Reforms in competition law await key CCI appointments

Livemint, April 23, 2023

The legislative wing appears to be moving faster than the executive on the competition law reforms, a gap that could hold back plans to substantially ease the terms of doing business in India.

The key reforms were passed as part of the Competition Amendment Act, 2023, towards 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 demitted office on 25 October, the regulator has had only two members.

Officials said the Centre is examining the ideal timing to roll out the reform measures, and the process of appointing these top level CCI functionaries is underway.

This also means examining timelines for triggering some of the regulatory actions once the amended provisions are notified, said a person in the know of the government’s plan.

Currently, the watchdog has been working with just two members, one short of the quorum required for adjudication, one of its key tasks.

Since February, the CCI has been clearing mergers and acquisitions (M&A) applications with the two members as an emergency measure to prevent any hardship to business.

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 Presidential assent earlier this month, is the benefit of deemed approval for mergers and acquisitions if CCI does not take a prima facie opinion within 30 days of receiving the request.

The government is examining if this can be executed with just two members or whether it should wait for the appointment of the new chairperson or members, said the person quoted above, who spoke on condition of anonymity.

The government’s idea is to time the implementation of the changes so that transition to the new regime is hassle free.

“Acknowledging a problem is the first step of resolving it,” said Amol Kulkarni, Director of Research at CUTS International, a non-profit, non-governmental organization working on public interest issues.

“There is a need to address on war footing the capacity constraints CCI is facing in its ability to implement the amendments to the law. The regulator could look beyond its traditional catchment area to external experts for knowledge base and support in implementing emerging regulatory concepts. CCI could also take learnings from other regulators like Sebi in implementing the settlement scheme,” said Kulkarni.

The government expects CCI to evolve the modalities for the scheme of negotiated settlements, which has to be fair.

The amendments allow CCI to settle cases of abuse of dominance and anti-competitive agreements and impose a fee payable by the offender.

Once notified, the scheme will be available to ongoing cases too, depending on what stage each case is at.

The law prescribes different stages of the investigation where the party can apply for either a commitment scheme or a settlement scheme.

M&As are critical for foreign direct investment inflows, and for developing a distressed asset market.

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