Author name: CBCL

[By Yatendra Singh] The author is a student of Dr Ram Manohar Lohia National Law University, Lucknow.   ​​​Introduction  ​​In the complex landscape of competition law, uncovering and prosecuting cartels remains a formidable challenge worldwide. India’s recent introduction of the Competition Commission of India (Lesser Penalty) Regulations, 2024 marks a significant stride towards enhancing antitrust enforcement. This article explores how these regulations incentivise cartel disclosure through leniency provisions akin to global standards, aiming to strengthen fair market practices. By examining the impact and nuances of these measures, this discussion underscores their pivotal role in shaping India’s competitive economic environment.​  For instance, cartelisation is not a new phenomenon. In the 1800s, powerful trusts like the Standard Oil Company had ​​monopolized crucial sectors in the United States, controlling prices and stifling competition. The unchecked power of these trusts led to market disruption, escalating prices, and compromising consumer welfare. In response, the US enacted its first Competition Act, the Sherman Antitrust Act, in 1890 to address these abuses, signalling the need for anti-trust legislation to curb monopolistic practices and safeguard economic and consumer interests.  ​​​While these laws are good for regulating the market and punishing those who break it, ​however​, they are not sufficient to unearth hidden Cartels. In fact, India’s first Anti-trust Act (Monopolies and Restrictive Trade Practices Act 1969) was replaced because it became redundant after India’s new economic policy in 1991 and the globalisation of the market. Cartels, by their nature, are hidden and secret. Cartel cases are difficult to investigate and detect because of the scope and complexity of many cartels. The conspiracy can be established through both direct and indirect means. ​​Often, only the participants know exactly how the cartel works. According to MIT economist Alexander Wolitzky, participants typically become aware of cartel activities through various channels, including industry conferences, informal networks among competitors and conventional wisdom.  Therefore, the Competition (Amendment) Act 2002 and new regulations in the leniency scheme, namely The Competition Commission of India (Lesser Penalty) Regulations, 2024, become important. This new amendment aims to unearth hidden cartels by offering an additional reduction in monetary penalty. It will be interesting to see how these new regulations play out in a market that operates through digital platforms, where detecting cartels becomes even more challenging.  ​​Cartels​  Cartels are defined under section 2 of the Competition Act as an association of producers, sellers, distributors, traders, or service providers who, by agreement amongst themselves, limit, control, or attempt to control the production, distribution, sale, or price of, or trade in goods or provision of services. A cartel is usually understood to be formed by a group of sellers or buyers who bond together and try to eliminate competition. Supreme Court defined cartels in ​​Union of India vs Hindustan Corporation Limited as an association of producers who, by agreement among themselves, attempt to control the production, sale, and price of the product to obtain a monopoly in any particular industry or commodity.   Cartelisation is a type of horizontal agreement that shall be presumed to have an appreciable adverse effect on competition under Section 3 of the Act. Horizontal agreement refers to an agreement between two or more parties that are at the same stage of production and on a similar line of production. ​​It is presumed to affect the consumer market adversely, such as inflated prices and reduced choices for cheaper alternatives. This was highlighted in Neeraj Malhotra v. North Delhi Power Ltd, where electricity distribution companies restricted consumer choices by distributing faulty meters, adversely affecting the market by inflating bills, limiting competition, and enabling price manipulation through cartel-like behaviour.  Horizontal agreements are, by their very nature, prohibited by law. In case there is an application of cartelisation against the enterprise, the enterprise has to prove its innocence. Additionally, the Competition Act empowers the CCI to impose penalties and/or fines on the detection of cartels under Section 27 of the Act.   In ​​Express Industry Council of India v Jet Airways (India) Ltd, the Competition Commission of India (CCI) found a cartel involving airlines, including Jet Airways, IndiGo, and SpiceJet, collaborating to fix Fuel Surcharge rates in the air transportation sector. CCI imposed penalties on Jet Airways (Rs. 39.81 crore), IndiGo (Rs. 9.45 crore), and SpiceJet (Rs. 5.10 crore) for overcharging cargo freight under the guise of a fuel surcharge. This action was deemed to violate Section 3(1) read with Section 3(3)(a) of the Competition Act, addressing anticompetitive practices and safeguarding consumer interests. In light of the above case, it is clear that once found guilty of cartelization, Enterprises have to pay a heavy penalty. However, the Competition Act also has a whistle-blower provision that could reduce these penalties up to 100%.   ​​Leniency Provision​  Section 46 of the act deals with the leniency provision. This provision can grant leniency by levying a lesser penalty on a cartel member who provides full, true, and vital information regarding the cartel. The scheme is designed to induce members to help detect and investigate cartels. This scheme is grounded on the premise that successful prosecution of cartels requires evidence supplied by a member of the cartel. ​​Leniency schemes have proved very helpful to competition authorities of foreign jurisdictions in successfully proceeding against cartels. For Instance, The US corporate leniency program has been very successful. Previously, the Department of Justice received about one amnesty application per year. With the introduction of the new policy, however, this rate has surged to approximately two applications per month. Notably, amnesty awards have been pivotal in several prominent cases, such as the Vitamins investigation, where the applicant received a substantial fine reduction totalling nearly $200 million.  Similarly, In India, In Anticompetitive Conduct in the ​​Dry-Cell Batteries Market in India Vs Panasonic Corporation and Others The commission finds that Panasonic Corporation and its representatives provided genuine, full, continuous, and expeditious cooperation during the course of the investigation. Thus, the full and true disclosure of information and evidence and continuous cooperation provided not only enabled the Commission to order an investigation into

