CCI Rolls Out Enhanced Leniency Plus Initiative to Crack Down on Corporate Collusion

CCI Rolls Out Enhanced Leniency Plus Initiative to Crack Down on Corporate Collusion

Following the lead of countries like the UK, the US, and Singapore, the Competition Commission of India (CCI) has introduced the "leniency plus" regime. This new system aims to combat cartels by incentivising companies under investigation to reveal information about other unknown cartels in exchange for reduced penalties.

Under the leniency plus programme, a company already facing scrutiny for participating in a cartel can apply for additional leniency by providing the CCI with full details about another, unknown cartel. If the information is deemed credible and leads to a successful investigation, the initial company receives even greater penalty reductions beyond the standard benefits offered by the existing leniency programme.

Experts in the field believe this programme could significantly increase the number of cartels exposed, similar to its success in the US. The CCI also expects the leniency-plus regime to bolster its ability to crack down on anti-competitive practices, ultimately creating a more competitive and fair business environment.

The leniency plus regime was introduced following the Companies Amendment Act, 2023, and incorporates feedback from stakeholders and international best practices. Notably, the calculation of penalties for anti-competitive behaviour will exclude indirect taxes, trade discounts, and intra-group sales. This move aligns with the government's earlier amendment aiming to enhance deterrence by imposing penalties based on the global turnover or income of entities found guilty of such behaviour.

As per the draft regulations, penalties may reach 10 per cent of the average sales or income over the three previous years for entities engaged in anti-competitive agreements or abusing dominant positions.

The calculation of the penalty would rely on global turnover or income, following the competition panel’s regulations. Importantly, the proposed regulations stipulate that turnover or income should exclude indirect taxes, trade discounts and intra-group sales.

If a business is obligated to compile consolidated financial statements according to section 129 of the Companies Act, 2013, or any other applicable legislation, its turnover or income would be sourced from these audited consolidated financial statements, as outlined in the CCI guidelines.

In the absence of audited financial statements, turnover will be ascertained based on the figure certified by the statutory auditor, backed by an affidavit from an authorised signatory of the company. If there is no statutory auditor appointed, a chartered accountant will certify the turnover, also supported by an affidavit from an authorised signatory.