The Ministry of corporate affairs (MCA) has issued a notification to amend the powers of the Competition Commission of India (CCI), wherein the competition watchdog can impose penalties of up to 10% of the global turnover on companies found to be violating the laws. The ministry has also notified the ‘Commitment and Settlement’ mechanism which could increase the compliance with the competition laws, and help companies mitigate their risks.
Prior to the amendments, the penalties were restricted to up to 10% of the turnover (of the preceding three years) generated from the products and services where the rules were infringed.
“The Central government hereby appoints the 6th day of March 2024 as the date on which the provisions of sections 20, 35 and 40 of the said Act shall come into force,” the notification said.
Experts said that the rise in penalty will force a lot of corporates to take the route of commitment and settlement. “Because of the steep rise in penalties, compliance will increase and the companies will increasingly go for settlements and commitments. Earlier, there was no mechanism to settle the issues but that has been provided now,” said Dhanendra Kumar, former chairman, CCI.
In settlement cases, violating entities can accept their lapses and negotiate with the CCI to impose lesser penalties. Commitment, however, refers to the changes in business practices by the companies against whom CCI has initiated the investigation. This is primarily done to enable the competition watchdog to close its investigation on mutually agreed terms.
It’s believed that the amendments are aimed at tackling the growing instances of market dominance abuse by the Big Tech firms. “The stricter penalties are likely to pose a bigger threat to the companies operating in different geographies as against the companies operating just in India. The amendments open a fresh window for the corporates to settle their disputes with the regulator amicably,” said Jidesh Kumar, managing partner, King Stubb & Kasiva, Advocates and Attorneys.