India needs private enforcement to strengthen competition law framework

Source: The post India needs private enforcement to strengthen competition law framework has been created, based on the article “Time is ripe for private damage actions” published in “Financial Express ” on 12th July 2025

UPSC Syllabus Topic: GS Paper2- Statutory, regulatory and various quasi-judicial bodies; GS paper3-, Indian Economy and issues related to Growth

Context: India has transitioned from a state-controlled economy to one governed by the rule of law and market regulation. While the Competition Commission of India (CCI) enforces competition law, the article argues for expanding the framework to include private damage actions, following global practices to ensure fair markets and consumer protection.

Evolution of Market Governance in India

1. Shift from State Control to Market Regulation: India moved from state ownership of production to a governance model that relies on private sector participation under regulatory oversight. This shift has enabled a rules-based economy.
2. Establishment of Regulatory Institutions: Sector-specific regulators were created in areas prone to market failure like telecoms and ports. The Competition Commission of India was set up as an economy-wide regulator to promote fair competition.
3. Economic Growth and Regulatory Foundations: Strong regulatory institutions, when balanced with stakeholder engagement, have supported India’s economic growth. India is now poised to become the third-largest global economy.

Limitations of Current Competition Law Enforcement

1. Narrow Scope of Deterrence: Regulatory actions focus mainly on deterring anti-competitive behaviour by ordering violators to stop and imposing financial penalties. However, these measures often do not fully reflect the harm caused.
2. Ineffective Penalties: Fines are usually formulaic and may not match the actual damage. In many cases, they are small compared to the profits earned, reducing their deterrence value.
3. Lack of Compensation for Victims: Regulatory actions rarely compensate those harmed. Victims, including consumers and competitors, remain unaddressed under the current enforcement model.

Global Models of Private Enforcement

1. Legal Provisions for Damage Claims: In the US, UK, EU, and China, individuals or firms can claim damages independently of regulatory proceedings. In the US, laws allow for treble damages, significantly raising deterrence.
2. Widespread Use Across Sectors: Private damage actions have been applied in sectors such as transport, healthcare, technology, and finance. These cases showcase the breadth and impact of private enforcement mechanisms.

Notable Global Case Examples

• EU fined truck makers €2.93 billion, triggering widespread claims.
• US air cargo collusion settled for $1.2 billion.
• Healthcare litigation in the US settled for $2.6 billion.
• UK certified a £13.6-billion Google case; Apple faces a £1.5-billion claim.
• China awarded its largest damages of RMB 1 billion against Alibaba.

India’s Framework and Emerging Potential

1. Legal Provision under Section 53N: India’s Competition Act permits affected market participants to claim compensation. However, very few such claims have been made and progress remains sluggish.
2. Initial Steps and Existing Precedents: Some appeals have been filed with the National Company Law Appellate Tribunal (NCLAT), but there is limited momentum in establishing a robust private enforcement regime.
3. Learning from Mature Jurisdictions: India can model its development on the US, EU, and UK systems to strengthen private enforcement and complement public regulatory efforts by the CCI.

The Need for Complementary Private Action

1. Enhancing Market Fairness: Private damage actions can fill enforcement gaps, ensuring fair competition and adequate consumer protection in a rapidly growing economy.
2. Reinforcing Public Enforcement: After 15 years of regulatory enforcement, India is well-positioned to broaden its legal toolkit. This would strengthen deterrence and incentivize lawful market behaviour.
3. Aligning with Global Best Practices: Developing private enforcement mechanisms will bring India in line with global standards, promoting both investor confidence and consumer welfare.

Question for practice:

Examine the need for introducing private damage actions alongside regulatory enforcement to strengthen competition law in India.