By Law Community (I) Team
“This article summarizes and discusses major changes brough about by the Competition Amendment Bill, 2022“
The Competition Act, 2002 (the ‘Act’) was enacted in order to regulate or minimize the negative aspects of competition and promote a healthy and fair competition in the market and protect the consumers’ interest. The Act plays a key role in regulating the competition of any economic activity in Indian markets.
The Act created the Competition Commission of India (CCI) which is an independent regulatory body in charge of maintaining the terms of competition law and enforcing its application. Over the years, the CCI has stepped up its role as a competition watchdog. When businesses are violating the integrity of competition in the market place, the CCI has the authority to launch an investigation, issue fines, and require the divestiture of those companies.
After the 2019 Law Review Committee report of CCI, The Competition (Amendment) Bill, 2022 (the ‘Bill’), was introduced in order to broaden the scope of anti-competitive agreements, provide for the evaluation of combinations based on value of transactions, reduce the time limit for approval of combinations, and introduce settlement and commitment framework to reduce litigation.
Key Changes Proposed by the Bill:
- Regulations for merger control based on transaction value:
The Bill amended the provisions related to the combinations, where it prohibits any person or enterprise from entering a combination that may cause a detrimental effect on competition in the market. The prohibition applies to transactions where parties involved have (i) accumulative assets of more than Rs. 1,000 crores, or (ii) accumulative turnover of more than Rs. 3,000 crores, with other conditions. The Bill expands the definition of combinations to include transactions with a value above Rs. 2,000 crores provided that the enterprise which is a party to such transaction has such substantial business operations in India.
- Changes to the definition of Enterprise, Relevant product market, Group and Control:
The definition of ‘enterprise’ has been expanded to include new forms of business organizations, such as limited liability partnerships and one-person companies. The definition of ‘group’ has also been modified to better capture the economic and financial relationships between entities operating in a group structure. The definition of ‘control’ was clarified for classification of combinations. The Act outlines the definition of ‘relevant product market’ as items and services that consumers view as interchangeable whereas the Bill has broadened this definition to include products and services that suppliers consider to be substitutable.
- Changes to the provisions on Anti-Competitive Agreements:
The Bill proposes amendments to prohibit anti-competitive agreements even between enterprises or persons not engaged in identical or similar businesses, if they actively participate in the furtherance of such agreements.
- Settlement and Commitment in Anti-Competitive Proceedings:
The Bill introduces provisions for monetary settlement and other (structural or behavioral) commitments by an enterprise against whom any inquiry has been initiated. The CCI may allow such settlements upon payment of proposed amount and commitments after taking into consideration the nature, gravity and impact of the contraventions. The Bill clearly states all money realized under such settlements shall be credited to the Consolidated Fund of India.
- Procedural timeline changes in section 6(2A) read with section 29 and 31 of the Act:
The Bill intends to quicken the process of combination approvals of CCI reducing the timeline to 150 days with 30 days for extensions as against 210 days after which, it is automatically approved.
- Appointment of Director General:
Under the Act central government has the authority to appoint the Director General of the CCI, however, the Bill proposes to grant the CCI the power to appoint the Director General with government approval. The Act currently requires the chairperson and members of the CCI to have a minimum of 15 years of experience in areas such as economics, competition, law, management, or business but the Bill aims to add technology to this list of required fields of expertise.
- Change in nature of punishments of certain offences under the Act:
The Bill intends to change certain punishments from imposition of fines to penalties. This Bill also proposes decriminalisation of certain offences, as earlier these offences included failure in compliance of orders of CCI and failure to comply the Director General’s directions with regards to anti-competitive agreements and abuse of dominance.
In conclusion, the Bill is a significant development in the regulation of competition in India. The changes proposed by the Bill are expected to have a positive impact on competition and the interests of consumers and to provide greater clarity and efficiency in the enforcement of the competition law. Even with its positives and lacunae, it will be worth a wait to see how much of the Bill in its current form gets approved and makes way for changes in the Act.