Appliance of Lesser Penalty Provisions in

Cartel Detection in India

-By Swati Bajaj*

Abstract
An agreement between two or more enterprises or persons
engaged in identical or similar trade is ‘cartel’, if that determines
purchase or sale prices; or, limits or controls production/supply/
markets/technical development,; or, shares the market by allocating
geographical area; or, results in bid-rigging. Section 3(3) of the
Competition Act, 2002 (Act) prohibits these kinds of agreements.
CCI has found infringement of section 3(3) in 71 cases1 and has
imposed stringent penalties under section 27 of the Act. It has faced
obscurity while investigating cases since cartel take place in secrecy
and even the Act does not necessitates any written agreement between
the parties engaged in cartel. To alleviate this difficulty, CCI has
come up with leniency programme which provide opportunity to the
enterprises which are party to cartel to facilitate in bursting cartel
by providing significant evidence and in return avail the benefit of
lesser penalty2 .
Section 46 of the Act provides for ‘lesser penalty’ which is to
be read with CCI (Lesser Penalty) Regulations, 2009. CCI has passed
its first order imposing lesser penalty in 2017 in Brushless DC Fan case
wherein the parties were engaged in bid-rigging. These regulations
were amended later on in 2017; afterwards, CCI has passed further
orders in cartel cases imposing lesser penalties.

* Pursuing PhD. University School of Law and Legal Studies, GGSIPU and also
working as Assistant Professor with Amity Law School, Delhi (Affiliated to
GGSIPU).
1. Data as on 30th June 2018 (compiled with the help of data of cases available on the
official website of CCI i.e. www.cci.gov.in), last seen on 24/11/2018.
2. S.46, Competition Act, 2002 and CCI (Lesser Penalty) Regulations, 2009 [Amended
in 2017].

150
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 151

This paper will discuss benefits of lesser penalty along with the
problems faced by CCI while dealing with the applications for lesser
penalty and what are the amendments introduced in 2017. The
paper will also focus on the lesser penalty cases decided by CCI.
Lastly, the paper will throw some light on lesser penalty provisions
in foreign jurisdictions like EU, USA etc.
I. Introduction
The Indian Competition Act, 2002 (Act) aims at providing equal
and fair opportunities to all the enterprises exist in the market and
accordingly, it prohibits ‘agreements’ whereby two or more enterprises
try to collude with the intention to control the market and remove
all sorts of competition amongst each other. These kinds of agreements
are called ‘cartel’ also known as ‘Horizontal agreements’ that is to
say ‘an agreement between enterprises which have a similar or
identical business and are functioning at same stream’. The
Competition Commission of India (CCI), in its advocacy booklet on
leniency, explained cartel as ‘when more than two enterprises enter
into an arrangement or an agreement with the intention of curbing
competition in the market by either limiting the production or supply
of goods or by allocating market or by engaging in collusive bidding’3 .
Its objective is to lift up the prices above the level of fair competition,
resulting in injury to consumers and to the economy”4 ; and, it results
in the elimination of competition between the enterprises and also
creates entry barriers for the new enterprises. The Act has empowered
Competition Commission of India (CCI) to impose a penalty on
enterprises and on their office bearers engaged in cartel under the
Proviso to Section 27(b) of the Act.5
3. Booklet on ‘Leniency Program’, Competition Commission of India, available at:
https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/
Leniency.pdf, last seen on 21/11/2018
4. Ibid.
5. Proviso to Section 27(b), Competition Act, 2002 reads as:
“Provided that in case any agreement referred to in section 3 has been entered
into by a cartel, the Commission may impose upon each producer, seller,
distributor, trader or service provider included in that cartel, a penalty of up to
three times of its profit for each year of the continuance of such agreement or ten
percent. of its turnover for each year of the continuance of such agreement,
whichever is higher”
152 Cases and Material on Competition Law

