Cartel fines in India 2009-2021: The role of recidivism and fining metrics

Abstract

This paper examines the cartel fines set in India between 2009 and 2021. The legislation allows for fines to be calculated using net profits or turnover for each cartel year, but they are typically based on the average annual turnover for only the three preceding years, and despite the establishment of a leniency program in 2009, there are very few applications. We show empirically that fines based on profit (rather than turnover) lead to significantly higher relative fines. In addition, recidivism appears to be a concern, as multiple offending firms receive lower relative fines. However, individuals in multiple offending firms (or associations) receive larger relative fines. 

Finally, there was a clear increase in the relative pre-leniency fines in 2017 (although fines remain far from the cap). This appears to be mostly driven by leniency applications, which had not occurred until then. Overall, the already lenient and unpredictable cartel fines set in India appear to offer little incentive to self-report collusion through a leniency program and may thus suggest low cartel deterrence.

Keywords: Antitrust, Cartels, Leniency, Competition policy

JEL Classification: C14, C41, K21, K42, L41