[By Dhananjay Dubey] The author is a student of Institute of Law Nirma University, Ahmedabad.   Introduction  A Non-Compete Agreement is a legally enforceable agreement in which the “Restricted Party” agrees not to participate in any competitive activities during and for a set period after the termination of their commercial relationship with the “Protected Party.” It is a common tool used by businesses to retain valued employees, protect secret information and customers, and prevent unfair competing activities. Employment terminations, contractor or consultant engagements, corporate partnerships, and mergers or acquisitions are all scenarios that use non-compete agreements. In exchange for accepting the constraints, the Restricted Party must be given consideration, such as job offers or monetary recompense. The Agreement prohibits the publication of confidential information, even after the termination of employment.  FTC’s Ban on Non-Compete Agreements: A Shift in Competition Law  Recently in the month of January 2024, the (Federal Trade Commission) FTC issued a rule to ban non-compete agreements to protect competition across the country. On 23rd April 2024, the proposed rule came into effect after much deliberation. The said rule bans all types of non-compete agreements as violative of Section 5 of the FTC Act which prohibits unfair or deceptive practices affecting commerce. The framework of the rule is broad, prohibiting not only non-compete agreements but also other parallel arrangements that serve similar goals. This rule applies to any agreement that prevents or penalizes employees from exploring opportunities with competing companies.  Under the final regulation, new non-compete agreements for top executives earning more than $151,164 per year and holding major policymaking roles, such as presidents or CEOs, are forbidden, although existing agreements are still lawful. This differs significantly from the proposed regulation, particularly in terms of the treatment of existing agreements and notice obligations. Existing non-compete agreements do not require a formal termination. Firms must notify non-senior executive staff with existing agreements that they will no longer be enforceable once the law is implemented, allowing them to pursue other alternatives. The FTC provides a sample notice for clarity and uniformity, emphasizing employees’ ability to pursue their professional goals unrestricted.  Exception to the Final Rule  Exceptions to the rule exist for certain settings and entities. Firstly, non-solicitation and non-disclosure agreements are exempted, although employers should exercise caution as overly restrictive clauses may still breach the law if they unduly limit individuals from working in the same field. Secondly, the rule does not cover in-term non-compete agreements, which restrict competition during employment. Additionally, entities excluded from the FTC Act, like banks and insurance companies, are not bound by the regulation. Franchisee/franchisor contracts are also exempt, though workers of both parties remain protected. Crucially, the final regulation includes an exception for the sale of a business, allowing non-competes in bona fide sales without mandating a minimum ownership stake, as initially proposed. This exception ensures that genuine commercial transactions are not impeded by the rule.  Referenced assessment with Competition Law in India.  This development marks a significant comprehension of competition law in India. The rationale behind proposing such a rule is that it impedes labor mobility and stifles competition, thereby hindering innovation and the establishment of new businesses. The pertinent question here is whether such a development can be anticipated within the Indian Competition law framework. To address this, a brief examination of existing jurisprudence is necessary. Under Indian Law restrictive covenants such as the non-compete clauses fall under the domain of Section 27 of the Indian Contract Act, which asserts that any agreement pursuance of which prevents or restrains a person from practicing a lawful profession, trade, or business is void to that extent, with an exception for the sale and purchase of goodwill. While non-compete agreements seemingly fall within this provision, the Supreme Court, in the landmark case of Niranjan Shankar Golikari v. Century Spinning, scrutinized the validity of such clauses under section 27 of the Indian Contract Act, 1872, which invalidates agreements restraining trade. Justice J.M. Shelat stressed that while restraints on trade are not inherently against public policy, they must be reasonably necessary to safeguard the employer’s interests, placing the burden of proof on the party advocating the contract. The key factor in this case was the reasonability of the non-compete clauses.  It was further held in the case of Larry Lee Maccllister vs. Pangea Legal Database Solutions by CCI that negotiating conditions at the start of employment, including any constraints on future employment, is a standard procedure that does not pose competition problems. Employees consider these conditions when negotiating salary, demonstrating that such agreements are typical employment practices that have little impact on competition. The CCI determined that limits in employment contracts prohibiting employees from joining rivals after termination do not raise competition concerns. Such limitations are regarded as appropriate in preventing trade secret exposure or harm to businesses. Employment contracts are thorough agreements that lay down the rights and duties of both the parties i.e. the employer and the employee. Restrictive covenants such as non-solicitation, non-disclosure, and non-competition agreements are critical for safeguarding employers’ interests and ensuring contractual balance. It was also reasoned that section 3 of the Competition Act addresses service agreements such as exclusive dealing agreements rather than employment issues. The Act’s purpose is to safeguard rights in rem rather than prohibit them in personam. Personam remedies are provided by CCI to individuals but the dependence of the same is through a problem in rem.   Analysis  The inclusion of restrictive covenants in an employment agreement is critical for preserving integrity and efficacy, benefiting both the employer and the employee by establishing defined boundaries. These provisions ensure that rights and duties are understood by both parties. Non-compete agreements, while necessary, do not meet the standards of section 3 of the Competition Act, 2002, which requires a clear delineation of the market that would bear the impact of the adverse appreciable effect created due to the competition concerns arising out of the said employment agreement. In case a defined market is not outlined, on a bare

