Note on Competition (Amendment) Act, 2023.

The amendment aims to provide trust-based business environment, regulatory certainty, and faster market
correction mechanisms. The key amendments are as follows:

1. Deal Value Threshold

The Competition Act currently requires transactions involving parties with: (i) cumulative assets of more
than INR 10 billion, or (ii) cumulative turnover of more than INR 30 billion, to obtain the prior approval
of the CCI.

In addition to the criteria of assets and turnover to determine notifiability of a transaction, value of any
transaction, in connection with acquisition of any control, shares, voting rights or assets of an enterprise,
merger or amalgamation that exceeds INR 2000 crore has been provided as a new notification criterion.
Provided that the enterprise which is being acquired or taken control of or merged or amalgamated has
such substantial business operations in India, as specified by the regulations. Such a transaction would
now be a reportable transaction, requiring the prior approval of the CCI. The scope of ‘substantial
business operations’ has not been given by the CCI yet.

2. Reduction of overall time period

 The Amendment Act provides for reduction of overall timeline for review of combinations (M&As) to
150 days, as against 210 days as presently provided.
 Timelines for prima facie opinion have been introduced in the Amendment Act. The Commission to form
prima facie opinion within 20 days of receipt of combination notice (as opposed to the current 30 working
days).
 If no prima facie opinion is formed within this period, the combination shall be deemed to have been
approved.

3. Introduction of limitation Period

Introduction of limitation period of 3 years for filing Information/ Reference for anticompetitive
agreements and abuse of dominant position (i.e from the date the cause of action actually arose).
However, the CCI has the discretion to take up such matters after the three year time period lapses, if it is
satisfied that there was sufficient cause for the delay and its reasons are recorded inwriting.

4. Definition for 'Control' and ‘Turnover’

The competition Act defines control as ‘control over the affairs or management by one or more
enterprises over another enterprise or group’ for the purpose of classification of combinations.’ The same
has been amended to include “the ability to exercise material influence, in any manner whatsoever, over
the management or affairs or strategic commercial decisions by (i) one or more enterprises, either jointly
or singly, over another enterprise or group; OR one or more groups, either jointly or singly, over another
group or enterprise.” The Act does not expand on the term ‘material influence’.

Explanation (c) to Section 5 for computation of 'turnover' has been added, which defines 'turnover' as
meaning the “turnover certified by the statutory auditor on the basis of the last available audited
accounts of the company in the financial year in which the combination notice has been filed, which shall

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be determined by excluding intra-group sales, indirect taxes, trade discounts and all amounts generated
through assets or business from customers outside India”. This has the objective of clarifying the scope
of turnover to be considered for the purpose of ascertaining whether the transaction meets the financial
thresholds.

5. Green Channel – Automatic approval of Combination

The CCI, through regulations, introduced Green Channel for automatic approval of combinations in
August 2019. In the spirit of promoting trust based regulation. It was a first of its kind system in the
world, wherein the transactions get automatically deemed approved on the day of filing if they fall within
the Category mentioned in Schedule III of the CCI Amendment Regulation, 2019. This Amendment Act
now incorporates the Green Channel into the Competition Act.

6. Enabling provision to allow open market transactions

The Amendment Act allows market purchases and other transactions on stock exchanges to be undertaken
by insertion of Section 6A as an exception to standstill obligations. Under this framework for market
purchases (through open offer or acquisition of shares through a series of transactions on a regulated
stock exchange), parties can conduct market purchases without a prior notification to the Commission.
Subsequently, they are required to give a notice to the Commission within a specified time period.
However, parties shall not exercise any ownership or beneficial rights or interest in such shares, until
receiving the Commission's approval for the combination except as specified by regulations.

7. Penalty indexed to Global Turnover

After inquiry if the Commission finds the enterprise in violation of Section 3 or 4 the penalty imposed
was not more that 10% of the average turnover for the last three preceding financial years upon each of
such person or enterprise which is a party to such agreement or has abused its dominant position. Now
Amendment Regulation explains ‘turnover’ to include ‘global turnover derived from all the products
and services by a person or an enterprise.'

