Free and fair competition is one of the piers of a structured market economy.
Fostering effectual competition stimulates organizations to spotlight on
efficiency and ameliorates customer welfare by proffering considerable option of
higher-quality products and amenities at lower costs.
It also boosts magnificent
transparency and accountability in government-business correlations and decision
making, helps truncate corruption, lobbying and rent seeking. Additionally, it
provides opportunities for chiefly based participation in the economy and for
apportioning in the benefits of economic growth. Certainly, competition is not
an end unto itself, rather a medium to attain economic efficiency and welfare
objectives. Hence, it serves as a driving force in the global economy.
With a view to streamline the Competition Act, 2002 and associated regulations,
the Ministry of Corporate Affairs (MCA) came out with the proposed emendations
to the Competition Act, 2002. MCA structured an independent- headstrong
committee aptly called, the Competition Law Review Committee (CLRC) for
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 provisions of the Act.
After rumination of the CLRC Report, the MCA came up with the draft Competition (Amendment) 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.
Remarkable changes propounded in the Bill
An evaluation demonstrates that out of the 50 suggestions recommended by the CLRC,
nearby 45 have been embraced by the MCA and encompassed in the Bill.
Some of the
most notable amendments that have been submitted comprehend:
Reform in the regulatory structure of the CCI:
The CCI has been
wearing many hats since its outset as it had been entrusted with advisory,
adjudicatory, quasi-legislate, investigative and advocacy functions. Commending
this, the CLRC suggested a transfigure in the regulatory arrangement to make it
more effective and robust to deal with the newfangled impediments.
Embracing the recommendation, the Bill provides for the configuration of a
Governing body which would comprise:
- the Chairperson of the CCI,
- its six whole time members,
- the Secretary of the Department of Economic Affairs,
- Ministry of Finance or his nominee,
- Secretary of the Ministry of Corporate Affairs and his nominee, and
- four other part-time members to be nominated by the Central Government.
They will be conferred with the authority to make rules, adopt measures to
generate awareness and frame a National Competition Policy. Additionally, the
Governing Board will exercise general superintendence, direction and management
of the matters of the CCI. The CCI will now only carry out the adjudicatory
Furthermore, the Bill also allowscreation of panels with a quorum of three
members. Provided the colossal nature of functions to be exercised by the
Governing Board, its autonomy is paramount. However, the Bill is silent on the
mode of nomination of these members. The selection committee set up under
Section 9 of the Act, which frames recommendations for the post of Chairperson
and the other members, will not frame any such recommendation for the part-time
members. In the interest of maintaining transparency and for shielding
independence of the Governing Board, the Selection Committee should be tasked
with commending part time members as well.
Statutory provision to solicit public opinions:
In a very propitious
move, the Bill build ups a responsibility on the Governing Board to invite
public comments on all rules. With a restrictedanomaly of exigency in public
interests, and regulations relating to in-house working of the CCI, this
provision will bring essential transparency and democratic rule making to the
Issuing the penalty guidance:
The Bill necessitates the CCI to exude
the much- awaited penalty direction. The penalty guidance is anticipated to
provide recognition to the pertinent turnover propositions and lay down the
means of ascertainment of the percentage of the penalty and application of
mitigating and aggravating factors. The CCI has the authority to foist
prohibitive penalties and in the truancy of any direction the way in which this
penalty was being enforced was enshrouded with obscurities. The guidance may lay
out the much-needed lucidity, although the Bill falls short of
foisting obligatory time limit within which the penalty directions will be
Streamlining process for regulation of combination:
The Bill makes
number of changes to the modulation of combinations,significant of these
include, decreasing the time-limit for deemed approval from 210 days to 150
days, make substantive changes.
Amendments to streamline the procedure for enquiry into combinations:
Currently the sections of the Act leave a lot of glaring gaps in
the enquiry process. In spite of this, the CCI through notifications,
regulations and practice has been ushering inquests into combinations. The Bill
aspiresto fill some of these gaps, providing statutory paramount to the
practices followed by the CCI. This will also decrease the likelihood of appeals
against combination orders which have formerly been on account of inadequacy of
the statutory provisions.
New thresholds for merger control:
The Bill authorize the Central
Government and CCI to expound new thresholds for merger divulgence by setting
forth a proviso to Section 5. The pristine thresholds, which can be apprised in
public interest, will now warrant the CCI to draw up sector specific thresholds
based on size of transaction or deal value or any other criterion. The amendment
turns up to be in furtherance of the CLRC's suggestion to seize transactions in
the digital market.
Provided the dynamic nature of the digital markets, implementation of this power
involvesapplication of prudence. This may out-turn in enlarging compliance costs
for the businesses and effect the ease of doing business. It is imperative that
the development of objective thresholds or criterion is preceded by a detailed
legal and economic assessment of the prerequisite of such thresholds, the basis
of the thresholds and the value of the thresholds.
Augmentation of definition of a cartel:
The Bill enlarges the
definition of a cartel to encompass a buyer's cartel as well. This entails that
even in cases of buyer's cartel, the supposition of substantial unfavourable
effect on competition will apply to buyer's cartel as well.
Granting protection to holders of intellectual property rights:
line with the commendations of the CLRC, the Bill, strives to broaden protection
proffered to holders of IPR. The exception for the IPR holders is presently
limited to anti-competitive agreements. Hence, this brings the much-needed
equivalence between the treatment of anti-competitive agreements and abuse of
The system of settlement and commitments:
In a very momentous
development, the Bill presents a structure for settlements and commitments
empowering the CCI to close the investigation on the basis of an application for
the settlement or commitment advanced by the investigated party.
The amendment bill seeks to address the loopholes, weaknesses and procedural
issues in the Competition Act, 2002and are pivoted on lubricating the ease of
doing business and minimizing the load of the CCI.
Owing to the ongoing COVID-19 pandemic, many people across India are calibrating
to thenew actuality of online work, e-education, e-commerce, etc whereby
important educational, professional and personal connections are being
facilitated by the internet. To its credit, the proposed amendments strive in
proliferating the CCI's capability to peruse the combinations (mergers and
acquisitions) in technology markets.
Also, apposite to the digital economy, the amendment tries to broaden the
definition of what constitutes a cartel. Additionally, the amendment
attempts to deepen India's nodal competition authority's (the Competition
Commission of India) capability to inquest anti-competitive arrangements. This
is significantas the digital economies are multi-sided markets which are prone
to rapid network effects.
It is noteworthy that the proposed amendments would benefit the middle
rangestartups businesses, the startups in the digital economy and public at
Ergo, the Bill is a positive step in the direction of an efficient CCI 2.0.
Written By: Riya Gulati - Paralegal at Law Offices of Caro Kinsella &
Youth Ambassador for the ONE Campaign, Ireland.