. Making them eligible to go in for settlement would reduce the monetary burden on those found to have been engaged in cartelisation, they said.

Cartels are considered to be the most egregious infractions of competition law as they can lead to higher prices, reduced competition and innovation, besides creation of monopolies or oligopolies, which can have negative effects on the economy and consumers. 

The Bill proposed settlement mechanism for resolving antitrust cases at a faster pace. However, the mechanism was confined to only certain types of anticompetitive agreements and abuse of dominance cases. Cartels were kept out of the purview of the settlement mechanism as they are considered to be more harmful to the market and the economy. 

In fact, the Bill, which was put up for public consultation by the Government, also did not propose so. 

However, in a surprise move, the parliamentary panel recommended inclusion of cartels within settlement mechanism. 

This had raised many eyebrows and experts tracking the development pointed out that already leniency regime was available to cartel participants to seek lesser penalty on self-disclosure. However, the panel has gone a step ahead and now even if a cartel participant, who did not self-disclose, is caught, he can still apply for settlement. 

Cement cos to benefit

Cement companies are going to be immediately benefited from the proposed inclusion of cartels in settlement mechanism as Competition Commission of India (CCI) is inquiring into a case of cartelisation, which may potentially result in imposition of huge penalties upon cement companies if found guilty of contravention of the competition law, sources said.

Earlier also, in 2016, CCI had penalised cement companies for cartelization and imposed a cumulative penalty of ₹6,714 crore upon top 11 cement companies and their industry platform Cement Manufacturers Association.