The Competition Commission of India (CCI) is gearing up to launch version 2.0: with the recent appointment of a new chairperson, and the enforcement of several provisions of the amended Competition Act, 2023 (Amended Act). The CCI’s enhanced powers are far-reaching, designed to promote more effective market regulation and facilitate the ease of doing business in India.
The Commission’s track record for prosecuting anti-competitive conduct and rectifying market practices has been a mixed bag. In the 14 years of its operation, it has passed several notable decisions in sectors such as real estate and automobiles. However, many of these cases are stuck in protracted appellate review and penalties remain uncollected, including over ₹630 crore imposed on the real estate major DLF in 2011; and ₹2,545 crore on 14 leading car companies in 2014.
The Amended Act marks a paradigm shift in this regard because it allows the CCI to enter settlements or commitments with potential wrongdoers, that ensure quick and timely market correction through a process of discussion. This allows the CCI to collect penalties and swiftly correct market conditions without protracted litigation.
The mechanism is particularly relevant in digital markets, where timely intervention and correction are critical. It will also permit companies to reduce business uncertainty and litigation costs, particularly since the CCI is now also empowered to impose staggering monetary penalties on companies up to 10 per cent of their global income across all businesses. Put simply: settlements and commitments are the proverbial win-win solution for the regulators, the regulated and the market.
However, despite its rapid passage in both Houses of Parliament and the prompt receipt of Presidential assent, many provisions of the Amendment Act — including most notably the provisions relating to settlements and commitments (S&C ) — are yet to be notified and remain unenforced. This hiatus between enactment and enforcement has resulted in some disquiet.
On the one hand, companies have been assured of a more “user-friendly” law which allows them to avoid massive penalties if they were to offer meaningful solutions through the settlement and commitments process. On the other hand, they cannot avail of the benefits that the S&C provisions provide, until they are enforced. The CCI is equally hamstrung; it will reportedly soon receive several investigation reports from its Director-General, that will require lengthy consideration and adjudication. Without functional S&C provisions, the CCI will be left without the requisite tools that would have otherwise enabled it to arrive at a quick solution through settlements and commitments.
Hopefully, the Government will notify the S&C provisions as soon as requisite regulations are framed. However, the time taken to do so might make both options unavailable to companies who are currently being investigated. This is because the Act requires parties to offer commitments any time before receiving the Director-General’s investigation report; and offer settlements any time before the CCI passes a final order in a case. Once either of these milestones are passed, companies will lose their right to make such offers, and the CCI will no longer be able to accept them.
There is a pressing need to allow companies that are being investigated to preserve their ability to offer a commitment or a settlement, should they choose to do so, and to allow the CCI to accept such offers. Parliament has, in its wisdom, clearly decided to extend this benefit and its intent cannot be subverted on account of administrative processes alone.
One way in which this could be achieved is by introducing a limited, transitory mechanism in the S&C regulations which will allow companies to make bona fide applications to the Commission, without prejudicing their rights or their confidentiality. This transitory mechanism would apply retrospectively only to applications received between the enactment of the Amendment Act and the enforcement of its S&C provisions. The CCI would be required to retrospectively examine all such applications received in accordance with the S&C regulations, once framed.
While the Amended Act does not specifically allow for the retrospective application of the S&C provisions, the Supreme Court has invoked the doctrine of fairness to extend benefits available in a statutory provision retrospectively even if the enactment did not specifically mandate it (Vijay vs State of Maharashtra — Supreme Court, 2006). In doing so, the apex court has acknowledged that provisions of statutes usually apply prospectively, but in specific instances where such statutory provision confers a benefit, then such benefits may be made applicable retrospectively. The doctrine of fairness — which finds its roots in administrative law — requires that legislative competence, policy and intention be considered when deciding whether a statutory provision should be retrospectively applied.
Introducing a transitory, limited-time process for accepting settlements and commitments through the S&C regulations will certainly meet the apex court’s tests for retrospective application. First, Parliament clearly intended to make available a settlements and commitments regime, as is evident from the new provisions of Sections 48A and 48B of the Amendment Act. Further, the legislative policy and purport behind the introduction of the S&C provisions have been emphasised — both in the 2019 Report of the Competition Law Review Committee and then reiterated in the 2022 Report of the Standing Committee. And finally, the legislative competence of Parliament to introduce the S&C provisions is without doubt.
The CCI is tasked with applying the provisions of the Amended Act with fairness and in line with the intent of Parliament. It is imperative that it keeps in mind the government’s objectives of enhancing the ease of doing business and providing for swift market correction. The S&C regulation must be quickly framed and enforced; and in the interim, companies should not be denied its benefits.
Singh is former legal advisor and Secretary to the Competition Commission of India, and Gandhi is a New-Delhi-based competition lawyer