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While the decision to update the competition act is commendable there are significant negatives, including the potential abuse of power, that lawyers say make the pending bill’s success anything but clear. Freny Patel reports

India’s 20-year-old competition law is finally about to be revamped with the government’s overarching goal to facilitate the ease of doing business. However, a close reading of the Competition Amendment Bill, 2022, introduced in the Monsoon session of parliament, shows it to be a bittersweet piece of legislation with many substantive, procedural and institutional changes. It might come across as business-friendly, but it certainly gives the Indian antitrust watchdog an iron hand to meet the challenges of modern-age markets and fast-evolving technology.

The bill promises to fast-track the M&A approval process, but at the same time targets the digital economy with the proposed deal-value threshold, adding to the number of deals filed for clearance. The legislation expands the scope of enforcement, giving the antitrust watchdog and its investigative arm, the director general (DG) greater investigative powers. The Competition Commission of India (CCI) would be able to decline to investigate certain cases or issues previously decided. The DG’s office would be empowered to seek information from all and sundry including employees, agents and third parties. Introducing commitments and settlements aimed at incentivising early resolution, reducing litigation and ensuring the payment of fines throws up the challenge for third-party claimants.


Although the introduction of a long-anticipated deal-value threshold of INR20 billion (USD250 million) aims to capture mergers in digital and technology-related markets – where targets do not necessarily have substantial assets or turnover – it brings a lot of uncertainty.

“There is a lack of clarity on how the deal-value threshold reads with the de minimis exemption (the small target exemption), which is issued by the Ministry of Corporate Affairs and renewed every five years,” says Avaantika Kakkar, Mumbai-based partner and head of competition practice at Cyril Amarchand Mangaldas (CAM).

“It is not clear whether the de minimis exemption will still apply absolutely, or whether the deal-value threshold takes primacy over the small target exemption,” she tells India Business Law Journal. Kakkar believes the deal-value threshold will take priority over the de minimis exemption and that transactions will be reportable to the CCI even if the target qualifies for the exemption.

Anisha Chand, a Mumbai-based partner in the competition and antitrust practice at Khaitan & Co, agrees. “If the current de minimis threshold continues to be applicable, it may dilute the essence of the deal-value threshold.”

Both Chand and Kakkar, among other antitrust lawyers, are of the view that introducing deal-value thresholds is not required as it confuses companies as to whether the de minimis exemption of INR 10 billion or the proposed deal-value threshold of INR 20 billion will take precedence.

The bill could have revised the structure of the current de minimis exemption by insisting that the exemption could be granted if both the asset and turnover thresholds are not breached. All the government would have had to do would be change the conjunction “or” into “and”, whereby under the de minimis exemption, parties are exempt from notifying the CCI if the target acquired has assets in India of INR3.5 billion “and” a domestic turnover not exceeding INR10 billion.

Had the qualifier for de minimis exemption been both asset and turnover, PVR’s recent acquisition of Inox – creating India’s largest cinema chain – would not have escaped CCI scrutiny.

Further adding to the confusion, the bill qualifies that the deal-value threshold will apply to parties with “substantial business operations” in the country. What qualifies as “substantial” will be decided by the CCI through appropriate regulations, lest the regulator and parties to the transaction are burdened with unnecessary notifications, especially when it comes to global M&A deals.

Head of the antitrust watchdog, Ashok Kumar Gupta, told media recently that the number of users or contracts could define the local nexus under the proposed threshold for merger notification, subject to public consultation. WhatsApp has few assets in India, but a vast customer base, which he cited as an example of a target with “substantial business operations”.

“Experience from matured jurisdictions like Austria and Germany suggests that interpreting the notion of substantial business operations in the domestic market is typically the most difficult part of the assessment in practice,” notes Vaibhav Choukse, New Delhi-based partner and head of competition practice at JSA.

