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COMPLICATED CASE OF CONFIDENTIALITY UNDER LENIENCY PROGRAM

[Harshit Shrivastava and Anushka Verma are both 5th Year BA.LLB. students at National Law Institute University, Bhopal]

Confidentiality and Privacy of the parties are the two fundamental principles and requirements for any investigation undertaken by any investigating agency. The confidential information is the privileged information which is the specific one for any enterprise or an individual. Hence, there exist a clear need to protect such information and ask the authorities to withhold it from disclosing.

Some information, mostly the confidential information, disclosed to the competition authorities is competition sensitive information and therefore requires due protection. The Competition Act, 2002 (“the Act”), ensures protection of privacy by not allowing the participation of the unauthorized third parties to observe the proceedings[1], thereby limiting transparency. Confidentiality is a procedural aspect that is granted to the person who specifically asks the Competition Commission of India (CCI) or Director-General (DG) to keep the information confidential. It is important because it plays a vital role in protecting businesses or trade secrets, financial information, and, most importantly, the identity of the informant who disclosed the information as per the leniency application so that he/she is not put at a disadvantageous position.

The primary focus of this article is to understand the concept of confidentiality under the Leniency Program and how confidential information is being treated under the same. The effect of the disclosure of confidential information is also discussed in this article. At last, the article concludes by analyzing the practice followed by other countries as to how the confidential information is being treated and its application by Indian Courts.


APPROACH TOWARDS CONFIDENTIALITY UNDER COMPETITION ACT:

The competition law framework protects confidentiality by means of the following provisions:

  1. The information shall be disclosed only with the prior permission of the informant but only for the purpose of the act, or in compliance with the act or provided by the law. [Section 57]

  2. The inspection of documents is allowed as per the provisions of CCI (General) Regulation, 2009 subject to the above mentioned rule. As per this regulation, the party or any other 3rd party can inspect the document on making an application and paying the fees. [Regulation 37 of CCI (General) Regulation, 2009.]

  3. The confidential information provided under the Lesser Penalty Regulation can be disclosed by DG if: firstly, provided by law; secondly, if the applicant agreed in writing; and lastly, if the information is public information. Furthermore, the Regulations allow the DG to disclose identity, information, documents, and evidence submitted by the leniency applicant during the proceedings if the DG considers that such disclosure is necessary for the investigation, even if the leniency applicant has not agreed to such disclosure. In such a condition, DG has to record the reasons and thereafter, needs to take assent of the commission for the disclosure. [Regulation 6 of LPR.]

The Leniency Program (LP) Act is an incentive for the members of the cartel to come forward and disclose the vital information and thereby avail the lesser penalty. According to LP, the member of the cartel has to disclose the vital information along with all the evidence, thereby, completing the chain of circumstantial evidence. Such disclosure helps the DG in detecting the cartel.

If the CCI is of the view that the information disclosed is exclusive and sufficient enough to detect cartel, then it has the power to reduce the penalty of such an applicant. While disclosing the information, applicant expects that the competition sensitive information which is also self-incriminatory in nature, would be protected and would not be disclosed.

As discussed above, if the confidential information is disclosed by DG, either on his own or on approval of CCI, then it would have a negative impact on the applicant, on an individual level; and on the entire LP.


IMPACT OF DISCLOSURE OF CONFIDENTIAL INFORMATION:

The objective of the LP is to detect cartels by providing incentives to the members of the cartel. The person who shares the information (mostly confidential) with CCI is of the impression that the information would not be disclosed in any manner. But, the problem is that;as per the principle of natural justice, the opposite party has a right to have access to the relevant documents. In this situation, whether the authorities are under an obligation to provide confidential information, remains the question for discussion.

Due to this, there exists a conflict between confidentiality and the due process of law. If the effective operation of the LP is followed by the authorities to promote public enforcement of the rules, it will affect the grant of access to information. In this condition, the authorities will have the discretionary power. Consequently, either the authority can effectively operate the leniency program or grant access to confidential information to the third party.

Furthermore, the Delhi High Court observed that natural justice is not an absolute obligation on the CCI[2]; the requirement of the principles of natural justice must depend upon the nature and subject matter of investigation, circumstances of the case, rules under which the investigation is being carried out, and the consequences which may visit a person after such investigation.

If the CCI chooses to disclose the information following the due process of law, then there is a high probability that such information can be used against the applicant in a subsequent proceeding. Furthermore, by virtue of this information, he would be estopped from denying any of the facts which he had mentioned in the leniency application.

The key concern is that if this becomes the practice, then the individual or entity hiding behind the cartel will not come out and won’t disclose any information, and the purpose of this program would be defeated.


APPROACH OF OTHER NATIONS ON DISCLOSURE OF CONFIDENTIAL INFORMATION IN ANTITRUST CASES:

The LP is followed by different countries around the world with an objective of detecting cartels. These countries have a different set of Practices with regards to the disclosure of confidential information. In European anti-trust laws, the concept of "Confidential Ring" has been introduced to protect confidentiality. According to the guidelines, the information which is available to a small group of people; is not available in public; and is of such a nature which, if disclosed, might cause severe damage is considered as confidential information.

According to this concept, such information can be disclosed only to a set ring composed of definite people who can have access to such information. This information is disclosed on the condition that the person to whom information is being disclosed, will not share the information as well as the identity of the informant

This approach of the European Courts has been adopted by the Indian Courts in many cases by allowing the legal representative to have access to the document but the clear stand of the CCI, as well as the Judiciary, is a debatable issue.

On the contrary note, in the USA, if the applicant has asked for confidentiality, such information can't be disclosed. They don’t have particular criteria to define information as confidential information and decide majorly on the facts. The prima face opinion of the courts is to treat the information as confidential one.



CONCLUSION AND SUGGESTION:

In the present situation, even after the amendments in the LP, the fear of disclosure exists. The reason for such fear is uncertainty and lack of clarity because the law is silent and does not provide a proper answer to the issue of disclosure of confidential information. India being a common law country considers the ratio of these judgments, but the approach taken by courts is ambiguous and confusing because there is no settled landmark verdict in this regard.

This confusion can only be resolved by properly defining guidelines which describe the process of disclosure, and the duties and responsibilities of the parties involved along with their rights. By doing so, CCI must ensure to strike a balance between the due process of law and the importance of confidentiality.

The guidelines shall include; firstly, the definition of confidential information and must describe the information which can be treated as confidential; secondly, under which circumstances the confidential information can be disclosed; thirdly, to whom the confidential information can be disclosed or in other words, who have a right to access such information; fourthly, the method of such disclosure; and lastly, the responsibility of the person to whom information is being disclosed. Here the CCI must ensure that the information disclosed shall not be used against the applicant by including the strict wording clause in the CCI (Lesser Penalty) Regulation,

In this way, the CCI can ensure that confidentiality is protected even by following the due process and by disclosing the confidential information. If there is protection of confidentiality, more people will come forward in the early stages which in turn will help the commission and the general public can be protected from the unfair trade practices of the company

[1] Regulation 47, The Competition Commission of India (General Regulation) 2009. [2]Somi Conveyor Beltings Ltd. &Anr. v. Union of India & Ors., W.P.(C) 1416/2016 & CM No. 6194/2016 (Stay) clubbed with Premier Rubber Mills v. Union of India & Ors., W.P.(C) 1969/2016

[SC1]Kindly provide an authority for the same

[W2]General opinion of the authors.

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