THE PURPOSE
The Competition Commission of India was established in the year 2003 to plot a body to eradicate the unethical practices in business that may affect the competition regime.
The Competition (Amendment) Bill, 2022 was introduced in the lower house of the parliament
on 5th August 2022 and it had been referred to the standing committee on 17th August 2022. The bill
seeks to eliminate the delay in the settlement of cases to regulate unethical market practices.
Additionally, it proposes to alter the provisions for enterprises entering into combinations, for
example performing the practice of mergers & acquisitions. Entering into combination without
proper notification was putting an unfavourable impact upon the existing competition by changing
the game, entirely. The bill aims to implant a value of transaction criteria for entities planning to
enter into a combination which mandates a certain value of assets to be owned by that entity while
notifying the authority about the change in the structure.
AN OVERVIEW OF PROPOSED CHANGES
The existing act pertained narrow definitions which were aiding the wrongdoers.
Moreover, the bill has also exhibited the value of Alternative Dispute Resolution by proposing the incorporation of a negotiation method with CCI to settle cases.
It has affixed several amounts of assets owned by an entity planning to combine with another entity. Also, it has defined the hold of the statute on the classification of combination and involves a time limit for its approval.
Furthermore, the bill covers investigation procedures, punishments, information, and method to
lessen the burden upon the ligation and make the combination process speedy. It has also
introduced the raids and seizure process.
Collectively, the current ruling government is exhibiting its intent to revive the business regime and market by incorporating several changes which are necessary for the hour.
MAJOR HIGHLIGHTS OF THE COMPETITION (AMENDMENT) BILL
The bill as mentioned above has proposed to alter various provisions of law some of which are
mentioned below:
1. Views of the bill on combinations
Combination stands for two entities unifying into one through merger or amalgamation
procedure or one principal enterprise acquiring the other. Earlier, they imposed a restriction upon transactions where parties involved had:
(i) cumulative assets of more than Rs 1,000 crore, or
(ii) cumulative turnover of more than Rs 3,000 crore, subject to certain other
conditions.
This bill widens the definition of combinations to include a deal value threshold with a
value above Rs 2,000 crore. ((Simran Dhir, Akshat Kulshresth, Samali Verma, Competition Amendment Bill, 2022: Key Changes To The Competition Act, 2002, Mondaq, (2022).))
It has focused on combination because of the mushrooming practice of Mergers & Acquisitions in the market. Additionally, the technology sector is also penetrating into this
practice and it owns a considerable share in the market. Hence, the bill also strives to balance the
entry of the IT regime entering into the combination and mitigate its adverse impact on
competition.
It has also modified the definition of combination. While the existing law elaborates it as control over affairs and management by one or more entities over another entity or a group,
the bill states combination as an ability of one or more enterprises to exercise material
influence over the management, affairs, or strategic commercial decisions of other. ((Key Highlights of The Competition Act, 2002, Taxmann,(2022).))
The bill has also reduced the time limit for getting approval for entering into
the combination and affixed it to 150 days to make fast-track approvals.
2. Views of the bill on Anti-competitive agreements
The existing act considers the agreement related to process and outcome production,
supply, storage or control of goods and services as an anti-trust agreement. Such
agreements either between entities or persons, performing homogenous business practice, will impact the market competition adversely if its outcome involves the determination of purchase, regulating supply & production or results in preplanned auctions.
The bill widens the definition of anti-competitive agreements by including the active
participation of persons or entities not running an identical business in such agreements. ((Ministry of Finance, Competition (Amendment) Bill, 2022, PRS Legislative Assembly, (2022).))
The bill also proposes the resolution of disputes arising out of anti-competition agreements
by methods including:
i. Settlement
ii. Commitments.
The resolution through a settlement can be considered as the making of the payment.
The procedure in which both of these practices will run may be stated by lawmakers in the
regulation, shortly.
3. Other amendments
a. The bill has also expanded the definition of relevant product market by including
‘production and supply’ into the provision.
b. It also renders central government the authority to appoint a Director General for
the commission to conduct inquiries on breach of provisions.
c. Bill also includes possessing an experience of 15 years in the technology sector as a
qualification for a person to become a member of the Competition Commission of
India.
d. The bill is attempting to amend the punishment for offences including abuse of a
dominant position and failure in adherence to order of CCI or Director General.
e. The Bill requires an obligatory deposit of 25% of the penalty for filing an appeal
with the Appellate Tribunal.
WAY AHEAD
It will be superficial to conclude a bill which is still running into the machinery of law and is subject
to several additions. Nonetheless, the bill is running on the passage guided by the government by
coining the term ‘ease of doing business’.
It also arrives with a solution for elevating the entrance of the IT realm into the competition. The juggle between alteration in M&A provisions and anti-competition agreements is aiming to cater for the need of the moment.
by Khushi Shukla
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Adjuva Legal and Adjuva Legal does not assume any responsibility or liability for the same.
