Introduction
On 03.04.2023, the Upper House of the Indian Parliament (Rajya Sabha) has passed the Competition (Amendment) Bill,2023 (Bill No. 185-C of 2022) which tends to propose significant amendments to the Competition Act,20021 in the two-decade-old antitrust law in India. The said Bill has received assent from the Hon'ble President of India on 11.04.2023 and is yet to be notified by the Ministry of Corporate Affairs for coming into effect.
Brief history of the Antitrust Laws in India
The Indian market is one of the largest markets in the world for both consumers and producers. For regulating the same, the Monopolies and Restrictive Trade Practices Act, 1969 was enacted with the objective to curtail the concentration of wealth in fewer hands and to limit monopolistic practices.
However, in the era of privatization, globalization and liberalization, there was a need for regulating competitive markets and abuse of dominant position to promote healthy competition in the Indian market. For addressing the need of the growing market, the Competition Act, 2002 was enacted and the Monopolies and Restrictive Trade Practices Act, 1969 was repealed.
The Competition Act, 2002 provides for the establishment of the Competition Commission of India2 for the enforcement and achieving the objective of the Competition Act, 2002.
Highlights of the major amendments under the Competition (Amendment) Act, 20233
- Introduction of the Deal Value threshold for merger &
acquisitions -(Amendment to Sections 5 and 6 of the Competition
Act):
As per the Amendment Act, the value of any transaction, in connection with acquisition, merger or amalgamation exceeding Rs.2000 Crores must be reported to the Competition Commission of India, if it has substantial business operations in India, as may be specified by regulations. Earlier, the combination deals would be needed to be reported to the Competition Commission of India based upon the value of the asset or turnover. The Amendment Act, 2023 also reduces the overall time limit for assessment of mergers and acquisitions by the Competition Commission of India from 210 days to 150 days. - Changes and broadening the scope of anti-competitive agreements
and cartel definition4:
The Amendment Act, 2023, has also broadened the scope of definition of the anti-competition agreements by replacing the "Exclusive supply agreement" with "Exclusive dealing agreement" with the intention to cover the selling side of the exclusive agreements and not just the purchase side of the exclusive agreement. The said provisions would also be applicable to an enterprise or association of enterprises or a person who is engaged in identical or similar trade. It shall be presumed to be part of the such agreement (anti-competitive agreement) if it participates or intends to participate in the furtherance of such agreement. The Amendment Act,2023 has broadened the definition of the cartel by including hubs and spoke in the definition of cartel i.e., those who do not directly participate in supply or production but participate indirectly at the horizontal levels such as trade associates or consultants or intermediaries. - Power to Competition Commission of India to appoint Director
General (Amendment to Section 16 of the Act):
It is pertinent to mention herein that the under the said Amendment Act 2023, the Competition Commission of India has the power to appoint the Director General for assisting in conducting an investigation/enquiry into contravention of the provisions of the Competition Act.
The Amendment Act, 2023 also provides for more investigating powers to the Director General for conducting the enquiry, including examination of any officer/agent of the party being investigated with the prior approval of the Competition Commission of India. The Amendment Act, 2023 also provides for power to the Competition Commission of India to call upon experts to provide expert opinions.5 - Introduction of Settlements and Commitments:
One of the most significant amendments under the said Amendment Act, 2023, is the introduction of offering settlements and undertaking commitments. Any concerned party against whom enquiry has been initiated for the contravention of the provisions of the Competition Act, 2002, after the receipt of the report of the Director General, can approach the Competition Commission of India for settlement, however, before the passing of the Final Order. The concerned party may also undertake commitments for modification after the enquiry has been initiated, however, before the issuance/submission of the report by the Director General. The same will ensure a speedy resolution of the enforcement proceedings through the introduction of settlement and compromise. - Issuance of Statement of objections and modifications:
The Amendment Act, 2023, empowers the Competition Commission of India to issue a statement of objections, if it is of the opinion that a combination has or is likely to have an adverse effect upon the competition in the market. The Commission may issue a statement of objections to the concerned party and direct them to explain within 45 days as to why the combination is to be allowed. The concerned party may approach the Commission with suitable modifications to eliminate the adverse effect of the combination to the market. - Limitation for entertaining of Complaints before the Competition Commission of India: No complaints or reference is to be made to the Competition Commission of India unless the same is filed within the period of three years from the date of cause of action, as per the Amendment Act, 2023.
- Pre-deposit for filing of an appeal before the Hon'ble
National Company Law Appellate Tribunal6:
Under the Amendment Act,2023, any person aggrieved by the order passed by the Competition Commission of India, may file an appeal within 60 days from the date of the receipt of the Order, however, with a predeposit of twenty-five percent of the amount imposed by the Competition Commission of India, as per directions of the Hon'ble National Company Law Appellate Tribunal. - Penalties to be calculated upon "global turnover derived
from all products and services":
Under the Amendment Act,2023, the penalties can be imposed upon the global turnover derived from products and services by the Competition Commission of India. The same may lead to higher penalties by the Competition Commission of India after an enquiry into the agreements or abuse of a dominant position. Earlier, the penalties were imposed based upon the relevant turnover, which was presumed to be domestic turnover. Under the Amendment Act, 2023, the Competition Commission of India has the power to recover legal costs and the same shall be credited to Consolidated Funds of India.
Conclusion
The Competition (Amendment) Act, 2023, has brought significant amendments to the Competition Act, 2002, in view of the dynamic changes in the fast-growing Indian market. Due to the increase in the scope of the digital market, the said Amendment Act, 2023 will be useful in increasing the scope of agreements to be reviewed by the Competition Commission of India, by introducing the Deal Value threshold limit and dilution of the threshold for control. Under the Amendment, Act,2023, the scope of penalty provisions has also been widened by introducing the "global turnover" concept, ensuring accountability and transparency.
The Amendment Act, 2023 provides more powers to the Competition Commission of India by providing authority to appoint the Director General for conducting enquiry or investigation relating to the breach of the provisions and power to recover the cost of legal fees and call upon experts for expert opinion. The introduction of provisions for settlement and compromise would facilitate speedy resolution of enforcement. The Amendment Act, 2023, aims at broadening the scope of the definition of cartel by including "intention to participate" and the same would increase the review of the agreements/entities by the Competition Commission of India. The Competition (Amendment) Act, 2023 aims to bring the antitrust law in India at par with changing Indian and global markets.
Footnotes
1 Act No. 12 of 2003
2 The Competition Commission of India has been established by the Central Government with effect from 14.10.2003
3 https://egazette.nic.in/WriteReadData/2023/245101.pdf29Amendment to Section 3 of Competition Act, 2002
4 Amendment to Section 35 of the Competition Act, 2002
5 Amendment to Section 53(B) of the Competition Act, 2002
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