[By Satyam Mehta] The author is a student of National Law University, Jodhpur.   Introduction Google has effectively blocked third-party cookies for 1% of Chrome users beginning this year, a move that has been delayed multiple times and was announced a couple of years back. However, despite this, the move has met with criticism from different stakeholders alleging that it strengthens Google’s already well-established monopoly. Consequently, Google has come under scrutiny from the UK watchdog Competition and Markets Authority (CMA). This article is an attempt at carefully analysing the paradigm Google is invariably trying to push, its ramifications and if there is a need for further scrutiny from different watchdogs around the world, especially in India.   Ramifications of the move Firstly, it is imperative to understand what third-party cookies are and what is the difference between third-party and first-party cookies. First-party cookies are what are treated as essential cookies by the Data Protection laws and they are vital to the functioning of the site. They are installed by the website you visit to store some important information, for example your language preference or your login information. Therefore, they are significant because they ease  user experience. On the other hand, third-party cookies can be installed by anyone, for example the ad tech companies, for the purpose of tracking the users across websites and profiling them to sell ads. The data can be accessed by anyone by logging into the third-party server code. Thus, third-party cookies are primarily used for tracking the users across websites and profiling them to display relevant advertisements. It is a no-brainer that these are not exactly privacy-centric and leak the users’ data to the ad tech companies that allow them to sell ads as a result of which the ad tech industry has burgeoned into a 600Bn $ a year behemoth. A 2019 GDPR ruling therefore made these cookies optional and mandated explicit consent to be required failing which a fine will be imposed.  Google aims to effectively phase out these cookies by the end of 2024 and follow in the footsteps of its competitors Firefox and Apple’s Safari that blocked these cookies way back in 2019 and 2017 respectively. Google claims that this is a privacy-centric move that will allow users’ data to be safeguarded from multiple stakeholders especially now that the privacy laws landscape is evolving. An obvious question springs then, why is there such rampant criticism of the move and why is Google being investigated for the same when it is just following the footsteps and the mandates of its competitors and watchdogs respectively. For starters, Chrome has 66% market share and while Apple has historically had a closed ecosystem, chunk of Google’s revenue comes from the advertising business. Google has had a monopoly in the ad tech business so much so that it has been sued by the Justice Department with Attorney Generals of various States coming on board. Thus, the paradigm that Google is pushing for has to be seen with a cautious approach from the side of both the users as well as the advertisers. While the majority of users either don’t really understand cookies or do not care whether their ads are relevant or not as long as the tech companies are not intrusive, this is a concern for the ad tech companies as this would change ad targeting dynamics, probably, in Google’s favour.  With the removal of the third-party cookies, the advertisers have to rely on first-party cookies and while Google has this data in abundance, thanks to its various owned and controlled entities such as YouTube, Maps, etc. the small ad tech companies don’t have such enormous amounts of data as they have traditionally relied on third-party cookies for the same. Thus, it will give Google a chance to strengthen its already strong position in the ad tech industry as the websites are not allowed to track users while the browser still logs their information. This doesn’t exactly promote a level-playing field and instead of promoting user privacy, it just makes Google the sole owner of the user data and to do with it as they please. Subsequently, Google promoted their privacy sandbox initiative that it claims will balance the privacy of the users and the needs of the ad tech companies. It is a no-brainer that there needs to be antitrust scrutiny into Google’s actions as what it is effectively doing is stopping the ad tech companies from collecting their own data while making them reliant on the Privacy Sandbox initiative and small ad tech firms will have to enrol to stay relevant because they do not have the enormous amounts of data that Google has as already discussed. There has been an investigation by the UK watchdog CMA that is ongoing and it has gotten Google to make some commitments but no other regulator has batted an eye as they think that the Britts have got it.  Analysis In the opinion of the author there has to be further scrutiny of Google’s actions and motives, especially in the Indian context as its Privacy Sandbox initiative has also been criticised at length but first, it becomes vital to understand the functioning of the Privacy Sandbox initiative. The browser will group people into different sets using different Application Programming Interfaces on the basis of their interests based on their browsing history. The data will never leave the browser and individual user targeting will be minimised as they will be targeted in sets while sharing generic information with the advertisers. However, upon examining this, it becomes apparent that it is disruptive of the level playing field as Chrome has access to user data at the granular level while the advertisers don’t which might allow it to give preferential treatment to its products. Therefore, Google committed to the CMA that it will not use personal user data in its ad system or discriminate in favour of its own products. However, there hasn’t been the same scrutiny by any other