CCI frames regulations on turnover determination, commitment and settlement mechanisms

The Competition Commission of India (CCI) on Wednesday rolled out three separate key regulations and the much-awaited penalty guidelines, taking a giant step in the implementation of certain crucial amendments effected in the Competition law in April last year.

The three regulations now framed by CCI related to turnover or income determination, commitment and settlement mechanisms. 

The regulation on turnover determination is expected to have major implications on multi-product companies and those with a global operations.

The CCI framed penalty guidelines would allow parties to have clarity on the principles the competition watchdog would apply while penalising any violations of the Competition Act. 

It is expected to add stability and certainty to the principles applied by the CCI, experts said. Interestingly the penalty guidelines have been framed without public consultations. 

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Penalty guidelines

Samir Gandhi, Co-Founder and Partner, Axiom5Law Chambers, said that the penalty guidelines are particularly important now since the CCI is empowered to impose a penalty on the global turnover of a company.

“Although the guidelines are non-binding, the CCI is required to consider them while

Imposing penalties and give reasons for deviating from them. It is particularly heartening to see the Commission recognise the implementation of a competition compliance program as being a mitigating factor for penalty computation,” he said.

While it would have been ideal if such an important set of guidelines had been framed after due consultation, it is hoped that the CCI will constantly fine tune the guidelines with due regard to difficulties faced during implementation, he added.

Vaibhav Choukse, Partner and Head of Competition Law, JSA Advocates and Solicitors, said the penalty guidelines provide for both, aggravating and mitigating factors and comprehensive methodology to be considered/ adopted by the CCI while imposing penalties on contravening enterprises / individuals for violating provisions of the Competition Act including enforcement and combinations. 

Multiple checks

“This will aid the CCI in having consistency in determining penalties and bring transparency and certainty to its decision-making process. 

“This will also bring a lot of certainty to the stakeholders as it will ensure multiple checks on the penalty from being disproportionate and also assist is risk assessment at the outset”, he said. 

To avoid steep penalties, companies under investigation, especially Big Techs, would be encouraged to opt for, the settlements or commitments mechanism in abuse/ vertical restraint cases or, leniency in cartel cases, experts said.

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