Cartels are formed in secrecy. The Act recognize ‘cartel’ in the

form of an ‘agreement’6 to which the Act has provided an unbolt
definition and has made difficult for the competition authorities to
establish the occurrence of such agreement wherein though there is
consensus ad idem but there is the absence of any sort of evidence.
Richard Whish, also stated in his writings that, “the members of cartel
go to great lengths to surpass evidence of their illegal
activities…..Throughout the world, the global competition authorities have
felt that if there is any major problem in enforcing competition law, it is
the detection and punishment of hardcore cartels”.7 So as to relieve this
problem the Act has a specific provision of a lesser penalty.
Lesser Penalty or the Leniency Program is a transparent and
predictable programme which encourages and incentivizes enterprises
indulged in the commission of cartels to come forward and disclose
vital information related to the cartel and assist the competition
authorities to detect the cartel in lieu of immunity or lenient treatment.
The provisions related to lesser penalty are given under section
46 of the Competition Act and under CCI (Lesser Penalty) Regulations,
2009.8 The detailed analysis of leniency provisions is discussed in
further part of this paper.
II. Historical Development
The history of competition laws in India can be traced back to
the enactment of Monopolistic and Restrictive Trade Practices Act,
1969 in the era when the economy of the country was besieged. The
Act was enacted on the recommendation of the Monopolies Inquiry
Commission (MIC) which was appointed by the Government of
India under the Commission of Inquiry Act, 1952 to find out the
impact of ‘concentration of economic power’ in one or common
hands and the pervasiveness of monopolistic and restrictive trade
6. Section 2(b), Competition Act, 2002 reads as:
“any arrangement or understanding or action in concert,— (i) whether or not,
such arrangement, understanding or action is formal or in writing; or (ii) whether or
not such arrangement, understanding or action is intended to be enforceable by
legal proceedings”
7. Richard Whish, David Bailey, Competition Law, 115 (8th Ed./2015) .
8. As amended in 2017 by Competition Commission of India (Lesser Penalty)
Amendment Regulations, 2017
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 153

practices in different sector with special reference to their causes and

consequences. The foundation of law is based on Article 38 and 39(c)
of the Directive Principle of State Policy under the Constitution of
India. Article 38 lay down a responsibility on the State to ensure the
promotion of people’s welfare, protection of social order, minimization
of inequalities and endorsement of equal opportunities9 . Also, article
39(c) provides that there shall not be any concentration of wealth
and means of production in one hand10 . Even though the MRTP Act
was based on the principle enshrined in Constitution, but the actual
policy of the Act was not to outlaw the concentration of economic
power per se but to curb them only when they are not conducive to
the common good.11
Price fixing under MRTP Act: Section 33(1)(d) of the MRTP Act
restricted any practice wherein there is an agreement among the
sellers or among the purchasers to sell or purchase any goods or to
tender for the sale of or purchase of such goods only at prices or on
terms and conditions agreed upon themselves. However, under the
MRTP Act, it is not necessary that all price-fixing agreement will be
regarded as illegal. Also, the Act under section 33(1)(j) required
registration of such price-fixing agreements which are entered to
have the effect of eliminating competition or a competitor. However,
the Act did not have any specific provision related to ‘lesser penalty’.
The MRTP Act was too narrow in its sweep to deal with
competition issues especially in the era of liberalization and
globalization. The Act was deficient in curbing cartels and those

