Perhaps not many laws have been subject to so much public scrutiny as competition law either before its enactment or afterwards. Almost immediately after its enactment, just after a duly appointed Member had assumed office and before a duly appointed Chairman could enter office, the Competition Act, 2002(Act) was challenged on various counts. This resulted in a very strange situation. The Competition Commission of India (CCI) could not be called a Commission in terms of the Act which needed a minimum quorum of a Chairman and, at least, two Members for being a legally recognized Commission. So, the CCI remained a one Member body (not a full Commission) till as late as March 1, 2009 when, for the first time, a Chairman and two Members were in office and the CCI, in the eyes of law, was a full Commission. The enforcement powers to CCI came in stages. In first phase only advocacy functions were allowed. This was followed by antitrust enforcement powers being given to the Commission from May 20, 2009. Thereafter, regulations of combinations (popularly known as Merger Review) came into force with effect from June 1, 2011. There were always fears that the CCI may turn out to be as effective (or ineffective depending upon one’s perspective) as MRTPC. Now, that five years have passed since the time the CCI began to get its enforcement powers, it is high time to look back if the fears about the efficacy of the powers given to the CCI were justified or misplaced. The author, the only official in senior echelons of the CCI who not only saw the transition from a CCI doing only competition advocacy to a fully functional Commission but also played a very crucial role in this transition by way of being the very first Director General of the functional CCI, laying down the investigative framework of investigation, and later as the first head of Merger Control who gave the country its very efficient Merger Review Format, takes a look at this issue.

1. 1
A 360 Degree Review of Penal Provisions’ Application under Competition Law
-K K Sharma1
Short Summary:
Perhaps not many laws have been subject to so much public scrutiny as competition law either before its enactment or
afterwards. Almost immediately after its enactment, just after a duly appointed Member had assumed office and before a
duly appointed Chairman could enter office, the Competition Act, 2002(Act) was challenged on various counts. This
resulted in a very strange situation. The Competition Commission of India (CCI) could not be called a Commission in
terms of the Act which needed a minimum quorum of a Chairman and, at least, two Members for being a legally
recognized Commission. So, the CCI remained a one Member body (not a full Commission) till as late as March 1, 2009
when, for the first time, a Chairman and two Members were in office and the CCI, in the eyes of law, was a full
Commission. The enforcement powers to CCI came in stages. In first phase only advocacy functions were allowed. This
was followed by antitrust enforcement powers being given to the Commission from May 20, 2009. Thereafter, regulations
of combinations (popularly known as Merger Review) came into force with effect from June 1, 2011. There were always
fears that the CCI may turn out to be as effective (or ineffective depending upon one’s perspective) as MRTPC. Now, that
five years have passed since the time the CCI began to get its enforcement powers, it is high time to look back if the
fears about the efficacy of the powers given to the CCI were justified or misplaced. The author, the only official in senior
echelons of the CCI who not only saw the transition from a CCI doing only competition advocacy to a fully functional
Commission but also played a very crucial role in this transition by way of being the very first Director General of the
functionalCCI, laying down the investigative frameworkof investigation, and later as the first head of Merger Control who
gave the country its very efficient Merger Review Format, takes a look at this issue.
Main Article:
Any law is as good as its implementation is an old wisdom. In any debate on the
effectiveness of any law, two things take precedence on any other. These are: First the
deterrent provisions in the law for the likely violation and the second is the effectiveness
of enforcement of this law. It does not need to be emphasized that the best intentioned
and drafted legislations shall fail if not effectively implemented. Jurisdictions across the
world are moving towards criminalization of competition law violations. The trend is
recognition of the serious harm of competition law infringements on consumers, other
stakeholders, the process of competition and the economy as a whole.
With respect to India, there is a need for a better appreciation that, unlike Monopolies
and Restrictive Trade Practices Commission (MRTPC), the Competition Commission of
India (CCI) has adequate powers to deal with the non compliant enterprises and to
ensure that it is in a position to effectively fulfill the mandate given to it. This write up
aims to elaborate on the adequate penal powers given to the CCI so as to be in a
1 Chairman , KK Sharma Law Offices and ex Director General and Head of Merger Control and Antitrust
Divisions, CCI. The authorcan be contacted on kksharmairs@gmail.com or
kksharma@kkslawoffices.com .

