Recently both houses of the parliament approved a long-awaited bill to amend the Competition Act, 2002. The Amendment shall come into effect from the date notified by the central government in the official Gazette. 2002 Act established the Competition Commission of India to promote consumer interest and create a trust-based business environment. The Act provides wide powers to CCI in respect of anti-competitive agreements, abuse of dominance, and combinations. But due to changes in market dynamics and technological advancement the provisions were not sufficient to meet the market requirement therefore, the need to amend the existing law arose.
Terminologies
To understand present amendments we should first understand some terms.
- Anti-competitive Agreements: these are agreements entered by the companies to influence the sale or purchase of goods and services, or for controlling the production or supply.
- Combinations: it implies mergers, acquisitions, or amalgamation of enterprises. Certain classes of Combination require approval of CCI.
- Gun Jumping: This occurs when two or more parties to a merger or acquisition finalize a notified transaction before it is approved or have completed a reportable transaction without informing the Commission.
- Hub and spoke Cartels: In a hub and spoke cartel, horizontal market participants (spokes) agree, either explicitly or implicitly, to communicate sensitive information through a vertical common player known as the “hub.” The hub serves as a conduit for the cartel, even though it is not actively involved in its operations.
- Relevant Product Market: A relevant product market is composed of all those goods and/or services that, given their features, price, and intended uses, the customer considers interchangeable or substitutable.
Existing Act vs. Amendments
Significance of Amendments
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Combination regulation will improve the Commission’s assessment process, notably in the infrastructure and digital sectors which results in ease of doing business and attracts foreign collaborations.
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Accelerating the approval process will hasten combination clearance and emphasise the value of pre-filing talks with the Commission.
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The current Bill intends to exclude open market purchases and stock market transactions from the obligation to inform the Commission in advance, much like the European Union merger laws.
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The introduction of technical expert in the commission will help it in studying the competition practices in the digital market.
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Calculation of penalties on the basis of global turnover results in higher penalties on companies which discourages them from indulging in anti-competitive agreements.
With the proposed amendments, the Commission should be able to better control several facets of the proposed Age market and strengthen its functioning. The suggested adjustments are unquestionably required, but they heavily rely on the regulations that the Commission later notifies. The government must also acknowledge that because market dynamics are dynamic, legislation must be revised often.
