Leniency programme

Indian Economy glossary

Also called: Lesser penalty · Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT

Meaning

A leniency programme lets a cartel member confess to the regulator and cooperate in return for a smaller penalty. In India it comes under Section 46 of the Competition Act 2002:

  • the first firm to apply can get up to 100% off its penalty;
  • the second, up to 50%;
  • the third, up to 30%.

Since the 2023 amendment, "leniency plus" gives an extra cut for revealing a second cartel the regulator did not know about. The programme uses the prisoner's dilemma: in this game, each player gains by betraying the others first. Leniency makes confessing first every member's best choice, so cartels become unstable.

Example

The 2021 beer cartel case (about ₹873 crore in penalties on United Breweries, Carlsberg and AB InBev) came to light through leniency.

Don't confuse with

  • Settlement and commitment: this 2023 route lets firms close vertical-agreement and abuse-of-dominance cases early. Cartels are excluded from it. Leniency applies only to cartels.

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