(Proposed) Amendments to the Indian Competition Act
Swati Sharma
2nd June 2020
The Indian Competition Act, 2002 (‘Act’) is a relatively nascent legislation compared to its counterparts in Europe, the United States, and Australia, and the Competition Commission of India (‘CCI’) completed its first decade of enforcement in May 2019. The present Act was last amended in 2007 and there have been pressing demands from all stakeholders to carry amendments so as to enable it to deal with the changes in the market and the business landscape. The Competition Law Review Committee (‘CLRC’) was set up by the Ministry of Corporate Affairs in October 2018. The CLRC submitted its report in July 2019,¹ proposing 50 major substantial and procedural amendments. 45 of these found their way into the Competition (Amendment) Bill, 2020 (‘Bill’) proposed in February 2020. The major amendments that the Bill seeks to make in the Act are as follows:
Amendments to the definition
Relevant product market: The current Act only requires the parties to depict demand-side substitutability in both antitrust and merger control filings; the Bill seeks to bring the supply-side substitutability into the definition pertaining to the relevant product market. This would also bring the Act in line with the EU treaty that recognizes similar practice in its notice on the definition of relevant market.
Cartel: The Bill introduces a hub and spoke cartel and buyer cartel into the definition of a cartel to ease the process of decision making by the CCI and bring in the additional clarity for the stakeholders.
Amendments to the anti-trust provision
Protection to IPR in abuse of dominance cases: The protection offered to the intellectual property holders for the participants of a cartel has been extended to the abuse of dominance cases bringing in much-needed parity between cartel and dominance.
Settlement and commitments: The Bill introduces the provision of settlements by the investigated party by submitting an application in this regard to the Director General (‘DG’) after he presents his report but prior to a final order from the CCI. Similar provisions exist in mature competition law jurisdictions and have been much demand in the Indian legal circles.
Penalty: The Bill proposes to introduce a penalty scheme giving recognition to the relevant turnover principles as laid down by the Apex Court² and clarifying the manner of determination of the percentage of the penalty and application of aggravating and mitigating factors.
Amendments to the organizational structure
Under the current Act the CCI is vested with functions relating to adjudicatory, adjudicatory, advisory, investigative, quasi-legislative, and advocacy. The Bill seeks to constitute a governing body with the representatives of the CCI and secretaries of the Ministries of Corporate Affairs, Finance, and Economic Affairs, with additional members nominated by the Central Government. This body would be tasked with the formulation of a National Competition Law Policy.
Amendment to the Combination laws
The Bill envisages a significant overhaul in the combination regulations with shortened timelines of 150 rather than 210 days and an additional 30 days of clock stop, or a new provision allowing formulation of a prima facie opinion in 30 days to see if the proposed combination would have any appreciable adverse effects.
Jurisdictional threshold: The Bill further allows the CCI in consultation with the Central Government to propose sector-specific thresholds based on deal value or size of transaction or any other criteria in transactions that do not breach the current threshold but may require an assessment by the CCI of the potential impact in the relevant market such as in the case of digital markets. The CCI had been advocating for this change for long which the Bill redresses.³ It should, however, exercise this power with abundant caution.
Streamlining the standstill requirement: The Bill proposes to permit the CCI in consultation with the Central Government to prescribe criterions for exempting certain combinations to notify or comply with the standstill obligations.
Amendments to the appeals
All final orders are appealable: The Bill corrects the judicial anomaly that sought that only the final orders of the Commission are appealable by making all such orders appealable.
Compounding of offences: The Bill envisages compounding of offences meaning a situation whereby an offender is discharged of all liability for committing any offence, in lieu of a monetary payment being made to the authority/person empowered to compound the offence.
Missed opportunities in the Bill
The Bill has been heavily criticized for not addressing the problem of lack of a proper appellate authority after the dissolution of the Competition Law Appellate Tribunal in 2017 to pave way for the National Company Law Appellate Tribunal. The latter, however, lacks specialization to look into competition law cases and is already much pressed with appeals arising from company law and insolvency matters leading to delay in decisions pertaining to competition. It was expected that the CLRC report would alleviate this by forming a separate bench to hear competition appeals in the present tribunal.
Conclusion
The Bill is a welcome step in ushering the CCI into the dawn of new market structure with a much-enabled legislation to govern with. The amendments are laudatory and would go a long way in bringing ease and parity into competition law proceeding as well as merger control cases. Public comments have been sought, and it is expected that the Bill should be passed by the Parliament of India without many changes once the monsoon session begins in July/August 2020, depending upon the havoc caused by COVID-19.
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¹ The Report of the Competition Law Review Committee; dated July 2019.
² Excel Crop. Care Limited vs. Competition Commission of India and Ors; 2017(6) SCALE241.
³ Competition law: CCI chief D K Sikri seeks changes in uniform threshold norms for M&As, The Economic Times, 11th May 2020.
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The views expressed herein are those of the author.
