Competition is the key to ever growing market, be it online or offline. Through market equilibrium, when demand forces interact with supply forces, then only equilibrium price and quantity that would be available in the market for a product is decided. The economy can work at its best only if there is healthy and productive competition but unfortunately the perfect scenario does not exist for any dimension of economy. Therefore, keeping in view of the economic development of the country, The Competition Act, 2002 came into force for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
In line with the same objective but taking slightly lenient view, The Competition Commission of India (Lesser Penalty) Regulations, 2024 came into force on 20th February, 2024.
As the name suggests, these regulations were made with a view to grant of lesser penalties based upon specified criteria, on entities involved in Cartel activities. Cartels are often formed by bigger entities with a view to erode competition, harm smaller businesses in the same field which ultimately leads to charging of any price from final end customer. It is a way out to create artificial market equilibrium which is eventually very harmful for the economy as a whole.
Hence, to mitigate the same, the provision for higher penalties was there in the Act. However, with these regulations, following less strict regulations are applicable now:
- The applicant who reports about the cartel for the first time may get 100% reduction in penalty.
- The applicant who submits information later may be get lesser percentage of reduction, such as, 70% or 50%.
- More comprehensive information may give more deduction in penalty.
- Confidentiality is the key and failure to comply may result in the forfeiture of priority status and consequent benefits.
- Competition Commission of India would carry out the detailed investigation and make investigation report based upon submitted information.
It looks that this move aims at enhancing transparency and disclosures so that the level of unfair trade practices can be reduced.
