ABSTRACT

Settlement and commitment mechanism are recently added by the new amendment that took place in 2023, to the already existing competition act in India. It aims to reduce the burden on judiciary and to dispose of matters in an efficient way. This mechanism, in addition to the previously existing provisions to the curb the anti-competitive regimes, will result in a harmonious end to the litigation process and will also ensure a peaceful co-existence of various enterprises. Along with these advantages, there are few drawbacks of these provision as well, which prevents it from reaching its true potential in our country. Owing to these disadvantages, these provisions have not been completely welcomed by people and it hasn’t been that famous in our country. In contrast, these provisions are widely used in other countries such as the European Union, Singapore as well as the USA.

INTRODUCTION

Following the Presidential assent given on 11th of April, 2023, the new Competition (Amendment) Act, 2023 was unveiled, introducing a range of new provisions regarding the antitrust laws in India.These laws regulate the competition in the market so that no enterprise can create a monopoly in the market and dominate the trade scene. In other words, antitrust laws serve as a check on Monopolistic Trade practices (MTP). These antitrust laws have provisions that carry penalties for breaking them. Amongst the newly added provisions through the new amendment, the Settlement and Commitment Framework was the most notable addition.

The Competition Commission of India (CCI) records a large number of cases pertaining to antitrust matters each year; in 2022, there were 59 complaints lodged.It took the CCI almost seven years to issue the final ruling, and it took the same amount of time to issue the ruling in East India Petroleum Private Limited v. South Asia LPG Company Private Limited. On the other hand, a lot of instances have been appealed to COMPAT. Approximately 919 CCI orders were appealed between 2009 and 2022, and 717 order items were set aside by COMPAT. Additionally, the Director General office's backlog is getting worse as a result of these cases.

These recently added frameworks are intended to lighten the load on the judiciary, and because there isn't an appeals process in place, matters are settled swiftly.

HISTORY / EVOLUTION OF COMPETITIVE LAWS IN INDIA

The 1969 enactment of the Monopolies and Restrictive Trade Practices Act (MRTP Act) was the inaugural piece of law in India to prevent the misuse of market power. The MRTP Act was passed to restrain monopolies, prevent monopolistic and restrictive trade practices, and guarantee that the economic system did not lead to the concentration of economic power. As India proceeded steadily on the path of reforms comprising Liberalization, Privatization, and Globalization (LPG), India eliminated the MRTP Act, 1969 as it realized the Act had outlived its usefulness and that monopoly control was not appropriate to support the growth aspirations of over a billion Indians.

As a result, Mr. Raghavan was appointed chairman of the High-Level Committee on Competition Policy and Law. The Committee recommended, in its report, on May 22, 2000, that the MRTP Act be replaced with a more contemporary competition statute in order to promote competition and get rid of anti-competitive behaviors in the economy following consultation with the stakeholders.

The Competition Act of 2002 was subsequently derived from the Competition Bill of 2001, which was presented in Parliament.

The Competition Act, 2002 (Act) seeks to safeguard consumer interests, restrict acts that have a negative impact on competition, encourage and maintain market competition, and guarantee the freedom of trade exercised by other market participants in India. The primary objectives of this act are:

?    to restrict trade practices negatively affecting competition

?    to promote and sustain competition in markets

?    to protect the interests of consumers

?    to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto

To keep up with the contemporary changes related to market competition in India and worldwide, the Competition Act, 2002 has been amended three times in 2007, 2009 and the most recent, in 2023.

In August 2022, the Competition (Amendment) Bill, 2022, was introduced in the Parliament and was referred to the Parliamentary Standing Committee on Finance. After four months, in December 2022, the Parliamentary Standing Committee submitted its report with recommendations. On 29th of March 2023, the bill was duly passed by the Lok Sabha and sent to Rajya Sabha. And on 03rd of April 2023, the bill was passed by Rajya Sabha as well. And on 11th of April, the President accorded his assent, thus turning it into an Act.