2. 2
position to be an effective regulator. This has also been done by drawing a comparison
with the erstwhile MRTPC regime and, after its repeal, the present competition regime
under CCI. By all accounts, the CCI has adequate powers to deal with the responsibility
entrusted to it. Be that as it may, still the criminal consequences for violations of
different provisions of competition law are not there on the statute in India. Or if we see
the world trends, we may say that the criminal consequences of the violations of
competition law in India are still some time away from the present times we are living
in. There are some provisions relating to contravention of the orders of the Commission.
This does become harsher with the contravention of the orders of CCI inviting not just
economic fines but also an imprisonment of up to three years. However, even this fine
and imprisonment can only be a consequence after a case is filed before Chief
Metropolitan Magistrate by CCI and not imposed by CCI itself.
In the present discussion, the competition law being a civil law, none of the violations of
competition law are treated as criminal acts inviting imprisonment in a jail. The term
sanction, essentially, is an abstract term connoting different meanings in different
contexts. However, speaking loosely, it may refer to a liability imposed on a person who
is held to be involved in a wrongdoing. Depending on the nature of the wrong
committed, a sanction may be classified as a civil sanction or a criminal sanction. While
a civil sanction implies an order in the form of directions, prohibitions, injunctions,
imposition of monetary fines, confiscation of assets, etc from the adjudicatory authority
on account of contravention of a provision of a civil law, a criminal sanction usually
entails punishment by way of incarceration for a specified term, adverse publicity,
disqualification, etc on account of commission of an offence as defined, by and large, in
the penal code of the nation. Having stated this, it must be borne in mind that treating
violations of any particular law as inviting either civil or criminal consequences is a
matter of state policy. In India, the legislature, in its wisdom, has provided hefty
penalties but not imprisonment for any violations of competition law. In the entire array
of consequences, provided in the Act, the only place where a person may be visited by a
term of imprisonment is section 42 of the Competition Act, 2002(the Act). For a ready
reference, the section 42 of the Act is being reproduced below:

3. 3
“42 Contravention of orders of Commission
(1) The Commission may cause aninquiry to be madeinto complianceof its orders or directions made in exercise of its powers under
the Act.
(2) If any person, without reasonable clause,fails to comply with the orders or directions of theCommissionissuedunder sections 27,
28, 31, 32,33,42Aand43A of theAct, he shall be punishablewith fine which may extend to rupees one lakh for each day during
which such non-compliance occurs, subject to a maximum of rupees ten crore, as the Commission may determine.
(3) If any persondoes not complywith the orders or directions issued,or fails to pay the fine imposedunder sub-section(2), he shall,
without prejudice to any proceeding under section39,be punishablewith imprisonment for a term which may extend to three years,
or with fine which may extendto rupees twenty-five crore,or with both, as the Chief Metropolitan Magistrate, Delhi may deem fit:
Provided that the Chief Metropolitan Magistrate, Delhi shall not take cognizance of any offence under this section save on a
complaint filed by the Commission or any of its officers authorized by it.”
The above provisions do indicate that any contravention of any orders or directions
passed by the Competition Commission of India(CCI) can invite imprisonment, after
following due process laid down under the Act, but for any violations of the Act, the CCI
does not have the powers to sent the wrongdoer to jail. To that extent, there are no
criminal sanctions in the Act. Nonetheless there are sufficient deterrent provisions in the
Act and, if we are not looking for not necessarily putting some one behind bars, the
enforcement provisions are adequate to do justice to the mandate given to it by law.
Before delving into the sanctions provided under the Act, it would be relevant to
highlight general framework of the Act and the circumstances that necessitated the
enactment of the Act. As is generally known, the Act was enacted in January, 2003.
Under the provisions of the Act, the (CCI) was established on October 14, 2003. On
account of certain legal challenges, the CCI could not be duly constituted and till March
1, 2009, and it remained a single member body not recognised as a duly constituted
Commission in terms of section 8 of the Act. The legal challenges led to a process
wherein the Act underwent amendments in September 2007. The Act, as on today,
contains a fairly good mechanism to enable the CCI to be in a position to enforce
compliance through deterrent means instead of collecting self professed undertakings of
good conduct from erring enterprises as was the case with erstwhile MRTPC.
It may be recalled that under the MRTP Act, the only remedy for any anti- competitive
acts carried on by any enterprises or persons was only to direct them to “cease and
desist”. The market having grown considerably over a period of time and winds of
challenge of economic liberalisation having crossed over the Indian shores from 1991
onwards, these remedies were not considered enough. When the economy grew, with
liberalization in different sectors, it also enhanced the possibilities of conduct of some of

4. 4
the market players being driven by a sense of excessive greed leading to their indulging
in a conduct which may suite their own profit motives but be not conducive to a
competitive market functioning and overall state of competition in market .
Therefore, there was felt a strong need for the State to put a regulatory mechanism in
place so that recently opened markets were not hijacked by some of the market
participants for their own good at the cost of the market freedom and other small
players in the market. This being so, it was considered really appropriate to introduce
the penal provisions which are not merely “cease and desist” but are deterrent enough
for the wrong doers lest they should hijack the market leadership at the cost of other
new entrants waiting to enter the market through fair means. In was in this background
that the legislature in its wisdom gave enough teeth to the newly constituted
competition agency, known as CCI, to deal with the enterprises which were not
compliant with the law of the land.
Going by the general standards of probity in public life, it may, perhaps, be too much to
expect the erring enterprises to give undertakings of good conduct and abide by it. Such
measures proved futile in the earlier regime of MRTPC. Accordingly, adequate penal
provisions were incorporated in the Act. However, as is true with any new legislation, it
is not just the provisions of the law which determine the fate of its future but also the
implementing machinery - in the present case, the CCI, COMPAT and the Supreme Court
which will finally lead to the evolution of the law in this land.
In this connection, it may be said with satisfaction that the judgment enunciated by the
Hon. Supreme Court in the CCI vs. SAIL has really shown that the Apex Court in the
land is fully abreast of the philosophy behind implementation of the competition law in
India and has, accordingly, dealt at length and how it should be followed. The judgment
also laid down broad parameters for the way the investigation should be conducted by
the investigation wing of the CCI i.e. Office of the Director General(DG) as well as how
the CCI should deal with the provisions of the section 33 of the Act for giving interim
orders and many such other issues. To this extent, this judgment in the case of CCI Vs.
SAIL given by the Hon’ble Supreme Court, on 09.09,2010, indicates the maturity of
judiciary in understanding the provisions of the new and modern law. However, other

