COMPETITION (AMENDMENT) BILL

• The lower house of Parliament passed the Competition (Amendment) Bill, 2023 which seeks to amend the Competition Act, 2002.
• The Bill seeks to amend the Competition Act, 2002, to regulate mergers and acquisitions based on the value of transactions.
• The Act prohibits any person or enterprise from entering into a combination which may cause an appreciable adverse effect on competition.
• Deals with transaction value of more than Rs 2,000 crore will require CCI’s approval.
• The Bill proposes to reduce the timeline for the CCI to pass an order on such transactions from 210 days to 150 days.
• For classification of combinations, the Act defines control as control over the affairs or management by one or more enterprises over another enterprise or group.
• The Bill modifies the definition of control as the ability to exercise material influence over the management, affairs, or strategic commercial decisions.

Anti-competitive agreements: 

• The Bill expands the scope of entities that can be adjudged to be a part of anti-competitive agreements.
• Currently, enterprises or persons engaged in similar businesses can be held to be a part of anti-competitive agreements.
• The Bill expands this to also include enterprises or persons who are not engaged in similar businesses.
• The Bill provides a framework for settlement and commitment for faster resolution of investigations of anti-competitive agreements and abuse of dominant position.

Decriminalisation of certain offences:

• The Bill decriminalises certain offences under the Act by changing the nature of punishment from imposition of fine to civil penalties.
• These offences include failure to comply with orders of the CCI and directions of the Director General related to anti-competitive agreements and abuse of dominant position.

The Competition Act 2002

• The Competition Act of 2002 replaced the Monopolies and Restrictive Trade Practices Act, 1969.
• Before the Competition Act was enacted, there were no provisions in India regulating competition or prohibiting anti-competitive agreements.
• It established the Competition Commission of India (CCI).

The Competition Act is based on three pillars of competition law:

1. Competition Commission of India (CCI),
2. Competition Appellate Tribunal (COMPAT) and
3. the National Competition Policy (NCP).

Main provisions:

• The competition law prohibits any agreement between two or more enterprises or persons to maintain market competition and safeguard consumers’ interests within India.
• Such agreements can be vertical or horizontal.
• Vertical agreements are those agreements between enterprises at different stages of production,
• Horizontal agreements are those between enterprises at the same production level.
• If any enterprise abuses its dominant position, it will be punished.
• If any agreement between enterprises or individuals hurts competition, it will be considered a criminal offence.
• The Commission will decide on mergers and acquisitions only if it does not harm competition in the market.
• To secure transparency and avoid any misunderstanding between enterprises or individuals, an enterprise shall inform CCI regarding their dealings that are likely to affect competition in the market before taking such action or entering into such agreement.

Competition Commission of India ·        The Competition Commission of India is a body that deals with all matters under the act. ·        The Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act 2002 throughout India and preventing activities that hurt competition in India. Headquarters: New Delhi. It has six regional offices: Kolkata, Chennai, Mumbai, Delhi, Hyderabad and Bangalore. Composition and appointment: ·        The Commission is headed by a Chairperson and is made up of six members appointed by the Central Government. ·        The chairperson must be a person who has been a Judge of the Supreme Court or Chief Justice of the High Court, or an economist with 20 years of experience. ·        Members should possess qualifications prescribed under Competition Commission Rules, 2009.

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB