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Future-proofing India’s Competition Law: Parliament passes the Competition (Amendment) Bill, 2023
Note: We’ve updated this article to reflect that the Rajya Sabha, India’s upper house of Parliament has also passed the Amendment Bill on 3 April, following the Lok Sabha, which passed the Bill on 29 March 2023.
After lengthy deliberations over 4 years, the Indian Parliament passed the Competition (Amendment) Bill, 2023 (Amendment Bill) on 3 April 2023. A number of the provisions in the Amendment Bill will only be operationalised once the CCI frames the relevant implementing guidelines and regulations. The Amendment Bill strengthens the hand of India’s market regulator, the Competition Commission of India (CCI) considerably. The amendments are aimed at “future proofing” the Competition Act, 2002 (Competition Act), to deal with a rapidly growing and dynamic economy.
The Amendment Bill introduces a series of significant changes which we have summarised and discussed in our note here. We’ve also compared the Amendment Bill’s text against the original Competition Act in a table here.
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Perhaps the three most noteworthy changes are:
Settlements and commitments mechanism: Enterprises under scrutiny can now either commit to change their business practices, or settle proceedings against them. This is a win-win-win solution that the Competition Act sorely lacked. The mechanism offers three distinct advantages - truncated inquiry timelines, discussion-based resolution of antitrust concerns and limiting protracted litigation.
Closer scrutiny of M&A: Transactions which may seem financially insignificant, but could have a material impact on competitive conditions in select markets could now require merger notification. Prompted by the concern around “killer acquisitions” going undetected, the Amendment Bill empowers the CCI to review transactions based on their value, in addition to the size of the acquirers & target.
Greater enforcement powers: The Amendment Bill takes a carefully calibrated “carrot and stick” approach by increasing incentives for companies to blow the whistle on cartels through a new “leniency plus” regime and simultaneously enhances the CCI’s power to impose penalties by extending penalties to “global turnover derived from all the products and services by a person or an enterprise”, rather than the more limited “relevant” turnover..
The amendments also introduce other “fixes”. For example, it expressly allows the CCI to review hub-and-spoke cartels and agreements that may not be strictly characterised as “vertical” or “horizontal”. Organisationally, it merges the office of the Director General - the CCI’s independent, fact-finding arm - into its fold. While this might seem like a mere administrative reshuffle, it could also weaken the institutional separation between the CCI’s investigation and adjudication arms, potentially impacting due process in proceedings.
For all the new ground covered, the amendments have left some important needs unaddressed. For instance, it does not include any requirement to appoint a judicially trained member to the CCI. This is despite protracted litigation on this issue, which was discussed by both the Competition Law Review Committee and the Parliamentary Standing Committee. Further, the Amendment Bill does not introduce an “effects” test in abuse of dominance cases, contrary to the specific recommendation made by the Parliamentary Standing Committee and a ruling by the National Company Law Appellate Tribunal, the appellate authority under the Competition Act.1