CCI notifies Procedures for Filing Settlement Applications and Conducting Proceedings

The Competition Commission of India ( CCI ), vide notification no. 04 of 2024 dated 6th March 2024 has notified the procedures for filing settlement applications and conducting proceedings. These regulations may be called the Competition Commission of India ( Settlement ) Regulations, 2024.

Application for settlement

When seeking settlement under the Competition Act, a Settlement Applicant must adhere to specific guidelines and procedures outlined by the Commission.

A “Settlement Applicant” refers to any enterprise, as outlined in clause (h) of section 2 of the Act, that is the subject of an inquiry initiated under sub-section (1) of section 26 of the Act due to suspected contraventions of sub-section (4) of section 3 or section 4 of the Competition Act. This enterprise submits an application to settle the proceedings initiated against them for these alleged contraventions to the Commission under the regulations governing settlement procedures.

Here’s a breakdown of the essential requirements and steps involved in the application process:

Submission of Settlement Application: The Settlement Applicant must submit a written Settlement Application to the Commission, accompanied by the requisite fee as specified in regulation 9. The application must include the following information:

1. Details of the Settlement Applicant, including name, legal status, registration number, contact information, and authorised representative(s).
2. Proof of fee payment to the Commission.
3. Findings of the Director General in the investigation report related to the Settlement Applicant.
4. Full disclosure of facts regarding alleged contraventions and proposed settlement details.
5. Previous history of contraventions or settlement applications, if applicable.
6. Nature, gravity, and impact of alleged contraventions.
7. Summary of Commission’s prima facie opinion, findings of the Director General, and competition concerns.
8. Details of other competition authorities or courts examining alleged contraventions.
9. Undertakings and waivers as per Schedule I.
10. Any additional information relevant to determining settlement terms and amounts.

Timeline for Submission: The Settlement Application may be submitted after receiving the Director General’s report or its confidential version. However, the application must be filed within 45 days of receiving the report. An extension of 30 days may be granted by the Commission under exceptional circumstances, provided sufficient reasons are provided.

Rectification of Defects: If the Settlement Application is incomplete or does not meet the requirements, the Commission may request the Applicant to rectify the defects or provide necessary information within a specified timeframe. Failure to do so may result in the invalidation of the application.

Withdrawal of Application: The Settlement Applicant has the option to withdraw the application at any time before the Commission passes an order under regulation 4.

Criteria for Consideration: The Commission will not consider a settlement application if it fails to address all contraventions found by the Director General or if any amount due under the Act is recoverable from the Applicant.

Consideration of proposal for settlement

Placement for Consideration: The Settlement Application, when complete as per regulation 3, is promptly presented for evaluation by the Commission within seven working days of receipt.

Review of Settlement Proposal: If the Commission is initially dissatisfied with the proposed settlement, it communicates the reasons to the Settlement Applicant and allows for submission of a revised Settlement Application within fifteen working days.

Abeyance of Inquiry: Upon consideration of the Settlement Application, the inquiry against the Settlement Applicant is suspended until a final decision on the settlement proposal is made by the Commission.

Inviting Objections and Suggestions: The Commission seeks objections and suggestions as per regulation 5 while evaluating the proposal for settlement.

Decision on Settlement Proposal: After examining the nature, gravity, and impact of alleged contraventions, along with the settlement proposal and any received comments, objections, or suggestions, the Commission may:

1. Agree to the settlement proposal and close the proceedings against the Settlement Applicant.
2. Reject the settlement application and proceed with the inquiry under section 26 of the Act.
3. Request a revised Settlement Application if not satisfied, subsequently either agreeing to or rejecting the revised proposal.

Failure to Submit Revised Application: If the Settlement Applicant fails to submit a revised Settlement Application within the specified time or provide requested clarification, information, or data, the Commission may reject the Settlement Application and resume the inquiry under section 26 of the Act.

Communication of Settlement Amount: Before passing an order under section 48A(3) of the Act, the Commission communicates the Settlement Amount to the Settlement Applicant, who must accept it within fifteen days.

