1. Meaning of a Cartel

A cartel is an arrangement between competitors designed to reduce or eliminate competition between them.

Typical cartel arrangements include:

1. Price fixing – competitors agree on prices or pricing formulas.
2. Market sharing – competitors divide customers, territories or markets.
3. Bid rigging – competitors manipulate tenders by deciding who will win and what bids others will submit.
4. Output restriction – competitors agree to restrict production or supply.
5. Customer allocation – competitors agree that particular customers will be served by particular cartel members.
6. Supply coordination – competitors coordinate quantities or availability.

Section 3(3) of the Competition Act treats these categories particularly seriously because they are presumed to cause an appreciable adverse effect on competition.

2. Why Directors Can Be Liable

The basic principle of company law is that a company is a separate legal person.

Therefore:

The fact that a company has committed a competition-law violation does not automatically mean that every director is personally liable.

Section 48 provides the mechanism through which liability can extend from the company to individuals.

The important question is therefore:

What was the director's position, knowledge, involvement and responsibility in relation to the cartel?

This distinction is crucial.

A passive or non-executive director who had no involvement and exercised appropriate due diligence should not automatically be treated in the same manner as a managing director who personally negotiated cartel arrangements.

3. Section 48 of the Competition Act

The amended Section 48 creates two principal routes to individual liability.

A. Section 48(1): Person in charge and responsible for the business

Where a company commits a contravention, a person who was:

• in charge of the company; and
• responsible for the conduct of its business

may be held liable.

The provision is therefore concerned with functional responsibility, not merely the title of "director."

For example:

A Managing Director who controls sales, pricing and tender strategy is considerably more exposed than an independent director who merely attends periodic board meetings.

4. Due-Diligence Defence

Section 48 contains an important defence.

An individual may avoid liability where he or she establishes that:

1. the contravention was committed without his or her knowledge, or
2. the person had exercised all due diligence to prevent the contravention.

Thus, Section 48 does not establish an absolutely irrebuttable form of director liability.

The director can attempt to demonstrate:

• lack of knowledge;
• absence from the relevant decision-making process;
• inadequate access to the relevant information;
• compliance instructions;
• competition-law training;
• internal compliance systems;
• objections to suspicious conduct;
• reporting of suspected cartel conduct;
• appropriate supervision.

This makes a strong competition compliance programme highly important.

5. Section 48(2): Consent, Connivance or Neglect

The second route is particularly important in cartel cases.

Where the company's contravention occurred with the:

• consent;
• connivance; or
• neglect

of a director, manager, secretary or other officer, that individual can also be held liable.

This is important because a person may not personally negotiate the cartel agreement but may nevertheless become liable if he or she knowingly permits or facilitates the conduct.

Example

Suppose a company's sales director learns that competitors have agreed on tender prices.

The director does not personally attend the cartel meeting but:

• approves the agreed bid,
• instructs employees to follow the arrangement, and
• deliberately ignores internal warnings.

That conduct can potentially constitute consent, connivance or neglect for Section 48 purposes.

6. 2023 Amendment: Stronger Individual Liability

The Competition (Amendment) Act, 2023 substantially changed Section 48.

Under the amended provision, the CCI can impose a penalty on responsible individuals of up to 10% of their average income for the preceding three financial years in ordinary cases.

More importantly for the present topic, where the contravention involves a cartel under Section 3(3), the statute permits a penalty of up to 10% of the individual's income for each year of continuation of the cartel.

This represents a significant deterrence mechanism.

Therefore:

Company cartel liability + individual director liability

can operate simultaneously.

The company cannot necessarily avoid liability merely because the cartel was organised by particular employees, and the responsible individuals cannot necessarily hide behind the corporate personality of the company.

7. Director Liability Is Different From Ordinary Corporate Liability

This distinction is essential for examination purposes.

The CCI's 2024 regulations specifically address determination of turnover or income for enterprises and individuals, while the 2024 Monetary Penalty Guidelines expressly cover persons liable under Section 48.

8. Case Law

Case 1: Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47

This is one of India's leading cartel decisions.

