The Centre on Friday notified several provisions of the Competition (amendment) Act 2023, which received Presidential assent on April 11. However, the Centre has withheld the notification of the provisions of the amended law which empowered the fair trade regulator to impose hefty penalties on erring enterprises for their anti-competitive conduct.
The Competition (amendment) Act 2023 had empowered CCI to impose penalties on “global turnover” basis derived from all products and services. However, this has not been notified in the latest MCA move.
Relief to Big Techs
This has provided immediate respite to global Big Techs including Google and Amazon who are facing anti- trust cases against them.
The MCA has now specified May 18 as the date on which several notified provisions of the amendment law will come into effect.
Unnati Agrawal, Partner, IndusLaw, said that one of the major substantive provisions which has come into effect include, hub and spoke cartels, which cover hybrid anti-competitive agreements and facilitators/ non-participants who had ‘intended to participate’ in the cartel.
This will have a significant impact for industry associations or intermediaries such as dealers/ suppliers in various industries and we can expect a slew of information being filed with the CCI against such entities for their role in facilitating a cartel, who can now be penalised, she added.
The penalty for false statements/ omissions has been increased from ₹ 1 crore to 5 crore to strengthen CCI’s power in ensuring companies furnish true, full and adequate disclosures in their submissions. Further, the process of filing appeals against CCI’s orders before the appellate tribunal has become more onerous as erring companies will have to necessarily pay 25 percent of the penalty amount in order for the appeal to be admitted for hearing.
This may lead to an unintended consequences, especially for smaller companies as they may indulge in dilatory tactics by approaching various high courts in administrative proceedings instead of approaching the appellate tribunal on merits of the case, according to Agrawal.
Other provisions
However, some of the other major substantive provisions, such as, deal value threshold, settlement and commitment mechanism, leniency plus regime and penalty based on global turnover are yet to be made effective, as they require corresponding regulations to be issued by the CCI.
The Centre has now operationalised a provision that would empower CCI to invite public consultation on regulations prior to their issuance coming into effect, stakeholder feedback will play a pivotal role in ensuring a smooth transition of these major amendments that are yet to come into force.
The MCA has also now notified the provision requiring the CCI to engage with stakeholders while drafting regulations, to ensure transparency.