A top industry body has suggested changes in the proposed Competition Amendment Bill, which aims to evaluate mergers and acquisitions, particularly of the digital entities, according to people aware of the matter.
The Federation of Indian Chambers of Commerce & Industry (FICCI) wants the new penalty rates to be slashed, flagged concern that a key provision allows the government to decide cartelization based on presumptions and cautioned that a one-size-fits-all approach for mergers and acquisitions may not serve the purpose, according to a note it has written to the authorities.
The bill, introduced in the Lok Sabha in the last monsoon session, aims to regulate mergers and acquisitions based on the value of transactions, and says that deals with transaction value of more than ₹2,000 crore will require the Competition Commission of India’s approval. For faster approvals, the proposed law also says the timeline for CCI to pass an order on such transactions will be reduced to 150 days from 210 days.
The note, reviewed by HT, shows that the industry body has objected to an addition of proviso to Section 3(3) of the act that says “provided further that an enterprise or association of enterprises or a person or association of persons though not engaged in identical or similar trade shall also be presumed to be part of the agreement under this sub-section if it actively participates in the furtherance of such agreement”.
{{/usCountry}}The note, reviewed by HT, shows that the industry body has objected to an addition of proviso to Section 3(3) of the act that says “provided further that an enterprise or association of enterprises or a person or association of persons though not engaged in identical or similar trade shall also be presumed to be part of the agreement under this sub-section if it actively participates in the furtherance of such agreement”.
{{/usCountry}}FICCI maintained that such inference based on a presumption should not be applicable. It added that the term “actively participates” is not well-defined and can lead to misuse of law.
The note also objected to the transaction value threshold of ₹2,000 crore and noted that applying the same principal for all industries would make it unreasonably burdensome. FICCI also said that market sizes vary for different industries and a “one-size-fits-all” transaction value threshold is not appropriate for all industries.
Suggesting that the threshold be raised to ₹5,000 crore, the industry body said that if small transactions were to be inquired into, the process will have an adverse impact on the ease of doing business.
While the bill introduces knowledge in the field of technology as an additional qualification for CCI members, FICCI has argued for the predominance of judicial members, as legal background can aid and assist the commission.
The proposed penalty in the bill — up to 10% of the turnover or income — has also met with reservations. While the bill decriminalises certain sections of the competition law, FICCI maintained that the proposed penalty is excessively harsh and can be lowered to 2% of the turnover of only the relevant section of business and not the entire enterprise.