Parliament approves Competition Amendment Bill, 2023

Terms of use

Terms of Use

The use of this site and the content contained therein is governed by the Terms of Use. When you use this site you acknowledge that you have read the Terms of Use and that you accept and will be bound by the terms hereof and such terms as may be modified from time to time.

All text, graphics, audio, design and other works on the site are the copyrighted works of nasscom unless otherwise indicated. All rights reserved.
Content on the site is for personal use only and may be downloaded provided the material is kept intact and there is no violation of the copyrights, trademarks, and other proprietary rights. Any alteration of the material or use of the material contained in the site for any other purpose is a violation of the copyright of nasscom and / or its affiliates or associates or of its third-party information providers. This material cannot be copied, reproduced, republished, uploaded, posted, transmitted or distributed in any way for non-personal use without obtaining the prior permission from nasscom.
The nasscom Members login is for the reference of only registered nasscom Member Companies.
nasscom reserves the right to modify the terms of use of any service without any liability. nasscom reserves the right to take all measures necessary to prevent access to any service or termination of service if the terms of use are not complied with or are contravened or there is any violation of copyright, trademark or other proprietary right.
From time to time nasscom may supplement these terms of use with additional terms pertaining to specific content (additional terms). Such additional terms are hereby incorporated by reference into these Terms of Use.

Disclaimer

The Company information provided on the nasscom web site is as per data collected by companies. nasscom is not liable on the authenticity of such data.
nasscom has exercised due diligence in checking the correctness and authenticity of the information contained in the site, but nasscom or any of its affiliates or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this site. The information from or through this site is provided "as is" and all warranties express or implied of any kind, regarding any matter pertaining to any service or channel, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement are disclaimed. nasscom and its affiliates and associates shall not be liable, at any time, for any failure of performance, error, omission, interruption, deletion, defect, delay in operation or transmission, computer virus, communications line failure, theft or destruction or unauthorised access to, alteration of, or use of information contained on the site. No representations, warranties or guarantees whatsoever are made as to the accuracy, adequacy, reliability, completeness, suitability or applicability of the information to a particular situation.
nasscom or its affiliates or associates or its employees do not provide any judgments or warranty in respect of the authenticity or correctness of the content of other services or sites to which links are provided. A link to another service or site is not an endorsement of any products or services on such site or the site.
The content provided is for information purposes alone and does not substitute for specific advice whether investment, legal, taxation or otherwise. nasscom disclaims all liability for damages caused by use of content on the site.
All responsibility and liability for any damages caused by downloading of any data is disclaimed.
nasscom reserves the right to modify, suspend / cancel, or discontinue any or all sections, or service at any time without notice.

For any grievances under the Information Technology Act 2000, please get in touch with Grievance Officer, Mr. Anirban Mandal at data-query@nasscom.in.

New

See all

No notification found.

Parliament approves Competition Amendment Bill, 2023

Sudipto

@Sudipto

April 4, 2023

Public Policy

560

While on one hand, the Committee on Digital Competition Law is examining the need for an ex-ante competition law in India, the Competition Amendment Bill, 2023 (2023 Bill) was passed both by the Lok Sabha and Rajya Sabha. The amendment Bill was first introduced in 2020, but it lapsed and therefore, the amendment Bill (2022, Bill) was reintroduced last year. Thereafter, the 2022 Bill was referred to the Parliamentary Standing Committee on Finance (SCF) which suggested sweeping changes, although only few of them made way to the 2023 Bill.

The exercise of amending the Competition Act, 2002 was initiated in 2019 with the constitution of the Competition Law Review Committee (CLRC). Nasscom was represented on the Digital Economy Working Group of the CLRC. Many of the salient features of the 2023 Bill draw their origin from the recommendations of the CLRC. For instance, the CLRC recommended the construct of deal-value threshold for merger control to address competition concerns in the digital markets.

