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Updated December 24th, 2023 at 17:17 IST

How amendments to Competition Act enhance clarity and reduce compliance burden for businesses

The amendments, which received Presidential Assent on April 11, 2023, aim to foster a more conducive environment for businesses to thrive.

Business Desk
Competition Act Amendments
Competition Act Amendments | Image:Unsplash
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The Ministry of Finance said on December 23, 2023, that the amendments to the Competition Act in 2023 facilitate greater clarity to businesses operating in India and reduce the compliance burden for companies. The amendments, which received Presidential Assent on April 11, 2023, aim to foster a more conducive environment for businesses to thrive.

 

Amendments to Competition Bill in 2023 facilitates greater clarity to businesses operating in India and reduce the compliance burden for companies.#ViksitBharat #FinMinReview2023#MCAReview2023 pic.twitter.com/EgrTIxXA43

— Ministry of Finance (@FinMinIndia) December 23, 2023

 

Key provisions of the amendment

  1. Deal value threshold: Perhaps the most notable change is the introduction of a deal value threshold. Transactions involving acquisition, merger, or amalgamation exceeding Rs 2,000 Crores and involving entities with substantial business operations in India will now require approval from the Competition Commission of India (CCI). This extends the scope of CCI review, ensuring scrutiny even for transactions typically exempted if their deal value surpasses the prescribed limit.
  2. Reduction in timeline: The amendment streamlines the process of combinations by reducing the timeline for the Competition Commission of India (CCI) to pass a final order from 210 days to 150 days. This move aligns with the government's commitment to ease of doing business and provides businesses with greater certainty in transaction timelines.
  3. Updated definition of control: The amended legislation introduces the concept of "material influence" within the definition of "control." This nuanced approach acknowledges the significance of exerting substantial influence over management, affairs, or strategic commercial decisions. The CCI has the authority to establish additional criteria to clarify "material influence," aiming to reduce ambiguity in determining control.
  4. Limitation period: The amendment introduces a three-year limitation period for filing information or references regarding alleged contraventions. This provision adds certainty and finality to competition law enforcement, preventing the reopening of cases long after the alleged contravention.
  5. Settlement and commitment mechanism: A novel framework for settlement and commitment is introduced for faster resolution of investigations related to anti-competitive agreements (except cartels) and abuse of dominant position. This mechanism provides enterprises with an opportunity to seek resolution through mutually agreed remedies or commitments, streamlining dispute resolution and reducing the burden on both businesses and regulatory authorities.

Impact on startups and small businesses

The amendments bring a ray of hope for startups and small businesses looking to engage in mergers, acquisitions, or combinations within the same industry. The streamlined execution of such combinations under the amended law is anticipated to significantly reduce the time, providing startups with more agility in their business strategies.

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In conclusion, the Competition (Amendment) Act, 2023, reflects the government's commitment to fostering a competitive business landscape in India. By enhancing clarity, reducing timelines, and introducing innovative mechanisms, the amendments seek to strike a balance between regulatory oversight and creating an environment conducive to business growth. As businesses adapt to these changes, the hope is that the amendments will contribute to a more vibrant and competitive Indian market.

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Published December 24th, 2023 at 17:17 IST

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