Competition Law: Statutory Update
The President of India recently gave his assent to the “Competition Amendment Bill, 2023 “(CAB, 2023). Background of the Bill:
The Bill first introduced in 2020 lapsed ;
It was again introduced in 2022;
It was referred to the Parliamentary Standing Committee on Finance (SCF)which suggested sweeping changes, but only few got accepted.
Some recommendation were taken from the Competition Law Review Committee (CLRC).
Some select anomalies are only highlighted here as controversies
The 2023 bill empowers CCI to impose a penalty of up to 10% [S.27 (b)]of the global turnover that is sales from all products or services, even if they are not related to the relevant product or relevant market.
This was not proposed by the CLRC;
This was neither provided in the 2020 bill nor the 2022 bill;
Hence, no public consultation were taken for this one;
This deviates from the ruling by the Supreme Court in Excel Crop case [2017 8 SCC 47] to limit the calculation of penalty to relevant turnover (based on doctrine of proportionality).
No Penalty Guideline to be framed to minimise discretion, as in other countries
2. Determination of deal value
The SCF recommended based on the feedback from stakeholders, that the bill 2022 should mandate the Commission to provide detailed guidance on how the deal value would be computed.
New criterion for notifying the deal value, that is if in excess of 2000Cr and either party has substantial business in India.
Whether “substantial business operations in India”, will include physical presence of the entity in India or mere market presence in India.
3. IPR protection is not a defence
Earlier, a party could take the defence that to protect its IPR in a reasonable manner, certain agreements having an anti-competitive provision were entered into.
Despite recommendation of the CLRC that a similar defence may be allowed with respect to abuse of dominance.
The SCF supported this view to avoid any uncertainty and promote innovation.
However, the 2023 bill does not include this defence.
4. Intent to participate will amount to cartelisation
S.3 :“….if it participates or intends to participate in furtherance of such agreement”
How do you establish intent? The penalty being very high, such wide scope or ambiguity should not have been used as any omission or being passive maybe construed as ‘intent’.
The 2022 Bill did not have this element of ‘intent’ which was introduced as an afterthought, hence no public comment on the same.
5. Unregistered Trademark is not an asset
whereas trademark registration is not mandatory by law and it is optional. It is an asset in common law.