Competition is the life force of an economy, spurring growth with inclusivity, innovation, technology, and democratic functioning of markets. While competition ensures the lowest prices and best quality for consumers, a level playing field and lowering of barriers fosters a business-friendly environment, promoting entrepreneurship and investment.
The year 2023 has seen Competition Law gaining traction both in India and globally. While in India, the competition regime saw a wholesale overhaul with 23 amendments, globally too, several developments like the recent Epic Games case in the US to EU’s Digital Markets Act raised new vistas for startups and apps.
Parliament’s 2023 amendments in the Competition Law
2023 will be remembered as a major milestone for the Indian Competition Act, with the parliament’s enactment of the Competition (Amendment) Act, 2023. Several of these changes, in sync with best global practices, were designed to take care of new challenges in a digital economy like killer acquisitions, algorithmic cartels, etc. For M&As, an additional criterion of 'deal value threshold' was introduced. This would enable CCI to review M&As having substantial business operations in India, even when entities are located abroad or have lower than the prescribed threshold. It also introduced settlement and commitment regime as in several advanced regimes, helping faster disposal of cases and market corrections. The law gives recognition to 'hub-and-spoke' cartels, capturing several indirect cartels and providing additional leniency provisions incentivising voluntary disclosures.
The 53rd report of the Standing Committee on Finance headed by Jayant Sinha, had raised concerns about several practices of big tech and others, like self-preferencing, abuse of dominance etc., and recommended the enactment of the Digital Competition Law with ex-ante approach. The Ministry of Corporate Affairs constituted a committee to work on it and their report is awaited.
There was a phase when after the superannuation of the former chairman, CCI didn’t have the requisite quorum. It must be said to the credit of CCI that they found a way, invoked the doctrine of necessity and cleared pending M&A cases continuing the flow of investments uninterrupted. After the appointment of a regular CCI chair, and three members, the quorum was fulfilled, and CCI moved ahead with full gusto. In a rapid series, CCI released draft regulations for public consultations regarding (i) settlements, (ii) commitments, (iii) combinations, (iv) lesser penalty, exhibiting CCI’s consultative practice.
International perspective
More From This Section
As the Indian economy moves up rapidly with digitisation and hi-tech, and European Commission implemented Digital Markets Act, CCI brought in a Digital Market Unit manned by multi-disciplinary experts. Meanwhile, consultations are on about the need and efficacy and designing digital law by Indian needs. The recent verdict in the US in Epic Games vs Google, which had huge a ripple effect globally, is a breather for startups and app developers. In Japan, the government is likely to bring in a regulation to facilitate the operations of app stores.
As India hosted G-20, Competition Law also found a mention in para 19 of the G-20 Leaders’ Declaration, reiterating the commitment of G-20 nations to promote a level playing field and fair competition by discouraging protectionism and market-distorting practices. Later, CCI also hosted the
8th BRICS International Competition Conference (ICC) in New Delhi in October. CCI also
signed an MoU with the Egyptian Competition Authority for bilateral cooperation.
Important cases
CCI has been commended for its disposal of cases. It received 1,250 antitrust cases of which 90 per cent have been decided. It reviewed more than 1,100 M&A cases, of which 98 per cent cases have been approved, average time of less than 30 days, and none blocked. Among major antitrust cases, CCI penalised chemist and druggist associations of Gujarat for antitrust practices, ordered investigations for cement and steel cartels on allegations of price fixing, penalised Chandigarh Housing Board for abuse of dominant position, etc.
Important combination cases include mergers of Air India and Vistara, Zee-Sony; HDFC Bank and HDFC Ltd; etc. A few approved acquisitions include 10.98 per cent of TVS Services by Premji Invest, internal restructuring of IDFC Group; internal merger plan of Haldiram group, etc. CCI penalised a few companies for gun jumping, like Bharti Airtel and Bank of Baroda, for not notifying relevant transactions. In a first, CCI disqualified a ‘Green Channel’ case and imposed a penalty for incorrect information in green channel notification.
In jurisprudence, the Supreme Court in Coal India case held that the Competition Act applies to PSUs. CCI imposed a penalty on Google of Rs 1,337 crore for abuse of dominant position in the Android mobile device ecosystem, also upheld by NCLAT in appeal. The Supreme Court is hearing appeals by Google in their cases of the Android ecosystem and app store market ecosystem.
This year has proved historic for Indian Competition Law. Although relatively young, it has come a long way within 14 years and is reckoned among mature world regulators who all often look at its decisions and approach. It has played a constructive role as a market regulator, in sync with the growth of the Indian economy being looked at globally in admiration, as GDP growth in Q2FY24 came up higher than expectations at 7.6 per cent and record GDP collections, all in sync with India’s new socio-economic policies in surging investments and growth.
Dhanendra Kumar has served as the First Chairman of the Competition Commission of India, Executive Director at the World Bank for India, Sri Lanka, Bangladesh and Bhutan. He is currently Chairman of Competition Advisory Services LLP.
With inputs from Aditya Trivedi, Associate
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper