Keeping up with Competition - April 2024
A monthly newsletter by Axiom5
Welcome to the seventh issue of Keeping up with Competition, our monthly newsletter. We recap the events in the world of Indian competition law and policy in March 2024.
Detailed summaries of orders passed by the Competition Commission of India (CCI) can be accessed here.
Regulations on Commitment, Settlement, and Determination of Turnover notified
On 05 March 2024, the Government of India notified the CCI (Settlement) Regulations, 2024, the CCI (Commitment) Regulations, 2024, and the CCI (Determination of Turnover or Income) Regulations, 2024. These regulations streamline CCI’s enforcement measures and enable enterprises facing inquiries for alleged contravention of the Competition Act, 2002 (the Act) to avoid prolonged litigation. Parties will now have the option to settle or offer commitments during the inquiry. Commitments can include various measures such as modifying business practices, divesting certain assets, or implementing compliance programs. If the Director General has already completed its investigation, the entity under investigation can still use the settlement regime to negotiate a settlement for a 15% reduction in penalties.
These regulations aim to overhaul CCI’s enforcement record by reducing appeals and encouraging parties to commit to changing their practices. Notably, between 2011 and 2023, the CCI imposed INR 17,362.5 crore (appx. USD 2.078 billion) in fines of which it only realised INR 258.5 crore (appx. USD 30.9 million) (1.5%) due to pending appeals. While this scenario is likely to change with these regulations, several concerns remain about their efficacy due to unconventional clauses like broad undertakings and waivers to not litigate, deemed admission of facts admitted before other forums, and so on.
A detailed assessment of the settlement and commitment regulations, with our comments, is available here.
Jurisdictional thresholds and de minimis thresholds revised
On 07 March 2024, the Ministry of Corporate Affairs (MCA) published the revised jurisdictional and de minimis thresholds.
The de minimis exemption thresholds have now been revised to INR 450 crore (appx. USD 53.86 million) for assets and INR 1250 crore (appx. USD 1.49 billion) for turnover. The jurisdictional thresholds in Section 5 of the Act have also been increased by 150% for both assets and turnover. A chart depicting the revised thresholds is available here.
Draft Rules on Green Channel, De Minimis, & Exempted Combinations released
On 11 March 2024, the MCA introduced three sets of draft rules for public consultation. The draft CCI (Green Channel) Rules propose to simplify the process for ‘green channel’ notifications for automatic approval of combinations if the parties do not have any horizontal overlaps or vertical/complementary links. The draft CCI (De Minimis) Rules aim to harmonise the thresholds for small target exemption, but in a departure from current practice, leave out combinations involving specific assets or business units of an enterprise from the scope of exemption. Meanwhile, the draft CCI (Exempted Combinations) Rules re-introduces a list of all such transactions that won't require CCI’s prior approval, given their inability to raise any competition concerns. These exemptions would replace the CCI’s existing set of exemptions that were available to non-problematic transactions.
Our detailed assessment of these draft rules is available here.
CDCL Report and the draft Digital Competition Act released
The MCA invited public comments on the Report of the Committee on Digital Competition Law (CDCL Report) and the accompanying draft Digital Competition Act. The CDCL Report highlights the need for a distinct ex-ante framework tailored to address competition concerns in digital markets. The deadline to submit comments, which was until 15 April 2024, has been extended until 15 May 2024 due to requests from various stakeholders.
Merger control - a snapshot
The CCI approved 6 combinations and published 7 detailed orders in March (the summaries of these orders are available here. Further, the CCI received 12 new notices, of which 2 notices were declared invalid.
Behavioural cases
In two separate cases, Rekha Oberoi v. MGF Development Ltd. & Ors. and Manohar Rawat v. Laerdal Medical Private Limited & Ors., the CCI issued closure orders. The CCI dismissed the first case, noting that it was in the nature of a contractual dispute between the parties; and the second case, noting that there was no evidence to substantiate the allegations.
Notably, the CCI directed an investigation against Google’s pricing policies on Play Store in Re: People Interactive India Private Limited.
Lastly, the Telangana High Court ordered an interim stay on CCI’s proceedings in GMR Hyderabad International Airport Limited v. Competition Commission of India. The High Court noted that the CCI had the inherent power to close proceedings in matters where the parties to the proceedings arrive at an amicable settlement among themselves.