Austria primarily focuses on whether the target has a local presence (i.e., a site or subsidiary), whereas Germany looks at the industry in question, in particular, whether parties’ turnover reliably reflects its market position in this industry. “It will be important to see the yardstick adopted by the CCI for defining substantial business operations in India because if the net is cast too wide, it may lead to unnecessary fillings,” says Choukse.


Gupta, the CCI chief, is optimistic that negotiated “settlements and commitments” – common in the EU, US and Japan – will help reduce litigation. Settlements are not unheard of in India as the stock market regulator, the Securities and Exchange Board of India (SEBI), as well as the income tax authority do offer the option of settlements. The bill seeks to follow suit in the competition sphere with the introduction of a settlement and commitment mechanism.

“The proposal is welcome, as a successful implementation of this regime will help both the CCI and parties to avert protracted litigation and associated costs,” says Chand. However, she adds that the fine print of the modalities, which will be revealed through regulations, will finally tell whether the regime is a hit or a miss.

Although an important addition to the legislation, much depends on how settlements and commitments will be incentivised, says a New Delhi-based antitrust lawyer. “It’s quite subjective and would depend on the individual company, because why would Google or Apple be willing to settle in India when they could be facing a similar antitrust inquiry in other jurisdictions? Not to mention follow-on action,” he says.

Deeksha Manchanda, a New Delhi-based partner at Chandhiok & Mahajan, says the nuts and bolts of settlement and commitments will make a big difference, whether orders are with or without prejudice. “It will be attractive if the CCI orders are passed without prejudice and no third party can claim damages,” says Manchanda. “If it is open to compensation claims, then parties may not be inclined to use the mechanism.

“What’s worse is the fact that the proposed amendment allows the DG and other parties to provide comments on the settlement and commitment options. This goes against the in rem nature of the proceedings,” she said, adding that parties may not want to disclose the discussions on settlement and commitment at a nascent stage to third parties.

A settlement is not tantamount to an admission of guilt, as parties would negotiate privately with the commission, says Kakkar, at CAM. This is a legal tool to avoid excessive litigation, she explains. Settlements are popular overseas because parties have been inundated by third-party damages claims. Jurisprudence in India so far does not favour punitive damages as such, and courts have focused more on the principle of restitution.

If the settlement is not made public, it has little value in setting a precedent, thereby impacting the CCI’s ability to establish jurisprudence. The proposed incorporation of settlements and commitments is aimed at quick resolution of antitrust cases given that many of them end up being litigated in courts resulting in the poor recovery of penalties imposed, not to mention the change in conduct.

Recovery of fines has been dismal this year. The CCI has reportedly collected a paltry sum of INR1.98 billion until mid-July this year against more than INR43 billion imposed in the past five years.


The proposed shrinking of merger review timelines from 210 days to 150 days will put unnecessary pressure on the CCI, especially given the serious capacity constraints, says Chand. She fears that it could increase the risk of invalidated merger filings, parties having to refile, and thereby adding to the cost of M&A in India. Parties could end up facing penalties for unintentional suppression of information, she adds.

Faster approval of M&A transactions will depend on a trust-based regime, the CCI’s Gupta has said. Those found abusing this trust by suppressing information would face heavy penalties.

Chand anticipates that the regulator could end up issuing more requests for information (RFIs) as a way to stop the clock as it finds itself under pressure to form a prima facie opinion within 20 days of the receipt of a merger application.

On average, the CCI approves a transaction in 17 to 18 working days, provided the M&A deal does not have any adverse impact on competition. It is one of the best compared to its counterparts overseas, says Choukse. The CCI’s case teams would have little patience for issuing RFIs, which he fears may result in invalidation of applications. He suggests that parties mandatorily opt for a pre-filing consultation to avoid such invalidations/RFIs.


Challenging orders of the CCI will become expensive as the bill empowers the National Company Law Appellate Tribunal not to accept an appeal without parties mandatorily depositing 25% of the penalty imposed by the CCI.

“The proposed 25% penalty deposit will have unintended consequences of impacting access to justice for small and medium-sized companies,” says Nisha Kaur Uberoi, a Mumbai-based partner and national head of competition law at Trilegal.

