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Immunity and leniency
Immunity and leniency programmes
Is an immunity and leniency programme available for companies? If so, how does it operate?
Yes, an immunity and leniency programme is available to companies under Section 46 of the Competition Act, read with the Competition Commission of India (Lesser Penalty) Regulations 2009.
An applicant may be granted the benefit of a reduction in penalty of up to 100% if it is the first to make a vital disclosure by submitting evidence of cartel, enabling the Competition Commission to form a prima facie opinion regarding the existence of the cartel, and the commission did not have sufficient evidence to form such an opinion at the time of application. Further, the commission may grant such benefit to an applicant which makes a vital disclosure at the investigation stage by submitting evidence which establishes that the cartel and the commission and director general had insufficient evidence to establish such a contravention at the time of the application.
The applicants subsequent to the first applicant may also be granted the benefit of a reduction in penalty on making a disclosure by submitting evidence which, in the commission’s opinion, may provide significant added value to evidence already in the commission’s or director general’s possession. The applicant marked second in the priority status may be granted a penalty reduction of up to 50%. The applicant marked as third in the priority status may be granted a reduction of up to 30%.
The commission will not consider the next applicant unless the evidence submitted by the first has been considered.
The commission has discretion in regard to the reduction in penalty. Such discretion is exercised with due regard to:
- the stage at which the applicant has come forward with the disclosure;
- the evidence already in the commission’s possession;
- the quality of information provided; and
- the full facts and circumstances of the case.
Can the enforcement authority decline or withdraw leniency? If so, on what basis?
The Competition Commission may decline or withdraw leniency if the leniency applicant breaches any of the conditions stipulated for grant of leniency. Leniency applicants are required to:
- cease further participation in the cartel from the time of the disclosure, unless otherwise directed by the commission;
- provide vital disclosure in respect of the violation;
- provide all relevant information, documents and evidence as may be required by the commission;
- cooperate genuinely, fully, continuously and expeditiously throughout the investigation and other proceedings before the commission; and
- not conceal or destroy any relevant document that may contribute to the establishment of the cartel.
Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?
Cooperators that do not qualify for immunity may still benefit, as such conduct is likely to be considered as a mitigating factor by the Competition Commission while determining the penalty.
What benefits (if any) are available for employees and former employees of a company that seeks leniency?
Even though an applicant means an ‘enterprise’, as defined under the Competition Commission of India (Lesser Penalty) Regulations 2009, the commission has extended leniency benefits similar to those of a company to its employees.
Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?
No immunity or leniency programme is specifically prescribed for individuals. However, the Competition Commission has granted leniency benefits to individuals on the same terms and conditions as applicable to an enterprise.
Have there been any notable recent cases in which a leniency application was the subject of adjudication
To date, there has been only one final order of the Competition Commission in which a leniency application has been evaluated. This was in a case of cartelisation in respect of tenders floated by Indian Railways for the supply of brushless DC fans and other electrical items, wherein the Competition Commission suo moto directed the director general to investigate a prima facie case of bid rigging. After the director general issued notice to the parties, one of the manufacturers approached the commission with an application for leniency. The information furnished by it – including details of calls, text messages and modus operandi adopted by the members of the cartel to rig the bid – played an important role in determining how the cartel operated.
The leniency applicant received a 75% reduction of the penalty imposed on it by the commission. Further, the commission also accorded the same penalty reduction to the company director. The commission further opined that had the manufacturer approached the commission before the commencement of the investigation, it could have enjoyed an even greater reduction in penalty.
Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?
What is the procedure for a leniency application?
An enterprise may make an application containing all material information as specified in the Competition Commission of India (Lesser Penalty) Regulations 2009. Alternatively, it may contact the designated authority of the commission, orally or via email or fax, to furnish the information and evidence relating to the existence of a cartel. Those who contact the designated authority orally or by email or fax are granted 15 days from the time of contact to furnish material information as specified in the schedule.
What is the typical timeframe for consideration of a leniency application?
Within three days of receipt of a leniency application or establishment of contact for furnishing the information and evidence relating to the establishment of a cartel, the designated authority must submit the case to the Competition Commission for its consideration. The commission then gives a priority status to the applicant.
An applicant that has contacted the designated authority orally or through email or fax is directed to submit a written application containing all the material information within 15 days of the date of first contact. Failure to do so may lead to forfeiture of the claim for priority status and the reduced penalty.
The grant of immunity or reduced penalty is finally considered when the commission passes its final order in the cartel case.
What information and evidence is required?
Information relating to the existence of a cartel that is true, complete and vital must be furnished by a leniency applicant. An application for a reduced penalty must include the following:
- name and address of the applicant, as well as of all other enterprises in the cartel;
- a detailed description of the alleged cartel arrangement, including its aims and objectives and the details of activities and functions carried out for securing such aims and objectives;
- the goods or services involved;
- the geographic market covered;
- the commencement and duration of the cartel;
- the estimated volume of business affected by the cartel;
- the details of all individuals, including their position, office and residence locations, who are or have been associated with the cartel, including those involved on behalf of the applicant;
- a descriptive list of evidence regarding the nature and content of the evidence; and
- any other material information.
In addition to the above, the leniency applicant may also be required to provide other information, documents or evidence as may be required by the director general or the Competition Commission.
What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?
Unless waived by the leniency applicant or required by law, no information or evidence can be disclosed to the subjects of the investigation.
What level of cooperation is required from applicants?
Applicants are required to cooperate genuinely, fully, continuously and expeditiously until the Competition Commission closes the case.
What confidentiality protection is offered to applicants?
The identity of a leniency applicant and the information furnished by it are treated as confidential, unless disclosure is required by law or has been waived or publicly disclosed by the applicant.
Can the company apply for a marker? If so, under which conditions?
A company can apply for a marker provided that it has been a member of the cartel and is in a position to furnish all material information and evidence relating to the cartel’s existence, as specified in the Competition Commission of India (Lesser Penalty) Regulations 2009.
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