Competition Commission of India (CCI), on Wednesday, issued draft regulations on settlement and commitment pursuant to the recent amendments in the Competition Act, 2002. 

Two separate draft regulations for Settlement and Commitment have been issued for public and stakeholder comments. The fair trade regulator has given a 21-day window (August 24 to September 13) for stakeholders to submit their written comments.

In competition law jurisprudence, commitment refers to a process, where a company under investigation, offers to change its business practices to address the concerns raised by the competition authority. This can lead to the closure of the investigation without a formal finding of infringement. 

On the other hand, settlement typically involves a negotiated agreement between the competition authority and the company, often resulting in the company admitting to the alleged infringement in exchange for reduced fines or penalties. 

Both commitment and settlement aim to resolve competition law concerns efficiently and without the need for a lengthy legal process.

The Competition (Amendment) Act, 2023, had introduced Section 48A of the Act to create a settlement mechanism, which enables an enterprise against whom an inquiry is initiated for an alleged contravention of provisions of the Competition Act which proscribe vertical anti-competitive agreements and abuse of dominant position, to apply for settlement before the CCI. 

The intent of creating a procedure for commitment is driven by the need to ensure quicker market correction, according to a background note issued along with the draft regulations. 

The Commitment Regulations provide the procedure to be followed during commitment proceedings including the following: 

(a)Form and contents of the application for commitment along with fee payable

(b)Procedure of commitment proceedings;

(c) Period during which commitments may be offered;

(d) Manner in which the CCI will invite objections and suggestions to the commitment terms;

(e) Nature and effect of the commitment order;

(f) Factors to be considered by the CCI in assessing the commitment terms;

(g) Implementation and monitoring of the terms of the commitment order;

(h) Revocation of the commitment order.

Experts’ take

Nisha Kaur Uberoi, Partner and National Head Competition, Trilegal, said that the proposed commitment and settlement regulations will be a game changer for enforcement proceedings in India.

The draft regulations will further benefit from a mandatory right to be heard prior to rejecting a commitment/settlement application as well as grandfathering provisions for matters currently under investigation, she added.

Samir Gandhi, Co founder, Axiom5 Law Chambers, said, “The publication of the draft settlement and commitments applications are a much awaited development, particularly because this will enable corporates who are currently undergoing CCI investigations to swiftly avail of this benefit, which was enacted 4 months ago but still awaits notification. While the draft regulations are a good start, I look forward to seeing further modifications to introduce a “grandfathering” clause which preserves commitment applications that may have already been made but have had no means of being processed.”

“There remain a few other significant areas for improvement which we are hopeful the consultation process will enable. For example, it’s unfortunate to see that the draft regulations permit the CCI to use materials that are provided by applicants while trying to offer a meaningful commitment, as evidence against themselves. This will act as a significant disincentive for parties to avail of this mechanism and should be corrected,” Gandhi added.

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