9. Article 38, The Constitution of India reads as:

“(1) The State shall strive to promote the welfare of the people by securing and
protecting as effectively as it may a social order in which justice, social, economic
and political, shall inform all the institutions of the national life.
(2) The State shall, in particular, strive to minimize the inequalities in income, and
endeavor to eliminate inequalities in status, facilities and opportunities, not only
amongst individuals but also amongst groups of people residing in different areas
or engaged in different vocations.”
10. Article 39(c), The Constitution of India reads as:
“that the operation of the economic system does not result in the concentration of
wealth and means of production to the common detriment.”
11. Bharat B Merchant, Monopoly Laws: A Comparative Study: India and USA 98
(3rd Ed./ 1976).
154 Cases and Material on Competition Law

deficiencies were remedied under Competition Act, 2002. The

‘Raaghvan Committee’ recommended the adoption of leniency
provision in new competition law and leniency program adopted in
India is based on the US ‘Amnesty Program’ and the EU Leniency
Notice. The US itself adopted the program in 1978 and the EU in
1996.
III. Comparative Analysis with other countries
Cartel is considered a serious economic offence in most of the
countries. Considering the complexity involved in the busting cartel,
every country has adopted leniency provisions to persuade the
enterprises/undertaking to self-report the cartel and avail the benefit
of a lesser penalty. This paper discusses the leniency program adopted
in US and EU.
United State America
In US, cartels/price fixing is considered as a criminal offence.
The Sherman Act, 1890 articulate that any contract or conspiracy
which aims to restrain trade or commerce is illegal and the person
who is the part of that contract is guilty of a felony and is liable to
be punished by a fine of $100,000,000 (in case of corporation), or
$1,000,000 (in case of other persons). Other than fine, those persons
can also be held liable to imprisonment which is not exceeding 10
years12 . The US Supreme Court in Verizon Communications Inc. v. Law
Offices of Curtis v Trinko13 referred cartel as “the supreme evil of
antitrust”.
US is the first country to adopt leniency provisions, the
Department of Justice’s Antitrust Division adopted two leniency
programs viz., Corporate Leniency Programme and Individual
Leniency Programme14 . The Corporate Leniency Programme was
first introduced in 1978 and then revised in 1993. After its revision,
the Antitrust Division observed that since 1999 out of all the cartel
cases prosecuted by the Division, 90 per cent were assisted by a
12. S. 1, The Sherman Act, 1890
13. Verizon Communications Inc. v. Law Offices of Curtis v Trinko ,540 U.S. 398 (2004)
(2004/ Supreme Court of United States).
14. Douglas F. Broder, A Guide to US Antitrust Law, Sweet & Maxwell 8-010 (2nd Ed./
2005).
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 155

leniency applicant.15 In US, leniency program is also called as ‘amnesty

program’ as it provides official pardon to the members of cartel who
otherwise are liable for strict penalty (fine/imprisonment).
In a speech delivered by SCOTT D. HAMMOND, he said that
there are three major cornerstones of Amnesty Programmes and
deterrence efforts i.e. stiff potential penalties, heightened fear of
detection and transparency in enforcement policies.16 The new
leniency policy (Corporate Leniency Policy) ensured these three major
aspects i.e. firstly, that amnesty is automatic if there is no pre-existing
investigation, the grant of immunity will be certain without any
space for discretion; secondly, that the amnesty will be available even
if the cooperation started after the initiation of investigation; and,
thirdly, amnesty is available to all directors, officers and employees
who come forward and cooperate with the Division.
The US ‘Individual Leniency Programme’ was introduced in
1994. It applies to all individuals who approach the Antitrust Division,
individually and not on behalf of or as a part of a corporate, to seek
leniency for reporting illegal antitrust activity.17
European Union
Mario Monti, the former Commissioner of EC, has described
cartel as, “cancers of the open market economy”. In Gas Insulated
Switchgear case 18 , the European Commission found that the
participants used codes to conceal their companies’ and have used
encryption software to protect the secrecy of their emails and
telephone conversations. It shows the ‘level of concern’ they exercise
while engaging in the cartel-like activity.
The European Commission adopted its first Leniency notice in
1996 which was inspired by the US’s Corporate Leniency Policy of

