In an effort to strengthen its enforcement framework and increase penalty recovery rates, Competition Commission of India (CCI) issued draft amendments to the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011 inviting public opinion.

The move is seen as a crucial step in addressing long-standing challenges in collecting fines imposed on entities that violate competition laws.

The proposed amendments aim to close 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 their feedback on the draft amendments by 6 December 2024. The consultation process aims to incorporate input from the public and industry to ensure that the updated recovery regulations are both effective and pragmatic, balancing deterrence with operational flexibility.

The CCI, empowered by Section 39 of the Competition Act, 2002, has historically faced challenges in enforcing monetary penalties. Given that recovery rates for fines levied remain low, the CCI has deemed it necessary to review the regulatory framework governing the collection process. The draft, which reflects insights gained from more than a decade of experience, follows two previous amendments in 2014 and 2021. However, persistent inefficiencies in the recovery have necessitated a more robust, transparent and streamlined approach.

Key changes in the draft amendments introduce more precise definitions, including terms such as “enterprise in default” and “person in default”, which are designed to simplify the identification of debtors and increase accountability. The changes also propose a more structured process for issuing demand notices, with specific deadlines for penalty payments and the automatic accrual of interest at a rate of 1.5% per month on overdue amounts. This clarity aims to remove ambiguities related to payment deadlines and strengthen the enforceability of the penalty.

The regulations propose a central role for the recovery officer, who will be responsible for monitoring compliance, issuing recovery certificates and executing recovery actions in cases of non-payment. These actions can now include the seizure and sale of both movable and immovable property. In cases where penalties remain unpaid, the CCI can initiate proceedings to guarantee recovery by seizing the assets of the defaulting company or individual, including those located abroad, in collaboration with international authorities where there are mutual agreements.

In addition, the draft amendments introduce a dedicated penalty recovery register, designed to track recovery progress and systematically record enforcement actions. This register, maintained by the recovery officer, will serve as an institutional record, contributing to transparency and enabling more rigorous monitoring by the CCI.

The changes also increase cooperation between agencies. Under the new rules, unpaid penalties can be referred to the Income Tax authorities, with the debtor being treated as a ‘defaulting assessee’ under the Income Tax Act, 1961. This mechanism is expected to speed up recovery by giving the CCI access to the established tax. recovery infrastructure, ensuring that debtors are pursued under both competition and tax law.

The draft includes provisions to prevent evasion tactics. Any transfer or disposal of assets by a debtor after the imposition of a penalty shall be void, except where it is done for proper examination and without knowledge of pending proceedings or with the prior permission of the CCI. Businesses facing penalties can apply for an extension or an installment payment structure. However, default on such installments would result in immediate enforcement action, with the entire outstanding penalty amount becoming due.