The previous post on the Competition Amendment Bill, 2012 discussed amendments upto Section 9. Continuing therefrom, is as follows:

6. Amendment to Section 20 and Section 21 and Section 21A

In Section 20 of the Act, in sub-section (2), the words “or reference” are to be omitted. Whereas, in Section 21, in sub-section (1), for the words “is raised by any party” and  “authority may”, the words “arises” and “authority shall” are to be substituted respectively. Furthermore, the proviso is also to be deleted.

While the amendment to Section 20(2) merely fixes a clerical error, the amendments to Section 21 are important as the intention is without a doubt to try and bridge the differences which have arisen between the CCI and various other regulatory bodies on jurisdictional conflicts between them (For previous posts on this issue, see here, here and here). Similarly, the amendments to Section 21A will ensure that the sector specific regulatory bodies do not feel left out by putting a vice – versa obligation upon the CCI as well.

While the amendment puts a compulsion on any sector specific regulatory body to refer a competition matter to the Commission (which is good), it however, does not clarify as to who exactly decides if a competition related issue has arisen. It does not clarify whether the CCI or the regulatory body is to be the final arbiter of this question and this does tend to encourage ambiguity and this will without a doubt be submitted as a preliminary objection by lawyers in such disputes. However, once can assume that the term “arises” would refer to any violation of the provisions of the Competition Act.

7. Amendment to Section 26

This is again a clarificatory amendment on the Commissions power to refer the matter back to the Director General for further investigation by inserting the line “and make appropriate orders thereon after hearing the concerned parties” after each Sub-Section.

8. Amendment to Section 27

There are two amendments proposed in Section 27

(i) In clause (b), after the proviso, the following proviso shall be inserted:

“Provided further that no such penalty shall be imposed by the Commission
under this section without giving an opportunity of being heard to the producer,
seller, distributor, trader or service provider, as the case may be.”

(ii) In clause (g), after the proviso, the following proviso shall be inserted:

“Provided further that while passing orders under this section, the
Commission shall give due regard to the opinion given by the statutory authority,
where such opinion has been obtained under the provisions of sub-section (1)
of section 21A of this Act.”.

These additions into Section 27 do not seem to serve any useful purpose. The first proviso to be inserted provides an unnecessary extra procedural hurdle whereas the latter proviso was not really needed considering the Commission would anyways have to do the same under Section 21A. However, since it does not seem capable of causing any foreseeable harm in the future, so be it.

9. Amendment to Section 31

The Amendment to Section 31(11) seeks to reduce the statutory time available to the Commission to decide on notices of Combinations from two hundred and ten days to one hundred and eighty days. At the same time, the Amendment to Section 31(12) allows the parties to the Combination to apply for another one hundred and eighty days to comply with the Commissions Order/modifications from the previous period of upto ninety days. While these amendments are welcome, they will not be able to deliver the desired effect unless the Commission is adequately staffed. From what one has heard through the grapevine, the CCI is still grappling with recruitment problems for various vacant posts.

10. Amendment to Section 41

This is by far the most important amendment proposed to the Act. It aims to ensure the Commission of full and effective control by conferring the authority on the Commission to grant powers of search and seizure to the Director General’s office as and when required. this is similar to powers given to U.S. and E.U. competition authorities and will go a long way in effectively enforcing the Act. While such sweeping preeminent powers have been much criticised in the E.U. (especially in the case of dawn raids), I feel the puzzle pieces shall overtime fall into place with the help of judicial interpretation and CCI regulations.

11. Amendments to Section 43, Section 51, Section 53A and Section 63

A few small clarificatory and clerical amendments have also been proposed:

In section 43 of the principal Act, for the words “punishable with fine”, the words “liable to a penalty” are proposed to be substituted.

In section 51 of the principal Act, in sub-section (2), in clause (a), for the words “the Registrar”, the words “the Secretary” shall be substituted.