15. Massimo Motta, Leniency Programs and Cartel Prosecution, European University
Institute (2001).
16. Scott D. Hamond, “Detecting and Deterring Cartel Activity through an Effective
Leniency Program”, speech delivered before the International Workshop on
Cartels, England (2000).
17. Douglas F. Broder, A Guide to US Antitrust Law, Sweet & Maxwell 8-010 (2nd Ed./
2005).
18. Gas Insulated Switchgear case ,COMP/F/38.899 (2007/European Commission) .
156 Cases and Material on Competition Law

1993. The notice was the first time amended in 2002 to include
automatic immunity and second time it was amended in 2006 ‘to
clarify the threshold for immunity in terms of information to be
provided and to clarify the duty of cooperation of all leniency
applicants’.19
The 2006 leniency notice offers both full leniency as well as
partial leniency. Full leniency is granted to the one who provides
substantial information to assist the European Commission in carrying
out investigation.20 The European Commission in March 2017 granted
immunity to Lufthansa and other 11 carriers received the benefit of
fine reduction ranging 10 per cent to 50 per cent.21
The Commission Leniency Notice has the statutory prerequisite
for a leniency applicant such as to put in the picture EC about other
applications (if any) it has filed or is intending to file before other
competition authorities. The rationale behind this is to enable the
Commission to coordinate its investigation with other competition
authorities. In DHL v. AGCM22 , DHL applied for immunity for air
and sea freight forwarding under EU Leniency notice. Subsequently,
DHL also lodged an application to the Italian National Competition
Authority for air and sea freight forwarding. The EC granted
conditional immunity to DHL for entire freight forwarding sector.
IV. Provision Analysis
23
Section 46 of the Act deals with the provision for ‘lesser penalty’
and to carry out this provision, CCI had drafted regulations under
19. Wouter P.J. Wills, The Use of Leniency in EU Cartel Enforcement: An Assessment
after 20 years, World Competition, Vol. 39, Issue 3, p. 327-388, September 2016 .
20. Udai S. Mehta, Suchismita Pati, Designing Effective Leniency Programme for
India: Need of the Hour, Disscussion Paper by CUTS International (January, 2016)
21. Air Cargo Cartel case, COMP/39258 (2017/ European Commission).
22. DHL Express (Italy) Srl, DHL Global Forwarding (Italy) SpA v. Autorità Garante
della Concorrenza e del Mercato, Case C – 428/14 (2016/ European Commission).
23. Section 46, Competition Act, 2002 reads as:
“The Commission may, if it is satisfied that any producer, seller, distributor, trader
or service provider included in any cartel, which is alleged to have violated section
3, has made a full and true disclosure in respect of the alleged violations and such
disclosure is vital, impose upon such producer, seller, distributor, trader or service
provider a lesser penalty as it may deem fit, than leviable under this Act or the rules
or the regulations:
Contd.
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 157

section 64 of the Act. In August 2009 CCI came up with Competition

Commission of India (Lesser Penalty) Regulations, 2009. The
regulations provide the detailed framework under which CCI can
grant lesser penalty to the applicants. Recently, the Regulations were
amended in 2017 by the Competition Commission of India (Lesser
Penalty) Amendment Regulations, 2017. The amended regulation
provides that an application to avail the benefit of lesser penalty can
be filled by both the enterprise or by an individual who is the member
of cartel.24 The amendment has increased the scope of leniency
provision and has influenced more enterprise or their individuals to
come forward.
The amended regulations provide for conditions to become eligible
for lesser penalty. Firstly, the applicant must have terminated the
cartel and must be continuing with the same from the time of
submission of leniency application; secondly, the applicant must have
given true and fundamental revelation in respect of cartel; thirdly,
Contd.
Provided that lesser penalty shall not be imposed by the Commission in cases
where the report of investigation directed under section 26 has been received
before making of such disclosure.
Provided further that lesser penalty shall be imposed by the Commission only in
respect of a producer, seller, distributor, trader or service provider included in the
cartel, who has made the full, true and vital disclosures under this section.
Provided also that lesser penalty shall not be imposed by the Commission if the
person making the disclosure does not continue to cooperate with the Commission
till the completion of the proceedings before the Commission.
Provided also that the Commission may, if it is satisfied that such producer, seller,
distributor, trader or service provider included in the cartel had in the course of
proceedings,—
(a) not complied with the condition on which the lesser penalty was imposed by
the Commission; or
(b) had given false evidence; or
(c) the disclosure made is not vital, and thereupon such producer, seller, distributor,
trader or service provider may be tried for the offence with respect to which the
lesser penalty was imposed and shall also be liable to the imposition of penalty to
which such person has been liable, had lesser penalty not been imposed.”
24. Before the Competition Commission of India (Lesser Penalty) Amendment
Regulations, 2017, the ‘applicant’ was defined as:
“an enterprise, as defined in clause (h) of section 2 of the Act, who is or was a
member of a cartel and submits an application for lesser penalty to the Commission”
158 Cases and Material on Competition Law

