ADVOCACY SERIES 8

Competition Act, 2002

Leniency
Programme

Fair Competition
for Greater Good

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COMPETITION COMMISSION OF INDIA
DISCLAIMER

This quick guide is published as part of the Competition Advocacy

and Awareness Programme of the Competition Commission of India
(the Commission). Its contents should, in no way, be treated as official
views of the Commission. Readers are advised to carefully study the
Competition Act, 2002, as amended by the Competition (Amendment)
Act, 2007 and the Competition (Amendment) Act, 2009, and seek legal
advice, wherever necessary.
 Introduction

This booklet contains information about the “Leniency Programme”

for detecting Cartel1 cases. This programme is designed to support
effective enforcement of the Competition Act, 2002 (as amended),
[the Act]. A transparent and predictable leniency programme has
been proven to be an effective tool to detect, investigate and combat
cartel cases worldwide.

The Competition Commission of India (CCI)

Competition Commission of India has been set up under an Act of

Parliament with the mandate:

a to prevent practices having adverse effect on competition,

a to promote and sustain competition in market,
a to protect the interests of consumers, and
a to ensure freedom of trade carried on by other participants
in markets, in India, and for matters connected therewith
or incidental thereto.

1 For details on Cartels, please see Appendix I.

4 COMPETITION ACT 2002 - LENIENCY PROGRAMME

Competition Act 2002

With a view to ensure that there is no adverse effect on competition

in India, the Act prohibits:

a any agreement which causes, or is likely to cause,

appreciable adverse effect on competition in markets in
India,
a abuse of dominant position by enterprises

The Act also regulates entering into combinations (consisting of

mergers, amalgamations and acquisitions).

Cartels: Penalty Provisions under the Act

Cartel formation is a pernicious offence under the Act. The

Commission is empowered to inquire into any cartel, and to impose
upon each person or enterprise included in that cartel, a penalty of
up to 3 times of its profit for each year of the continuance of such
agreement or 10% of its turnover for each year of continuance of
such agreement, whichever is higher.

In addition, the Commission has the power to pass inter-alia any

or all of the following orders (section 27):

a direct the parties to a cartel agreement to discontinue and

not to re-enter such agreement;
a direct the enterprises concerned to modify the agreement.
a direct the enterprises concerned to abide by such other
orders as the Commission may pass and comply with the
directions, including payment of costs, if any; and
a pass such other order or issue such directions as it may
deem fit.

Rationale of Leniency Programme

a It is an incentive to those cartel members who choose to

share information and cooperate with the Commission.

COMPETITION ACT 2002 - LENIENCY PROGRAMME 5

 Leniency Programme

What is Leniency Programme?

a Leniency programme is a type of whistle-blower protection,

i.e. an official system of offering lenient treatment to a cartel
member who reports to the Commission about the cartel.
a Competition authorities have framed various leniency
programmes to encourage and incentivize various actors
connected with the commission of such competition
infringements to come forward and disclose such anti-
competitive agreements and assist the competition
authorities in lieu of immunity or lenient treatment.
a Leniency programme is a protection to those who come
forward and submit information honestly, who would
otherwise have to face stringent action by the Commission
if existence of a cartel is detected by the Commission on
its own.

Leniency Provisions under the Act

Section 46 of the Act provides for such leniency provisions which

states:

“The Commission may, if it is satisfied that any producer, seller,

distributor, trader or service provider included in any cartel, which is
alleged to have violated section 3, has made a full and true disclosure
in respect of the alleged violations and such disclosure is vital, impose
upon such producer, seller, distributor, trader or service provider a
lesser penalty as it may deem fit, than leviable under this Act or the
rules or the regulations:

Provided that lesser penalty shall not be imposed by the Commission

in cases where the report of investigation directed under section 26
has been received before making of such disclosure.

Provided further that lesser penalty shall be imposed by the

Commission only in respect of a producer, seller, distributor, trader

6 COMPETITION ACT 2002 - LENIENCY PROGRAMME

or service provider included in the cartel, who has made the full,
true and vital disclosures under this section.

Provided also that lesser penalty shall not be imposed by the

Commission if the person making the disclosure does not continue
to cooperate with the Commission till the completion of the
proceedings before the Commission.

