Crime Today News
The Competition Commission of India (CCI) has investigated 35 cartel cases over the past five years, with the health and pharmaceutical sector emerging as the most scrutinized industry, according to Finance and Corporate Affairs Minister Nirmala Sitharaman.
Responding to a question in the Lok Sabha, Sitharaman revealed in a written reply that the health and pharma sector accounted for the highest number of cartel cases, with five investigations.
Closely following was the railways sector, which saw four cartel cases under CCI’s scrutiny. Other industries that came under investigation included civil aviation (1 case), power (1 case), coal (2 cases), financial services (2 cases), and iron & steel (2 cases).
Strengthening international cooperation
To tackle cartelisation, including cross-border cases, the CCI has signed multiple bilateral and multilateral Memorandums of Understanding (MoUs) with key global competition authorities. These agreements are in place with countries and entities such as Egypt, Mauritius, Japan, Brazil, BRICS nations (Brazil, Russia, China, and South Africa), Canada, the European Commission, Australia, and the United States Department of Justice (DOJ).
Sitharaman emphasized that these MoUs allow for enforcement cooperation between CCI and its global partners, subject to respective legal frameworks and resource availability. This collaboration is expected to help address cartel activities that have international dimensions, ensuring a more competitive and fair marketplace in India.
Further, India has signed 14 Free Trade Agreements (FTAs) with its trading partners, some of which contain dedicated competition law chapters. These provisions require each country to take necessary steps against anti-competitive practices, thereby fostering efficient trade and investment flows between partner nations.
New Legal tools to combat cartels
In a bid to strengthen its fight against cartelisation, the CCI introduced the “Lesser Penalty Plus” (LPP) mechanism within the framework of Section 46 of the Competition Act. On February 20, 2024, the CCI (Lesser Penalty) Regulations, 2024 were notified, replacing the earlier 2009 regulations.
The LPP mechanism is designed to incentivize companies that have already applied for a lesser penalty in one cartel case to disclose information about another cartel unknown to the CCI. This approach aims to encourage greater self-reporting of cartel activities, making it more difficult for such illegal agreements to operate undetected.
Additionally, the scope of cartel investigations has been expanded through the Hub & Spoke mechanism, introduced under the Amendment Act, 2023. The new provision under Section 3(3) of the Competition Act, 2002 ensures that even entities or individuals who are not directly involved in an identical or similar trade but facilitate anti-competitive agreements can be presumed to be part of a cartel. This amendment closes loopholes that previously allowed intermediaries to escape scrutiny while enabling cartelisation.
CCI’s advocacy efforts
Apart from enforcement actions, the CCI has been actively conducting awareness programs to promote competition compliance. Over the last five financial years, the commission has conducted 1,446 advocacy programs aimed at educating businesses, industry associations, policymakers, and the public about the importance of competitive markets and the consequences of cartel behavior.
Implications for future
With increasing regulatory scrutiny and the introduction of stricter laws, cartelised industries in India face a higher risk of exposure and penalties. The health and pharma sector, which has historically been at the centre of pricing and distribution-related cartel allegations, is likely to remain under the CCI’s radar.
The government’s push for international cooperation, coupled with new legal mechanisms such as Lesser Penalty Plus and the Hub & Spoke model, suggests a more aggressive stance against cartelisation in India. Going forward, businesses will need to ensure compliance with competition laws to avoid hefty penalties and reputational damage.
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