IN-FOCUS
LESSER PENALTY PROVISIONS UNDER COMPETITION ACT, 2002
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy
against the public, or in some contrivance to raise prices.” –Adam Smith
What Adam Smith described is
a phenomenon be er known as
Cartels that continues to plague
competitive processes in markets
across the globe. By forming such
cartels, enterprises or persons enter
into an agreement to x prices
reduce output, allocate markets
or rig bids to distort the market
outcomes in their favour. The
Competition Commission of India
(the Commission/CCI) is empowered
to inquire into such cartels and to
impose penalty upon each person
or enterprise included in that cartel.
However, the biggest challenge lies
in detecting cartels, as they are secret
by nature and substantial resources
have to be dedicated by Competition
authorities to detect them. As a
solution, authorities around the
world have adopted Leniency/
Lesser penalty programmes which
are universally considered as one
of the best available ways to detect
cartels. Since cartels are so secretive,
internal information is usually
necessary to identify them and
leniency programmes enable such
information to be made available to
the competition authority.
What is Leniency Programme?
Leniency programme is an o cial
system of granting immunity
or lenient treatment to a cartel
member who comes forward
and discloses information about
such anticompetitive agreements
and assists the Commission.
The bene t of having a sound
leniency programme is that it
helps the Commission to get inside
Competition Commission of India Advocacy Booklet Series
let document Leniency pdf
2
The United States Department of Justice Frequently Asked Questions About The Antitrust Division s Leniency Program And Model Leniency Le ers
available at h ps www justice gov atr le
3
OECD Challenges and Co Ordination of Leniency Programmes
4
ICN Anti Cartel Enforcement Manual Chapter
petitionnetwork org uploads library doc pdf
Fair Play Volume April June
information and details of the
suspected cartels as it incentivizes
the cartel members to cooperate with
the Commission and escape stringent
penalties.
Leniency provisions are a win win
situation for the Commission as
well as for the cartel member who
agrees to share information with the
Commission.
International Experience
United States was the rst to
adopt leniency provisions in
whereby corporations or individuals
involved in illegal cartel activities
were allowed amnesty if they came
forward and denounced the cartels.
After a number of amendments,
this programme proved to be a
success and motivated several other
countries to adopt similar leniency
provisions.
Implementation of leniency
programme by Canada in
European Commission in
United Kingdom in and France
and Germany in demonstrated
the interest of countries in adapting
this carrot and stick method At
present, more than 60 countries
including Australia Japan Korea
Poland etc. have adopted a leniency
programme. Developing economies
such as Bra il Mexico South
Africa also have active leniency
initiatives leading to the detection
and dismantling of the largest global
cartels and resulting in record
breaking nes 2
According to OECD, the percentage
Leniency Program available at h ps www cci gov in sites default les advocacy book
download
available at h ps one oecd org document DAF COMP
Drafting and implementing an e ective leniency policy
4
of cartel cases detected through
leniency applications is reported to
range between for countries
like Canada, Chile, Germany, Korea
and New ealand and up to for
the EU. In the United States, over
of penalties imposed by the US
Department of Justice were linked to
investigations assisted by leniency
applicants.3
Though leniency programs di er
from jurisdiction to jurisdiction
yet, as per an ICN report, most of
them share common features which
includes a full immunity (zero
penalty given to the rst member of
the cartel who self reports the cartel
and its involvement and a lesser
penalty is awarded to the subsequent
second (or even third or more)
applicant.4
Leniency Provisions in India
Section 46 of the Competition Act,
2002 (Act) provides for leniency
provisions which empower
the Commission to grant lesser
penalty to any member of the
cartel (producer, seller, distributor,
trader or service provider) who has
violated Section 3 of the Act if they
make a full and true disclosure in
respect of the alleged violations and
such disclosure is also vital. The
Commission shall not grant lesser
penalty wherein the report of the
investigation by the DG has been
already received before making a
disclosure or the person making
the disclosure does not continue to
cooperate until the completion of the
proceedings.