5. 5
two organizations including CCI and COMPAT also have to display some level of
understanding and follow that understanding to ensure that the functioning of
competition law in the country is synchronized with the global market realities.
The recognition of the effective harm of competition law infringements has been
increasing the world over. Three types of violations are the basic concerns of the
competition law authorities across the globe, viz., anti-competitive agreements, abuse of
dominant position and anti-competitive mergers. Amongst these, it is the anti-
competitive agreements which are considered to be most harmful amongst all
competition law violations. Cartels, referring to agreements or arrangements or
understanding amongst firms or entities engaged in provision of similar goods or
services for the purpose of suppressing competition in the market, are considered to be
the most pernicious competition law violations. As a matter of fact, Former EU
Competition Commissioner Monti described cartels as a “cancer” on the European
economy.2
Cartels may take various forms, viz., price fixing cartels, output restricting
cartels, market allocating cartels or bid rigging cartels. Notwithstanding the form, the
primary purpose of cartel is joint profit maximization. Wherever cartels operate, nations
experience social and economic disruption since the local industries or small business
houses cannot compete with big combinations that have lower costs of production,
supply, distribution and collusive strategies to sell the products. As it would be seen in
subsequent paragraphs, it is cartels which are mostly subjected to criminal sanctions
across jurisdictions.
Right at the beginning, it would be relevant to point out that jurisdictions across the
world are now moving towards introducing criminal sanctions, particularly imprisonment
of the delinquent persons, against competition law contraventions, particularly hard core
cartels which are widely considered as most pernicious amongst competition law
violations and obstruction to justice.
A move towards criminalization of competition law violations is argued to substantially
increase the prospects of deterrence. In Arthur Liman’s words, ‘For the purse snatcher,
2 Foreword by Mario Monti to the XXXI Report on Competition Policy 2001, European Commission,
2002, p. 4.

6. 6
a term in the penitentiary may be little more unsettling than basic training in the army.
To the businessman, however, prison is the inferno, and conventional risk-reward
analysis breaks down when the risk is jail. The threat of imprisonment, therefore,
remains the most meaningful deterrent to antitrust violations’3
A criminal conviction
severely damages the defendant’s image and reputation, and the associated stigma and
negative publicity far outweigh the inconvenience and embarrassment of an adverse
decision in a civil proceeding.4
Let us a look at how this issue is dealt by different
jurisdictions. For ease of reference, selected jurisdictions which have inclined their
competition law towards introducing criminal sanctions are reproduced below in a
tabular format:
Serial
No.
Jurisdiction Criminal
Sanction
Offence Period of
commencement
Governing Law
1A Israel Imprisonment up
to 3 years
(1) Being party to a restrictive
arrangementnotduly approved,
nor issued with a Temporary
Permit nor granted an
Exemption pursuant to Section
14;
(2) Not complying with a
condition stipulated upon an
Approval of a restrictive
arrangement or issuance of a
Temporary Permitor grantof an
Exemption, as maybe applicable;
(3) Not giving notice of a
corporate merger or performing
an act tantamount to a full or
partial merger, contrary to the
provisions of Chapter III;
(4) Not complying with a
condition stipulated upon the
grant of a consent to a merger;
(4a) Abusing his or her position
in the market pursuant to the
provisions of Section 29A,
provided thathis or her intention
to reduce competition in the
marketplace or to injure the
public is proven
(5) Violating instructions given
pursuant to Section 30 or an
order issued pursuantto Sections
1988
In the earlier version,
it was 2 years
Earlier version
available here:
http://eng-
archive.antitrust.gov.il
/files/197/RTP.PDF
Section 47(a) of Restrictive Trade
Practices Law 1988
Latest version available here
http://eng-
archive.antitrust.gov.il/files/27/RTP%
20Law.pdf
3 A. L. Liman, ‘The Paper Label Sentences: Critique.’ (1977) 86 The Yale law Journal 619.
4 Vicky Comino, ‘Civil or Criminal Penalties for Corporate Misconduct: Which Way Ahead?’ (2006) 34
Australian Business Law Review 428

