Settlements And Commitments Under Competition Law

On average, the Competition Commission of India (CCI) takes approximately four years to reach the final decisions under Section 27 of the Competition Act, 2002. Further, approximately 476 orders of CCI were appealed before the Competition Appellate Tribunal (COMPAT) from 2009 to 2017. The report notes indicate that the investigations are taking more time for completion than required which reflects inadequate staff strength and increasing complexity of cases. Considering all these, the government is up for the introduction of the Commitment and Settlement clause in the Competition Act to reduce the pendency of cases by reaching settlements. This will extend the relief to companies bleeding with greater loss due to such kinds of prolonged trials.


Competition Commission of India, Settlements, Commitments, Draft Competition Amendment Bill, 2020, Anti-Trust Regimes, Competition Act, 2020


The Problem of Pendency of Cases

With the competition act introduced in 2002 and turning 18 years old, there has predictably been a steep learning curve for the enforcement structure of this act. The CCI receives a huge number of cases in a year related to anti-trust matters especially in cases of abuse of dominant position and anti-competitive agreements. Currently, the CCI takes an average of 871 days to arrive at a single order of contravention from the date of passing a prima facie order. CCI took around five years to issue its decision in the case of India Glycols Limited v. Indian Sugar Mills Association and Others and seven years for its decision in East India Petroleum Private Limited v. South Asia LPG Company Private Limited.

The above statistics demonstrate the amount of burden and how the resources of CCI are expended on long-drawn investigations and defending appeals against its orders. It is therefore imperative to consider the adoption of new methods through which the resources of the Commission may be utilized more optimally and settlements are intended to lessen the burden persistent because of scarce manpower. As a consequence, the Ministry of Corporate Affairs proposed a set of amendments to the existing Competition Act 2002 in its Draft Competition Amendment Bill, 2020 in February 2020. This was according to the recommendations made by the Competition Law Review Committee in its report published in July 2019.

Why Settlements and Commitments?

The Settlement involves an admission of liability by the party for violation of anti-trust law. For settlement, the authorities need to establish with the initial investigation that there was a violation of the law. After this, the set of fines and remedies are imposed on the party which is lesser in comparison to what could have been if it been imposed after the full investigation and trial. Commitment involves a denial of liability but still choosing to commit behavioural remedies in business systems as mutually agreed by the parties and authorities to avoid the impact of such nature which can be harmful for the competition. These remedies are usually agreed upon for a commitment in exchange for the termination of further investigation. Also, the commitment system of resolution is usually offered only in less severe violations.

In Tamil Nadu Film Exhibitors Association v. CCIthe High Court of Madras held that the settlements and commitments will be valid under the Act as long as it will disable the continuance of anti-competitive activities and will prove to be prejudicial to the interests of the consumers. Settlement options are not something very new to India s it is already available under the regulatory framework of Securities and Exchange Board of India (SEBI) and the Income Tax Department.

The intent behind the introduction of commitment and settlement clauses in the Competition Act is to speed up the resolution process for cases. Moreover, the Commitment and settlement mechanisms are efficient ways of resolving cases as it reduces the cost of investigation, improves compliance, and is a win-win situation for both the parties. This move coincides with the government’s efforts to decriminalize several violations under the Companies Act and rationalise penalty provisions to make the regulatory regime less adversarial and more investment-friendly. 

Understanding the Draft Competition Amendment Bill, 2020

The Bill proposes the insertion of both commitments and settlements clauses for the implementation of commitments into competition law in India. It seeks to insert section 48B into the Act, according to which an enterprise or any person under scrutiny may choose to take the route more convenient than litigation and file an application proposing required commitments to minimize the anti-competitive concerns. The commitment applications need to be filed before the Director General (DG) submits its report on the completed investigation and then should be approved at the discretion of CCI.

