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J.Sagar Associates Farhad Sorabjee & Reeti Choudhary
BACKGROUND
1. What is the relevant legislation concerning the leniency policy and what is the enforcing body?

The Competition Act 2002 (the Act) and the regulations drafted under it, known as the Competition Commission of India (Lesser Penalty) Regulations 2009 (the Lesser Penalty Regulations), set out the leniency policy in India. Legal challenges to the Act resulted in major amendments in 2007. These challenges coupled with resistance from business associations in India resulted in a delay in the implementation of the substantive provisions of the Act with respect to anti-competitive agreements which only came into force on 20 May 2009. These provisions provide for the imposition of penalties for infringement of the Act and empower the Competition Commission of India (the Commission) to impose penalties lower than prescribed under the Act. While section 27 of the Act permits the imposition of a monetary penalty not exceeding 10 per cent of the average turnover for the last three preceding financial years upon any undertaking or person (either legal or natural person) or other group (eg association of persons or of undertakings) in the case of anti-competitive agreements generally, if such anti-competitive agreement is in the nature of a cartel, the penalty could extend to three times the profit gained by the member of the cartel for each year of his membership of the cartel or up to 10 per cent of the undertaking's turnover for each year of its membership of the cartel, whichever is higher. The power to impose a lesser penalty as the Commission may deem fit and the requirements for qualification for the imposition of a lesser penalty have been provided for under section 46 of the Act. Further details with respect to procedures and requirements are provided for in the Lesser Penalty Regulationi, which also prescribe the benefits available to the applicant. Applications for leniency under the Lesser Penalty Regulations are to be made to a designated officer of the Commission. The application and enforcement functions of the leniency policy are carried out by the Commission, as is the allowance of a reduction in statutory penalties. The investigation arm of the Commission is the Director-General of Competition (the Director-General), which conducts the investigation and presents its report to the Commission.

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2. What are the basic tenets of a leniency/immunity programme? Is

leniency available also for other types of competition law violations than cartels?

Under the Lesser Penalty Regulations, the leniency provisions cover undertakings or persons who have been members of a cartel and are willing to provide information to the Commission and cooperate with the Commission in the termination of the cartel activities. Under the Act, cartel activities include agreements of any sort entered into between undertakings and/or associations of undertakings, engaged in the identical or similar trade of goods or provision of services. Cartel activities are defined broadly under the Act and include an agreement: to regulate the purchase or sale prices of the goods or services; to control production, supply, markets, technical development, investment or the provision of services; to determine the manner and extent of sharing of market or source of production or provision of services; and to engage in bid rigging or collusive bidding. Such agreements are presumed to have an appreciable adverse effect upon competition. To be eligible for receipt of the benefit of a reduction in penalty, applicants are required to comply with the following conditions: from the time of disclosure, the applicant must cease to participate further in the cartel or its activities, unless expressly otherwise directed by the Commission; the applicant is expected to provide all relevant information, documents and evidence as may be required by the Commission and not conceal, destroy, manipulate or remove documents; the applicant is required to cooperate genuinely, fully, continuously and expeditiously throughout the investigation and proceedings before the Commission; and in matters under investigation by the Commission, the applicant must have approached the Commission before the investigative arm, the Director-General, has submitted its findings on the matter to the Commission. The Commission may also impose other conditions in addition to those above. If the Commission is of the opinion that the conditions have not been complied with or that the information provided by the applicant does not constitute full and vital disclosure, it shall not grant the applicant a reduction in penalty. A vital disclosure entails a full and true disclosure of information enabling the Commission to form a prima facie opinion about the existence of a cartel, or which establishes the existence of cartel activity. Before rejecting the application, the Commission will afford a hearing to the applicant. Despite rejection of an application, the Commission has the right to use information provided in the rejected application in its investigation and impose upon such applicant the full penalty leviable under the Act. The Lesser Penalty Regulations provide for full immunity from a penalty
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to the first applicant making a vital disclosure by submitting evidence which enables the Commission to arrive at a preliminary conclusion, subject to the results of a further detailed investigation on whether a cartel exists and is operating, without which the Commission did not have sufficient evidence at the time to form such an opinion. Full immunity is also available to an applicant making a vital disclosure by submitting evidence during an ongoing investigation which establishes an infringement, and without which the Commission did not have sufficient evidence at the time to establish the infringement. The grant of full immunity is discretionary. Subsequent applicants may also be granted reductions in penalties by making disclosures and submitting evidence providing significant added value to the evidence already available to the Commission or the Director-General to establish the existence of a cartel. The term 'added value' refers to evidence that enhances the ability of the Commission or the Director-General to establish the existence of a cartel. Pursuant to this, the applicant marked second is entitled to a penalty reduction of up to 50 per cent of the full penalty, and the applicant marked third is entitled to a penalty reduction of up to 30 per cent of the full penalty. Again, the partial leniency provisions are also discretionary and the manner of exercise of this discretion remains to be tested.
How many cartels have been unveiled and punished since the 3. adoption of the leniency programme?

