The Competition (Amendment) Bill, 2023 which seeks to amend the Competition Act, 2002, towards regulating mergers and acquisitions based on the value of transactions, has been cleared by both the Houses of Parliament, the Finance Ministry stated on Monday. The Bill which includes several key amendments to the existing framework, such as an expansion of the scope of cartel prosecution, the introduction of a deal value threshold for mergers and combination and the modification of ‘turnover’ to mean global turnover, besides other changes, was passed in the Rajya Sabha on Monday.
The proposed legislation was first introduced on 5 August, 2022 in the Lok Sabha and was referred to the Standing Committee on Finance on 17 August, 2022, which submitted its report on 13 December, 2022. The Bill was scheduled to be introduced on 17 March, 2023, by BJP MP Jayant Sinha who is also Chairperson for Standing Committee on Finance. The Competition (Amendment) Bill, 2022 was introduced after reviewing the recommendations proposed by the Competition Law Review Committee which was constituted in 2018 by the Ministry of Corporate Affairs to ensure that the Competition Act is in line with India’s economic fundamentals.
After the proposed official amendments, the Competition Bill 2023 proposes to make the assessment for combinations time-bound and quicker by reducing the time limit from the existing 210 days to 150 days from the date of filing of combination notice by the parties. Further, a time-period of 30 days (from the receipt of such notice) has been fixed for prima facie opinion to be framed on combination notifications failing which the combination shall be considered as deemed approved. On the lines of best global practices, a size of transaction test is to be introduced in terms of ‘value of transaction’ as another criteria for notifying combinations. All deal values involving acquisitions, mergers and amalgamations exceeding Rs. 2000 crore having target enterprise in India shall be notified to the Competition Commission of India for approval before their consummation.
To bring more certainty for businesses, the scope of inter-regulatory consultations is being enhanced on matters raised before the authorities (CCI and other regulators). A leniency plus framework is proposed to incentivise the parties in an ongoing cartel investigation to disclose information regarding other existing cartels. The existing provision for fine/imprisonment under the said Act by the National Company Law Appellate Tribunal (NCLAT) will be replaced with punishment for contempt, in accordance with the provisions of the Contempt of Courts Act, 1971. The word ‘fine’ is to be replaced with ‘penalty’ in some other provisions of the Act which empower the Commission to impose penalties for various non-compliances. Moreover, the Commission can issue guidance notes on matters including manner of calculation of penalty that may be imposed for contravention of the provisions of the Act for greater transparency and certainty in its enforcement practices.
For greater transparency and participation of stakeholders in making subordinate legislation, it is proposed that CCI may issue regulations only after public consultation. A green channel route has been introduced for certain combinations which shall be eligible for deemed approval in a trust-based framework, upon filing of a combination notice. Currently, only factors namely, wholesale price index or fluctuations in exchange rate of rupee or foreign currencies, are considered relevant for revision of combination thresholds. Other factors are now being provided through official amendments to factor in situations like global competitive scenarios or revision of thresholds in other jurisdictions etc. As per the amended Bill, the Government, after considering all these factors, may also keep the thresholds at the same level. At present, the Government has the option only of either enhancing or reducing the thresholds by way of notification.
There are certain other amendments that have been proposed to include changes in certain definitions like that of ‘enterprise’, ‘relevant product market’, ‘group’, ‘control’ etc.