A new Competition (Amendment) Bill 2007, which is expected to give more teeth to the Competition Commission of India (CCI), was introduced in Parliament.
“Based on the recommendations of the standing committee, an expert committee, which looked into the nuances of the Bill introduced in 2006, it was decided that a new Bill be introduced in the Lok Sabha,” said a senior official at the ministry of corporate affairs (MCA), who did not wish to be named.
The official also predicted that since most aspects of the Bill have already been discussed and debated widely, the new Bill is likely to be passed in the current Parliament session.
The new Bill seeks to give statutory powers to the commission, which was set up in 2003. Once put in place, it will replace the Monopolies and Restrictive Trade Practices Commission (MRTPC), which has been in existence since 1969.
The new Bill has made it mandatory for most companies involved in mergers and acquisitions to notify CCI about the proposed deals as long as the individual companies’ combined assets are at least Rs1,000 crore, or if the combined annual revenues are at least Rs3,000 crore.
Similarly, two groups of Indian companies in merger or acquisition talks need to inform the commission if their combined assets are at least Rs4,000 crore or if the combined revenues are at least Rs12,000 crore.
Two merging foreign companies that have an Indian presence will also have to notify CCI in case both companies’ combined assets worldwide are at least $500 million (Rs2,060 crore) or if, together, they have annual sales of at least $1,500 million.
Besides, their Indian subsidiaries should have combined assets of Rs500 crore, or sales of Rs1,500 crore.
The Bill also says that if two global groups are being merged or acquired, the notification limit is $2 billion in combined assets or combined revenue of $6 billion, with Indian subsidiaries having a combined asset base of Rs500 crore or sales of Rs1,500 crore.
“Most nations have antitrust provisions such as this to check monopoly, duopoly or oligopoly. The numbers (for assets and turnover) are also fairly high (so) not many M&As will need CCI’s approval,” said Sanjeev Krishnan, executive director at audit firm PricewaterhouseCoopers.
However, he expressed concern over the clause that allows the commission 210 days to give its approval, saying that could be a problem in hostile takeover situations.
The Bill, introduced by corporate affairs minister Prem Chand Gupta, also has a provision for a quasi-judicial body—called the Competition Appellate Tribunal—to hear appeals against any direction issued by CCI.
It also seeks to vest the commission with the powers to impose a penalty of up to Rs25 crore, or up to three-year imprisonment, or both, in cases of continued contravention of its orders, provided the chief metropolitan magistrate of Delhi signs off.
Under the new Bill, the selection committee for the commission will be headed by the Chief Justice of India or his nominee. The number of key officials or members on the selection committee will be four instead of two as suggested earlier.
Meanwhile, MRTPC will continue to deal with pending cases for two years after the commission is established, but is not expected to take on fresh cases once the commission is constituted.