Competition Act, 2002, was enacted with the intent to curb and regulate unfair trade practices in the business world. However, the central government recognized the need to amend the Act in line with changing dynamics of Indian and global business world.

Accordingly, Competition (Amendment) Bill, 2023, was introduced and passed by the Parliamnet with significant amendments to Competition Act, 2002.

Key amendments are as follows:

1) Mergers and Acquisitions (M&A): M&A is one area with immense scope for hostile takeovers. In order to prevent such hostile takeovers, amendments have been brought in below listed amendments in this M&A segment and other sectors covered under Competition Act, 2002:

a) Approval: Competition Committee of India (CCI) approval is must for transaction (involving acquired or amalgamated entity with substantial business operations in India) with value exceeding INR 2,000 crores, the said threshold could be updated from time to time as and when needed – Which is not the case earlier, wherein approval of CCI for transaction is required based on the parties' assets or turnover exceeding certain threshold – Deal value has no consideration for seeking CCI's approval. Primary aspect of introducing deal value is to ensure there are no hostile take overs.

b) Objections and Modifications: CCI has the right to object any proposed M&A in its opinion the said transaction could adversely affect healthy competition between competitors in the market and to seek explanation from the parties on the ground why it has to permit the parties to proceed with the transaction. In that case, parties may offer amendments to the M&A transaction to weed out root cause for such adverse effect. If proposed amendments are satisfactory, then CCI may approve the transaction or otherwise reject the transaction or offer a scheme to be implemented by the parties to address the concerns.

c) Timelines: Existing timelines of 210 days for overall approval of M&As is reduced to 150 days. Further, CCI is required to provide its opinion within 30 days from the date of application or else it will be deemed CCI's approval is given for the transaction.

2) Settlements and Commitments Framework:

a) Before CCI passes antitrust order and after Director General submits their report - If entities are guilty of anticompetitive agreements or abuse of dominance, have the provision to propose a settlement for the alleged contraventions.

b) After CCI passing prime facie order and before Director General submits the report, guilty entities can also propose commitments in respect of the alleged contraventions.

c) CCI is the ultimate authority to accept or reject the proposed settlement or commitments.

d) The underlying intent is to avoid settlement via court rather provide a window to guilty companies to settle the disputes with CCI directly.

e) Appeal to appellate tribunal is no cakewalk, as companies intending to appeal need to deposit with such appellate authority 25% of penalty ordered by CCI or else appellate authority will not entertain such appeals. Further it will make companies think twice before going to appeals.

3) Revised penalties:

a) CCI is authorized to impose a penalty to a tune of 10% of the average income or turnover (including global turnover) for the last three preceding financial years in anti-competitive and abuse of dominant cases. Earlier, global turnover and income are not considered as parameters in imposing penalties.

b) Person in charge can avoid liability only if breach of the Competition Act occurred due to such person's lack of knowledge or appropriate measures (all due diligence) are taken by such person to prevent such breach.

c) Provision for recovery of legal costs (along with penalties) is permitted and recovered costs to be credited to the Consolidated Fund of India.

d) Penalties in cases of misrepresentation are increased to INR 5 crores from INR 1 crore.

e) Depending on certain parameters CCI may impose lesser penalty on defaulters.

4) Anti-competitive agreements: Anti-competitive agreements horizon has been broadened to include deal facilitators and intermediaries to make them responsible for their willful and known involvement in anti-competition activities. Certain critical components under existing regime are modified to include services along with goods. This expansion to competitive acts coverage shall deal with anit-competitive cases involving services as well. With a shift in paradigm, sellers are covered in the anti-competitive arrangements, from "exclusive supply agreement" to "exclusive dealing agreement". Two critical components (i.e "foreclosure of competition by hindering entry into the market" and "accrual of benefits") under appreciable adverse effect on competition (AAEC) are modified to "foreclosure of competition" and "accrual of benefits or harm" respectively. To cover indirect restrictions, definition of the "resale price maintenance" is redefined.

5) Competition Commission of India (CCI)

a) CCI is permitted to enter into arrangement with other government or regulatory authorities, which is not case earlier.

b) Another interesting addition is that statutory authorities can refer cases (involving matters regulated by Competition Act, 2002) on suo motu basis to CCI (as applicable) and vice versa.

c) As of now, Director General is competent authority to carry out investigation and submit report to CCI, however, CCI is authorized to direct Director General to perform further investigation, if needed as needed case by case.

d) No person or entity who is a party to any proceeding before CCI shall employ member of the CCI for a period of 2 years from date of cessation of office.

e) A new requirement of presence of members with technology background is mandatory.

f) CCI is empowered to appoint Director General, prior central government was the only competent authority to do the same. In addition, Director General also conferred with more powers to carry out an investigation.

6) Miscellaneous changes

a) Experts: Now, there is flexibility to a party under investigation to call for experts opinion from different disciplines, prior this option of calling expert opinion is limited to officers of the company or chartered accountants, or legal practitioners.

b) Time Limitation: No complaint filed after three years from the date of cause of action will be entertained by CCI, unless parties' involved provide satisfactory reasons.

c) Relevant market definition:

Relevant product market definition is revised to reflect consideration of two products or services to be part of the same relevant market if it is regarded as interchangeable or substitutable by the consumer along with supplier as well. Supplier prospect is the new addition. Couple of items (i.e a) costs associated with switching demand or supply to other goods or services and b) categories of customers) are added to the criteria of identification of "relevant product market".

d) Relevant geographic market:

Similar addition of another couple items (i.e characteristics of goods or nature of services and b) costs associated with switching supply or demand to other areas) is made to the "relevant geographic market" definition.

e) Additional powers: Central government and CCI are empowered to issue notifications and regulations as and when required, but a touch of transparency is included. CCI prior to official enforcing any regulations has to publish them for comments from public and make necessary changes based on feedback received from public.

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.