01 Apr The Competition Bill 2023
The Competition Bill 2023
This article covers “Daily current affairs for UPSC“and the topic is ‘The Competition (Amendment) Bill 2023’ which is in the news, it covers “Polity” In GS-2; the following content has relevance for UPSC.
For Prelims: The Competition (Amendment) Bill 2023
For Mains: GS-2, Polity
Why in news: The Lok Sabha passed Competition (Amendment) Bill, 2023 with 13 amendments.
About The Competition Bill 2023
- The Bill seeks to amend the Competition Act of 2002 to regulate mergers and acquisitions based on transaction value.
Key features of the Competition Bill 2023
- Definition of control for classification of combination: Bill modifies the definition of control as the ability to exercise material influence over management, affairs, or strategic commercial decisions.
- Prohibition of anti-competitive agreements: The bill prohibits any agreement or conduct that restricts or distorts competition in the market.
- Transactions worth more than Rs 2,000 crore will need CCI approval.
- Prohibition of abuse of dominant position: The bill prohibits any abuse of dominant position by a company, which could include imposing unfair terms or conditions, predatory pricing, or denying access to essential facilities.
- The time limit for approvals: The Bill proposes to shorten the 210 days for the CCI to issue an order on such transactions to 150 days.
- Merger control: The bill provides for mandatory pre-merger notification and approval of mergers and acquisitions that may have a significant adverse impact on competition in the market.
- Establishment of a regulatory authority: The bill establishes an independent regulatory authority to oversee competition in the market, investigate alleged violations of the law, and impose penalties on violators.
- Leniency programs: The bill provides leniency programs for companies that voluntarily disclose anti-competitive practices, providing incentives for such companies to come forward and cooperate with the regulatory authority.
- Consumer protection: The bill provides for the protection of consumer interests, including the prevention of false or misleading advertising and the promotion of fair and transparent pricing.
- Advocacy and awareness: The bill includes provisions for advocacy and awareness programs to promote understanding of the competition law and its implications among businesses, consumers, and other stakeholders.
Why there is a need for Competition (Amendment) Bill 2023
Some of the recent incidents demonstrate the importance of effective competitive laws and regulatory bodies in India to prevent anti-competitive practices and regulatory bodies in India to prevent anti-competitive practices and protect the interests of consumers and businesses. The CCI has been actively investigating and taking action against such violations, which helps to promote fair competition in the Indian market.
Recent incidents of violating the loopholes of competition laws in India:
- Google: In 2018, the Competition Commission of India (CCI) fined Google for abusing its dominant position in the Indian online search market. The CCI found that Google was promoting its services in search results while demoting the services of competitors.
- E-commerce companies: In 2020, the CCI launched an investigation into allegations of anti-competitive practices by e-commerce companies such as Amazon and Flipkart.
- The investigation was initiated after complaints were filed by traders’ associations, alleging that these companies were engaging in unfair business practices such as deep discounting and preferential treatment to certain sellers.
- Telecom industry: In 2021, the CCI fined three major telecom companies – Bharti Airtel, Vodafone Idea, and Reliance Jio – for colluding to deny interconnectivity to Reliance Jio in 2016. The CCI found that the three companies had entered into an anti-competitive agreement to restrict competition in the market.
- Cement industry: In 2021, the CCI imposed a penalty on 10 cement companies for cartelization and price-fixing. The investigation found that the companies had colluded to control prices and restrict the entry of new players in the market.
Key Issues and Analysis
- Acquisitions in the digital markets are valued based on data or certain business innovations of the company being acquired. Acquisition of such entities may not fall under the purview of traditional thresholds of assets or turnover to evaluate their impact on competition. The Bill proposes to evaluate such deals based on the value of transactions.
- The Bill expands the powers of the Director General for investigating contraventions under the Act. This includes the power to seek information and documents from legal advisers also. This may be at variance with the provisions of lawyer-client confidentiality under section 126 of the Indian Evidence Act, of 1872.
- The Bill mandates depositing 25% of any amount levied by CCI before filing an appeal against a CCI order before the NCLAT. The question is whether specifying a mandatory deposit in the law is appropriate.
- The Act allows the use of intellectual property rights as a defense in cases of anti-competitive agreements. This defense is not available in cases involving abuse of the dominant position. The Bill does not address this gap.
- The National Competitive Policy of India should focus on promoting free and fair competition by focusing on competitive neutrality, i.e. creating a level playing field between all private and public sectors and gradually opening up sectors such as mining, ports, railways, and electricity to the actual competition.
- Early adoption of NCP is critical for realizing the full potential of the digital economy in the aftermath of significant disruptive innovations such as the Internet of Things, machine-to-machine learning, 5G, and so on.
- The recent government moves to implement limited privatization of Indian Railways through the introduction of 109 pairs of routes for private train operations for passenger train services demonstrate India’s growing recognition of the significance of introducing competition in the public sector.
- Yet, unless institutionalized and executed following the adoption of a well-considered and thoroughly debated NCP, such ad hoc measures may not provide the desired benefits.
- For this, there needs to be political will and a national consensus of all political parties.
About Competition Act 2002
- The Competition Act 2002 is legislation passed by the Indian Parliament to promote fair competition in the market, prevent anti-competitive practices, and protect the interests of consumers.
- The Act was enacted to replace the archaic Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, which was unable to effectively address the competition issues in the Indian market.
- The Competition Act 2002 established the Competition Commission of India (CCI) as the regulatory body to ensure the provisions of the Act are effectively implemented.
- The CCI is responsible for preventing anti-competitive agreements, abuse of dominant position by enterprises, and regulating mergers and acquisitions to ensure they do not result in a significant adverse impact on competition.
About The Competition Commission of India (CCI)
- The Competition Commission of India (CCI) is an independent regulatory body established under the Competition Act, of 2002 to promote and sustain competition in the Indian market, protect the interests of consumers, and ensure freedom of trade.
- The CCI is headquartered in New Delhi and has regional offices in Mumbai, Chennai, and Kolkata.
- The CCI is responsible for enforcing the provisions of the Competition Act, which includes preventing anti-competitive agreements, abuse of dominant position by enterprises, and regulating mergers and acquisitions to ensure they do not result in a significant adverse impact on competition.
- The CCI has the power to conduct investigations, impose fines and penalties, and even order the divestment of assets in cases of anti-competitive behavior.
- The CCI has also been actively engaged in advocacy and creating awareness about competition issues in India. It regularly organizes seminars, conferences, and training programs for businesses, lawyers, and other stakeholders to promote understanding of the competition law and its implications.
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