Facts

The case concerned manufacturers of Aluminium Phosphide Tablets supplying government agencies through tenders.

The CCI found evidence indicating coordinated conduct, including identical pricing and concerted conduct concerning tenders.

Supreme Court's importance

The Supreme Court upheld the finding of cartelisation and recognised the seriousness of coordinated bidding behaviour.

The Court examined Section 3(3), including provisions relating to:

• price determination;
• limitation of supply; and
• bid manipulation.

The case also became extremely important for the law concerning penalty calculation.

The Supreme Court held that, under the then applicable law, the relevant turnover rather than unrelated turnover of an enterprise should form the basis of penalty calculation.

Importance for directors

Although Excel Crop Care primarily concerned enterprise liability and penalty methodology, it is foundational for understanding the seriousness of cartel conduct and the relationship between corporate participation and sanctions.

It also demonstrates that apparently commercial explanations for identical bids will not necessarily defeat a cartel finding when the overall circumstances demonstrate concerted conduct.

9. Case 2: Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Competition Commission of India

The Delhi High Court's decision concerning Mahyco Monsanto Biotech is particularly important for director liability under Section 48.

The challenge concerned whether CCI could proceed against individual directors/officers under Section 48.

The Court recognised the statutory basis for proceeding against individuals associated with an enterprise and rejected an interpretation that would make Section 48 practically meaningless.

Principle

Section 48 is not confined to situations in which an individual personally signs the anti-competitive agreement.

The inquiry may extend to:

• who was responsible for the company's affairs;
• who controlled relevant activities;
• who participated in the conduct;
• whether there was consent or connivance; and
• whether there was neglect.

Significance

The case demonstrates that corporate personality does not create an absolute shield for directors.

10. Case 3: In Re: Alleged Cartelisation in Supply of LPG Cylinders — Allampally Brothers Ltd. & Others

This is one of the most useful CCI decisions for understanding the practical operation of Section 48.

The CCI considered cartelisation in the supply of LPG cylinders and separately examined the responsibility of company officers.

The investigation identified numerous managing directors and directors whose responsibilities included management of the businesses involved in the cartel.

The CCI specifically considered whether these individuals were:

"in charge of and responsible for the conduct of the business."

Important principle

The CCI did not merely look at the corporate designation.

It examined evidence such as:

• statements made by directors;
• responsibility for day-to-day operations;
• responsibility for tenders;
• management functions;
• decision-making authority.

Where directors themselves admitted that they were responsible for day-to-day business, that evidence became highly significant.

Penalty

The CCI imposed individual penalties calculated as a percentage of the relevant average income.

Legal significance

This case demonstrates that a director's own statement concerning his managerial responsibility can become important evidence supporting Section 48 liability.

11. Case 4: In Re: Alleged Bid-Rigging in E-Tenders — Suo Motu Case No. 01 of 2020

This case concerned bid rigging in tenders relating to soil testing.

The CCI found evidence of coordinated bidding and considered the role of individual directors and executives.

One individual, Suresh Kumar Gupta, was found to have played an active role in manipulating the bidding process.

Another individual, Nitish Agarwal, was found to have responsibility for the affairs of his company and had admitted circumstances concerning the submission of cover bids.

Principle

The case illustrates the difference between:

mere corporate designation

and

actual participation or responsibility.

Where the evidence establishes active involvement in bid manipulation, Section 48 liability becomes substantially stronger.

The CCI imposed individual penalties based on a percentage of average income.

12. Case 5: SBI Infrastructure Management Services / Cartelisation and Bid-Rigging Case

This case concerned alleged cartelisation and bid rigging in a tender process.

The CCI found evidence including communications between participants and evidence relating to geographical allocation and bid manipulation.

The investigation resulted in findings against both enterprises and individuals under Section 48. The Government's summary records that nine individuals associated with the parties were held liable under Section 48.

Importance

This case demonstrates the evidentiary importance of:

• emails;
• communications between competitors;
• geographic allocation;
• coordinated bids;
• instructions concerning who should bid;
• relationships between decision-makers.

Director-liability lesson

Modern cartel enforcement does not depend exclusively upon finding a formal written cartel agreement.

