This article, authored by our competition team, provides a snapshot of the key changes to the Indian antitrust regime post the passage of the bill further amending the Competition Act, 2002.
Authored by Vinod Dhall, Senior Adviser, Gaurav Desai, Partner, Shruti Bhat, Counsel, Apurva Badoni, Associate and Juhi Hirani, Associate.
A New Age for the Indian Antitrust Regime
The Indian Parliament recently passed the Competition (Amendment) Bill, 2022. This bill will become law once it receives Presidential assent. Pursuant to this development, the Indian antitrust regime has received a significant overhaul, which we have discussed below.
A. Merger control
(a) Introduction of the deal value threshold:
Apart from the existing filing thresholds, merger control assessments will need to be conducted taking into account the value of the transaction. Transactions with a value exceeding INR 20 billion (approx. USD 242 million) would be required to be notified to the Competition Commission of India (the CCI) in cases where the target has “substantial business operations in India” (which will be clarified subsequently by way of regulations).
(b) Definition of control:
The threshold for ‘control’ has received more certainty, i.e. it will be the ability to exercise “material influence” over the management or affairs or strategic commercial decisions of an enterprise or group.
(c) Acquisitions resulting from open offers, etc.:
The standstill obligations under the Indian merger control regime would not apply to open offers and market purchases on stock exchanges provided the acquirer: (i) makes a merger filing with the CCI within such time and manner as may be prescribed; and (ii) does not exercise any ownership, beneficial rights or interest in the target until receipt of the CCI’s approval.
(d) Definition of turnover:
Computation of turnover in India will exclude intra-group sales, indirect taxes, trade discounts and, most importantly, all amounts generated through sales to customers outside India.
(e) Increase in maximum penalty for making false statements or omission of material information:
The maximum penalty for doing so (in merger cases) has been increased from INR 10 million (approx. USD 0.12 million) to INR 50 million (approx. USD 0.61 million).
(f) Procedural timelines:
Amongst others, the overall time period given to the CCI after which there would be a deemed approval is now 150 days, instead of 210 days, and the time period for the CCI to form a prima facie view for a Phase 1 clearance is now 30 calendar days, instead of 30 working days.
(a) Settlement and commitment:
In a new development, parties to an anti-competitive vertical agreement and / or abuse of dominance investigation can now offer commitments or propose settlements. (This has been separately covered in detail in our article here.)
(b) Hub and spoke cartels:
Entities which are not engaged in identical or similar trade could also be expressly caught under the ambit of anti- competitive horizontal agreements if they participate (or intend to participate) in the furtherance of such agreements. This will be particularly relevant for trade associations who have been found guilty of cartelisation in several cases in the past.
(c) Computation of penalty based on global turnover:
In enforcement cases, penalty will now be computed based on the global turnover derived from all the products / services of the party being fined.
(d) Limitation for filing of an information / reference:
An information or a reference to the CCI needs to be filed within three years from the date on which the cause of action has arisen (though delays can be condoned).
(e) Dismissal of repeat cases at prima facie level:
The CCI can dismiss a case at the prima facie level if the case presents the “same or substantially the same facts and issues” as dealt with by the CCI previously.
(f) Leniency plus:
A further reduction in penalty can be provided to a cartel participant if it discloses details regarding another cartel.
(g) Penalty deposit for appeals:
Appeals from the CCI’s orders before the appellate tribunal will only be entertained once 25% of the penalty (as imposed by the CCI) is deposited by the parties.
(h) Guidelines on penalty:
The CCI will be required to publish guidelines on the appropriate amount of penalties for antitrust contraventions.
This material is for general information only and is not intended to provide legal advice. For further information, please contact: