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The inclusion of the settlement and commitment regulations in the amended competition law is set to boost the credibility of 含羞草社区 antitrust commission and promote fair play in the market. But stakeholders see room for improvement in the draft rules, writes Freny Patel

The implementation of settlement and commitment provisions under 含羞草社区 revamped competition law will be a game-changer. The provisions will not only speed up the resolution of antitrust cases and reduce litigation, but also be a saving grace for the antitrust watchdog, which is looking at a backlog of more than 120 cases pending adjudication.

The first female chairperson of the Competition Commission of India (CCI), Ravneet Kaur, took office in May this year, seven months after the former antitrust chief, Ashok Kumar Gupta, left the position in October 2022.

As the Indian government had dilly-dallied on the appointment of a new chairperson, Kaur faces a sizeable backlog. During the seven-month wait, the antitrust watchdog lacked the requisite quorum of three commissioners to adjudicate matters and therefore was not fully functional.

On 23 August 2023, the CCI released the draft rules for settlement and commitment for public consultation under section 48A of the Competition (Amendment) Act, 2023.

If any parties are suspected of violating the competition law, they have the option to present their commitments within 45 days of receiving a prima facie order for investigation. They can also choose to settle with the commission once the investigation report has been submitted by the Office of the Director General, which is the CCI’s investigation arm.

The revamped competition law – four years in the making – with the inclusion of settlement and commitment among other provisions, is poised to enhance the credibility of the antitrust watchdog and promote fair competition in the Indian market.

Large global tech giants – the likes of Apple, Amazon and Google – stand to benefit the most from the settlement and commitment provisions, having addressed similar antitrust concerns in several jurisdictions overseas by offering commitments or settling with respective authorities.

Settlement and commitment regulations “will free up the CCI’s scarce resources, which are presently being expended on long-drawn investigations and defending appeals against its orders”, says Abir Roy, co-founder and practice head of competition law at Sarvada Legal in New Delhi. These provisions will address market concerns as parties put forward corrective measures, he adds.

Sonam Mathur, a New Delhi-based partner at TT&A, agrees that the settlement and commitment provisions “will offer procedural efficiency” and enable the CCI to intervene swiftly and effectively in certain cases where parties are willing to close investigations sooner.

“[The provisions] also allow companies to better manage their exposure to penalties if there is a risk identified,” says Mathur.

Further, the provisions will help the CCI ramp up its enforcement efforts as the odds of its decisions being upheld by the National Company Law Appellate Tribunal (NCLAT), and thereafter the Supreme Court of India, will improve, says Rahul Rai, a partner and co-founder of Axiom5 Law Chambers.

During a press briefing, Jyoti Jindgar Bhanot, the CCI’s economic adviser, stated that the commission’s experience in dealing with more than 1,000 antitrust cases has shown that behavioural cases require a significant amount of investigation time due to their complexities and procedural requirements.

As parties appeal to the NCLAT and the Supreme Court of India, the commission is faced with very low realisation in terms of penalties imposed.

Kanika Chaudhary Nayar, a New Delhi-based partner at DSK Legal, says the draft settlement and commitment rules aim to revolutionise 含羞草社区 competition law regime, providing companies with a “time-efficient route out of their purported contraventions, guilt-free”.

The implementation of settlement and commitment provisions will encourage voluntary compliance by the parties involved, leading to a more harmonious business environment, the legal fraternity says.

However, there are two sides to the draft rules, and several law firms and stakeholders have written to the CCI seeking modifications to some provisions lest they discourage parties from approaching the commission altogether.

Multinational companies facing similar antitrust investigations overseas, for instance, may choose not to settle in India even though a settlement is not tantamount to an admission of guilt, unlike in other jurisdictions.

Rai says, “The implications for the industry can only be positive if the implementing regulations are balanced and allow for a consultative approach to reach a settlement or an appropriate package of commitments.” The draft settlement and commitment regulations fall short of adequately balancing the competing interests of the CCI and the parties under investigation, says Rai.

A key impediment many lawyers have pointed out is the complete discretion granted to the CCI to use any information submitted by an applicant against it or any other party to the proceedings should they fail to reach an agreement on the settlement terms. And that is without necessarily allowing the applicants to be heard, says Nayar.

“The opportunity to be heard ought to be made a mandatory requirement as per the settled principles of natural justice,” she says.

Ultimately, self-incrimination will deter even the most well-meaning companies from exploring the settlement and commitment mechanism, say both Nayar and Rai.

Lack of interim relief

It is unclear whether third parties can seek interim relief once the settlement proceedings have commenced, due to a loophole in the draft regulations. The reason behind this confusion is that section 33 of the Competition Act 2002 permits temporary relief during an inquiry, but the draft settlement and commitment regulations suggest that the inquiry against an applicant will be put on hold until a final decision is reached on the settlement or commitment application.

Roy, of Sarvada Legal, suggests that the draft settlement and commitment regulations should include a clause that clarifies the power of the CCI to issue interim orders to protect the interests of the market, even if a settlement and commitment application has been filed. This is especially important for the digital market, which has a tendency to tip. Tipping is when a product gains enough users to create a monopoly for the supplier.

Settlement talks tend to differ from commitment proceedings in that market stakeholders are not involved, Roy laments. The participation of these stakeholders, through objections or comments, would offer greater insight into the adequacy of the proposed remedies, and whether they would effectively address the anticompetitive concerns raised, as well as the actual impact on the market.

Mathur agrees that while the availability of interim relief under the commitment and settlement mechanisms is not explicitly ruled out, it would be helpful if market participants are kept in the discussion on the remedies being negotiated between the parties and the CCI.

“It would be beneficial to mandatorily have market testing or consultation on all remedies, without exception,” says Mathur. In the event of an unsatisfactory resolution, affected market participants should be able to appeal commitment and settlement decisions instead of having to approach the CCI afresh, she adds. Rai, however, feels that the concern over interim relief is misplaced. “Interim relief is usually granted in the early stage of an inquiry, and usually contemporaneous with, or in quick succession of, the CCI’s decision initiating an investigation,” he points out, adding there is little indication then on whether a party would opt to settle.

Nayar says that the time-bound processes of commitment and settlement – which must be completed within maximum periods of 90 days and 120 days, respectively – will not be effectively achieved if the discussions between the parties and the CCI go on indefinitely in a loop.

“The requirement of an appeal against the final order ought to have been considered and proposed by the commission … The only plausible reason for circumventing the same could be to cater to the fundamental issue of reducing the number of litigations and targeting speedy justice,” explains Nayar.