The Competition (Amendment) Bill, 2022

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Last Updated26/08/2022

The long-awaited Bill to amend the Competition Act, 2002, was finally tabled in the Lok Sabha recently.

The Indian Competition Act was passed in 2002
But it came into effect only seven years later.
Provided for the establishment of the Competition Commission
Pursues 3 issues of anti-competitive practices:
- anti-competitive agreements
- abuse of dominance
- combinations.
Market changed rapidly due to technological changes, amendments became necessary to promote market competition.
So, a review committee was established in 2019.

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Section 5: Parties indulging in merger, acquisition, or amalgamation need to notify the Commission of the combination on the basis of ‘asset’ or ‘turnover’.
New Bill proposes to add a ‘deal value’ threshold.
Mandatory to notify the Commission of any transaction with a deal value over ₹2,000 crore or if either of the parties has ‘substantial business operations in India’.
Commission shall frame regulations to prescribe the requirements for assessing whether an enterprise has ‘substantial business operations in India’.
It will strengthen the Commission’s review mechanism
Particularly in digital & infrastructure, not reported earlier, as the asset or turnover values did not meet jurisdictional thresholds.
When business entities are willing to execute a combination, they must inform the Commission.
Commission may approve or disapprove the combination.
Earlier had 210 days to approve the combination, after which it was automatically approved.
New Bill seeks to accelerate the timeline to only 150 working days (a 30 days conservatory period for extensions).
Will speed up the clearance of combinations
Will increase the importance of pre-filing consultations with the Commission.


Unaffordable Transactions	Acquisitions involving open market purchase of target shares must be completed quickly. If parties wait for the Commission’s clearance, the transaction may become unaffordable.
Unfavourable regulations	Similar to the European Union merger regulations. Amendment Bill proposes to exempt open market purchases & stock market transactions to advance notify them to Commission. Condition: acquirer does not exercise voting or ownership rights until the transaction is approved and notified to the Commission.

Currently, the prohibition on anti-competitive agreements covers entities with similar trades engaging in anti- competitive practices.
It ignores hub-and-spoke cartels operating at different levels of vertical chain by distributors and suppliers.
The amendment broadens the scope of ‘anti-competitive agreements’ to catch entities facilitating cartelisation.

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The new amendment proposes a framework for settlements and commitments relating to vertical agreements and abuse of dominance.
In this case, the parties may apply for a ‘commitment’ before the Director General (DG) submits the report.
‘Settlement’ will be considered after the report is submitted and before the Commission decides.
In the amendment, the Commission's decision will not be appealable after hearing all stakeholders in the case.
It will come out with regulations regarding procedural aspects.

Allows the commission to give an additional waiver of penalties to an applicant who discloses the existence of another cartel in an unrelated market.
Condition: The information enables the Commission to form a prima facie opinion about the existence of the cartel.

According to the Bill, the DG has the power to conduct investigations, including raids.
The Commission will only consider information filed within three years of the occurrence of the cause of action.
For false information filed, five crore penalty will be imposed.
For failure to comply with the Commission directions, a penalty of ₹10 crore will be imposed.
Commission will develop guidelines regarding the amount of penalties for various competition violations.
For an appeal to be heard by the National Company Law Tribunal (NCLT) against the Commission’s order, the party will have to deposit 25% of the penalty amount.

By these amendments, the Commission should be better equipped to handle new-age market and transform its functioning to be more robust.
The proposed amendments are heavily dependent on regulations that will be notified by the Commission later.
These regulations will influence the proposals.
The government needs to recognise that market dynamics change constantly, so it is necessary to update laws regularly.