At the time of writing this chapter, no effective leniency application has been filed with or processed by the Commission. No cartels have been unveiled to date.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?

An applicant is required to provide information in accordance with the requirements of regulation 10 of the Competition Commission of India (General) Regulations 2009 (as amended) (the General Regulations). According to the provisions of the General Regulations, an applicant is required to provide details of the alleged infringement along with all documents, affidavits and evidence in support of the application and a descriptive list thereof. Procedures for filing additional information and an abstract of facts and pleadings are also set out. Further, the General Regulations also provide that an applicant seeking a lesser penalty must provide all relevant information, documents and evidence as may be required by the Commission. As the General Regulations specifically ask for documents, affidavits and a detailed list thereof, it is clear that documentary evidence is expected to be provided. There has been, however, no guidance given as to the nature and detail of the evidence required to be provided, and this has been left to the discretion of the applicant. Whether or not testimonial evidence simplicitor would be considered to be sufficient evidence is as yet untested and there is no specific guidance or provision to suggest that this would be the case.
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As mentioned in question 2, for an applicant to successfully obtain full leniency, it must make a vital disclosure by submitting evidence which enables the Commission to arrive at a prima facie opinion on the existence of a cartel, without which the Commission could not have arrived at such an opinion. Full immunity is also available if an applicant makes a vital disclosure by submitting evidence during an ongoing investigation which establishes an infringement, without which the Commission may not have been able to establish the infringement. Further, an applicant is required to fulfil the obligations mentioned in question 2.

TIMING
5. What are the benefits of being 'first in' to cooperate?

The first undertaking to make a vital disclosure pertaining to cartel activity or an infringement of the provisions of the Act is the only undertaking eligible to benefit from the reduction in fines up to or equal to 100 per cent of the penalty leviable under the Act. The Lesser Penalty Regulations appear to make the granting of full immunity discretionary even if the disclosure and evidence meets all other requirements. This suggests that immunity is no longer automatic upon fulfilment of the requirements. As the provisions have not been tested in practice so far, it remains to be seen as to whether and how the Commission will exercise this discretionary power.
6. What are the consequences of being 'second'? Is there an `immunity plus' or 'amnesty plus' option?
An undertaking making a disclosure after the first applicant, pertaining to cartel

activity or an infringement of the provisions of the Act, and that provides significant added value to the evidence already in possession of the Commission or the Director-General, may be granted the benefit of a reduction in fines up to or equal to 50 per cent of the fines leviable under the Act. There is currently no specific provision, guidance or precedent for 'immunity plus' or 'amnesty plus' options. However, it is possible that if an applicant provides requisite information and material, knowingly or unknowingly, with respect to a lateral infringement, the Commission may seek further information with respect to it and institute an investigation into thatinfringement. There is nothing in the provisions of either the Act or the Lesser Penalty Regulations that precludes the Commission from treating the disclosure as a marker should it decide to investigate such an infringement, and it is possible that these options may arise and be acknowledged by the Commission in the future.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are 'useful contributions' defined? Yes. Under the Lesser Penalty Regulations, the third applicant in an investigation being conducted by the Commission or Director-General may also be granted the benefit of a reduction in penalty of up to 30 per cent of the penalty leviable under the Act.
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To be eligible for leniency, disclosures by applicants subsequent to the first are required to significantly add value to the evidence already in the possession of the Commission or the Director-General towards establishing the existence of a cartel. The added value is assessed by the extent to which the evidence provided enhances the ability of the Commission or the Director-General to establish the existence of a cartel. Again, there is no guidance or precedent as yet as to how this provision will be interpreted.

SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? If so, what are the conditions required to receive full leniency? Can ringleaders/coercers receive full leniency? If there is a requirement to 'cooperate fully
and on an ongoing basis' what does it entail? Does the regulatory
authority require the applicant to cease participation in the cartel conduct after its application?

