Competition Law and Amendments: Making markets fair and ensuring economic growth

Introduction

Competition Law, as the name suggests refers to the framework of laws meant to regulate the economic markets of a country in the context of economic competition between enterprises and other stakeholders along with preventing various other practices having an adversely appreciable effect on competition.

In India, the Competition law framework was initially based on the Monopolies and Restrictive Trade Practices Act, 1969 which acted as a market regulator for preventing the concentration of economic power in the hands of a few individuals or enterprises which may be detrimental to public interest and prohibit any practice which would potentially lead to monopolistic tendencies in the markets. However, post the 1991 economic reforms, there was a need to set a robust framework of competition laws for regulating various market practices of anti – competitive agreements, abuse of dominant position by enterprises and combinations in forms of mergers, amalgamations and acquisitions which could undermine the free flow of competition in the market. The act has also setup the Competition Commission of India which is a regulatory watchdog for enforcement of provision of the act.

Competition Amendment Act, 2023

The Competition Amendment Act, 2023 is the latest amendment in the field of Competition Law which has brought significant changes in the Competition Act 2002 in order to increase the effectiveness of competition law across the country along with introducing various new provisions such as:

• Control and Regulation of Mergers

The Competition Amendment Act 2023 has brought in a series of merger control regulations, one of the most significant being the setting up of a ‘deal value threshold’. Under the provisions of the deal value threshold, all the transactions comprising of mergers, acquisitions or amalgamations which cross the 2,000 Cr. INR mark and comprise of entities with substantial business operations in India would be required to obtain compulsory approval from the regulatory body i.e., Competition Commission of India.

Moreover, it has also been clarified by the amendment that the buyer needs to have a substantial presence in India instead of the purchaser’s presence. The time period within which the Competition Commission is required to assess the merger and acquisition has also been reduced to 150 days from the erstwhile 210 days. The Act has also proposed to increase the time duration for CCI to form prima facie objections to 30 calendar days. However, the outer time limit for overall review by the Commission is still restricted to 150 days, giving the commission a reasonable time for handling complex merger cases in detail.

• Changes in significant definitions

Another important change brought in by the Competition Amendmenmt Act 2023 is change in significant definitions of various phenomena under the act. For instance, the definition of ‘control’ has been amended by the act which has brought into its scope the concept of ‘material influence’. According to this change, the ability to exert significant control over the affairs, management and decisions of an entity is one of the benchmarks for determining control over an entity.

• Alteration of powers of the Directorate General

The Amendment has brought in significant changes in powers of the DG which include an increase in investigation powers for conducting enquiries, examinations or other proceedings of various officers/agents of the parties under investigation only through the prior approval of the Competition Commission of India. Moreover, both the Director General and the Commission are empowered to take expert opinions of various industry specialists for the purpose of conducting investigations.

• Settlements and Commitments

Introduction of settlements and commitments is one of the phenomenal features of the 2023 amendment which has introduced the option for concerned parties to seek settlements before passing the final order by the Commission in event of being investigated for contravention of any provision of the 2002 Act.

The concerned parties also have an option to undertake commitments for seeking modifications once the enquiry has been undertaken by the commission and the report has not been submitted to the Director General. These features have been added keeping in mind the speedier resolutions of enforcements via the introduction of settlements and commitments. The Amendment Act has also empowered the Commission to issue statements of objections in case there is a consensus upon the fact that a particular combination is likely to have an appreciable adverse impact on the competition in the economy. Additionally, the commission is also empowered to issue statements of objections to the enterprise directing them to issue explanations within a period of 45 days as to why the enterprise should be allowed to enter into combinations with other enterprises.

Conclusion

The Amendment of 2023 in the Competition Act has brought numerous significant changes in the competition law framework of the economy. Through an increased scope of governing various combinations and mergers, the amendment is supposed to prohibit those agreements which will not be beneficial for the economy.

Secondly, various agreements having appreciably adverse impacts upon the competition in the economy including deal threshold limits will also enable the Commission to bring those activities into control which may have a detrimental impact upon the free flow of competition in the economy. In order to regulate the overall economic trends of competition in the country, various other powers have also been bestowed upon the Commission by authorising the Director General to conduct various investigations, carry out enquiries and engage subject matter specialists and experts in order to broaden the paradigm of Indian competition law and bring it at par with the global trends.

FAQs