Why in news: The Indian Competition Act was ordained in 2002, but it succeeded in effect almost seven years later.
The Competition Commission primarily pursues three issues of anti-competitive practices in the market: 1. Anti-competitive agreements
2. Abuse of dominance and 3. combinations.
History of amendments
As the dynamics of the market fluctuate quickly due to specialized developments, artificial intelligence, and the increasing importance of factors other than price, amendments became necessary to sustain and promote market competition.
Therefore, a review committee was established in 2019 which proposed several major amendments. The long-awaited Bill to amend the Competition Act, 2002, was finally tabled in the Lok Sabha recently.
Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002, it was duly constituted in March 2009.
The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of Raghavan committee.
Competition Commission of India aims to establish a robust competitive environment.Through proactive engagement with all stakeholders, including consumers, industry, government and international jurisdictions.
By being a knowledge intensive organization with high competence level.
Through professionalism, transparency, resolve and wisdom in enforcement.
What are amendments in this bill?
- One of the key amendments that the competition bill attempts to alter is that of Section 5 of the Competition Act, 2002 about the mergers and acquisition of enterprises.
The decision has been taken as several digital mergers and acquisitions with low transaction values are often not notified to the CCI. Addressing this concern in order to promote healthy competition, the government has set the transaction threshold at Rs 2,000 crore. The bill seeks, “to provide that if the value of any transaction in connection with the acquisition of any control, shares, voting rights, etc., exceeds Rs 2,000 crore, it would require filing a notice of combination before the Commission and to empower the Central Government to exempt certain transactions from the requirement to file combination notice under the Act.”
2. The proposed bill also wants to curtail the overall time limit of assessment of combinations to a period of 150 days from 210 days.
The assessment period can be extended to a maximum period of 30 days if the parties are required to file either additional information or to remove defects in the notice.
3. Another key amendment proposed is for Section 48 of the Competition Act in terms of penalties in case the enterprises engage in cartelization. According to Section 48 (A), and Section 48 (B), any enterprise against whom any inquiry is initiated may submit a written application to the CCI for the payment of fee against the alleged contraventions.
4. Notably, the bill also seeks to amend Section 41 of the act giving power to the Director General to investigate cases pertaining to contraventions. As per the proposed bill, contraventions are liable for penalty. The penalty shall not be more than 10 per cent of the average income or the last three preceding financial years and with certain other provisions.
What is gun-jumping?
Parties should not go ahead with a combination prior to its approval. If the combining parties close a notified transaction before the approval, or have consummated a reportable transaction without bringing it to the Commission’s knowledge, it is seen as gun-jumping. The penalty for gun-jumping was a total of 1% of the asset or turnover. This is now proposed to be 1% of the deal value
What is the Competition Act, 2002?
The Competition Act was passed in 2002 and has been amended by the Competition (Amendment) Act, 2007. It follows the philosophy of modern competition laws.The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse effect on competition within India.
In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established.
Government replaced Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.
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