On February 17, 2025, the Competition Commission of India (“CCI”) issued the draft of the Competition Commission of India (Determination of Cost of Production) Regulations, 2025 (“Draft Regulations”)[1]. CCI invites comments from stakeholders on the Draft Regulations latest by March 19, 2025. The Draft Regulations hereby repeal and replace the previously issued Competition Commission of India (Determination of Cost of Production) Regulations, 2009.
CCI aims to ensure that the regulatory framework for determining the cost of production remains robust and relevant in the face of these developments. The proposed amendments to the Draft Regulations aim to enhance the clarity and application of the provisions related to predatory pricing and ensure that the regulations continue to serve the intended purpose of promoting and sustaining competition in the Indian market.
The key highlights of the Draft Regulations are as follows:
1. Determination of Cost:
- “Cost” under Section 4 of the Act, shall generally be taken as average variable cost, serving as a proxy for marginal cost.
- However, CCI may consider alternate cost measures, such as average total cost, average avoidable cost, or long-run average incremental cost based on industry characteristics, market structure, and technology.
2. Engagement of Experts:
- CCI or the Director General may consult experts for cost determination.
- If an enterprise disputes CCI’s cost determination, it may request expert appointment, subject to written justification.
- CCI retains discretion to appoint experts at the cost of the requesting enterprise.
3. Confidentiality Requests:
Requests for confidentiality of documents submitted to CCI or the Director General shall be evaluated as per the Competition Commission of India (General) Regulations, 2025.
4. Procedural Clarity:
If the Act, rules, or regulations do not explicitly address a specific situation, CCI shall determine the appropriate procedure for cost determination.
[1] https://www.cci.gov.in/images/stakeholderstopicsconsultations/en/draft-competition-commission-of-india-determination-of-cost-of-production-regulations-20251739789121.pdf