The Ministry of Corporate Affairs (MCA) on February 12th 2020 published the Competition (Amendment) bill,2020 providing the Indian competition law regime with some new amendments. The Competition Law Review Committee (CLRC) is a high level committee constituted to suggest amendments to cater to the changes in the ever dynamic Indian market. The committee released a report notifying several regulatory amendments and renewed focus on digital economy. After considering  the report from CLRC, the MCA has now prepared the Competition (Amendment) Bill, 2020. It is to be said that the end consumers or the customers are to benefit from these changes.

Some of the salient features of the Competition (Amendment) Bill,2020 are being listed down below:

• Changes in the role of the Competition Commission of India (CCI)

The role of the CCI is multifarious which includes investigation, control and evaluation of restrictive business practices, abuse of dominance by large scale businesses to ensure that competition prevails.

The key amendment introduced in the bill is the formation of a Governing council to bring about more robustness and efficiency in the functioning of the CCI. The Governing body would be constituted  of the Chairperson of the CCI, the six whole time members of the committee, 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 . This council would be empowered to pass regulations, take measures to promote awareness and create a National Competition policy. It will also supervise the functioning of the CCI.

• Appointment of the Director General 

The CCI is to exercise the power to appoint the Director General and not the central government. The office of the Director General (DG) which is constituted under Section 16 of the Competition act is to now act as an investigation branch of the CCI which makes the DG answerable to CCI who was earlier answerable only to the central government.

• Introduction of the settlement and commitment mechanism

 A development that the bill introduced is a regime for settlement and commitment mechanism which permits the CCI to close the investigation on basis of an application for settlement and commitment which is moved by the investigated party.  The objective behind the adoption of such mechanism was to enable the CCI to resolve the anti trust cases faster which would the help the businesses to prevent themselves from long investigation procedures and also reduce the uncertainty However some aspects remain unattended as to whether the settlement and commitment regime would apply to existing cases or not, whether the right to claim compensation survives in case of a settlement. The  bill also mentioned that the commitments are to be made only after the CCI passes an order for investigation prior to the receipt of the  Director General’s report.

This development in the act enables the party which is to be investigated to admit the anti competitive conduct. The commitment and settlement procedure is to take place in the non cartel cases as well. The mechanism of settlement and commitment is non appealable but can be revoked by the CCI under certain circumstances.

• Definition of control

With the various amendments coming the bill also introduced an amendment where the a new definition of control was given. Now the control means to recognize the exercise of material influence[1]. This development has twofold advantages, firstly, the decisions would be more reliable and consistent a large number of transactions will be perused while an investment friendly economy sustains. However the minimum standards to establish such control are not defined in the act itself.

• Streamlining the process for regulation of combinations

There are substantive changes brought in with the bill which includes the number of changes to the modulation of combinations. The principal act stipulated certain specific grounds which would constitute a combination altogether and the parties which are involved in such transactions would be under an obligation to notify the Competition Commission of India before the execution of any such agreement . The time limit for a deemed approval is decreased from 210 days to 150 days. The central government in consultation with the CCI is now empowered to identify any other ground which would constitute a combination [2]. This increases the judicial threshold of the CCI which would help include a number of digital transactions which were currently out of the scope of CCI’s scrutiny.

• Inclusion of new age technology and digital marketing 

The main purpose behind the development of the act is to include in its scope the digital markets which explicitly recognizes the buyer’s cartel and hub and spoke cartels.[3]After this development the transaction in tech and digital space will now come under the CCI jurisdiction. The CLRC  conceded the ways which were used by various companies to escape CCI’s scrutiny and also considered the orders which were issued by the CCI in the Hyundai motor’s case [4] and Uber case [5] and held that knowledge and intention is not to play any major role in these cases. The bill clearly mentions the control over data and specialized assets The rationale behind such inclusion was to expand the scope of the section to online businesses collecting customer data through user feedback loops 

• The provision for penalties guidance

The CCI is now entrusted with the power to impose prohibitive penalties on the companies and the manner in which the penalties are to be imposed . These penalties are expected to give recognition to the relevant turnover principles and lay down the percentage for the imposition of the penalties.

• Definition of a cartel

The definition of cartel now includes the buyer’s cartel as well. The AEEC stated that “though the act covers the buyer’s cartel Within the purview of Section 3(1) read with section 3(3) of the act treating buyer’s arrangement/cartel at par with seller’s cartel may not be appropriate”[6]

Bibliography

[1] Under explanation of clause a of section 5

[2] Proviso to section 5

[3] Section 3(3) Competition act

[4] http://www.scconline.com/DocumentLink/eJSPg4yX

[5] 2018 SCC online CCI 86 

[6] https://www.google.com/amp/s/www.barandbench.com/amp/story/columns%252Fa-look-at-the-draft-competition-amendment-bill-2020-clarity-transparency-robustness-and-bit-more-to-be-desired

Submitted by- Shefali Yadav