Yes, as mentioned in the answer to question 5, full leniency may be granted to the first applicant making a vital disclosure. The vital disclosure should involve a full and true disclosure of information enabling the Commission to form a prima fade opinion about the existence of a cartel, or which establishes the existence of cartel activity. The conditions required to be fulfilled have been detailed in the answers to questions 2 and 4. Full leniency is available to the first applicant making a complete and vital disclosure. The Act and the Lesser Penalty Regulations do not distinguish between ringleaders, coercers or other members of a cartel. One of the prerequisites for being eligible for leniency is to cease all participation in the cartel, unless expressly otherwise directed by the Commission, and to cooperate fully, continuously and expeditiously. This is provided for in Regulation 3 of the Lesser Penalty Regulations. The applicant is also required to: provide all relevant information, documents and evidence as may be required by the Commission; and not conceal, destroy, manipulate or remove relevant documents in any manner that may contribute to the establishment of a cartel. The applicant is also expected to cooperate with the Commission until the conclusion of the proceedings. Section 46 of the Act expressly states that an applicant who fails to cooperate shall not be eligible for the grant of a lesser penalty. It remains to be seen how the requirement to 'cooperate genuinely, fully, continuously and expeditiously throughout the investigation and proceedings' will be treated and interpreted.
9. How many companies have received full immunity from fines to date?

So far, no company has received full immunity from fines. The Commission has yet to process a leniency application.
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PROCEDURE
10. What are the practical steps required to apply for leniency?

The Lesser Penalty Regulations do not provide for private consultation/ informal guidance prior to the initial contact/filing of the application. The leniency programme is as yet untested, and it is not clear as yet whether this will be provided for in the future. The Lesser Penalty Regulations set out a marker system for applicants under the leniency programme. The Lesser Penalty Regulations permit markers to be set orally, to be followed up by provision of evidence and material within 15 calendar days. The Commission will assign a priority status to the applicants in the order of their initial contact with it. Initial contact may be made by the applicant either directly or through its authorised representative by providing the prescribed written application in accordance with the Schedule to the Lesser Penalty Regulations or, if the applicant prefers, by fax, email or orally. If the applicant has made initial contact through email, fax or orally, it will need to ensure that the prescribed written application is received by the Commission within 15 calendar days of the initial contact. Failure to do so will result in the applicant losing its status, with subsequent applicants, if any, moving up the queue. Within three working days of the receipt of the prescribed written application, the designated authority shall put up the application before the Commission. The Commission shall mark the priority status of the applicant. In the case of applications received via fax, email or orally, the date and
time of receipt of the application by the Commission for the purpose of the

marker shall be the date and time as recorded by the designated authority or as recorded on the server or the facsimile transmission machine of the designated authority. In the event that the prescribed written application is not received within the stipulated period, the applicant may forfeit its marker position, affecting its eligibility for the grant of a lesser penalty. On completion of the evaluation of the first applicant's evidence, the Commission shall form an opinion about whether the applicant has provided full, true and vital disclosure of information and evidence. If inclined to reject an application for leniency, the Commission shall first provide a hearing to the applicant and evaluate its position. Until such evaluation of the evidence submitted by the first applicant has been completed, the next applicant shall not be considered by the Commission. In the event that the priority status is not granted to the first applicant, the subsequent applicants move up the queue and the procedure mentioned above for the first applicant shall apply mutatis mutandis. If the Commission is of the opinion that the initial second applicant has provided full, true and
vital disclosure of information and evidence, this initial second applicant shall be eligible for the receipt of the benefit of up to 100 per cent reduction in penalty. Orders passed by the Commission reducing or waiving the penalty that may be imposed under the Act are conditional upon compliance with
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conditions and restrictions set out in the Lesser Penalty Regulations and in the order. If the Commission is subsequently satisfied that the applicant is
disentitled to the benefit, it may revoke the benefit granted. The applicant shall be liable to pay the full penalty under the Act and may be tried for the offence with respect to which leniency had been sought. The Commission may however continue to utilise the information to advance its investigation.
11. Is there an optimal time to approach the regulatory authority?

Reduction of up to 100 per cent of the penalty is only available to the applicant 'first in' ie where this benefit has not already been granted to another applicant. Further, until the Commission has evaluated the information received from the applicant with first priority, it will not process or evaluate information or evidence received subsequently. If a disclosure is made after the Commission receives the report of the Director-General in an investigation, a lesser penalty will not be available. It is not possible to accurately predict or know when the Director-General is likely to provide its report to the Commission. Given the current resources available to the Commission, the practical feasibility of suo motu investigations (ie when the Commission acts on its own motion) is in some doubt. However given the size of the market in many areas, it is quite possible that participants in multi-jurisdiction international cartels will need to make several leniency filings, including in India, and that issues of timing in such cases will be driven by the need for coordination. In addition, in cases where no investigation has commenced - given the current levels of resource and data availability - it is unlikely that the Commission would already have in its possession evidence that would enable it to disregard the information provided by an informant and therefore deny leniency under the Act.
12. What guarantees of leniency exist if a party cooperates?

