Confidentiality processes and procedures are among the most significant components of any competition enforcement framework. In April 2021, the Competition Commission of India (CCI) published a draft proposal for public comment, to revisit the detailed mechanism for dealing with confidentiality claims made by parties under regulation 35 of the Competition Commission of India (General) Regulations, 2009. The CCI also recently conducted a stakeholder workshop to discuss the resulting comments and suggestions. Keeping in mind the practical difficulties faced by the authorities, parties and their representatives alike, the draft proposal sought to strengthen the existing regime by ensuring simple, fair and expedited proceedings. It also tried to balance the competing interests of parties seeking the protection of commercially sensitive information against those of parties wishing to exercise their rights to defend themselves effectively.
One of the ways to achieve this balancing act, is the confidentiality ring or club comprising an identified group of people permitted by a court or a regulator to see specified confidential material. The CCI’s initiative to set up such rings is a welcome move. To make the process of setting them up more efficient and transparent, greater clarity should be provided on the procedure for their creation and the factors to be considered in setting up these rings.
Investigated parties should have the power to request the setting up of a ring. Similarly, third parties or informants whose information is proposed to be shared should be provided with an opportunity to object to the creation of the ring or to the disclosure of specific information. This would ensure that the parties are not discouraged from providing their confidential information. It would also be necessary to determine what information has to be disclosed, as such parties should be required to submit concise non-confidential summaries of each of their claims to be given confidentiality. A collaborative process between the regulator and the opposite party to decide on the setting up of the ring, its members and the information required to be disclosed will go a long way to ensure proceedings run smoothly.
The proposed regime imposes a complete bar on the sharing of confidential information with persons who are not a part of the confidentiality ring. This may impact the rights of the party under investigation to mount a proper defence, especially where input is required from commercial work streams or from third parties who are not or cannot be made part of the confidentiality ring. As such, members of the confidentiality ring should be allowed to prepare non-confidential summaries of the confidential information, which can be shared with such employees or third parties as may be necessary. Such summaries and their recipients may be approved by the CCI or the director general.
The proposed amendments provide for penal action for breaches of undertakings by representatives of the parties, or for giving incorrect information in the self-certification provided. However, the failure to identify confidential information accurately, given the absence of detailed guidelines on what constitutes confidential material, does not warrant penal action. Further, the imposition of penalties on the representatives of the parties could have a chilling effect on the willingness of advocates and representatives to be involved in the establishment of confidentiality rings.
In any event, the CCI retains the power to impose monetary penalties under section 45 of the Competition Act, 2002, for egregious cases of incorrect and excessive claims of confidentiality. It is recommended that where a penalty is imposed, the CCI should release public versions of the penalty orders to apprise stakeholders of the standards and grounds considered by the CCI when imposing the penalty as these may differ on a case-by-case basis.
The draft proposal released by the CCI recognises the conflicting aims of parties and the need for swifter disposal of cases. These amendments are of great significance, especially given the need for quicker market corrections in dynamic markets.
Ruchi Khanna is an associate and Deeksha Manchanda is a partner at Chandhiok & Mahajan