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Competition Commission mandated to share info with Enforcement Directorate under PMLA

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The Centre has brought Competition Commission of India (CCI) within the ambit of agencies that have to mandatorily share information, including confidential ones, with the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA Act). 

It has empowered the ED to obtain corporate information from CCI, putting at risk the confidential information shared by corporate India with the competition watchdog under its merger control and anti-trust framework.

The information sharing regime notified by the Centre has created a flutter as personal  information obtained by the investigation arm of CCI during “dawn raids” such as call data records, e-mail dumps, ITRs, etc., which is otherwise not sharable even under the confidentiality ring of CCI, would become easily accessible to ED leading to roving and fishing inquiries, say CCI observers.

In April this year, CCI had revamped its confidentiality regime after stakeholder consultations  and introduced the concept of “confidentiality ring” to give comfort to the corporates sharing commercial information with the competition watchdog.

Confidentiality ring

Under the confidentiality ring,  controlled and limited access is given to the parties of the commercially sensitive information. However, the latest move is now not only likely to compromise confidentiality regime of CCI, it may also expose merger filings where a lot of information on corporate restructuring details will find its way to the law enforcement agency (ED).

“The new arrangement on information sharing may have wider ramifications for corporates. In case of global M&A deals which are also notifiable to CCI, the new information sharing regime may undermine investor confidence besides vitiating ease of doing business,” a competition law practitioner told businessline

With this notification, the Centre is empowering the ED to embark on fishing expedition to pursue commercial  sensitive information. No safeguards have been provided in the notification to prevent the misuse and unauthorised leakage of such information  from ED, the practitioner added.

With the National Anti-profiteering Authority (NAA) coming under the CCI’s fold from December 1, the information obtained by Director General (Anti-Profiteering) during investigation is also likely to be shared by CCI with ED, sources said.

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Already institutions like Reserve Bank of India (RBI), SEBI, Central Economic Intelligence Bureau and Ministries like Corporate Affairs Ministry (MCA) are legally bound to share information sought by the ED under the PMLA.

Aseem Chawla, Managing Partner at the law firm ASC Legal, said: “The obligation to share requisite information with the authorities under the given PMLA framework ought not yield a supposition that any confidentiality related aspects of matters dealt with by it would be at risk. At the same time it is equally important that a fine balancing act is maintained by the CCI.”

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Published on November 27, 2022

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