top of page
  • Writer's pictureLexology

Q&A: Competition Law Infringement Investigations in India


VIbrant competition graphic depicting Q&A session on Competition Infringement Investigations in India

Competition law infringement investigations can overwhelm the largest in business. We sat down with Rahul Goel, and Anu Monga to get their take on what really happens in a competition infringement investigation. For instance, what are the rights and obligations of a business, how to deal with competition law authorities and much more. Our session was structured in 11 questions that they answered providing a definitive guide for businesses that are wanting to learn more about competition infringement investigations.

 

Section 1: Investigations

How is an investigation into a suspected breach of competition law started?

An investigation into a suspected breach of competition law provisions can be initiated by the Competition Commission of India upon:

The receipt of information filed by any person (including enterprises or trade and consumer associations)

Upon its own initiative (suo moto)

When a matter is referred to it by the central or state governments under section 19 of the Competition Act 2002 (the Competition Act)

Subsequent to an examination of the facts and upon being satisfied on a prima facie basis that the matter requires detailed investigation, the Competition Commission of India (CCI) is required to pass an order under section 26(1) of the Competition Act directing the Office of the Director General to initiate an investigation into the suspected breaches of competition law and submit its report within a specified timeframe.


A third party or a person who is not a participant of a cartel can file information with the CCI under section 19(1)(a) of the Competition Act as an informant.


 

Section 2: Limitation Period

What are the company’s obligations towards competition law authorities during a dawn raid?

The party to the proceedings must not disturb the course of a dawn raid by the authorised competition law authorities. In that regard, a legal representative and other employees or persons hired by the enterprise are obliged to:

Enable authorised persons of the Competition Commission of India (CCI) to enter the premises (as mentioned in the warrant)

Enable authorised persons of the Competition Commission of India (CCI) to access business documentation and other requested documents, regardless of the manner in which these documents are kept

Enable authorised persons of the Competition Commission of India (CCI to access computers and other electronic devices found on the business premises of undertakings, which implies the provision of passwords to access computers, servers, etc

Provide answers to authorised persons to inquiries in relation to the premises, belongings and documents relating to the subject matter of the inspection

Actively cooperate with officials of the Competition Commission of India (CCI) I in other manners

Cooperate fully and actively in all other manners with authorised persons of the Competition Commission of India with the dawn raid investigation

What rights does the company have during a dawn raid organised by competition law authorities?

An indicative list of rights of a company during a dawn raid are listed below:

Company's Right

Description

Legal professional privilege

The communications and correspondence between the client and the attorney or advocate is privileged under sections 126 and 129 of the Evidence Act 1872 and, accordingly, they need not be shared with the authorised persons of the Competition Commission of India (CCI)

Privilege against self-incrimination and the right to silence

The individual can choose to remain silent if in his or her opinion, answering any question posed by the authorised persons of the Competition Commission of India (CCI) may potentially result in self-incriminating. It is a fundamental right protected under article 20(3) of the Constitution of India 1950

The right to privacy

An individual can refuse to answer the question if it is irrelevant and interferes with his or her privacy. It is a fundamental right protected under article 20(3) of the Constitution of India 1950

Guard against fishing expeditions

The authorised persons of the Competition Commission of India conducting the dawn raid cannot go beyond the scope and purpose of the investigation (as stipulated in the warrant). However, Competition Commission of India officials may insist upon reviewing and taking documents or materials that may not be relevant to the investigation (being undertaken by the Directorate General). In such a scenario, it is advisable to record an objection with the Competition Commission of India team (conducting the investigation) and write to the Competition Commission of India (CCI)

Judicial review of the inspection decisions

The parties can always challenge the inspection decisions of the authorised persons of the Competition Commission of India (CCI) as well as their conduct during dawn raids (including excessive use of power) in writ jurisdiction before the High Courts

Return of Documents

Documents and objects seized by the authorities must be returned to the company within 180 days as provided under section 27(3) of the Companies Act 2013.

What are the limitation periods for investigation of competition law infringements?

Information with respect to any alleged violations of sections 3 and 4 of the Competition Act can be filed at any time. However, the informant is required to establish that the violation has been continuing or took place after 20 May 2009.


The Competition Commission of India (CCI) must investigate concentrations within one year of the concentration taking effect.


 

Section 3: Information Gathering Powers

What weight will the competition law authorities place on companies implementing or amending a competition compliance programme in settlement negotiations?

Considering that the Competition Act does not provide for settlement proceedings, the Competition Commission of India (CCI) has not yet entered into any settlement proceeding. However, considering that the Competition Commission of India (CCI) has taken competition compliance programmes as a mitigating factor when imposing penalties under section 27 of the Competition Act, it is likely that (after notification of Competition Bill) the Competition Commission of India (CCI) will take compliance programmes as a mitigating factor when entering into settlements with companies.


What powers does the competition authority have to gather information?

