We’re a step closer to an overhaul of our competition law

Source– The post is based on the article “We’re a step closer to an overhaul of our competition law” published in the mint on 16th December 2022.

Syllabus: GS3- Indian economy

Relevance– Regulation of economy

News– The article explains the issues related to Competition(Amendment) Bill,2022. It also explains the standing committee report of this bill.

What are key provisions of this bill?

Deal value threshold for CCI FIling– One of the key proposals of the bill is introduction of a deal-value based threshold. Currently, a deal triggers CCI filing requirements when certain thresholds based on parties turnover are met.

The bill proposes a mandatory CCI filing requirement for all deals valued above 2000 crore rupees. Such a deal should have substantial business operations in India. This requirement for business presence is called the local nexus requirement.

However, there is no clarity on how the deal value would be calculated and what quantum of local nexus would trigger a filing.

Settlement of cartel cases– The Bill has excluded the cartels from the settlement mechanism. It is most pernicious violation of the competition law and settlement procedure for them would send a wrong signal.

What are recommendations of the Standing Committee on Finance on this bill?

Local nexus requirement should apply to target and not to acquirer. Calculation of deal value and nature of local nexus has been left to CCI.

It proposed to expand the scope of settlement mechanisms to cartels also. Admission of guilt may not be mandatory for settlement. It allowed the provision of compensation for consumers affected by cartels

Allowing a dominant company to impose reasonable conditions necessary to protect IPR.

Using the rule-of reason approach to assess the abuse of dominant position.

Limiting the scope of hub and scope cartels to exclude those who do not intend to actively participate in furtherance of a cartel, such as online platforms acting only as intermediaries.

Not raiding or recording the statement under oath made by external legal counsels or independent advocates, which would compromise the principle of attorney-client privilege.