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India – United states cooperation on competition law – heightening the need for compliance

India – United states cooperation on competition law – heightening the need for compliance

On 27 September 2012, the Competition Commission of India (CCI) signed a Memorandum of Understanding on antitrust cooperation (MoU) with the US Federal Trade Commission (FTC) and the US Department of Justice (DOJ), Antitrust Division, which are the 2 key US federal antitrust / competition enforcement agencies. The MoU enables both countries to cooperate on competition law investigations and also allows the Indian and US regulators to share information on investigations and consult on enforcement and policy issues.

In addition to the US MoU, the CCI has also signed similar agreements with Russia and is at an advanced stage of negotiation for entering into MoUs with China, South Africa, Indonesia, Japan, the United Kingdom, and Brazil. Through economic agreements with other countries that are currently in progress, the CCI may soon have similar agreements with the European Union, New Zealand, and Australia.

KCO Comment:

India’s entering into a MoU with the US is a signal event in the short history of Indian competition law. For example, the US has long used internationally coordinated dawn raids (i.e., unannounced search and seizures) with other competition regulators as a potent weapon to find information about cartels. The MoU means that the DOJ and FTC will closely liaise with their Indian counterpart, the CCI, most likely in relation to international cartels involving the two countries.

In addition, these arrangements help give effect to the extra-territorial operation of the (Indian) Competition Act, 2002, as amended, (Competition Act) under Section 32, which provides that the CCI can investigate and issue orders against activities taking place outside India but having anticompetitive effects within India. However, as a practical matter, unless India enters into these MoUs and bilateral arrangements with other jurisdictions, the CCI cannot effectively enforce this power.

As was seen in the orders of the CCI dated 20 June 2012 and 30 July 2012 in the cement cartel cases, the CCI is issuing exceedingly high fines for breaches of the Competition Act. Now that the CCI has the ability to cooperate with countries like the US on competition law enforcement, it becomes all the more critical for companies to achieve compliance as soon as possible, such as by implementing a strong compliance programme, a dawn raid preparedness plan, and a sound document retention plan.

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