The Indian Parliament passed the Competition Amendment Bill, 2023 (“Bill”) on April 3, 2023 and the Bill received the President’s assent and came into force on April 11, 2023 (“Amendment Act”). The Act intends to streamline legal requirements and incorporate the Competition Commission of India’s (“CCI”) learnings over the last 14 years.
The Amendment Act outlines extensive changes to the Competition Act, of 2002, to simplify the legislative rules. Merger control, reduced approval deadlines, a lower threshold of ‘control,’ conditional waiver of standstill obligations for open market purchase, enhanced penalties, antitrust enforcement, settlements and commitments system, leniency, and scope of anti-competitive agreement extended are among the revisions.
Only transactions that exceed specific asset or turnover limits require permission from the CCI under the current structure. The Amendment Act includes a new “deal value”, that is INR 2000 crores, for determining whether a transaction requires CCI approval. The term “value of transaction” has also been defined in the Amendment Act to include any valuable consideration, whether direct or indirect, or deferred, for any acquisition, merger, or amalgamation.
The Amendment Act reduced the statutory deadline for the CCI to form a preliminary opinion on a merger notification from 30 working days to 30 calendar days. Furthermore, the overall schedule is to be shortened from 210 to 150 days.
In addition to de facto and de jure control, the Amendment Act codifies ‘material influence’, in any manner, as a standard for control. Such manner may include special rights, status, vested power, expertise, or commercial relationships.
The Amendment Act exempts the acquirer from the standstill obligations and permits the purchase of securities on a stock exchange, provided that a merger notification is filed promptly with the CCI and the acquirer does not exercise any rights/interest/receive dividends in such shares/securities.
The Amendment Act raises the maximum penalty for false representations or omissions in merger notifications to INR 5 crores. Parties who fail to furnish the CCI with the necessary information for determining whether a non-notified transaction requires CCI clearance may face penalties.
The Amendment Act allows a corporation facing a CCI investigation for abuse of a dominant position and anti-competitive agreements to apply to the CCI (Commitment) to settle their case or give obligations concerning the alleged violation. In the event of a settlement,’ the injured party may bring a compensation claim against the contravening firm, once the Director General of Investigation provides their report but prior to the CCI’s declaring their final decision. An enterprise that is a lenient applicant in one cartel and assists in the discovery of a new/separate cartel will obtain a penalty reduction for both, the existing and newly discovered cartels.
The Amendment Act, 2023 seeks to streamline legislative requirements and incorporate the Competition Commission of India’s learnings. The Amendment Act makes significant changes to the competition laws of India to align them with worldwide best practices and new technology. The Amendment Act has received mixed reactions, but the reforms it brings are expected to speed up mergers and acquisitions, reduce uncertainty for parties involved, facilitate faster resolution of enforcement proceedings, broaden the range of penalties under competition law, and support “ease of doing business” and anti-competitive initiatives for Indian entities entering global markets.
