A New Age for the Indian Antitrust Regime
The Indian Parliament recently passed the Competition (Amendment) Bill, 2022. This bill will become law once it receives Presidential assent. Pursuant to this development, the Indian antitrust regime has received a significant overhaul, which we have discussed below.
A. Merger control
(a) Introduction of the deal value
threshold:
Apart from the existing filing thresholds, merger control
assessments will need to be conducted taking into account the value
of the transaction. Transactions with a value exceeding INR 20
billion (approx. USD 242 million) would be required to be notified
to the Competition Commission of India (the
CCI) in cases where the target has
"substantial business operations in India" (which will be
clarified subsequently by way of regulations).
(b) Definition of control:
The threshold for 'control' has received more
certainty, i.e. it will be the ability to exercise "material
influence" over the management or affairs or strategic
commercial decisions of an enterprise or group.
(c) Acquisitions resulting from open offers,
etc.:
The standstill obligations under the Indian merger control
regime would not apply to open offers and market purchases on stock
exchanges provided the acquirer: (i) makes a merger filing with the
CCI within such time and manner as may be prescribed; and (ii) does
not exercise any ownership, beneficial rights or interest in the
target until receipt of the CCI's approval.
(d) Definition of turnover:
Computation of turnover in India will exclude intra-group
sales, indirect taxes, trade discounts and, most importantly, all
amounts generated through sales to customers outside India.
(e) Increase in maximum penalty for making false
statements or omission of material
information:
The maximum penalty for doing so (in merger cases) has
been increased from INR 10 million (approx. USD 0.12 million) to
INR 50 million (approx. USD 0.61 million).
(f) Procedural timelines:
Amongst others, the overall time period given to the CCI
after which there would be a deemed approval is now 150 days,
instead of 210 days, and the time period for the CCI to form a
prima facie view for a Phase 1 clearance is now 30
calendar days, instead of 30 working days.
B. Enforcement
(a) Settlement and commitment:
In a new development, parties to an anti-competitive
vertical agreement and / or abuse of dominance investigation can
now offer commitments or propose settlements. (This has been
separately covered in detail in our article here.)
(b) Hub and spoke cartels:
Entities which are not engaged in identical or similar
trade could also be expressly caught under the ambit of anti-
competitive horizontal agreements if they participate (or intend to
participate) in the furtherance of such agreements. This will be
particularly relevant for trade associations who have been found
guilty of cartelisation in several cases in the past.
(c) Computation of penalty based on global
turnover:
In enforcement cases, penalty will now be computed based
on the global turnover derived from all the products / services of
the party being fined.
(d) Limitation for filing of an information /
reference:
An information or a reference to the CCI needs to be filed
within three years from the date on which the cause of action has
arisen (though delays can be condoned).
(e) Dismissal of repeat cases at prima facie
level:
The CCI can dismiss a case at the prima facie
level if the case presents the "same or substantially the same
facts and issues" as dealt with by the CCI previously.
(f) Leniency plus:
A further reduction in penalty can be provided to a cartel
participant if it discloses details regarding another cartel.
(g) Penalty deposit for appeals:
Appeals from the CCI's orders before the appellate
tribunal will only be entertained once 25% of the penalty (as
imposed by the CCI) is deposited by the parties.
(h) Guidelines on penalty:
The CCI will be required to publish guidelines on the
appropriate amount of penalties for antitrust contraventions.
First published April 4, 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
