India's Cartel Penalty Practices, Optimal Restitution and Deterrence

Abstract

We review the cartel penalty and leniency practices of the Competition Commission of India (CCI), in light of the law and economics literature on optimal penalties, as well as current practices in different jurisdictions. Our analysis reveals that although India’s Competition Act allows for a much harsher penalty than other jurisdictions in cartel cases, the actual practices followed by the 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. In the majority of cases, penalties fall short of restitution and deterrence benchmarks suggested by some earlier literature. We conclude with some suggestions to improve India's penalty and leniency regime.