Amnesty provision likely in comptetition bill

the proposed competition law is likely to have an amnesty clause. arun jaitley, minister for law, justice and company affairs, has written to pranab mukherjee, chairman of the law ministry's standing committee, informing him that world over anti-trust laws contain a leniency provision. the minister has confessed that this information was brought to his attention only after the competition bill was tabled in parliament. he has pointed out that in many countries, inclusion of leniency clause in anti-trust law has proved to be more effective in combating cartelisation than the prosecution route. for industry, this could well prove to be manna from heaven, a provision legally permitting it to move from a higher to lower charge on confession of guilt. for the investigators, it could mean quick results, better track record, higher collections in penalties and greater effectiveness. for consumers too, there could be value in terms of a quicker crack down on cartels and the reestablishment of fair value for a product in the market. the detractors, however, are bound to point out that a clemency clause would let a violator off the hook more easily, with lower punishments. but as a senior law ministry source points out, cartelisation is a lower order crime, not equal to fraud, which demands tough punitive measures. very simply explained, the leniency clause is similar to the compounding provision contained in indian company law. it is also similar to the amnesty clause available to informants in the us, where plea-bargaining could be used for the mutual benefit of the investigator and the informant. the us experience shows that plea-bargaining has been highly successful in not only for bringing criminals to book but also to break hardcore cartels. in the context of a competition law, leniency clauses vary from country to country, but in general, they provide incentives for voluntary disclosures of information relating to cartelisation. this information could come from an employee or from companies, which are members of the cartel. the point up to which a disclosure of information would earn amnesty varies from law to law. so also the incentives for turning in information. however, in general, the incentives are in the form of lower penalties or total/partial immunity from prosecution. according to an oecd report, which was subsequently adopted by oecd's competition law and policy committee in february 2001, the us leniency clause is most effective. it provides for distinctly lower penalties for those who wish to turn in evidence first. take for instance the us investigation of graphite electrodes cartel. the amnesty applicant received no penalty, the next firm to come in was fined $32.5 million, third at $ 110 million and the last one, $ 135 million. similarly, the us investigations of the vitamin cartel showed that the amnesty applicant's cooperation led to directly to guilty pleas and fines of $ 500 million and $ 225 million against two other firms. the oecd report highlights the fact that the 1993 refinement of the us anti-trust law, which led to the inclusion of the leniency clause, resulted in dozens of arrests and fines exceeding $ 1 billion. presently, amnesty clauses exist in eu, canadian, uk and german laws. france and sweden are considering a switchover, while korea, which already has a leniency programme, is considering legislation for further improvement. in the indian context, mr jaitley's willingness to provide for an amnesty provision in the proposed competition law could well mean the difference between stalling and the passage of the bill. introduced in parliament in august 2001, the bill has been opposed not only by industry but it holds the dubious distinction of ruling party mps actually trying to scuttle it. when it had been on the verge of being referred to the house committee (which is the normal procedure), ruling party members had lobbied hard to get it referred to the joint select committee of the house. that is one way to delay a bill. the speaker, however, did not succumb to the pressure and the bill is presently before the standing committee on home, the law ministry's house committee, for consideration. meanwhile, mr jaitley himself is leaving no stones unturned to ensure its passage. at his first interaction with industry after the introduction of the bill, he promised trade and industry that the government would not rush into its implementation of the bill even after its passage. he reassured industry that the proposed act would come into force only when industry was ready and its introduction would only be in phases (such a thing is possible by delaying the notification of the rules under any law.) his tone at this meeting was that industry had nothing to worry as the government was not proposing to bring back chapter iii of the mrtp act, which was used in the past to curb size. yet, industry reactions till now indicate that it is not easily convinced. this is because the way the competition bill is worded, it would leave bulk of industry out of the new law's purview, zeroing in on a handful of companies. however, this is the most influential segment of indian industry, currently in the process of consolidation through mergers, amalgamations and acquisitions. hence, this segment is not likely to take too kindly to the passage of any law, which regulate the manner in which companies grow in size. recognising this, the law minister has mounted his counter-offensive. appeasement offers to the house committee apart (which could convince opposition mps to vote in its favour), he has appointed s chakravarthy as consultant to dca. formerly from the mrtp commission and a member on the svs raghavan committee, which drafted india's competition law, mr chakravarthy's brief is to convince industry that there is nothing to fear in the bill. interestingly, even while mr jaitley is banking on mr charavarthy's superior communications skill as compared to his officers' as justification for expending the exchequer's scarce funds, industry is not biting yet. this is signalled by the fact that mr chakravarthy's first port of call was the mumbai chambers of commerce.

Amnesty provision likely in comptetition bill

THE PROPOSED competition law is likely to have an amnesty clause. Arun Jaitley, minister for law, justice and company affairs, has written to Pranab Mukherjee, chairman of the law ministry’s standing committee, informing him that world over anti-t...

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