The Settlement clause is given in section 48A which is proposed to be added into the Act. Contrary to the position of commitment applications, settlements may be entered by enterprises or persons even after the DG presents the report of the investigation but before the regulator makes the final decision on the investigation. Under both these clauses, the CCI may analyse the “nature and gravity” of the contraventions and can accordingly accept or reject the proposals. Most importantly, the provisions seek to make binding on the parties, as orders made under these sections are proposed to be un-appealable. 

The Bill also proposes the establishment of a governing body which will consist of ex-officio members and part-time members. The objective behind this was first to reduce the work burden on the CCI as the governing body will carry out all the quasi-legislative function and policy decision, and secondly, with the introduction of part-time members and ex officio members, it will bring in external perspective and will also strengthen the democratic legitimacy and accountability of the CCI.

Commitment and Settlement in other Countries

Provisions regarding commitment and settlement concerning anti-trust violations have been in the US, EU & UK for more than a decade. It is important to note that in most countries either such mechanisms are not offered or offered with different procedures in severe cases of violations under anti-trust laws.

United States of America (USA)

In the mid-90s, the USA made a shift in the Anti-Trust regime wherein they adopted a new approach to avoid litigation and enhance regulation. This shift in approach by antitrust enforcement agencies was governed by the ‘belief’ that consent orders have a higher potential to extract fines and better resolution from the involved parties in comparison to what it could obtain via litigation. The phrase “Time is Money” held truer than ever before as the businesses preferred commitments and settlements over prolonged litigation trials.

Further, the law proposed by the CCI only allows the enterprises to initiate the commitment process whereas in the US even the regulator can if he deems appropriate can propose to enter into a commitment scheme. By doing so, the regulator can assess the case and decide whether it is in its economic as well as operational interest to conduct a long investigation and build a full-fledged antitrust case. Such provision proves to be an additional cost-saving asset in the hands of the regulator. 

European Union (EU) and the United Kingdom (UK)

The anti-trust law enforcement agencies in the European Union and the United Kingdom have always streamlined and expedited the mechanism for commitments and settlements. The European Commission responsible for anti-trust Regulation in Europe initially adopted the settlement mechanism whereas the commitment mechanism was adopted after some years. In the starting years, the European Commission only allowed the settlements in the cases of vertical violations and cartels. However, it recently adopted a settlement mechanism with a different procedure since 2016.


The existing backlog and high pendency of the cases are attributable to the fact that the CCI has scarce resources. Long delays from such adjudication procedures will consequently lead to business suffering losses. Viewing these clauses from an enterprise’s perspective, the main advantage of settlement and commitment mechanisms is the ability to expedite the closure of the matter. By choosing these processes, an enterprise can avoid the impact of an investigation on its reputation. This includes the negative impact of an unclear outcome of the investigation on an enterprise’s stock prices.

It shall prove to be a huge relief if mechanisms of these kinds enable the authorities and companies to achieve quick resolution but these amendments at the same time should ensure that it also enhances the efficiency of the law and not just ease the burden of authorities. The end purpose of any antitrust legislation and any of its related agencies should be to provide consumers a free market with healthy competition. For this, the CCI should be given the necessary discretion and flexibility to perform its function in such a manner that it meets the objectives of the act.


Why The Settlement And Commitment Clause Is Needed In India?

As India has huge piles of pending cases and backlog along with scarce manpower, it is very much needed to implement these clauses in the country to ensure the early and secure disposal of the matter.

Can The Cases Under ‘Commitment And Settlement’ Be Reviewed Or Reopened?

As by the proposed amendment, the orders of settlement and commitments between the parties are non-appealable but if there are gross concealments of any information on which the decision is based then it may be open for review but limited to certain parameters.

How Is Settlement Procedure And Commitment Procedure Being Different From Each Other?

Settlement procedures will always be initiated after the DG investigation’s report, but Commitment can be started even before the submission of the report. However, looking at this pragmatically, both the mechanisms will operate once some kind of proceedings is initiated by the CCI.






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