The Finance Minister introduced the Competition Amendment Bill, 2024 in the Lok Sabha on Friday, which contains several important amendments to the Competition Act, the powers of the Competition Commission, and the process of conducting competition investigations. According to a statement in the bill on the objects and reasons of the amendment, “the last decade has seen significant developments in Indian markets and a paradigm shift in the way businesses operate.”
The bill expands the definitions of important terms, expands the scope of anti-competitive practices, provides greater investigative powers, and allows a case to be settled by paying a fine under certain conditions to “facilitate the process”. The draught law includes provisions to reduce the time required to evaluate a case. It also sets a time limit within which the Commission is to receive information or complaints about anti-competitive behavior.
It is proposed to amend 6 of the law so that the reference to 30 days is deleted and the total period for evaluating combinations is shortened to 150 days from 210 days. It also allows the Commission to extend the deadline for up to 30 days to comply with parties’ requests to submit additional information or to correct defects in the notification. In addition, Clause 14 of the bill seeks to amend Section 19 of the Act to provide that the Commission shall not entertain any information or reference beyond the period of three years from the date of cause of action.
However, the Commission may condone the delay if it is satisfied with the reasons given by the parties. This change in timeline is expected to speed up the approval and assessment processes as part of the “ease of doing business”. The proposed amendment to Section 3 of the Act seeks to broaden the scope of anti-competitive agreements and to include a party facilitating an anti-competitive horizontal agreement under such agreements. Clause 6 of the bill seeks to amend Section 5 of the Act by inserting new clauses (d) and (e) to provide that if the value of any transaction in connection with the acquisition of any control, shares, voting rights, etc., exceeds Rs 2,000 crore, it would require the filing of a notice of combination before the Commission and empower the Central Government to exempt certain transactions from the requirement to file a combination notice under the Act.
Specifically, this provision requires the Commission to monitor and assess the terms of mergers and acquisitions of large companies and groups, particularly due to rapid technological changes in recent years. It also allows clarity to define turnover conditions, transaction amounts, etc. It further states that the “combination” will not be effective for 210 days after the notice is sent to the authorities or the Commission issues its orders, whichever is earlier.
According to Shweta Shroff Chopra, partner at Shardul Amarchand Mangaldas, “The introduction of trade value thresholds is one of the most significant changes proposed in the Bill.” transactions in the digital and infrastructure space that cannot be reported because the assets and/or turnover amount are below the target thresholds for de minimis exemptions. Although this change will increase the CCI’s jurisdiction, much will depend on how the CCI determines a “substantial” domestic connection. It is also proposed to amend 12 of the Act on the restriction of employment by the chairman and members of the commission within 2 years from the date of termination of office.
The section prohibits members of the CCI from accepting employment or retention in any capacity in any matter which is or has been pending before the Commission under this Act or a person appearing or appearing before the Commission in an inquiry. or face sanctions as a director or manager of a company. However, this restriction does not apply to any employment in the state administration or employment with a statutory body.
In recent years, while the CCI has increasingly taken action against companies believed to be engaging in anti-competitive activities rather than merely acting on specific complaints, recent changes have expanded the director’s powers. The Commission of India Under the existing law, while the CCI has powers to summon, discover documents and examine witnesses in the same manner as a civil court, Clause 26 of the Bill seeks to amend Section 41 of the Act to lay down the procedure for investigation, research, etc., and the powers of the general director to investigate violations of any provision of the law.
Under these provisions, the Director General (DG) is empowered to produce any records or documents of any person in connection with an investigation and is not limited to the “parties” being investigated. DG can keep the papers/books/registers for one hundred and eighty days. The DG will also have the power to approach the court of the Chief Metropolitan Magistrate, Delhi, to obtain permission to enter any place and seize any documents or records if “in the course of an investigation, the DG has reasonable grounds to believe that information relating to any party or person may be destroyed, defaced, altered, falsified or secret.” The DG can also call the police or “any government official” to assist them in their investigation in the search and seizure process.