Electronic communications and circumstantial evidence may demonstrate coordinated conduct.

Therefore, directors should assume that:

Emails, WhatsApp messages, tender instructions, meeting records and internal correspondence can become competition-law evidence.

13. Case 6: PMP Infratech Pvt. Ltd. / Rati Engineering

In this matter, the CCI found collusive bid rigging and considered the liability of the office bearers of the concerned enterprises.

The CCI held the relevant officials liable under Section 48 because the companies were managed and controlled by them during the relevant period.

The CCI imposed penalties on both the companies and their respective individuals.

Significance

The case reinforces an important proposition:

A director or responsible officer cannot necessarily escape liability merely because the cartel arrangement was implemented through the company.

If the evidence establishes that the person was managing and controlling the business during the relevant period, Section 48 may be attracted.

14. Case 7: Macromedia Digital Imaging Pvt. Ltd. v. Competition Commission of India

This case provides useful judicial discussion of Section 48.

The statutory language of Section 48 was examined in the context of corporate contraventions and individual liability.

The decision explains the two important statutory routes:

Section 48(1)

The individual is liable because he or she was:

• in charge of; and
• responsible for the conduct of the company's business.

Section 48(2)

The individual is liable where the contravention occurred through:

• consent;
• connivance; or
• neglect.

Importance

The case demonstrates that Section 48 should not be interpreted as an automatic penalty provision against every person holding the title of director.

There must be a statutory basis connecting the individual to the company's contravention.

15. Case 8: Keshav Bihani v. Competition Commission of India, 2026

This is particularly relevant because it reflects the current judicial debate concerning Section 48.

The case involved a challenge to the invocation of Section 48 and the imposition of individual liability in connection with an alleged cartel.

The appellant argued, among other things, that Section 48 could not be invoked merely because a company had contravened the Competition Act and that the statutory requirements concerning individual liability had to be satisfied.

The case is important because it highlights continuing questions concerning:

• when Section 48 can be invoked;
• the relationship between corporate and individual penalties;
• the meaning of "punished accordingly" under the earlier version of Section 48;
• the effect of the 2023 amendments;
• the calculation of individual penalties.

It is therefore particularly useful for understanding the transition from the pre-2023 Section 48 regime to the amended individual-penalty framework.

16. What Evidence Can Establish Director Liability?

In cartel investigations, the CCI and DG can examine a broad range of evidence.

A. Emails

Examples:

• "Please quote the same price."
• "You will win this tender."
• "We will not participate."
• "You take North India and we will take South India."

Such communications can be powerful evidence.

B. WhatsApp and electronic communications

Informal communications between executives can establish:

• communication between competitors;
• coordination;
• price exchange;
• tender allocation;
• customer allocation.

C. Tender documents

Repeatedly identical or suspiciously coordinated bids can be significant.

D. Meeting records

Minutes and calendars may demonstrate meetings between competitors.

E. Telephone records

Communication patterns can corroborate other evidence.

F. Internal company documents

These may show:

• instructions from directors;
• pricing decisions;
• tender strategies;
• communications with competitors.

G. Director's own testimony

A director admitting responsibility for day-to-day business may provide evidence relevant to Section 48.

The Allampally LPG-cylinder case illustrates the significance the CCI can attach to such statements.

17. Mere Directorship Is Not Enough

This is one of the most important examination points.

A person does not become liable simply because:

"He was a director."

The relevant statutory questions include:

1. Was the person in charge of the business?
2. Was the person responsible for the conduct of the business?
3. Did the person know about the cartel?
4. Did the person participate in it?
5. Did the person consent to it?
6. Did the person connive in it?
7. Did the person neglect relevant compliance obligations?
8. Can the person establish lack of knowledge?
9. Can the person establish due diligence?

Consequently, a purely nominal or non-executive director may have a stronger defence than a managing director responsible for sales and tender decisions.

18. Burden of Proof and the Due-Diligence Defence

Section 48 creates an important allocation of responsibility.

Once the statutory conditions are established, an individual may seek to demonstrate:

"I did not know."

or:

"I exercised all due diligence."

