Corporate Affairs Ministry (MCA) has notified the introduction of ‘Leniency plus’ regime, paving the way for the Competition Commission of India (CCI) to roll out a new Cartel detecting tool that is expected to revolutionise Anti Trust enforcement in the country.

Under the regime, companies under investigation for one cartel would be encouraged to report other unknown cartels to CCI.

Such a programme helps competition authorities to discover secret cartels and to obtain insider evidence of the infringement. 

With the latest MCA move — notifying the relevant provisions in the Competition (Amendment) Act 2023, the stage is set for the CCI to issue related regulations, sources said. 

MCA has now said that ‘leniency plus’ related provisions would come into effect from February 20.

What is leniency plus?

Leniency plus is a proactive antitrust enforcement strategy aimed at attracting leniency applications by encouraging companies already under investigation for one cartel to report other cartels unknown to the competition regulator. 

The benefit that would entail from such disclosure is reduction of penalty in the first cartel to the person disclosing the information, without prejudice to the company obtaining lesser penalty regarding the newly disclosed cartel.

While the Competition Act provides a framework for CCI to deal with leniency or lesser penalty applications, it until recently did not recognise leniency plus. 

Samir Gandhi, Co founder, Axiom5 Law Chambers, a law firm, said: “It’s heartening to note that the government has operationalised the “leniency plus” provisions of the Competition (amendment) Act. We’re hopeful that this will give the CCI the requisite tools to focus their enforcement efforts at successfully prosecuting cartels which have a direct impact on the economy and consumer welfare”

CCI draft regulation

CCI had, in October last year, issued draft Lesser Penalty regulations. 

The draft regulations offer leniency applications in an ongoing cartel inquiry the incentive to disclose the details of another unrelated cartel.

Under leniency plus, an applicant who has filed an existing lesser penalty (LP) application, and who makes a full, true and vital disclosures in respect of the existence of a second cartel is eligible to receive an additional reduction in monetary penalty of up to 30 per cent in the first cartel. 

The applicant would also get a reduction of penalty of up to or equal to 100 per cent in respect of the newly disclosed cartel.

A leniency plus regime is expected to further incentivize applicants to come forward with disclosures regarding multiple cartels, thereby enabling the CCI to save time and resources on cartels investigation. 

This regime is already recognised in jurisdictions like the UK, US, Singapore and Brazil.