By Shivalik Pal
Intern, Vidhi Parivartan
The Competition Law (Amendment) Bill, 2023 was approved by Lok Sabha on March 29, 2023. This bill seeks to amend the Competition Law (Amendment) Bill, 2022 further in accordance with a suggestion made by the Standing Committee on Finance.
The Competition Act of 2002 was passed in order to foster and maintain market competition, safeguard consumer interests, and guarantee market players’ freedom of trade. It set up the Competition Commission of India (CCI) to get rid of business practises that hurt rivalries in the market. Reviewing the suggestions made by the Competition Law Review Committee led to the introduction of the Competition (Amendment) Bill, 2023. The legislation aims to widen the definition of anti-competitive agreements, provide for the value of transactions to be taken into account when evaluating combinations, shorten the approval period for combinations, and provide a framework for settlement and commitment to help avoid litigation.
While the proposed amendment states that CCI may impose fines up to 10% of the enterprise’s overall global turnover .Prior to this new amendment, the penalty for such a violation was up to 10% of total “relevant turnover,” that is, the enterprise’s turnover related to the products and services affected by the infringement as opposed to the enterprise’s whole worldwide turnover.
The new legislation includes hybrid anti-competitive agreements in the definition of cartelization. As a result, it allows the CCI to treat active cartel participants and facilitators equally. A penalty may be imposed on someone if they “intend to participate” in a cartel, according to the proposed change, which also adds elements of “mens rea” to cartel prosecution.
The removal of the immunity granted to attorney-client privileges under the Evidence Act of 1872 is another significant change in the new measure that might have profound consequences. The proposed modifications include shortening the window for evaluating combinations, enlarging the definition of anti-competitive agreements, and altering the sanctions.
According to the new bill, assuming the party being purchased has significant business operations in India, mergers and acquisitions with a value greater than Rs. 2,000 crores must be registered to the Competition Commission of India (CCI).
Additionally, the law shortens the 210-day assessment period for combinations to 150 days. In order to allow third parties to seek compensation in cases of abuse of power and unfair business practises (apart from horizontal agreements), the amendment has recommended the adoption of a Settlement and Commitments framework.
Other modifications include expanding the definition of anti-competitive agreements to encompass hub-and-spoke cartels, vendors, and sales of products and services, as well as altering the criteria CCI uses to assess whether an agreement will significantly harm competition.
Additionally, fines will be calculated based on revenue or worldwide turnover, and both the business and those in control are responsible for violations. The measure also establishes a new mechanism for settlements, which enables entities to suggest agreements to resolve alleged violations. Moreover, President Droupadi Murmu has given her assent to the bill following which it has affected into a law. Further these significant changes made to the law will be implemented by the Ministry.