Competition (Amendment) Bill 2022 – Update (April, 2023)

April 1, 2023

The Competition (Amendment) Bill 2022 was recently passed by the Lok Sabha with the aim of promoting fair competition in the market and preventing anti-competitive practices. The bill was originally introduced in the lower house on August 5, 2022, and was referred to the Parliamentary Standing Committee on Finance, which was headed by Jayant Sinha. The panel made several recommendations that have been incorporated into the amended law passed by the lower house.

Periodic Revision of Threshold and “Effects” of Anti-Competitive Conduct

The Parliamentary panel recommended periodic revision of the basic deal value threshold, retention of the existing overall time limit, and mandating the Competition Commission of India (CCI) to establish the “effects” of anti-competitive conduct of dominant undertakings. The CCI is now authorised to penalise entities found engaging in anti-competitive behaviour based on their global turnover. Previously, penalties for anti-competitive behaviour were based on the percentage of the entity’s “relevant” turnover, which typically means their annual domestic turnover.

Impact of the New Provision on Global Turnover

The provision to penalise entities based on their global turnover could have a significant impact on tech companies, as it could lead to unfair and punitive outcomes and discrimination between enterprises. In the European Union, the penalty for anti-competitive activity is limited to 10% of the overall annual turnover of the company.

Definition of “Turnover” in Competition Law Landscape

The definition of “turnover” is a controversial subject in the competition law landscape. In 2017, the Supreme Court fixed the principle of “relevant turnover” for determining penalties in competition law contraventions. The principle of “relevant turnover” was upheld in a case concerning the alleged contravention of the Competition Act, 2002 in the public procurement of Aluminium Phosphide tablets by the FCI.

Time Limit for Approval of Mergers and Acquisitions

The Competition (Amendment) Bill 2022 reduces the time limit for the approval of mergers and acquisitions to 150 days. This move is expected to reduce uncertainty and provide clarity to businesses engaged in mergers and acquisitions.

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