The Competition Amendment Bill was passed in the Lok Sabha today amidst uproar. Through this, it is proposed to make several changes in the existing law in the calculation, liability and settlement system of fines on the global business of companies.
The value of the deals has also been fixed under the Bill. This will give the Competition Commission of India (CCI) an opportunity to review special pricing deals.
Till now only the business of any company in India was considered in the matter of penalty. But the Competition Bill with the amendment states that the company will be seen trading in products and services across the globe.
Avantika Kakkar, partner and head (competition), Cyril Amarchand Mangaldas, said, “From a trader’s point of view, considering total turnover can lead to unfair and punitive results. Also, it may lead to discrimination between enterprises as all enterprises commit the same violation but the penalty may vary depending on the size and scope of the business.
The Competition Bill was introduced in the Lok Sabha only in August last year. The Bill was then referred to the Parliamentary Committee on Finance, which is headed by Jayant Sinha. The government did not accept most of the recommendations of the committee.
Under this Bill, the time limit for approval of mergers and acquisitions has been reduced to 150 days from the existing 210 days. The transaction value limit has also been made a yardstick for notification of mergers and acquisitions. This has been done primarily to prevent rogue acquisitions in digital markets, which have so far escaped the Commission’s scrutiny due to low assets and low revenues.
Pallavi Shroff, managing partner, Shardul Amarchand Mangaldas & Co, said, “Some of the amendments are business friendly and in line with the ease of doing business mission of the government. But there may be uncertainty in the implementation of some others. The implementation of many of these comprehensive proposals will also depend to a large extent on the rules issued by the CCI.
Other modifications include the formal introduction of the Leniency Plus model. CCI will impose lower penalty on cartels under investigation so that they come forward to give information about other cartels.
The Bill also clarifies the definition of ‘control’. This will ensure the applicability of the compensation provisions under the CCI settlement order. Personal influence will be the basis for ‘control’ in the target company during CCI approval. The Standing Committee had also suggested this.
According to government sources, the bill may be introduced in the Rajya Sabha next week.