7. 7
25 or 31;
(6) Violating an order issued
pursuant to Sections 35
(ancillary order) or 36 (interim
ruling)
1B Israel Imprisonment of
up to 5 years
Committing the following offence
under aggravatingcircumstances
(1) Being party to a restrictive
arrangementnotduly approved,
nor granted a temporary permit
or exemption pursuantto Section
14;
(2) Not complying with a
condition for the approval of a
restrictive arrangement or the
grant of a temporary permit or
an exemption, as may be
applicable;
(3) Notgiving notice of a merger
of companies or performing an
act tantamount to a full or
partial merger, contrary to the
provisions of Chapter III;
(4) Not complying with a
condition stipulated for approval
of a merger;
(4a) Abusing his position in the
market pursuant to the
provisions of Section 29A,
provided that his intention to
reduce business competition or to
injure the public has been
proven;
2000 Section 47 A of Restrictive Trade
Practices Law 1988
(As amended in 2000)
See Section 47(a) and 47A, available
here
http://www.antitrust.gov.il/eng/Antitr
ustlaw.aspx
OECD document evidencing that
amendments were made in 2000,
available here
http://www.oecd.org/competition/5010
4572.pdf
2 Germany Imprisonment of
up to 5 years
Bid Rigging
Restricting competition
through agreements in the
context of public bids.
1998
Act Against
Restraints of
Competition, 2005
available here
http://www.gesetze-
im-
internet.de/englisch_g
wb/index.html does
not provide for
imprisonment.
Section 298 of the Criminal Code
(STGB)
available here
file:///C:/Users/KKOFFICE1/Downloa
ds/Germany_CC_1971_amended_200
9_en.pdf
3 UK Imprisonment of
up to 5 years
Cartel 2002 Section 188, The Enterprise Act, 2002
available here
http://www.legislation.gov.uk/ukpga/2
002/40/contents
4 Australia Imprisonment of
up to 10 years
Cartel 2009 Sections 44ZZRF, 44ZZRG, 79,
Competition and Consumer Act, 2010.
Section 79, available here:
http://www.austlii.edu.au/au/legis/cth/
consol_act/caca2010265/s79.html

8. 8
Section 44ZZRF, available here:
http://www.austlii.edu.au/au/legis/cth/
consol_act/caca2010265/s44zzrf.html
Section 44ZZRG, available here:
http://www.austlii.edu.au/au/legis/cth/
consol_act/caca2010265/s44zzrg.html
5A Korea Imprisonment of
up to 3 years
Engaging in abusive conduct;
Engaging in unfair concerted
practices or caused others to
engage
in such practice; Hindering,
refusing or evading
investigation.
2011 Article 66 of Monopoly regulation and
Fair Trade Act, 2011
Available here:
file:///C:/Users/KKOFFICE1/Downloa
ds/1.+Monopoly+Regulation+and+Fair
+Trade+Act.PDF
5B Korea Imprisonment up
to 2 years.
Engaging in Resale Price
Maintenance.
2011 Article 67 of Monopoly regulation and
Fair Trade Act, 2011
Available here:
file:///C:/Users/KKOFFICE1/Downloa
ds/1.+Monopoly+Regulation+and+Fair
+Trade+Act.PDF
The above table clearly indicates the gradually growing trend towards introducing or
increasing criminal sanctions against individuals responsible for competition law
infringements. We should not lose sight of the fact that if and when the violations are
visited by imprisonment and there is a criminal sanction behind such violations, the
standard of proof needed by court shall suddenly become very high in comparison to
present times when the violations of competition law are visited by economic penalties
alone.
Generally speaking, a conversion of a civil contravention into criminal offence necessarily
entails escalation of the ‘standard of proof’ required to prove the commission of an
offence. While the ‘standard of proof’ applied in the case of civil contravention is
‘preponderance of probabilities,’ the ‘standard of proof’ applied in the case of criminal
offence is ‘beyond reasonable doubt’. Needless to state, the later standard is harder to
achieve but is, nonetheless, essential before restrictions are imposed upon the liberty of
the offender. Further, due recognition of general principles of criminal law, outlining
appropriate violations in competition law which are sought to be made criminal, putting
in place an effective investigative mechanism as well as leniency or reward schemes are
essential elements to achieve successful enforcement of criminal sanctions.

9. 9
Be that as it may, it is relevant to keep in mind that any debate about criminalization is
never immune from arguments of over-criminalization. The most significant economic
cost of criminalization would be its chilling effect on legitimate business activity. It
carries a serious risk of making managers risk averse – more than the shareholders in a
company would wish them to be – because of the possibly devastating personal fears of
a prosecution.
With respect to the penal provisions within the framework of the Act, it is interesting to
state that they are found not only in chapter titled as “Penalties” i.e. Chapter VI of the
Act but also at other places such as section 27 and section 28, in Chapter IV of the Act.
There are certain other areas where provisions give enough deterrent power to the CCI
although not named as penalties. Interestingly, substantial chunk of penal powers are
outside the chapter of “penalties”. However, these penal provisions are also equally
important and effective. One such section is section 28 of the Act which gives power to
CCI to divide an enterprise. For ready reference, section 28 of the Competition Act 2002
is being quoted below:
“28 (1) The [Commission] may, notwithstandinganythingcontainedin anyother law for the time being in
force, by order in writing, direct division of an enterprise enjoying dominantposition to ensure thatsuch
enterprise does not abuse its dominantposition.
(2) In particular, andwithoutprejudice to the generality of the foregoing powers, the order referred to in sub-
section (1) may provide for all or any of the following matters, namely:—
(a) the transfer or vesting of property, rights, liabilities or obligations;
(b) the adjustmentof contracts either by discharge or reduction of anyliability or obligation or
otherwise;
(c) the creation, allotment, surrender or cancellation of any share,stocks or securities;
(d) [Omitted by Competition (Amendment) Act, 2007]
(e) the formation or winding upof an enterprise or the amendmentof the memorandumof association
or articles of association or any other instruments regulating the business
of any enterprise;
(f) the extent to which, and the circumstances in which, provisions of the order affecting an enterprise
may be altered by the enterprise and the registration thereof;
(g) any other matter which maybe necessary to give effectto the division of the enterprise.
(3) Notwithstandinganythingcontainedin any other lawfor the time being in force or in any contractor in
any memorandum or articles of association, an officer of a companywhoceases to hold office as such in
consequence of the division of an enterprise shall notbe entitled to claim anycompensation for such cesser.”
The afore-stated provision endorses the remedy adopted against abuse of dominant
position in mature jurisdictions, as United States (US). Way back in the year 1974,
American Telephone and Telegraph Company (AT & T) was charged with abusing its
dominant position in an antitrust suit filed by the US Department of Justice (DoJ), which
had sought divestiture of AT&T from the Bell operating companies and the divestiture

