What to expect from competition law changes

Why was there a need to amend the law?

Changes in economic activity, including the boom in start-ups, growth of the digital economy and the need to improve the ease of doing business, necessitate an update to the law. The rise in new-age businesses meant that entities with huge valuations and market-influencing power escaped the Competition Commission of India’s (CCI) merger rules as they could exceed asset and sales-based monetary thresholds to get CCI approval. did not complete Also, a new approach was needed to correct market distortions as fines imposed by the CCI started going to the courts, affecting consumers.

What are the major changes?

The amendments passed by both the Houses of Parliament seek to expedite regulatory decisions on mergers and acquisitions and expand the regulatory reach of the CCI to higher value transactions. 2,000 crore even though they do not meet the traditional criteria of the Merger Regulation on the basis of assets and sales. The Bill also proposes greater redress through higher penalty provisions based on global sales of corporations. A ‘Lenancy Plus’ scheme aims to encourage entities facing cartel investigations to disclose information about other cartels. The Bill also provides for negotiated settlement.

When will these be implemented?

After the Bill receives the President’s assent, the CCI plans to go for public consultation on the proposed rules to fine-tune the provisions without any unintended consequences. The government intends to introduce rules and regulations before the end of the year. Ministries will have to come out with rules within six months of the change in law.

What is the new merger approval timeline?

The Bill proposes to speed up CCI approval of mergers and acquisitions to within 150 days, down from the maximum of 210 days now. The CCI has to make a first impression of a transaction within 30 days of receiving information about the transaction. If it misses the deadline, the deal is deemed accepted. However, for this to work, the manpower of the CCI needs to be increased. It is still waiting for the chairman to be appointed by the government. But it has secured permission to clear the merger so that economic activity does not suffer.

What about digital competition?

A separate Digital Competition Bill has been suggested by two parliamentary committees to look at the digital economy, where businesses can quickly scale up, tipping the market and erecting entry barriers for new smaller firms. Can The bill would potentially propose ‘do’s and don’ts’ for large digital economy firms to nip market jumping behavior in the bud. This forward-looking approach is different from the traditional approach in which the regulator takes steps after the deed.