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After the Lok Sabha gave its nod for the Competition (Amendment) Bill 2022, Parliament is now set to pass this legislation with the Bill now listed before the Rajya Sabha on Monday for its passage.
The Competition (Amendment) Bill 2022 is part of the Rajya Sabha’s legislative business for Monday, sources said, adding that Finance Minister Nirmala Sitharaman is expected to move the Bill as passed by Lok Sabha for consideration and passing of the Upper House.
The Competition (Amendment) Bill 2022, as passed by the Lok Sabha on Wednesday, has several new features including penalties indexed to ‘global turnover’ and the concept of “deal value threshold”.
Last Wednesday, the Lok Sabha passed the Bill after Sitharaman moved as many as 13 official amendments to it in the lower house.
The Bill was passed without any discussion amidst ruckus and sloganeering by the oppositions parties demanding Joint Parliamentary Committee probe on the Adani-Hindenburg report.
Competition (Amendment) Bill 2022 was originally introduced in Lok Sabha on August 5 last year and subsequently referred to the Parliamentary Standing Committee on Finance headed by Jayant Sinha for examination and report.
The House panel submitted its Report in December 2022, making a number of recommendations to revise the Bill. The Centre however rejected most of the recommendations.
The Competition (Amendment) Bill 2022 seeks to, among other things, broaden the scope of anti-competitive agreements; reduce the time limit for approval of mergers and acquisitions from the existing 210 days to 150 days; introduce deal value threshold as an additional criterion for notifying M&As to capture killer acquisitions in digital markets, which were hitherto falling below the notification criteria due to asset and revenue light business models of new age companies.
Global turnover
A significant amendment that has raised a lot of chatter among the legal fraternity and corporate circles is the move to index the penalties for competition law violations to consider ‘global turnover’ of the enterprises from ‘all the products and services’. The House Panel had not recommended the usage of ‘global turnover’.
The Centre’s proposal effectively seeks to nullify a Supreme Court ruling, which restricted the powers of CCI in levying penalties by holding that turnover for calculating penalties can only be taken as relevant turnover, i.e. revenues earned from infringing goods or services.
The proposal is likely to spell big trouble for multinational companies, which operate in multiple jurisdictions globally. However, the same is also being seen by experts as strengthening the powers of CCI to deter potential violators of antitrust law.
The Union Cabinet had on January 24 approved the proposal mooted by the Ministry of Corporate Affairs (MCA) to move official amendments in light of certain recommendations made by the House Panel.
Jayant Sinha headed Parliamentary Panel had made a slew of recommendations to the Bill, including periodic revision of the basic deal value threshold of ₹2,000 crore and its indexation to inflation; retention of the existing overall time limit of 210 days for CCI to assess M&A deals; and the controversial one of requiring the CCI to establish ‘effects’ of anti-competitive conduct of dominant undertakings.
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