The ambit of the Monopolies & Restrictive Trade Practices Act, 1969 was found to be inadequate for fostering competition in the market and eliminating anti-competitive practices in the national and international trade. Accordingly, the Government of India, in tune with international trends and to cope with changing realities, enacted the Competition Act, 2002 (the "Competition Act") in 2003.
The Competition Act is an omnibus code dealing with matters relating to the existence and regulation of competition and monopolies based on principles well established in jurisdictions such as European Commission Competition law, US Anti Trust law etc. The Competition Act was enacted to encourage and regulate competition in India keeping in view that the Indian market should be ready to face competition from within the country as well as abroad.
The Competition Act inter alia provided for the establishment of the Competition Commission of India ("CCI"), mandated to eliminate practices adversely affecting competition, to promote and sustain competition, to protect consumers’ interests and to ensure freedom of trade carried on by other participants in markets.
The CCI could not be made fully functional due to a writ petition filed before the Supreme Court against certain provisions of the Competition Act, the Rules framed there under and the selection of the Chairperson and Member of the CCI.
To make the CCI operational, the Indian Parliament has now passed the Competition (Amendment) Bill, 2007 (the "Bill"). The Bill proposes significant amendments to the Competition Act.
The CCI, which was proposed to function as a judicial body, would now act as an expert body in an advisory capacity, to prevent and regulate anti-competitive practices.
Earlier, appeals from the orders of the CCI lay before the Supreme Court. Under the Bill, a Competition Appellate Tribunal is empowered to hear and dispose off appeals from any order or decision of the CCI.
Whilst in other jurisdictions, parties are required to compulsorily notify the competition authorities if their combination crosses the threshold limits specified under their respective laws, India was one of the few nations, where notification of combinations was voluntary.
The Bill has now imposed an obligation on entities to mandatorily notify the CCI of combinations i.e. mergers and acquisitions etc. above certain threshold limits viz. if the combination is between entities having operations in India or abroad, and the operations of the combined entity have assets of Rs. 500 crores or a turnover of Rs. 1,500 crore in India. The CCI would be bound to render its ruling within a stipulated period of 210 days from the date of the intimation.
It is envisaged that the Bill will pave the way for a powerful competition regulator for promoting and regulating competition in markets, enhancing efficiency and maximizing consumer welfare.
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