Introduction
In the dynamic landscape of competition law in India, the year 2023 marked a series of pivotal developments that shaped the country's approach towards anti-trust and fair market practices. On April 11, 2023, the Competition (Amendment) Act, 2023 ("Amendment Act"), was enacted, laying the groundwork for substantial changes including and not limited to implementation of a deal value threshold, establishment of a settlement and commitment mechanism, widening the scope of the definition of 'control', inclusion of facilitators of anti-competitive agreements or cartels under the purview of persons liable for entering into anti-competitive agreements, revised timelines, and penalties.
Notably, the Amendment Act expressly specified that its provisions would be implemented in a staggered manner and the Competition Commission of India ("CCI") regulations would be framed following the public consultations. In this background, this article seeks to set forth a snapshot of the provisions enforced and regulations rolled out for public consultation within the competition regulatory landscape in the year 2023, following the enactment of the Amendment Act.
- Enforcement of certain Provisions on May 18, 20231
On May 18, 2023, the Ministry of Corporate Affairs ("MCA") notified certain provisions of the Amendment Act pertaining to anti-competitive agreements and abuse of dominance, marking a crucial step towards enhancing the efficiency and effectiveness of competition law regime in India. Significant provisions notified under the Amendment Act, include the following: (a) broadening of the scope of cartels to include 'Hub and Spoke Arrangements'; (b) revised limitation period of three years for filing information; (c) limitation on filing similar complaints; (d) concept of partial deposit of 25% penalty in case of admission of an appeal; (e) increased penalty (up to 5 crores) for false statements and omission of material information; (f) stakeholder's consultation prior to the publication of draft regulations; (g) compounding of offences.
- Draft Regulations on Settlement2 and Commitment3 issued for Public Consultation on August 23, 2023, through September 9, 2023
With the objective of reducing litigation and ensuring quicker market correction, on August 23, 2023, the CCI published two significant draft regulations for public consultation, namely, 'CCI (Settlement) Regulations, 2023' ("Draft Settlement Regulations"); and 'CCI (Commitment) Regulations, 2023' ("Draft Commitment Regulations").
The Draft Settlement Regulations are intended to enable a company found in breach of the provisions of the Competition Act, 2022 ("Act") following enquiry by the Director General ("DG") of CCI, to submit a settlement application. Under this application, the company would rectify its conduct and potentially pay a maximum penalty. In addition, the company would disclose complete and true facts with regards to the alleged contraventions and findings of the DG along with the settlement proposal.
Similar to the Draft Settlement Regulations, in the case of the Draft Commitment Regulations, it is proposed that a company found to indulge in anti-competitive practices by the CCI, can file a commitment application. The commitment application needs to be filed within 45 days from the receipt of the order passed by the CCI. The provisions for commitment are broadly in parity with those for settlement, including the requirement to pay a non-refundable fee and the proceedings should be completed within a 90 (ninety) days' timeframe, during which the CCI's inquiry would be temporarily suspended.
- Draft Regulations on Combinations issued for Public Consultation on September 9, 2023, through September 25, 20234
To supplement the forthcoming provisions under the Amendment Act, the CCI, on September 09, 2023, published the draft CCI (Combinations) Regulations, 2023 ("Draft Combination Regulations") for public consultation. The Draft Combination Regulations aim to provide guidance on: (a) ascertaining the value of transaction and substantial business operations; (b) acquisition vide an open offer or open market purchases, (c) layered requests for additional information, (d) modifications to notified transaction, (d) enhanced filing fee.
- Draft Regulations on Lesser Penalty issued for Public Consultation on October 16, 2023, through November 06, 20235
Enhancing the effectiveness of the existing leniency program in India, on October 16, 2023, the CCI published draft CCI (Lesser Penalty) Regulations, 2023 ("Draft Leniency Regulations") for public consultation. The Draft Leniency Regulations aim to provide guidance on: (a) grant of 'lesser penalty plus'; (b) procedure for grant of 'lesser penalty' and 'lesser penalty plus'; (c) determining factors by the CCI; (d) content of the leniency application; (d) forfeiture of leniency application; (e) withdrawal of leniency application; (f) expansion of scope of leniency to cartel facilitators; (g) confidential treatment to the identity of the applicant.
- Draft Regulations on Determination of Turnover or Income on December 22, 2023, through January 25, 20246
Imparting parity to the computation of turnover and income for imposition of penalty under Section 27 of the Act and under the merger control regime, the CCI published the draft CCI (Determination of Turnover or Income) Regulations, 2023, for public consultation.
Under the proposed regulations, the turnover or income for enterprises covered under Section 27 of the Act, includes 'the total value of sales or revenue or receipts, by whatever name called, and other operating income', in accordance with the audited financial statements maintained by such enterprise and excludes indirect taxes, trade discounts, and intra-group sales. In the context of individuals covered under Sections 27 and 48 of the Act, the income would be calculated as gross total income in accordance with the tax returns prescribed under Income Tax Act, 1961, and rules made thereunder. If the tax returns are not available, the income would be the total income as certified by a Chartered Accountant and corroborated by an affidavit from the individual. Similarly, for an individual who is not obligated to file a tax return, the income would be the total income as certified by a Chartered Accountant and validated by an affidavit from such individual.
Conclusion
In conclusion, the regulatory landscape governing competition and anti-trust practices in India experienced a substantial development in 2023, marked by the introduction of numerous regulations. Despite this influx of regulatory measures, it is noteworthy that most of these regulations are currently pending implementation. The hold-up in bringing these regulations into effect could likely indicate a deliberate and meticulous approach by the legislature, reflecting its commitment to developing a robust and comprehensive framework for competition and anti-trust oversight in the country. The legislative intent appears to prioritize the creation of an effective and sustainable regulatory environment, ensuring that the regulatory regime aligns with the dynamic needs of the Indian market and serves as a bulwark against anti-competitive practices. As these regulations await implementation, the expectation is that they will play a pivotal role in fostering fair competition, safeguarding consumer interests and promoting a level playing field for businesses operating in the Indian marketplace.
Footnotes
1 S.O. 2228(E) date of Enforcement 18th day of May 2023
2 Consultation on draft 'The Competition Commission of India (Settlement) Regulations, 2023'
3 Consultation on draft 'The Competition Commission of India (Commitment) Regulations, 2023'
4 Consultation on draft 'The Competition Commission of India (Combinations) Regulations, 2023'
5 The Competition Commission of India (Lesser Penalty) Regulations, 2023
6 CCI (Determination of Turnover or Income) Regulations, 2023
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