Evaluating the Effectiveness of the Competition Act, 2002 in Detecting and Penalizing Cartel Behaviour in India

Abstract

Cartels fix prices, rig bids, and divide markets. Detected cartels raise prices by double-digit percentages across jurisdictions. The harm is not abstract: deadweight loss, misallocated resources, and fiscal losses in public procurement that disproportionately burden developing economies. This dissertation undertakes a systematic comparative evaluation of cartel enforcement in India, the EU, and the US. The Competition (Amendment) Act, 2023 introduced global turnover penalties, a leniency-plus framework, and expanded hub-and-spoke liability. Yet horizontal cartels were excluded from the settlement procedure. Does this produce stronger deterrence or merely statutory complexity? That is the central question. India is the world's fifth-largest economy. The Competition Commission of India remains a young institution operating without criminal sanctions. Empirical data: of approximately Rs 20,350 crore in penalties imposed as of April 2025, Rs 18,512 crore stayed or dismissed on appeal. A penalty never collected does not deter. The analysis anchors on optimal deterrence theory. Expected cost must exceed expected benefit. The calculus is equally sensitive to detection probability and sanction magnitude. Leniency programmes interact in complex ways. Sanctions must strip total cartel profit discounted for detection. The research employs functional comparative methodology across three models: India (developing-economy administrative regime), the EU (civil-penalty administrative regime with private enforcement growing), and the US (criminalised model with imprisonment and treble damages). The penalty recovery crisis is the most urgent problem. The leniency framework has not generated self-reporting. Without credible ex officio detection or individual criminal liability, India's leniency programme asks corporate actors to take significant risks for uncertain rewards. The exclusion of horizontal cartels from settlement contradicts Parliament's own Standing Committee recommendation. The global turnover penalty, without binding proportionality safeguards, creates constitutional vulnerability. NCLAT's full merits review and easy appellate stays make enforcement finality structurally elusive. The dissertation formulates reform recommendations: extend settlement to cartels, establish an anonymous whistleblower tool, mandate proportionality in penalty guidelines, individual civil penalties and director disqualification, reform appellate review, invest in dawn raids and digital forensics, and develop private enforcement infrastructure. An effective competition regime is not a luxury. It is a precondition for India's consumer oriented market economy. The law exists. The institutional foundation exists. What is needed
1 Monopolies and Restrictive Trade Practices Act 1969, ss 2, 10, 33, 37; Bhattacharjea (n 1) 61314.
now is the will to close the gap between statutory ambition and enforcement reality.