Analysis of Draft Competition Amendment Bill, 2020

Analysis of Draft Competition Amendment Bill, 2020

Date : 01 Jun, 2020

Post By Barbie Duggal

The aim of the market is to attract the customers to buy the goods and services. Different sellers all over the market want to rule over by encouraging the potential buyers to buy from them.  What is needed to stay in the business is to win the competition among their co-sellers and so as to get on track; the sellers tend to involve themselves in anti- competitive practices. In order to ensure the market face a proper competition and to safeguard interests of customers, the competition law has to be made active to abide by.

A condition where the other competition player is eradicated, the state of monopoly will be achieved. Herein, the person having the monopoly of the business will be entitled to alter the price, control the supply and in return deteriorate the quality of the product. In totality, sell whatever and in whatever price.  In pursuance of which, The Monopolies and Restrictive Trade Practices Act was introduced in the year 1969. Its effect was supposed to be of price- limiting and trade- controlling nature

It was succeeded by the Competition Act 2000, the salient features of which will now be discussed.

Introduction to the Competition Act, 2002

With the introduction of the Monopolies and Restrictive Trade Practices Act, the market economy started to move towards free will practices which led the practices to get on with form. India witnessed the economic liberalization and subsequently the reign of effective competition mechanism came into play.

When the need to bring a transformed regulation was felt, the features of MRTP Act were remodeled into the Competition Act, 2002.

The Competition law has been talked about in the Constitution as it says the social welfare of the state has to be secured. By which in this aspect, it is meant, the economical status has to be maintained in order to make certain the welfare is secured. The question on how it has to be done is also answered in the Constitution. It says there has to be equality maintained in the status of people, the facilities provided and the opportunities.

It also provides for the ownership and control of the material resources for the good of people. It will automatically lead to distribution of wealth in an economical way, avoiding its concentration.

The Act covers the following in its Chapters:

  1. Anti competitive agreements: The Act prohibits any enterprise to enter into any agreement regarding the supply of services and goods that hampers the competition in India.

  2. Abuse of dominance: Any enterprises that are in a dominant position in the market shall not make any provisions that restrict the other participants to be in the competition or control the price and supply of services.

  3. Regulation of combinations: As per this act, no such amalgamation or merger should take place which is likely to affect the competition in the market.

  4. Establishment of the Competition Commission of India: The Competition Commission of India was mandated to be appointed by this Act.

  5. Functions of the CCI: All of the practices which are forbidden by this Act, the non-happening of which has to be ensured by the CCI. Its duty is to conduct investigation into such activities and dominant

Taking up the Facebook- Reliance Jio deal where Facebook is investing huge amount in Jio-Mart. With such big amount, CCI has to go through the deal as to ensure fair competition in the market as Facebook acquired WhatsApp has more than 400 Million users[3].

Overview of the Draft Competition (Amendment) Bill, 2020

With the changing market trend, the competition law had to be in sync with the trade practices. The Competition Act had to be reviewed eventually with time for the law to be adequate to meet the need and to provide proper check and balance to new market problems. Amidst such situation, in 2018, a Competition Law Review Committee was set up. This committee extended their reviews on the different angles and problems of the competition law along with analyzing the different practices internationally and their mechanism.

It was through these recommendations, the Competition (Amendment) Bill, 2020 was introduced. Some significant changes were made under this Amendment Bill seeking to improve the Competition Act.

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Significant changes made in Competition Amendment Bill

Amendments presented below are some important ones:

  1. As far as the amendment made in Section 6 is concerned, if any combination is found to be not according to the requirements or to produce any false information, the approval will be void ab initio. However, the natural principle of audi alterum parteum has to be made available to the parties.

  2. Section 6A was introduced providing for the effect of the acquiring of shares, securities and open offer. If commission has been notified in the time frame provided, the convertible securities and shares are maintained as per the provisions, or no ownership on the acquired shares is declared by the acquirer, the implementation should not be prevented.

  3. Bill provided for the establishment of a governing body which will be responsible for appointing the members of the commission. The provision of Government Board was mandated here to regulate the activity of the commission.

  4. If any inquiry has been instituted on any person, the person can submit commitments in response to the allegations which will be considered by the commission.

  5. If the inquired person is found to present any false facts will render the order passed under Section 48A and 48B revoked.

Conclusion

A market-friendly regime is what the need of the hour is and so are the amendments in the competition law from time-to-time aiming at. To be administrative and meeting the needs of the consumers the law has to be up to date and to be so, it is imperative to amend the law when required.

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