8. Penalties
Under the Competition Act, a failure to notify the CCI of the combination may result in the CCI imposing
a penalty of up to 1% of the assets or turnover (whichever is higher) of the combination. The CAA
modifies this provision, and now any party to a combination who fails to make the requisite notification
to the CCI or submit the relevant information in response to an inquiry into the combination initiated by
the CCI may be liable to pay a penalty of up to 1% of the total turnover, assets, or transaction value of
such a combination, whichever is higher.

9. Leniency Plus
The CCI can now grant additional leniency to an existing leniency applicant in lieu of “true and vital”
disclosures vis-a-vis a separate undisclosed cartel. To encourage additional cartel disclosures by granting
incentives to the disclosing party.

Leniency programme is a type of whistle-blower protection, i.e. an official system of offering lenient
treatment to a cartel member who reports to the Commission about the cartel. Section 46 of the Act
provides for such leniency provisions which states: “The Commission may, if it is satisfied that any
producer, seller, distributor, trader or service provider included in any cartel, which is alleged to have
violated section 3, has made a full and true disclosure in respect of the alleged violations and such
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disclosure is vital, impose upon such producer, seller, distributor, trader or service provider a lesser
penalty as it may deem fit, than leviable under this Act or the rules or the regulations.”

10. Hub-and-Spoke type arrangements brought under the presumptive rule of Appreciable
Adverse Effect on Competition (AAEC)

The Amendment Act provides for presumption of Appreciable Adverse Effect on Competition (AAEC)
against participants, who may not be engaged in identical or similar trade, to be part of the agreement
under Section 3(3) if they participate or intend to participate in furtherance of such agreement. This would
capture hub-and-spoke cartels within the presumptive framework of Appreciable Adverse Effect on
Competition.

As such, the scope of a cartel has been widened to include all players who participate in or facilitate such
activities, irrespective of whether the party is engaged in an identical or similar trade as the remaining
participants. This will enable the Competition Commission of India (“CCI”) to also assess anti-
competitive coordination taking place through hub and spoke arrangements (e.g., collusion through trade
associations) under the cartel provisions of the Competition Act.

11. Settlement and Commitment Regulations

Introduction of Settlement & Commitment framework for faster market correction.

The settlement mechanism would apply to alleged contraventions related to certain anti-competitive
agreements and abuse of dominance.

o 'Settlement' introduces an alternative route to resolve any violation under the Act by any party.
o The Amendment proposes that the CCI will be empowered to terminate proceedings initiated
against anticompetitive practices and abuse of dominance upon the payment of a monetary amount
or other terms, based on the nature, gravity, and impact of the contravention.
o An application for settlement may be filed only after receipt of investigation report from Director
General but prior to passing of final order by the CCI. CCI may impose certain conditions which
may include settlement amount. A settlement application can be filed within 45 days of the receipt
of the DG’s investigation report.
o Additionally, once the DG concludes its investigation, relevant evidence has been placed on the
record for CCI’s adjudication. As a result, settlement provisions may involve an admission of
guilt.
o This resolution arrived may be seen as a final order because since it more like an agreement
between the parties, appeals cannot be initiated against these settlements. Notably, the CCI will be
the main and last authority concerned in such cases.

The Commitment framework enables parties to offer commitments for certain type of anti-competitive
agreements and abuse of dominance.

o ‘Commitment' primarily means that the enterprise against which any proceedings have been
initiated has to agree to comply with a certain set of rules or more appropriately known as
‘behavioral remedies’. As a result, the initial proceedings as identified by the CCI may be
terminated on account of such effective terms and methods of implementation as offered. It must
be highlighted that the decision has to be made keeping in mind the interests of all the

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 stakeholders involved including the interests of the parties involved in the investigation, the
interests of the third parties and of the market conditions in general. They are a more effective
compliance tool because they usually result in quicker and palpable remedies and changes.

o An application for commitment may only be submitted after an inquiry has been initiated by CCI,
but within such time, prior to the receipt of investigation report from Director General by the party
concerned. Empowers CCI to accept commitments on such terms and the manner of
implementation & monitoring, as may be specified by Regulations. A commitment application
can be filed within 45 days of the receipt of the investigation order passed by the CCI.

By plain reading of the proposed provisions, it can be understood that a commitment would involve
offering behavioural changes, whereas a settlement would involve a monetary component (in the nature
of a fine or penalty) in addition to offering behavioural changes.

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