On May 19, 2023, the Ministry of Corporate Affairs (‘MCA’) notified certain provisions of the Competition (Amendment) Act, 2023 (‘Amendment Act’), effective from May 18, 2023 (‘19 May Notification’). The Amendment Act, which was enacted on April 11, 2023 had clarified that its provisions would be enforced in a staggered fashion. While most of the provisions that are notified by way of the 19 May Notification are clarificatory changes that were introduced by the Amendment Act, some of the significant provisions notified by the MCA, include:
- Expansion of Scope of Cartels to Include “Hub and Spoke Arrangements”: Companies which are not engaged in identical or similar business activities can also be held liable for an anti-competitive horizontal agreement, where they participate or intend to participate in facilitating such an agreement.
- Limitation Period for Filing Information: A complaint against anticompetitive conduct needs to be filed before the Competition Commission of India (‘CCI’) within three years from the date on which the cause of action arose. The CCI is empowered to condone delays.
- Limitation on Filing Similar Complaints: The CCI may not inquire into a complaint regarding an anti-competitive agreement or abuse of dominance, if it has already decided on the same or substantially the same facts and issues in a previous order.
- Admission of Appeal on Partial Deposit of Penalty: Enterprises appealing CCI’s penalty with the National Company Law Appellate Tribunal (‘NCLAT’) will be required to deposit 25% of the penalty amount as a condition for the NCLAT to adjudicate on the appeal.
- Increased Penalty False Statements and Omission of Material Information: The maximum penalty that may be imposed by the CCI on a party to a combination for intentionally making a false statement or omitting any material information has now been increased to INR 5 crore.
- Publication of Draft Regulations: The CCI is now required to publish draft regulations for public comments, issuing a general statement in response to the public comments by the date of the notification of the regulations, and periodically reviewing its regulations. Although this process is now formalised by way of the Amendment Act, the CCI typically ensured transparency in its regulation making process.
- Compounding of Offences: The Amendment Act introduces a provision which allows the compounding of any offence under the Competition Act, 2002 (which does not entail imprisonment) at any point of time during the proceedings, by the NCLAT or a court before which the proceeding is pending. The Amendment Act does not clarify whether this is applicable to merger control as well.
Notably, several significant provisions, including those pertaining to deal value thresholds for merger control notifications; allowing post facto notification in case of on market purchases; penalty on global turnover; and introduction of settlements and commitments (which would apply to cases involving abuse of dominance or vertical agreements), are yet to be notified. This is likely because some of these substantive introductions brought about by the Amendment Act, can come into force along with the accompanying regulations. This would also require the CCI to publish draft regulations for stakeholder consultation before enforcing these provisions. The CCI is likely to issue draft regulations for public comments in the coming weeks.