N. Parvati

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INTRODUCTION

The Monopoly and Restrictive Trade Practices Act, 1969 came into force so as to keep a check on the operation of the economic system and to make sure that that the economic power was not concentrated with one common detriment. However as new economic policies were introduced in the market, the Act of 1969 was not able to serve its purpose with utmost efficiency and this paved the way for the enactment of the Competition Act, 2002. This Act was enacted with the motive of shifting the focus from the subject of monopoly to the subject of competition in both national and international markets. With the national and international markets expanding on a rapid pace and with the advent of new technologies, the Competition Act, 2002 came under the spotlight. In light of the current circumstances a need was felt to bring changes to the Act and therefore the Government constituted The Competition Law Review Committee in 2018[1] who had the job to study the present situation of the market, to analyze the Competition Act, 2002 and accordingly suggest changes that were required to make that Act consistent with the current market trends. The Committee suggested several changes to be brought in the Act and on the basis of the suggestions the Government drafted the Competition (Amendment) Bill, 2020.

SUGGESTIONS OF THE COMMITTEE

Introducing structural changes in the Competition Commission of India

From the time of its constitution the Competition Commission of India has been multi-tasking. It has played the role of an advisor, of an adjudicator, of an investigator and of a regulator as well and the same has been talked about in the case of Brahm Dutt v. Union of India.[2] The Committee realized that there was too much burden on the CCI and therefore suggested that a Governing Board should be constituted. This board shall be composed of a Chairman and six whole time members and four part time members who shall be appointed by the Central Government. The Bill also suggests of inserting a new section i.e. Section 18A which elaborates on the functions of the Governing Board. As per this section the direction, management and general superintendence of the matters of the CCI shall be entrusted upon the Governing Board. With this division of powers between two bodies i.e. the CCI and the Governing Board the efficiency with which works are performed will be duly increased. However this Bill is silent on the mode of appointment of the part time member into the commission. The selection committee constituted as per Section 9 of the Competition Act 2002 has been given the power to recommend names for the position of chairperson and the whole time members to the Central Government but there has been no clarity regarding the mode of appointing part time members throughout the Act. 

Delegation

Initially Section 13 of the Act of 2002[3] dealt with the Administrative powers of the Chairman however through the Draft Amendment Bill sought insertion of a new section i.e. Section 13A which shall deal with the provisions of delegating powers of CCI and the Governing Board which can further reduce the burden resting on CCI.  

Appointment of Director General and amendments in his duties

As per Section 16 of Act of 2002 Director General was appointed by Central Government however by the way of Draft Amendment Bill this power has been shifted from them to the Commission. The duties of the Director General have also been considerably increased by the way of the amendment to Section 41. As per this amendment a person shall be punished with imprisonment or fine if he fails to produce any documents to the DG or if he fails to appear before the DG. However the loopholes in this amendment is that there is no mention of the time limit within which such documents are to be presented before DG and moreover Section 41 clearly assigns only investigatory powers to the DG and therefore it cannot be given the right to adjudicate or penalize. The investigating right of the DG office was clearly mentioned in the case of CCI v. Steel Authority of India Ltd. [4] where it was given the status of specialized investigating wing of the Competition Commission of India. 

Inclusion of agreements of digital market

In Section 3 of the Competition Act, 2002 various anti-competitive agreements have been mentioned however with the change in existing market conditions have made the Committee to suggest a new agreement which is hub and spoke agreement. In this type of agreement ‘spokes’ are the competitors and ‘hub’ is the one who facilitates this competition among the spokes. [5] Such an agreement gives rise to lot of anti-competitive activities by the participants. The objective of the Act to prevent practices having adverse effect on competition in the market can be efficiently achieved by the insertion of hub and spoke agreement into the Act. 

Amendments relating to combinations

This Draft Bill has assigned a meaning to the word control mentioned in Section 5 of the Competition Act, 2002. Through an Explanation to clause (a) of Section 5 control has been regarded as a material influence over other enterprise. [6]

The time period for approval of combinations has been reduced from 210 days to 150 days and also an extension of 30 days has been granted. [7] Through this bill the Green Channel concept has also been approved where certain categories of combinations are exempted from the procedures under Section 6 of the Act after consultation with the Commission by the Central Government. [8] With the introduction of the Green Channel the committee aimed to implement a speedy approval of combinations that will not have any adverse effects on the competition. Evidences prove that many combinations need not go through the hassle and can simple declare their transaction to CCI. Any non-disclosure or concealment of complete information shall have strict consequences. [9]

ANALYSIS OF THE DRAFT AMENDMENT BILL:

1. Though the introduction of Governing Board can really help in distribution of powers among the Board and the CCI, the election of part time members as well as the powers of such Board should be given more clarity. 
2. The powers granted to the Director General requires further clarity as it has been given a status of investigating body by the Act. 
3. Since NCLAT has major experience in the field of company and insolvency laws, the committee in its report [10] had suggested dedicating a bench of NCLAT for expeditious hearings and disposal of competition appeals however no such provision has been granted in the Bill. 
4. The Committee had also suggested for a Judicial Member to be present during the final hearing so as to have a check on the adjudicatory functions of CCI. This was suggested on the basis of the decision of the Delhi High Court in the case of Mahindra Electric Mobility Ltd and Anr v Competition Commission of India. [11] However this particular suggestion has also not been adopted in the Draft Amendment Bill. 

CONCLUSION

The amendment bill has been introduced to address the loopholes in the Competition Act, 2002. The ongoing pandemic has forced lot of people to continue their dealings digitally and the present amendment bill focuses to keep its pace with the upcoming market trends. However some areas pointed out by the committee still haven’t been addressed in the current draft amendment bill and therefore the present bill requires further consideration before being enacted. 

References 

[1] Government of India, MCA, ‘Government constitutes Competition Law Review Committee to review the Competition Act’ (30 September 2018). Last accessed on 15 May, 2021 can be accessed at  <https://pib.gov.in/PressReleseDetail.aspx?PRID=1547975>

[2] (2005) 2 SCC 431

[3] The Competition Act, 2002, No. 12, Acts of Parliament, 2002(India) 

[4] (2010) 10 SCC 744

[5] Lavanya Jha, Shreya Jha, “Inclusion of the Hub-and-Spoke Agreement in the Draft Competition Bill, 2020”, The CBCL Blog, (21 May, 2020). Last accessed on 17 May, 2021 and can be accessed at   <https://cbcl.nliu.ac.in/competition-law/inclusion-of-the-hub-and-spoke-agreement-in-the-draft-competition-bill-2020/ > 

[6] Under Explanation of clause (a), Section 5.

[7] Under Section 6(2). 

[8] Under Section 6(7). 

[9] Ministry of Corporate Affairs, Government of India, Report Of Competition Law Review Committee available at https://ies.gov.in/pdfs/Report-Competition-CLRC.pdf, last seen on 17 May, 2021. 

[10] Ibid

[11] SCCOnline (2019) Del 8032