India had strengthened its efforts to combat anti-competitive practices by introducing the Leniency Plus Provision in the Indian Competition Act, 2002. This was by way of an amendment to the Indian Competition Act, 2002 duly notified on April 11, 2023 -- The Competition (Amendment) Act, 2023.

Leniency provisions, laid down in Section 46 of the Competition Act, 2002, are aimed at encouraging individuals and companies involved in cartelisation to come forward and report their involvement in illegal agreements. These provisions provide incentives in the form of reduced penalties in exchange for cooperation with competition authorities. However, under these provisions individuals or entities that have already availed leniency for one cartel are encouraged to come forward with information about another undisclosed cartel. Such an approach is already being followed by the UK, the US, Singapore, and Brazil.

Key features

Multi-Cartel Disclosures: Unlike traditional leniency provisions, which primarily focus on individual cartels, the Leniency Plus Provision incentivises leniency applicants to reveal additional cartels they have knowledge of and also part of that cartel.

Immunity for Multi-Cartel Disclosures: As per the draft Lesser Penalty Regulations, 2023, this applies to a Leniency Applicant who had earlier made a full, true and vital disclosure in respect of alleged contravention of provisions of Section 3 of the Act, and makes a full, true and vital disclosure in respect to another cartel (second cartel) over alleged violation (under Section 3). This will enable the Commission to form a prima facie opinion regarding the existence of newly disclosed cartel. under sub-section (1) of section 26 of the Act. The applicant may be granted an additional reduction to the leniency applicant of monetary penalty up to or equal to 30 per cent of the penalty imposed with regard to the first cartel besides obtaining benefit of reduction in penalty of up to or equal to one 100 per cent in respect of newly disclosed cartel in terms of sub-section (1) of section 46 of the Act. for their participation in the newly revealed cartel.

This reduction in penalty is granted to encourage the reporting of anti-competitive agreements in a different market.

Enhanced Rewards: The provision rewards applicants for revealing multiple cartels, offering substantial reductions in penalties for their cooperation in cases involving the first cartel (ongoing) as well as newly disclosed cartel(s).

Confidentiality: Just like traditional leniency provisions, the Leniency Plus Provision ensures that the identity of leniency applicants and the information provided remain confidential, mitigating concerns about potential retaliation.

The advantages

Enhanced enforcement: By encouraging leniency applicants to reveal additional cartels, the CCI gains access to crucial information that can help in the detection of cartels, significantly boosting its enforcement efforts.

Enhance compliance: The Leniency Plus Provision fosters a culture of compliance among leniency applicants, enabling the uncovering of hidden cartels.

Deterrence: The provision significantly raises the stakes for cartel participants, as they are more likely to be exposed not only for one cartel but potentially for multiple anti-competitive agreements, creating a stronger deterrent effect.

Market transparency: The provision contributes to increased market transparency by exposing unknown cartels, thereby promoting fair competition enhancing consumer welfare.

The leniency provision plays a key role combatting cartels and anti-competitive practices.

The writer is Joint Director, CCI. Views are personal