Jul 4, 2020

The Competition Act, 2002 replaced the Monopolies and Restrictive Trade Practices Act, 1969, as it became obsolete on account of international economic developments relating more particularly to competition laws, and therefore a need was felt to focus on competition. The Central Government to serve this need set up a High-Level Committee on Competition Policy and Law to study the competition regime in the nation and prepared a report recommending modifications to the MRTP Act.

This ultimately led to the repeal of the Act and a new Act namely, the Competition Act, 2002 was enacted by the Parliament of India. The Competition Act, 2002 was first amended by the Competition (Amendment) Act, 2007 and then again by the Competition (Amendment) Act, 2009. The ultimate objective of this act is to protect the interests of free and fair competition which includes the process of competition and as a consequence of which will protect the interests of the consumers. It also aims to prohibit the abuse of dominance by any business in the Indian market.

It is important for a structured market economy that healthy competition among organizations should take place which will motivate them to efficiently produce high-quality products and services at a competitive price. The Indian Competitive Law governs every business activity that takes place within the country to boost transparency and accountability. This Act not only encourages participation but also provides opportunities for businesses to contribute to the economic growth of the country.

The Ministry of Corporate Affairs (MCA) proposed considerable emendations to the Competition Act, 2002 where it structured an independent committee called the Competition Law Review Committee (CLRC) for analyzing the Act and making recommendations for amendments to the substantive and procedural provisions of the Act. After a detailed analysis of the report provided by the CLRC, the MCA came up with the draft Competition (Amendment) Bill. This Bill was issued in the public domain on February 20th, 2020 for general comments.

The ultimate objective of this bill is to bring the required lucidity to certain provisions,intensify the transparency in the authorities to increase the robustness and efficiency of the system. Out of the fifty remarkable changes that this Bill proposed, forty- five suggestions by CLRC have been accepted by MCA that will be encompassed in the Bill. Some of the notable changes that this Bill suggests are first, reform in the regulatory structure of CCI. CCI had been entrusted with advisory, investigatory, quasi-legislative, adjudicatory and advocacy functions. The CLRC report suggests that there should be a regulatory arrangement in the structure of CCI to make it more efficient and robust.

The Bill provides for the configuration of a governing body which would comprise of: the Chairperson of the CCI, its six whole-time members, the Secretary of the department of economic affairs, Ministry of finance or his nominee, Secretary of the ministry of corporate affairs and his nominee and four other part-time members to be nominated by the Central Government. The Governing body will be conferred with the power to make rules, take measures to generate awareness,and frame a National Competition Policy. They will exercise superintend ence,management, and provide directions to the matters of CCI. CCI now only focuses on adjudicatory functions.

Furthermore,this bill suggests the creation of a panel with a quorum of three members. The selection committee under Section 9 of the Act will not frame any recommendations for the post of part-time members. Secondly, the bill proposes that it is the responsibility of the Governing body to invite public comment son all the rules. The interest of the public should be of paramount importance and this will not only bring transparency but also set up a democratic rule making. Thirdly, the Bill suggests CCI issue penalty guidance. Such guidance will result in the required lucidity. Fourthly, this Bill brings about a substantive change by decreasing the period time which is deemed for approval from 210 days to 150 days.

Next, the Bill proposes to bring amendments to streamline the procedure for an inquiry into combinations. This will fill the gaps in the inquiry process which this Act lacked by providing statutory practices to be followed by the CCI as a result of which appeals against combination orders will decrease. Further, the Bill authorizes the Central Government and CCI to expound a new threshold for merger control by setting forth a proviso to Section 5 with a suggestion to seize transactions in the digital market. The Bill enlarges the definition of a cartel to encompass a buyer’s cartel as well. It also strives to broaden protection to holders of intellectual property rights. The exception for the IPR holders is presently limited to anti-competitive agreements. Hence, this brings lucidity between the treatment of anti-competitive agreements and abuse of dominant position. Lastly, the bill presents a structure for settlement and commitments which empower CCI to close the investigation based on an application for the settlement or commitment advanced by the investigated party.

The Competition (Amendment) Bill, 2020 seeks to address the loopholes, weaknesses, and procedural issues in the Competition Act, 2002 to lubricate the ease of doing business and minimizing the load of CCI. The proposed amendments are going to benefit the middle range startups, businesses, the startups involved in the digital economy, and the public at large. The onset of COVID-19 pandemic has led to an emergence of the online work environment, e-education, etc. and therefore with the proposed amendments, CCI’s capability to examine the combinations in technology markets will increase tremendously.