10. 10
and dissolution of Western Electric, AT &T’s manufacturing subsidiary. The said
divestiture was complete in the year 1984, dividing the former telephone monopoly into
eight units. From the above provisions of Section 28, it is noticed that the CCI has the
power to divide an enterprise in order to ensure that such an enterprise does not abuse
its dominant position. Interestingly, this section does not require the enterprise to have
actually abused its dominant position for invoking this section. This is indeed a
significant power and enough to create a great deterrence. However, interestingly, this
section 28 of the Act, does not find place in chapter for penalties but in chapter IV
relating to duties, powers and functions of the CCI. Similarly, Section 27 ,dealing with
the orders of the CCI, and containing the penal provisions which are substantial in
nature, is also not in the penalty chapter and has been titled merely as ‘orders by
Commission after inquiry into agreements or abuse of dominant position’. Therefore, the
present scheme of the Act is such although the main headline making penalties have
been levied under section 27 of the Act but this section is not within the Chapter VI,
titled as “penalties” but in Chapter IV titled as “orders by Commission after inquiry into
agreements or abuse of dominant position”.
Now coming to the substantive penalties which can be imposed by the CCI-whether in
the Chapter VI of the Act titled as ‘penalties’ or elsewhere- the most significant section
in this regard is section 27 of the Act which is being quoted below for ready reference:
“27. Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an
enterprise in a dominantposition, is in contravention of section 3 or section 4, as the case may be, it may pass
all or any of the following orders, namely:—
(a) directanyenterprise or association of enterprises or person or association of persons, as the case
may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-
enter such agreement or discontinue such abuse of dominant position, as the case may be;
(b) impose such penalty, as itmay deem fitwhichshall be not more than ten per cent of the average
of the turnover for the last three preceding financial years, upon each of such person or enterprises
which are parties to such agreements or abuse:
[Provided thatin case any agreement referred to in section 3 has been entered into by a cartel, the
Commission mayimpose upon each producer, seller, distributor, trader or service provider included
in that cartel, a penalty of up to three times of its profit for each year of the continuance of such
agreement or ten per cent. of its turnover for each year of the continuance of such agreement,
whichever is higher.]
(c) [Omitted by Competition (Amendment) Act, 2007]
(d) direct that the agreements shall stand modified to the extent and in the manner as may be
specified in the order by the Commission;
(e) directthee enterprises concerned to abide by such other orders as the Commission may pass and
comply with the directions, including payment of costs, if any:;
(f) [Omitted by Competition (Amendment) Act, 2007]
(g) pass such other [order or issue such directions] as it may deem fit.
[Provided thatwhile passing orders under this section, if the Commission comes to a finding,thatan
enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in

11. 11
clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also
responsible for, or have contributed to, such a contravention, then it may pass orders, under this
section, against such members of the group.]
From the above we find that, in terms of clause (b) of section 27 of the Act, the CCI can
impose a penalty up to 10% of the average of the turnover for the last three preceding
financial years upon each of the person or enterprise who are/were parties for entering
into an anticompetitive agreement or abusing their dominant position. This penalty
goes to become a more deterrent penalty if an anticompetitive agreement has been
entered into by a cartel. It may be recalled that harm caused to the society at large by
cartels, almost universally, has been held to be the most pernicious form of anti-
competitive conduct and is looked down upon across the competition world. Therefore,
if an agreement is found to have been entered into by a cartel, the CCI may impose
upon each member of such cartel, a penalty which can go up to three times of its profit
for each year of continuation of such agreement or 10% of its turnover for each year of
such agreement whichever is higher. It implies that if a cartel is indulging in anti
competitive agreement, in that event, the limit of penalty at the average of turnover of
last three preceding financial years does not apply and the period of continuation of the
agreement by the cartel is also a determining factor thereby making it really tough as
far as the deterrence impact is concerned. In terms of clause (d) of section 27, the CCI
can also direct that the agreement shall stand modified to the extent and in the manner
as may be specified by CCI. The CCI also has the authority to direct the enterprises
involved to comply with any directions including payment of cost in terms of clause (e)
of section 27 of the Act. The clause (g) of this section is also in the nature of an
omnibus clause by which the CCI is empowered to pass such order or issue such
directions as it may deem fit. This is over and above the specific provisions for monetary
penalty given in section 27 of the Act.
For the enterprises which may not comply with the directions of CCI under section 27 of
the Act or such other acts which deal with the penalties on erring parties, there are
enough provisions in the chapter VI titled as ‘penalties’. These sections are section 43 -
penalty for failure to comply with the directions of the Commission and DG, section 43A
dealing with power to impose penalty for non furnishing of information on combination,
section 44 relating to the penalty for making false statements or omission or furnishing