Provided also that the Commission may, if it is satisfied that such

producer, seller, distributor, trader or service provider included in
the cartel had in the course of proceedings,—

(a) not complied with the condition on which the lesser penalty
was imposed by the Commission; or
(b) had given false evidence; or
(c) the disclosure made is not vital,

and thereupon such producer, seller, distributor, trader or service

provider may be tried for the offence with respect to which the lesser
penalty was imposed and shall also be liable to the imposition of
penalty to which such person has been liable, had lesser penalty
not been imposed.”

Competition authorities have framed various

leniency programmes to encourage and incentivize
various actors connected with the commission of
such competition infringements to come forward
and disclose such anti-competitive agreements
and assist the competition authorities in lieu of
immunity or lenient treatment.

COMPETITION ACT 2002 - LENIENCY PROGRAMME 7

 Leniency Programme – For Whom?

Leniency programme is available for those enterprises /

individuals who disclose to the Commission their role in
a cartel and cooperate with subsequent investigations,
are rewarded by a reduction of or complete amnesty from
penalty. Leniency programs are universally accepted as
being the best way to combat cartels.

To effectuate the leniency programme, the Commission

has made Competition Commission of India (Lesser Penalty)
Regulations, 2009. The salient features of the same are given in
the succeeding Chapter.

The Regulation - Competition Commission of

India (Lesser Penalty) Regulations, 20092

To carry out the leniency provisions in the Act, section 64 empowers

the Commission to draft regulations for matters in respect of which
provisions is to be made by regulations. In pursuance of such
powers, the Competition Commission of India (Lesser Penalty)
Regulations, 2009 were brought out in August 2009. These
Regulations provide the framework in which the Commission can
give lower punishments than statutorily provided in the case of
cartel membership.

There are three main components of a leniency programme.

These are - a set of conditions to be satisfied for getting benefits
under the leniency programme, the procedure for grant of lesser
penalty, and the quantum of penalties that are waived when lenient
treatment is meted out to the cartel member who cooperates with
the Commission by submitting information on the cartel. Each of
these components is described below:

2 For details, please see Appendix II.

8 COMPETITION ACT 2002 - LENIENCY PROGRAMME

Conditions to avail Benefits of Leniency Provisions

The applicant must:

a provide the information before the receipt of the report of

investigation directed under section 26 of the Act
a cease to further participate in the cartel from the time of its
disclosure unless otherwise directed by the Commission
a provide vital disclosure in respect of violation under sub-
section (3) of section 3 of the Act
a provide all relevant information, documents and evidence
as may be required by the Commission
a co-operate genuinely, fully, continuously and expeditiously
throughout the investigation and other proceedings before
the Commission
a not conceal, destroy, manipulate or remove the relevant
documents in any manner, which may contribute to the
establishment of a cartel.
a The reduction in monetary penalty will depend upon
following situations:-

- the stage at which the applicant comes forward with

the disclosure
- the evidence already in possession of the Commission
- the quality of the information provided by the
applicant
- the entire facts and circumstances of the case

Procedure for Grant of Lesser Penalty

a The applicant can make application as per the contents

specified in the Schedule either orally, or through e-mail
or fax to the designated authority
a The Commission shall mark the priority status of the
applicant and the designated authority shall convey the
same to the applicant but mere acknowledgement shall
not entitle the applicant for grant of lesser penalty

COMPETITION ACT 2002 - LENIENCY PROGRAMME 9

 a The date and time of receipt of the application by the
Commission shall be the date and time as recorded by the
designated authority
a Unless the evidence submitted by the first applicant has
been evaluated, the next applicant shall not be considered
by the Commission.
a Lack of continuous cooperation entitles Commission to
reject the application after providing due opportunity of
hearing to that applicant.
a After rejection of the priority status of first applicant, the
subsequent applicants shall move up in order of priority
for grant of priority status by the Commission.

