In what has been a slow session of Parliament in terms of legislative work, the Lok Sabha cleared a much-needed change to India’s competition law. The Competition Amendment Bill, 2022 seeks to tweak the 2002 competition law, which lays down important guardrails for the market in India to be fair, preventing participants from cartelising or abusing positions of dominance. For a while now, the law was seen as being outdated, especially since the turn of the millennium when market dynamics began to change with greater foreign investment in the economy and the rise of digital businesses. The existing competition law’s provisions were criticised for being bureaucratic, lenient and vague. Last year, a standing committee pored over some of the initial provisions and came up with amendments that are now part of the version passed by Lok Sabha (and will need to clear Rajya Sabha).
Among the changes is the need for the watchdog, Competition Commission of India(CCI), to be notified when the value of a merger or acquisition is above ₹2,000 crore. Previously, the thresholds to notify CCI were based on asset or turnover value, with there being some confusion regarding how either was calculated. The new law also speeds up the approval process, setting a deadline of 150 days, down from 210, for CCI to pass an order; provides a framework for the settlement of cases falling under the law; and decriminalises certain provisions by shifting punishments to civil penalties or accepting behavioural or structural commitments – aimed at improving the ease of doing business in the country.
But it is a fourth change that is most noteworthy and timely. The bill seeks to expand the scope of penalties by taking into account an offending enterprise’s global turnover, not just the value of the business it does in India. This is of relevance at a time when the technology industry has some of the largest enterprises, with their influence as well as profits reaching across territories. Big tech players such as Google (Alphabet), Amazon and Apple are under CCI’s scrutiny for anti-competitive practices. One example on how the old law is inadequate was captured in the case of Google, and its mobile operating system business. In October last year, CCI imposed a $162 million penalty on Google for its policies and practices relating to how it licensed Android to phone manufacturers, which the agency deemed to be anti-competitive. This number was less than 0.06% of Google’s total annual revenue of over $250 billion in 2022 and a little over 0.33% of the revenue generated by Google Play (the Android business) the same year. The National Company Law Appellate Tribunal (NCLAT) this week upheld the penalty, but set aside key directions that would have significantly impacted the company’s business plans in India. The direction in this particular case will now be decided by the high court.
Whatever the outcome, the proceedings underlined how enforcement of competition laws could be limited to not more than a slap on the wrist, especially when big tech is involved. Taking into account global turnover will, therefore, be a key deterrent, as it has been in other economies such as the European Union, where Google has been hit with billions of euros in fines. In this sense, the changes in the law will help India’s regulatory regime catch up with some of the risks that borderless behemoths such as Big Tech pose to market fairness.
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