12. 12
material information, section 45 for offences in relation to furnishing of information. For
a ready reference, these sections are being quoted below:
“Penalty for failure to comply with directions of Commission and Director General
43. If any person fails to comply, without reasonable cause, with a direction given by—
a. the Commission under sub-sections (2) and (4) of section 36; or
b. the Director General while exercising powers referred to in sub-section (2)
of section 41, such person shall be punishable with fine which may extend to rupees one lakh for each day during which
such failure continues subject to a maximum of rupees one crore, as may be determined by the Commission]”
“[Power to impose penalty for non-furnishing of information on combinations]
[43A.If any person or enterprise who fails to give notice to the Commission under subsection(2) of section 6, the
Commission shall impose on such person or enterprise a penalty which may extend to one per cent. of the total turnover or
the assets, whichever is higher, of such a combination.]”
“Penalty for making false statement or omission to furnish material information
44. If any person, being a party to a combination,—
c. makes a statement which is false in any material particular, or knowing it to be false; or
d. omits to state any material particular knowing it to be material, such person shall be liable to a penalty
which shall not be less than rupees fifty lakhs but which may extend to rupees one crore, as may be
determined by the Commission.”
“Penalty for offences in relation to furnishing of information
45.(1)Withoutprejudice to the provisions of section 44, if a person, who furnishes or is required to furnish under this Act
any particulars, documents or any information,—
e. makes any statementor furnishes any documentwhichhe knows or has reason to believe to be false in any
material particular; or
f. omits to state any material fact knowing it to be material; or
g. wilfully alters, suppresses or destroys any document which is required to
be furnished as aforesaid, such person shall be punishable with fine which may extend to rupees one crore as may be
determined by the Commission.]
(2) Withoutprejudice to the provisions of sub-section(1), the Commission mayalso pass such other order as it deems fit. “
No institution or body can be effective if it does not have enough powers to enforce its
mandate. In the process of regulation of a combination or in other matters, it is
necessary for a regulator to be able to punish or penalize those who do not furnish the
correct or complete information as well as do not give correct statements. This has been
taken care of in terms of section 44 wherein for making a false statement, omission to
state material particulars, a person is liable to penalty not less than Rs. 50 lakhs but
extendable to Rs. 1 crore which is substantive deterrent in the Act. Similarly, if
somebody furnishes information which is found to be false, he shall be punishable with a
fine to the extent of Rs. 1 crore as may be determined by the CCI.
Regulation of combinations is one of the ex-ante methods of market regulation to
safeguard any disturbance into otherwise competitive markets. When any acquisition,
acquiring of control or merger or amalgamation is being contemplated, the parties to the
combination are expected to give a notice of such a combination to CCI within a period

13. 13
of thirty days for the approval of the board and wait for the CCI to clear the transaction.
There are two expectations from these combining parties in terms of law. Firstly, the
expectation is of submitting a true and fair account of the transaction to the competition
agency. Secondly, within a period of two hundred and ten days after which the notice to
combination is deemed treated as cleared by CCI, the parties to the combination are
expected to wait for the clearance from the CCI and not go ahead with the transaction.
Section 43A provides a mechanism by which CCI is empowered to impose a penalty
which can extend up to 1% of the total turnover if the CCI has not been given notice of
a combination in terms of section 6 of the Act.
All the above mechanisms would remain only holy homilies if the CCI did not have any
power to enforce compliance of its orders on monetary penalties. This mechanism has
been provided by way of section 42 of the Act. In terms of section 42, the CCI may
cause an enquiry to be made into compliance of its order and a fine extending upto Rs.
1 lakh per day for non compliance of any order or directions of the CCI issued under
sections 27, 28, 31, 32, 33, 42A and 43A can be imposed during the period of non
compliance. The only fetter on the powers of the CCI is subject to a maximum of Rs. 10
crores. This is of enough deterrence value.
It may be mentioned that this compliance is one time compliance and the CCI is free to
invoke the provisions of section 42(2) of the Act in every instances of compliance. This
section does not say that the maximum limit of Rs. 10 crores is with reference to a
person. On the face of it, this is with reference to a case and instance of noncompliance.
It would automatically follow that the CCI is free to invoke these provisions in instances
of more than one compliance except for the fact that in each episode of non compliance,
the ceiling of Rs. 10 crores would be applicable.
If even that fine imposed under section 42(2) of the Act remains not complied with,
there is a provision of imprisonment for a period up to three years or an additional fine
up to Rs. 25 crores or both for which the Commission can move before the Chief
Metropolitan Magistrate, New Delhi. Here, it would be pertinent to point out that
jurisdictions across the world have now been inclining towards criminalization of
competition law violations, Therefore, although the violations of Competition Law are

