Time limit for assessment of combinations reduced vide Competition (Amendment) Act, 2023

On 11-4-2023, the Ministry of Law and Justice notified the Competition (Amendment) Act, 2023 to amend the Competition Act, 2002.

Key Points:

1. The definition of “party” has been inserted. It includes

   “a consumer or an enterprise or a person or an information provider, or a consumer association or a trade association, or the Central Government or any State Government or any statutory authority, as the case may be, and shall include an enterprise or a person against whom any inquiry or proceeding is instituted; and any enterprise or person impleaded by the Commission to join the proceedings.”

2. In Section 5 relating to “Combination”, clause (d) has been inserted which provides that the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises will be a combination of such enterprises and persons or enterprises, if value of any transaction, in connection with acquisition of any control, shares, voting rights or assets of an enterprise, merger or amalgamation exceeds Rs. 2 thousand crores.

3. The timeline relating to “Regulation of Combinations”, for disclosing the details of the proposed combination within 30 days of approval of the proposal relating to merger/ amalgamation or execution of any agreement/ other document for acquisition has been revised to be disclosed after any of the 2 conditions but before consummation of the combination.

4. The revision of combination coming into effect has been revised from 210 days to 150 days from the day on which the notice has been given to the Commission.

5. Section 6-A has been inserted which says that implementation of an open offer or an acquisition of shares or securities convertible into other securities from various sellers, through a series of transactions on a regulated stock exchange from coming into effect will not be affected by the provisions of Section 6 (2-A) and Section 43A.

6. Section 18 which relates to the “Duties and Functions of Commission” has been revised also providing that the Commission can enter into any memorandum or arrangement with any statutory authority or department of Government for discharging its duties.

7. Section 26 relating to “Procedure for inquiry under Section 19” has been revised and Sub-section 2-A has been inserted which says the Commission will not inquire into agreement if the same facts and issues raised in the information received from the Central ir State Government or a statutory authority has already been decided by the Commission in previous order.

8. In Section 26 relating to “Procedure for inquiry under Section 19”, sub- section 9 has been inserted which says that upon completion of inquiry the Commission may pass an order closing the matter or pass an order under section 27, and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned.

9. Section 29-A has been inserted which relates to the “Issue of statement of objections by Commission and proposal of modifications”. It says that if upon completion of the process under section 29, where the Commission is of the opinion that the combination has an appreciable adverse effect on competition, it will issue a statement of objections to the parties identifying such appreciable adverse effect on competition and direct the parties to explain within 25 days of receipt of the statement of objections, why such combination should be allowed to take effect.

10. Section 43-A relating to “Power to impose penalty for non-furnishing of information on combination” has been revised determining the Sections under which the failure to give notice can be penalized. The Sections namely are 6 (2), 6(4), 6(2-A) and 20 (1).

11. The higher limit of penalty mentioned in Section 44 for making false statements or omission to furnish material information has been raised to Rs. 5 crores from Rs. 1 crore.

12. In the case of “Contravention by Companies” mentioned in Section 48, the Commission can impose a maximum penalty of not more than 10% of the average of the income for the last 3 preceding financial years.

13. Section 48-A has been inserted which relates to “Settlement”. In general, it says that any enterprise, against whom any inquiry has been initiated under Section 26 (1) for contravention of Section 3 (4) can initiate settlement by applying in writing to the Commission upon payment of fees.

14. According to the insertion of Section 48-B, any enterprise applying under Section 48-A can offer “Commitments” in respect of alleged contraventions stated in Commissioner’s order under Section 26 (1) providing there is no appeal filed under Section 53 B against the order passed by the Commision.

15. According to insertion of Section 48-C, in cases where the Commision finds out that applicant failed to comply with the order passed under Sections 48-A or 48-C, the same order will stand revoked and withdrawn and such an enterprise will be liable to pay legal costs incurred by the Commission which may extend to Rs. 1 crore and the Commission can also restore or initiate the inquiry in respect of which the order under section 48A or section 48B was passed.

16. Section 59-A has been inserted relating to “Compounding of Certain Offences”. It says that except for any offence punishable with imprisonment, with or without fine, can be compounded by the Appellate Tribunal or Court, before which such proceeding is pending.

17. Section 64 relating to the “Commission’s Powers to make Regulation” has also been revised and various regulations have been inserted.

18. Sections 64-A and 64-B have been inserted laying down the Process of Issuing Regulation enabling transparency in the process and the Commission’s power to publish guidelines on the provisions of this Act.