The Government of India has put the draft Competition (Amendment) Bill, 2020 in the public domain for inviting comments. The Bill seeks to make substantial amendments to the Competition Act, 2002. Previously too, the original Act had been amended on a few occasions.
The Competition Commission of India commenced enforcement of the antitrust provisions of the Competition Act in 2009 and the regulation of combinations in 2011. Since then, the CCI has made considerable progress in its work -- its orders now reflect a better and more mature understanding of the competition law and its underlying economic principles, and a higher level of expertise in undertaking competition analysis.
On the other hand, during the course of its regulatory and enforcement work, certain discrepancies and difficulties in the Act have come to notice which needed to be addressed through further amendments. The government had set up a Competition Law Review Committee to study the changes needed in the Act and make recommendations thereon.
The committee undertook fairly wide consultations before submitting its report. The Secretary, Ministry of Corporate Affairs and the CCI chairman were both members of the committee. Hence the CLRC report implicitly carried their agreement with its recommendations. Most of the provisions in the Amendment Bill are based on the CLRC recommendations.
On the side of substantive provisions of law, the Bill contains some major amendments which will on the one hand, strengthen the enforcement capabilities of the CCI, and on the other hand, make changes in the commission’s processes with the view to facilitate speedier decisions.
These include provisions relating to including buyers’ cartels and hub-and-spoke cartels; widening the scope of agreements, introducing settlements and commitments; introducing leniency plus for cartels, etc.
Regarding mergers, the new provisions proposed include: shortening timelines for merger processes, introducing a ‘green channel’, enabling ‘deal ’ based criteria for deals covered in the CCI’s remit, facilitating acquisitions resulting from open offers and public bids. etc.
Apart from the substantive provisions of the law however, the Bill also seeks to make far-reaching changes in the structure of the Competition Commission.
Direct Supervision Of DG Office
A significant change is in the equation between the Competition Commission and the office of the Director-General. The DG office will now be brought into the main body of the CCI, and the appointments of the DG staff will be made by the commission. Currently, though the DG is supervised by the CCI, it has a measure of autonomy in undertaking its investigations. After the DG’s assimilation into the CCI, the commission will have more direct supervision over the DG office.
Presently, the DG and all staff in the DG office are appointed by the government and that too only on deputation. This has often resulted in long delays in the appointments due to the recruitment processes of the government, resulting in staff shortages. Further, it impairs the growth of specialisation and institutional memory in the DG office due to the short tenures of the DG staff and frequent changes therein, often during an investigation.
Effective Doubling Of Capacity
The strength of the CCI, as per the Act, is one chairman and six members, all whole time. In practice though, the government had limited the strength to only four. The Bill reiterates that the CCI will comprise the chairman and six members. Further, the commission can set up panels of at least three members. This is a commendable step.
It will enable two panels to sit simultaneously and separately dispose of cases, thereby virtually doubling the capacity of the CCI to pass orders. For example, one panel can be processing mergers, while the other can process antitrust enforcement matters. It is also hoped that the government will proceed to appoint all six or at least a few more members. Restricting the strength to three—as at present—handicaps the commission in meeting the quorum requirements.
A ‘Governing Board’
The Bill also seeks to introduce a Governing Board that shall comprise all seven whole-time members and six more members: two of these will be ex-officio and four will be part-time members. The governing board, it seems, will have over-riding powers in all matters except quasi-judicial powers for deciding actual cases.
The governing board will have the powers to make regulations, enter into agreements etc., and promote competition advocacy. These powers are currently vested in the Commission.
In that sense, there will be a curtailment of the powers of the CCI and this can be viewed as restricting its autonomy. However, there can be advantages in so far as the weight of the entire board—including two senior ex-officio members from the government—would be felt behind the commission’s decisions. These could particularly be helpful in inter-regulatory issues, as for example had arisen with TRAI.
This would also enable a greater appreciation within the government of the CCI’s role and functions, and may facilitate the formulation of a ‘Competition Policy’ by the government, which has been on the back-burner for years. It would, of course, have to be ensured that the governing board’s authority should not impair the complete independence of the CCI in the exercise of its quasi-judicial powers in specific merger or antitrust cases.
An adverse perception in this regard, whether inside or outside the country, would be detrimental to the reputation of the CCI.
The induction of part-time members in the governing board is to be welcomed since it will allow outside expertise to be brought to bear on the proceedings of the board. Due to the incompatibility of government salaries with those in the private sector, it has always been difficult to attract eminent experts from the private sector into regulatory positions including the Competition Commission. The position of part-time members on the governing board can to some extent mitigate this deficiency.
Other Fixes
The Bill rightly has provisions for greater interaction between regulators by enabling mutual consultation, even outside specific cases and arriving at agreements for mutual coordination so as to serve the objectives of both the competition law and the other regulatory law. For example, a recent judgment of the Supreme Court imposing its understanding of the jurisdiction of the CCI vis-a-vis TRAI has unnecessarily circumscribed the remit of the CCI, which would in effect allow violations of the competition law by market players to continue, while complying with the regulations of TRAI.
The enforcement of the competition law suffered a setback when the government abolished the Competition Appellate Tribunal and merged it into the National Company Law Appellate Tribunal.
The already overburdened NCLAT has been able to deliver only a few substantive decisions after it got appellate powers under the Competition Act. This has resulted in stalling the progress of a large number of competition law cases. However, the Bill recommends constituting a specialised bench of the NCLAT for competition law cases. If implemented in the spirit in which this provision has been proposed, it could go a long way in redressing the deficiency of having a separate appellate tribunal for competition law.
All in all, the Bill seeks to address several discrepancies and gaps observed in the law during the past decade of implementation of the Act including in structural matters. However, its legislative progress has to be watched as it still has to be introduced in Parliament, after which the parliamentary processes will take over. It can be over a year before the amended Act can see the light of the day.
Vinod Dhall was the first Member and Acting Chairman of the Competition Commission of India. He set up the CCI and created its institutional and procedural framework. He is also former Secretary - Department of Company Affairs, Government of India.
The views expressed here are those of the author and do not necessarily represent the views of BloombergQuint or its editorial team.
As a Subscriber you get
Stories
RECOMMENDED FOR YOU
POPULAR