SETTLEMENT AND COMMITMENT UNDER THE COMPETITION (AMENDMENT) ACT, 2023

Antitrust lawsuits are very time-consuming to resolve; as demonstrated in the India Glycols Limited v. Indian Sugar Mills Association and Others case, the CCI might take up to six years to issue a final ruling. The court system, which is already overwhelmed with outstanding cases, is heavily burdened by this. This eventually has an impact on the final consumer and lowers market efficiency. The amendments to the Competition Act 2002 introduced many new provisions such as broadening the scope of anti-competitive agreements, reduction in time-limit for review of M&As from 210 days to 150 days, introduction of Deal Value as another criterion for notifying M&As, limitation Period of 3 years for filing Information(s). Among these, the introduction of a settlement and commitment framework for faster market correction is a remarkable addition. This provision is introduced to reduce litigation and enable a more expedient and straightforward alternative conflict settlement process. It enables a more expedient and straightforward alternative conflict settlement process. Below is a more detailed discussion of the provisions of settlement and commitment.

SETTLEMENT

According to Section 48A, any one of the parties involved against whom an investigation has been initiated, can offer a settlement to dispose of the issue raised. There are in total eight sub-sections under this section which specify various conditions related to the settlement framework.

Under sub-section (1), it is stated that "Any enterprise, against whom an enquiry has been initiated under sub-section (1) of Section 26 for contravention of sub-section (4) of Section 3 or Section 4, may, for the settlement of the proceeding initiated for the alleged contraventions, submit an application in writing to the Commission in such form and upon payment of such fee as may be specified by regulations."

In sub-section (2), the time period in which the application through which the settlement is offered is given. The application can be submitted at any time

?    after the receipt of the report of the Director General

?    prior to the passing of an order

After scrutinizing the nature, gravity and seriousness of the transgression, the Commission can agree to the settlement proposal[1]. It covers the penalty and some other conditions. The commission may give the party concerned, the Director General or any other party involved, an option to give any suggestions or any objections they want to state.[2]

The commission can pass an order to reject the settlement application and carry on with the inquiry (under section 26) if

?    if the Commission believes that the settlement offered is not appropriate in the circumstances

?    if the Commission or the party concerned do not reach an agreement on the terms of settlement within such time as specified by the regulations[3]

The settlement offered will follow the procedure that will be set out by the regulations passed by the Commission. [4]

Usually, for the purposes of this act, the National Company Law Appellate Tribunal (NCLAT), serves as the Appellate Tribunal and the provision for appeal is stated under section 53B.

But, like in the case of settlement offers, no appeal can be made against any order passed by the Commission under section 48A.[5]

The Consolidated Fund of India will receive all settlement proceeds realized under this Act.[6] The Consolidated Fund of India is the recipient of all government revenues from borrowing, direct and indirect taxes, and receipts from government loans. The Consolidated Fund is made up of all of the government's outlays and receipts, less any unusual expenses. The Consolidated Fund of India is the most significant of all government accounts.

ü In Tamil Nadu Film Exhibitors Pvt. Ltd (TNFEA). & Ors. v. CCI,the parties settled and prayed disposal of the case before the Madras High Court based on their settlement during the pendency of the case.

ü In Nhava Sheva International Container Terminal Pvt. Ltd. v. CCI, the settlement proposal was given acceptance by the Bombay HC.

COMMITMENT

Through the new amendment, the provision of commitment is introduced under Section 48B. It states that any enterprise, against whom an inquiry has been initiated, may submit an application in writing to offer commitments.

Under sub-section (1), it is stated that, "Any enterprise, against whom an inquiry has been initiated under sub-section (1) of section 26 for contravention of sub-section (4) of section 3 or section 4, as the case may be, may submit an application in writing to the Commission, in such form and on payment of such fee as may be specified by regulations, offering commitments in respect of the alleged contraventions stated in the Commission's order under sub-section (1) of section 26."

In sub-section (2), the time period in which the application through which the commitment is offered is given. The application can be submitted at any time

?    after an order has been passed by the Commission

?    prior to the receipt by the party of the report of the Director General as may be specified by regulations.

After weighing the effectiveness of the proposed commitments against the nature, degree, and impact of the claimed violations, the Commission may approve the submitted commitment subject to the terms and methods of implementation and monitoring as may be defined by rules.[7] When evaluating the commitment offer, the Commission may give the Director General, any of the parties involved, or any other party a chance to voice any objections or recommendations they may have.[8]

The commission can pass an order to reject the commitment application and carry on with the inquiry (under section 26) if

?    if the Commission believes that the commitment offered is not appropriate in the circumstances

?    if the Commission or the party concerned do not reach an agreement on the terms of commitment[9]

Just like in the case of settlement, the commitments offered will follow the procedure that will be set out by the regulations passed by the Commission[10] and no appeal can be made against any order passed by the Commission under section 48B.[11]

ü In Telefonaktiebolaget LM Ericsson & Anr. v. CCI & Anr, CCI withdrew its order after the parties settled their dispute after a compromise between the parties.