P en pdf
available at h p www internationalcom

If the Commission is satis ed that
the member of the cartel has in the
course of proceedings,—
(a) not complied with the condition
on which the lesser penalty was
imposed by the Commission or
b has given false evidence or
(c) the disclosure made by the
member is not vital,
The Commission may try them for
the o ence with respect to which
the lesser penalty was imposed
and shall impose penalty.
To e ectively implement the
leniency programme, Competition
Commission of India Lesser Penalty
Regulations Regulations
were introduced in As per
the regulations, the reduction in
monetary penalty depends upon few
factors as explained in the following
diagram
actors n enc ng red ct on of enalty
the stage at which
the applicant
the evidence
comes forward
already in
with the disclosure
possession of the
Commission
Quantum of Immunity under
Leniency Provisions
The quantum of reduction in
monetary penalty under the Lesser
Penalty Regulations are as under
Upto a reduction in penalty
of the applicant if it is the rst to
make a v tal d sclosure enabl ng
the Comm ss on to form a
r ma fac e o n on regarding
the existence of a cartel.
Upto a reduction in penalty
of the applicant, even if the
ma er is under investigation
if thout ts d sclosure the
Comm ss on or the rector
eneral d d not have su c ent
ev dence to establish the
contravention
Reduction in penalty of up to
and may be granted to
the second or th rd a l cant s
respectively on making a
disclosure by submi ing
evidence, which provides a
signi cant added value to the
evidence already available with
the Commission or Director
General for establishing the
existence of the cartel.
Cases
In Re: Cartelisation in respect
of nc carbon dry cell ba er es
market in India v. Eveready
Industries India Ltd. (Case No.
02 of 2016)
Cartel members: Eveready Industries
India Limited, Indo National Limited
and Panasonic Energy India Co Ltd
etc.
the quality of
the information
provided by the the entire
facts and
applicant
circumstances
of the case
Contravention of provision: Section
read with Section of the Act
Lesser Penalty granted by
Commission:
hundred percent reduction
of penalty was granted to
Panasonic Energy India Co Ltd
as it was the rst to approach the
Commission and the information
and evidence provided by it was
crucial in assessing the domestic
market structure of ba eries
nature and extent of information
5 Volume
exchanges with regard to the
cartel and identifying the names,
locations and email accounts
of key persons involved in the
cartel activities and enabled
the DG to conduct search
and seizure operations at the
premises of the manufacturers
and seize crucial evidence.
30 (thirty) percent reduction
in the penalty was granted
to Eveready Industries India
Limited who was second
in making a disclosure and
approached the Commission
not at the beginning but at a
later stage of the investigation,
i.e. three days after the search
and seizure operations had been
carried out by the DG.
20 (twenty) percent reduction in
the penalty was granted to Indo
National Limited who was third
in making a disclosure in this
case. The Commission took into
account several factors such as,
applicant s three week delay in
approaching the Commission,
the existing priority status,
continuous and expeditious
co operation extended by the
applicant including admission of
cartelisation etc. before asserting
the penalty.
In Re: Nagrik Chetna Manch
(Case No. 50 of 2015)
Cartel members: Forti ed Security
Solutions Forti ed Ecoman Enviro
Solutions Pvt Ltd Ecoman Lahs
Green India Pvt Ltd Lahs Green
Sanjay Agencies Mahalaxmi Steels
Mahalakshmi and Raghunath
Industry Pvt Ltd Raghunath
Contravention of provision: Section
d read with Section of the
Act.
Lesser Penalty granted by
Commission:
fty percent reduction
in penalty was granted to
Mahalaksmi and Lahs Green
and their individuals, keeping
April June Fair Play
 in view the modus operandi of
the cartel, the stage at which the
lesser penalty application was
led the evidences gathered
by the DG independent of
Lesser Penalty Application
and co operation extended
in conjunction with the value
addition provided in establishing
the existence of cartel.
forty and twenty ve
percent reduction in penalty
was granted to Sanjay Agencies
and Ecoman, along with their
individuals respectively as the
evidences and cooperation
provided by them was held to
have helped the investigation in
establishing the existence of a
cartel.
