In a recent development in India, the Central Board of Direct Taxes (‘CBDT’) has authorised the Indian tax authorities to share ‘relevant and precise’ information with the Competition Commission of India (‘CCI’)[1].
This is important because the CCI requires financial information of companies (as well as individuals) to investigate violations under the Competition Act (‘Act’). With this development, it seems that the CCI intends to penalise individuals (acting on behalf of the concerned company) on a more proactive basis.
When the CCI was in its infancy, its position on the issue of ‘individual’ liability was that separate proceedings were required to be initiated after following the necessary procedure[2]. Up until 2013, no penalties had been ascribed to individuals in any case.
After a number of cartel decisions, the CCI prob-ably realised that levying a nominal penalty on the turnover of ‘associations’ was not deterring it’s significantly more wealthy individual members from engaging in anti-competitive behaviour.
To remedy this situation, CCI has been increasingly imposing penalties on individuals, with the first penalty on an individual being levied in 2014 in the Bengal Chemist case[3]. To deter-mine the penalty of the individuals, the CCI took into account, the income certificates of the concerned office bearers. This decision was a breakthrough for the CCI as it was the first instance wherein penalties on individuals were imposed.
The issue of ‘individual culpability’ and penalty has been enshrined in the CCI’s thought-process and decision-making for some time now[4]. However, the CCI was facing issues in getting the requisite financial information from the individuals.
To this effect, CCI required access to the income tax returns being filed by errant individuals, and that is where the development of CBDT agreeing to share relevant information with the CCI suddenly gains significance.
By getting the requisite ‘individual’ financial information from the CBDT, the CCI be better equipped to assess and penalise individuals who run afoul of the Act.
[1] 1 https://economictimes.indiatimes.com/news/economy/policy/cbdt-allows-income-tax-authorities-to-share-information-with-cci/articleshow/77291049.cms
[2] Kapoor Glass Pvt Ltd v Schott Glass India Pvt Ltd, Case No. 22 of 2010; GKB Hi-Tech Lenses Pvt Ltd v Transition Optical India Pvt Ltd, Case No. 01 of 2010
[3] Bengal Chemists and Druggists Association, Suo Moto Case No. 2 of 2012
[4] See Indian Sugar Mills Association v Indian Jute Mills Association, Case No. 28 of 2011 and P.K.Krishnan v Alkem Laboratories & Ors, Case No. 28 of 2014