OTHER RELEVANT PROVISIONS

Section 3 prohibits any •enterprise

                                      •association of enterprises

                                      •person

                                      •association of persons to enter into any agreement

to enter into any agreement in respect of •production

•distribution

•supply

•storage

                           •acquisition or control of goods

            •provision of services

which causes or is likely to cause an appreciable adverse effect on competition within India. Any agreement in contravention of this provision is void [sub-section (2)]. Agreements that are in contravention to sub-section (1) include

(i) tie-in arrangement

(ii) exclusive dealing agreement

(iii) exclusive distribution agreement

(iv) refusal to deal

(v) resale price maintenance

Provisions stated in sub-section (3) do not apply to agreements governing joint ventures of firms if such agreements aim at increasing the efficiency of the business. Provisions stated in sub-section (4) are not applicable on agreements between an enterprise and an end consumer.

Section 4 outlines provisions concerning the abuse of a dominant position. It clearly states that no enterprise or group shall abuse its dominant position. It is further stated in sub-section (2) the conditions in which there would be abuse of dominant position.

Section 19 provides for the provision of inquiry into certain agreements and the dominant position of enterprise. Seb-section (1) of this section also states that the Commission won't entertain a claim unless it is filed within three years from the date on which the cause of action has arisen. This provision was added by the new amendment.

Section 26 states the procedure for inquiry; it lays out the entire process for how the investigation must be conducted in great detail. If the Commission is of the opinion that there exists a prima facie case, it shall direct the Director-General to cause an investigation to be made into the matter.[12]

REVOCATION OF SETTLEMENT OR COMMITMENT ORDER OR PENALTY

The settlement and commitment offer can be revoked under some circumstances by the Commission. These circumstances are included

?    if an applicant fails to comply with the orders passed under section 48A or section 48B

?    if it comes to the notice of the Commission has not made full or true disclosure

?    if there has been material change in facts

Under the above stated conditions can the offers of settlement or commitment be revoked and withdrawn. Plus, the defaulting party has to pay will be held liable to pay the costs incurred by the Commission. The costs may extend to rupees one crore. The Commission may also restore or initiate the inquiry as well.

ADVANTAGES

The provision of settlement and commitment were introduced with the motive to reduce the burden on litigation and ensure a faster remedy to solve the issues arising in the market without compromising the quality of legal remedies. A lot of thought went into making of this framework and it was introduced after a lot of consideration. Weightage was given to every aspect of market competition as well as the legal issues related to it. After a lot of work, the settlement and commitment were introduced to aid the enterprises. This procedure has multiple advantages including:

?Faster Resolutions:

In comparison with comprehensive antitrust investigations, it expedites resolutions. This avoids wasting time and the significant resources needed for the investigation and any ensuing litigation.

?Specifically Tailored Remedies:

Additionally, they make it feasible to create remedies that are specific to the market and the behavior in question, something that may not be achievable in infringement decisions that are imposed following a thorough investigation.

?Balancing Playing Fields:

Commitment/settlement procedures can assist in preserving fair competition and leveling the playing field by promptly resolving antitrust issues, guaranteeing stability in market dynamics.

?More Equipped to Concentrate on Research and Innovation:

Firms that are able to quickly resolve antitrust issues are better able to focus on innovation and development as opposed to becoming entangled in protracted legal and regulatory disputes.

?More Favorable than Legal Action:

Firms can avoid the risk and uncertainty of legal fights, where the conclusion may be negative and result in heavy fines, by choosing commitment decisions instead of litigation

?Encouraging Harmonious Relations:

As firms collaborate with regulators to develop solutions to competition-related issues, these mechanisms promote a cooperative approach between regulators and firms, which may promote improved compliance cultures within industries.

CRITICAL APPRAISAL

Though these provisions were introduced to aid the enterprises with the legal process, there are some uncertainties regarding the procedures which truly are a drawback. Due to these uncertainties, these provisions are not as famous and as widely used as they ought to be. These drawbacks are holding back the true potential of these procedures to actually help firms through their legal issues. Relevant steps should be taken to resolve these issues so that the firms can take full advantage of these frameworks. Some of the uncertainties regarding this procedure include:

?Cartels not included in settlement provisions:

The settlement and commitment framework do not take into its ambit the offense of cartelization. Cartelization is considered to have an adverse effect on competition. It is a public offense and directly affects the general public. The settlement and commitment framework ought to encompass the resolution of cartelization matters in an extra-judicial manner. Even in the report of the Standing Committee on Finance (2022-2023), it was recommended by the Federation of Indian Chambers of Commerce and Industry (FICCI) that the scope of the settlement procedure should be widened to include the offense of cartelization as the primary objective of this provision would not be met if cartelization is not covered under it.