2023 Bill introduces penalty on global turnover.

While the 2023 Bill has differences (See, Table 1) compared to the 2022 Bill, one striking difference is the addition of the power to the Competition Commission of India (Commission) to impose penalty upto 10% of the global turnover. With this new amendment in 2023 Bill, the penalty can be calculated on the global turnover of an enterprise i.e., sales derived from all product or services, even if they are not related to the relevant product or relevant market.

Interestingly, this was not proposed by the CLRC, and did not feature neither in the 2020 Bill nor the 2022 Bill. As a result, this significant change did not figure in the public consultation. This overturns the jurisprudence set by the Supreme Court in the Excel Corp case to limit the calculation of penalty to relevant turnover. The Court had noted that when the agreement leading to contravention of Section 3 of the Competition Act involves one product, there appears to be no justification for including other products of an enterprise for the purpose of imposing penalty. The Court also held that such an interpretation is in line with the doctrine of proportionality. In other words, the turnover derived from the product and/or geographic market, where infringement has occurred, could alone form the basis for computing penalty.

While other regulators, like the European Commission also has a power to impose penalty on the world-wide turnover, it is subject to penalty guidelines (Please see section: Scope for improvement).

Differences between current position, 2022 Bill & 2023 Bill

In this section, we map only differences between the extant position under the Competition Act, 2022 Bill and 2023 Bill. Amendments proposed in the 2022 Bill to amend the Competition Act and which have been passed "as is" by the Parliament are not covered in this table.

Current Position

Competition Act, 2002

2022 Bill

2023 Bill

Possible Impact

Section 3 – anti-competitive agreements (cartelisation)

Horizontal agreements between entities only limited to identical or similar trade of goods or provision of services are investigated.

Horizontal agreements between entities not engaged in identical or similar trade shall also be presumed to be part of anti-competitive arrangements if it actively participates in the furtherance of such agreement.

Now if the firm participates or even intends to participate, it can be subject to scrutiny.

This change can impact hub and spoke model[i] where entities need not operate in the same trade.

Also, adding intention to participate as a ground can expand the scope of investigation and violation.

Section 5 – Combinations

For a combination like, merger, acquisition, or amalgamation transaction to be subject to ex-ante review, either assets value threshold (based on book value of assets as per the audited financial statements) or turnover value threshold is required to be met.

It was proposed that if a combination meets the deal value threshold of more than 2000 crore INR and if the parties to a combination transaction must have substantial operations in India, it will be subject to ex-ante review process.

The SCF suggested that the local nexus test should be confined to the target entity. This proposal was accepted and now the entity being acquired, taken control of, merged, or amalgamated would only be considered for meeting the criterion of substantial operations in India.

Deal value is a new construct added to the combination review regime. While this threshold is sector agnostic, CLRC recommended this addition to capture deals in the digital markets where target entities may have lean balance sheets and not necessarily meet the assets or turnover threshold.

Section 6– Regulation of Combination

No option for parties to request for additional time to furnish relevant information or remove defects from the notice filed to the Commission intimating any such proposal of combination.

It was proposed that the Commission would have discretion to grant time upto 30 days on requests from parties for additional time to furnish relevant information or remove defects to the notice filed under combination.

Discretion to grant additional time has been deleted.

No change.

Section 20 – Inquiry into combination by Commission

The Central Government in consultation with the Commission, after every 2 years, enhance or reduce the assets value or turnover threshold for combination depending on the wholesale price index or fluctuations in exchange rate or foreign currencies.

The Bill proposed adding the words “value of the transaction” after the phrase “value of the turnover”, to account for the provision adding a deal value threshold under Section 5.

The asset value, turnover or deal value threshold can be enhanced, reduced, or kept at the same level depending on the wholesale price index or fluctuations in exchange rate or foreign currencies or such factors that in the opinion of the Central Government are relevant in this matter.

The new addition -Deal value threshold along with assets and turnover thresholds can be reviewed periodically to align with the value of combination transactions markets witness.

Also, the government can consider factors other than wholesale price or currency fluctuations to review combination thresholds.