14. 14
not criminal offence as is the case in USA, UK etc, the law provides enough teeth to put
a fear of mind in the case of noncompliant enterprises.
The fight against select competition law violations, particularly cartels, is legally and
practically a demanding task. This is because first of all, cartel members, by their very
definition, are secretive about their prohibited behavior and, therefore, agencies have to
undertake great efforts to detect concealed cartels. Secondly, agencies need
extraordinary powers and skills to collect sufficient evidence to mount a viable case
against sometimes uncooperative defendants. It is the ‘cloak of secrecy’ within which a
cartel operates which gives rise to the need for an effective ‘leniency’ mechanism. This
scheme is grounded on the premise that successful prosecution of cartels requires
incriminating evidence to be voluntarily supplied by a member of the cartel. Leniency
has been employed by almost all the competition regimes across the world to
successfully unmask and prosecute most competition law violators. Leniency could mean
any reduction in the penalty compared to what would be sought in the absence of full,
voluntary co-operation. The clearest, most complete form of leniency is amnesty. In the
US program, where cartels are subject to criminal sanctions, leniency implies immunity
from prosecution. In the EU program, leniency is described in terms of reductions in
fines. Other enforcement agency decisions that could be considered lenient treatment
include agreeing not to refer a matter for criminal prosecution, or not to pursue
penalties against individuals.5
Pakistan and Korea have introduced payment of monetary
reward to the informants of prohibited activity in respective jurisdictions.
The CCI has also been given the power to leverage its power to impose penalties for
effective compliance by way of giving the power to relax and impose lesser than the due
penalty on an erring enterprise in terms of the provisions of section 46 of the Act. This
is an important provision. This enables the CCI to use carrot and stick policy in enforcing
compliance. It is in view of this and, in keeping with global experience, the CCI has also
come up with the regulations for lesser penalties which are also popularly known as
leniency regulations. The Act empowers the CCI to grant leniency by levying a lesser
penalty on a member of the cartel who provides full, true and vital information regarding
5 Fighting Hard Core Cartels: Harm, Effective Sanctions and Leniency Programmes (OECD, 2002).

15. 15
the cartel. If a member of the cartel comes forth and makes a full, true and vital
disclosure regarding the cartel and its practices, the CCI may after the consideration of
the information given by the cartel member, award reduction in the penalty of up to
100%. An applicant who applies for lesser penalty after the first application for lesser
penalty can also benefit from reduction in penalty of up to or equal to 50% of the full
penalty leviable, upon making disclosure of the evidence that provides significant added
value to the evidence already in possession of the CCI. Similarly, members or applicants
who are third may be granted reduction in penalty of up to 30%, as according to the
information provided by them and its use to the CCI in the case. The scheme is
designed to induce members to help in detection and investigation of cartels.
However, there is one area and that is section 43A of the Act about non furnishing of
information in case of combinations where there is a scope of improvement. This
appears to be a case where deterrence appears to have been of lesser impact which
may not be enough. In terms of section 20(1) of the Act, the CCI can look into cases of
combinations having appreciable adverse effect on competition within a period of one
year of the combination having come into effect. If we look at the fee paid to the
advisors for combination, it is noticed that the fine of 1% of turnover may be taken as a
reasonable cost by some of the delinquent but really enterprising enterprises. These
enterprises may choose not to report a transaction and thereafter wait for a period of
one year to lapse. If they are caught, the penalty amount may be treated as the cost of
such an adventure. If this aspect is improvised and some higher and more meaningful
penalty is prescribed, it would make this, otherwise little light fine, also worth being a
deterrent. Except for this, the penal provisions, as of now, are enough to ensure
compliance.
Having analysed the substantive provisions of the Act, it would be now pertinent to
examine the penalties imposed by CCI in different cases and their status at the time of
writing. Given below in a tabular format are different penalties imposed by CCI and their
present status:

16. 16
Serial
No.
Case Competition
law
Violation
Penalty
imposed
by CCI
(In
INR-
crores)
Percentage
of
Turnover
(In %)
Status of
appeal
(if
applicabl
e)
Penalty
imposed
by
COMPAT
(In INR-
crores)
Percent
age of
Turnove
r
(In %)
1 Indian Sugar Mills
Association & Ors. vs
Indian Jute Mills
Association & Ors.
Cartel 0.48 5 N.A. - -
2 Collective boycott/refusal
to deal by the Chemists &
Druggists Association,
Goa (CDAG), M/s
Glenmark Companyand,
M/s Wockhardt Ltd.
Cartel 0.10 10 N.A. - -
3 Builders Association of
India vs Cement
Manufacturers'
Association (CMA) &
Ors.
Cartel 0.73
(On CMA)
10 Pending - -
4 In re: Suo Moto case
against LPG cylinder
manufacturers
Cartel 165.58 7 Decided Penalty
imposed by
CCI upheld
7
6 In re: Aluminium
Phosphide Tablets
Manufacturers
Cartel 317.00 9 Decided 10.00** 9
(Reduced to 1
% in case of
M/s. Sandhya
Organic
Chemicals (P)
Ltd.)
7 Ref Case filed by Director
General (Supplies &
Disposals), Directorate
General of Supplies &
Disposals, Departmentof
Commerce, Ministry of
Commerce & Industry,
Government of India
against M/s Puja
Enterprise & Ors.
(Shoe Makers Case)
Cartel 6.18 5 Pending - -
8 Coal India Ltd. vs. Gulf
Oil Corporation Ltd.
( Explosives
Manufacturers Case)
Cartel 60.00 3 Decided 5.80 0.3
9
Sunshine Pictures
Private Limited & Eros
0.02 10 N.A. - -