Quantum of Immunity under Leniency Provisions

The quantum of immunity available under leniency provisions in

comparison to penalty prescribed under clause (b) of the section
27 of the Act is as under:-

Benefit of reduction in penalty upto or equal to 100% is available to

the applicant if he is the first to make a vital disclosure enabling the
Commission to form a prima-facie opinion regarding the existence
of a cartel on the basis of evidence submitted. Further,

a Benefit of reduction in penalty upto or equal to 100% is

available even if the matter is under investigation but
without disclosures made by the applicant; the Commission
or the Director General did not have sufficient evidence to
establish such a contravention
a Benefit of reduction in penalty upto or equal to 100%
will only be considered, if at the time of the application,
no other applicant has been granted such benefit by the
Commission.
a The second or third applicant in the priority status may also
be granted benefit of reduction in penalty to the tune of 50%
and 30% of the full leviable penalty respectively on making
a disclosure by submitting evidence, which provide a fillip
to the already available evidence with the Commission

10 COMPETITION ACT 2002 - LENIENCY PROGRAMME

 or Director General for establishing the existence of the
cartel.

Confidentiality

Under the Competition Commission of India (Lesser Penalty)

Regulations, 2009, it has been specifically mentioned that the
identity of the applicant as well as information obtained from it
shall be treated as confidential and it shall not be disclosed save
under the three situations stated below:-

a when the disclosure is required by law; or

a when the applicant has agreed to such disclosure in
writing; or
a when there has been a public disclosure by the applicant.

Such an arrangement of maintaining confidentiality would

encourage submission of vital information with the Commission.

Conclusion

A transparent and predictable Leniency Program of the Commission

supports the effective and efficient enforcement of the Act.
Individuals and business organizations are more likely to come
forward, cooperate, and plead guilty (rather than litigate) when they
are aware of the relevant leniency considerations and the benefit
that they can derive by availing of the leniency programme of the
Commission.

Benefits of an effective Leniency Program are as follows:

a There is high risk of detection of cartels and the sanctions

imposed on cartel participants on detection is quite greater
than the benefits that can be availed by cartelization.

COMPETITION ACT 2002 - LENIENCY PROGRAMME 11

 a There is great deal of transparency and certainty in
leniency programme of the Commission. The applicant
coming forward with vital disclosures and following the
pre-determined conditions can assuredly avail leniency
provisions under the Act.
a The evidence that are collected through cooperation lead
to greater clarity in fixing responsibility
a The fear of adverse publicity and stigma of violator of laws
of the land and the incentives provided under the leniency
programme must induce violating enterprises to apply for
leniency.

In nutshell, availing of leniency provisions is a win-win situation

for the Commission as well as for the cartel member who agrees
to share information with the Commission.

How to Contact the Commission

Anyone wishing to obtain additional information about the Act, the

Competition Commission of India (Lesser Penalty) Regulations,
2009, or to file a information under any of these should contact the
Commission at the following:-

Website : www.cci.gov.in

Address: Competition Commission of India

The Hindustan Times House, 18-20, Kasturba Gandhi Marg
New Delhi – 110 001.
For Enquiry relating to Designated authority, under
Competition Act, and Regulations, regulation 2(f) and 5 of the
2002 Competition Commission of India
(Lesser Penalty) Regulation, 2009
Secretary Secretary
Competition Commission of India Competition Commission of India
Tel. : + 91 – 11 – 23704651 Tel. : + 91 – 11 – 23704651
Fax : + 91 – 11 – 23704652 Fax : + 91 – 11 – 23704652
Email: [email protected] Email: [email protected]

12 COMPETITION ACT 2002 - LENIENCY PROGRAMME

 APPENDIX-I

Cartel3

According to the Act

Cartel is defined in Section 2, sub-section (c) of the Act as:

“Cartel” includes 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”.

What is a “Cartel”?

a Cartels are agreements between enterprises (including

a person, a government department and association of
persons / enterprises) not to compete on price, product
(including goods and services) or customers.

a The objective of a cartel is to raise price above competitive

levels, resulting in injury to consumers and to the economy.
For the consumers, cartelization results in higher prices,
poor quality and less or no choice for goods or/and
services.

a A cartel is said to exist when two or more enterprises

enter into an explicit or implicit agreement to fix prices,
to limit production and supply, to allocate market share
or sales quotas, or to engage in collusive bidding or bid-
rigging in one or more markets. An important dimension
in the definition of a cartel is that it requires an agreement
3 For more information on Cartels, please refer to advocacy booklet titled
“Provisions Relating To Cartels” at the link given below:
» Log on to www.cci.gov.in
» Click on “Advocacy Booklets”
» Click on “Provisions Relating To Cartels”

