Government to Amend Competition Law; Proposes Settlement Framework, Reduced Time For M&A Approvals

The government on Friday proposed a raft of amendments to the competition law, including the introduction of a settlement framework, a reduction in the time limit for combination approvals and decriminalisation of certain contraventions. It will be the first time since the enforcement of the Competition Act in 2009 that amendments will be made to the Act.

The Competition (Amendment) Bill, 2022, introduced in the Lok Sabha on Friday, has also proposed provisions for having 'value of transaction' as a criteria for notifying combinations to the Competition Commission of India (CCI). If the value of any transaction, in connection with the acquisition of any control or shares, among others, exceeds Rs 2,000 crore, then the entities concerned will have to notify the CCI subject to certain conditions.

Another change proposed is reducing the time limit for approval of combinations to 150 days from the current 210 days and also requiring the CCI to form a prima facie opinion within 20 days for expeditious approval of combinations.

The government is also looking to broaden the scope of anti-competitive agreements and the inclusion of a party facilitating an anti-competitive horizontal agreement under such pacts as well as substitute the provision pertaining to penalty.

The provision providing for a penalty up to Rs 1 crore or imprisonment up to three years or both in case of contravention of any order of the National Company Law Appellate Tribunal would be replaced with the provision for contempt, as per the bill.

The government also plans to introduce a "Settlement and Commitment framework to reduce litigations" and incentivise parties in an ongoing cartel investigation in terms of lesser penalty to disclose information regarding other cartels. An application for settlement can be filed only after receipt of the investigation report and before passing the final order by the CCI as may be specified by the regulations.

Besides, the CCI will be empowered to accept commitments from parties subject to certain conditions. An application for commitment can be submitted only after an inquiry has been initiated by the CCI but before receipt of the investigation report by the party concerned.

Other amendments suggested include a limitation period of three years for filing information on anti-competitive agreements and abuse of dominant position before the CCI, changes in certain definitions like 'enterprise', 'relevant product market', 'group' and 'control' to provide clarity. Among other amendments, the government has proposed the appointment of the Director General by the CCI with the prior approval of the central government and issuance of guidelines, including penalties to be imposed by the CCI.

The Competition Act was brought in 2002 and subsequently, it underwent amendments in 2007 and 2009. In May 2009, the anti-trust provisions of the law came into force and two years later in May 2011, the CCI started screening mergers and acquisitions.

In the Statement of Objects and Reasons for the bill, the government said there has been a significant growth of Indian markets and a paradigm shift in the way businesses operate in the last decade. The Competition Law Review Committee, set up by the corporate affairs ministry which is implementing the Act, had suggested various changes to the law.

"After review of the recommendations proposed by the committee, public consultations and with a view to provide regulatory certainty and trust-based business environment, it is considered imperative to amend the said Act," it said. The bill was introduced in the Lok Sabha by Minister of State for Corporate Affairs Rao Inderjit Singh.

(PTI)