Is there a need for further incentives for Competition Compliance?

The Confederation of Indian Industries (CII) has recommended to the parliamentary standing committee on finance, which is reviewing the Competition (Amendment) Bill, 2012, regarding inclusion of incentives to those enterprises for instituting competition compliance programmes  within their organisation. The CII in a statement stated that the Competition Commission of India should give due consideration to whether an enterprise has a competition compliance programme while determining the penalty to be levied for violation of competition laws. They have recommended that existence of a compliance programme should be considered as a mitigating factor while determining the said penalty.

The question that needs to be discussed is whether there is a need for further incentives as recommended by the Confederation of Indian Industries.

in my opinion, there are enough reasons already for enterprises to have an effective competition compliance programme. A further incentive of reduction of fine seems more like an insurance policy than a necessary compliance encouragement tool. The reasons as to why there should not be a reduction of fine for an organisation which has a competition compliance programme is as follows:

  • Companies should concentrate on not infringing competition laws in the first place. The risk of heavy penalties is encouragement enough for companies to have a competition compliance programme.
  • Competition compliance programmes do provide the advantage of enabling early detection of violation and would help enterprises take preventive measures. On early detection, the enterprises have the option of applying under the leniency programme established by the Competition Commission of India. Enterprises, depending upon their timing and quality of assistance, are entitled to immunity and leniency by the Commission. Therefore, a further provision for reduction of penalty in case an enterprise has a compliance programme is unnecessary.
  • Fine reductions would prove to be quite unfair. It would mean that just because an enterprise had a competition compliance programme, it is entitled to keep more of the financial benefit of a competition law infringement,.
  • This incentive of fine reduction would discourage enterprises from reporting to the Commission regarding competition law violations as quickly as possible under the leniency programme.

Rather than providing such an incentive like reduction of fine, there could be other ways of encouraging companies to have an effective compliance programme. The Commission should detect and punish as many infringements as possible. This would have a stronger deterrent effect on enterprises to ensure that they avoid infringing competition laws, Also, the Commission should increase legal certainty by ensuring that the content of the competition law violation judgments is clear and unambiguous. This would ensure that enterprises are well informed regarding what is legal and what is not at a reasonable cost.

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