The fines imposed on Google have cast a spotlight on the true extent of free and fair competition in the country. Today as the trillion-dollar club expands and some of the big techs find themselves on the wrong side of the competition law framework, anti-trust regulatory bodies across the world are being called upon to buttress their enforcement regimes and institutional opacity to assess the abuse of dominant position and cracking down on cartels.
Globally, anti-trust regulatory bodies have relied on market participants themselves as the most effective tool to expose cartelization and other anti-competitive behaviors. While the Competition (Amendment) Act, 2023 in keeping with global best practices has introduced provisions for enhanced leniency, going forward, there is a need to build on this by focusing on two other crucial pillars of global anti-trust enforcement ecosystem — accessibility and anonymity.
Of late, there has been a decline in the number of anti-competitive practices identified by or brought to the notice of the Competition Commission of India (CCI) over a period of time. One of the possible reasons for this could be the lack of accessibility for whistleblowers or insiders who occupy key managerial positions in their organisations and who are privy to material information by virtue of the position(s) that they hold.
Things as they stand today make it difficult for a whistleblower to approach the CCI due to institutional barriers, the foremost of which is the lack of protection afforded to whistleblowers. This coupled with a lack of incentive in the form of an adequate financial reward mechanism, makes the act of approaching the commission an unattractive proposition for whistleblowers.
Significantly, despite the CCI’s reliance on informers to prepare a prima facie case, its parent act, regulations, or rules have no provision akin to SEBI (LODR) Regulations or section 177 of the Companies Act which mandate the creation of a whistleblower policy by listed companies. As it stands today, the CCI’s general regulations require an informer to reveal her personal information without providing a guaranteed statutory protection to such informer. Neither does it provide confidentiality for such information unless requested by the informant and subject to the discretion of the director general or the commission. This places whistleblowers in a quandary as they could face retaliation from their employers. Note that cartel members who have turned informants are entitled to confidentiality under Regulation 6 of The Competition Commission of India (Lesser Penalty) Regulations, 2009, even without a request being made. On the contrary, the Competition Act does not explicitly permit a whistleblower associated with a faulting entity to claim leniency in a personal capacity.
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Across the world, states have passed regulations and legislations to protect whistle blowers against any such retaliatory measures. In 2020 the United States passed the Criminal Antitrust Anti-Retaliation Act (CAARA); in 2019, the European parliament passed directive 2019/1937, and in 2022 Japan passed an amendment to the whistleblower Act mandating that business operators designate a person to receive whistleblowing reports and consequently conduct investigations. It is crucial to note that protection for whistleblowers not only incentivises them to approach the competition regulator but it would make it appealing for cartel members to turn informers and apply for leniency.
Introducing whistle blower provisions with legal safeguards ‘gamifies’ the system. Gamification refers to the introduction of incentives, strategies, feedback loops, triggers, and game design elements and principles to non-game environments. Such a gamification of the reporting mechanism would have the desirable effect of promoting competition amongst anti-competitive actors. A whistleblower regime coupled with a mechanism for financial rewards for whistleblowers as in the case of qui tam provisions provided under the False Claims Act of the United States would force players involved to come forward and disclose material information on cartels and other anti-competitive practices prevalent in a particular market, thereby strengthening the hands of the CCI in going after errant enterprises.
In a gamified system, it is a reasonable proposition for a market player involved in a cartel to expose cartelisation in a particular product or geographic market and consequently benefit from lesser penalty regulations than to have one of its own employees or an ‘insider’ spill the beans and reap the financial rewards, and thereby losing out on whatever leniency the current regime including the proposed settlement and commitment framework offers.
Similarly, in such an ecosystem an employee who is privy to such insider information is also competing with other actors including his or her fellow employees, contractors, accountants, consumers, etc. and other potential informants. Therefore, an incentive to provide information to the CCI first before anyone else in order to avail the financial reward would exist. These players need to protect their self-interests by maintaining their ’first mover advantage’ which ensures that the incentive is not effaced.
The CCI, it is suggested, need not rely solely on disclosure from corporate applicants under the Lesser Penalty Regulations, information received from rival players or references from the Union government, state governments or a statutory body. Promoting a ‘SpeakUp’ culture in the context of competition law would nudge informers into approaching the commission either due to the attractiveness of the financial reward or because it is the right thing to do, given that the commission has been making concerted efforts towards creating awareness on competition law through its advocacy programme and market studies. This would further strengthen the existing antitrust regime. It would transform the regulatory atmosphere from a zero-sum into a win-win for all stakeholders.
The experience of other antitrust regulatory bodies has shown that this regime works and works well. For instance, in 2021, Taiwan doubled the statutory reward for whistle-blowers for information on cartels. Significantly, in the US a whistleblower was awarded $36 million for exposing bid-rigging in fuel supply contracts for the US military which resulted in the largest-ever bid rigging settlement and a significant monetary award to the whistle-blower.
The need of the hour is to incorporate provisions pertaining to qui tam and fixed rewards which could be appropriated from the competition fund established under Section 52 of the Act, as a means to encourage whistleblowers. Simultaneously, the viability of introducing confidentiality in an opt-out framework as a matter of right than as a privilege may also be considered. The Anonymous whistle-blower tool introduced by the European Commission in 2017 is a case in point.
The introduction of whistle-blower provisions, in the Competition Act would allow the commission to fully realise its moto of ‘Fair Competition for Greater Good’. India must keep up with evolving antitrust regulations globally. With the rise of big techs and the government’s emphasis on promoting a Start Up culture and entrepreneurship, the fifth largest economy of the world needs proactive regulators with an ear to the ground and one that can cultivate trust and accessibility within its regulatory sphere.
