CCI’s Unsettled position on Settlement.

Recently Apple’s years-long antitrust dispute in South Korea came to an end when the Korean Fair Trade Commission (KFTC) accepted Apple’s proposal of the a financial package of US$89.73 million in full settlement of the dispute, as a correction scheme meant to make up for unfair market practices. Apple Korea is to invest 40 billion in building a research and development center for local small-sized businesses in the mobile phone manufacturing sector and 25 billion won in offering consumers 10 percent discounts in iPhone repairs and warranties. Korean authority believes that this scheme would actually provide direct benefits to consumers. This highlights the multiple possibilities of addressing anti-competitive conduct rather than the traditional approach followed in India, of sticking to rudimentary mechanisms of enforcement.

In India an antitrust scrutiny of any alleged abusive conduct or agreement begins if the commission is of the opinion that there exists a ‘prima facie’ case of violations of the provisions of the Act, and thus directs DG to investigate in the matter, through a 26(1) order. Then the DG digs deeper into the facts of the case, analyses the market conditions and tries to find evidence of the alleged infringement. CCI while enquiring the case makes a thorough analysis of the DG report, evidence brought on record, along with the submissions of the parties, and passes its decisions. Now such antitrust proceeding can end in two ways. Either, (1) the commission doesn’t find any infringement (or sufficient evidence to prove it) and thus closes the case, or (2) commission finds an infringement by the entity, in which case it would issue a cease & desist order and/ or impose appropriate fines to deter future similar behaviour; or it could close.

However, unlike India antitrust authorities in many jurisdictions have a third option: they can accept remedies (in form of settlements and commitments) proposed by the parties to correct their actions. These are consensual remedies in antitrust cases used as enforcement tools by competition authorities to terminate an investigation by accepting commitment/settlement proposed by the parties to address the competition concerns identified by the agency.


In cartel cases if the competition authority after conducting initial investigation, establishes an infringement on part of the entities, by admitting their guilt, they may attract lesser penalty compared to what could have otherwise been imposed on conclusion of full investigation and trial, as a reward for their cooperation and saving investigative resources. This process is called settlement and its beneficial as it expedites the closure of the matter by avoiding unnecessary appeal and parties trying to delay penalties.


Unlike Cartel case, in abuse of dominance and vertical restraint cases, regulators are more concerned with correcting the market rather than imposing fines. Penalties may deter future anti-competitive conduct, but lengthening the proceedings would mean continuance of harm caused to competition and markets, which may become irreversible by the time proceedings conclude. Thus, parties can make commitments as to its future conduct, in form deterrence from alleged acts in the future, and behavioural remedies to solve the competition concerns. Commitments can be invoked at preliminary stages of antitrust proceedings, and if accepted, are binding on the party who submitted them. This not only ensures swifter enforcement but also promote a culture of voluntary compliance.

In US, parties can settle charges with the Federal Trade Commission through consent agreements without admitting any infringement. On the other hand, the European Commission (EC) allows settlements only in cartel cases while also providing a leniency programme. Commitment and settlement mechanism in the Competition proceedings help to speed up the resolution mechanism and avoiding high pendency of cases and the tackle the backlog. Long delays from such adjudication procedure consequently lead to consumers suffering losses.

However, in India, the current practice is that the regulator will not suspend proceedings even if the parties have settled amongst themselves because the proceedings are considered to be in rem and not in personam.

Moreover, an informant cannot even withdraw the information once filed with the Commission. Although, as per Section 46 of the Act read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (LPR) an entity may seek lesser penalty in lieu of disclosure of anti-competitive activity and express admission of guilt, however such remedies are only available to parties who have been a part of cartels. While a leniency program may be useful to gather evidence, settlements in cartel cases can speed up the adoption of decisions, reduce litigation, reduce administrative expense and benefit parties through reduced fines.

Interestingly, as per the Annual report of 2018-19, CCI had imposed penalties of INR 13,768.42 crores under Section 27 of the Act as on 31 March 2019, out of which less than 1% has been recovered, due to unnecessary appeals and parties trying to delay penalties. Which shows the ominous need to include Commitment & Settlement mechanism to speed up the resolution of Competition proceedings in a better and time bound manner.

Even the report of the CLRC observed that inclusion of Commitment & Settlement procedures are likely to enable the CCI to resolve antitrust cases faster and consequently, also free up its scarce resources. Further, businesses can avoid long investigations and uncertainty'. Thus, the report recommends that the Act should be amended to expressly enable the CCI to accept settlements from parties. Effect of such recommendations was visible in, the Draft Competition (Amendment) Bill, 2020, which includes provisions that would allow parties to settle proceedings and offer commitments in abuse of dominance and vertical restraint cases. The draft bill excludes cartel cases from the proposed settlement provisions. This exclusion may have been because of leniency programmes available under India’s competition laws. The draft bill is unclear whether settlement proceedings would require parties’ admission to contravention or whether CCI will record a finding of contravention in its order. However, everyone is waiting to see the final form of the proposed settlement and commitment regime, as it would be interesting to see whether the CCI adopts the practices of other jurisdictions or develops a unique approach to increase enforcement efficiency.

35 views0 comments

Recent Posts

See All