Uberoi says these companies will have to pay a higher deposit from the existing 10%, “which will significantly impact them, given that India’s highest economic penalties are imposed under the Competition Act”.

Chand agrees that the 25% deposit would likely disadvantage smaller companies in seeking fair judicial recourse, and discourage parties from filing appeals. “It would be better to have the tribunal decide on the deposit on a case-by-case basis, up to 10% of the penalty imposed.”

Parties will no longer blatantly appeal CCI orders and are likely to scrutinise the option, given the fear that the 25% amount deposited could be forfeited should the tribunal not accept the appeal, opines one New Delhi-based lawyer.

Another Mumbai-based antitrust lawyer feels otherwise: “Appeals are likely to continue unless the tribunal upholds more of the CCI’s orders and does not reduce the penalty amount.”


There is a great degree of inter-regulatory play given the CCI’s role as overarching market regulator. In April this year, the Bombay High Court barred the antitrust watchdog from taking any action against debt trustees and directed the securities market watchdog, the SEBI, to undertake an initial investigation into the alleged bank cartel case (see “CCI’s hands tied in debt trustee dispute”, India Business Law Journal).

The bill aimed to do away with the overlaps among regulators, said Gupta. By reducing “regulatory arbitrage”, it would be possible to ensure “holistic enforcement”, and thereby provide much-needed certainty and predictability for the corporate world.


Should the CCI be empowered to appoint the DG, it will end up being the judge, jury and executioner as opposed to the current practice where the DG is independent.

The merger of the DG with the CCI has to be viewed from the lens of constitutional and administrative law principles, says Manchanda. It is a significant change in the structure of the CCI, she adds. The bill states that the DG may examine on oath any of the officers and other employees and agents of the party being investigated. The bill has adopted the definition of an agent under the Companies Act, which includes lawyers. Manchanda says this is extremely dangerous, as it will impact legal privilege.

Uberoi adds that the dawn raid powers of the DG have not just been codified but significantly expanded, and are not in line with the concept of legal privilege under section 126 of the Indian Evidence Act, 1972. This act provides protection to the professional communication and potentially sensitive and confidential communication of a client with their legal advisers.

“As professional communications between external legal counsel and clients are privileged, the DG therefore will not be able to summon ‘external lawyers’ and the bill will need to be watered down to this extent,” she says, adding that bankers and auditors, on the other hand, can be summoned for depositions as envisaged under the proposed law.


What is amiss is the presence of a judicial member. “Given the CCI’s role as an adjudicator, the bill could have mandated the presence of a judicial member for a quorum to be valid while performing adjudicatory functions,” says Chand. This is even as the bill proposes to change the composition of the selection committee for the post of chairman and members of the CCI to include members with technical expertise.

Many proposals have raised industry concerns and warrant greater clarity, both from the government and the CCI. A good number of legal experts are of the view that the bill in its current form will see pushback from the industry, especially when it comes to the deal-value threshold and the merger of the CCI and the DG. “Some of the proposals can be tweaked for better implementation,” says Chand.

The Parliamentary Standing Committee for Finance was asked to examine the bill and present its report within three months from 17 August, which offers a window of opportunity to present one’s concerns, she adds. Revamping India’s Competition Act, 2002, has been in the offing considering the growth of Indian markets and changes in the past decade on how businesses operate, the Minister of Finance and Corporate Affairs, Nirmala Sitharaman, has said, laying out the objectives of the amendment bill.

The government set up the Competition Law Review Committee in 2019 to examine and suggest amendments to the competition legislation. The proposed changes in the bill are “just tweaks” to the existing Competition Act, 2002. The real crux or substance of the legislation lies in the regulations and rules that the CCI has yet to frame following the enactment of the bill. It is too early to evaluate how good or bad the proposed amendments are without knowing the underlying rules and regulations.

While the draft legislation seems to be revolutionary and innovative, its success finally rests on the actual implementation based largely on regulations that the antitrust watchdog will issue.

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