Context- The Corporate Affairs Ministry (MCA) has recently notified the introduction of the ‘Leniency plus’ regime, which is recognised in jurisdictions like the UK, US, Singapore and Brazil.
What is Cartelisation?
- According to the CCI, cartelisation is a practice wherein a group of competitors (manufacturers, dealers, vendors, and so forth) form an agreement to limit competition.
- It reduces output while growing expenses, driving customers out of the market (if they do not want to pay a higher price) and unknowingly transferring wealth (in the event that they need to pay).
- A cartel protects its individuals from full marketplace exposure, which reduces costs even as harming overall economic performance and innovation.
- Cartels vs monopoly: A monopolist absolutely dominates a selected market (considering that there is no rival), whereas cartels are formed (with the goal of proscribing competition) to dominate the market.
- The Competition Act of 2002 intends to foster and preserve market competition, safeguard consumer interests, and secure market players’ freedom to trade.
- It created the CCI to eliminate practices that harm market competition.
- The Competition (Amendment) Act 2023 codifies cartel facilitators’ liabilities. The CCI can now impose fines of up to 10% of an organisation’s entire global turnover.
What is Leniency Plus?
- Leniency plus is a proactive antitrust enforcement strategy aimed at attracting leniency applications by encouraging organizations already under investigation for one cartel to report different cartels unknown to the competition regulator.
- The advantage of such disclosure might be a reduction of the penalty within the first cartel for the person sharing the records, without prejudice to the employer receiving a reduced penalty for the newly disclosed cartel.
- While the Competition (Amendment) Act 2023 gives a framework for CCI to cope with leniency or lesser penalty packages, it till currently did not understand leniency plus.
Significance of the Leniency Plus Regime
- The CCI had (in October 2023) issued draft Lesser Penalty policies.
- The draft guidelines provide leniency programs in an ongoing cartel inquiry the motivation to disclose the info of some other unrelated cartel.
- Under leniency plus, an applicant who has filed an present lesser penalty (LP) software, and who makes complete, proper and essential disclosures in recognize of the existence of a 2d cartel is eligible –
- To get hold of an extra reduction in economic penalty of up to 30% in the first cartel.
- The applicant would additionally get a reduction of penalty of up to or equal to 100% in admiration of the newly disclosed cartel.
- A leniency plus regime is anticipated to further incentivise applicants to come forward with disclosures concerning more than one cartel, thereby enabling the CCI to save time and assets on cartel investigation.
- This will give the CCI with the considered necessary tools to conserve their enforcement efforts at successfully prosecuting cartels that have a direct impact at the economy and consumer welfare.
Source: The Hindu
UPSC Mains Practice Questions:
Q.What is the Competition Commission of India (CCI)? Why was the Competition (Amendment) Act 2023 enacted? (250 words)
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