The CCI (Lesser Penalty) Regulations, 2024

Section 46 permits the Commission to impose a lesser penalty on a member of a cartel who makes a full and true disclosure that is vital. The Lesser Penalty Regulations, 2024 replaced the regulations of 2009 and came into force alongside the other 2023 amendment instruments in March 2024. They formalise the marker system, set out the conditions an applicant must satisfy, fix the reductions available by order of priority, provide for confidentiality and for withdrawal, and give effect to the leniency plus mechanism.

1. Who May Apply

• An enterprise that is a member of a cartel as defined in Section 2(c), whether or not it initiated the arrangement, and whatever its role in it.
• An individual who has been involved in the cartel on behalf of an enterprise may apply in respect of his own liability under Section 48, and an enterprise's application may cover the individuals who acted for it. This matters because the personal exposure of an officer is an independent reason for a cartel to break.
• Not a party to a vertical agreement or an abuse. Leniency is confined to cartels; the routes for those contraventions are commitment and settlement.

2. The Marker System

An applicant makes contact with the Commission and is granted a marker, which preserves its place in the queue while the material is assembled. The marker is granted on the basis of the information initially furnished, which must identify the cartel, its members and the products or services affected. The applicant is then given time to complete the disclosure, and if it does so within that period its priority relates back to the date of the marker. Without a marker system the first applicant would be whoever happened to be ready first rather than whoever decided first, and the incentive to come forward quickly would be lost.

3. The Conditions

1. Full and true disclosure of the existence of the cartel, its members, the products and geography affected, its duration and its manner of operation, together with the evidence in the applicant's possession.
2. Vital information, meaning that it adds materially to what the Commission has. Its value accordingly falls as the investigation progresses.
3. Cessation of participation in the cartel from the time of disclosure, unless the Commission directs otherwise so that the investigation is not compromised.
4. Continuing cooperation, genuine, full and expeditious, throughout the investigation and the proceedings, including producing further material and making officers available.
5. No concealment, destruction or manipulation of relevant documents, which is the condition most often breached and the commonest ground of revocation.
6. Confidentiality of the fact of the application, except as the Commission permits.

4. The Reductions

• The first applicant may be granted a reduction of up to one hundred per cent of the penalty, that is complete immunity from penalty, where the disclosure enables the Commission to form a prima facie opinion or, where an investigation is already under way, establishes the contravention.
• The second applicant may be granted a reduction of up to fifty per cent.
• Subsequent applicants may be granted a reduction of up to thirty per cent.
• These are ceilings. The actual reduction depends on the stage at which the application was made, the value the evidence added, and the quality of the cooperation.
• The benefit is from penalty alone. It is not immunity from a finding of contravention, from a cease and desist direction, or from a claim for compensation under Section 53N by a person injured.

5. Leniency Plus

The regulations give effect to the mechanism introduced by the amendment of 2023. An applicant already seeking a lesser penalty in one cartel may disclose a second and unrelated cartel of which the Commission is unaware. If the disclosure in the second cartel qualifies, the applicant receives the ordinary benefit there and, in addition, a further reduction of the penalty in the first. The object is to reverse the incentive of an enterprise participating in several cartels, which had no reason to disclose the others once its position in the first was secure.

6. Confidentiality, Withdrawal and Revocation

• Confidentiality. The identity of the applicant and the material supplied are treated as confidential and are not disclosed except with consent or where required for the purposes of the Act, which includes giving other parties a fair opportunity to meet the case; that is done through the confidentiality ring under the General Regulations.
• Withdrawal. An applicant may withdraw before the Director General's report, subject to the consequences the regulations specify; evidence already furnished may be used, with the protections provided.
• Revocation. Where the applicant has not complied with the conditions, has concealed or destroyed evidence, has failed to cooperate, or has made a disclosure that is not vital or not true, the Commission may revoke the lesser penalty and proceed as if no application had been made. This is the sanction that makes the conditions real, and it is why the applicant's conduct after filing matters as much as the quality of the initial disclosure.

7. Related Topics and Provisions