The government has recently notified the provisions relating to settlement and commitment under the competition law, which will enable faster resolution of cases involving anti-competitive practices and abuse of dominant position.
What are settlement and commitment provisions?
Settlement provisions allow parties involved in competition law violations of vertical anti-competitive agreements [Section 3 (4)] and also abuse of dominance (Section 4) by a dominant enterprise to voluntarily propose payment of such amount or on such other terms and manner of implementation of settlement and monitoring as may be specified by regulations.
Commitment provisions allow parties to offer commitments to eliminate the concerns raised by the Competition Commission of India (CCI) regarding any alleged contravention of Section 3 or Section 4 of the Act. The CCI may accept such commitments and close the inquiry without imposing any penalty or finding any contravention.
Why are these provisions important?
These provisions are expected to enhance CCI’s regulatory process, including swifter market corrections, especially in fast-changing digital markets. They will also reduce litigation and provide certainty and flexibility to the parties involved.
According to Vaibhav Choukse, Partner and Head of Competition Law at JSA Advocates and Solicitors, “These provisions will enable parties to resolve cases at an early stage without going through a long-drawn investigation and adjudication process. They will also allow CCI to focus its resources on more complex and serious cases.”
How will these provisions work?
The CCI has also notified the regulations pertaining to these provisions, which lay out the procedure to be followed during settlement and commitment proceedings. The regulations inter alia provide for the following:
- Form and contents of the application for settlement along with fee payable;
- Circumstances in which the settlement applications can be rejected by CCI;
- Period during which settlements may be offered;
- Manner in which CCI will invite objections and suggestions to the settlement terms;
- Nature and effect of the settlement order;
- Manner of determining Settlement Amount;
- Factors to be considered by CCI in assessing the settlement terms;
- Implementation and monitoring of the terms of the settlement order;
- Revocation of the settlement order and the consequences thereof, etc.
The regulations also require the applicants to disclose details of other competition authorities which have examined or are currently examining the alleged contraventions. This requirement aims to provide CCI with a comprehensive understanding of alleged violations, enabling a broader perspective on the nature and extent of the issues.
What are the challenges and opportunities?
While these provisions are welcome steps in improving the competition law regime in India, they also pose some challenges and opportunities for both CCI and the parties.
Some of the challenges include:
- Determining the appropriate settlement amount or commitment terms that reflect the gravity and duration of the violation as well as deter future violations;
- Ensuring transparency and consistency in accepting or rejecting settlement or commitment applications;
- Balancing the interests of consumers, competitors, and other stakeholders while approving settlement or commitment terms;
- Monitoring and enforcing compliance with the settlement or commitment terms effectively; and
- Dealing with situations where settlement or commitment orders are revoked due to non-compliance or change in circumstances.
Some of the opportunities include:
- Resolving cases expeditiously and amicably without admitting guilt or liability;
- Avoiding lengthy and costly litigation and penalties;
- Offering innovative solutions to address competition concerns in dynamic markets;
- Learning from best practices and experiences of other jurisdictions that have similar provisions; and
- Enhancing cooperation and coordination with other competition authorities on cross-border cases.
Conclusion
The introduction of settlement and commitment provisions in the competition law is a milestone in Indian competition law. It will provide a new avenue for resolving cases involving anti-competitive practices and abuse of dominant position in a timely and efficient manner. It will also benefit both CCI and the parties by saving time, resources, and litigation costs. However, these provisions also require careful implementation and application by CCI to ensure that they serve their intended purpose of promoting fair competition in the market.
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