COMPETITION ACT 2002 - LENIENCY PROGRAMME 13
 between competing enterprises not to compete or to restrict
competition.

a Cartels are universally established as being the most

pernicious form of agreement for competition regulators.
It is the most egregious violations of competition law. One
of the most important goals of Competition Policy is to root
out cartels. To deter the conspirators of cartels, stringent
provisions for imposition of strong sanctions including
criminal prosecution have been incorporated in various
jurisdiction world-over. In India, participating in a cartel
is a civil offence.

14 COMPETITION ACT 2002 - LENIENCY PROGRAMME

 APPENDIX-II

[Published In The Gazette Of India, Extraordinary, Part iii,

Section 4]

THE COMPETITION COMMISSION OF INDIA

NOTIFICATION

The Competition Commission of India (Lesser Penalty)

Regulations, 2009 (No. 4 of 2009)

New Delhi, the 13th day of August, 2009

No. L-3(4)/Reg-L.P./2009-10/CCI. – In exercise of the powers

conferred by section 64, read with section 46 and clause (b) of
section 27 of the Act (12 of 2003), the Competition Commission of
India hereby makes the following regulations, namely: -

1. Short title and commencement

(1) These regulations may be called the Competition

Commission of India (Lesser Penalty) Regulations,
2009.
(2) They shall come into force on the date of their
publication in the Official Gazette.

2. Definitions

(1) In these regulations, unless the context otherwise

requires,–

(a) “Act” means the Competition Act, 2002 (12 of 2003);

(b) “applicant” means an enterprise, as defined in clause
(h) of section 2 of the Act , who is or was a member of
a cartel and submits an application for lesser penalty
to the Commission;
(c) “cartel” means a cartel as defined in clause (c) of section
2 of the Act;

COMPETITION ACT 2002 - LENIENCY PROGRAMME 15

 (d) “Commission” means the Competition Commission of
India established under sub-section (1) of section 7
of the Act;
(e) “company” means a company as defined in clause (a)
of Explanation to sub-section (2) of section 48 of the
Act;
(f) “designated authority” means an officer of the Commission
who is authorized by the Chairperson to function as
such, for the purpose of these regulations;
(g) “Director General” means the Director General as
defined in clause (g) of section 2 of the Act;
(h) “priority status” means the position of the applicant
marked for giving the benefit of lesser penalty in the
queue of the applicants;
(i) “vital disclosure” means full and true disclosure of
information or evidence by the applicant to the
Commission, which is sufficient to enable the
Commission to form a prima-facie opinion about the
existence of a cartel or which helps to establish the
contravention of the provisions of section 3 of the
Act.

(2) Words and expressions used but not defined in these

regulations shall have the same meanings respectively as
assigned to them in the Act, rules, regulations or in the
Companies Act, 1956 (1 of 1956), as the case may be.

3. Conditions for lesser penalty

(1) An applicant, seeking the benefit of lesser penalty under

section 46 of the Act, shall –
(a) cease to have further participation in the cartel from
the time of its disclosure unless otherwise directed by
the Commission;
(b) provide vital disclosure in respect of violation under
sub-section (3) of section 3 of the Act;
(c) provide all relevant information, documents and
evidence as may be required by the Commission;

16 COMPETITION ACT 2002 - LENIENCY PROGRAMME

 (d) co-operate genuinely, fully, continuously and
expeditiously throughout the investigation and other
proceedings before the Commission; and
(e) not conceal, destroy, manipulate or remove the relevant
documents in any manner, that may contribute to the
establishment of a cartel.

(2) Where an applicant fails to comply with the conditions

mentioned in subregulation (1), the Commission shall be
free to use the information and evidence submitted by the
applicant, in accordance with the provisions of section 46
of the Act.
(3) Without prejudice to sub-regulations (1) and (2), the
Commission may subject the applicant to further restrictions
or conditions, as it may deem fit, after considering the facts
and circumstances of the case.
(4) The discretion of the Commission, in regard to reduction
in monetary penalty under these regulations, shall be
exercised having due regard to –
(a) the stage at which the applicant comes forward with
the disclosure;
(b) the evidence already in possession of the Commission;
(c) the quality of the information provided by the applicant;
and
(d) the entire facts and circumstances of the case.

