The National Company Law Appellate Tribunal brought forward kits final verdict sustaining the competition’s regulator’s findings that suggested that Goggle misused the tech firm’s market dominance in the Android ecosystem. As a result, the Lok Sabha passed competition-related legislation. The legislation brought forward novel challenges for Google along with many other global tech firms.
The Competition (Amendment) Bill, 2023, was passed by the Lok Sabha recently on Wednesday. The Bill intends to amend the Competition Act, of 2022. One of the key changes introduced in the law is that it confers the Competition Commission of India (CCI) with the ability to penalize entities that are indulged in anti-competitive behavior on the basis of their global turnover.
Till now, the penalties were decided as the percentage of the relevant turnover of the culpable entities. This typically implies their annual domestic turnover.
Let's begin to understand the story of the Competition Amendment Bill, from the beginning.
The Competition Act, 2002
In the Indian market, the Competition Act, of 2002, regulates competition. It also forbids practices that are anti-competitive in nature like misuse of dominant market positions, cartels, and such mergers and acquisitions that may affect the competition adversely.
The Act has been previously amended by the Competition (Amendment) Act of 2007.
New Changes Proposed
There are quite a few changes proposed by the Bill. Let's discuss them one by one.
First things first, penalties!
Yes, in cases of violations of the Competition Law, there are many penalties introduced. The Bill proposed changes the meaning of the term "turnover" to incorporate global turnover that is acquired from all the products and services by an enterprise or an individual.
The amendment thus proposed brings forward penalties in cases of competition law violations on the basis of an enterprise's global turnover, instead of its turnover in the country.
The time limit for CCI to approve combinations
The Bill brings forward a time limit for the CCI to create a viewpoint and approve or disapprove a combination. The time limit will be changed from 30 working days to 30 days.
This change in the time limit would simply speed up the task of approving mergers and acquisitions in the country.
CCI approval for deals having more than Rs 2,000 crore transaction value
The main aim of the Bill is to regulate mergers and acquisitions in India on the basis of the value of transactions. All the deals having a transaction value of more than Rs 2,000 crore will need CCI's approval.
Additionally, the Bill intends to decrease the time period for the CCI to pass an order on transactions like these from a period of 210 days to just 150 days.
Moreover, the Bill decriminalizes a myriad of offenses under the Act by bringing a change in the punishment type. Such offenses include not being able to comply with the instructions of the Director General or the directions of the CCI with regard to the anti-competitive agreements and misuse of dominant positions.
What are the benefits of Bill to discuss?
The Bill comes with a myriad of changes that would enhance the functioning of the market in many ways.
First things first, the Bill clearly improves transparency. The Bill seeks to change the definition of "turnover" and includes "global turnover" in it. This step would foster accountability and transparency in the market. Such amendments would make sure that the companies are unable to escape penalties with regard to competition law violations by means of shifting their revenue to other nations.
Not to forget, the Bill also enhances ease of business. The amendments to the Act intend to decrease regulatory obstacles and foster ease of practicing business in the country. The amendments aim to offer better clarity to business in India. Moreover, such changes would also decrease the compliance burden for companies.
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