In Re: Cartelisation by
broadcasting service providers
by r gg ng the b ds s bm ed n
res onse to the tenders oated
by Sports Broadcasters. v. Essel
Shyam Communication Limited
(now Planetcast Media Services
Limited) (Suo Motu Case No. 02
of 2013)
Cartel members: Essel Shyam
Communication (ESCL), now known
as Planetcast Media Services and
Globecast, a subsidiary of the Orange
Group earlier France Telecom
Group Globecast India Private
Limited Globecast Asia Private
Limited etc.
Contravention of provision: Section
d read with Section of the
Act.
Lesser Penalty granted by
Commission:
hundred percent reduction
in the penalty was granted to
Globecast and its individuals
for making vital disclosure
by submi ing evidence of the
alleged cartel, enabling the
Commission to form a prima
facie opinion regarding existence
of the cartel, for cooperating
fully and continuously
Fair Play Volume April June
throughout the investigation
and other proceeding before the
Commission.
30 (thirty) percent reduction
in the penalty was granted to
ESCL as although the evidence
furnished by it added value
to the ongoing investigation,
the Commission had already
made a prima facie opinion and
referred the ma er to DG for
investigation.
In Re: Cartelization in respect
of tenders oated by nd an
Railways for supply of
Brushless DC Fans and other
electrical items. (Suo Moto Case
No. 03 of 2014)
Cartel members: M s estern
Electric and Trading Company M s
Pyramid Electronics and M s R
Kanwar Electricals
Contravention of provision: Section
3(3)(c) and 3(3)(d) read with Section
of the Act
Lesser Penalty granted by
Commission:
seventy ve percent
reduction in the penalty
was granted to M s Pyramid
Electronics keeping in view the
value addition provided by it
in establishing the existence of
cartel and the stage at which it
had approached CCI.
Procedure for Grant of Lesser
Penalty
The applicant or its authori ed
representative may make an
application containing all the
material information, or may
contact the designated authority,
either orally or through
e mail or fax for furnishing
the information and evidence
relating to the existence of a
cartel. The designated authority
shall thereafter within ve
working days put up the ma er
before the Commission for its
consideration.
6
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.
The date and time of receipt
of the application by the
Commission shall be the date
and time as recorded by the
designated authority.
Unless the evidence submi ed
by the rst applicant has been
evaluated, the next applicant
shall not be considered by the
Commission.
Lack of continuous cooperation
entitles the Commission to reject
the application after providing
due opportunity of hearing to
that applicant.
After rejection of the priority
status of the rst applicant the
subsequent applicants shall
move up in order of priority for
grant of priority status by the
Commission.
Conclusion
A majority of OECD member
countries regard leniency as the
most important tool for detecting
cartels. India too, has followed the
international best practices and has
successfully incorporated leniency
provisions in its competition law
regime Rise in number of leniency
applications has facilitated the
Commission in not only gathering
hard evidences but also in detecting
and penalizing cartels. A transparent
and robust leniency programme
as laid out by the Commission has
e ectuated an e cient enforcement
of the Act and has helped the cartel
members weigh the bene ts they
could avail, especially in the form of
reduction in penalty by coming
forward and cooperating with the
Commission.