The grant of leniency is discretionary. After the issuance of the Lesser Penalty Regulations, this discretion remains even if the party cooperates and, as such, leniency is not guaranteed by the provisions of law. The exercise of this discretion and the development of the jurisprudence and precedents around it are awaited. It is possible that the Commission may choose to grant full leniency in all cases when the applicants meet all conditions and requirements, only using its discretionary power in unforeseen or extraordinary cases.
CONSEQUENCES
13. What effects does leniency granted to a corporate defendant have on the defendant's employees? Does it protect them from criminal and/or civil liability?

The law does not protect employees of undertakings which have been granted leniency from either criminal or civil liability. In fact, under
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section 48 of the Act, every person who is in charge of and was responsible
to the company for the conduct of its business at the time is deemed to be guilty of the infringement. This presumption is rebuttable. If an infringement takes place as a result of the connivance or consent or neglect of a director, manager, secretary or other officer, that person shall also be deemed guilty of the infringement. In the case of a firm, this includes a partner. While the Act does not extend criminal jurisdiction to the Commission, regular criminal prosecutions may happen on the basis of a finding of guilt. Any such finding of guilt may have serious consequences under ancillary laws including, for instance, the disbarment of a person from directorships.

14. Does leniency bar further private enforcement? The leniency policy does not prevent private enforcement against a person or undertaking found guilty of contravening the provisions of the Act. Section 53N of the Act provides for compensation to be awarded by the Competition Appellate Tribunal to any person or undertaking for losses or damages that may arise out of the finding of an infringement of the Act by the Commission, or out of the finding of an infringement of the orders of the Commission or the Competition Appellate Tribunal.
The person or undertaking claiming damages needs not prove afresh the violation of the Act or the infringement of the order passed. The enquiry to be conducted shall be limited to the determination of the eligibility to and quantum of compensation due. PROTECTION AGAINST DISCLOSURE/CONFIDENTIALITY 15. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent? Is the identity of the leniency applicant/other cooperating parties disclosed during the investigation or in the final decision? Is information provided by the leniency applicant/other cooperating parties passed on to other undertakings under investigation? Can a leniency applicant/other cooperating party request anonymity or confidentiality of information provided? Under the Lesser Penalty Regulations, an applicant shall be afforded confidentiality. The Commission shall also maintain confidentiality of the identity of the applicant or the information obtained from it and not disclose the identity of the applicant or the information obtained unless: the disclosure is required by law; or the applicant has agreed to such disclosure in writing; or there has been a public disclosure by the applicant. Under the provisions of the Act, except in compliance with or for the purposes of the Act, the Commission may disclose information only after obtaining the consent of the concerned party. In the absence of any precedence or guidelines, there is no clarity as to the circumstances in which the Commission will consider disclosure of confidential information to be required by law or for compliance with the
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Act, and whether such circumstances will extend to include disclosure to the other members of the cartel. Further, the General Regulations permit an applicant to request the Commission to treat its identity and information provided by it as confidential. Additionally where publicly disclosing documents will result in a disclosure of trade secrets, or destruction or appreciable diminution of the commercial value of any information, or can reasonably be expected to cause serious injury, an applicant may request the Commission or the Director-General to maintain the confidentiality of such documents. In the event that such documents form part of the applicant's written submissions, the public version of the submissions shall be an exact copy of the confidential version with the confidential information omitted. The confidentiality to be bestowed upon the documents shall be decided at the discretion of the Commission or the Director-General and shall be granted for such period as specified. Factors that the Commission or Director-General may consider before arriving at any decision of confidentiality include: the extent to which the information is known to the public; the extent to which the information is known to the employees, suppliers, distributors and others involved in the party's business; the measures taken by the party to guard the secrecy of the information; and the ease or difficulty with which the information could be acquired or duplicated by others. Documents that the Commission has agreed to treat as confidential shall be segregated from the public record and secured in a sealed envelope bearing, inter alia, the notation 'Confidential record under Regulation 35' (of the General Regulations), and the date on which confidential treatment expires. If the Commission includesin any order or decision or opinion, information that has been granted confidential treatment under this regulation, the Commission shall file two versions of the order or decision or opinion. The public version shall omit the confidential information that appears in the complete version and be marked 'Subject to confidentiality requirements under Regulation 35 (of the General Regulations)'. This version shall be served upon the parties, and shall be included in the public record of the proceeding. Any person or party, including any officer, employee, expert appointed or engaged by the Commission who is privy to the contents of such confidential documents shall ensure that they maintain their confidentiality. These provisions of the Lesser Penalty Regulations and the General Regulations may be in conflict with those of the Right to Information Act 2005 (the Information Act). The Information Act was enacted to provide a mechanism enabling persons to secure access to information which is under the control of public authorities. The Information Act empowers a person desiring to obtain any
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information to secure access to it by making a request specifying the particulars of the information sought by them. No reason for requesting the information or any personal details (except as may be necessary for contacting them) are required to be given. Information so requested is required to be provided to the person within 30 calendar days from the date of the request. The Information Act has set out certain grounds on the basis of which the concerned authority may reject such a request for information. These include, inter alia: information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court; information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information; and information which would impede the process of investigation or apprehension or prosecution of offenders.
16. Is the evidence submitted by the leniency applicant protected from transmission to other competition authorities with whom the authority in question cooperates? If so, how?

