A practitioner’s perspective on India’s new negotiated-resolution framework under the Competition Act, 2002
In 2023, India saw a landmark shift in its competition law regime when the statute embraced the settlement and commitment mechanisms, which have been used quite often by mature jurisdictions such as the European Union and the United States. It provides enterprises facing investigations into vertical restraints or alleged abuse of dominance with a statutory mechanism to resolve proceedings without a final finding of contravention. With the relevant regulations now in force, the Competition Commission of India (“Commission”) has a formal process for considering negotiated resolutions in appropriate cases.
The reform is likely to influence both enforcement strategy and defence strategy. Enterprises will need to assess at an early stage whether the concerns identified by the Commission can be addressed through a credible proposal. The Commission, in turn, will need to determine whether the proposed terms adequately address the competition concerns while preserving deterrence, transparency and the development of competition jurisprudence.
Although the body of precedents remains limited, the Commission has been slowly moving forward in making the regime operational. Over the last two years, the Commission has accepted its first settlement proposal, and commitment applications have begun to enter the public domain. While settled principles will develop over time, the initial experience already indicates the issues that parties and advisers will need to consider when evaluating the settlement and commitment routes.
This article considers the statutory framework, the principal strategic considerations for businesses, the factors likely to guide the Commission’s assessment, and the additional issues that may arise in digital-market cases.
The legislative framework
Sections 48A and 48B were introduced in the Competition Act, 2002 (“Competition Act”) by way of the Competition (Amendment) Act, 2023, which created separate statutory mechanisms for settlement and commitment. The Competition Commission of India (Settlement) Regulations, 2024 and the Competition Commission of India (Commitment) Regulations, 2024 were then notified on 6 March 2024, providing details of how the framework will operate. Both the settlement and the commitment routes enable proceedings to conclude without a final finding of contravention, but they operate at different stages of the investigative process and require different assessments by the applicant and the Commission.
A commitment application may be made after the Commission forms a prima facie opinion under Section 26(1) of the Competition Act and directs an investigation by the Director General, but before the investigation report is submitted. The application is therefore made before the evidentiary record has been fully developed. The applicant must be able to demonstrate that the proposed commitments are capable of addressing the competition concerns identified at the prima facie stage.
A settlement application is made later, after submission of the Director General’s investigation report and before the Commission passes its final order. At that stage, the applicant will ordinarily have a clearer view of the evidence, the allegations and the potential exposure. Settlement is therefore considered against a more developed factual record than a commitment application.
As a policy choice, both these mechanisms are confined to investigations concerning vertical agreements under Section 3(4) and abuse of dominance under Section 4 of the Competition Act. The more serious category of cartel enforcement has been deliberately kept out of the negotiated resolution mechanism, even though a significant number of the investigations by the Commission are related to cartel investigations.
Strategic considerations for businesses
For businesses, the availability of settlement and commitment mechanisms requires a more structured assessment of enforcement risk. As the decision will usually involve legal, commercial and reputational considerations, parties will need to consider whether a negotiated resolution can address the identified concerns in a manner that is proportionate, implementable and commercially acceptable.
The framework should be approached as part of the overall defence strategy. In some cases, the legal and factual issues may warrant continued contest. In others, an early resolution may reduce uncertainty, management time, litigation costs and ongoing business disruption. The appropriate course will depend on the strength of the case, the likely remedial burden, the stage of the proceedings and the wider commercial context.
Commitments
The decision to file a commitment application requires particular care because commitments are offered before the investigation report is available. While it may be incorrect to assume that the Commission may not have adequate evidence at this stage, it is highly likely that the Commission will not have the advantage of a 360-degree perspective on the identified concerns due to lack of stakeholder consultations and the benefit of the Director General’s evaluation. It is likely that the scope of investigation may evolve post-initiation of investigation by the Director General. An application for commitment therefore requires the enterprise to evaluate the likely trajectory of the investigation before the relevant evidence has been fully gathered.
In abuse of dominance matters, commitments may be particularly relevant where the enterprise is prepared to modify a commercial practice without accepting that it is either dominant or that there is any abuse. The absence of a final finding may be material for future complaints, compensation exposure and engagement with other regulators. These considerations should be assessed alongside the practical consequences of the proposed commitments.
Settlements
The considerations influencing settlement are materially different. Once the investigation report is available, the applicant can evaluate the evidence and the potential findings with greater precision. The decision to pursue settlement will usually turn on whether continued litigation is likely to produce a materially better outcome, taking into account the settlement amount, any behavioural measures, reputational considerations and the commercial value of closure.