SECTION 3 & 4 ORDERS
CCI held that withdrawing post sale discounts alone is not suf cient
to establish an anti-competitive agreement
Information was led under Section
of the Competition Act in
three cases, which were clubbed,
namely i Mr Saifudheen E
Proprietor of M s Popular Traders
against Ramco Cements Limited
Ramco and the Kerala Cement
Dealers Association KCDA
Case No of ii Mr K M
Chakrapani Proprietor of M s Coir
India against Ramco Case No of
and iii Mr Muraleedharan
K Proprietor of M s S V S
Enterprises against Ramco and
KCDA Case No of The
Commission vide its Order dated 05th
February clubbed the three
ma ers and referred the same for
investigation to Director General
DG under Section of the Act
The DG conducted investigation
and led its common investigation
report including two Supplementary
Investigation Reports on th March
th
August th
June
respectively In its second
Supplementary Investigation
Report the DG found contravention
of Section of the Act by Ramco
CCI granted 100 percent reduction in penalty to Panasonic Energy
India Co. Ltd. in Indian Zinc-Carbon Dry Cell Battery cartel case
The case was taken up by the
Commission suo motu under Section
of the Actbased on the disclosure
by Panasonic Energy India Co Ltd
Panasonic under Section of
the Act read with the Competition
Commission of India Lesser Penalty
Regulations Lesser Penalty
Regulations against three leading
Indian inc carbon dry cell ba ery
manufacturers Eveready Industries
India Ltd. (Eveready), Indo National
Ltd Nippo Panasonic and their
association,Association of Indian
Dry Cell Manufacturers AIDCM for
colluding to x prices of inc carbon
dry cell ba ery in India
KCDA and Dalmia Cements (Bharat)
Limited Dalmia on the basis of
their conduct during a meeting held
on 23rd October at Hori on
Hotel, Thiruvananthapuram
Meeting As per the DG this
meeting was organised by the
said cement manufacturers with
the assistance of a unit of KCDA
i.e. Thiruvananthapuram Cement
Dealers Association (TCDA). In the
meeting o cers o ce bearers as
the case may be, of the Opposite
Parties were found to have exhorted
cement dealers not to sell cement
below the invoice price.
The issues before the Commission
were two fold, rst the role of KCDA
in obstructing supply of cement to
dealers, thereby limiting/controlling
the supply of cement in the State of
Kerala and second xation of sale
prices of cement dealers On the rst
issue, Commission was of the view
that the material available on record
is not su cient to conclusively
establish any role played by KCDA
in termination of cement dealership,
insisting its consent/NOC as a
During investigation, the DG
carried out simultaneous search
and seizure operations at the
premises of Eveready, Nippo and
Panasonic on August and
seized incriminating material and
documents therefrom Subsequently
while the investigation was in
progress and report from the DG
was pending, Eveready and Nippo,
approached CCI as applicants under
the Lesser Penalty Regulations
The evidence collected in the case
showed that the three ba ery
manufacturers, facilitated by
AIDCM had indulged in anti
mandatory requirement for award
of cement dealership or stoppage
of supplies to the dealers. With
respect to the second issue, it was
alleged that rstly the Opposite
Parties through their o ce bearers
made statements to cement dealers
during the said Meeting to avoid
sales below their invoice price and
secondly, withdrawal of the discount
o ered by Ramco and Dalmia In this
regard, the Commission observed
that detailed investigation followed
by two further investigations could
not discover material that could
persuasively establish indulgence
into any anti competitive conduct
covered under the provisions of
the Act Further one o instance of
only two, among many competitors,
withdrawing post sale discounts
alone was not su cient to establish
an anti competitive agreement
Hence, the Commission closed
the ma er holding that no case of
contravention of Section 3(3) read
with Section of the Act is made
out in the present case.
competitive conduct of price
coordination, limiting production/
supply as well as market allocation
in contravention of the provisions
of Section 3(3)(a), 3(3)(b) and 3(3)(c)
read with Section of the Act It
was observed that the conduct was
continuing from i e prior to th
May the date on which Section
3 of the Act became enforceable, and
till 23rd August i e the date of
search and seizure operations by the
DG.
CCI decided to levy penalty on
the three ba ery manufacturers
at the rate of times of their
Volume April June Fair Play
 pro t for each year from to
Also penalty of INR
Lakh was levied on AIDCM at the
rate of percent of average of its
receipts for preceding three years.
Additionally, penalty leviable on
individual o cials o ce bearers
of the three ba ery manufacturers
CCI busts cartel in tenders of Pune Municipal Corporation
In Nagrik Chetna Manch led
an information with the Commission
under Section a of the Act
alleging bid rigging/ collusion in
Tender nos. 34, 35, 44, 62 and 63 of
oated by the Pune Municipal
Corporation during the period
December to March
for “Design, Supply, Installation,
Commissioning, Operation and
Maintenance of Municipal Organic
and Inorganic Solid aste Processing
Plant s The case was forwarded to
the DG for investigation as Case no.