the applicant must have provided all relevant information or

documents as may be required by CCI to form proper evidence;
fourthly, the applicant must have co-operated genuinely with bona
fide intention throughout the investigation and other proceedings
before CCI; and, fifthly, the applicant must not have concealed or
manipulated any significant document which may contribute to the
establishment of cartel.25
If the leniency application has been submitted by an enterprise
then the enterprise shall provide the name of its employees/office
bearers who are also involved in cartel in order to seek lesser penalty
for them.26
The regulations also provides that CCI shall exercise its discretion
by considering the stage at which the leniency application was
submitted; the quality of the information provided by the applicant;
the evidence already in possession of CCI; and how much contribution
that information given by the applicant proved to be significant in
detecting cartel.27
The regulation provides a procedure which CCI requires to
follow while granting lesser penalty. The regulation says that the
applicant or its authorized representative may contact CCI either
through the written application (format prescribed in the schedule to
the Regulations); or, orally; or, e-mail or fax.28
If the application has been received in oral form or through e-
mail or fax, CCI needs to direct the applicant to submit a written
application within a period not exceeding 15 days. If the applicant
fails to submit written application within the prescribed time of 15
days from the date of communication or within the time extended
by CCI (if any), the claim of the applicant will become forfeit for
priority status and accordingly for the benefit of grant of lesser
penalty. Thereafter, the matter is required to be put up before CCI
for its consideration within 5 working days starting from the date
of receiving the information. CCI shall mark the priority status of the

25. Regulation 3, CCI (Lesser Penalty) Regulations, 2009

26. Ibid.
27. Regulation 3, sub-regulation (4), CCI (Lesser Penalty) Regulations, 2009.
28. Regulation 5, CCI (Lesser Penalty) Regulations, 2009.
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 159

applicant(s) (if more than one has applied) and shall convey the same
to the applicant(s). The date and time of receipt of the application
by CCI shall be the date and time as recorded by the designated
authority. CCI has to examine all the applicants on first come first
serve basis. CCI may reject an application after considering the same
and the evidence supplied after giving an opportunity of hearing to
the applicant if CCI finds the application insufficient. If the priority
status of the first applicant is rejected by CCI then the next following
application will be considered for assigning the priority status.
The regulations also provides for ‘quantum’ of immunity under
leniency provisions. It says that in case of first applicant and individual
– at the prima facie stage – The applicant may be granted up to 100
per cent reduction in penalty, if it enables CCI to make a prima facie
opinion regarding the existence of cartel. At the investigation stage –
The applicant may be granted up to 100 per cent reduction in penalty
if it enables CCI or DG to establish the case.29
In case of second in the priority status – The applicant may be
granted benefit up to 50 per cent reduction in the penalty; provided
the information given by the applicants put in noteworthy significance
to the evidence already in possession of CCI or DG.30
In case of third or subsequent in the priority status – The applicant
may be granted benefit up to 30 per cent reduction in the penalty;
provided the information given by the applicants put in noteworthy
significance to the evidence already in possession of CCI or DG.31
After the amendment, regulation related to ‘confidentiality’ was
also substituted by the new regulation. The regulation says that CCI
or DG needs to keep the identity of the applicant, the information,
documents and evidence furnished by the applicant, etc in
confidentiality. Nevertheless, if any disclosure is required by law and
is given by the applicant in writing; or, if the applicant discloses it
publically, then, in that case, no confidentiality is required to be kept
by CCI or DG. Besides, if DG necessitates disclosing any information
but the applicant has not agreed to the same, then the DG cannot

