Using Leniency Effectively in Anti-Cartel Investigations: A Study of Recent Trends in Cases Decided by the CCI

Abstract

The Directive Principles of State Policy as enshrined in Article 39 of the Constitution of India lay down, inter alia, that the State shall direct its policy towards securing that the operation of the economic system does not result in concentration of wealth, to the common detriment. However, a study of the Indian market, decades after the enactment of the Constitution, reveals that the same is prone to wealth concentration, due to the concentration of production and supply of goods and services. A classic manner in which such concentration occurs is through the formation of cartels. Generally speaking, cartels are covert arrangements between competitors to eliminate rivalry amongst themselves, in the market. Cartels are lucrative agreements because if a cartel flourishes then the total profits made by the participants of the cartel would be higher than the individual profits made by them in a competitive market. Cartels act like a single firm monopoly and are prohibited the world over because of the damaging effects they have on the economy.2 In India, the MRTP Act, 1969, was enacted to give effect to the directive enshrined in Article 39 of the Constitution of India. However, the MRTP Act became redundant due to various reasons, including economic reforms like liberalization and globalization. India’s present law, the Competition Act, 2002, aims to curb cartelization effectively. With the use of contemporary tools like leniency programmes, the Competition Commission of India is encouraging cartel members to co-operate in anti-cartel investigations, resulting in crackdown of cartels in various important sectors of the economy. This paper analyses the impact of cartels on the economy and the measures being taken by the Competition Commission of India to deter cartelisation, by grant of leniency to whistleblowers.