Cartel leniency programme in India—why no race here?

Abstract

This article evaluates the implementation of the cartel leniency programme by the Competition Commission of India (CCI) using comprehensive data covering all related decisions of the CCI from 2009 to 2021. All other things remaining the same prima facie discoveries of cartels should have resulted in a ‘shock’ to ex ante expected returns of cartels, thereby encouraging more leniency applications. But, we find no such results or rather no ‘race’ to the agency. A successful leniency programme requires a transparent and deterrent penalty, plus consistency in applying leniency provisions. However, inconsistencies in the choice of penalty base and uncertainties in determining final penalties while using mitigating and aggravating factors have led to a poor correlation of penalties with cartel gain or harm. Strategic or otherwise, this has encouraged appeals to the appellate authority, thereby reducing the effective penalty to levels below deterrence. Many acts of bid rigging have been penalized using less stringent criteria and, in a few circumstances, also provided the benefit of leniency. Further, while individuals concerned in leniency cases have always been penalized, the CCI has not been so consistent in non-leniency cartel cases. These asymmetries and ‘other’ costs create disincentives for exercising the leniency option. We offer suggestions for enhancing the possibility of a race to the agency.