The Competition Commission of India has issued draft regulations for the settlement and commitment scheme under the new Competition Act. This move is expected to benefit large technology companies currently undergoing investigations, as they are now provided with the option to make payments to expedite the resolution of anti-competitive charges. The issuance of the draft regulations comes at a time when several prominent technology firms such as Google, Apple, and Facebook are facing probes by the competition regulator for alleged abuse of their dominant position and violations of fair-trade rules.
Last year, the search engine behemoth Google was fined Rs 1,337 crore by the CCI for exploiting its dominant position within the Android ecosystem. This fine is presently being contested by Google in the Supreme Court.
Accelerated settlement under Competition Act
The provisions of the scheme were incorporated into the Competition Act through amendments this year, with the aim of facilitating swifter market corrections. Two options have been introduced: commitment and settlement. The commitment mechanism enables accused enterprises to propose commitments before the CCI. Correspondingly, the settlement mechanism allows such enterprises to seek settlement with the regulator.
A company can now opt for settlement after the investigation report has been submitted by the Director General of CCI. This entails the company paying a settlement amount which might extend up to the maximum penalty amount as stipulated in the Act.
The option to propose a commitment scheme is available to a company only for 45 days following the issuance of a prima facie investigation order by the CCI. This entails no payment other than the application fee. In both scenarios, the inquiry against the company will be suspended until the CCI reaches a final decision.
Legal firms assert that both settlements and commitments are crucial antitrust tools for expediting investigation and adjudication timelines. They also hold potential for enhancing the business environment in India by streamlining resource-intensive investigation procedures for both regulators and the regulated parties.
The draft rules also specify that companies are not required to admit guilt when opting for either the settlement or commitment option. However, they are obligated to provide a comprehensive and accurate disclosure of facts pertaining to the alleged violations of the Act in their applications. In the case of settlements, they must also share the findings of the Director General. The information furnished by applicants can be utilized by the CCI against them or other parties involved in the inquiry who are not part of the proceedings.
The CCI retains the authority to accept or reject these proposals within a specified timeframe, while seeking clarifications from the applicants if necessary. Furthermore, the CCI has the prerogative to consider the level of cooperation exhibited, the nature of disclosure made by the settlement applicant and proposal, and may even offer a settlement discount of up to 15%, in line with the draft regulations. Currently, the settlement and commitment scheme is applicable solely to cases related to the abuse of dominant position, excluding cases involving cartels.
Before finalising the draft, the antitrust watchdog is soliciting input from stakeholders on these draft regulations. The comment period commences on August 24 and concludes on September 13, as communicated by the regulator. Legal experts suggest that the government should enhance the draft by establishing clear guidelines for the settlement amount, effectively balancing considerations of guilt with concessions.
They also recommend that the government provide unambiguous instructions for potential applicants, enabling them to assess the costs and benefits of entering into a settlement. For instance, the European Commission’s settlement mechanism, applicable only to cartels, permits a 10% reduction in fines for the applicant. Similarly, the Competition and Market Authority’s settlement mechanism allows for up to a 20% reduction in fines in case of an admission of guilt.
More mature jurisdictions such as the European Union and the United Kingdom have been testing effective antitrust enforcement tools, including the settlement and commitment scheme. It is expected that the same approach will enable the Competition Commission of India to allocate its resources more judiciously, avoiding protracted investigations and lengthy appeals.