CCI Wants To Do Away With Default Anonymity For Informants

In over 1,000 words, the competition regulator explained in great detail how its present confidentiality regime is burdensome and inefficient. It leads to multiple filings, onerous record-keeping, litigation and delays in the enforcement process, the Competition Commission of India pointed out in a proposal published this week.

And so, to institutionalise the confidentiality framework, the regulator has proposed that parties must self-certify that the information for which confidentiality is being sought meets the parameters under the law, a confidentiality ring be set up in certain cases, and that anonymity was not guaranteed to informants.

Self-Certification

To start with, as per the new proposal, parties would continue to submit confidential and non-confidential versions of their filings. But their compliance officers will need to give an undertaking that the information for which confidentiality is sought meets the parameters—that it will result in disclosure of trade secrets, destruction or appreciable diminution of the commercial of any information, and that disclosure can cause serious injury.

The CCI will have the power to deny claims if the self-certified non-confidential version is found to be deficient. Now, the onus will be on the parties to act more judiciously and seek confidentially only if a case of significant harm can be made out, Rahul Rai, an independent lawyer practising competition law, told BloombergQuint.

It would make CCI’s functioning a lot more efficient. A lot of time gets lost in negotiating confidentiality claims with the CCI.

Rahul Rai, Competition Lawyer

Confidentiality Ring

The regulator’s second proposal involves a confidentiality ring—a concept borrowed from the European Commission. It allows for confidential information to be made available only to a certain category of individuals.

These should be representatives from commercially non-operational streams and will need to sign a non-disclosure agreement. Any breach will attract penal consequences, the CCI has proposed.

Currently, this concept is applied in an ad hoc manner, Karan Chandhiok, partner at law firm Chandhiok & Mahajan, pointed out. If it’s built into the law it creates institutional memory, new officers who join the CCI also know in which circumstances a confidentiality ring has been set up in the past and parties who may not be dealing with the regulator on a regular basis are aware of the concept, he explained.

It’ll be useful in cases where parties have disclosed their customer or supplier list, pricing or margin, discount data to the regulator but the opposing side needs to view it to support their case. For instance, where allegations of foreclosure of competition are made, Chandhiok said.

In such a case, the question is—do I need to see his data to prove my point? If you’re alleging that I’ve lost opportunity in the market, the other side may need to see your data to rebut or defend itself. In such a scenario, the CCI may set up a confidential ring for natural justice reasons.

Karan Chandhiok, Partner, Chandhiok And Mahajan

There may be conditions attached to it—that sales or marketing teams will not be part of the ring and only external legal advisors; the information can only be viewed at the CCI and no copies can be made, Chandhiok said.

This is particularly useful in abuse of dominance and vertical restraint cases, Rai added.

Very often, these are allegations made by companies in the same market. For instance, how company ‘A’ locks-in its distribution channel. The CCI will seek access to confidential information—distributor list, agreements with them, exclusivity clauses. The opposing party may not be able to make its case if it doesn’t get to see this information.

Rahul Rai, Competition Lawyer

In such situations, the regulator will need to play a balancing act and set up a confidentiality ring with people who are not business-decision makers and will be bound by very strict non-disclosure, indemnity terms, Rai pointed out.

Informant’s Identity

The final proposal of the regulator is to do away with the informant’s identity remaining anonymous as the ‘default’ option. Confidentiality may be accorded to informants in appropriate cases, the regulator has suggested, and may be revoked after recording reasons.

The law should protect the identity of genuine complainants—whistleblowers, aggrieved business partners or anyone who can demonstrate genuine risk of retribution. But not motivated entities that have taken to abuse CCI’s forum, Chandhiok opined.

It’s the same thing as a public interest litigation—you want to know what’s the motive? You want to know whether the entity has a genuine grievance or is simply trying to settle a score or is a front for someone else. You want to know if the complainant is just trying to get information on a competitor through the regulatory process.

Karan Chandhiok, Partner, Chandhiok & Mahajan

The company against which allegations are made has a right to know the antecedents of the informant, Chandhiok added.

Currently, the law is structured in a way that the informant’s identity or motive doesn’t become a hindrance in the CCI initiating an investigation, Rai pointed out. But the law also requires that statements or allegations have to go through the rigor of cross-examination. "It’s the natural justice right of the party, against whom the complaint is made, to counter allegations made against it," Rai said.

So the regulator is proposing to only move away from a regime where anonymity is the default option. The CCI will continue to grant it in genuine cases, both experts pointed out.