29. Regulation 4, CCI (Lesser Penalty) Regulations, 2009.

30. Ibid.
31. Ibid.
160 Cases and Material on Competition Law

disclose the same without recording the reasons in writing and after
taking prior approval of CCI.32
V. Judicial Trends (India)
The Competition Commission of India (CCI) imposed penalty
for the first time under Section 46 of the Act in 2017 in Brushless DC
Fan Case33 . In this case, CCI gave 75 per cent reduction in the penalty
of one of the three enterprises engaged in bid-rigging. The brief
details of the case are as follows:
CBI, while enquiring into the alleged misconduct, found an e-
mail dated 17.03.2013 in the e-mail inbox of Shri Ramesh Parchani,
a partner of M/s. Western Electric and Trading Company, Delhi. The
email provided details of four tenders of Indian Railways and BEML
for procurement of BLDC fans. It contained the quantity, unit value,
rates to be quoted by Pyramid Electronics, R. Kanwar Electricals, and
Western Electric and Trading Company and quantities to be shared
amongst them in the four tenders. The rates mentioned in the email
also matched with the rates quoted by the three above mentioned
enterprises in the railway tenders.
The bidders have divided among two categories i.e. Part I and
Part II. Part I bidders are the older approved vendors which have
earlier supplied goods as a Part II bidder and have received favorable
report from the railway unit. M/s. Pyramid, M/s. R. Kanwar and
M/s. Westrern Electric – the three bidders involved in the present
case are all Part I bidders. DG examined the emails furnished by CBI
to CCI and found that the rates mentioned in the emails are exactly
the same as quoted by them in the tenders floated by Railways for
Brushless DC Fans.
With regard to the sending of email and similar quotation of
rates in the bids – Sh. Sandeep Goyal, partner of M/s. Pyramid
admitted the same. Sh. Sandeep Goyal furnished further details to
CCI regarding the discussions took place between the three bidders
before quoting the bids.
32. Regulation 6, CCI (Lesser Penalty) Regulations, 2009.
33. Cartelization in respect of tenders floated by Indian Railways for supply of
Brushless DC Fans and other electrical items, Suo Moto Case no. 03/2014,
(Competition Commission of India, 18/01/2017).
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 161

DG also examined the other two parties and their call data
records and came to the conclusion that the parties are involved in
bid-rigging and they had prior meetings and discussion with regard
to the tenders.
CCI allowed the parties to cross-examine Sh. Sandeep Goyal
and also directed DG to submit supplementary report related to
cross-examination. CCI observed that it appears from the emails that
the three parties decided to divide the four tenders amongst themselves
in a mutually agreed manner, envisaging bid rotation. CCI considered
the application of Sh. Sandeep Goyal and M/s. Pyramid and granted
lesser penalty with 75% reduction in their penalty.
Zinc-carbon dry cell batteries case
After the amendment in leniency regulations in 2017, it was the
first case of cartel decided by CCI under section 46 of the Act34 . The
case was initiated with a leniency application filed by Panasonic
Energy India Co. Ltd. in 2016 under Regulation 5 of CCI (Lesser
Penalty) Regulations, 2009 r/w Section 46 of the Act.
Panasonic revealed cartel between itself and two other enterprises
viz. Eveready Industries India Ltd. & Indo National Ltd. (Nippo). All
these three enterprises were engaged in manufacturing and supplying
zinc-carbon dry cell batteries. The purpose of the cartel was found
to control the distribution and price of zinc-carbon dry cell batteries
in India.
While investigating the case, the Director General carried out
search and seizure under section 41(3) of the Act at the premises of
all the three enterprises and seized certain incriminating material.
During the pendency of investigation, both Eveready and Nippo
approached CCI with their applications/ request for lesser penalty.
Considering the evidences brought by all the enterprises and the
co-operation extended by them during the investigation and the
stage at which such leniency application was submitted, CCI granted
100 per cent reduction in the penalty of Panasonic and its office

