The competition bill 2022

The competition bill 2022

Subject : Economy

Section: Inflation

Context: Last week, the government of India introduced the Competition (Amendment) Bill, 2022, in the Lok Sabha.

Key proposals:

• It seeks to amend the Competition Act, 2002.
• The Bill expands the definition of combinations to include transactions with a value above Rs 2,000 crore.
  • The Act prohibits any person or enterprise from entering into a combination which may cause an appreciable adverse effect on competition.
  • The prohibition applies to transactions where parties involved have:
    • cumulative assets of more than Rs 1,000 crore, or
    • cumulative turnover of more than Rs 3,000 crore, subject to certain other conditions.
• The Bill modifies the definition of control as the ability to exercise material influence over the management, affairs, or strategic commercial decisions.
  • The Act defines control as control over the affairs or management by one or more enterprises over another enterprise or group.
•  The Bill reduces the time limit relating to combinations to 150 days.
  • The Act specifies that any combination shall not come into effect until the CCI has passed an order or 210 days have passed from the day when an application for approval was filed, whichever is earlier.
• The Bill adds enterprises or persons not engaged in identical or similar businesses in the list of agreements having adverse effect on competition, if they actively participate in the furtherance of such agreements.
  • As per the Act any agreement between enterprises or persons, engaged in identical or similar businesses, will have such adverse effect on competition if it meets certain criteria.  These include: (i) directly or indirectly determining purchase or sale prices, (ii) controlling production, supply, markets, or provision of services, or (iii) directly or indirectly leading to collusive bidding.
• Bill proposes to extend the scope of cartels by bringing hybrid anti-competitive agreements within their ambit.
• The Bill adopts a leniency plus programme for cartel identification which involves companies already under cartel investigation to report its involvement in another cartel to get penalty protection.
• The Bill permits CCI to close inquiry proceedings if the enterprise offers: (i) settlement or (ii) commitments.
• The Bill empowers the CCI to bring additional types of transactions within the ambit of the green channel route. 
• The Bill proposes to exempt transactions involving open market purchases and other transactions on a regulated stock exchange from the standstill obligations of the merger control regime provided
  • the transaction has been timely notified to the CCI; and
  • the acquirer does not exercise any ownership/ beneficial rights/interest in such shares or securities.
•  The Bill widens the definition of relevant product market to include the production or supply of products and services considered substitutable by the suppliers.
  • The Act defines relevant product market as products and services which are considered substitutable by the consumer.
•  The Bill expands qualification of the  members of CCI should have professional experience  in the field of technology.
  • As per the Act, the chairperson and members of CCI should have professional experience of at least 15 years in fields such as: (i) economics, (ii) competition matters, (iii) law, (iv) management, or (v) business.
•  The Bill changes the nature of punishment for certain offences from imposition of fine to penalty.