In section 53A of the principal Act, in sub-section (1), in clause (a), for the words, brackets and figures “sub-sections (2) and (6)”, the words, brackets and figures “sub-sections (2), (6), (7) and (8)” shall be substituted. This has probably been proposed in response to arguments raised in Singhania & Partners LLP v. Microsoft Corporation and Jindal Steel & Power Ltd. vs Steel Authority of India Ltd. [Attached our the main Orders of the Commission. Please visit the COMPAT website for the Tribunal Orders on the Appeals, where such grounds were raised.]

In section 63 of the principal Act, in sub-section (3), after the words “Every notification issued under”, the word, figure and letter “section 5A”, shall be inserted.

CONCLUSION

Overall, its a good bill, and in all probability the treasury benches shall face little opposition on it. the real question is when it will come up for vote and be passed. In the meantime, here’s hoping for a better competition regime in the Country soon.

P.S.: If I had to rate the Bill, I would give it a 7/10. Please do reply with with your thoughts on how you would rate the Bill in the comments sections below.

The Government on 10th December finally introduced the much awaited (and speculated upon, considering the number of pieces I read in the Economic Times on it) Competition Amendment Bill, 2012.  Obviously, we have been looking forward to write a post on the Bill (and i’m sure the readers have been waiting as well). So, hereunder, is a detailed analysis of the Competition Amendment Bill, 2012.:

1.  Amendment of Section 2

Section 2(y) defines the term “Turnover” . In it, as per the Bill, after the words “goods or services”, the words “excluding the taxes, if any, levied on sale of such goods or provision of services” are to be inserted. This amendment does help to provide a clarification on the turnover threshold for combinations.  However, what is also important is to note that it also reduces the quantum of penalty which can be levied by the Commission under Section 27 of the Act, which relies heavily on this term to ascertain the quantity to be levied. Personally, I do not consider this to be irrelevant as considering the intention of the Competition Act is to take punitive action against violators of the provision of the Act, any amendment whose consequence is to reduce the punitive burden on the violator in case of contravention is not suitable in the long term interest of enforcement of the Act. Some may choose to disagree, but I have always been a firm believer that competition law violators need to be hit hard where it hurts the most (their wallets) in order  to ensure the desired effect.

2. Amendment to Section 3

Section3(4) enumerating the definitions of various vertical restraints to appropriately include “services” wherever necessary. I had noticed this lacunae during my early readings of the Act around two years ago, and in fact, the restrictive definition was also a contention in a moot court competition. While my argument was rejected then, it is nice to find one’s stand partially vindicated. 🙂

3. Amendment to Section 4

In section 4(1), after the words “or group”, the words “jointly or singly” are to be inserted. This will help in enforcing the concept of “collective dominance” under competition law as recognised in the EU and shall provide some much needed clarification on the interpretation of the Act. (See here for one of my previous posts which partially discusses this issue)

4.  Section 5 and the new Section 5A

firstly, just to clarify, the amendment to Section 4 shall ensure that the Commission does not need to rely on the definition of “Group” under Section 5, which may have caused some confusion since the purpose of that definition is to aid Section 5 exclusively. Moving on, in the Explanation, in clause (b), in sub-clause (i), for the words “twenty-six per cent.”, the words “fifty per cent.” shall be substituted as per the bill. It narrows the definition slightly, but it probably will not have a significant impact on it. What is more relevant is the insertion of a new Section 5A which states as follows:

“5A. Notwithstanding anything in section 5, the Central Government may, in
consultation with the Commission, by notification, specify different value of assets
and turnover for any class or classes of enterprise for the purpose of section 5.”.

The insertion of this new section is primarily intended to supplement the power of the Central Government under Sections 54, 55 and 56 of the Act.

5. Amendment to Section 9.

This is a needless Amendment. In intends to formulate two different procedures for the selection of the Chairperson and the other members of the Commission respectively. this would have made sense if the intention of the Government is to try and circumvent the delay which is often accompanied in the appointment of various Tribunal and Regulatory heads by ensuring that the Commission continues to function. However, such a purpose will not be fulfilled by this amendment since the amendment requires that the Selection Committee first recommend the names, which basically brings everybody back to square one !!

(TO BE CONTD.)