Cartels may be kept out of settlement purview

Livemint, February 09, 2023

Cartels may not be allowed to settle their anti-competitive behaviour by negotiating with authorities as recommended by a Parliament panel that has examined the Competition Amendment Bill, a person aware of the discussions said.

Before the bill is taken up by Parliament for passing, the government plans to make the change and retain the provision to limit negotiated settlements to abuse of dominance cases and anti-competitive agreements barring cartels and collusive behaviour like bid rigging.

The parliamentary standing committee on finance led by Jayant Sinha in December suggested in its report that expanding the settlement scheme’s scope to include cartels could be considered. However, the government has accepted the panel’s recommendation to compensate those affected by the anti-competitive conduct of entities that get to negotiate and settle their cases with the regulator, said the person, who spoke on condition of anonymity.

Accordingly, the original provisions in the bill will be worded differently now to provide for compensation in cases of settlements. The tweaks in the bill are expected to be made before it is taken up for passage in the budget session of Parliament.

Experts said cartelization is viewed as a serious offence, which probably led to it being kept out of the negotiated settlement scheme. “Already, there is a provision for leniency to cartels where parties to the cartel come clean on their conduct and get relief on the penalty. Keeping cartels out of the proposed settlement scheme could be a balancing act,” said Amol Kulkarni, Director of Research at CUTS International, a non-profit, non-governmental organization working on public interest issues.

“Enhancing the compensation provision and enabling the Competition Commission to order compensation to consumers, businesses and other entities affected by the anti-competitive conduct of entities that negotiate and settle cases with the regulator will be a major consumer-friendly move,” he said.

The standing committee proposed there should be a provision in the law for compensating affected consumers in an appropriate manner. The Centre may go for only a few changes to the bill that is pending before Parliament.

An email sent to a spokesperson for the corporate affairs ministry on Wednesday seeking comments for the story remained unanswered till press time.

Separately, the ministry is holding consultations about whether there is a need for a Digital Competition Act, proposed by the standing committee on finance in December in another report, and also to frame a draft bill. The highlight of the standing committee report was the recommendation for a set of norms in the form of dos and don’ts for tech giants who act as digital gatekeepers because of their entrenched market position.

The idea of this consultation is to have a broader consensus within the government about the need for another law on competition in digital markets and also to set its contours as sectoral regulations on the digital economy are still evolving. NITI Aayog, the department of economic affairs, the department of consumer affairs, the department for the promotion of industry and internal trade and the ministry of electronics and information technology are part of this discussion.

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