There are no specific provisions in the Act or the Lesser Penalty Regulations governing the exchange of information between the Commission or the Director-General and other competition authorities. How this develops remains to be seen in particular as the Commission has not yet had the occasion to deal with an application for leniency. However, it is also significant that the Commission has in the past cooperated closely and in great detail (including in the context of the general development of competition law in India) with other competition authorities and continues to do so. The confidentiality of the documents per se is envisaged in detail as mentioned under question 15. The maintenance of confidentiality appears to be time-bound, as confidential documents are separately maintained and are required to have a date on which confidential treatment expires. There is also a considerable overlap of domain between the Commission and sectoral regulators such as the electricity or telecommunications regulatory authorities. Cooperation and referrals for opinions and the like are provided for between these authorities. There is insufficient information yet as to how this will be approached by the Commission and the Director-General.
17. To what extent can evidence submitted by the leniency applicant (transcripts of oral statements or written evidence) become discoverable in subsequent private enforcement claims? Can leniency information be subjected to discovery orders in the domestic courts? Can leniency information be subjected to discovery orders
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in foreign courts? Can leniency information submitted in a foreign jurisdiction be subjected to discovery orders in the domestic courts?

Evidence submitted and claimed by the leniency applicant as confidential is required to be treated as such and the Commission is mandatorily required by law to determine the validity and areas of confidentiality in the evidence submitted. A sanitised public version may be made available. Information already known to the public and the ease of access to such information by others are factors to be considered when assessing confidentiality. A person may seek discovery by invoking the provisions of the Information Act or by obtaining a court order directing the authority to make disclosure. The Information Act permits an authority to reject a request for disclosure on the grounds of commercial confidentiality, among others, and it is unlikely that the Commission will disclose confidential information lightly and breach inter se confidentiality obligations. While it is possible in theory to obtain an order for discovery from domestic courts, it is again unlikely that the Indian courts would lightly pass such orders, and they would almost certainly not do so during the course of a pending investigation or proceedings under the Act. An order by a foreign court for discovery would have to be enforced in India. Such enforcement would need to be routed through an Indian court, where it may be resisted on the basis of being contrary to the public policy of India, which includes the general provisions of Indian law (including the Act). It is also improbable that a domestic court would pass orders for discovery of documents submitted outside its jurisdiction. The answer above is based on the general principles of enforcement of Indian civil law and is unrelated to specific situations concerning the Commission. There is no specific law which requires the Commission, as a statutory authority in India, to provide such information upon request.
18. Are there any prppedents in which evidence from a leniency application has been discovered in a private enforcement claim?

To date, no leniency application has been filed or processed by the Commission.

RELATIONSHIP WITH SETTLEMENT PROCEDURES
19. What is the relationship between leniency and applicable settlement procedures? Are they mutually exclusive?

Presently, the Lesser Penalty Regulations do not provide for any settlement agreements with the Commission. It is expected that the Commission may not be inclined to enter into such agreements in order to avoid controversy.
REFORM/LATEST DEVELOPMENTS
20. Is there a reform underway to revisit the leniency policy? What are the latest developments?

As mentioned earlier, competition law in India and the leniency policy itself is a relatively recent development. The Lesser Penalty Regulations were
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brought into force in the later half of 2009. The absence of guaranteed full leniency to the first applicant appears to have created a major obstacle in the efficacy of the provisions.

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