India’s Competition Commission grants first immunity from cartel fines

Some nine years after obtaining competition law enforcement powers against cartels, the Competition Commission of India (CCI) has granted total immunity from penalties for the first time.

The CCI found that battery-makers Eveready, Nippo and Panasonic Energy India engaged in an eight-year cartel which resulted in a 60% increase in the price of dry-cell batteries since 2010.

Panasonic, the whistle-blower, was granted 100% immunity from penalties.  The CCI also reduced Eveready’s fine by 30% to 1.71 billion rupees (EUR21 million), and Nippo’s fine by 20% to 423 million rupees (EUR5.2 million).

The case is also reported to be the first in which the CCI has formally used its dawn raid powers.

The Competition Act 2002 provides the CCI with the power to impose lesser penalties. If the CCI is satisfied that any member of a cartel has contravened the provisions of the Competition Act, but has made full and true disclosures in respect of the alleged contraventions and such disclosures are ‘vital’, the CCI may impose a lesser penalty than that prescribed under the Competition Act.

The case is a welcome development in competition law enforcement in India and shows that the CCI is prepared to offer leniency in appropriate cases.  However, its infrequent deployment is in sharp contrast to the reliance on the policy in some other jurisdictions.  In contrast, in the EU leniency is probably the single most powerful tool that the European Commission uses to detect and enforce against cartels. 

Leniency will only be attractive if the net benefit to the company of applying for leniency exceeds the real and likely penalty. Yet there is no detailed guidance in India on the likely level of penalty or the potential size of the reduction for leniency, other than the practice that can be discerned in case law.

Competition and Markets Authority probes anticompetitive agreements in musical instruments sector

The CMA has announced that it is investigating anti-competitive agreements in the musical instruments and equipment sector under the Chapter I prohibition and Article 101 TFEU.

The CMA’s website contains details of its launch of five investigations (case references 50565-2 to 6) into alleged anti-competitive agreements and/or concerted practices in relation to musical instruments and equipment.

Minimal details of the probes are available at present.  The CMA states that it will carry out an initial investigation through to autumn 2018

CMA press release, 17 April 2018:  https://www.gov.uk/cma-cases/musical-instruments-and-equipment-suspected-anti-competitive-agreements-50565-6

CMA publishes guidance on competition law and joint ventures

The Competition and Markets Authority has published a short guide for businesses on competition law compliance in relation to joint ventures.

The guidance follows a decision of the CMA in December 2017 where it imposed a fine of £1.7 million on two suppliers of laundry services for a market sharing agreement that it found to be in breach of the Chapter I prohibition of the Competition Act 1998.  The CMA’s case was that the violation occurred under the cover of a joint venture.

The guidance comprises ‘dos and don’ts’ for businesses who are considering entering into or who are already involved in joint ventures, alliances or similar forms of cooperation with competitors.  The CMA has stated that it will be communicating with over 1000 law firms across the UK asking them to draw this guidance to the attention of their clients.

The substantive content of the guidance is nothing new. It recognises that agreements may be a response to increasing competitive pressures driven by globalisation, the speed of technological progress and the generally more dynamic nature of markets.  Cooperation can also be a means to share risk and pool know-how to get innovative products and services to market faster.

Where the economic and consumer benefits outweigh the negative effects on competition, such agreements will usually be lawful.  However, the guidance is a timely reminder that many cooperative business arrangements or routine agreements may fall foul of competition law and need to be scrutinised to ensure that any restrictions imposed are the minimum necessary to deliver their claimed benefits.

Source: CMA press release of 12 April 2018:  https://www.gov.uk/government/publications/joint-ventures-and-competition-law-dos-and-donts

Competition and Markets Authority to be given State aid powers post-Brexit

The UK government has said that the Competition and Markets Authority will be given State aid powers following the UK’s withdrawal from the European Union.

The minister for small businesses, consumers and corporate responsibility stated in a letter of 28 March 2018 to Lord Whitty, the Chair of the, EU Internal Market Sub-Committee that the Government’s view is that the UK should be prepared to establish a “full, UK-wide subsidy control framework, with a single UK body for enforcement and supervision”.  Further, the Government has concluded that at the point an independent UK State aid authority is required, the CMA would be “best placed” to take on the role of State aid regulator.

The European Commission has stated that state aid provisions would be a condition of any trade deal between the EU and the UK.

At first sight, it is understandable that the CMA might seem well-positioned to take on this role in view of its experience of markets. But it would need to have the resources to take on this expanded mandate.  While the CMA is independent from government, the EU would need to be convinced that it was genuinely free from political capture to take on this role.  State aid differs from mainstream competition law.  The application of State aid law is a politically sensitive issue.  This is a clear area of controversy. 

There are some examples of member state authorities taking on a similar role in pre-accession situations, but obviously Brexit is the converse situation and without precedent.

Source: http://data.parliament.uk/DepositedPapers/Files/DEP2018-0337/280318_-_Letter_Andrew_Griffiths_to_Rt_Hon_Lord_Whitty.pdf