CCI decision to seek individual culpability in cases makes decision-makers at companies uneasy

MUMBAI: The Competition Commission of India has with some vigour started seeking individual culpability in cases for which it penalises organisations, a development that could make decision-makers at companies uneasy.

So far this year, the commission has penalised individuals in five cases and has queries running on a significantly higher number.

"These are mostly names that show up in multiple cases. We will give them a fair chance to be heard, but if we do assess that individuals are responsible, the commission will take action," said CCI chairman Ashok Chawla. Typically, the penalty imposed on corporates is 10 per cent of profit. "In individuals' cases, it would be 10 per cent of their income," he said.

Ashok Gupta, general counsel at the Aditya Birla Group, said he supported the move as it would help improve compliance of competition guidelines.

"The intent behind such a provision is to ensure that directors and officers act carefully and examine the matter from all legal angles while making decisions," he said.Addressing a hall full of lawyers at a CII conference on competition law last Friday , Chawla said the commission was not a quasi-judicial body -it was instead a group of experts whose purpose was to enforce implementation of competition in true spirit.

Earlier this year, the commission fined two Kerala film distributor associations which blocked scheduling of Hindi films in their area of influence. The fine was based on the financials reported by the entities for income tax.

The individuals involved in such cases would have much higher stakes and more to lose financially in a competition commission clampdown. In another case involving a druggist and chemist association, the commission levied an Rs 18-crore fine, of which Rs 13 lakh was on the association and the rest on indi viduals.

Suhail Nathani, cofounding partner of law firm Economic Law Practice, said making individuals responsible "is a good thing, because an organisation is eventually governed by its decision-makers".

So far, the commission has penalised people where there is clear evidence through call records, emails and minutes of meetings, he said. It has also charged individuals whose organisations are repeat offenders.

"The first offence can be treated as lack of knowledge of the law or even as a mistake, but after that there can be no excuse," he said.