In an unusual move, Jayant Sinha, Chairperson of the Parliamentary Standing Committee on Finance proposes to move Competition (Amendment) Bill, 2023 for amending the Competition Act, 2002.
The Bill is shown on the website of Lok Sabha under the head ‘List of Businesses’ for Private Members’ Legislative Business of March 17 for introduction.
This move comes at a time when there is wide anticipation that government will move amendments to the Competition (amendment) Bill 2022 in the ongoing second leg of the budget session.
The 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. Official amendments were circulated by the government on February 7 this year.
Global turnover
In one of the major official amendments, the Centre proposed stiff penalties for competition law violation by providing that while calculating monetary penalties, the Competition Commission of India (CCI) will 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 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 Ministry of Corporate Affairs (MCA) to move official amendments in light of certain recommendations made by the House Panel.
Effects-based approach
As per sources privy to developments, the government has rejected the proposal of the Panel to incorporate ‘effects’-based approach in the Competition Act for examining the cases of abuse of dominance.
Presently, the law does not require competition watchdog to establish ‘actual effects’ of the anti-competitive conduct of dominant undertakings. Introduction of effects-based doctrine was a key demand of big tech industry and the representatives of the sector deposed before the Parliamentary panel seeking its incorporation into the law.
The Competition (amendment) Bill 2022, which proposes many substantive, procedural and institutional changes, is the first time when the government is going in for comprehensive changes to the Competition law since its coming into force in 2009.
Amendments for regulatory certainty
The Competition (Amendment) Bill 2022 seeks to, among other things, broaden the scope of anti-competitive agreements; reduce time limit for approval of mergers and acquisitions from the existing 210 days to 150 days; introduce deal value threshold as an additional criteria 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; provide limitation period of three years for filing cases relating to anti-competitive agreements and abuse of dominant position; introduce settlement and commitment framework; deepen scope of inter-regulatory consultations; incentivize parties in an ongoing cartel investigations in terms of lesser penalty to disclose information regarding other cartels (leniency plus).
Jayant Sinha headed Parliamentary Panel had made a slew of recommendations to the Bill including periodic revision of basic deal value threshold of ₹2,000 crore and its indexation to inflation; retention of 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.