The Competition Act 2002, a comprehensive competition law in India, governs competition-related matters and tries to stop anti-competitive practices there. The Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 was replaced by the Competition Act of 2002. The MRTP Act mostly addressed monopolistic and restrictive business practices but lacked the requisite heft to handle contemporary competition challenges adequately. The Competition Act was passed to harmonize Indian competition law with global best practices and establish a more effective framework for policing anti-competitive behavior.

The Competition Act aims to support and maintain competition in the Indian market, safeguard consumer interests, and guarantee the freedom of trade practiced by other market actors. Anti-competitive agreements, the abuse of dominant positions, and the regulation of combinations (mergers and acquisitions) that might be detrimental to competition are all things it aims to stop and punish.

• Section 3: Outlaws anti-competitive agreements, such as those that limit competition, fix prices, restrict the supply of goods or services, or divide up markets among rivals.
• Section 4: forbids businesses with a sizable market share from abusing their dominant position. It stops unfair business practices that harm competition, like predatory pricing or denying market access.
• Sections 5 & 6: Regulate mergers, acquisitions, and amalgamations that may significantly negatively impact competition in the relevant market.
• Section 19: Creates the Competition Commission of India (CCI) as the administrative body in charge of upholding the Competition Act, looking into anti-competitive behavior, and advocating for free markets.

In India, several anti-competitive practices have been addressed using the Competition Act to encourage fair competition. Cases concerning cartelization, abuse of dominance, and mergers that might harm competition have all been carefully looked into by the CCI. It can impose fines, issue cease-and-desist orders, and take corrective action to restore competition.

The competition (amendment) bill has substantially changed the existing Amendment Act of 2002. Consequently, this will help boost the competition regime, especially in the digital markets. Below are some key changes.

1. Transaction value above Rs. 2000 crore will require CCI’s approval.

Companies being acquired must obtain CCI approval if they have a “substantial business operation” in the country and if the acquisition or merger exceeds Rs. 2,000 crores. However, before the amendment, CCI was to be notified only when the parties involved assets or turnover over a certain threshold, which left out “killer acquisitions”, wherein large companies acquire start-up companies that are not doing well financially. This can be seen in Facebook’s acquisition of WhatsApp and Instagram.

2. Reduction of time limit for approval of combinations from 210 days to 150 days

The bill aims to streamline the approval process for mergers and acquisitions by reducing the overall time the Competition Commission of India (CCI) takes to approve such requests. It also seeks to shorten the timeframe for companies to respond to objections raised by the CCI. The CCI must form its initial opinion within 30 days; otherwise, the combination will be considered approved. Furthermore, the bill suggests a reduction in the time limit for the assessment of amalgamations to 150 days, down from the current duration of 210 days.

3. Local Nexus Criteria

Section 5 of the Competition Act, 2002 applied the local Nexus test to both parties. However, FC recommended that the local nexus test should apply to the target company or substantial business operation of the company being acquired.

4. Penalty based on income or global turnover.

The proposed changes in the bill empower CCI to impose penalties on anti-competitive agreements and the abuse of dominant position. The penalty can amount to 10% of the average income or turnover of the last three financial years. Notably, the turnover considered for penalties will be the global turnover, extending beyond domestic turnover.

5. Increase in penalty for combination misrepresentation.

The bill introduces an increased penalty for misrepresentation during the approval process of a combination. The CCI can impose a penalty of up to ₹5 Crore, surpassing the upper limit of ₹1 crore.

6. Liability of the company and people in charge

Under the proposed changes, the company and the individuals responsible will be held liable, except in cases where the person was unaware of the contravention or exercised all necessary diligence.

7. Other Amendments

The proposed changes in the Competition Bill 2023 have also set aside that the Consolidated Funds of India will be credited with any legal expenses that the Competition Commission of India can recover. Moreover, the measure also grants the CCI the authority to establish guidelines for the appropriate penalties for any Act violations. This will aid in ensuring that punishments are just and appropriate.

The Competition (Amendment) Bill 2023 is a welcome development that will strengthen the Competition Act and promote competition in India. The amendments will make it easier to prosecute cartels, deter anti-competitive behavior, and approve mergers that are in the public interest. These provisions will help ensure that the Competition Act effectively prevents anti-competitive behavior and promotes competition in India.