Overview of the Competition (Amendment) Act, 2023

The Competition Amendment Bill was approved by the Lok Sabha in March 2023 and became an Act in April 2023 after receiving the President's assent.

The new legislation introduces several amendments to the Competition Act, 2002. The original Act was aimed at safeguarding customer interests from anti-competitive behaviour, fostering and maintaining market competition, protecting consumer rights, and ensuring the freedom of trade for all market participants.

• The Amendment focuses on regulating mergers and acquisitions based on the value of transactions. Any transaction exceeding Rs 2,000 crore will now require CCI's approval.
  • This means that transactions valued at Rs. 2000 crore or more will fall under the jurisdiction of the Competition Commission of India (CCI), even if they do not meet the traditional asset-turnover criteria.
• The amendment act substitutes the terms ‘offense’ and ‘punishable with fine’ with ‘contravention’ and ‘liable to a penalty’, respectively, in relation to specific competition law infringements.
• The only criminal provision under the act is for non-compliance with certain orders. This provision empowers the CCI to approach the courts and initiate criminal proceedings.
• The amendment broadens the scope of entities that can be considered part of anti-competitive agreements. It now includes enterprises or individuals not involved in similar businesses.
• The amendments introduce a new provision that allows for the compounding of ‘offences’ that are not ‘punishable’ with compulsory imprisonment (Section 59A).
• Some industry experts believe that the wide-ranging language used in Section 59A could allow compounding for competition law violations that result in civil penalties.
• The act provides a framework for settlement and commitment, facilitating quicker resolution of investigations into anti-competitive agreements and abuse of a dominant position.
• It reduces the time limit for the CCI to pass an order on an application for approval of combinations from 210 days to 150 days.
• The act introduces the concept of ‘global turnover’ of the company, from ‘all the products and services’, as the benchmark for imposing penalties by the CCI for antitrust violations.
• It introduces the leniency plus model.
  • Under this model, an applicant who discloses the existence of other cartels and whose information assists the Commission in establishing a preliminary view of the cartel’s existence, can be granted an additional waiver from penalties.
• The term ‘material influence’ will be used to determine “control” in the target company for CCI approval.
  • The legislation offers a clear definition of “control” and clarifies how compensation claims provisions apply to settlement orders from the CCI.
• The amendment introduces the intention to actively participate in assessing hub-and-spoke cartels.
  • The amendment expands the definition of “anti-competitive agreements” to include organizations that facilitate the formation of cartels, regardless of whether their business activities are identical.

Probable impacts:

• The introduction of the concept of ‘global turnover’ could significantly increase the penalties for any anti-competitive conduct by large corporations.
• It may influence investment sentiments in the economy.