Sansad TV Perspective: Competition (Amendment) Bill, 2022

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: ‘Competition (Amendment) Bill, 2022’.

Anchor: Teena Jha

Guests:

1. Sanjay Chadda, Senior Advocate, Supreme Court of India
2. Deepshikha Sikarwar,  Senior Editor, The Economic Times
3. Dr. Amar Patnaik, Member, Parliamentary Standing Committee on Finance
4. Dhanendra Kumar, Former Chairman, CCI
5. Dr. S. P. Sharma, Chief Economist & Director of Research, PHDCCI

Context: The Lok Sabha and the Rajya Sabha passed the Competition (Amendment) Bill, 2022.

Highlights of the discussion:

• Introduction
• Salient Features of the Bill
• Significance of the Bill
• Associated Concerns and Way Ahead

Introduction:

• The Competition (Amendment) Bill 2023 has been cleared by both houses of Parliament.
• It was a key legislative agenda of the government for the budget session of Parliament as it seeks to revamp the competition law and bring it in sync with the new economic practices and issues.
• The new law will empower the Competition Commission of India (CCI), giving it the ability to penalize entities found engaging in anti-competitive behaviour based on their global turnover.
• This is the fourth time the competition law has been amended. It was amended in the years 2007, 2009, 2014, and 2023.

For details, read here: Competition (Amendment) Bill, 2022

Salient features of the Bill:

• The bill tries to streamline the Competition Act 2002 with new practices and issues in the country,
• It decriminalizes certain offences by changing the nature of offences from the imposition of fines to civil penalties.
• It has suggested measures for CCI and Director General related to the anti-competitive agreement and abuse of dominant position.
• The key highlight of the bill is that it empowers the CCI to impose stiff penalties based on the global turnover of an entity that indulges in anti-competitive practices.
• The transactions of more than Rs. 2000 crore will require the approval of CCI. The time limit for these approvals has been reduced from 210 days to 150 days.
• The penalty for the abuse of a dominant position has been made to be 10 percent of the global turnover of the entity or three times the company profits for the last three preceding years.
  • It should be noted that earlier the penalty was related to only domestic turnover.
• The bill also expands the scope of entities that can be judged to be a part of anti-competitive agreements.
• Moreover, it has also introduced a green channel route for certain combinations that shall be eligible for deemed approval in a trust-based framework upon the filing of a combination notice.
• There is a provision for ‘Settlement and Commitment’ to ease the legal procedure.
  • The penalties of approximately Rs. 17000 crores have been imposed, but the recovery has been below 1 percent.
  • With these provisions, companies can enter into commitments like that available in SEBI and taxation.
• Other small changes like a reference by the Director General for evidence have also been made.
• There is a provision where CCI will make a prima-facie view within 30 calendar days. In case of failure, it would be deemed to be clear.

Significance of the Bill:

• The amendment was long overdue considering the changed scenario of the market and business.
• It is the first substantive amendment in competition law after the enforcement of competition law in 2002.
• It is a comprehensive amendment that the government of India has undertaken and has given due consideration to digital commerce.
• It has given more value to trust. Moreover, the concept of leniency has been added for promoting ease of doing business.
• The amendment will impact both the multinational companies in India and Indian firms with a global presence.
• It will also take into account the e-commerce and digital economy.
• It has incorporated best practices from across the globe.
• Many companies are becoming dominant and abusing their power.
• The recommendations of the Competition Law Review Committee have been incorporated into the bill.
• It will save time and resources for both CCI and the companies.
• The bill has identified ten anti-competitive practices of digital markets like bundling of service, predatory pricing, deep discounting, exclusive tie-ups, and search and ranking preferences.
• In case of merger or acquisition, the target company will be given priority and charge.
• The overall emphasis is given to speed and ease of doing business.

Industries’ response:

• The industry has welcomed the bill. The major players have accepted the two-pronged approach of ease of doing business and a strong regulatory framework.
• It is accepted as it has the potential to put India on the list of most attractive destinations for Foreign Direct Investment.
• However, some provisions might be challenged once the bill becomes an act and the rules are laid out by the CCI.

Associated concerns:

• It is argued that the reduction in the time limit from 210 to 150 days would put pressure on CCI.
• One of the major concerns is about the clause of global turnover, which might be opposed by many big tech companies.
• The CCI suffers from vacancies.
• Many CCI orders are appealed at NCLT and even go up to the Supreme Court level. These concerns should be addressed.

Way Ahead:

• It is important to focus on the capacity of CCI staff for the smooth implementation of the bill (Act after Presidential Assent).
• The rules should be made in a manner that reduces the number of litigations and appeals.

Read all the previous Sansad TV Perspective articles in the link.

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