Analysis Of Draft Competition Bill ,2020

Free and fair competition is one of the piers of a structured market economy. Fostering effectual competition stimulates organizations to spotlight on efficiency and ameliorated s customers welfare by profeering considerable option of higher -quality products and amenities at Lowe costs.

It also boosts magnificent transparency and accountability in government -business correlation and decision making ,helps truncate corruption ,lobbying and rent seeking . Additionally ,it provides opportunities for chiefly based participation in the economic growth . Certainly , competition is not an end up to itself ,rather a medium to attain economic efficiency and welfare objective. Hence ,it serves as driving force in the global economy.

With a view to streamline the competition Act,2002 and associated regulations,thw Ministry of Corporate Affairs came out with the proposed emendations to the Competition Act ,2002.MCA structured an independent – headstrong  committee aptly called,the Competition Law Review Committee for analyzing the Act and accompanying laws and regulations .In a report presented to the MCA in August 2019,the CLRC provided numerous exhortations for amendments to the substantive and procedural provision of the act.

After rumination of the CLRC Report ,the MCA came up with the draft Competition Bill. This bill was issued in the public domain on 20th February 2020 for general comments .The initial glance of the Bill divulges that it entreats to bring about the much -needed lucidity to certain provisions, intensify the transparency in the authorities and revamp the efficiency and robustness of the system.

The bill was issued on 20th February 2020 for general views of the public.The Bill’s initial glimpse shows that it calls for the much -needed clarity of some provisions and streamlining the reliability and robustness of the system

Significant of this development

The review of the draft suggests that MCA has approved about 45 suggestions out of 50 proposed by the CLRC and this is a moment of pride for CLRC.Some of the moment of pride for CLRC.Some of the most important changes introduce include

1.Reform in the Regulatory Structure of CCI

The CCI has been performing a lot of functions since it’s formation as it has been tasked with regulatory ,adjudicative ,quasi-legislative ,and advocacy roles.With this in mind ,the CLRC recommended a transfigure in the legislative system to make it more efficient and stable to tackle the modern obstacles.

On the basis of the recommendation,the draft provides for the formation of a governing body to be comprised of the chairperson of CCI ,the six full -time members ,the Secretary of the Department of Economic Affairs , Ministry of Finance or his nominee ,the Secretary of MCA and his nominee ,the Secretary of MCA and his nominee and four other part-time members to be appointed by the central government.This body will be  bestowed with the authority to lay down rules ,to implement awareness -raising initiatives,and frame a national competition policy .The CCI from now onwards will perform only the function of adjudication and the board will exercise control on the affairs of the CCI.

Besides ,the bill also calls for the formation of a committee comprising of three members .The extend and nature of functions to be performed by the board requires autonomy in its affairs.

2.Issuing the Penalty Guidance

The Penalty has been desired for a long time and this bill requires the CCI to issue directions on the Penalty.The penalty guidelines are required to include identification of applicable restructuring plans and set out the criteria to assess the amount of the penalty and go incorporate relief and aggravating factors .The CCI has the power to enact restrictive penalties .Earlier ,there was room for doubt on the manner in which the penalty was imposed due to the absence of any guidelines .The guidelines will offer much -needed clarification in the matter of penalty. However ,there is nowhere  mentioned in the bill regarding the time period under which the guidelines for penalty should be issued by the CCI.

3.Statutory provision to invite public comments

The CLRC has proposed a very positive change in the draft .The draft places a duty on the board to obtain public views on all the regulations done by it .Tjis clause would definitely bring Accountability and democratic governance to the system .However ,the bill also has the limited exception of urgency in matters related to the public interest and internal operations of the CCI.But this exception doesn’t destroy the essence of the law provision.

4.Expansion of the Definition of Cartel

The bill broadband the concept of a Cartel go cover the buyers Cartel as well .The objective of expanding the definition  was to include the presumption of appreciable adverse impact on Competition to the buyers Cartel as well.

Originally ,the concept of Cartel included just a group of producers ,sellers ,distributors ,traders ,or service providers but not buyers .It has long been known under antitrust law that a Cartel may exist in either side of the market I.e. on the seller’s side or the buyer’s side.

Moreover ,the buyer’s Cartel had already been included under Section 3(3) of the Act,sinve Section 3(3)of the Act covered the fixing of selling prices and purchasing prices.However ,this amendment makes it crystal clear that the groups of buyers are now included in section 3(3) of the Act.

5.All final Orders made Appealable

Section 53A of the Act permits appeals to the National Company Law Appellate Tribunal of the orders of CCI ,subject to the provisions mentioned in the Act .This clause was rendered for clarification in a major antitrust law case before the Supreme Court I.e. Competition Commission of India v.Steel Authority of India Ltd.And And .In this case,the question beforw the Supreme Court of India was to determine whether the prima facie warrant of inquiry introduced pursuant to section action 26(1)can be challenged under Section 53A or not.

The court following the literal interpretation rule held that the appeals would lie solely on orders passed pursuant to certain section explicitly me times in Section 53A .The rationale behind such a decision was that the Legislature has not mentioned Action 26(1)in the list of Appealable orders under section Section 53A.

6.New Thresholds for Merger Control

The draft allows the CCL and Central Government to establish specific requirements for registration of mergers by adding a clause in Secyion5 of the Acts .The new requirements that can be notified in the public interest would also allow the CCI to establish sector -specific threshold based on deal value or the scale of transaction or some other criterion.The amendment tends to follow the proposal of the CLRC to monitor transactions in the digital market.

7.Consistent Inadequacies in the Act

The Draft Competition Bill 2020 has to a large extent addressed all the major issues and fallacies of the Competition Act,2002.However ,there are still some loopholes in the Act which the CLRC should have provided the solution in their draft.A few important things which should have been included by the CLRC are

1.A statutory requirement allowing a separate bench of National Companies Law Appellate Tribunal to hear antitrust complaints will significantly help to speed up the disposal of cases of Competition Law.This would help in achieving the objective of competition law in an efficient way.

2.Apparently ,the Act has some major gaps in the inquiry process adopter by The CCI .in addition ,the authority if the CCI to issue such directions has been questioned on numerous occasions.The bill tried to fix these issues but could not provide an effective solution with regard to section 26.The clause in the Bill still leaves several gaps and is vague in nature .There is a need for a more lucid structure to solve the issue.

In Mahindra Electricity Mobility Ltd

V Competition Commission Of I said.The Delhi High Court ruled that all final judgment of the CCI need to be made in the presence of a member of the judiciary..


The amendment bill aims to fix the gaps ,shortcomings ,and administration problems ,in the Competition Act,2002which is targeted at lubricating the ease of doing business and reducing the load on the CCI.Mpreevwr ,the draft aims to strengthen the Competition Commission of India to inquest anti -cinpetitive agreement.Tjis is very important as the emerging economies are multi -sided markets that are vulnerable to rapid network effects.




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