CCI seeks changes in fine recovery rules; seeks public feedback

New Delhi: Faced with low recovery rates of penalties imposed on companies for anti-competitive conduct, the Competition Commission of India (CCI) has sought to revise its recovery procedures.

The regulator has sought public feedback on a series of amendments to the penalty recovery system that have been in place for over a decade under the CCI (Conditions of Recovery of Penalties) Regulations 2011.

Comments will be accepted until June 6, the CCI said in a background note on the proposed changes.

“Based on the experience gained in implementing these regulations over the years and with a view to streamlining the restoration process, certain amendments have been deemed suitable for inclusion in the above regulations,” the CCI said. These regulations have undergone minor revisions twice in the past – once in 2014, Another time is in 2021.

In addition to amending the draft regulations, the CCI has also issued a revised demand notice for public comments. The proposed amendments clarify that penalties can be imposed not only on businesses but also on “individuals” who break the law. Under the proposed amendment, the legal heirs of the defaulter will be liable to pay the penalty.

Responsibilities of legal heirs

The revised draft states that the liability of the legal heir is limited to the extent that the estate granted by the deceased to his legal heir can bear the liability for compensation.

In its annual report for FY23, CCI said that in FY22 and FY23, the regulator imposed the following penalties: $1,336 Crores and Rs. $2,672 crore, but only about 13% and less than 1% of it can be recovered, Mint Daily report on October 20th. Mint It was also reported at the time that the regulator had established a three-person internal committee to recommend measures to make the recovery process more robust.

Experts say the proposed amendments aim to plug existing loopholes and ensure a swift and effective crackdown on anti-competitive practices.

“Historically low recovery rates may indicate systemic vulnerabilities that make it easy for companies to evade penalties or delay payments without facing significant consequences. Through these amendments, the CCI aims to establish a stricter and streamlined recovery process , ultimately enhancing its deterrence.

“By introducing structured demand notices, compound interest on deferred payments and asset seizure provisions, the CCI is creating a strong framework that prioritizes accountability. These new measures also allow for working with the income tax authorities to treat penalties as tax payable, which It has greatly enhanced recovery efforts,” Chandwani said.

penalty interest

After the payment due date and until the penalty is paid, the interest rate will be 1% of the amount outstanding for each month or part of the month.

Chandwani said that through these changes, the CCI not only enhances deterrence but also encourages businesses to adhere to fair competition standards by sending a clear message that non-compliance will lead to significant financial and reputational consequences.

Chandwani added that this change in recovery rules is a necessary step for the CCI to close the enforcement gap, strengthen its authority and ensure that penalties achieve their intended purpose, deter anti-competitive practices and create a fairer market environment.

A former CCI official told Mint Although penalties may be recovered slowly, the CCI’s enforcement actions have been effective in achieving market correction.