New Delhi: The legislative branch is moving faster than the executive on competition law reforms, a difference that could stall plans to substantially lower the conditions for doing business in India.
The key reforms were passed as part of the Competition Amendment Act, 2023 at the end of the budget session of Parliament. Yet the Competition Commission of India (CCI) remains without a chairman and three other members, potentially hampering the watchdog’s work.
Since former CCI chairman Ashok Kumar Gupta left office on October 25, the regulator has had only two members.
Officials said the Center is examining the ideal time to implement the reform measures and the process of appointing these top-level CCI functionaries is underway.
This also means that the timelines for initiating certain regulatory actions will be examined once the amended provisions are notified, said a person familiar with the government’s plan.
Currently, the watchdog is functioning with just two members, one short of the quorum required for adjudication, one of its key functions.
Since February, the CCI has been approving merger and acquisition (M&A) applications with two members as an emergency measure to prevent any difficulties in business.
The amendments passed by Parliament in the budget session include a new scheme of negotiated settlement.
Another similar industry-friendly provision introduced through the amendment law, which received the President’s assent earlier this month, allows mergers and acquisitions to take place if the CCI does not take a prima facie opinion within 30 days of receiving the request. For which the benefit of deemed approval is available.
The government is examining whether it can be executed with just two members or whether it should wait for the appointment of a new chairman or members, the person cited above said on condition of anonymity.
The idea of the government is to make the implementation of the changes time-bound so that the transition to the new regime is hassle-free.
“Acknowledging a problem is the first step to solving it,” said Amol Kulkarni, director of research at CUTS International, a non-profit, non-governmental organization working on issues of public interest.
“The lack of capacity of the CCI in its ability to implement amendments to the law needs to be addressed on a war footing. The regulator may look to outside experts beyond its traditional catchment area for help in implementing the knowledge base and emerging regulatory concepts. CCI can also take lessons from other regulators like SEBI in implementing the resolution plan.”
The government expects the CCI to evolve modalities for a negotiated settlement scheme, which should be fair.
The amendments allow the CCI to deal with cases of abuse of dominance and anti-competitive agreements and levy duty payable by the offender.
Once notified, the scheme will be available for ongoing cases as well, depending on the stage at which each case is.
The law prescribes various stages of investigation where a party can apply for a settlement scheme or a settlement scheme.
M&As are important for foreign direct investment inflows and for the development of the stressed asset market.
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