Lok Sabha Approves the Competition (Amendment) Bill, 2022

The Lok Sabha, the lower house of the Indian Parliament, has made a significant stride in the realm of competition law by approving the Competition (Amendment) Bill, 2022. This bill, which aims to amend the existing Competition Act of 2002, was introduced during the Monsoon Session of the Parliament last year and subsequently referred to the Parliamentary Standing Committee on Finance for detailed scrutiny. Chaired by the esteemed Jayant Sinha, the committee engaged in comprehensive discussions and sought inputs from various stakeholders to ensure a balanced and effective legislation.

Streamlining Transactions and Enhancing Regulatory Measures

The primary objective of the Competition (Amendment) Bill, 2022 is to introduce regulatory measures for mergers and acquisitions based on transaction value. Under the proposed amendments, transactions exceeding ₹2,000 crore will require the approval of the Competition Commission of India (CCI). This move aims to bring transparency and accountability to larger-scale transactions, safeguarding the interests of the economy and consumers alike.

In addition to the transaction value threshold, the bill seeks to reduce the timeline for the CCI to issue orders on such transactions from 210 days to 150 days. This streamlining of the process ensures that the regulatory body can efficiently evaluate and make decisions on these transactions, contributing to a more agile and responsive regulatory environment.

Expanding the Scope of Anti-Competitive Agreements

An important aspect of the bill involves expanding the scope of entities considered involved in anti-competitive agreements. Currently, only enterprises or persons operating in similar fields can be held accountable for such agreements.

However, the proposed amendments aim to extend this accountability to businesses and individuals operating outside similar fields, thereby broadening the applicability of anti-competitive regulations. This expansion ensures a fair and competitive market by discouraging collusion and unfair practices across various sectors.

Framework for Faster Resolution and Decriminalization

The Competition (Amendment) Bill, 2022 also introduces a framework for faster resolution of investigations through settlement and commitment mechanisms. This provision allows for swifter corrective action against anti-competitive behaviour, sparing compliant companies from extensive investigations and reducing the burden on the resources of the CCI. By incentivizing companies to rectify their behaviour promptly, this mechanism encourages fair competition and ensures that market dynamics remain healthy.

Furthermore, the bill decriminalises certain offences under the Competition Act, replacing fines with civil penalties. Offences such as non-compliance with CCI orders and abuse of dominant market positions fall under this purview. This shift towards civil penalties emphasises corrective measures rather than punitive measures, fostering a more collaborative and solution-oriented approach to addressing competition law concerns.

Commendations and Benefits

Unnati Agrawal, a legal expert from IndusLaw, commends the bill, noting that it aligns the Competition Act, 2002 with the evolving economic and business landscape in India. The amendments provide the CCI with more authority and flexibility to address competition law concerns promptly and effectively.

Particularly noteworthy is the introduction of deal value thresholds, which extends the CCI’s scrutiny to transactions involving “asset lite” and “low revenue” companies that were previously not notifiable. This broadened scope ensures that competition law remains relevant and adaptable in the face of changing market dynamics.

Agrawal further highlights the benefits of the settlements and commitments mechanism, emphasising its ability to swiftly correct anti-competitive behaviour. By sparing compliant companies from prolonged investigations, this mechanism reduces uncertainty and allows businesses to focus on their core activities.

Additionally, it helps alleviate the burden on the CCI’s resources, enabling the regulatory body to concentrate on cases that require deeper scrutiny and intervention.

Implementation and Pending Provisions

While the Competition (Amendment) Bill, 2022 has been approved by the Lok Sabha, its implementation is contingent upon the issuance of regulations by the CCI. These regulations will outline the methodology for computing deal value and determining substantial business operations in India, among other aspects. Timely issuance of these regulations is crucial to provide regulatory certainty and facilitate a smooth transition to the new framework.

Notably, certain provisions in the bill, such as computing penalties based on global turnover, remain highly contentious and await endorsement from the Rajya Sabha, the upper house of Parliament. The inclusion of these provisions during the last-minute amendment of the 2022 Bill could potentially lead to higher penalties for global multi-product companies. The final decision on these provisions will significantly impact the overall effectiveness and scope of the amendments.

Conclusion

The Lok Sabha’s approval of the Competition (Amendment) Bill, 2022 signifies a significant step forward in enhancing competition law in India. The proposed amendments introduce regulatory measures based on transaction value, streamline the CCI’s decision-making process, and expand the scope of anti-competitive regulations. Additionally, the bill introduces mechanisms for faster resolution of investigations and decriminalises certain offences, promoting a fair and dynamic market environment.

The bill’s approval acknowledges the need to align competition law with the evolving economic landscape and protect the interests of businesses and consumers. However, the successful implementation of these amendments relies on the issuance of necessary regulations and the endorsement of contentious provisions by the Rajya Sabha.

As India progresses towards a more competitive and thriving market, the Competition (Amendment) Bill, 2022 plays a crucial role in ensuring a level playing field and promoting fair competition for the benefit of all stakeholders.