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How CCI wants to handle cartels with kid gloves in the Covid-19 era

Is the Competition Commission of India (CCI) changing its approach in considering mitigating factors such as cooperation and admission of guilt in cartel cases, and going soft on industry in current Covid-19 times?

One would tend to think so, going by CCI Chairman Ashok Kumar Gupta’s remarks on Friday at a virtual event that the competition watchdog may in the coming days “assimilate” such factors in its decision-making process, which will encourage the parties to cease anti-competitive behaviour and bring about the much-needed market correction faster.

Many competition law experts saw this as the regulator getting industry-friendly, especially during tough market conditions in the Covid-19 era.

It maybe recalled that the CCI had in the wake of the pandemic adopted an “accommodative” approach and had in two specific cases — one involving the Railways and the other on industrial and automotive bearings — in June and July this year decided to waive penalties for anti-competitive behaviour and just issue cease and desist orders. This was done after parties concerned extended cooperation in the inquiry and investigation.

Anisha Chand, Partner, Khaitan & Co, felt the CCI Chairperson’s latest remarks may be sending a “confusing signal”, and wondered if the country is returning to the MRTP era with only cease and desist orders.

Deterrent effect

She also noted that the industry’s fear of engaging in anti-competitive practices may just fade away if the CCI takes an approach that is too soft. The stance could also dilute the deterrent effect of the competition legislation on the industry, she said.

Chand said that cooperation from the party concerned cannot and should not be a ‘get out of jail free’ card entirely, although it can be a factor to minimise the penalty implication. The CCI should take a measured approach and apply ‘cooperation’ as a factor for penalty waiver on case-to-case basis, she said.

The overall objective of competition law should not be compromised as a result of the CCI’s endeavour to be seen as an industry friendly regulator, Chand added.

Sonam Chandwani, Managing Partner at KS Legal & Associates, said the accommodative stance of the CCI is only to revive growth and mitigate the Covid-19 impact. The accommodative stance would remain as long as necessary and till the time parties cooperate in investigation and follow the cease and desist orders, she said.

The CCI has avoided imposition of penalties considering the hardship small and medium enterprises are facing due to pandemic. “In my view, it is just a matter of time when specific concessions are being provided to parties,” she added.

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