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Settlement & Commitments In Indian Competition Regime: Addressing The ‘Guilt’ Conundrum

The author is Yash Arjariya, second year student at Hidayatullah National Law University.

The current Indian competition law regime provides two ways in which antitrust proceedings against any corporation may culminate. Either, the regulator may uncover enough evidence of anti-competitive practices and thus issue a cease and desist order and/ or apply suitable penalties to forestall any such conduct in future dealings of the entity; or the regulator may end the proceedings with a finding of non-infringement.

However, two issues have emerged in Indian jurisdiction with respect to the traditional approach. Firstly, the Competition Commission of India (‘CCI’) has found itself in problem while timely disposing of the cases before it. The Karnataka HC in Flipkart Pvt Ltd v. Competition Commission of India lamented that efforts to liberalise the Indian economy in order to bring it on equal footing with the best of the economic systems in this era of globalisation would be jeopardised if a time-bound schedule and, in any case, prompt resolution by the Commission is not observed. In the cases of East India Petroleum Private Limited v. South Asia LPG Company Private Limited and India Glycols Limited v. India Sugar Mills Association, the CCI took seven years and five years, respectively, to render its decisions. In the case of deferral and prolongation, the fundamental aim and intent of the Act is expected to be thwarted and the risk of considerable harm to the free market operations and consequentially, to the nation’s economy cannot be ruled out.

Secondly, the recovery of the monetary penalty imposed by CCI for anti-competitive behaviour has been dismal. According to information submitted to the Parliament by the Ministry of Corporate Affairs, entities have paid less than Rs 200 cr of the Rs 4400 cr levied as fines by CCI over the previous five years. In its annual report 2015-2016, the CCI recognised the minimal amount of penalties realised by it. Of the Rs 13,981 crore imposed by it during 2011-12 and 2015-16, it only realised Rs 95 crore by 31 March, 2016. It is significant to account for statistics brought forth by the annual report of 2018-19, which bring forth that the Commission levied fines of more than thirteen thousand crores under Section 27 of the act, out of which it had collected less than 1%.

The report of Competition Law review Committee suggested the inclusion of Settlement and Commitments clause in the Indian legislative instrument for overcoming the aforementioned issue. Subsequently, the Competition (Amendment) Bill, 2022 was introduced in Lok Sabha which encapsulated provisions for introducing settlements and commitments in Indian Antitrust regulation.

Settlement and Commitments

The Madras HC in its decision in Tamil Nadu Exhibitors Association v. Competition Commission of India, had held that CCI enjoys wide amplitude of residuary powers whose logical end can be acceptance of settlement/compromise between parties with respect to an antitrust issue.

The proposed Competition (Amendment) Bill, 2022, provides for a settlement and commitment scheme in sec 48A & 48B. Parties facing claims of anti-competitive behaviour may submit a pledge to alter their behaviour once CCI conducts an inquiry but before the Director General assigned to the Commission delivers the investigation report. In their pledge, parties commit to alter their anti-competitive in their future dealings. In contrast, an application for settlement may be filed only after the investigation report by the Director General is submitted but before CCI reaches its final ruling.

The proposed commitment and settlement scheme needs to be distinguished from the Leniency regime in Indian Competition Practice. Leniency regime as embodied in Sec 46 of the Indian Competition Act may be useful to gather evidence while settlements & commitments scheme can speed up the adoption of decisions, reduce litigation, reduce administrative expense and benefit parties through reduced fines.

Existing regulations in Indian law with respect to settlements

The Income tax Act establishes the Income Tax Settlement Commission (Settlement Commission) by the virtue of Sec 245B, regulating the relevant subject matter as per Income Tax Settlement Commission (Procedure) Rules, 1997.

Further, SEBI has been in forefront in successfully executing the settlement method of swift dispute resolution. SEBI (Settlement of Administrative and Civil Proceedings) Regulations & SEBI Settlement Regulations contemplates a system for settlement of particular breaches. The provision in the SEBI regulations is similar in legal effect to that of proposed in Competition Amendment Bill, 2022, i.e., settlement without the admission of guilt.

