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Leniency regimes in BRICS nations: lessons for India
A growing trend shows that global economic power is shifting away from the United States and Europe and towards the BRICS nations. The BRICS nations are predicted to hold the dominant position in the world by 2050. The rapid development of these economies and their markets is also raising a serious concern for the national antitrust enforcement authorities of the BRICS countries in their respective jurisdictions. This study attempts to examine the effectiveness of antitrust law, with a special focus on new developing trends in each of the BRICS jurisdictions. In addition, the study examines the proposed changes and limitations of the Indian Competition (Amendment) Bill 2022. The study reveals that the national antitrust laws and their enforcement processes are not fully developed and in need of considerable changes. Furthermore, the study indicates that while the proposed Amendment Bill 2022 is a progressive step in the right direction, it fails to cover certain key areas of the digital era, requiring further modifications to anticipate future impacts of economic development. In conclusion, the author recommends some points for effective policymaking, along with their future implications.
This paper conducts an event study analysis to empirically assess the industry-wide impact of cartels. Using a sample of recent European cartel cases, we estimate the effect of the surprise inspection and final decision on the stock market value of cartel and noncartel firms. The overall effect of both events is negative for cartel members and statistically insignificant for noncartel members. However, the impact of the inspection is significantly negative for European noncartel suppliers and for noncartel suppliers in nonchemicals industries. This is consistent with the theory that cartels can create additional damages through positively affecting the performance of their competitors.
Can adoption of an antitrust/competition law substitute for a formal competition policy that lays down principles for reforming other government policies that affect competition? We address this question in the context of India, which has a track record of antitrust enforcement as well as a history of extensive controls over the private sector and domination of key sectors by state owned firms. After briefly summarizing these features, we argue that several clauses of the Competition Act, 2002, allow the Competition Commission of India (CCI) to challenge public restraints on competition. We then undertake a detailed review of several cases that have addressed public restraints and that have gradually extended the jurisdiction of the Act. We also identify some areas that remain beyond its reach—government policies that violate competitive neutrality, and discretionary purchases by public buyers—and we note possible social or business justifications for such restraints. Finally, we briefly discuss conflicts between the CCI and other regulatory agencies. We suggest that these remaining challenges can be addressed without laying down a broader policy.
We review the legal framework and case law pertaining to anti-cartel enforcement in India. We begin with a very brief review of enforcement under the Monopolies and Restrictive Trade Practices Act, which was in force from 1969 to 2009. We then discuss in detail the anti-cartel clauses of its successor, the Competition Act. This serves as a prelude to our critical review of cases decided under this statute up to the end of 2016, with particular emphasis on those resulting in important precedents or major penalties. Most of these decisions have, however, been remanded, reversed, or modified on appeal. We discuss the major reasons for these setbacks, including violations of the principle of natural justice, arbitrary levels of fines, and inadequate evidence. The emerging trend in jurisprudence is that evidence of anti-competitive effects will be necessary to establish a contravention, even in cases involving hard-core cartels. We find that the antitrust regime has paid insufficient attention to issues of deterrent penalties, price transparency, and the collusion-facilitating role of vertical restrictions and government policies. We also note the disuse of some of the progressive features of the Competition Act, such as provisions for a leniency programme, dawn raids, and extra-territorial application. © The Author 2017. Published by Oxford University Press. All rights reserved.
A cartel is a group of similar, independent companies which join together to fix prices, limit production or share markets or customers among themselves. The most significant feature of this anticompetitive activity is its restriction of competition between the parties involved in the arrangement. The objective of a cartel is to raise prices above competitive levels, which can result in injury to consumers and to the economy. This is why cartels are considered not only harmful for the economy as a whole but also, as a catalysing factor, destructive for the idealized approach of maintaining a level playing field in the market. Thus various jurisdictions, or rather almost all competition regimes, declare cartels an illegal activity subject to severe fines and penalties. But it is well known that the enforcement mechanisms of laws against cartels differ from country to country, and yet the striking similarity is that almost all competition authorities face the same uphill task of detecting and busting cartels in a manner that leads to efficient and desired prosecution.This paper focuses on an analysis of the newly introduced leniency regulations in India and the parameters of their effectiveness through a comparative analytical study of BRICS leniency regulations, specifically the experiences shared by South Africa, Brazil and Russia in the application of leniency tools and a marker system. The paper further considers the weaknesses of the existing leniency regulations in India and in BRICS and concludes by offering a future path for possible improvements in the form of certain recommendations.
