This month Competition Commission Of India issued draft regulations on combinations and has been released for public consultation . The stakeholders are given a time period of twenty one days to give comments regarding the same. The CCI Combination Regulation 2023 will repeal and replace the Competition Commission of India (Procedure in regard to transaction of business relating to combinations Regulations 2011. The notification specifies on a deal value threshold for merger and acquisition where value of transaction exceeds Rs 2000 crore and the enterprises either acquired , taken control of ,merged or amalgamated has substantial business operations , relaxing application of Section 6(2A) of the Act to transaction that involve implementation of an open offer or purchase of securities on regulated stock exchanges provided they comply with certain conditions, reduction in the timeline for assessment of combinations to 150 days, introducing an initial thirty days for forming a prima facie opinion , amendment to the scheme for review of combination that includes the state of objections, change in proposing the modifications to combinations.
The watchdog will now scrutinize the big giant players of the markets , ensuring a trust based environment and witnesses a splurge in the business operating , the factors about thresholds bringing adverse effects on the competition under the merger control mechanism inclusive of the digital market space . Earlier the acquisition deal of Facebook and Whatsapp , worth billions effectuated without clearance of CCI. “ Substantial Business Operation in India “ means the number of users ,subscribers , customers and visitors during the preceding twelve months encompasses ten percent or more of overall global count, cumulative of the products and sources. The easier compliance is a sign of progress and ensures no one exploits the economy to suit their needs.
On August 23, The Competition Commission of India (CCI) codified two draft regulations for deliberation to the public. The Competition Commission of India (Settlement) Regulations, 2023 enunciates the procedure to be followed during the settlement proceedings which is inclusive of the following steps Form and contents of the application for settlement along with fee payable; Procedure of settlement proceedings; Period during which settlements may be proposed; Modus operandi in which the Competition Commission of India will call forth objections and suggestions to the settlement terms; Facets to have a gander at by the Competition Commission of India in assessing the settlement terms; factors that exerts influence on determining the settlement amount ;Nature and effect of the settlement order; Effectuation and monitoring of the terms of the settlement order; and Revocation of the settlement order. The Competition (Amendment) Act, 2023 introduced Section 48A of the Act to concoct a settlement mechanism. Section 48A of the Act allows an enterprise against whom an inquiry under Section 26(1) of the Act is initiated for an alleged contravention of Section 3(4) or 4 of the Act, as the case may be, to apply for settlement before the Competition Commission of India . The idea of devising a procedure for settlement is propelled by the need to taper litigation and to ensure market correction. Section 64(1) of the Act empowers the Competition Commission of India (CCI) to make regulations congruous with the Act and the rules made thereunder for carrying out the purposes of the Act.
Section 48A of the Act 2023 provides on settlement where an application may be proffered at any time after the receipt of the report of the Director General under sub-section (4) of section 26 but prior to such time before the passing of an order under section 27 or section 28 as may be specified by regulations. The Commission may, after taking into consideration the nature, profundity and reverberation of the contraventions, agree to the proposal for settlement, on payment of such amount by the applicant or on such other terms and manner of implementation of settlement and monitoring as may be specified by regulations. While looking into the proposal for settlement, the Commission shall provide an opportunity to the party concerned, the Director General, or any other party to submit their objections and suggestions, if any. If the Commission is of the opinion that the settlement offered is not pertinent or right in the circumstances or if the Commission and the party concerned do not reach an agreement on the terms of the settlement within such time as may be specified by regulations, it shall, by order, reject the settlement application and proceed with its inquiry under section 26. The procedure for conducting the settlement proceedings under this section shall be such as may be specified by regulations. No appeal shall lie under section 53B against any order passed by the Commission under this section. All settlement amounts, realized under this Act shall be credited to the Consolidated Fund of India.
The Competition (Amendment) Act, 2023 acquainted with Section 48B of the Act to create a commitment mechanism. Section 48B of the Act enables an enterprise against whom an inquiry under Section 26(1) of the Act is actuated for an alleged contravention of Section 3(4) or 4 of the Act, as the case may be, to offer commitments before the CCI. The intent of creating a procedure for commitment is driven by the need to ensure quicker market correction. The CCI proposes the Competition Commission of India (Commitment) Regulations, 2023 . The Commitment Regulations provide the procedure to be followed during settlement proceedings including the following: Form and contents of the application for settlement along with fee payable; Procedure of settlement proceedings; Period during which settlements may be put in forward; Manner in which the CCI will invite objections and suggestions to the settlement terms; Factors to be considered and cogitated by the CCI in assessing the settlement terms; Manner of determining the settlement amount; Nature and effect of the settlement order; Implementation and monitoring of the terms of the settlement order; and Revocation of the settlement order. The Commission may, after looking into consideration the nature, gravity and impact of the alleged contraventions and potency and efficacy of the proposed commitments, accept the commitments offered on such terms and the manner of implementation and monitoring as may be specified by regulations. While considering the proposal for commitment, the Commission shall bestow with an opportunity to the party concerned, the Director General, or any other party to submit their objections and suggestions, if any. If the Commission is of the outlook and slant that the commitment offered is not appropriate in the circumstances or if the Commission and the party concerned do not reach to a conclusive agreement on the terms of the commitment, it shall pass an order rejecting the commitment application and proceed with its inquiry under section 26 of the Act. The procedure for commitments offered under this section shall be such as may be specified by regulations. No appeal shall lie under section 53B against any order passed by the Commission under this section. However this may stand as a limitation to the legal means of justice.
The European Union has already adopted a settlement and commitment under the competition law regime. The commission can impose fine and other remedies to restore competition. They paved way for this under Regulation1/2003. Till 2016, when the European Commission emanated its first settlement decision pursuant to Article 102 of the Treaty on the Functioning of the European Union following the introduction of said regulation, settlements in the European Union were limited and restricted to vertical infringements and cartel cases governed by Regulation (EC)No 622/2008 procedural guidelines. The Settlement mechanism also exists in the United Kingdom (UK) under Rule 9 of the Competition Act 1998. The anti-trust regime in the United States underwent and endured a drastic change in the middle of the 1990s, with the new strategy being to prevent and avert litigation and strengthen regulation. The concept “time is money” was more applicable than ever as businesses chose promises and settlements to protracted trials, even when the latter would have cost less or not resulted in a punishment at all if the agency failed to assemble sufficient evidence to prove a violation. The US Federal Trade Commission, resolved were through negotiated settlements, referred to as “commitments”, especially in cartel cases. The inclusion of these measures under the amended law is a very positive development that sets forth how India’s antitrust laws are becoming more advanced and progressive. US antitrust laws have metamorphosed through, over a century of enforcement and judicial oversight, and their application has been informed surged by sound economics applied to case-specific facts. Today, antitrust enforcers and courts have generally undertaken the promotion of consumer welfare as the antitrust policy lodestar, and an antitrust policy consensus around that standard has developed. The settlement mechanism is already available wherein the entity can settle the case by paying settlement charges under SEBI. The settlement and commitment mechanisms helps to address anti-competitive issues in a swifter manner avoiding lengthy investigations leading to speedy disposal of cases.
With the rise , progression and transmogrification of the digital markets that India has witnessed over the years , regulation of these Big technology firms became a necessity .The prevailing Competition Act 2002 is inclusive of the traditional market excluding the purview of the digital market competition. While there is an ongoing spark regarding it being an ex-ante regulation and its efficacy ,many are of the view that it ensures equitable and contentious digital ecosystem. The Indian Parliament intends to promulgate a Digital Competition Act (DCA) that fosters transparency in digital ecosystem , having a pragmatic approach.