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Source: The post new changes in India’s competition law has been created, based on the article “Competition penalties going by global turnover call for a rethink” published in “Live mints” on 17th April 2024.
UPSC Syllabus Topic: GS Paper2- governance–regulatory bodies
News: The article discusses recent updates to India‘s competition law, including new regulations on penalties, settlements, and global turnover calculations. It emphasizes the need for stronger enforcement to ensure penalties are effective and considers the impact of these laws on foreign investment and economic growth.
What are the new changes in India’s competition law?
Monetary Penalty Guidelines: Updated guidelines define how penalties are calculated, emphasizing up to 30% of relevant turnover with a cap at 10% of global turnover.
Regulations for Settlements and Commitments: New regulations allow companies to settle cases or make commitments to adjust their business practices to comply with competition law, aiming for faster resolutions.
New Thresholds for Application: Adjustments to thresholds that determine which cases are subject to these rules, enabling the CCI to address anti–competitive practices more effectively.
Draft Bill on Digital Competition Law: A committee‘s report led to a draft bill specifically aimed at regulating competition within digital markets, showing a move towards specialized regulation in this rapidly evolving sector.
What are the major criticisms of the new changes in India’s competition law?
Low Recovery of Fines: Despite imposing substantial fines, the recovery rate has been very low, with only 0.4% of fines recovered over the past five years, indicating inefficiency in enforcement.
Lengthy Legal Processes: Most fines are challenged in courts, leading to long legal battles that not only delay the enforcement but also reduce the deterrent effect of the penalties.
Potential Deterrent to FDI: The application of fines based on global turnover could discourage multinational companies from investing in India due to the fear of severe financial penalties.
What comparisons can be made with other jurisdictions regarding India’s competition law changes?
Penalty Caps Comparison: India’s penalty cap can reach up to 10% of global turnover, similar to Germany’s cap, but lower than the EU’s potential 20% cap for digital market violations, providing a severe but not the harshest framework for fines.
Methodology for Calculations: Like the EU and UK, India incorporates factors such as the nature of the violation and the duration in determining fines. However, India specifically emphasizes relevant turnover, aligning with the EU’s two-step approach and the UK’s six-step approach to penalty assessments.
Resolution Mechanisms: Similar to practices in the EU and UK, India now promotes settlements and commitments as viable alternatives to traditional litigation, aiming to resolve cases faster and more efficiently.
Digital Market Regulation: India’s draft bill on Digital Competition Law aligns with global movements such as the EU’s Digital Markets Unit, signaling a shift towards specialized regulations for the increasingly influential digital sector.
Question for practice:
Examine the recent updates to India’s competition law and evaluate the major criticisms and comparisons with other jurisdictions.