Payment of Settlement Amount: The Settlement Applicant must pay the Settlement Amount within thirty days of acceptance, upon which the Commission passes an order under section 48A(3) of the Act.

Non-acceptance or Non-payment: Failure to communicate acceptance or pay the Settlement Amount within the prescribed time results in rejection of the Settlement Application by the Commission.

Conclusion of Settlement Proceedings: Settlement proceedings must be concluded within 180 working days from the receipt of the complete Settlement Application, with the possibility of extension under specific circumstances.

Commission’s Authority to Seek Information: The Commission may request clarification, information, or data from the Settlement Applicant as necessary.

Grounds for Rejection: The Commission reserves the right to reject a Settlement Application if the Settlement Applicant refuses to engage or breaches undertakings and waivers as per Schedule-I.

Opportunity of Being Heard: The Settlement Applicant is granted an opportunity to be heard before the Commission passes an order rejecting the Settlement Application.

Interim Directions: During the pendency of the Settlement Application, the Commission may issue interim directions to safeguard consumer interests and competition in the market.

Communication of Rejection: Any rejection under this regulation is communicated to the Settlement Applicant, who remains bound by undertakings and waivers per Schedule I.

Invitation for Objections and Suggestions on Proposal for Settlement

The Commission, during its consideration of a settlement proposal, extends the opportunity for concerned parties, the Director General, or any other relevant party to submit comments, objections, or suggestions within a 21-day period. To facilitate this, the Commission will provide a summary devoid of confidential information. This summary will encompass:

1. The prima facie opinion of the Commission as expressed in the order issued under sub-section (1) of section 26 of the Act.
2. Findings of the Director General in the investigation report received under sub-section (4) of section 26 of the Act, inclusive of details regarding competition concerns and alleged contraventions.
3. A comprehensive overview of the settlement proposal offered by the Settlement Applicant, detailing how it addresses the competition concerns, and any additional relevant information as deemed necessary.

Comments, objections, and suggestions submitted by concerned parties should include:

1. Name and contact details, including address, telephone number, and email, of the concerned party and its authorized representative(s), if applicable.
2. A statement of comments, objections, and suggestions, duly authenticated by the authorized representative and supported by relevant documents.
3. A concise summary not exceeding four pages.
4. Any supplementary information deemed pertinent to aid the Commission in determining the terms of the settlement.

Manner of Determining the Settlement Amount

1. To ascertain the Settlement Amount, the Commission will calculate a base amount, which may reach the maximum penalty amount that could have been imposed under section 27(b) of the Competition Act.
2. In determining the base amount as outlined in sub-regulation (1), the Commission will adhere to the Penalty Guidelines.
3. The Settlement Amount will be determined by applying a settlement discount of 15% to the base amount computed under sub-regulations (1) and (2).

Nature and Effect of Settlement Order

1. The order issued by the Commission, approving the settlement proposal, shall not be interpreted as a determination of contravention by the Commission against the Settlement Applicant, without prejudice to the provisions of section 53N of the Competition Act.
2. The submission of a Settlement Application or the issuance of a settlement order by the Commission will not impact the inquiry under section 26 of the Act regarding alleged contraventions concerning other parties not involved in the settlement proceedings.
3. The settlement order shall be considered final and binding upon the Settlement Applicant.

Assessment of the Terms of the Settlement

In evaluating the Settlement Application, the Commission shall consider the nature, gravity, and impact of the alleged contraventions. Factors to be taken into account include:

1. The nature, duration, and extent of the alleged contraventions
2. Whether the settlement terms effectively address the alleged contraventions and can be implemented and monitored efficiently.
3. Whether the terms of settlement promote market contestability.
4. Procedural efficiencies, self-executing terms, and prompt correction of market distortions.
5. The Settlement Applicant’s past compliance history, including any prior violations or pending investigations.
6. Actions taken by the Settlement Applicant to rectify past violations or prevent future ones.
7. Any other relevant factors deemed appropriate by the Commission in the specific circumstances of the case.

