The Standing Committee has suggested removal of the provision regarding the commitment mechanism

The Standing Committee on Finance presented its report in Parliament today and recommended several clarifications and changes in the proposed Competition Amendment Bill, 2022. A standing committee headed by Jayant Sinha has suggested the proposed bill to clarify the manner of calculation of transaction value and allow inclusion of nexus in the settlement process.

The Committee also suggested the Competition Commission of India (CCI) and the Director General to introduce an impact-based analysis before detecting anti-competitive conduct. The committee said that if the deal is to be scrutinized, the deal value should be reviewed every year instead of once in two years.

The committee noted in its report that the bill does not specify how to calculate the transaction value and what is meant by direct, indirect or retroactive consideration. Agreeing with the views of the stakeholders, the committee said, "These conditions may bring such transactions into the merger control process, which are unlikely to have an adverse effect on competition."

The Ministry of Corporate Affairs has proposed that Rs. Transactions above Rs 2,000 crore and mergers and acquisitions of companies with significant operations in India have to be reported to the Competition Commission of India. The objective was to identify mergers and acquisitions where assets or annual turnover may be less than a defined threshold but the data may be too large for digital and new age markets.

One of the main concerns of the stakeholders was – What will be included in the deal value?... Will it have only Indian operations or will it be a fully global transaction? The Ministry of Corporate Affairs has clarified that this is only for the digital sector and will also apply in case of small target tests.

A provision has also been introduced in the proposed bill for settlement and settlement, whereby any enterprise facing investigation can apply for settlement. The CCI said it was open to agreeing to a settlement offer, which could include payment or such other terms, or both.

The Standing Committee has suggested removal of the provision regarding the commitment mechanism whereby third parties can raise objections or suggestions. Stakeholders said this could lead to a breach of privacy. The Committee has said that such a rule should be discretionary and not mandatory. The committee has also said that companies opting for such action should also be given the option to withdraw it, while the current bill only vests this power with the Competition Commission of India.

Regarding accession, the committee suggested that the whole process should be considered as a practical step to bring the possibility of reconciliation under the ambit. It contends that anything reaching a compromise, whether collusive or not, can be anti-competitive.

The Ministry of Corporate Affairs in its submission to the committee clarified that it will issue detailed rules for settlement and commitment mechanism to reduce arbitrariness and ensure accountability. The idea behind the proposed amendment is to speed up disposal of competition cases and reduce litigation.

The Committee observed that the Bill does not specify whether the settlement or commitment requires the company to admit guilt. Prima facie admission of fault should not be mandatory... There should also be a provision to allow the petitioner to reconsider the settlement/commitment after a final settlement order by the Competition Commission of India as a last resort.