What’s in the news?
- Corporate Affairs Ministry (MCA) is in the process of finalising Rules for operationalising the provisions of the Competition (Amendment) Act, 2023 enacted this year post receipt of Presidential assent on April 11.
- This amendment Act was the most comprehensive overhaul of the existing competition law since its original enactment in 2002.
About the Act
- The Competition (Amendment) Act, 2023 was recently passed by the Parliament.
- The Act makes a number of changes to the Competition Act, 2002, which is the country’s primary competition law.
- The amendments aim to strengthen competition regulation, streamline operations, and foster a business-friendly environment.
Highlights of the Act
- One of the most significant changes introduced by the amendment is the establishment of a new deal value threshold. Under this provision, transactions involving acquisition, merger, or amalgamation that meet or exceed INR 2,000 Cr and involve entities with substantial business operations in India will necessitate approval from the Competition Commission of India (CCI).
- This threshold expands the scope of CCI review, ensuring that even transactions that would typically fall under the minimum exemption are subject to scrutiny if their deal value surpasses the prescribed limit.
Concept of Material Influence:
- One important change is the updated definition of “control,” which now includes the concept of “material influence.”
- This change acknowledges that having the ability to exert significant influence over the management, affairs, or strategic commercial decisions of an entity or group of entities is a key factor in determining control.
- CCI has the authority to establish additional criteria, through regulations, to clarify what constitutes “material influence.”
- This addition aims to provide clearer guidelines on what control means and reduce uncertainty when determining its extent in various business arrangements.
Timeline for the Implementation:
- The amendment has also reduced the timeline for the implementation of a combination from 210 days to 150 days.
- Additionally, the CCI is now required to formulate a prima facie opinion on a combination within 30 days; failure to do so results in the combination being deemed approved.
- These modifications offer enhanced certainty to businesses by reducing waiting periods and streamlining the review process, thereby enabling timely execution of transactions.
- The Competition (Amendment) Act also introduces a three-year limitation period for entertaining information or references regarding alleged contraventions under the Act.
- This limitation period imparts certainty and finality to competition law enforcement, preventing the reopening of cases long after the alleged contravention. It establishes a clear timeframe for parties to file complaints and ensures the timely execution of competition law enforcement.
- The Competition (Amendment) Act, 2023, has brought significant amendments to the Competition Act, 2002, in view of the dynamic changes in the fast-growing Indian market.
- The Amendment Act aims to bring the antitrust law in India at par with changing Indian and global markets.