The Competition Commission of India (CCI) was established in March 2009 by the Government of India to implement and enforce the Competition Act, 2002. As a quasi-judicial body, it provides opinions to statutory authorities and handles various cases. CCI consists of a Chairperson and six members appointed by the Central Government. It primarily addresses three aspects of anti-competitive practices in the market – Anti-competitive agreements, abuse of dominance, and combinations. Its objectives include eliminating practices that adversely affect competition, promoting and sustaining competition, safeguarding consumer interests, and ensuring freedom of trade in Indian markets.
Change in Market Dynamics and Need for Amending the Competition Act, 2002
The pace of technological progress and the rising significance of factors other than price have changed market dynamics rapidly, necessitating amendments to the Act. For instance, according to section 5 of the Act, parties involved in mergers or acquisitions only needed to notify the CCI based on asset or turnover. This provision overlooked instances of gun-jumping, where combining parties close a transaction before approval, and hub-and-spoke cartels, where vertically related players impose horizontal restrictions on suppliers or retailers.
Key Provisions in the Proposed Amendments
The proposed Bill to amend the Competition Act includes the introduction of a deal value threshold mandating that any transaction exceeding a deal value of ₹2,000 crores with either party having significant business operations in India be notified to the Commission.
To speed up the clearance of combinations, the amendment reduces the existing 210-day approval window to 150 working days, plus a 30-day extension period if necessary. This makes pre-filing consultations with the Commission more important.
Penalties for gun-jumping have been revised from 1% of the asset or turnover to 1% of the deal value. Further, the amendment proposes to exempt open market purchases and stock market transactions from the requirement to notify the Commission in advance, while broadening the scope of ‘anti-competitive agreements’ to ensnare entities that facilitate cartelisation.
Introducing Settlements and Commitments for Vertical Agreements and Abuse of Dominance
The amendment introduces a settlement and commitment framework for cases related to vertical agreements and abuse of dominance. If such cases arise, parties may apply for a commitment before the Director General (DG) submits the report. The Commission’s decision on commitment or settlement will not be appealable after all stakeholders in the case have been heard.
Additional Changes
The amendment allows the Commission to give additional leniency to an applicant who can expose another cartel in unrelated markets, provided the information enables the Commission to form a prima facie opinion about the cartel’s existence.
The appointment of a Director General will now be done by the Commission rather than the Central Government, giving it greater control. Guidelines regarding penalties will be developed by the Commission. In addition, to have an appeal heard by the National Company Law Tribunal (NCLT) against the Commission’s order, the party must deposit 25% of the penalty amount.
Implications and Expectations
These changes are designed to help the Commission manage aspects of the New Age market more effectively and robustly. However, the proposed changes are heavily dependent on regulations subsequently notified by the Commission. Furthermore, the government needs to acknowledge that market dynamics are constantly evolving, hence laws need regular updating.
Competition Commission of India: Role and Purpose
CCI seeks to create a robust competitive environment through proactive engagement with all stakeholders – consumers, the industry, government, and international jurisdictions. It aims to eliminate practices having adverse effects on competition, promote and sustain competition, protect consumers’ interests, and ensure freedom of trade in Indian markets. It accomplishes these objectives by addressing anti-competitive agreements, the abuse of dominance, and combinations in the market.
