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Source: The post is based on the article “Making sense of the changes in competition law ” published in Livemint on 5th April 2023
What is the News?
Parliament has given its approval to the Competition Amendment Bill, 2023. The Bill amends the Competition Act, 2002.
Why did the Competition Act need amendments?
Shifts in economic activity, including the boom in start-ups, growth of the digital economy and the need to improve ease of doing business warranted updates to the Competition Act, 2002.
Moreover, the growth in new-age businesses meant that entities with huge valuation and market-impacting power escaped the Competition Commission of India’s (CCI) merger regulations because they did not meet asset and sale-based monetary thresholds for seeking CCI clearance.
Besides, a new approach to correcting market distortions was needed after penalties imposed by CCI tended to end up in courts affecting consumers.
What are the key changes made by the Competition Amendment Bill, 2023?
Firstly, the bill extends CCI’s regulatory reach to transactions valued at more than ₹2,000 crores even if they do not meet the conventional criteria for merger regulation based on assets and sales.
Secondly, it proposes greater deterrence by way of higher penalty provisions based on the global sales of corporations.
Thirdly, it introduces a ‘leniency plus’ scheme to encourage entities facing cartel investigations to disclose information about other cartels.
Fourthly, it proposes to expedite CCI clearance of mergers and acquisitions to within 150 days, down from a maximum of 210 days now.
What about Digital Competition?
A separate Digital Competition Bill has been suggested by two Parliamentary committees to keep an eye on the digital economy where businesses can quickly attain scale, tip the market and erect entry barriers to new smaller firms.
This Bill will likely propose ‘dos and donts’ for large digital economy firms so that market tipping behaviour is checked.