17. 17
International Media
Limited vs Central
CircuitCine Association,
Indore & Ors.
10 A Foundation for
Common Cause & People
Awareness vs. PES
Installation Private
Limited & Ors.
Cartel 3.00 5 Decided 1.80 3
11 In re: Varca Druggist &
Chemist & Ors. vs.
Chemists & Druggists
Association, Goa
Cartel 0.20 10 N.A - -
12 Vedant Bio Sciences vs
Chemists & Druggists
Association of Baroda.
Cartel 0.005 10 Pending - -
13 M/s Cinergy
Independent Film
Services Pvt. Ltd vs
Telangana Telugu Film
Distribution Association
& Ors.
Cartel 0.12 10 N.A. - -
14 M/s Santuka Associates
Pvt. Ltd. vs All India
Organization of
Chemists and Druggists
and Ors.
Cartel 0.47 10 Pending - -
15 M/s Reliance Big
Entertainment Private
Limited vs Tamil Nadu
Film Exhibitors
Association.
Cartel 0.46 10 Decided Penalty
imposed by
CCI upheld
10
16 In Re: 1. M/s
Maharashtra State Power
Generation Company
Ltd. vs M/s Mahanadi
Coalfields Ltd. & Ors. 2.
M/s Maharashtra State
Power Generation
Company Ltd. vs M/s
Western Coalfields Ltd.
& Ors, 3. M/s Gujarat
State Electricity
Corporation Limited vs
M/s South Eastern
Coalfields Ltd. & Ors
Abuse of Dominant
Position
1773 3 Pending - -

18. 18
*A totalpenalty of Rs 6,317 crores was imposed on 11 cement companies and Cement Manufacturers Association (CMA).
While the penalty levied on CMA was a percentage of its turnover for the preceding financial years, penalty was imposed
on the cement companies at the rate of 0.5 % of their net profit for the preceding financial years.
** The penalty levied by the CCI on the three ALP Tablet manufacturers was at the rate of 9% of their ‘overall turnover.’
The COMPAT, on appeal, upheld the finding of CCI of cartelization against the three companies but ordered 9% penalty
on the ‘relevant turnover’ instead of the turnover of the entire group. This led to reduction in penalties, as the delinquent
companies were ‘multi-product companies.’
It would be relevant to point out that in European Union, albeit even under the erstwhile
Council Regulation 17/1962 relating with imposition of fines, the Commission was
empowered to impose penalty on a competition law violator of up to 10% of the
turnover in the preceding business year of each of the undertakings participating in the
infringement, the rate of penalty imposed upon the delinquent undertakings remained
(Coal India Case)
17 In Re. M/s HT Media
Limited & M/s Super
Cassettes Industries
Limited
Abuse of Dominant
Position
2.83 8 N.A - -
18 Sh. Surinder Singh
Barmi vs. Board for
Control of Cricket in
India (BCCI)
Abuse of Dominant
Position
52.24 6 Pending - -
19 MCX Stock Exchange
Ltd. & Ors. vs National
Stock Exchange of India
Ltd. & Ors.
Abuse of Dominant
Position
55.5 5 Decided Penalty
imposed by
CCI upheld
5
20 Belaire Owner's
Association vs DLF
Limited and Ors.
Abuse of Dominant
Position
630 7 Decided Penalty
imposed by
CCI upheld
7
21 Shri Shamsher Kataria vs
Honda Siel Cars India
Ltd. & Ors.
Abuse of Dominant
Position
2545 2 Pending - -
22 M/s Kansan News Pvt.
Ltd. vs M/s Fastway
Transmission Pvt. Ltd.
& Ors.
Abuse of Dominant
Position
8.04 6 Decided CCI order set
aside
Penalty
imposed by
CCI set aside

19. 19
between 2% and 4% for the initial 16 years.6
In contrast, as it can be inferred from
above, in the very first five years of enforcement of competition act by the CCI, the
Commission has been able to send a strong message by imposing penalties ranging
from 2 % to up to fully permissible 10% of the turnover of the delinquent enterprises
for the preceding financial years.
Put together, the entire array of penal and prosecution provisions in the Act, as of now,
are enough to ensure compliance and put the Act on a much stronger footing, not only
as compared to the earlier MRTP Act but also vis-à-vis few mature jurisdictions.
6 See Damien Geradin, ‘The EC fining policy for violations of competition law: An empirical review of the
Commission decisional practice and the Community courts’ Judgments’(2005) available here:
https://www.coleurope.eu/content/gclc/documents/GCLC%20WP%2003-05.pdf.