This means that companies should maintain documentary evidence of compliance.

For example:

• competition compliance policies;
• employee training;
• director training;
• written instructions prohibiting competitor communications;
• reporting mechanisms;
• compliance certifications;
• internal audits;
• legal review of tender practices;
• whistle-blower systems;
• records of directors' objections to suspicious conduct.

A director who merely says:

"I did not know what the sales team was doing"

may have a weaker defence where the director had direct responsibility for sales and tender operations.

19. Competition Compliance as a Director's Governance Responsibility

Cartel risk should increasingly be viewed as a corporate-governance issue, not merely a legal department issue.

Directors should ensure that the company has:

1. Competition policy

A written prohibition on:

• price fixing;
• market sharing;
• bid rigging;
• output restrictions;
• exchange of competitively sensitive information.

2. Training

Relevant employees should understand:

• what constitutes a cartel;
• what information cannot be exchanged with competitors;
• how to respond to competitor contacts.

3. Tender controls

Special compliance procedures should apply to:

• government tenders;
• large procurement processes;
• industry associations;
• joint bidding arrangements.

4. Competitor-contact protocols

Employees should know that discussions about:

• future prices;
• discounts;
• customers;
• production;
• market allocation

may create serious competition-law risks.

5. Monitoring

Companies should periodically review:

• unusual pricing patterns;
• identical bids;
• repeated tender outcomes;
• communications with competitors.

20. Leniency and Director Risk

Cartel investigations are also influenced by the leniency regime under Section 46.

A cartel participant that makes a full and true disclosure and satisfies the statutory requirements may obtain a reduction in penalty.

This creates a significant strategic consideration for directors.

If a company discovers a cartel, delaying disclosure may increase exposure.

The 2023 amendment strengthened the statutory framework concerning lesser penalties for cartel participants that provide qualifying disclosures.

Therefore, an effective compliance system should provide an internal mechanism for:

Detection → Investigation → Legal assessment → Remedial action → Possible leniency application.

21. Relationship With the Companies Act, 2013

Competition-law liability and company-law liability are separate.

A director involved in cartelisation may potentially face consequences under:

Competition Act, 2002

Including:

• Section 3;
• Section 27;
• Section 48;
• other applicable enforcement provisions.

Companies Act, 2013

Depending on the facts, issues may arise concerning:

• directors' duties;
• fiduciary responsibilities;
• good faith;
• due care and diligence;
• disclosure obligations;
• managerial responsibility;
• possible disqualification consequences where statutory conditions are satisfied.

Thus, cartelisation may be both:

a competition-law violation and a corporate-governance failure.

22. Corporate Veil and Director Liability

Ordinarily, incorporation creates a separate legal personality.

However, competition legislation expressly provides a mechanism for individual responsibility.

Therefore, the argument:

"The company committed the cartel, not me"

is not necessarily sufficient.

Section 48 specifically addresses situations where persons behind the corporate entity:

• controlled the business;
• were responsible for business conduct;
• consented to the conduct;
• connived in the conduct; or
• neglected their responsibilities.

This is why Section 48 is often described as a form of statutory vicarious or derivative liability, although its precise operation depends on which subsection is invoked and what evidence exists.

23. Director Liability in Bid-Rigging Cases

Bid rigging is particularly important because tender processes provide identifiable evidence.

Suppose five companies participate in a government tender.

Before submission:

• Director A calls Directors B and C.
• They agree that A will win Tender 1.
• B submits a deliberately high bid.
• C submits another high bid.
• A submits the lowest bid.
• For Tender 2, B becomes the designated winner.

This may demonstrate:

Competitor communication + allocation + coordinated bidding = potential cartel/bid rigging.

If the directors personally organised the arrangement, Section 48 exposure becomes particularly strong.

The Indian cases concerning aluminium phosphide tablets, LPG cylinders, soil-testing tenders and SBI-related tenders demonstrate how CCI examines both enterprise conduct and the role of individuals.

24. Director Liability and "Hub-and-Spoke" Cartels

A particularly difficult situation occurs when a director or executive acts as a facilitator.

For example:

Company A's director communicates with Company B's director and then passes information to Company C.