Fee under sub-section (1) of section 48A of the Act

Applications submitted to the Commission under sub-section (1) of section 48A of the Act must include proof of payment of non-refundable fees as follows:

1. Rs. 2,50,000 for Settlement Applicants with a total turnover of up to Rs. 50,00,00,000 in India in the preceding financial year.
2. Rs. 10,00,000 for Settlement Applicants with a total turnover exceeding Rs. 50,00,00,000 and up to Rs. 500,00,00,000 in India in the preceding financial year.
3. Rs. 50,00,000 for Settlement Applicants with a total turnover exceeding Rs. 500,00,00,000 in India in the preceding year.

Fees can be paid via demand draft, pay order, or banker’s cheque payable to “Competition Commission of India ( Competition Fund ), New Delhi,” or through Electronic Clearance Service ( ECS ) by direct remittance to the Competition Commission of India ( Competition Fund ) Account No. 1988002100187687 at Punjab National Bank, Bhikaji Cama Place, New Delhi-110066.

Implementation and Monitoring of Settlement Order

When the Commission deems it necessary to monitor the implementation of the Settlement Order, it may appoint agencies for oversight in accordance with the Competition Commission of India ( General ) Regulations, 2009, and specify the terms and conditions accordingly.

Revocation of the Settlement Order

1. If a Settlement Applicant fails to comply with the Commission’s order under section 48A of the Act, or if it’s discovered that the Applicant hasn’t made full and accurate disclosures during the settlement proceedings, or if there has been a material change in facts, the Commission will revoke and withdraw the order.

• The Commission will provide the Settlement Applicant with an opportunity to respond within 15 working days from the date of receipt of the show-cause notice before forming an opinion on the matter.

1. Upon revocation of the settlement order, the Settlement Applicant is liable to pay legal costs incurred by the Commission, as determined by the Commission, up to a maximum of one crore rupees, payable in accordance with regulation 9(2).
2. The legal costs imposed on the Settlement Applicant are recoverable in the same manner as prescribed for the recovery of penalties under the Act, as per the Competition Commission of India ( Manner of Recovery of Monetary Penalty ) Regulations, 2011.
3. Additionally, if the settlement order is revoked and withdrawn, the Commission may initiate or reinstate an inquiry or investigation against the Settlement Applicant for which the order under section 48A was issued.

Power to Use Information

If the Commission revokes and withdraws a settlement order under section 48C of the Act, it and the Director General can utilize the information and documents submitted by the Settlement Applicant in proceedings under the Act.

In cases where a Settlement Application is rejected or withdrawn, the Commission and the Director General may utilize information gathered from sources other than the Settlement Applicant in proceedings under the Act.

The Commission, subject to the provisions of regulation 35 of the Competition Commission of India (General) Regulations, 2009, along with section 57 of the Act, can use information submitted by the Settlement Applicant against other parties to the inquiry who are not part of the settlement proceedings.

Any facts established against the Settlement Applicant or admitted in ongoing or concluded proceedings in India or abroad, related to the same cause of action under any law, shall be deemed admitted by the Settlement Applicant concerning the proceedings proposed to be closed under these regulations.

Request for Confidentiality

Parties may request confidentiality for information or documents submitted during settlement proceedings following the procedure outlined in the Competition Commission of India ( General ) Regulations, 2009, as amended.

Such requests for confidentiality will be duly considered in accordance with the provisions laid down in the Competition Commission of India ( General ) Regulations, 2009, as amended, along with section 57 of the Act.

Inspection and Certified Copies of Documents

Inspection and certified copies of documents submitted during settlement proceedings may be granted only to the Informant and the Settlement Applicant. Confidential versions of such documents will be handled according to regulation 35 of the Competition Commission of India ( General ) Regulations, 2009.

Inspection and certified copies of comments received under regulation 5 will be permitted only after the expiry of the 21-day period mentioned therein.

Powers to Determine Procedure in Certain Circumstances

In situations not covered by these regulations, the Commission may determine the procedure for a particular case with reasons recorded in writing.

Power to Remove Difficulties

The Commission retains the authority to issue clarifications, specify procedures through circulars or guidelines, and its decisions in this regard shall be binding in the implementation of these regulations.

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