CCI seeks to revamp penalty restoration guidelines; seeks public suggestions

New Delhi: Confronted with low restoration of penalties imposed on firms for anti-competitive practices, Competitors Fee of India (CCI) has sought to revamp its restoration procedures. 

The regulator has sought public suggestions on a set of amendments to its greater than a decade previous penalty restoration regime prescribed within the CCI (Method of Restoration of Financial Penalty) Laws, 2011. 

CCI mentioned in a background observe in regards to the proposed modifications that feedback will likely be accepted until 6 June. 

“Based mostly on the expertise gained throughout implementation of those rules through the years and to streamline the method of restoration, sure amendments are deemed match to be integrated within the mentioned rules,” CCI mentioned. These rules had undergone minor modifications twice previously—as soon as in 2014 after which in 2021.

Together with a draft of the amended rules, CCI additionally introduced out a modified demand discover for public suggestions. The proposed amendments make it clear that the penalty could also be imposed not solely on the enterprise, however on a ‘individual’ additionally, who has violated the regulation. As per the proposed amendments, authorized heirs of the individual in default is liable to pay the penalty. 

Authorized inheritor’s legal responsibility

The legal responsibility of a authorized inheritor will likely be restricted to the extent to which the property of the deceased bestowed upon such authorized inheritor, is able to assembly the legal responsibility, mentioned the draft of the amended regulation.

CCI mentioned in its annual report for FY23, that in FY22 and FY23, the regulator imposed penalties of   ₹1,336 crore and   ₹2,672 crore, however may get well solely about 13% and fewer than 1% of these, respectively, Mint reported on 20 October. Mint additionally reported then that the regulator arrange a three-member inner committee to advocate measures to make the restoration course of extra strong.

Consultants mentioned that the proposed amendments goal to shut current loopholes and guarantee swift and efficient enforcement in opposition to anti-competitive practices. 

“The traditionally low restoration charges probably point out systemic loopholes, making it straightforward for companies to evade penalties or delay funds with out going through substantial penalties. With these amendments, CCI goals to create a extra stringent and streamlined restoration course of, finally reinforcing its deterrent energy,” mentioned Sonam Chandwani, managing companion at regulation agency KS Authorized & Associates.

“By introducing structured demand notices, compounding curiosity on delayed funds, and asset attachment provisions, CCI is creating a sturdy framework that prioritizes accountability. These new measures additionally permit for collaboration with earnings tax authorities, treating penalties as tax dues, which considerably strengthens restoration efforts,” mentioned  Chandwani.

Penal curiosity

The speed of curiosity will likely be 1% on “the quantity excellent, for each month or a part of a month” after the due date for fee until the penalty is paid. 

With these modifications, CCI isn’t solely enhancing its deterrent energy but in addition sending a transparent message that non-compliance will end in substantial monetary and reputational penalties, thus encouraging firms to stick to truthful competitors requirements, mentioned Chandwani.

This revamp in restoration guidelines is thus a obligatory step for CCI to shut enforcement gaps, improve its authority, and make sure that penalties serve their meant objective to discourage anti-competitive behaviour and foster a fairer market atmosphere, added Chandwani. 

A former official of CCI instructed Mint that though penalty restoration could also be gradual, CCI has been efficient in reaching market correction with its enforcement motion.