34. Cartelization in respect of zinc carbon dry cell batteries market in India v. Eveready
Industries India Ltd. & Ors, Case no. 02 of 2016, (Competition Commission of
India, 19/04/2018).
162 Cases and Material on Competition Law

bearers; 30 per cent reduction in the penalty of Eveready; and, 20

per cent reduction in the penalty of Nippo.
Cartel in tenders floated by Pune Municipal Corporation cases
Thereafter, another case35 was initiated by CCI based on some
information from Nagrik Chetna Manch related to 5 tenders floated
by Municipal Corporation of Pune for the procurement of design,
supply, installation, commissioning, operation and maintenance of
Municipal Organic and Inorganic solid waste processing plants.
The tenders were rigged by six firms including Fortified, Ecoman,
Lahs Green, Sanjay Agencies, Mahalaxmi Steels and Raghunath
Industries. During the investigation, DG collected certain evidences
such as the 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, etc. The application of lesser
penalty was submitted in this case by all the six enterprises after the
investigation was started; however, the penalties were reduced in
case of only 4 firms i.e. Mahalaxmi, Lahs Green, Sanjay Agencies and
Ecoman.
Hence, CCI granted 50 per cent reduction in penalty of both
Mahalaxmi and Lahs Green along with their office bearers; 40 per
cent reduction was granted to Sanjay Agencies, and 25 per cent
reduction in penalty was granted to Ecoman.
CCI received two more bid-rigging cases related to tenders floated
by Pune Municipal Corporation. Both the cases were taken by CCI
suo moto on the basis of evidence and information collected by DG
during investigation in Nagrik Chetna Manch case. In the first case,
the tender was related to the financial year 2013-1436 and in another
case, the tender was related to the financial year 2014-1537 . In both

35. Nagrik Chetna Manch v. Fortified Security Solutions & Ors., Case no. 50 of 2015,
(Competition Commission of India, 01/05/2018).
36. Cartelization in Tenders no. 21 and 28 of 2013 of Pune Municipal Corporation for
Solid Waste Processing, Suo Motu Case no. 03 of 2016, (Competition Commission
of India, 31/05/2018),
37. Cartelization in Tenders no. 59 of 2014 of Pune Municipal Corporation for Solid
Waste Processing, Suo Motu Case no. 04 of 2016, (Competition Commission of
India, 31/05/2018).
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 163

