Settlements and Commitments in the Indian Competition Regime: Construing Practicality

[Ashu Bhargav is a student at the Faculty of Law, University of Delhi and Yavipriya Gupta at the Hidayatullah National Law University]

The Indian competition law regime has witnessed significant developments in the past decade, as a consequence of which the Ministry of Corporate Affairs (MCA) has proposed a set of amendments to the existing Competition Act 2002 (the Act), in its Draft Competition Amendment Bill, 2020 (Bill) in February 2020. This was pursuant to the recommendations made by the Competition Law Review Committee (CLRC) in its report published in July 2019. Among several changes proposed, the introduction of the clause providing for “Settlements and Commitments” is a noteworthy addition. The provision permits a party undergoing an investigation by the Competition Commission of India (CCI) to move an application for settlement or voluntarily undertake certain commitments. Subject to this, the CCI shall close the investigation if it deems fit, thereby also rendering it the discretion to act upon such matters. However, several aspects lack clarity, thereby raising several concerns surrounding its implementation and implications upon the existing as well as future cases. The authors seek to analyze the same in light of the current competition law regime in India.

Understanding the Proposed Scheme 

Responsive to the recommendations of the CLRC and various other professionals, the Bill proposes a scheme for both commitments and settlements. For the purposes of implementing commitments into legal architecture of competition law in India, the Bill seeks to insert section 48B into the Act. According to the provision, an enterprise or any person under regulatory scrutiny may choose to take the route that is more convenient than litigation and file an application proposing required commitments to minimize the anti-competitive concerns of the antitrust regulator. However, approval of such applications is at the discretion of the CCI. The commitment applications need also to be filed before the Director General (DG) submits its report on the completed investigation. Settlements are proposed to be enacted by inserting section 48A into the Act. As opposed to the position of commitment applications, settlements may be entered into by enterprises or persons even after the DG presents the report of the investigation to the CCI and concerned parties, but before the regulator makes the final decision on the investigation. Under both settlements and commitments, the CCI, under it discretionary powers, may analyze the “nature and gravity” of the contraventions and accordingly accept or reject the proposals. The proposed provisions also bestow on the CCI the power to abrogate the settlements or commitments previously agreed upon, as and when it thinks the proposal was not enough or the parties have not come up in agreement for the scheme. Most importantly, the provisions seek to make the schemes for settlements and commitments binding on the parties, as orders made under these sections are proposed to be un-appealable. 

Building Steam

The proposal for settlement and commitments has not made its appearance for the first time on the Indian legal scene. Earlier, in July 2019, the CLRC Report had also proposed amendment of the Act to include the mechanism of settlements and commitments. In their view, these are alternative and innovative tools which may be used by CCI from time to time to curb anti-competitive activities without going into vexatious and delayed litigations. Such mechanism also definitely allows the regulator to use its valuable resources onto other functions. Not only do we have policy backing in the form of the above-mentioned report, but there are also judicial precedents which, although presently being challenged by the CCI, provide strength to the already existing legislative push for incorporating these mechanisms in the Act.

In Tamil Nadu Film Exhibitors Association v. CCI, the Madras High Court held that settlements and commitments would be valid under the scheme of the Act as long as they do not enable the continuance of anti-competitive activities, restrict freedom of trade or prove to be prejudicial to the interests of the consumers. We find provision for such settlements and commitments in other Indian laws as well. Under the SEBI Act, 1992, settlement finds a place such that it can be on monetary or non-monetary terms. The Income Tax Act, 1961 goes to the extent that it requires the Central Government, under section 245B, to set up a Settlement Commission for the purposes of settlement of taxation disputes. At this point, it is pertinent to note that settlement is not a novel concept in the Indian legal system. To keep up with this tradition, antitrust laws are also set to be amended to provide for a system of settlements and commitments.  

