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Reforming the cartel leniency regime in India

The absence of meaningful numbers can be attributed to a key concern in the existing system – that of conviction. Presently, the decision of the CCI records the formal conviction of the applicant and calculates the leviable fine. It is only after passing a judgment on the guilt and sentence of the leniency applicant, that it grants a reduction in penalty.

The decision describes in detail the evidence gathered, the cartel’s modus operandi and individual roles (including that of the applicant). These are concerning aspects of the leniency regime because firstly, a conviction diminishes the standing of the entity (and its global parent). It could translate into a decline in monetary terms, particularly when regulatory disclosure requirements may necessitate its announcement to the public. Secondly, a conviction may also disqualify the entity (and its management) from participating in future competition, such as in public tenders. Thirdly, the conviction and details disclosed in the CCI’s decision exposes the leniency applicant to potential claims for compensation as provided for under the Act.

The conviction is also unjust because in the case of leniency applicants, their evidence is affirmed by a sworn affidavit which then contributes to their conviction. This is contrary to the spirit and intent of Article 20(3) of the Constitution of India, which protects persons from being compelled to be witnesses against themselves. It is this constitutional guarantee which also protects the approver from their own testimony. These failings call for urgent reforms to the leniency regime in India.

Source: Barandbench

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