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  • Writer's pictureMahua Roy Chowdhury

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).

CONTROVERSIES

Some select anomalies are only highlighted here as controversies

1. Penalty

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.

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