JOIN USParliament clears amendments to competition law
Parliament on Monday cleared the amendments to the competition law that will pave the way for promoting the ease of doing business as well as enhance the framework to deter entities from indulging in unfair business practices.
Reduction of CCI's assessment time frame for combinations to 150 days from the date of filing the notice, introduction of a settlement and commitments framework and imposition of penalties on erring entities based on their global turnover are among the key features of the Competition (Amendment) Bill.
The bill has been approved by Parliament nearly eight months after its introduction in Lok Sabha, which gave its nod on March 29. The bill was also referred to the Parliamentary Standing Committee on Finance, which tabled its report in Parliament on December 13 last year.
Rajya Sabha approved the bill on Monday after Lok Sabha cleared the same on March 29. Amid din, both the Houses passed the bill without any discussion. Corporate Affairs and Finance Minister Nirmala Sitharaman moved the bill in the Upper House on Monday.
To ensure time-bound clearance of combinations, CCI will have to complete its assessment within 150 days instead of existing 210 days from the date of filing of combination notice by the parties. Also, prima facie opinion has to be formed within 30 days from the receipt of the notice, otherwise the particular deal will be deemed as approved.
In CCI parlance, combinations refer to mergers and acquisitions.
Besides, a size of transaction test will be introduced in terms of 'value of transaction' as a criteria for notifying combinations. All deal values involving acquisitions, mergers and amalgamations exceeding Rs 2,000 crore having target enterprise in India should be notified to CCI for approval before their consummation, according to the corporate affairs ministry.
The ministry, which is implementing the law, a green channel route will be introduced for certain combinations which shall be eligible for deemed approval in a trust-based framework.
A leniency plus framework will be put in place to incentivise the parties in an ongoing cartel investigation to disclose information regarding other existing cartels.
In addition, there will be a settlement and commitments framework in cases of abuse of dominance and anti-competitive agreements (except for horizontal agreements). In case of settlement, compensation can be claimed by the third parties, if aggrieved, as per the ministry.
While the scope of the law will be widened to include agreements other than vertical and horizontal agreements which are anti-competitive in nature, there will also be a three-year limitation period for filing information before CCI to ensure that only genuine cases that adversely affect competition are considered by the regulator.
Once the bill comes into force, CCI will have powers to impose penalties on entities based on their global turnover instead of the current practice of considering only relevant market turnover.
One of the amendments is that the power to appoint Director General (DG) will be vested with CCI instead of the central government to bring in more operational and administrative efficiency in the functioning of the regulator.
However, such appointment will be after the prior approval of the central government as a check and balance and to ensure independence of the working of the office of DG, the ministry said in a note.
Keeping in view the concerns of the Parliamentary panel, the definition of agent in the bill is being modified through official amendments. Thus, only persons employed as legal advisors by persons under investigation may be called for examination in course of investigation by the DG, it added.
CCI may also issue guidance notes on matters, including manner of calculation of penalty that may be imposed for contravention of the provisions of the Act, for greater transparency and certainty in its enforcement practices.
It will be the first time since the enforcement of the Competition Act in 2009 that amendment will be made to the Act.
The Act was brought in 2002 and subsequently, it underwent amendments in 2007 and 2009. In May 2009, the anti-trust provisions of the law came into force and two years later in May 2011, CCI started screening mergers and acquisitions.