The Competition (Amendment) Bill, 2022

Source: The post is based on the article “The Competition (Amendment) Bill, 2022” published in The Hindu on 25th August 2022.

What is the News?

The Competition (Amendment) Bill, 2022 was introduced in the Lok Sabha. The Bill seeks to amend the Competition Act, 2002.

What are the key features of the Competition (Amendment) Bill, 2022?

Regulation of combinations based on deal value: Any acquisition, merger or amalgamation may constitute a combination. The act currently says parties indulging in merger, acquisition, or amalgamation need to notify the Commission of the combination only on the basis of ‘asset’ or ‘turnover’. The Bill proposes to add a ‘deal value’ threshold.

Time limit for approval of combinations: The Act specifies that any combination shall not come into effect until the CCI has passed an order or 210 days have passed from the day when an application for approval was filed, whichever is earlier. The Bill reduces the time limit in the latter case to 150 days.

Gun Jumping: Parties should not go ahead with a combination prior to its approval. If the combining parties close a notified transaction before the approval, or have consummated a reportable transaction without bringing it to the Commission’s knowledge, it is seen as gun-jumping.

– The penalty for gun-jumping was a total of 1% of the asset or turnover. This is now proposed to be 1% of the deal value.

Addresses the issue of the Hub and Spoke Model: 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.

– To combat this, the Bill broadens the scope of ‘anti-competitive agreements’ to catch entities that facilitate cartelisation even if they are not engaged in identical trade practices.

Leniency Plus: The Bill allows the commission to give an additional waiver of penalties to an applicant who discloses the existence of another cartel in an unrelated market, provided the information enables the Commission to form a prima facie opinion about the existence of the cartel.

Settlement and Commitment in anti-competitive proceedings: Under the Act, CCI may initiate proceedings against enterprises on grounds of: (i) entering into anti-competitive agreements, or (ii) abuse of dominant position.  

– The Bill permits CCI to close inquiry proceedings if the enterprise offers: (i) settlement (may involve payment), or (ii) commitments (may be structural or behavioral in nature).

Appointment of Director General: The Act empowers the central government to appoint a Director General to CCI.The Bill amends this to empower the CCI to appoint the Director General, with prior approval of the government.

Penal Provisions: The penalties and penalty guidelines are proposed to be amended. 

– For any false information filed, a penalty of five crores will be imposed, and for failure to comply with the Commission directions, a penalty of ₹10 crores will be imposed. 

– For an appeal to be heard by the National Company Law Tribunal(NCLT) against the Commission’s order, the party will have to deposit 25% of the penalty amount.