cases, CCI found collusive bidding which is in violation of section

3(3)(d) of the Act.
In case related to tender no. 21 and 28 of 2013, the opposite
parties involved are four enterprises viz., Saara Traders, Ecoman,
Fortified and Raghunath Industries. Here, CCI granted 50 per cent
reduction in penalty only to Saara Traders and not to other opposite
parties. CCI was of the view that when Ecoman approached CCI,
several evidence indicative of collusion amongst opposite parties
were already been gathered by the DG including the details of modus
operandi of the cartel. Similarly, in case of Raghunath Industries and
Fortified, CCI observed that the stage at which lesser penalty
application was filed by the parties; DG had already gathered all the
necessary information and evidence with the help of the first applicant.
Also, the material information disclosed by them was already in the
possession of DG. Hence, CCI did not grant any reduction to these
three enterprises.
In other case related to the involvement of Tender no. 59 of 2014,
CCI found that the tender belongs to the same year in which the
tender involved in Nagrik Chetna Manch case was floated. Also,
considering that the four enterprises involved in collusive bidding in
tender no. 59 of 2014 are same as in Nagrik Chetna Manch case. Hence,
CCI decided not to impose any other penalty as the penalty has
already been imposed in the previous case.
Sports Broadcasters case38
The case was initiated with the leniency applications filed by
Globecast India Pvt. Ltd. And Globecast Asia Pvt. Ltd. (collectively
called as ‘Globecast’). Globecast disclosed vital information to CCI
related to a bid-rigging arrangement with Essel Shyam
Communications Ltd. (ESCL) related to a tender floated by sports
broadcasters for the procurement of sporting events.
During the investigation, DG found material information related
to collusive bidding between Globecast and ESCL. Initially, ESCL

38. Re: Cartelisation by broadcasting service providers by rigging the bids submitted
in response to the tenders floated by Sports Broadcasters. v. Essel Shyam
Communication Limited & others, Suo Motu Case No. 02 of 2013, (Competition
Commission of India, 11/07/2018).
164 Cases and Material on Competition Law

tried to defend itself by citing various cases of CCI; however, later

on, ESCL also approached CCI disclosing vital information related
to bid-rigging. It fully cooperated with DG during the investigation
and also got an external forensic audit of the entire organization.
Considering the lesser penalty applications of both Globecast
and ESCL, the authenticity and relevance of information disclosed
by them and the stage at which the applications were filed; CCI
granted 100 per cent reduction in penalty to Globecast and 30 per
cent reduction in penalty to ESCL.
VI. Conclusion
Anti-competitive behaviour like ‘cartel’ is like ‘termite’ which
‘eats’ the whole industry and cause severe damage to the growth of
nation’s economy. Many jurisdictions have suffered and faced the
ill-effects of ‘cartel’. The main reason behind the entire problem is
that cartels originate in darkness and hardly leaves any proof behind
it. Consequently, for the competition authorities, it becomes a
challenging task to detect and curb cartel-like behaviour. However,
if once it gets detected then the penalty imposed by the authorities
is enormously intense.
Leniency program is an initiative taken by the competition
authorities of many jurisdictions within which the authorities have
tried to create a balance between the atrocities faced by them in
detecting cartel and the severe penalties faced by members of the
cartel. It basically creates a win-win situation for both. It helps in
overcoming obstacles associated with obtaining witnesses and
evidence. As already mentioned the program was first adopted by
the US DoJ’s Antitrust Division in 1978 and after that EU and India
also adopted the program. Though in EU, the program underwent
several times through amendments. It was initially adopted in 1996
and later on amended in 2002 and then in 2006. In both the countries,
the leniency program was a success and it kept the trust of both the
authorities and the undertakings. In India, the Leniency regulations
were adopted in 2009 when the whole Act along with CCI became
fully functional. However, considering the loopholes in the regulations,
the regulations were amended in 2017 for the first time.
 Appliance of Lesser Penalty Provisions in Cartel Detection in India 165

Indian competition authority leads its breakthrough in busting

the first cartel in 2017 (before amendment). After the amendment,
it has busted five cartels end-to-end in the span of one year only.
Before the amendment, CCI (Lesser Penalty) Regulations used the
phrase ‘may be granted’ in its regulation 4. The word ‘may’ yield risk
to the applicant that even after cooperating with CCI whether he
will be given immunity or not. The discretion in the hands of CCI
could have resulted in arbitrariness. Hence, the amendment increased
the scope of lesser penalty and has influenced the trust of applicants.
In all the cartel cases decided with the assistance of lesser penalty
application, CCI has granted at least some immunity to all the
applicants based on the factors mentioned in the regulations. Hence,
CCI has taken an optimistic tread in enforcing Competition Act,
2002.
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