While this can make the process of reviewing combination thresholds more holistic, the Commission may consider publishing certain guidance on these factors so there is clarity and certainty among the businesses.

Section 29 – Procedure for investigation of combination

The current statutory timeline is 30 days for the Commission to form a prima-facie opinion that a combination is likely to cause or has caused an appreciable adverse effect on competition within the relevant market in India.

It was proposed that the Commission would form a prime-facie opinion within 20 days of receipt of notice from the parties.

The original time limit of 30 days has been retained. The SCF recommended that given the capacity limitations of the Commission, the timeline should not be reduced.

No change in time limit for formation of prima-facie opinion by the Commission.

Section 41 (Powers of the DG)

At present, there is no powers with the DG to investigate the legal advisers, bankers, and auditors of the investigated entity.

A definition of “agent” was proposed.

“Agent", in relation to any person, means, any one acting or purporting to act for or on behalf of such person, and includes the bankers and legal advisers of, and persons employed as auditors by, such person.

This could potentially bring external lawyers engaged by the firm within the scope of DG investigation. Perhaps this would violate the attorney-client privilege under the Indian Evidence Act, 1882.

The definition of “agent” has been slightly tweaked as follows:

the bankers, and persons employed as auditors and legal advisers, by such person.

The SCF recommended Committee that the clause must specify with clarity that nothing in this section shall be in contravention of the Indian Evidence Act 1872 or any other Act that protects attorney-client privilege.

The amendment does not explicitly protect the attorney-client privilege as recommended by the SCF.

However, in effect, the DG investigation can perhaps exclude external lawyers from its ambit.

Section 53N (Awarding compensation)

One can make application to the NCLAT to adjudicate on claim for compensation arising from orders of the Commission or NCLAT and to pass an order for recovery of such compensation.

It was proposed to extend this right to claim compensation arising from orders of the Supreme Court in matters of appeal against the NLCAT’s decision.

In addition to the orders of the Supreme Court, the compensation can be claimed even arising from findings of a settlement order.

One who has suffered loss or damage due to anti-competitive practices of the entity may claim compensation under settlement order.

This may influence incentives of entities in pursuing this mode of dispute resolution, particularly because availing the settlement provision deprives the party of the right to appeal the decision under sec 53B of the Act.

Scope for improvement

While the amendments to the Competition Act, 2002 are expected to strengthen the anti-trust framework of India, there are clearly few missed opportunities. Some of these are:

Clarity on determination of deal value: The SCF based on the feedback from stakeholders observed that there could be apprehensions around the manner of computation of deal value and therefore, the Bill 2022 should mandate the Commission to provide detailed guidance on how the deal value would be computed. Like, how to account for post-closing adjustments[ii] or deferred consideration.[iii]Similarly in the case of “substantial business operations in India” whether it would entail physical presence of the enterprise in India or the presence of its user base (reflective of its market position) in India. Releasing guidance notes would align India with jurisdictions, like Austria and Germany who have adopted a similar concept of deal value threshold.
Penalty guidance: For many years there has been a demand for creation of penalty guidelines to ensure certainty and reduce discretion in imposition of penalty. This was an opportunity to include a statutory obligation on the Commission to frame guidelines, especially, now the penalty can be imposed on income as well as turnover (including global turnover). This would have aligned India with other jurisdictions. For instance, while European Commission has a power to impose penalty on the world-wide turnover, it is subject to penalty guidelines. Similarly, other mature jurisdictions, like, U.K. (obligation under section 52 of the Competition Act, 1998) and Singapore (discretion under section 61 of the Singapore Competition Act, 2004) have a scope for non-binding penalty guidance.
Effects-based test: The 2023 Bill does not include effects-based test to establish harm in cases of abuse of dominant position (section 4). Incorporating the same could have provided a realistic economic assessment of alleged competition harms. Even the SFC recommended inclusion of this test since the law does not impose a statutory mandate on the Commission to use this lens while evaluating harms. Although this recommendation was not accepted.

