The Competition (Amendment) Bill, 2022

The long-awaited Bill to amend the Competition Act, 2002, has been finally tabled in the Lok Sabha recently.

The Competition (Amendment) Bill, 2022:

• The Bill seeks to amend the Competition Act, of 2002.
  • The Act establishes the Competition Commission of India (CCI) for regulating market competition.
• Highlights of the Bill include:
  • introduction of ‘deal value thresholds' under which ‘large-value' transactions will require the approval of the Competition Commission of India (CCI);
  • relaxations for implementation of open offers and stock exchange purchases;
  • shortened timelines for review of ‘combinations';
  • Amendment of the definition of ‘control' to include ‘material influence';
  • introduction of ‘settlement' and ‘commitment' to resolve investigations in respect of anti-competitive vertical agreements and abuse of dominance; and
  • Facilitation of exchange of information between departments of the Government of India and the CCI.

Key Changes:

• Introduction of ‘deal value thresholds'
  • The Bill introduces ‘deal value thresholds', under which transactions of a value exceeding INR 2,000 crore will require the prior approval of the CCI, provided that the parties to such transaction have “substantial business operations in India” (“Deal Value Thresholds”).
  • The Bill proposes that open offers and acquisitions of shares or securities on a regulated stock exchange may be implemented prior to the receipt of the CCI's approval.
  • Introduction of ‘settlement' and ‘commitment'
  • The Bill proposes that enterprises facing investigations relating to
    1. anti-competitive vertical agreements under Section 3(4) of the Competition Act, or
    2. abuse of dominant position under Section 4 of the Competition Act, may settle such proceedings or offer commitment(s) to the CCI in the following manner:

Settlement: an application for ‘settlement' may be submitted by an enterprise at any time after the receipt of the Director General of the CCI's (“DG”) report in respect of its investigation into the relevant matter, but before the CCI passes a final order; and

Commitment: an offer for ‘commitment' may be submitted by an enterprise at any time after the CCI has initiated an investigation but before receipt of the DG's report.

• Penalty for gun-jumping
  • Currently, the penalty for gun-jumping (i.e., the penalty for non-furnishing of information on combinations) may extend to one percent of the total turnover or the assets, whichever is higher of the relevant combination.
  • The Bill proposes that the penalty for gun-jumping may extend to one percent of the total turnover or the assetsor, value of the transaction, whichever is higher, of the relevant combination.
• The issue of Hub-and-Spoke Cartels:
  • A Hub-and-Spoke arrangement is a kind of cartelisation in which vertically related players act as a hub and place horizontal restrictions on suppliers or retailers (spokes).
  • Currently, the prohibition on anti-competitive agreements only covers entities with similar trades that engage in anti-competitive practices.
  • This ignores hub-and-spoke cartels operated at different levels of the vertical chain by distributors and suppliers.
  • To combat this, the amendment broadens the scope of ‘anti-competitive agreements’ to catch entities that facilitate cartelisation even if they are not engaged in identical trade practices.
• Officers and employees of the party under investigation
  • The Bill proposes that all officers, employees, and agents of a party which are under investigation shall have a duty to:
    • preserve and produce all information, books, papers, other documents, and records of, or relating to, the party which are in their custody or power to the DG; and
    • provide all assistance in connection with the investigation to the DG
  • The Bill also proposes that the DG may examine, on oath, any officer, employee, or agent of the party being investigated, in relation to its affairs, with the previous approval of the CCI.
• Specific provision to withdraw leniency applications
• • The Bill proposes to permit a party to withdraw an application for lesser penalty or leniency in the manner and within such time as may be specified by the regulations issued by the CCI.