The facilitator may not be a formal member of every agreement but can become important evidence of coordination.

This is particularly relevant in industries where:

• competitors have close relationships;
• trade associations are active;
• common consultants are used;
• common distributors operate;
• competitors exchange sensitive information.

Directors should therefore exercise caution even when communication is not expressly about fixing prices.

25. What Directors Should Never Do

Directors and senior executives should avoid:

• discussing future prices with competitors;
• discussing proposed discounts;
• agreeing not to compete;
• allocating customers;
• dividing territories;
• coordinating tender bids;
• agreeing who will win a tender;
• exchanging competitively sensitive information;
• instructing employees to submit cover bids;
• using trade associations to coordinate commercial strategy;
• deleting cartel-related evidence;
• encouraging employees to conceal communications.

The last point is especially serious because attempts to conceal evidence can aggravate the legal and reputational consequences.

26. Practical Compliance Framework for Directors

A company can reduce director exposure through a structured compliance system:

Step 1 — Identify high-risk activities

Especially:

• tenders;
• pricing;
• competitor meetings;
• trade associations;
• distribution agreements.

Step 2 — Train directors and employees

Training should be repeated periodically.

Step 3 — Establish approval controls

High-risk competitor interactions should receive legal/compliance oversight.

Step 4 — Monitor communications

Particularly where employees regularly interact with competitors.

Step 5 — Maintain records

Directors should document legitimate commercial reasons for significant decisions where appropriate.

Step 6 — Investigate red flags

Examples:

• identical bids;
• identical unusual price changes;
• unexplained tender withdrawals;
• repeated market allocation;
• competitor communications immediately before bids.

Step 7 — Escalate suspected cartel conduct

Potential cartel conduct should be promptly investigated by appropriate legal/compliance personnel.

Step 8 — Consider leniency

Where a cartel is discovered, legal advice should be obtained immediately concerning the possibility and strategy of a lesser-penalty application.

27. Important Distinction Between Sections 48(1) and 48(3)

Under the amended statutory structure, it is useful to conceptualise the two situations as follows:

The amended Section 48 expressly provides for individual penalties and creates a specific rule for cartel agreements continuing over multiple years.

28. Major Legal Principles Emerging From the Case Law

The cases collectively establish several important propositions.

Principle 1 — Cartels are treated as serious competition violations

The Competition Act adopts a particularly strict approach toward hardcore cartel conduct.

Principle 2 — Corporate personality does not immunise responsible individuals

A company and responsible individuals can face separate consequences.

Principle 3 — Mere designation is insufficient

The individual's actual responsibility and conduct matter.

Principle 4 — Managing directors face greater exposure

Because they ordinarily exercise greater control over business operations.

Principle 5 — Evidence can be circumstantial

The CCI need not necessarily find a document saying:

"We hereby agree to form a cartel."

Patterns of conduct, communications, pricing and tender behaviour can collectively establish coordination.

Principle 6 — Electronic evidence is increasingly important

Emails and other digital communications can be central to cartel investigations.

Principle 7 — Due diligence matters

Directors can defend themselves by demonstrating lack of knowledge or appropriate preventive measures.

Principle 8 — Cartel duration affects exposure

After the 2023 amendments, Section 48 expressly contemplates individual penalties calculated by reference to each year of cartel continuation.

29. Six-Case Summary for Examination

30. Overall Conclusion

Director liability in cartel cases represents the movement from purely corporate punishment toward individual accountability.

The Competition Act does not stop at penalising the company. Section 48 is designed to reach individuals who actually controlled, participated in, consented to, connived in or negligently permitted anti-competitive conduct.

The post-2023 position is particularly significant. Section 48 now expressly provides for monetary penalties against responsible individuals, and in cartel cases the penalty can extend to 10% of the individual's income for each year of continuation of the cartel, subject to the statutory framework and applicable penalty guidelines.

The central legal proposition can therefore be stated as:

A director is not liable merely because he or she holds office; but a director who is responsible for the company's business, participates in cartel conduct, consents to it, connives in it, or negligently permits it may face personal liability under Section 48.