CCI Notifies Commitment And Settlement Regulations

The Competition Commission of India has notified the Commitment and Settlement regulations.

The Competition (Amendment) Act 2023 had substantially altered the 2002 version of the law. As a result, certain provisions were supposed to be implemented in a deferred manned after all the stakeholder consultations.

Draft provisions governing settlements and commitments were released as last year, and now the competition watchdog has released in the final version of these regulations that come into force from March 6.

As a part of the 2023 amendments to the act, a provision for filing a commitment application was introduced so that any entity against whom an investigation for anti-competitive conduct has been initiated can offer commitments to address the competition concerns.

Under the regulations, any entity that has been accused of anti-competitive behaviour and is the subject of an investigation can submit an application to the CCI containing information about their commitments and how they will deal with the alleged violations and competition concerns.

The application must also include details of the nature, gravity and impact of the alleged contraventions, and the duration of the enterprise's involvement in the alleged contraventions.

These regulations will not cover cartels and will only be available for anti-competitive vertical agreements and abuse of dominance cases.

The regulations envisage the submission of an application, the CCI's consideration of the application, and the subsequent communication of whether or not the CCI is satisfied. Thereafter, the applicant must file a revised application, which may or may not be accepted.

While considering the commitments offered, the regulator is required to provide an opportunity to all the stakeholders such as the Director-General, the party concerned or any other party to submit their objections or comments within 21 days after the submission of the application.

The order passed by the commission with respect to the commitments offered will be final and binding upon the applicant.

It must be noted that the commission also has the power to revoke its commitment order if it finds out that the applicant has failed to comply with its directions or has not disclosed the facts truly and fully.

Finally, once the commission revokes or withdraws an order, the regulator will be permitted to use the information provided by a commitment applicant against it.

A provision that allows the information provided by a commitment applicant to be used against it will become a deterrent for parties to come forward and report a contravention and defeat the very purpose of this mechanism, Ela Bali, partner at JSA Advocates & Solicitors had told NDTV Profit at the time when the draft regulations were released last year.

However, Avimukt Dar, partner at IndusLaw had that added if a party is disclosing something that is damaging to the market, then the CCI should have the right to use it against it in order to discharge its duty.

A commitment application must be filed within 45 days of the CCI launching an investigation into the matter. This deadline, however, can be extended up to an additional 30 days if sufficient cause for delay can be shown.

This would exclude all the cases that are currently under investigation but for which the DG report has not yet been finalised within the scope of the regulations. The CCI should consider a sunset mechanism to allow parties currently under investigation to explore the benefits of the regime, said Deeksha Manchanda, partner at Chandiok and Mahajan had said.

It must be noted that even the final version of the guidelines don't have a sunset mechanism.

Various multinational companies have used settlement terms in other jurisdictions to mitigate antitrust and competition law concerns. In India, such an option was not available under prior to the 2023 amendment.

Under the notified regulations, a party found in contravention of the Competition Act by the director general of CCI's investigative arm, can file a settlement application. The CCI will consider the application if it finds that the proposed terms of the settlement are in the public interest and address the alleged contraventions.

The settlement application must include details of the proposal for settlement as to how the same will address the alleged contraventions, competition concerns, and the manner of implementation and monitoring thereof.

Similar to the commitment regulations, these regulations, too, will not cover cartels.

A settlement application must be filed within 45 days of the DG's report. This timeline can be extended by another 30 days if sufficient cause for delay can be shown.

Once the application is accepted by the regulator, the applicant will have to pay the settlement amount within 15 days of its acceptance.

While the settlement amount will vary from case to case, the regulations say that the regulator may impose a maximum penalty that could have been imposed if the case had gone through a full investigation.

The government has incentivised these regulations by allowing the CCI to apply a discount of up to 15% on the determined settlement amount, making it a viable choice for applicants.

A successful settlement will lead to a quicker resolution of cases, a faster market correction, and the preservation of the CCI’s time and resources spent in finalising and defending a contravention order in appeal, Aman Singh Sethi, partner at Shardul Amarchand Mangaldas had opined last year when the draft regulations were released.

The order passed by the commission with respect to the offered settlements will be final and binding upon the applicant.

A settlement can also be revoked by the regulator if it finds the applicant in non-compliance or if it finds out that the facts were not fully disclosed before it. Similar to the revocation powers conferred on the regulator under commitment regulations, the commission will be use the information provided by the applicant against it for the purposes of investigation.

Lastly, the regulations prescribe that any settlement order passed by the commission would be non appealable before an appellate court.

The settlement regulations, along with making the commission's decision under Section 48A non-appealable, are set to reduce protracted litigation battles, Manmeet Kaur, partner at Karanjawala & Co. had said.