4. Grant of lesser penalty

Subject to the conditions laid down in regulation 3, the applicant

may be granted benefit of lesser penalty than leviable under clause
(b) of section 27 of the Act, as the commission may decide, in the
following manner, namely;-

(a) The applicant may be granted benefit of reduction in penalty

upto or equal to one hundred percent, if the applicant is
the first to make a vital disclosure by submitting evidence
of a cartel, enabling the Commission to form a prima-facie
opinion regarding the existence of a cartel which is alleged

COMPETITION ACT 2002 - LENIENCY PROGRAMME 17

 to have violated section 3 of the Act and the Commission
did not, at the time of application, have sufficient evidence
to form such an opinion:

Provided that the Commission may also grant benefit of

reduction in penalty upto or equal to one hundred percent,
if the applicant is the first to make a vital disclosure
by submitting such evidence which establishes the
contravention of section 3 of the Act in a matter under
investigation and the Commission, or the Director General
did not, at the time of application, have sufficient evidence
to establish such a contravention:

Provided further that the application for the benefit of

reduction in penalty upto or equal to one hundred percent
will only be considered, if at the time of the application,
no other applicant has been granted such benefit by the
Commission.

(b) The applicants who are subsequent to the first applicant

may also be granted benefit of reduction in penalty on
making a disclosure by submitting evidence, which in
the opinion of the Commission, may provide significant
added value to the evidence already in possession of the
Commission or the Director General, as the case may be,
to establish the existence of the cartel, which is alleged to
have violated section 3 of the Act.

Explanation. – For the purposes of these regulations,

“added value” means the extent to which the evidence
provided enhances the ability of the Commission or the
Director General, as the case may be, to establish the
existence of a cartel, which is alleged to have violated
section 3 of the Act.

(c) The reduction in monetary penalty referred to in clause (b)

shall be in the following order-

18 COMPETITION ACT 2002 - LENIENCY PROGRAMME

 (i) the applicant marked as second in the priority status
may be granted reduction of monetary penalty upto or
equal to fifty percent of the full penalty leviable; and
(ii) the applicant(s) marked as third in the priority status
may be granted reduction of penalty upto or equal to
thirty percent of the full penalty leviable.

5. Procedure for grant of lesser penalty

(1) For the purpose of grant of lesser penalty, the applicant

or its authorized representative may make an application
containing all the material information as specified in the
Schedule, or may contact, orally or through e-mail or fax,
the designated authority for furnishing the information
and evidence relating to the existence of a cartel. The
designated authority shall, thereafter, within three working
days, put up the matter before the Commission for its
consideration.
(2) The Commission shall thereupon mark the priority status of
the applicant and the designated authority shall convey the
same to the applicant either on telephone, or through e-mail
or fax. If the information received under sub-regulation (1)
is oral or through e-mail or fax, the Commission shall direct
the applicant to submit a written application containing
all the material information as specified in the Schedule
within a period not exceeding fifteen days.
(3) The date and time of receipt of the application by the
Commission shall be the date and time as recorded by
the designated authority or as recorded on the server or
the facsimile transmission machine of the designated
authority.
(4) Where the application, along with the necessary documents,
is not received within a period of fifteen days of the first
contact or during the further period as may be extended
by the Commission, the applicant may forfeit its claim for
priority status and consequently for the benefit of grant of
lesser penalty.

COMPETITION ACT 2002 - LENIENCY PROGRAMME 19

 (5) The Commission, through its designated authority, shall
provide written acknowledgement on the receipt of the
application informing the priority status of the application
but merely on that basis, it shall not entitle the applicant
for grant of lesser penalty.
(6) Unless the evidence submitted by the first applicant has
been evaluated, the next applicant shall not be considered
by the Commission.
(7) Where the Commission is of the opinion that the applicant
or its authorized representative, seeking the benefit of
lesser penalty or priority status, has not provided full
and true disclosure of the information and evidence as
referred and described in the Schedule or as required by the
Commission, from time to time, the Commission may take
a decision after considering the facts and circumstances
of the case for rejecting the application of the applicant,
but before doing so the Commission shall provide an
opportunity of hearing to such applicant.
(8) Where the benefit of the priority status is not granted to
the first applicant, the subsequent applicants shall move
up in order of priority for grant of priority status by the
Commission and the procedure prescribed above, as in
the case of first applicant, shall apply mutatis mutandis.
(9) The decision of the Commission of granting or rejecting
the application for lesser penalty shall be communicated
to the applicant.

