Cartels - Enforcement, Appeals, & Damages actions

It was featured by Global Legal Insights as India chapter in their publication on Cartels - Enforcement, Appeals & Damages.

The Competition Act of 2002 (“Act”), brought into force on 20 May 2009, is aimed at preventing anti-competitive practices, promoting and sustaining market competition, protecting the interests of consumers, and ensuring freedom of trade carried on by market participants in India.

It is also the primary legislation regulating cartels in India.

The Competition Commission of India (“CCI”) is the statutory regulator, established under the Act, and entrusted with the responsibility of curbing anti-competitive practices in India.

Apart from several other rules and regulations, the CCI (General) Regulations, 2009 (“CCI General Regulations”) detail the procedures laid down by the CCI in terms of powers conferred by Section 64 of the Act.

Under Section 19 of the Act, the CCI is empowered to initiate investigations into all anticompetitive agreements and conducts, either suo moto or upon the receipt of information or reference (by Central or state government or statutory authority), or through the leniency programme (referred to as the “Lesser Penalty” regime under the Act).

As per the Act, all anti-competitive agreements, especially cartels, are prohibited and void.

Section 2(c) of the Act defines the term “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”.

However, the proposed Competition Amendment Bill, 2020 (“Competition Bill 2020”), which is yet to enter into force, intends to widen the scope of “cartel” under Section 2 (c) to include buyer cartels as well.

This amendment to include buyer cartels has been proposed in light of the developments and lacunas in cartel enforcement.

In terms of cartel enforcement, Section of 3 of the Act not only prohibits anti-competitive agreements between horizontal players, but also attaches a presumption of an appreciable adverse effect on competition (“AAEC”) to such agreements.

This presumption of AAEC under Section 3 is to be read in line with the factors stipulated under Section 19 (3) of the Act, i.e., inter alia: creation of barriers to new entrants in the market; driving existing competitors out of the market; and foreclosure of competition by hindering entry into the market.

Upon satisfaction of the Section 19 (3) factors, the CCI may initiate an action against the parties in the manner stipulated under Section 26 of the Act and impose appropriate penalties under Section 27.

Upon arriving at a prima facie opinion against the anti-competitive conduct or practices of the parties, the CCI passes an administrative order under Section 26(1) of the Act, ordering the Director General’s office (“DG”) to conduct an investigation into such alleged practices/conduct.