Competition Amendment Act, 2023 [UPSC Notes]

Bringing a few major changes to the existing Competition Act, Parliament passed the Competition Amendment Act. Know what changes are made to the competition law in India and the powers of the CCI in this article. This topic is important for the IAS exam polity and economy sections.

Competition (Amendment) Act, 2023

Lok Sabha passed Competition Amendment Bill in March 2023. The bill became an Act in April 2023 when it received presidential assent.

The legislation makes the following changes to the Competition Act, 2002. (The Competition Act aims to protect the interests of customers from anti-competitive behaviour, encourage and maintain market competition, defend consumer rights, and ensure the freedom of trade of other market players.)

• The Amendment aims to regulate mergers and acquisitions based on the value of transactions and the approval of CCI will be required for a transaction value of more than Rs 2,000 crore.
  • It brings transactions valued at Rs. 2000 crore or more under the purview of the Competition Commission of India (CCI), even if the traditional asset-turnover criteria are not met.
• The amendment act replaces the words ‘offense’ and ‘punishable with fine’ with  ‘contravention’ and ‘liable to a penalty’, respectively which relates to certain competition law violations.
• The only criminal provision under the act is for non-compliance with certain orders, which provides CCI with the power to approach the courts and initiate criminal proceedings.
• The amendment also expands the scope of entities that can be adjudged as part of anti-competitive agreements to include enterprises or persons not engaged in similar business.
• These amendments also contain a new provision that allows compounding of ‘offences’ that are not ‘punishable’ with mandatory imprisonment (Section 59A).
• Some experts opine that due to the broad wordings used in Section 59A, compounding may also be available to competition law violations resulting in civil penalties.
• The act also provides a framework for settlement and commitment for faster resolution of investigations of anti-competitive agreements and abuse of dominant position. 
• The act reduces the time limit for CCI to pass an order on an application for approval of combinations from 210 days to 150 days.
• Introduction of the concept of ‘global turnover’ of the company, from ‘all the products and services’ as the benchmark for imposing penalties by the CCI for antitrust violations.
• Introduction of leniency plus model
  • Under this model, if an applicant reveals the existence of other cartels and the information helps the Commission establish a preliminary view of the cartel’s existence, then the Commission can grant the applicant an additional waiver from penalties.
• ‘Material influence’ to be used to determine “control” in the target company for CCI approval.
  • The legislation has provided a clear definition of “control” and clarified how compensation claims provisions apply to settlement orders from the CCI.
• It introduces the intention to actively participate in assessing hub-and-spoke cartels.
  • The amendment extends the range of “anti-competitive agreements” to encompass organizations that aid in forming cartels, regardless of whether their business practices are identical.

Possible impacts:

• The introduction of the concept of ‘global turnover’ will substantially increase the number of penalties imposed for any anti-competitive conduct by big companies.
• It might affect the investment sentiments in the economy.

Competition Amendment Act, 2023 [UPSC Notes]:- Download PDF Here