New Delhi: Faced with a low recovery rate of sanctions imposed for anti-competitive behaviour, the Competition Commission of India (CCI) has started exploring ways to make recovery more effective.
The regulator has set up a three-member internal committee to recommend measures to make the recovery process more robust, two people briefed on the development said.
Committee making suggestions for changes
The committee will make suggestions to amend the CCI regulations on recovery of monetary penalties, which were originally issued in 2011 and amended in 2014 and 2021, said the person who spoke on condition he not be named.
The move to streamline the procedures for collecting fines comes at a time when Parliament's Public Accounts Committee is preparing for a performance audit of a number of regulators such as CCI, Sebi and TRAI, and the Parliamentary Standing Committee on The Ministry of Finance is investigating the financing and the track record. of CCI and the Serious Fraud Investigation Office.
Once the recommendations are ready, the CCI is likely to hold a public consultation before further amending the regulations, said a second person also aware of the development.
CCI said in its annual report for FY23 that in FY22 and FY23, the regulator imposed fines of ₹1,336 crore and ₹2,672 crore, but could recover only about 13% and less than 1% of that, respectively.
The panel's recommendations are expected to help improve recovery. CCI has the power to collect fines by seizing the movable or immovable property of the entity that fails to make payment as ordered.
But companies tend to challenge this in the National Company Law Appellate Tribunal (NCLAT) or the Supreme Court.
Questions emailed to CCI on Friday seeking comment on the story remained unanswered at the time of publication.
The effectiveness of CCI cannot be judged solely by collection of fines as its primary purpose is to correct market behavior and counter anti-competitive practices, said Sonam Chandwani, managing partner at law firm KS Legal & Associates.
“The inability to collect fines stems from several issues, including the absence of a dedicated recovery mechanism and a lack of deterrent measures. .over, companies often appeal against CCI orders, resulting in lengthy litigation and interim stays granted by appellate bodies, causing delays in payment of fines,” explains Sonam Chandwani, managing partner at law firm KS Legal & Associates.
“To address this, the CCI needs specialized units with robust enforcement mechanisms to ensure that fines are collected efficiently. Also, putting in place stringent systems and offering flexible payment options could improve timeliness of recovery and strengthen compliance with CCI guidelines,” Chandwani said.
The government introduced several changes to competition law last year to expose cartels and find companies guilty of less serious anti-competitive behavior, allowing them to opt for settlements as part of efforts to reduce litigation and speed up case closure to achieve.
Following this, CCI introduced its 'lesser punishment plus' regulations in February this year, expanding the scope of its scheme designed to encourage cartels to make disclosures and cooperate with investigations.
Under the amended scheme, the second member of a cartel to blow the whistle will receive a greater reduction in sentence if he reveals the existence of another cartel. In the case of the second cartel, it could even lead to a complete remission of punishment, depending on the riders. This is an extension of the arrangement that was in place, which allowed a 100% exemption for the first cartel member to blow the whistle.
Under settlement and undertaking regulations introduced in March this year, erring entities can undertake to address regulators' concerns about anti-competitive conduct before an investigation is completed, or settle by paying an amount up to determined by the CCI after the investigation. The arrangements are expected to help finalize cases quickly and provide certainty to businesses.