The Competition (Amendment) Bill 2023

The Competition (Amendment) Bill 2023

News: Parliament has given its approval to the Competition Amendment Bill, 2023.

 It was introduced by the Ministry of Finance to amend the Competition Act, 2002 to bring it in line with the modern development of new technology and the digital market. In December 2022, the Bill was referred to the Parliamentary Standing Committee on Finance for further scrutiny.

What it seeks to do?
 It seeks to Amend Competition act, 2002
 Bring Competition law in line with new economic practices emerging in the country
 Incorporate best international practices
 it introduces a ‘leniency plus’ scheme to encourage entities facing cartel investigations to disclose information about other cartels

Decriminalization of Certain offences
 Decriminalizes certain offences in the act by changing the nature of punishment from imposition of fines to civil penalties.
 These offences include failure to comply with orders from CCI and Director general related to anticompetitive agreements and also abuse of dominant position.

Increases regulations of combinations based on ‘Value of Transaction’

Combination – It refers to mergers, acquisitions or amalgamation of enterprises

 Any transaction exceeding ₹2,000 crore would require CCIs approval, helping to bring acquisitions in digital markets (Big Tech firms) under it. For example, when facebook acquired whatsapp in 2014 it wasn’t within the ambit of CCI as per the previous version of Competition Act, 2002.
 Also, the bill prohibits entering into a combination that may cause an appreciable adverse effect on competition.

Reduction in Time Limit for approval of Combinations
 It proposes to expedite CCI clearance of mergers and acquisitions to within 150 days, down from a maximum of 210 days now.

It broadens the scope of Anti-competitive agreements

Anti-competitive agreement - Anti-competitive agreements are any agreement for goods or services which has an appreciable adverse effect on competition in India and is therefore prohibited.

 As per the new Bill, even the enterprises or persons not engaged in identical or similar businesses shall be presumed to be part of such agreements if they actively participate in such agreements. Earlier, such entities were exempted.

Framework for Settlement and Commitment process in anti-competitive practices
 The bill provides a framework for settlement and commitment for faster resolution of investigations by CCI. The bill limits the time period for filing information on it to CCI to three years. This will lead to quick litigation with reasonable penalties.

Imposition of Penalties
 CCI can impose a penalty of up to 10% of a company’s average turnover in the “relevant market.

“Turnover” will refer to the “global turnover derived from all the products and services by a person or an enterprise”

 Experts argue that this will lead to higher penalties for global multi-product companies. But, those in favor of amendments state that the penalties are based on ‘abuse of dominance’. Dominance of big companies per say is not bad!

Important terms used in Bill
Hub and Spoke Cartels - Entities not engaged in similar businesses but have influence. The amendment broadens the scope of ‘anti-competitive agreements’ to catch entities that facilitate cartelisation even if they are not engaged in identical trade practices.
Gun Jumping – It refers to the illegal practice of prematurely disclosing information or completing a transaction related to a merger or acquisition before the transaction has been fully approved by regulatory authorities.
New Age Market - New technology-enabled firms or new types of businesses, that are not under the preview of CCI

Way forward
 The Bill while giving more teeth to the CCI also seeks to facilitate ease of doing business.
 With the new changes, the Commission should be better able to manage certain aspects of the New Age market and make its operation more robust.
 Lastly, the CCI needs to be adequately staffed so that they can approve decisions in time bound manner to facilitate EODB. 

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