Considerations for the Commission
On the other hand, for the Commission, the choice is between expeditious restoration of market conditions and protracted litigation by the parties. In certain cases, opting for a settlement or a commitment makes more sense for the competition regulator rather than waiting for the final adjudication of the issues by the higher courts in appeal.
From the perspective of the regulator, commitments are likely to be most effective where the identified competition concerns remain capable of a prospective correction. The suitability of a commitment would also depend on the temporal nature of the alleged conduct. Commitments are likely to be most appropriate where the competition concerns can be addressed prospectively through a change in conduct. Where the alleged conduct has already produced durable market effects, the Commission may need to consider whether the proposed measures are sufficient to address those effects. The assessment should include the nature of the harm, the scope of the proposed measures and the likelihood of effective implementation.
In settlement cases, one important consideration for the Commission would be as to whether the investigation has already achieved its regulatory objective. In many cases, the investigation by itself may have altered market behaviour, prompted changes in the applicant’s commercial practices or generated sufficient deterrence in the industry. The Commission may therefore weigh the benefits of continuing with a contested adjudication over achieving the objectives of the competition law through an appropriate statutory resolution.
The Commission may also consider whether the matter raises issues that warrant a reasoned determination. Cases involving emerging theories of harm, complex issues concerning abuse of dominance or novel questions of market definition may require adjudication in order to provide guidance to businesses and practitioners. In other cases, settlement may be an appropriate means of concluding proceedings where the remedial and deterrent objectives of enforcement can be achieved without a final order on the merits.
Digital markets: the case for regulatory caution
Digital markets require particular care in the assessment of settlement and commitment proposals. Unlike traditional industries, digital markets are characterised by strong network effects, data-driven competitive advantages, rapidly evolving technologies and business models that frequently outpace regulatory intervention. Consequently, the competitive implications of a particular practice, and equally the long-term effectiveness of the proposed remedial measures, are often considerably more difficult to predict.
In such cases, a settlement or commitment may do more than resolve the dispute between the immediate parties; it may, in practical terms, influence how the market develops in the future. Behavioural commitments concerning platform access, ranking methods, data portability or access to data sets can affect a much wider set of market participants. The Commission may therefore need to look beyond whether the proposed settlement or commitment answers the concerns identified in the investigation, and also consider whether it could unintentionally shape market dynamics in ways that are difficult to predict at the time of approval.
This does not mean that investigations involving digital markets are inherently unsuitable for settlement or commitment. However, the features of these markets may require the Commission to exercise greater institutional caution before bringing proceedings to a close through a negotiated resolution.
Institutional issues in the evolution of the framework
Transparency will be central to the legitimacy of the statutory resolution framework. Stakeholders are likely to have confidence in the process when the Commission’s reasoning explains how the accepted proposal addresses the material competition concerns identified during the proceedings. The reasoning need not be equivalent to that contained in a final infringement order, but it should indicate the basis on which statutory discretion has been exercised.
The effectiveness of the settlement and commitment framework will also depend on how the Commission conducts stakeholder consultations. These consultations serve a broader institutional purpose: they allow the Commission to test whether the proposed remedial measures are sufficient to address the competition concerns identified during the investigation or at the prima facie stage.
As the framework develops, questions are likely to arise about the breadth and representativeness of these consultations. In several investigations, particularly those involving digital platforms or industries with strong network effects, the alleged conduct may affect a wide range of market participants, each with distinct commercial interests. Informants, competitors, customers, suppliers, industry associations and consumer groups may all offer materially different views on whether the proposed measures are adequate. This broader perspective can assist the Commission in assessing whether the competition concerns have been sufficiently addressed. The Commission’s approach to identifying the stakeholders whose views should be sought will therefore assume considerable importance, both in ensuring that the relevant concerns are properly considered and in strengthening confidence in the legitimacy of the framework.
Another notable feature of the Indian settlement and commitment framework is the legislative choice to give finality to orders accepting such applications. Unlike final adjudication orders, which may be appealed before the National Company Law Appellate Tribunal and thereafter before the Supreme Court of India, orders accepting settlements and commitments are not subject to appellate review. This finality applies even where concerns may arise regarding procedural irregularities, manifest errors or arbitrary decision-making. Appellate scrutiny ordinarily performs an important function within a regulatory framework: it corrects individual decisions and helps develop legal principles through authoritative judicial interpretation. In a regime where appeals are unavailable, the responsibility of the primary decision-maker becomes even more significant. The Commission’s reasoning therefore becomes the principal source of guidance on the standards governing settlement and commitment, and on the manner in which its statutory discretion is exercised.
