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A new bill on competition law to give more power to the regulator on seizures and raids, broaden the scope of approvals

A new bill on competition law to give more power to the regulator on seizures and raids, broaden the scope of approvals

Under the Competition (Amendment) Bill, 2022, the government seeks to increase the severity of the punishments for offences and quicken CCI approvals of mergers and acquisitions.

The variety of anti-competitive contracts is expanded. Quicker clearances for mergers and acquisitions (M& A) The number of lawsuits dropped. Offer parties a lower penalty in exchange for their cooperation during an investigation.

On Friday, the administration revealed a raft of proposed amendments to the competition laws, including the establishment of a settlement mechanism, a reduction in the time required to obtain authorization for combinations, and rewards for parties who cooperate with cartel investigations.Indian economy and competition law : an overview of major judicial  pronouncements - iPleaders

Additionally, provisions for using “value of transaction” as a criterion for notifying combinations to the Competition Commission of India have been suggested in the Competition (Amendment) Bill, 2022, which was tabled in the Lok Sabha on Friday (CCI).

Other recommended revisions include a three-year deadline for reporting anti-competitive agreements and abuses of dominant positions to the CCI, as well as clarifications to terms like “business,” “important product market,” “group,” and “control.”

These are some of the amendments made in a bill submitted to Parliament that aims to make significant changes to Indian law by establishing new safeguards against abuse of power, the purchase of controlling holdings, and corporate M&A deals.

The administration also wants to replace the paragraph about penalties and expand the definition of anti-competitive agreements to include parties that facilitate anti-competitive horizontal agreements.

According to the bill, the section that stipulates that violating any ruling of the National Company Law Appellate Tribunal might result in a fine of up to Rs 1 crore, a sentence of up to three years in jail, or both would be changed.Substantive Provisions under the Competition Act, 1998

The government intends to enhance the fine for offences including restricting competition and hurting consumer interests to Rs 5 crore from Rs 1 crore through The Competition (Amendment) Bill, 2022. According to a draft of the bill examined, the decision to change the Competition Act, 2002 was required due to the considerable growth of Indian markets and the creation of diverse business models.

Due to “a fundamental shift in the way businesses functioned in the previous decade,” the new measure, which was submitted in the Lok Sabha on August 5, was necessary. Is it scheduled to be presented in the Rajya Sabha during the week of August 8–12?

If a company wants to acquire ownership, shares, voting rights, etc., and the transaction’s worth exceeds Rs 2,000 crore, it must have the Competition Commission of India’s (CCI) clearance. If the buyer has submitted an application to the CCI promptly or hasn’t yet exercised rights from the purchase, the launch of an open offer or the purchase of shares or convertible securities may proceed without interruption.

The proposed legislation would decrease the 210-day maximum evaluation period for M&As to 150 days. It also seeks to strengthen CCI by allowing its Director General to confiscate records and documents during an inquiry. The Chief Metropolitan Magistrate of Delhi must be contacted by the CCI for this.

The Director General, a senior official who normally conducts investigations into anti-competitive offenses, may also hire a police officer or another central government official to help with the investigation. According to the law, each officer is required to abide by the CCI’s request.Merger and Amalgamation in Competition Law | Law column

Recently, the CCI has conducted raids targeting businesses it believes are engaging in anti-competitive behavior, including beverage producers and tire manufacturers. Technology-related credentials are required for CCI members, which is a blatant indication that the government wants to bolster the regulator’s escalating investigational resources and professional experience. Additionally, the measure aims to establish “technical expertise and knowledge as an additional criterion for the members of the selection committee.”

Another suggested modification would shorten the present 210-day clearance period for combinations to 150 days and require the CCI to formulate a prima facie conclusion within 20 days to expedite the process.

In addition, the government intends to implement a “Settlement and Commitment framework to decrease litigation” and provide incentives to participants in an ongoing cartel investigation to provide information about additional cartels in exchange for a lighter punishment.

The government has suggested, among other changes, that the CCI choose the Director General with the prior consent of the central government and issue rules, including sanctions to be applied by the CCI.The Competition Act, 2002 and Competition Commission of India: an analysis  - iPleaders

Businesses under investigation have the option of settling by paying a price outlined by rules. If the CCI decides that the punishment is not suitable, it will give opposing parties a chance to be heard and may reject the settlement.

For two years from the date of leaving office, the CCI chairperson and members are prohibited from accepting new jobs. Give the appellate panel the authority to refuse to hear appeals unless the complainant pays 25% of the fine the CCI levied.

Offer a reduced punishment in exchange for information to encourage parties to cooperate with a cartel investigation. Allow the CCI to extend the deadline by up to 30 days to accommodate parties’ requests to submit more information or correct mistakes in a notice. Limit the amount of time to three years for CCI to receive information on anti-competitive agreements and misuse of dominant positions.

In 2002, the Competition Act was passed.

According to the government’s Statement of Objects and Reasons for the law, the Indian market has grown significantly during the past ten years, and commercial operations have undergone a paradigm change. The corporate affairs ministry, which is executing the Act, established the Competition Legislation Review Committee, which made many revisions to the law recommendations.Govt forms Competition Law Review Committee to review Competition Act 2002

“It is deemed important to alter the aforementioned Act,” the statement said. Rao Inderjit Singh, minister of state for corporate affairs, proposed the bill after evaluation of the proposals presented by the committee, public discussions and to offer regulatory clarity and a trust-based business climate.

edited and proofread by nikita sharma



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