The benefits of bilateral agreements in regard to international cartels are clear: only a synchronized and international approach will help the developing nations in protecting their markets from unfair competition practices. This article shows the state of anti-cartel policies and legislation in selected jurisdictions, the present state of the coordination of competition policies through promotion and cooperation at the bi-national and international level and highlighted some examples of more publicized anti competition cases. One observation is that more could be done by the developing NIC nations to increase the collaborative ties of their anti competition policies and organs as well as ensure that they fall under the wider umbrella of regional competition regimes such as in the case of South Africa and the European Union. The necessity to safeguard consumer welfare through effective domestic anti competition frameworks was highlighted in the discussed cartel cases. Time will tell whether the emerging economies will be able to balance competition policy and consumer welfare in an effective and progressive way without affecting their trade and investment policies.
"This article reviews the state of game theory in legal scholarship and finds that it remains excessively focused on one tool: the Prisoners' Dilemma. I claim that this focus is not justified, that it distracts legal scholars from exploiting other insights of game theory, particularly the problem of coordination. I show how the need for coordination is as pervasive and important to law as the Prisoners' Dilemma, illustrating with game theory discussions of constitutional law, international law, property disputes, traffic, culture, gender roles, and many other topics. I also explain how a focus on the Prisoners' Dilemma unnecessarily contributes to the divide between Law & Economics and Law & Society scholars, all of whom might find some common ground in exploring coordination games."
The paper provides a comparative overview of the BRICS competition regimes with a special focus on the institutional design of the national competition authorities in these countries. It analyses the institutional design of the competition law authorities in the BRICS countries by looking at their autonomy, resources (financial and human), enforcement powers, technical capacity and workload. The paper represents an academic contribution to the mutual learning and experience sharing in the field of competition law currently pursued by the competition authorities of the BRICS countries with the aim to strengthen their institutional and procedural competition enforcement frameworks.
Nowhere was the postwar growth of multinational corporations more dramatic than in the petroleum industry. The major oil companies of the western nations were soon banded together in a complex of joint exploration, producing, refining, and marketing organizations. But efforts to advance criminal prosecution of the American companies under the antitrust laws soon ran head-on into overriding considerations of national security. The hardening of the Cold War, complicated by internal political weaknesses in Iran, persuaded both President Truman and President Eisenhower to soft-pedal litigation. In the end, criminal prosecution of joint production enterprises became civil suits against marketing and pricing agreements, which were settled by consent decree. This, according to Professor Kaufman, amounted to attacking “the tail but not the head or body of the energy tiger.”
This paper critically examines India's new Competition Act. I begin by examining the working of its predecessor, the 1969
Monopolies and Restrictive Trade Practices Act. Earlier studies, as well as a survey of recent cases undertaken for this paper,
show that most cases under that Act involved consumer complaints and contractual disputes unrelated to competition. Very few
cartels were prosecuted, the development of a rule of reason for vertical agreements was hamstrung by the legislature, and
merger review was terminated in 1991. Thereafter, judgments increasingly tried to enforce “fair” business conduct “in the
public interest,” often protecting competitors rather than competition. India thus has little relevant experience for the
many technical economic criteria in the Competition Act. Although the new Act has several positive features, it is riddled
with loopholes that might condone hard-core cartels, predatory pricing, and potentially anticompetitive cross-border mergers,
while it also perpetuates the earlier tendency to penalize “unfair” behavior with no bearing on competition. I argue that
several institutional limitations will also impair the Act's effectiveness and conclude with a plea for capacity building
and phased implementation.
This paper discusses the impact of a leniency program on incentives within cartels. The objective of this program is to encourage a cartel member to confess and implicate his co-conspirators with hard evidence about their collusive agreement. We develop a simple model of cartel behavior under a first-price sealed-bid procurement auction and we show how an effective leniency program can prevent the internal coordination of cartel members.
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