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Cartels - Enforcement, Appeals, & Damages actions 2021

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AnantLaw provided key trends, developments, insights on Cartels - Enforcement, Appeals, and Damages actions that were published as India Chapter by Global Legal Insights in their publication. You can download the full chapter here.


The key statute in relation to cartel regulation and enforcement in India is the Indian Competition Act, 2000 (“Act”); the provisions whereof were enforced on 20 May 2009. Section 2(c) of the Act defines a ‘cartel’ to include “an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”.

What is a cartel?

The proposed revision to the definition of cartels shall include a reference to buyer’s cartels. As per the proposed Competition Amendment Bill, 2020 (“Competition Bill 2020”), a cartel has been defined to include “an association of producers, buyers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit or control or attempt to limit or control the production, distribution, sale or price of, or, trade in goods or provision of services”.

Under Section 3 of the Act, anti-competitive agreements including cartels are prohibited and are also presumed to have an appreciable adverse effect on competition (“AAEC”). The Act further provides for investigation, inquiry and penalties for violations. Under Section 19 of the Act, the Competition Commission of India (“CCI”) is authorised to initiate investigation upon receiving information of anti-competitive conduct of parties. Sub-section (3) of Section 19 provides certain parameters that the CCI shall consider while conducting an enquiry into the anti-competitive behaviour of entities. Section 26 of the Act lays down the procedure for such investigation and inquiry; while Section 27 provides remedies and monetary penalties for violations. In 2017, the Supreme Court of India held that the imposition of penalty on (especially) multi-product companies must be on the basis of ‘relevant turnover’ or the ‘turnover’ for which the enterprise/company was investigated and found to be in violation of the Act. As per the Supreme Court imposition of penalty beyond the ‘relevant turnover’ would be in violation of ‘principle of proportionality’ under the Constitution of India. The CCI initiates investigations into cartel activities upon receipt of information from parties or on a suo-moto basis (based on news reports, public discussions, etc.) or through the leniency programme (referred as Lesser Penalty Regime under the Act).

What is the Director General's (DG) office?

The Director General’s office (“DG”) is the investigative wing of the CCI. The DG works in accordance with the direction of the CCI and commences investigation upon receipt of (prima facie) order under Section 26(1) of the Act. The DG has not been vested with powers to undertake investigations on a suo moto basis. After completion of the investigation process, the DG submits its investigation report to the CCI along with all the material, evidence and documents as may be collected during the investigation process. The said investigation report of the DG may be submitted as ‘Confidential’ and ‘Public Version’ as per the requirements of each case. There are several (writ) petitions pending before various High Courts in India (as well as the Supreme Court of India), challenging the arbitrariness in the orders issued by the CCI and/or the DG. The issues in writ petitions vary from the CCI’s obligations while passing the prima facie order under Section 26(1) of the Act, to the scope of discretion for grant of confidentiality (and the necessary balance with rights of defence), to what constitutes as ‘right to lawyer’ during proceedings under the Act, and many others.

Upon receipt of the DG investigation report, the CCI may direct circulation of the same to all the concerned parties for comments/responses and thereafter conducts a detailed hearing into the matter (wherein all the parties are allowed to present their arguments/submissions). The Act permits the right to cross-examine witnesses, both before the DG as well as the CCI; however, despite the Act permitting this, entities invoking the said provision have had to fight for it before courts in India.

After final arguments/submissions by all parties in a case, the CCI has the power (under Section 27 of the Act) to impose fines and/or issue directions if companies are found to be cartelising, i.e. in violation of Section 3 of the Act. However, if the CCI believes that the DG investigation report requires further investigation, the DG can then be directed to undertake further investigation and submit a supplementary investigation report.

It may be noted that not all information(s) filed under Section 19 of the Act are sent for investigation and further not all investigations always result in imposition of penalty (or other orders, holding parties under investigation to be in violation of the Act). Accordingly, if the CCI is not satisfied with the information filed under the Act, with respect to cartelisation by certain companies, the CCI may either seek additional evidence from the Informant or pass an order closing the case, under Section 26(2) of the Act.

In terms of Section 53B of the Act, only the final orders of the CCI can be appealed before the National Company Law Appellate Tribunal (“NCLAT”). However, in terms of Section 53T of the Act, any order passed by NCLAT can be appealed before the Supreme Court of India. The appeal can be filed within 60 days from the date of receipt of the order.

What are Leniency Regulations?

The Competition Commission of India (Lesser Penalty) Regulations, 2009 (“Leniency Regulations”) were enacted to provide a regime for implementing Section 46 of the Act. Through the Leniency Regulations, those parties which volunteer to provide vital information regarding the existence of cartels are incentivised with reduced penalties, provided the disclosure is ‘full, true and vital’ and the ‘leniency applicant’ cooperates with the CCI until the completion of proceedings before the CCI.

The Government of India has proposed significant amendments to the present Act and the proposed Competition Bill 2020 is likely to be tabled before the Parliament of India in February 2021. The Competition Bill 2020 will come into force after the same is passed by both the houses of Parliament and approved by the President of India. It will then get notified by the Government of India in the Gazette and the same shall specify the date of notification/ enforcement of the amendment to the Act.

Full chapter authored by AnantLaw can be downloaded from the link below.

2021 India Chapter - GLI - Cartels - Enforcement, Appeals, & Damages actions
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