JANUARY
COMPETITION (AMENDMENT) BILL
The Competition Act aims to promote healthy competition in India. The main intention of the act is to avoid monopoly. Take Facebook for instance. Some economists are of the opinion that Facebook exhibits a monopoly. Meaning, it wants to rule the world of digital messaging. To achieve this, Facebook bought almost every competitor that entered its way. FB achieved this through mergers or acquisitions. FB acquired Instagram and WhatsApp, major competitors.
The competition act prevents such mergers and acquisitions. The act was legislated in 2002. In 2022, the Government of India proposed certain changes and additions to the act. The amendment is still pending and the GoI recently added some more changes along with those it intended to introduce in 2022.
Contents
- What additions were made in 2023?
- What changes were introduced in 2022?
What additions were made in 2023?
- Bill to be discussed during Budget Session of 2023
- Regulatory frameworks to be fine-tuned. To be brought in line with the digital world and the changes that occurred in the past two decades
- The scope of the settlement and commitment scheme is to be expanded
What changes were introduced in 2022?
- Deals with values more than Rs 2000 crores should be notified to CCI
- Merger approval should be done within 150 working days. This was 210 working days before
- CCI should have at least one judicial officer as its member
APRIL
COMPETITION (AMENDMENT) BILL 2022
The Competition (Amendment) Bill 2022 was recently passed by the Lok Sabha with the aim of promoting fair competition in the market and preventing anti-competitive practices. The bill was originally introduced in the lower house on August 5, 2022, and was referred to the Parliamentary Standing Committee on Finance, which was headed by Jayant Sinha. The panel made several recommendations that have been incorporated into the amended law passed by the lower house.
Contents
- Periodic Revision of Threshold and “Effects” of Anti-Competitive Conduct
- Impact of the New Provision on Global Turnover
- Definition of “Turnover” in Competition Law Landscape
- Time Limit for Approval of Mergers and Acquisitions
Periodic Revision of Threshold and “Effects” of Anti-Competitive Conduct
The Parliamentary panel recommended periodic revision of the basic deal value threshold, retention of the existing overall time limit, and mandating the Competition Commission of India (CCI) to establish the “effects” of anti-competitive conduct of dominant undertakings. The CCI is now authorised to penalise entities found engaging in anti-competitive behaviour based on their global turnover.
Previously, penalties for anti-competitive behaviour were based on the percentage of the entity’s “relevant” turnover, which typically means their annual domestic turnover.
Impact of the New Provision on Global Turnover
The provision to penalise entities based on their global turnover could have a significant impact on tech companies, as it could lead to unfair and punitive outcomes and discrimination between enterprises. In the European Union, the penalty for anti-competitive activity is limited to 10% of the overall annual turnover of the company.
Definition of “Turnover” in Competition Law Landscape
The definition of “turnover” is a controversial subject in the competition law landscape. In 2017, the Supreme Court fixed the principle of “relevant turnover” for determining penalties in competition law contraventions. The principle of “relevant turnover” was upheld in a case concerning the alleged contravention of the Competition Act, 2002 in the public procurement of Aluminium Phosphide tablets by the FCI.
Time Limit for Approval of Mergers and Acquisitions
The Competition (Amendment) Bill 2022 reduces the time limit for the approval of mergers and acquisitions to 150 days. This move is expected to reduce uncertainty and provide clarity to businesses engaged in mergers and acquisitions.