The Competition (Amendment) Act: It’s ‘Settled’ now, and ‘Committed’ to the cause of competition in India

One of the aspects of the Amendment Act that businesses are trying to understand is the application of the settlements and commitments regime to existing cases.

By T Sundar Ramanathan, Vivek Pandey and Sukanya Vishwanathan

The Competition (Amendment) Act, 2023 (‘Amendment Act’), which received the assent of the President of India on April 11, will usher in wide-ranging changes to the competition landscape of the country. One such seminal change is the introduction of Commitment and Settlement under the Competition Act, 2002 (‘Competition Act’). Here, we will focus on two primordial aspects of this Amendment – applicability to existing cases, and claims for compensation based on settlements and commitments filed by parties.

Prior to this Amendment Act, when a case was brought up before the Competition Commission of India (CCI) in relation to vertical agreements and / or abuse of dominant position of the Competition Act, the matter would have to be taken to its logical end by the CCI by either determining that there is a contravention of the said provisions or that there is no contravention. This could be time consuming and would occupy sizeable resource of the Director General (DG) and CCI, and hence, at times, investigations took longer. The settlement and commitments introduced by the Amendment Act enables CCI to conclude matters by passing an order of settlement or commitment respectively upon receiving an appropriate proposal for settlement or commitment. The introduction of the settlement and commitment regime should enable CCI to conclude trials quickly and place its focus on specific sectors and matters where it believes more time and resources need to be utilised.

Applicability to existing cases

One of the aspects of the Amendment Act that businesses are trying to understand is the application of the settlements and commitments regime to existing cases. In our view, the language of the Amendment Act is quite clear and does not make any distinction between existing / pending cases and new cases after the introduction of the Amendment Act. Therefore, even in existing matters where a prima facie case has been initiated and an investigation is underway, enterprises before the CCI can file the application for settlement or commitment. This also offers the advantage pursuing such applications of avoiding reputational and brand risks as also reduced legal costs for parties.

Compensation claims

The Competition Act allows parties who have suffered loss or damage because of the contravention of the provisions of the Competition Act to file a claim for compensation. When a party files an application for settlement or a commitment, there is an apprehension whether it would amount to an admission of guilt or contravention, and whether, in turn, it makes it easier for parties aggrieved to file claims for compensation. While this is an issue that will have to be considered on the law and on fact-to-fact case, one issue does stand out from the Amendment. A party can file an application for compensation from an order of settlement, but there is no such provision for filing an application for compensation from an order of commitment, and hence, a compensation application cannot be filed against an order of commitment. In the Scheme of the Amendment Act, a commitment is filed before the investigation is concluded by the DG, while a settlement is filed after the investigation is concluded by the DG. Therefore, it would be worthwhile for parties in whose existing cases the DG Report has not yet been prepared to consider filing appropriate commitment applications (once the manner and procedure are finalised by the CCI in regulations).

Way forward

There are a few other aspects that need to be considered in this Amendment Act, which it is hoped will be clarified in the regulations. But all in all, the Amendment Act is “settled” now, and the regime of settlements and commitments, it is hoped, will definitely “commit” itself to the cause of competition and promoting and sustaining markets in the country.

(T Sundar Ramanathan is an Advocate-on-Record at Supreme Court of India and Co-Founder of Sarvada Legal. Vivek Pandey and Sukanya Vishwanathan are  Advocates Sarvada Legal)