CCI introduces Leniency “Plus” regime in India- Will it suffice?
CCI decides its fourth leniency, imposes penalty on broadcasting service providers for bid-rigging in tenders floated by Sports Broadcasters-
By way of an order dated 11 July 2018, the Competition Commission of India (CCI) imposed a penalty of INR 22.36 Crore on Essel Shyam Communication (Essel Syam) for bid-rigging in tenders floated by sports broadcasters, including for the Indian Premier League in 2012.
However, the quantum of fine on Essel Syam and its officials were reduced by the CCI under the lesser penalty provisions of the Act. The CCI’s decision is the fourth order to be passed under the Leniency provisions.
The investigation by the CCI was initiated on the basis of disclosures by Globecast India Private Limited and Globecast Asia Private Limited (collectively referred to as ‘Globecast’) under Section 46 of the Competition Act, 2002 (Ac) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’). Subsequently, during the course of the investigation by the DG, Essel Shyam Communication Limited (ESCL), now Planetcast Media Services Limited, also approached the CCI.
It was disclosed to the CCI that there was exchange of commercial and confidential price sensitive information between ESCL and Globecast through Mr. Bharat K. Prem, an employee of Globecast India Pvt. Ltd, which resulted in bid rigging of tenders for procurement broadcasting services of various sporting events, especially during the year 2011-12. It was alleged that Mr. Bharat k. Prem had clandestinely entered into a Consultancy Agreement with ESCL, under which Bharat, used to work for ESCL for a fixed remuneration and a share in profits from the contracts obtained through bid rigging.
From the evidence collected by the DG, the CCI found that the ESCL and Globecast operated a cartel amongst them in the various sporting events (numbering fourteen) held during the years 2011-12 including IPL-2012. While submitting bids for the tender floated by various broadcasters during the period July 2011- May 2012 for provision of end-to-end broadcasting services, they exchanged information and quoted bid prices as per the arrangements arrived at amongst them. Accordingly, it was held that they committed an infringement of the provisions of Section 3(3)(d) read with Section 3(1) of the Act during this period.
Considering contravention of provisions of the Act by Globecast and ESCL, an amount of INR 31. 94 Crores and INR 1.33 Crores was computed as leviable penalty on ESCL and Globecast, respectively, in terms of proviso to Section 27 (b) of the Act. While computing leviable penalty, CCI took into consideration all relevant factors including duration of cartel, mitigating factors, etc. and decided to levy penalty at the rate of 1.5 times of their profit for the period July 2011 – May 2012. Additionally, considering totality of facts and circumstances of the case, penalty leviable on individual officials of Globecast and ESCL was computed at the rate of 10 percent of the average of their income for preceding three years.
Keeping in view the stage at which the lesser penalty application was filed, co-operation extended in conjunction with the value addition provided by the evidences furnished by the lesser penalty applicants in establishing the existence of cartel, CCI granted Globecast and its individuals 100 percent reduction in the penalty and 30 percent reduction in penalty to ESCL and its individuals. Pursuant to reduction, penalty imposed on ESCL was INR 22.36 Crores (Rupees Twenty Two Crores and Thirty Six Lakhs).
Comment: This is the fourth case of leniency decided by CCI. The case is an example of exchange of sensitive commercial information between competitors bidding for tender for broadcast of India’s premium sport/cricket event, the Indian Premier League, 2012
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