The Competition Commission of India issued a press release stating that it had granted leniency to three dry cell battery manufacturers in a cartel investigation. One of the subject companies, Panasonic, received full 100% leniency. I believe that this may be the first time that a company has received 100% credit for reporting and cooperating in a CCI investigation. (I invite my friends in India to comment or elaborate.) Below is an excerpt from the document, and the full press release can be found here.
CCI issues important order under Lesser Penalty Provisions in the cartel case by leading Indian Zinc-Carbon Dry Cell Battery Manufacturers
The Competition Commission of India (‘CCI’) passed final order imposing penalty on three leading Indian zinc-carbon dry cell battery manufacturers – Eveready Industries India Ltd. (‘Eveready’), Indo National Ltd. (‘Nippo’), Panasonic Energy India Co. Ltd. (‘Panasonic’) and their association AIDCM (Association of Indian Dry Cell Manufacturers) for colluding to fix prices of zinc-carbon dry cell battery in India. CCI invoked the provisions of Section 46 of the Competition Act, 2002 (‘the Act’) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’) to reduce the penalty imposed upon Panasonic, Eveready and Nippo by 100 percent, 30 percent and 20 percent respectively.
Thanks for reading. Bob Connolly
Why did it take ten years to first apply the law?
I believe the first CCI leniency grant was last year–a 75% reduction. This may have been the first 100% leniency grant. Just an educated guess, but I think companies were slow to seek leniency until the CCI could show it had enough teeth to warrant companies making voluntary disclosures. I’d be happy to post a comment/article by anyone more well versed in the Indian Competition Law regime/history. I am just a distant, but interested observer.
Hello! I have a few questions.
Doesn’t granting 100% leniency go against the spirit of any competition act/ policy by sending out a message to companies that they can walk away scott free even if they act anti-competitively? How does one reconcile the two? I understand that the leniency provision is to incentivise companies to come out and disclose but can they not be incentivised in some other way? Is such an incentive really necessary if it serves no purpose?
Thank you!
Hi. Thanks for your comment. You raise some valid points, but over 100 jurisdictions have decide the benefits of leniency outweigh the cost, and have created some type of leniency provision. The overwhelming consensus is that the incentive offered to leniency applicants is wise public policy given the difficulty otherwise of detecting and successfully prosecuting secret cartels. The other benefit of leniency is that even when the government already has an investigation, a leniency applicant can accelerate the investigation and save resources to be used on other matters. In many jurisdictions (but perhaps not India) the leniency company will still face law suits from civil litigants. To sum up, leniency is a high price to pay for cooperation, but in the enforcement world it is considered a price worth paying.
Thank you for your reply sir. Yes, on reading further, I too realise that leniency is universally accepted. I have one further question which is similar to my previous one. Is 100% leniency not at cross purposes with the purpose of a penalty? An Act can stipulate lets say 50% reduction or lesser, but a 100% reduction is a complete waiver of penalty. A 100% leniency can probably be justified at best in a case like this where the DG/ Commission had no prior information of the existence of a cartel but what about in cases where the information would have come to the knowledge of the DG/Com with a basic enquiry- Is the value of the information then so significant as to justify a 100% reduction? What really is the rationale for a 100% reduction?