Livemint, March 12, 2023
Gireesh Chandra Prasad
Synopsis
The proposed commitment and settlement scheme will enable businesses to negotiate settlements with the CCI and pay a fee to the government in case of anti-competitive agreements and abuse of dominance.
New Delhi: The government is planning to roll out a settlement scheme for competition law breaches and introduce deal value as a measure for regulating mergers and acquisitions involving global firms by the year end, hoping the reforms will get Parliamentary approval in the budget session itself, said two people in the know.
Work is underway on framing the rules and regulations, which will specify the finer points of the amendments to the law, said one of two people aware of the discussions in the government.
The ministry of corporate affairs will modify the proposals in the Competition Amendment Bill, 2022 currently pending in Lok Sabha, in the budget session which resumes on Monday, based on recommendations of the Parliamentary standing committee on finance, which studied the Bill.
“Once cleared in Lok Sabha, the Bill will be moved in Rajya Sabha in the current session along with modifications. We expect the regulations on commitment and settlement scheme and merger regulation based on deal value threshold later this year once the Bill gets Presidential ascent. This is expected well before the year-end,” the person quoted above said.
The second person said that modifications to the Bill will be made before it is taken up for consideration in both the Houses in the current session itself and that the Competition Commission of India (CCI) will hold public consultation before the regulations are finalised. The second half of the budget session runs from 13 March to 6 April.
The proposed commitment and settlement scheme will enable businesses to negotiate settlements with the CCI and pay a fee to the government in case of anti-competitive agreements and abuse of dominance. But it won’t be applicable in cases of cartelization, which is seen as very serious offence. This is expected to avoid lengthy litigation and improve ease of doing business.
The proposed new merger regulation criteria is ₹2,000 crore of deal value, which will bring global transactions involving Indian target entities with local business operations under the CCI’s M&A regulations.
Another reform the ministry is expecting to make is about increasing the penalty for anti-competitive practices. The penalty, as proposed, will be a percentage of the offending company’s global revenue or income. The current practice is to levy part of the ‘local or relevant market’ revenue as penalty. This is likely to be a bigger deterrence.
Experts said that deal value-based merger regulation and negotiated settlements are significant changes proposed in the Bill, which could pose transition issues, including capacity constraints at the CCI, which needed to be addressed on a priority.
“Considering that these changes are being introduced at a time the Commission itself is dealing with resource and staff constraints, is perhaps more worrying. It is is absolutely important to build capacity, add more staff and get all the members of the Commission on board while introducing these legislative changes so that there is no unintended consequence or confusion in the market. It will also provide assurance to the stakeholders,” said Amol Kulkarni, Director of Research at CUTS International, a non-profit, non-governmental organisation working on public interest issues.
Emails sent to the CCI and to the ministry of corporate affairs on Friday seeking comments, remained unanswered at the time of publishing.
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