Commitment Orders under Section 48A: Settlement or Strategic Evasion?

[Chetan and Naliny are students at Usha Martin University, Ranchi.]

The Competition (Amendment) Act 2023 introduced the concept of a settlement regime under Section 48A-48B for streamlining cartel and abuse cases and "decrease litigation" by faster resolution. Any person or enterprise against whom prima facie order has been passed under Section 26(1) of the Competition Act 2002 (Act) for the alleged contravention of Section 3(4) or Section 4 may approach to settle the case by way of monetary payment or behavioural remedies. This, on face of it, seems to increase speed and efficiency. However, it also moves enforcement away from adversarial adjudication and instead to negotiated compliance. The tension is apparent as Section 48A replaces a public finding of abuse with a private resolution, which is of concern in terms of whether accountability and deterrence have been diluted.

Adjudicatory Silence and the Resulting Doctrinal Vacuum

Critically, acceptance of commitments is that the Competition Commission of India (CCI) does not return a finding of contravention. The regulatory framework explicitly states that "Commitment Orders shall not be construed as a finding of contravention". In a practical sense, that is, where a matter is closed by committing to something, the CCI does not decide that Section 3 or Section 4 of the Act has been violated. There is neither an admission of liability nor a formal conclusion on merits. This leads to a doctrinal gap, as the lack of a reasoned ruling means that no binding or persuasive precedent will be developed to provide much guidance to future enterprises or courts.

This absence is not simply procedural, but doctrinally important. Competition law evolves based on the case law that defines what competition law forbids and how its ambiguity is enforced. Commitment orders do not significantly contribute to this process. By closing matters without adjudication, the regime runs the risk of slowing the progress of jurisprudence. Both the enterprises and the regulators are left without clear interpretative benchmarks under the Act. In the absence of articulated "red lines", the market is incapable of setting inside clear standards of compliance. In effect, commitment orders leave no finding, limited guidance and no precedent, with the underlying issues substantially unresolved.

Commitments as Strategy: From Compliance to Evasion

In practice, Section 48A provides a strong incentive for early resolution. Enterprises facing protracted and expensive investigations may seek to "avoid litigation (mainly done today to avoid penalties) " by offering commitment. The framework, in effect, allows some flexibility in bargaining with the CCI as the enterprise has an opportunity to suggest behavioural changes at an early stage and, in return, avoid a full investigation and the risk of paying penalties. This dynamic is especially beneficial to dominant companies with access to specialised legal counsel and the capability of navigating regulatory processes to their strategic advantage. Rather than contest the allegations on merits, such enterprise may offer limited concessions which are sufficient to get proceedings closed.

The result is a move towards negotiable enforcement. Instead of setting up contraventions through adjudication and sanctioning them, the CCI may settle the matters on the basis of the commitments proposed by the enterprise. A commitment application therefore acts as an exchange - warding off the risk of penalties in return for prospective compliance. This raises one structural concern that a commitment under Section 48A will serve less as a corrective mechanism, and more as a shield against liability. Enterprises effectively obtain procedural advantage of settling investigations on negotiated terms. Further, the commitment framework involves waiver of appellate remedies and thus the scope for judicial scrutiny is limited. In effect the mechanism enables enterprises to walk away from proceedings without a determination on merits and this results in concerns that enforcement will increasingly focus on settlement as opposed to the substantive development and application of competition law.

Lessons from the EU: Efficiency at the Cost of Enforcement?

The European Union’s Article 9 of the Council Regulation (EC) No 1/2003 (Regulation 1/2003) allows commitments to be made at the end of abuse of dominance cases, without any admission of liability. The framework explicitly provides that commitment decisions "find that there are no longer grounds for action by the Commission without concluding whether or not there has been…. an infringement". In Case C-441/07 P Commission v. Alrosa Company Ltd, the Court of Justice of the European Union reiterated that binding commitments are about regulating future behaviour and are not about identifying past liability. By design, therefore, commitment decisions under EU law are not decisions on the merits of infringement, but only decisions to bring proceedings to an end where proposed remedies seem adequate.

This experience illustrates some of the strengths and limitations of such a regime. From an efficiency perspective, commitments obviate long-term litigation so the European Commission can obtain behavioural corrections in a timely way without having to engage in detailed fact-finding. But this procedural economy comes at some cost to clarity of enforcement. Commitment decisions function "without prejudice", which leaves open the possibility of the Commission being able to reopen proceedings in the event the new evidence emerges, but otherwise leaves the alleged conduct formally unaddressed and this will result in potentially anti-competitive behaviour is not authoritatively condemned. Academic commentary has emphasised that the excessive reliance on commitments may weaken deterrence as enterprises may view compliance undertakings as a pragmatic way out of compliance, rather than take the risk of facing sanctions.

The EU model thus exhibits the trade-off that exists in such frameworks; although they can improve the efficiency of the administration, the fact that no findings are available may reduce legal accountability and the normative power of competition law.

Re-Calibrating Section 48A: Restoring Enforcement Balance

To avoid enforcement gaps, Section 48A needs to be suitably narrow in calibration to ensure that efficiency in procedure does not translate into a free pass of anti-competitive conduct. A planned approach is needed so as to balance expediency and accountability.

First, a substantive threshold should keep severe cases of abuse out of commitments; consistent with Article 9 of Council Regulation (EC) No 1/2003 (Regulation 1/2003), the CCI should not accept commitments where penalties are under consideration as Recital 13 explains that such mechanisms are "not appropriate" under such circumstances.

Second, commitment orders need to be reasoned, with the CCI briefly explaining how the proposed remedies address identified competition concerns (thus avoiding non-speaking approvals, preserving transparency).

Third, a limited or partial determination model should be adopted, where the CCI records essential factual findings, such as prima facie market power or exclusionary conduct, without making a full determination, and thus helps to develop jurisprudence.

Fourth, strong post-commitment monitoring must be guaranteed through clear compliance checks and reopening triggers; although Section 48C of the Act does allow for revocation, it should be made operational with a clear set of standards and financial consequences for breach.

Finally, transparency needs to be increased through requiring the publication of brief summaries of commitment decisions (with rationale and substance), and the introduction of a limited notice-and-comment process, along the lines of the EU framework, to enable input from stakeholders.

Collectively, these measures ensure the efficiency benefits of negotiated resolution while restoring accountability and doctrinal clarity to ensure that settlement under Section 48A does not undermine effective enforcement.

Conclusion

Section 48A brings a much-needed flexibility in India's competition law regime. However, such flexibility cannot be left unconstrained. In its current form, the commitment mechanism threatens to undermine the deterrent effect of the commitment mechanism and retard the development of antitrust jurisprudence. In the absence of calibrated safeguards (for example, clear thresholds, disclosure requirements, monitoring mechanisms and transparency), it may be gradually tilting enforcement towards negotiated compliance. There is, therefore, a real worry about the possible transformation of competition law from a regime based on adjudication to one based on settlement. The right response is not to abandon Section 48A, but to organise it with procedural and substantive safeguards, so that gains in efficiency do not come at the cost of accountability.