of Investigation revealed that
six companies rms were involved in
bid rigging namely Forti ed Security
Solutions Forti ed Ecoman Enviro
Solutions Pvt Ltd Ecoman Lahs
Green India Pvt Ltd Lahs Green),
Sanjay Agencies Mahalaxmi Steels
Mahalakshmi and Raghunath
Industry Pvt Ltd Raghunath
The DG collected several pieces
of evidences during investigation,
which showed collusion amongst
bidders, such as common address
of some bidders, use of same bank
account by bidders for preparing
demand drafts use of common IP
addresses for uploading tender
bids, besides oral statements of
o cials of the rms Accordingly
the Commission concluded that
there was meeting of minds and
co ordination between various
individuals which included
proprietor/ partner/ director of the
rms to rig the tenders by submi ing
proxy/ cover bids to enable Ecoman
to emerge as L bidder in all ve
tenders. Such collusive bidding
is prohibited under provisions of
Section 3(3)(d) of the Act.
Importantly, during the pendency
Fair Play Volume April June
and AIDCM was computed at the
rate of percent of the average of
their income for preceding three
years. Invoking the provisions of
Section 46 of the Act read with the
Lesser Penalty Regulations the
penalty imposed upon Panasonic
Eveready and Nippo as well as their
of investigation, all six companies/
rms approached the Commission
as Lesser Penalty Applicants under
Section 46 of the Act read with the
Lesser Penalty Regulations
The Commission after nding
contravention of provisions of the
Act computed INR Lakhs
INR Lakhs INR Lakhs INR
Crores INR Crores and
INR Lakhs as leviable penalty
on Forti ed Ecoman Lahs Green
Sanjay Agencies Mahalakshmi and
Raghunath respectively However
under the Lesser Penalty provisions
of the Act and the Lesser Penalty
Regulations the Commission
reduced penalty on four rms i.e.
Mahalakshmi Lahs Green Sanjay
Agencies and Ecoman. While
Mahalaksmi and Lahs Green and
their o cials were granted
percent reduction in penalty Sanjay
Agencies and Ecoman, along with
their o cials were granted and
25 percent reduction in penalty,
respectively.
In addition to the above ma er the
Commission, suo motu, investigated
two more cases involving tenders
of Pune Municipal Corporation
for “Design, Supply, Installation,
Commissioning, Operation and
Maintenance of Municipal Organic
and Inorganic Solid aste Processing
Plant s These cases were taken up
on the basis of evidence gathered by
the DG during investigation into the
above ma er and disclosure by rms
under Section 46 of the Act read with
the Lesser Penalty Regulations
One case was initiated to investigate
two tenders oated by the Pune
Municipal Corporation during the
nancial year i.e. Tender nos.
individuals was reduced by
percent, 30 percent and 20 percent
respectively Pursuant to reduction
penalty imposed on Eveready was
INR Crores and on Nippo was
INR crores No penalty was
imposed on Panasonic
and of The other case was
initiated to investigate one tender
oated during the nancial year
i.e. Tender no of
From the evidence gathered during
investigation, the Commission found
evidence of bid rigging/ collusive
bidding, in contravention of the
provisions of Sectiton 3(3)(d) of the
Act in above stated Tender nos
and of and Tender no
of oated by Pune Municipal
Corporation by submi ing proxy
cover bids. This was also revealed
in the Lesser Penalty Applications
led by ve rms namely Saara
Traders Pvt Ltd Saara Lahs Green
Ecoman Forti ed and Raghunath
In the case involving two tenders
oated in nancial year
Saara Ecoman Forti ed and
Raghunath were found to have
contravened the provisions of the
Act. Accordingly, an amount of
INR Lakhs INR Lakhs
INR Lakhs and INR Lakhs
respectively was computed as
leviable penalty on each of these
rms Penalty was also imposed on
individual o cials of these rms
except for Forti ed a proprietorship
rm Although all rms approached
CCI as Lesser Penalty Applicants
CCI granted 50 percent reduction in
penalty only to Saara and its o cials
Further in case involving tender
oated in nancial year
Lahs Green Ecoman Forti ed and
Raghunath were found to have
contravened the provisions of the
Act by rigging the bid in Tender no.
of However in view of the
penalty already levied in Case no. 50
of for infringement during the
period no penalty was levied
on the rms or its o cials