Challenges and Cures: The Way Forward

A thorough perusal of the proposed amendment gives rise to several issues that remain to be addressed. The provision lays down a way to expedite the process of regulating anti-competitive practices and abuse of dominant position. However, it does not provide clarity on whether it shall be made applicable on existing cases, or shall have a prospective application. Moreover, under the current provisions of the Competition Act, a claim for compensation in case of contravention of an order passed by the CCI under sections 27, 28, 31, 32 and 33 can be made in accordance with section 42A. However, the same has not been provided for in the case of a settlement or commitment order, as there is no mention of “finding of infringement” in such orders. Such an ambiguity could ultimately result in a bar of compensation claims against such orders, thereby hampering the interests of the stakeholders who suffered loss as a result of the infringement. Also, no appeal shall lie against any order passed by the CCI approving an application for settlement or commitment, thereby implying a clear lack of judicial review in such cases.

The infringement decisions passed by the competition authorities are usually in the nature of enforcement of provisions to effectively bring such infringement to end and therefore contribute as a deterrent on future misconduct by the entities concerned. This is especially because such infringement decisions also set a landmark for similar misconduct, which is not the case in settlement and commitment orders. The imposition of fines pursuant to an infringement decision is another contributing factor preventing the enterprises from making illicit gains by abusing their positions of dominance. Finally, the ample discretion rendered upon the competition authority to approve or disregard the settlement or commitment proposals ultimately enables it to act beyond the scope of its legal powers, as also observed with regards to the use of consent decrees in the U.S.A.

Position in E.U. & the U.S.

In contrast to the Indian scenario, the antitrust regulators and similar agencies in the European Union have already provided for a robust mechanism of settlements and commitments via Regulation 1/2003 passed in December 2002. However, settlements in the European Union initially only included vertical infringements and cartel cases governed by procedural guidelines as provided by Regulation (EC) No 622/2008  until 2016,  when the European Commission (Commission) provided for its first settlement decision under Article 102 Treaty on the Functioning of the European Union (TFEU) following the introduction of the said regulation, and reduced the fine of Altstoff Recycling Austria (ARA) by 30% in exchange for its cooperation. Further, the law proposed by the CCI only allows enterprises to come forward and initiate the commitment scheme, whereas in the US even the regulator can, as it thinks appropriate on a case-by-case basis, propose to the infringing enterprises to enter into a commitment scheme. By doing so, the regulator can itself carry out a situational assessment of the case and decide whether it is in its economic as well as operational interest to conduct a long drawn investigation of the infringement and build a full-fledged antitrust case. Such provision is an additional cost-saving asset in the hands of the regulator. 

That being said, the merits of settlement and commitment provisions must not be overlooked. It is imperative to minimize the use of lengthy and costly procedures involved in antitrust investigations, thereby paving way for alternative methods like settlements and commitments. According to a report, the CCI had levied around Rs. 13,087 crore in penalties over a period of seven years, wherein it managed to collect only about 0.3% (Rs. 43 crore) of the penalties imposed until the end of December 2018. Such low rate of recovery is essentially due to the involvement of enterprises in such matters, often challenging the CCI’s orders at various appellate bodies, which results in pending litigation, creating a severe restraint upon the speedy resolution of antitrust disputes. The above barrier can be eliminated effectively by adopting the alternative remedy of settlements and commitments. However, under the proposed section 48A, which seeks to enact the legal scheme for settlements, applications for settlement can be filed even long after the investigation is completed, but right before the regulator arrives at the final decision. The authors believe that it gives an unreasonable time frame to the enterprises to conduct self-assessment while closely following the investigation. It may become prone to misuse especially when enterprises would be able to learn of the likely outcome of the case and thus act accordingly, thereby putting the resources employed in the investigation to waste.


Enterprises are more likely to undertake these alternative remedies, due to the higher flexibility they provide in reaching a common ground. Thus, both the competition authority as well as the concerned parties can benefit from these alternatives, which ultimately set out a robust and speedier end to infringements and anti-competitive practices. Besides, the provision has also streamlined the process of decision making as well as enforcement on the part of regulators in other jurisdictions such as E.U. and the U.S., thereby facilitating the primary objectives of antitrust law. Considering the high number of pending cases before the CCI and an essentially long drawn and costly process of investigation before advancing the final order, it is only prudent that such provisions be included in Indian regulatory framework with due regard to the stakeholders’ interests. Hence, it is obvious that settlements and commitments bring new light to the Indian law on antitrust and it is hoped that the gaps outlined above will be addressed in the final form of the legislation. For now, the authors highly appreciate the inclusion of these time-tested antitrust mechanisms.

Ashu Bhargav & Yavipriya Gupta

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