Competition (Amendment) Bill, 2020

Introduction:

The Competition Act, 2002 was enacted which replace the Monopolies and Restrictive Trade Practices Act, 1969 as it was considered to be insufficient to control the malpractices in a competitive market and ensure fair competition, therefore The Competition Act, 2002 came in force. The Government constituted the competition Law Review Committee in 2018 which aims to study the new market trends. The Competition (Amendment) Bill, 2020 was drafted on the recommendations of the committee. The key changes can be classified in the following headings.

Regulatory Structure of CCI:  

The Competition (Amendment) Bill, 2020 suggest for the constitution of a governing body. The governing body will have; the chairperson of the CCI; 6 whole time members; the secretary of the Department of Economic Affairs, Ministry of Finance, Secretary of the Ministry of Corporate Affairs and 4 other part time members which is to be nominated by the Central Government.

The Governing body has vested all the powers to male regulations, take measures to promote awareness and create a “National Competition Policy”. The board will exercise general superintendence, management and direction of affairs of the CCI. The CCI will now discharge the adjudicatory functions only.

Invitation of Public Comments:

To protect and promote the welfare of public or citizen, the bill creates an obligation on the governing board to seek public comments on all regulations. However the exceptions are limited to the working of the CCI. This system will ensure transparency in the prevailing system.  

Penalty Procedure Guidelines:

The Amended Bill proposes, that CCI has the power to impose prohibitive penalties and in the absence of any guidance the manner in which this penalty was being imposed was shrouded with ambiguities. The guidance may provide the much-needed clarity, even though the Bill falls short of imposing a mandatory time limit within which the penalty guidelines will issued.   

New Norms for Merger Control:

The Bill empowers the CCI and Central Government to define new norms for merger notification by introducing a proviso to section 5. The new norms, which can be notified in public interest, will now enable the CCI to make sector specific norms based on deal size of transaction or any other criteria. The amendment was in furtherance of the CLRC’s recommendations to capture transactions in the digital market.   

Introduction of Green Channel:

The Amended bill authorises the Central Government to provide a deemed approval process for transactions which are not currently exempted from mandatory notification obligation. This provision will also grant statutory recognition to the amendments made to the CCI (Combination Regulations), 2011which introduced deemed approval process under the green channel for combinations that do not involve any form of overlap (horizontal, vertical or complementary) between the business activities of the parties.    

Definition of Cartel:

The new Amended Bill expand the definition of cartel to include a buyer’s cartel too. This means that even in the case of buyer’s cartel, the presumption of appreciable adverse effect on the competition (AAEC) will apply to buyer’s cartel as well.  

Protection to the holder of the Intellectual Property Rights:

On the recommendation of CLRC, the Bill has widen the protection to the IPR holders. The exemption for the IPR holders is currently restricted to anti-competitive agreements. This brings clarity between the treatment of anti-competitive agreements and abuse of dominant position. The Bill also expand the scope of IPRs for which protection is available to IPR holders.  

Settlements and Commitments:

The Bill introduces a system for settlements and commitments permitting the CCI to close the investigation on basis of an application for settlement or commitment moved by the investigated party. The Bill specifies that commitments have to be made after CCI passes an order of investigation, within a specified tie prior to receipt of DG report. This in contrast with the CLRC recommendations. If the period is insufficient it may not allow parties to fully weigh their option.  

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