Policy | Will the proposed changes to the competition law weaken it?

The seeming addition of criteria for merger thresholds actually appear to broaden the exemptions available to merging entities (yes, even in the digital space), contrary to proposals of the Competition Law Review Committee and public statements made in this behalf. Such a change charters an entirely contrary course for the CCI when compared with the importance that its peers receive in comparable jurisdictions.

The change proposed to the definition of ‘control’ under the Act has implications on the understanding of the word ‘group’ which have clearly not been considered. While it is arguable that the proposed change reiterates the position of law as it stands today, one is forced to ask why the change necessitated at all? Would this guidance not better be served under the regulations that the CCI can notify from time to time? The idea was, after all, to enable the CCI to evolve with changing market dynamics.

Some of the proposed changes, are of course, definite improvements such as the broadened understanding of the word ‘agreements’; the leniency ‘plus’ regime that allows parties to claim further reduction in penalties if they disclose existence of any other cartel; and, the inclusion of hub-and-spoke arrangements (the CCI has fleetingly referenced such arrangements in certain orders).

Codifying such arrangements opens up possibilities for aggrieved parties, as well as the CCI for busting anti-competitive arrangements that impact market competitiveness. The inclusion of settlement and commitment mechanisms for parties being investigated for abuse of dominance and vertical restraints, shows maturity of the regime.

Another amendment, that has its heart in the right place, but may be too much of a good thing, is the proposed change in timelines for merger review. This is because timelines for merger review at the CCI have been generally exemplary and this fact is well-acknowledged, even internationally. The proposed change may superficially appeal to some stakeholders but in the long run, would not benefit industry because of the administrative hurdles that not only the CCI but also the parties will face with such extremely compressed timelines.

The development of consumer law and policy, internationally, meanders between timorous souls on one hand and bold spirits on the other. The same is true for competition law and policy. While consumer law evidently exists for the benefit of the consumer, the scope of competition law is much more, because it impacts the very heart of commerce and industry; because the large corporations in India have approached the CCI for remedy and recourse against other large corporations in the country; because cartels are pernicious and there exists a real remedy against them; because when large mergers are scrutinised, the market has a voice, which it otherwise would never have had. More, because the promise of a fair, strong, independent and reasonable regulator (which the CCI has earned itself the reputation for) is a good sell point for foreign direct investment.

Union Finance Minister Nirmala Sitharaman speaking at an event commemorating 10 years of the CCI gave valuable guidance when she said that the CCI should help foster healthy competition by staying proactively alert and by taking suo motu action on developments both in domestic and international markets in the context of the ‘new economy’. She spoke about the CCI working with agencies of the government in fostering a fair and competitive market for domestic industry.

She spoke of a restrained, competition watchdog that would help rein in companies that operated in India, but escaped its jurisdiction. When the world is waking up to the reality of ‘competition sans borders’, will the new changes leave our watchdog with too tight a leash?

Avaantika Kakkar is Partner & Head, Competition, Cyril Amarchand Mangaldas. Views are personal