The legislative framework nevertheless preserves an important safeguard. Although orders accepting settlements or commitments attain finality within the regulatory proceedings, they do not extinguish the statutory right of an aggrieved person to seek compensation under Section 53N of the Competition Act, where the statutory requirements are otherwise satisfied. However, the compensation and damages regime has not yet developed significantly in India, and it remains unclear how it will operate in settlement or commitment cases. This question is particularly important in commitment cases, where there is no authoritative finding on whether the conduct in question violated competition law.
Emerging practice: early lessons from the Commission’s experience
Since the settlement and commitment regime has been in place for only about two years, the Commission’s experience with these mechanisms remains at an early stage. It would therefore be premature to identify settled principles governing the acceptance or rejection of proposals. The matters that have entered the public domain nevertheless provide preliminary guidance on the practical issues likely to shape the development of the framework.
The most significant development so far has been the Commission’s willingness to engage with these off-ramp mechanisms as part of competition enforcement, rather than treating them as exceptional departures from adjudication. Over time, businesses are likely to assess settlement and commitment alongside litigation strategy, particularly where remedial measures can address the identified concerns without requiring a final finding on the merits.
At the same time, because the framework is still developing, several practical questions that routinely arise for practitioners continue to await authoritative guidance. For example, there remains limited public guidance on the types of commitments that are likely to satisfy the Commission, the extent to which stakeholder objections may influence its assessment, and the manner in which competing policy considerations are weighed before a statutory resolution is accepted. It is also not yet clear how much weight the Commission will give to the views of sectoral regulators in appropriate cases.
Preparing an effective settlement or commitment proposal
The quality of the proposal placed before the Commission will be central to the success of the statutory resolution process. A persuasive application should do more than record the applicant’s willingness to modify conduct or pay a settlement amount. It should assist the Commission in assessing whether the proposed resolution advances the objectives of the Competition Act.
The application should begin with a clear identification of the competition concerns to be addressed. The proposed measures should be linked to the Commission’s theory of harm and should explain how the concerns identified in the proceedings will be addressed. A concern-by-concern approach is likely to assist the Commission in assessing the adequacy of the proposal.
The measures offered should be realistic, proportionate and capable of implementation. Applicants should set out the operational steps required, the implementation timeline, the internal governance arrangements for compliance and, where appropriate, the mechanism through which compliance may be monitored or verified. A concrete implementation plan will assist the Commission in determining whether the proposal can achieve its regulatory purpose.
Applicants should also anticipate the stakeholder consultation process. A proposal that addresses likely concerns from informants, competitors, customers or other affected market participants will assist the Commission and demonstrate that the applicant has considered the wider market implications of the proposed resolution.
In the initial phase of implementation, well-structured applications may also contribute to the development of administrative practice. Proposals that clearly connect each remedial measure to an identified competition concern are likely to assist the Commission in the immediate matter and support a more predictable settlement and commitment framework over time.
Conclusion
The settlement and commitment framework is one of the more important procedural reforms in Indian competition law. It gives the Commission and investigated enterprises an additional mechanism for resolving appropriate cases and may allow competition concerns to be addressed in a more timely and commercially practical manner.
The success of the framework, however, is unlikely to be measured solely by the number of settlement or commitment applications accepted by the Commission. Its long-term legitimacy will depend upon whether businesses, informants and the wider market develop confidence that statutory resolution consistently serves the objectives of the Competition Act while preserving transparency, accountability and effective competition enforcement.
As the Commission’s jurisprudence develops, three considerations are likely to assume particular significance. First, statutory resolution should remain directed towards addressing the competition concerns that justified regulatory intervention rather than merely facilitating consensual closure of proceedings. Secondly, the Commission’s orders should continue to provide sufficient reasoning to enable businesses and practitioners to understand the principles governing the exercise of its discretion. Finally, the emerging jurisprudence should provide progressively greater certainty regarding the standards expected of settlement and commitment proposals, thereby enabling statutory resolution to become an effective and predictable component of India’s competition enforcement architecture.
The coming years are likely to determine the enduring success of these mechanisms. As additional orders are rendered and administrative practice evolves, settlement and commitment have the potential to become an integral feature of Indian competition enforcement. Their effectiveness will ultimately depend not only upon the statutory framework enacted by Parliament but also upon the consistency, transparency and analytical discipline with which that framework is implemented by the Commission.