Introduction
Merger control
Antitrust enforcement
Procedure


Introduction

Both houses of Parliament in India recently approved the Competition (Amendment) Bill 2023 and later received the assent of the president for the legislation to become the Competition (Amendment) Act 2023. The amendment introduces significant substantive and procedural changes to Indian competition law, including the widening of powers of the Competition Commission of India (CCI). The amendment also aims to update the decade-old Competition Act 2002 with much needed reforms and overhauls certain key aspects of the regime in India. While certain amendments are aimed at equipping the CCI to effectively regulate the increasingly important digital markets, other amendments will require careful exercise of the new provisions through clear and effective regulations.

Merger control

Deal value thresholds
The amendment introduces deal value thresholds which require the notification of transactions valued in excess of 2,000 crores (approximately $243.9 million) to the CCI for its prior approval. The application of this test is still subject to the target having "substantial business operations" in India. The CCI is expected to issue regulations clarifying the scope and interpretation of these thresholds.

Expedited merger review timelines
The amendment has drastically shortened merger review timelines. The earlier statutory review period of 210 days for deemed approval has now been reduced to 150 days. While the intention of the amendment is commendable, this in practice this may mean several more requests for information from the CCI in a bid to gain more review time, which could cause some administrative strain. Parties will also face pressure to provide comprehensive notifications and will likely be required to conduct substantive prefiling consultations on draft merger notifications to minimise delay.

Amendments to definition of control
The amendment codifies the CCI's current decisional practice for defining control (ie, the ability to exercise "material influence" over the management or affairs or strategic commercial decisions). Although the amendment does not define "material influence" or provide parameters to make such determination, in the past the CCI has considered the following when assessing acquisition of "material influence":

  • board representation;
  • financial arrangements;
  • strategic, informational veto or investor protection rights; and
  • the status or expertise of a person.

Derogation of stand-still obligations for stock market purchases
In a welcome change, the amendment has recognised the time-sensitive nature of open market purchases and exempted these transactions from the stand-still obligations (subject to timely notification and non-exercise of beneficial or voting rights).

Antitrust enforcement

Increased penalties based on global turnover
The amendment has restored the CCI's powers to impose penalties calculated on the basis of a party's global turnover. This signals the clear intention of the government to ensure that competition law violations are adequately penalised and that these penalties deter such conduct in the future.

Settlement and commitments
In one of the most significant amendments to the Indian antitrust regime, a mechanism for settlements and commitments has been added to the CCI's enforcement arsenal. Parties can now apply to the CCI to offer commitments while under investigation or can settle a case after investigation. This is only available for abuse of dominance and anti-competitive vertical restraints under investigation, not cartels. Parties entering settlements and commitments can still be subject to compensation claims. The CCI will likely clarify the detailed procedure through regulations

Updates to leniency regime
The amendment seeks to modernise the leniency regime in India by introducing a "leniency plus" mechanism. Where a party under investigation blows the whistle on an additional cartel, it may be granted lenient treatment under both cartel investigations. The amendment also empowers the CCI to reject a market status granted to an applicant who fails to cooperate. A leniency applicant is now also allowed to withdraw its leniency application. The CCI and Directorate General (DG) Office can however use the evidence provided under such application for the purpose of investigation.

Hub and spoke cartels and intent to cartelise
Entities which are not competitors but nonetheless facilitate or intend to facilitate a cartel (eg, trade suppliers, distributors or other third parties) can now be held liable under the same hefty penalty provisions applicable to colluding competitors.

Procedure

Limitation period for filing
The amendment has imposed a limitation period of three years from the date of the cause of action, beyond which the CCI will not accept a complaint (except in cases where the delay may be condoned).

Res judicata
In another step to ease the CCI's case load, the amendment empowers the CCI to reject a complaint if the same or similar facts and issues have been previously addressed and disposed of.

Wider powers of DG
The amendment empowers the DG Office to retain seized documents, information, books and papers for up to 360 days. The investigation arm of the CCI is also empowered to examine third parties and agents under oath (only those professionals that are employed by the parties) as well as to seek the assistance of police officers when conducting dawn raids. The parties under investigation are now statutorily required to preserve and protect relevant documents and offer any assistance required by the DG during the investigation.

Penalty for appeals
Currently, the appellate tribunal directs parties appealing a case to deposit a proportion of the penalty at the stage of hearing on admission. The amendment has now codified this practice and increased the deposit amount from the current 10% to 25% of the penalty. This may become a significant hurdle for smaller parties' ability to exercise the right of appeal.

On 19 May 2023, the Government of India notified and brought into effect several provisions of the Competition (Amendment) Act 2023. These include the amendments regarding the hub and spoke cartels and the procedural amendments mentioned in this article. Notably, amendments that require supporting regulations have not yet been brought into force by the government, which include:

  • deal value thresholds;
  • expedited merger control timelines;
  • settlement and commitments; and
  • penalty on global turnover.

For further information on this topic please contact Sonam Mathur or Dinoo Muthappa at TTA by telephone (+91 11 46299999) or email ([email protected] or [email protected]). The TTA website can be accessed at www.tta.in.