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Government of India introduces competition (amendment) bill, 2012

Government of India introduces competition (amendment) bill, 2012

The Government of India introduced theCompetition (Amendment) Bill 2012 (the Bill) in the Parliament on 10 December 2012. The Bill aims to rectify few provisions of the Competition Act, 2002 (the Act) which arose out of suggestions made by the National Competition Policy Committee. The salient features of the proposed Bill are as under:

–        While defining turnover of an enterprise, statutory taxes, if any, levied on the sale of goods or provision of services have been excluded;

–        Till now vertical agreements covered sale and purchase of goods between enterprises. The Bill has included provision of services as part of commercial transactions likely to be assessed under the Act;

–        The reasonable exemption of intellectual property rights has been broadened to include any future/new intellectual property Laws which may emerge from time to time;

–        Collective dominance by enterprises and abuse thereof has been proposed to be added in Section 4 of the Act;

–        The Government Notification of March 2011 enlarging the definition of “group” by increasing the voting rights from 26% to 50% has been proposed to be made part of the Act thereby replacing the Notification by inserting suitable amendments in the principal Act itself;

–        The different assets and turnover thresholds tests for certain class of enterprises for pre-merger filing before the CCI have been proposed and powers have been given to the Government of India to notify different thresholds for different industries in consultation with the CCI. This amendment appears to be in line with the advice given by the Planning Commission of India in respect of the pharmaceutical sector;

–        Powers of the Chairperson, CCI have been substantially enhanced as the Bill proposes to make the Chairperson as one of the Members of the Selection Committee while selecting other Members of the CCI. While the status of Chairperson has been distinguished from that of other Members of the CCI but suitable amendments in the definition clause relating to Members have not been made. This infirmity may also give rise to unforeseen complications/difficulties in relation to implementation of Section 10(4) of the Act read with the proposed amendment of Selection Committee relating to other Members;

–        The Chairperson will replace the Chief Metropolitan Magistrate, New Delhi while authorizing dawn raids to be conducted by the Director General (DG), CCI. The power to authorize dawn raids by the Chairperson may help expedite cartel/bid rigging investigations but challenge against exercise of such powers on grounds of becoming judge of its own cause is not ruled out;

–        Harmonization and the concurrency between the CCI and the sector regulators are proposed to be made a mandatory cross referencing between them from the present discretionary powers available under the Act. Section 21 and 21 (A) have been proposed to be amended suitably thereof;

–        Whenever the Commission disagrees with the Investigation Report of the DG it may close the matter being not proved. Concerns were raised by parties aggrieved by such orders since the principal law did not provide an opportunity of appeal against such orders. These infirmities have been proposed to be remedied by suitable amendments in Sections 26 and 53A of the Act. In case the CCI decides to impose pecuniary penalties against cartels and bid riggings post completion of inquiry, an opportunity of being heard is proposed to be given parties before imposition of penalties and suitable insertions have been proposed to be made in Section 27 of the Act;

–        Waiting period for any merger notification has been reduced from 210 days to 180 days and necessary amendments thereof have been proposed in Section 31(11) & (12) of the Act. However, corresponding changes in Section 6(2) (A) of the Act have not been made which may give rise to unforeseen complications; and

–        The issues relating to joint ventures continued to remain a grey area and distinguishable from international best practices.

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