With the aim of strengthening its application framework and improving penalty recovery rates, the Competition Commission of India (CCI) has released draft amendments to the Competition Commission of India (Mode of Recovery of Monetary Penalties) Regulations, 2011, seeking public comments.

The move is seen as a crucial step in resolving long-standing issues surrounding the recovery of fines imposed on entities violating competition laws.

The proposed changes aim to address gaps in the recovery process, strengthen compliance and ensure that sanctions act as a credible deterrent against anti-competitive practices.

The CCI has invited stakeholders to submit comments on the draft amendments by December 6, 2024. The consultation process aims to incorporate public and industry feedback to ensure that the updated recovery regulations are both effective and pragmatic, balancing deterrence and operational flexibility.

The CCI, empowered by section 39 of the Competition Act 2002, has always faced difficulties in enforcing financial sanctions. As the recovery rates for fines imposed remain low, the CCI deemed it necessary to review the regulatory framework governing the recovery process. The draft, which reflects lessons learned from more than a decade of experience, follows two previous amendments in 2014 and 2021. Yet persistent recovery inefficiencies have necessitated a more robust, transparent and streamlined approach.

The main changes in the draft amendments introduce more precise definitions, including terms such as “defaulting company” and “defaulting person”, which aim to simplify the identification of defaulters and strengthen accountability. The amendments also propose a more structured process for issuing demand notices, with specific deadlines for the payment of penalties and the automatic accumulation of interest at the rate of 1.5 percent per month on amounts in suffering. This clarity aims to eliminate ambiguities around payment deadlines and to strengthen the enforceability of the sanction.

The regulations propose a central role for the recovery agent, who will be responsible for monitoring compliance, issuing recovery certificates and executing recovery actions in the event of default. These actions can now include the seizure and sale of movable and immovable property. In cases where penalties remain unpaid, the ICC may initiate recovery proceedings by seizing the assets of the defaulting company or person, including those located abroad, in collaboration with international authorities where agreements reciprocity exists.

Additionally, the draft amendments introduce a dedicated fine recovery register, designed to track recovery progress and systematically record enforcement actions. This register, kept by the recovery agent, will serve as an institutional file, contributing to transparency and allowing more rigorous monitoring by the CCI.

The amendments also strengthen cooperation between agencies. Under the new rules, unpaid penalties can be referred to the income tax authorities, with the defaulter being treated as a “defaulted beneficiary” under the Income Tax Act, 1961. This mechanism is expected to expedite the recovery by granting the CCI access to the established taxes. recovery infrastructure, ensuring that defaulters are prosecuted under competition and tax laws.

The draft includes provisions to prevent evasive tactics. Any transfer or assignment of assets by a defaulter after the imposition of a penalty will be set aside, except in cases where it is made for adequate consideration and without knowledge of the pending proceedings or with the prior authorization of the CCI. Businesses facing penalties can request an extension or tiered payment structure. However, failure to pay these installments would result in immediate enforcement action with the full outstanding penalty amount being due.