India’s Cartel Penalty Practices, Optimal Restitution and Deterrence

We analyze the cartel penalty regime in India in light of the literature on optimal penalty for restitution and deterrence, as well as current penalty practices in different jurisdictions. Our analysis reveals that though India’s Competition Act allows for a much harsher penalty than other jurisdictions in cartel cases, the actual practices followed by the Competition Commission of India (CCI) are often inconsistent and non-transparent, resulting in a large number of court cases and very low penalty recovery. This inconsistency also weakens the leniency programme adopted by the CCI in order to induce cartelists to come forward with evidence. Our analysis reveals that in the majority of cases, penalties fall short of restitution and deterrence benchmarks suggested by some earlier literature. We suggest that in order to enhance both punishment and deterrence, CCI should adopt a consistent profit and durationbased penalty regime already prescribed in the law, and issue penalty guidelines taking into account the lack of profit/turnover data, aggravating and mitigating factors, as well as aberrations such as the role trade associations in the Indian context.

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