Retrospective correction of guilt?

In the EU, a settlement (Commission Regulation (EC) No 622/2008) decision (issued solely in Cartel antitrust violations) establishes an infringement and demands the parties to admit guilt, but a commitment (Council Regulation (EC) No 1/2003) decision (issued in mergers) does not establish an infringement and does not compel the parties to admit guilt.

The Directorate For Financial and Enterprise Affairs Competition Committee Report highlighted U.S. Federal Trade Commission’s (FTC) ability to resolve antitrust violations without necessarily proceeding through litigation and obtaining effective and timely remedies from anti competitive behaviour. The FTC resolves civil non-merger antitrust cases and mergers through commitments, while mergers are dealt with procedural tool settlements.

In the EU and USA, Non-Cartel Conduct matters are settled through commitments, without the admission of guilt. While the cartel antitrust matters which include both unilateral conduct, such as exclusive dealing and monopolization, and concerted action cases, such as unlawful agreements are settled, with the corporations admitting their guilt.

Thus, the settlement orders in advanced jurisdictions involve the admission of guilt; the logical culmination of such practice is that it allows for filing of private damages suits for claiming damages arising out of such antitrust practices adopted by the corporations. The proposed settlement framework in India contains no admission of guilt, allowing the corporation to more vigorously fight follow-on damages claims. When a firm settles without admitting wrongdoing, it may refute the claims and give a complete defence when private damages proceedings are initiated against it.

It is pertinent to also refer to the 52nd report of the Standing Committee on Finance which also flagged the need to clarify whether initiation of settlement procedure will require admission of contravention by the entity. The clarification is needed, given the fact that such an admission may have repercussions such as director disqualifications (Schedule V, Companies Act, 2013), increased scrutiny by other sectoral regulators etc.

The Opportunity Cost analysis

A person or class of persons who have suffered loss or damage due to anti-competitive practices of the entity may claim compensation under Sec 53N of the Competition Act. It is not clear whether settlement would protect the settlement applicant from compensation proceedings under Sec 53N of the act. However, it can be logically deduced that if admission of guilt is mandated while moving a settlement application, protection from Sec 53N cannot be sought.

As per sec 48B(7) of the proposed Competition (Amendment) Bill, 2022, decision made by CCI in settlement application before it cannot be appealed under sec 53B of the Competition Act. Thus, by availing the option of settlement, the entity is deprived of its right to appeal against the decision made by CCI with respect to the matter.

Hence, unless there is protection to the settlement applicant from section 53N of the Act, the settlement provision may be a non-starter and may not do enough to incentivise entities in pursuing this mode of dispute resolution, particularly because availing the settlement provision deprives the party of the right to appeal the decision under sec 53B of the act.


Indian Antitrust regulation has been facing acute problems in two major fronts; to timely pursue antitrust regulation and to effectively recover the imposed monetary penalties. The proposed inclusion of Settlements and Commitments scheme in Indian Competition Act is a boon, much on the lines of advanced and matured jurisdiction, which will provide for swift and harmonious resolution of anti-competitive practices.

The author is of the opinion that admission of guilt should not be mandated in the Indian Antitrust regulation regime. Admission of guilt will deter the incentive for entities to go for this mode of dispute resolution majorly for two reasons; first, decisions made by CCI in such application will be non-appealable. And such admittance of guilt will expand the scope of Sec 53N of the act to such settlements. Thus, admission of guilt while moving an application for settlement will exhaust the beneficial motive and effect of the proposed provisions as entities will find no benefit to move application under these provisions.

Advanced jurisdiction like EU does not necessitates admission of guilt in settlement and commitments albeit in cartel matters. In the proposed amendment bill, cartels are excluded from the scope of settlement and commitments but will be proceeded against by CCI in traditional manner of proceedings. The Competition Law review Committee in its report favoured the exclusion of cartels from the scope of this scheme. Thus, the current proposed scheme in India is similar to the antitrust regime in the EU & US, which don’t require admission of guilt in cases other than cartel cases.

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