Updated: May 18
THE COMPETITION (AMENDMENT) ACT, 2023.
The President of India gave assent to the Competition (Amendment) Bill, 2023, on April 11, 2023, to become the Competition (Amendment) Act, 2023 (“Amendment Act”). This Amendment Act proposes significant amendments to the Competition Act of 2002. The Competition Act of 2002 ("Act") was passed, during the Atal Bihari Vajpayee government which replaced the Monopolies and Restrictive Trade Practices Act, of 1969 to protect consumer interests from anti-competitive behavior, promote and sustain market competition, protect consumer interests, and guarantee the freedom of trade of other market participants. Before the Amendment Act, the Competition (Amendment) Act of 2007 was passed by the Parliament. The need for this Act arose in light of Liberalisation, Privatization, and Globalization in 1991 to encourage private enterprises. The objective of the Act was to create a level playing field for all domestic and international businesses. If there is competition in the market, consumers will receive high-quality goods at reasonable prices. In addition, it will provide producers with incentives to innovate and improve efficiency and productivity. This will ultimately contribute to more equitable and effective economic growth.
The Key Amended provisions of the Amendment Act are below:
1. More clarity is provided in definitions like enterprise, relevant product market, Group, Control, etc.
2. The concept of Hub and Spoke Cartel has been introduced by broadening the scope of vertical anti-competitive agreements and the inclusion of a party facilitating an anti-competitive horizontal agreement under such agreements.
3. Reduction of the time limit for approval of combinations from 210 (Two Hundred and Ten) days to 150 (One Hundred and Fifty) days and for forming a prima facie opinion by the Commission within twenty days (from the existing 30 days) for expeditious approval of combinations.
4. Provisions for the value of transaction which expands the definition of combinations to include transactions with a deal value above Rs 2,000 crore.
5. Change in the definition of control from decisive influence to material influence while assessing mergers & acquisitions.
6. Limitation period of three years for filing information on anti-competitive agreements and abuse of dominant position before the Commission.
7. Introduction of Settlement and Commitment framework to reduce prolonged litigations.
8. Incentivizing parties in an ongoing cartel investigation in terms of lesser penalties to disclose information regarding other cartels.
9. Substitution of a provision that provides for a penalty up to rupees one crore or imprisonment up to three years or both in case of contravention of any order of the National Company Law Appellate Tribunal with provision for contempt.
10. Under Section 5 on Combinations under the Act, the Amendment Act has proposed a new deal value threshold which states that any transaction in connection with the acquisition of any control, shares, voting rights, or assets of an enterprise, merger, or amalgamation, the deal value of which exceeds INR 2,000 crore and if such enterprise (i.e., the one acquired/merged/ amalgamated) has 'substantial business operations in India' will require approval from the Competition Commission of India.
On preliminary review of the Amendment Act, it appears that introducing the deal value threshold and changes in the definition of control will expand the scope of merger control and necessitate notification, despite the absence of specific regulations.
Stakeholders have welcomed the considerable changes in the Act. However, provisions regarding the inclusion of global turnover go against existing law and may place an excessive burden on stakeholders.
To avoid liability, mergers, and acquisitions in India will need to undergo a more in-depth analysis.