Under sections 36(2) and 41(2) of the Competition Act, the Competition Commission of India (CCI) and the Office of the Director General are granted powers to discharge functions under the Act. They have the same powers vested in a civil court under the Code of Civil Procedure, 1908, so may:

Summon and force the attendance of any person and examine him or her under oath

Require the discovery and production of documents

Receive evidence as an affidavit

Examine witnesses

The Competition Commission of India can also direct any person to produce any document, data or information that may be in his or her custody or possession before the Office of the Director General or its secretary.


 

Section 4: Dawn Raids

For what types of competition law infringement will the competition authority launch a dawn raid? Are there any specific procedural rules for dawn raids?

Section 41(3) of the Competition Act empowers the Office of the Director General to conduct dawn raids with respect to the matters that are under investigation (ie, behavioural matters, anticompetitive agreements and abuses of dominance). The Office of the Director General is required to obtain a warrant from the Chief Metropolitan Magistrate, Delhi before conducting a dawn raid on a company’s premises. The homes of a company’s personnel, as well as their personal smartphones, laptops and vehicles, may also be searched during a dawn raid. Dawn raids are generally conducted when there is concern that the company under investigation may destroy the evidence or not cooperate in providing evidence and data. The Supreme Court of India, referring to its order dated 15 January 2019 in CCI v JCB India Ltd and Others, held that material seized during a dawn raid can be used for the purpose of an investigation.


According to information in the public domain, the Office of the Director General has conducted six dawn raids, five of which were in matters relating to cartels or anticompetitive agreements, and one of which was with respect to abuse of dominance.


 

Section 5: Refusal to Cooperate

What are the penalties and other consequences for refusing to cooperate with the authorities during a competition law investigation?

Under section 43 of the Competition Act, the penalties for non-compliance with directions or orders of the Office of the Director General under section 41(2) range from a fine of 100,000 rupees per day of non-compliance to a maximum of 10 million rupees. Further, under section 45, any person who fails to provide information, particulars or any documents, makes a false statement or fails to furnish particular material may be punished with a maximum fine of 10 million rupees.


What are the penalties for refusing to cooperate with the authorities in a competition law investigation?

Chapter VI of the Competition Act prescribes penalties for refusing to cooperate with the authorities during an investigation. Section 43 of the Competition Act prescribes a penalty of up to 10 million rupees for non-compliance with the directions of the Competition Commission of India (CCI) and the DG given under sections 36(2), 36(4) and 41(2) respectively. Further, the failure to comply with the orders or directions issued by the Competition Commission of India (CCI) or pay fines imposed for non-compliance may result in imprisonment for a maximum term of three years or the imposition of a maximum fine of 250 million rupees, or both, as determined by the Chief Metropolitan Magistrate of Delhi.


 

Section 6: Confidentiality protection

What confidentiality protection is afforded to the company or individual, or both, involved in competition law investigations?

Section 57 of the Competition Act provides that information of any enterprise obtained by the Competition Commission of India (CCI) shall not be disclosed without the prior permission of the enterprise in writing, otherwise than in compliance with the provisions of the Competition Act or any other law that is in force. Regulation 35 of the General Regulations further narrows the scope of protection granted under section 57 of the Competition Act, clarifying that only in cases where public disclosure would:

Result in the disclosure of trade secrets

Result in the destruction or appreciable diminution of commercial value of the information

Reasonably be expected to cause serious injury would confidentiality be granted.

The General Regulations further provide a set of factors that the Competition Commission of India and the Directorate General may consider at the time of deciding a request for confidentiality, namely:

The extent to which the information is known to the public

 The extent to which the information is known to employees, suppliers, distributors and others involved in the party’s business

The measures taken by the party to guard the secrecy of the information

The ease or difficulty with which the information may be acquired or duplicated by others

The CCI can be approached contrary to any confidentiality conferred by the Directorate General

However, the confidentiality order of the Competition Commission of India (CCI) is non-appealable.


Further, while dealing with leniency applications, in terms of Regulation 6 of the Lesser Penalty Regulations, the CCI and the DG are obliged to treat the identity of the applicant and the information, documents and evidence provided by the leniency applicant as confidential. However, the Competition Commission of India (Lesser Penalty) Amendment Regulations 2017 introduced Regulation 6(A), which allows the inspection of documents filed by the leniency applicants. Hence, the leniency applicants are required to submit applications in accordance with Regulation 35 of the General Regulations.


 

Section 7: Infringement notification

Is there a duty to notify the regulator of competition law infringements?

The Competition Act does not cast a mandatory duty on any person under section 2(l) of the Competition Act to notify the CCI of any infringements of its provisions.


 

Section 8: Limitation period

What are the limitation periods for competition law infringements?

The Competition Act does not prescribe any period of limitation for investigating anticompetitive agreements under section 3 or abuse of dominance under section 4 of the Competition Act. However, the CCI’s power to investigate a combination or initiate any inquiry is restricted to one year from the date on which the combination took effect.


AnantLaw Briefings

bottom of page