Nasscom as part of its feedback on the 2020 Bill had recommended to include effects-based test for determination of harm under section 4 of the Competition Act.

Absence of segregation of powers: The 2023 Bill vests the Commission with the powers to appoint the DG. This could risk diluting the autonomy and independence of the DG in the discharge of its prosecutorial/investigative functions under the Act. The obligation to appoint the DG should have been retained with the Central Government. While the CLRC had recommended that the office of the DG should be formally folded into the CCI as an ‘Investigation Division, it suggested several safeguards to avoid situations of conflict of interest. The 2023 Bill does not provide for such measures.

Nasscom had recommended that the Commission by way of regulations should create institutional firewalls between the DG and the Commission, to avoid any actual or potential conflicts of interest.

IPR not a safe harbour: Currently, a party can take the defence that to protect its IPR in a reasonable manner, certain agreements were entered into, although they might have anti-competitive effect [vertical restraint provisions (section 3(5))]. The CLRC had recommended that a similar defence may be allowed with respect to abuse of dominance. The SCF endorsed this view to avoid any uncertainty and promote innovation. However, the 2023 Bill misses out on this safe harbour provision.

Lack of coordination mechanism: Given the increasing cross sectoral business models, coordination and communication between sectoral regulators and the Commission in the matters of competition can avoid abrupt policy positions and wrong signalling to the market. The 2023 Bill provides a facilitation provision where the Commission may enter in a memorandum of understanding with any statutory body or department of the government. However, this would be at the discretion of the Commission. The Competition Act, 2002 provide for references between sectoral regulators and the Commission. But the CLRC observed that this provision has been used sparsely and recommended to lower the threshold for such reference. For instance, reference should be allowed even in the absence of any contradiction or conflict between the ambit of the Commission and the sectoral regulators. The 2023 fails to provide changes to this effect.

[i] See, Eshan Mohapatra, Hub-and-Spoke Cartels, Economic & Political Weekly, Commentary, Volume 57, Issue No 2, (January, 2022)

“Hub-and-spoke agreements operate through the coming together of actors operating at one horizontal level of the economic process (the spokes) controlled through a common agent operating at a different level (the hub), thus creating a space wherein the exchange of information is facilitated through the common agent between the various parallel and competing horizontal actors resulting in facilitation of collusions in the market Hub-and-spoke cartels can have the same negative effect in the markets as is achieved though the horizontal agreements without the information ever getting transferred directly between the competitors situated on the same horizontal plane, thus making it difficult for the investigators to prove the presence of a collusion among the competing businesses.”

[ii] Provisions focus on liabilities and assets of the target company that fluctuate as a result of business operations between the time the parties agree on a purchase price and the actual closing of the transaction, which could be months after the initial agreement on price.

[iii] Refer page no 7-20 of the Standing Committee on Finance, The Competition (Amendment) Bill, 2022, December 2022.

For more details, please write to Sudipto Banerjee at: sudipto@nasscom.in with a copy to policy@nasscom.in

competition law deal value parliament Competition bill

Disclaimer

That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.

Sudipto

Nasscom Public Policy Highlights | ...

Dhananjay

Public Policy

07 Nov 2024

Call for Inputs: SEBI's Consul...

moncourt.ananya831

Public Policy

06 Nov 2024

Survey on issues faced by units in ...

Tejasvi

Public Policy

05 Nov 2024

Nasscom's interaction with NTI...

Sudipto

Public Policy

23 Oct 2024

Nasscom’s feedback on treatment of ...

Sudipto

Public Policy

23 Oct 2024

Flexible Hybrid Working Model in SE...

Vertika Misra

Public Policy

23 Oct 2024

Nasscom Public Policy Highlights | ...

moncourt.ananya831

Public Policy

09 Oct 2024

Nasscom - Deloitte Report on Indian...

Tejasvi

235

Public Policy

01 Oct 2024

GST: Recommendations in relation to...