?Ambiguity about the time period in which the commitment application has to be submitted:

The report of the Standing Committee on Finance (2022-2023) also stated that there is ambiguity regarding the time in which the application for commitment has to be submitted. There may be conjecture and uncertainty due to the delay between the DG's inquiry report being submitted to the Commission and the party receiving it.

?Determining the settlement sum:

The Amendment Act's Section 48A (3) permits the CCI to approve a settlement proposal in exchange for payment of a settlement sum (to be determined by rules). In order to effectively utilize the provisions, the rules had to incorporate comprehensive recommendations for the computation of the payment amount. This would make it possible for the parties to fairly weigh the advantages and disadvantages of offering a settlement over paying a final penalty. The guidelines must also strike a balance between making sure that the settlement amount is high enough to discourage anti-competitive behavior and not so high that it discourages parties from proposing settlements, to the extent that it is equal to or only marginally less than the potential penalty payable by an investigated party.

?Interference by Third Parties

Under sub-section (4) of section 48B, it is stated that while the Commission is considering the commitment proposal, the Director General or the parties involved or any other parties can give their suggestions and objections, if they have any. The inclusion of the third parties in this process can lead to significant interference in the due process of the commitment mechanism and can lead to deviation from the original path. This can, in turn, nullify the primary objective of the settlement and commitment mechanism to reduce the burden on the legal system.

SIMILAR PROVISIONS OUTSIDE INDIA

EUROPEAN UNION

A settlement and commitment procedure has been implemented by the European Union to enforce competition legislation within the EU. The European Commission looks into cases of abuse of dominant market positions and cartels under the EU's competition law regime. Through Regulation 1/2003, they made provisions for aSettlement and Commitment framework.

The settlement procedure is applicable to cartels only, which is not the case in India where cartels are excluded from the ambit of settlement and commitment framework. On the other hand, commitment procedures govern only the firms or parties involved.

SINGAPORE

The Competition and Consumer Commission of Singapore ("CCCS"), a statutory agency created under the Competition Act (Cap. 50B) ("Competition Act"), is responsible for administering and enforcing competition legislation in Singapore.The Competition Act has three prohibitions:

Section 34: agreements, decisions or concerted practices whichprevent, restrict or distort competition within any market in Singapore.

Section 47: any conduct which amounts to the abuse of a dominantposition in any market in Singapore.

Section 54: mergers and acquisitions that substantially lessencompetition within any market in Singapore

The Competition Act establishes a commitment mechanism that covers each of these above stated three prohibitions. After accepting a commitment or commitments from the parties, CCCS must decide whether or not the Competition Act has been violated.

Parties that settle a commercial dispute through international settlement agreements that follow mediation are subject to the Singapore Convention on Mediation ("SCM"). It offers a uniform structure for the application and enforcement of international settlement agreements that come from mediation.

UNITED STATES OF AMERICA

Enterprises that are the subject of an inquiry are permitted to propose settlements and promises by the US Department of Justice (DOJ) and the Federal Trade Commission (FTC), two antitrust authorities. Regarding commitments, the DOJ uses a procedure wherein consent decrees are issued and presented to a trial court. These decrees are akin to consent decrees for civil actions in India. The entire process is based on talks that end in a set of legally-binding promises for the enterprise, thus there isn't really a "trial" as such15. In addition, the FTC uses its statutory authority to issue consent orders with obligations in the absence of a trial.

CONCLUSION

The Indian legislative has made a consistent effort to keep abreast with modern developments in every sphere of the world.The settlement and commitment framework is a step in this direction as well. It aims to maintain control over Monopolistic Trade Practices (MTP) and to create regulations pertaining to market competition that are of the highest caliber.This framework will aid budding enterprises to gain a place in the market and at the same time, keep an eye on the practices of the business giants. These type of out court settlements, especially Alternative Dispute Resolution (ADR) should be more popularized in our country as it will help the already overburdened judiciary to work a tad bit more efficiently.  Overall, these newly added strings of provisions are beneficial to the firms and enterprises as well as to the end consumers.