6. Confidentiality

Notwithstanding anything contained in the Competition

Commission of India (General) Regulations, 2009, the Commission
shall treat as confidential the identity of the applicant or the
information obtained from it and shall not disclose the identity or
the information obtained unless-

(a) the disclosure is required by law; or

(b) the applicant has agreed to such disclosure in writing; or
(c) there has been a public disclosure by the applicant.

20 COMPETITION ACT 2002 - LENIENCY PROGRAMME

7. Removal of difficulty

In the matter of interpretation or implementation of the

provisions of these regulations, if any doubt or difficulty
arises, the same shall be placed before the Commission
and the decision of the Commission thereon, shall be
binding.

THE SCHEDULE

CONTENTS OF THE APPLICATION

[See sub-regulations (1) and (2) of regulation 5]

The application for lesser penalty shall, inter-alia, include the

following, namely;-

(a) name and address of the applicant or its authorized

representative as well as of all other enterprises in the
cartel;
(b) in case the applicant is based outside India, the address
of the applicant in India for communication including the
telephone numbers and the email address, etc;
(c) 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;
(d) the goods or services involved;
(e) the geographic market covered;
(f) the commencement and duration of the cartel;
(g) the estimated volume of business affected by the alleged
cartel;
(h) the names, positions, office locations and, wherever
necessary, home addresses of all individuals who, in the
knowledge of the applicant, are or have been associated
with the alleged cartel, including those individuals which
have been involved on behalf of the applicant ;

COMPETITION ACT 2002 - LENIENCY PROGRAMME 21

 (i) the details of other Competition Authorities, forums or
courts, if any, which have been approached or are intended
to be approached in relation to the alleged cartel;
(j) a descriptive list of evidence regarding the nature and
content of evidence provided in support of the application
for lesser penalty; and
(k) any other material information as may be directed by the
Commission.

Secretary, CCI

nnn

22 COMPETITION ACT 2002 - LENIENCY PROGRAMME

Economic Division

Member
Combination Division

Anti-Trust Division

Member
Legal Division

Member
Investigation Division
Chairperson

Advocacy Division

Member
ORGANOGRAM

Capacity Building Division

Maximum 7 Members (including Chairperson)

Member

Secretariat

DG Office
Member
Regulations
notified by the Competition Commission of India

4
The Competition Commission of India (Procedure for
Engagement of Experts and Professionals) Regulations,
2009; (No. 1 of 2009)
4
The Competition Commission of India (General)
Regulations, 2009; (No. 2 of 2009)
4
The Competition Commission of India (Meeting for
Transaction of Business) Regulations, 2009;
(No. 3 of 2009)
4
The Competition Commission of India (Lesser Penalty)
Regulations, 2009; (No. 4 of 2009)
4
The Competition Commission of India (Determination of
Cost of Production) Regulations, 2009; (No. 5 of 2009)
4
The Competition Commission of India (General)
Amendment Regulations, 2009; (No. 6 of 2009)
4
The Competition Commission of India (Manner of
Recovery of Monetary Penalty) Regulations, 2011; (No. 1
of 2011)
4
The Competition Commission of India (Procedure in
regard to the Transaction of Business relating to
Combinations) Regulations, 2011

Above regulations
are available at
www.cci.gov.in
 Advocacy Booklets
by
Competition Commission of India

Above booklets are available at

www.cci.gov.in

COMPETITION COMMISSION OF INDIA

Hindustan Times House, 18-20, Kasturba Gandhi Marg,
New Delhi-110001, India
Fair Competition
Ph. +91-11-23473400 Fax +91-11-23704686
for Greater Good Website : www.cci.gov.in