Settlement of cases under Indian competition law

With competition law turning a decade old, there has, predictably, been a steep learning curve for the enforcement structure. The government recently constituted the Competition Law Review Committee to review the current provisions of the Competition Act, 2002 (act). One of the suggestions in the pipeline is introducing a settlement mechanism.

Presently, the Competition Commission of India (CCI) takes the view that settlement mechanisms are not permitted under the scheme of the act. While a legislative amendment is desirable, an argument can be made that the current provisions permit the CCI to implement a settlement mechanism.

Unspent power

In the Tamil Nadu Film Exhibitors Association case, Madras High Court held that settlement can be permitted within the scheme of the act under section 27(g) as it affords residuary powers to the CCI. The sub-section gives the CCI the power to pass “any other order or issue such directions as it deems fit” that have not been enumerated in the section.

Currently, it takes the CCI an average of 871 days to arrive at an order of contravention from the date of passing a prima facie order. This clearly demonstrates the burden on the CCI. Settlements are intended to lessen the burden on the CCI’s scarce manpower. They could also benefit the contravener as the process ensures a fair amount of certainty. It may, however, lead to false positives. An innocent party alleged to have contravened the act might choose to settle to avoid the risk of a heavy penalty, impact of the investigation on its share prices and/or reputational loss.

Karan Singh Chandhiok is a partner and Salman Qureshi is an associate at Chandhiok & Mahajan.