Tejasvi

236

Public Policy

01 Oct 2024

GST Update - Clarification on place...

Tejasvi

Public Policy

30 Sep 2024

Feedback on Proposed Building Code ...

Sudipto

Public Policy

29 Sep 2024

TRAI Recommendations on the Framewo...

Vertika Misra

Public Policy

27 Sep 2024

Representation to RBI regarding delays by banks in pocessing export documents

garimap

@GarimaP

27 Dec 2022

Public Policy

On December 26, 2022, we reached out to the Reserved Bank of India (RBI) highlight issues being faced by the industry in processing of export documents including SOFTEX and reconciliation of inward remittances, updating information on the Export…

GST Update: Summary of decisions taken in 48th GST Council meeting

Tejasvi

@tejasvi

22 Dec 2022

Public Policy

The 48th meeting of the GST Council was held in Delhi on December 17, 2022. Some of the important updates pursuant to the meeting are as follows: Key Updates: The Council had, in its 47th meeting, granted in-principle approval for allowing…

CALL FOR INPUTS - CONSULTATION PAPER ON OPERATIONALISING UNIFIED HEALTH INTERFACE

Sudipto

@Sudipto

20 Dec 2022

Public Policy

On December 14, 2022, the National Health Authority (NHA) released a Consultation Paper on operationalising the Unified Health interface (UHI) in India that outlines the market rules that will govern the UHI Network. UHI is envisioned as a…

NASSCOM's Webinar on Internal Compliance Programmes for Export of Dual-Use Items

garimap

@GarimaP

15 Dec 2022

Public Policy

On December 14, 2022, NASSCOM organised a webinar focussing on Internal Compliance Programmes (ICP) for Export/Transfer of Dual Use Items. The webinar saw extensive participation from the industry and government departments. In the inaugural…

SEZ Update: Flexible hybrid work model enabled for employees of IT-ITeS units in SEZ till December 2023

Tejasvi

@tejasvi

14 Dec 2022

Public Policy

The much-awaited Notification enabling a flexible hybrid work model to be adopted by the IT-ITES units in SEZ has been issued by the Ministry of Commerce and Industry. NASSCOM has been pursuing this matter for over 2 years now and we are extremely…

GST: Submission highlighting issues faced by IT- BPM and e-commerce industry

Tejasvi

@tejasvi

12 Dec 2022

Public Policy

Based on inputs from our members, NASSCOM has submitted a detailed memorandum to the officials of Department of Revenue and GST Council highlighting suggestions to address GST related issues faced by IT- BPM and e-commerce industry. The suggestions…

New

Parliament approves Competition Amendment Bill, 2023

Sudipto

Sudipto

Representation to RBI regarding delays by banks in pocessing export documents

garimap

GST Update: Summary of decisions taken in 48th GST Council meeting

Tejasvi

CALL FOR INPUTS - CONSULTATION PAPER ON OPERATIONALISING UNIFIED HEALTH INTERFACE

Sudipto

NASSCOM's Webinar on Internal Compliance Programmes for Export of Dual-Use Items

garimap

SEZ Update: Flexible hybrid work model enabled for employees of IT-ITeS units in SEZ till December 2023

Tejasvi

GST: Submission highlighting issues faced by IT- BPM and e-commerce industry

Tejasvi

About Us

Knowledge Center

In the News

Topics In Demand

Notification

New

Parliament approves Competition Amendment Bill, 2023

Share this blog

Related blogs

Dhananjay

07 Nov 2024

moncourt.ananya831

06 Nov 2024

Tejasvi

05 Nov 2024

Sudipto

23 Oct 2024

Sudipto

23 Oct 2024

Vertika Misra

23 Oct 2024

moncourt.ananya831

09 Oct 2024

Tejasvi

01 Oct 2024

Tejasvi

01 Oct 2024

Tejasvi

30 Sep 2024

Sudipto

29 Sep 2024

Vertika Misra

27 Sep 2024

About Us

Knowledge Center

In the News

Newsletter