The proposed amendments to the Competition Act, 2002 were released by the Ministry of Corporate Affairs (MCA). For the purpose of analysing the Act and related laws and regulations, the MCA established an independent, powerful committee known as the Competition Law Review Committee (CLRC). The CLRC recommended various revisions to the Act’s substantive and procedural aspects in a report delivered to the MCA in August 2019.
According to an analysis, 45 of the CLRC’s 50 recommendations have been accepted by the MCA and are included in the Bill.
Since its inception, the CCI has been tasked with performing consultative, adjudicatory, quasi-legislative, investigative, and advocacy responsibilities. The CLRC applauded this and advised a change in the regulatory structure to make it more effective and strong in dealing with the new constraints. Embracing the recommendation, the Bill provides for the configuration of a Governing body which would comprise:
I) The CCI’s Chairperson.
II) Its six full-time members.
III) The Secretary of the Department of Economic Affairs.
IV) The Ministry of Finance or his candidate.
V) The Ministry of Corporate Affairs and his nomination.
VI) Four other part-time members to be nominated by the Central Government.
STATUTORY PROVISIONS TO SOLICIT PUBLIC OPINION:
The Bill establishes an obligation for the Governing Board to request public comment on all rules, which is a very wise approach. This provision will bring important openness and democratic rule-making to the set-up, with a constrained anomaly of emergency in public interests and regulations relating to CCI in-house working.
The CCI is required by the Bill to issue the long-awaited penalty instruction. The penalty advice is expected to recognise the relevant turnover propositions and spell forth the methods for calculating the penalty percentage and applying mitigating and aggravating variables. The CCI has the ability to impose prohibitive penalties, and the manner in which this punishment was implemented in the case of truancy in either direction was cloaked in mystery. Although the recommendations may provide much-needed clarity, the Bill does not impose an obligatory time limit for the issuing of penalty directions.
PROCESS OF REGULATIONS
The bill makes a number of modifications to the modulation of combinations, the most notable of which is a reduction in the time-limit for presumed approval from 210 to 150 days, as well as other substantive changes.
Currently, the Act’s clauses leave a number of gaps in the investigation process. In spite of this, the CCI has been combining inquests through announcements, regulations, and practise. The Bill aims to close some of these gaps by establishing statutory precedent for the CCI’s actions. This would also reduce the number of appeals against combination orders that were previously made due to inadequacy of the statutory requirements.
NEW TRESHOLD FOR MERGER CONTROL
By adding a proviso to Section 5, the Bill allows the Central Government and CCI to define additional merger disclosure levels. The CCI will now be able to set sector-specific thresholds based on transaction size, deal value, or any other criterion based on the pristine thresholds, which can be disclosed in the public interest. The change appears to be in support of the CLRC’s proposal to confiscate digital market transactions. Because of the dynamic nature of the digital marketplaces, exercising this authority necessitates caution. This may result in increased compliance expenses for organisations, as well as a reduction in the convenience of doing business. The formation of objective thresholds or criteria must be preceded by a thorough legal and economic analysis of the prerequisites for such thresholds, the foundation for the thresholds, and the thresholds’ value.
ARGUMENT DEFINATION OF CARTEL
The bill broadens the definition of a cartel to include a buyer’s cartel. This means that even in the situation of a buyer’s cartel, the premise of a significant unfavourable effect on competition will apply.
GRANTING PROTECTION TO HOLDER IPR
The Bill aims to broaden the protection provided to IPR holders, in keeping with the CLRC’s recommendations. Anti-competitive agreements are currently the only exception for IPR holders. As a result, the much-needed parity between the treatment of anti-competitive agreements and abuse of dominant position has been achieved.
SYSTEM OF SETTLEMENT AND COMMITMENT
The Bill introduces a system for settlements and commitments, allowing the CCI to end an investigation based on an application for a settlement or commitment advanced by the examined party. This is a significant move.
The amendment bill aims to eliminate loopholes, vulnerabilities, and procedural issues in the Competition Act of 2002, with a focus on making doing business easier and reducing the CCI’s workload.
Due to the ongoing COVID-19 epidemic, many individuals in India are adjusting to the new reality of online work, e-education, e-commerce, and other activities in which the internet facilitates essential educational, professional, and personal connections. To their credit, the proposed modifications aim to expand the CCI’s capacity to investigate technological market combinations (mergers and acquisitions).
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