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Competition amendment bill: Rajya Sabha clears law for stricter compliance

Apr 04, 2023 12:05 AM IST

The Rajya Sabha on Monday approved amendments to the antitrust law that empower the Competition Commission of India to impose penalties on global turnovers of erring firms instead of their sales in the local market, a modification that could lead to harsher punishments on big technology multinationals.

The Rajya Sabha on Monday approved amendments to the antitrust law that empower the Competition Commission of India to impose penalties on global turnovers of erring firms instead of their sales in the local market, a modification that could lead to harsher punishments on big technology multinationals.

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The changes, proposed as part of the Competition (Amendment) Bill, 2022, and cleared amid din, also include expanding the scope of penalties to cartels and their facilitators. The Lok Sabha has already given its nod to these modifications on March 29.

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“With this, the parliamentary approvals to the amendments have been concluded,” a government official said, requesting anonymity. “These amendments aim at bring in international best practices, providing ease of compliance, and resolution of assessment for combinations (mergers and acquisitions) in a timebound manner.”

The amendments include expanding the scope of penalties to entities collaborating in cartelisation and allowing the overseer to regulate M&As based on the value of transactions with a 2,000 crore threshold, if the target entity has substantial business operations in India.

It also proposed that antitrust regulator would take a view on the likelihood of a combination or M&A causing adverse effect on the competition in a time bound manner. “The bill proposes that the overall time limit for such assessment to be reduced from the existing 210 days to 150 from the date of filing of combination notice by the parties,” the official said. “Further, prima facie opinion be framed on combination notifications within a time period of 30 days from the receipt of such notice, failing which the combination shall be considered as deemed approved.”

The draft legislation was tabled in Parliament on August 5, 2022. On August 16, it was referred to the parliamentary committee on finance. Based on the panel’s recommendations, which submitted its report on December 13, the government moved the bill on February 8 with some additional amendments.

In a detailed analysis of various amendments, Law firm Shardul Amarchand Mangaldas & Co said the competition commission will now be able to impose penalties on offending parties based on their global turnover derived from all the products and services as opposed to relevant turnover.

“This may result in enterprises with global operations being exposed to higher level of penalties,” said Aman Singh Sethi, a partner in the firm. “However, in an important and welcome change, the CCI will now be required to publish guidelines on the appropriate amount of penalties for contravention of the Competition Act.”

Commenting on the key changes, IndusLaw partner Unnati Agrawal said: “Now the CCI will be empowered to treat cartel facilitators at par with the cartel participants. Hence, dealers and suppliers of a cartel participant may also be prosecuted under these provisions.”

Experts will now wait for the commission to frame rules according to the modified law. “A lot will depend on the regulations to be issued by the CCI to flesh out many of these broad proposals,” said Pallavi Shroff, managing partner at Shardul Amarchand Mangaldas and Company, a law firm.

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