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The Editorial Column is authored by Tarpan Soni and Arnav Mahajan, Junior Editor and Assistant Editor respectively at RGNUL Financial and Mercantile Law Review.
1. INTRODUCTION
The Ministry of Corporate Affairs introduced the Competition (Amendment) Bill, 2022 (The Bill) in Lok Sabha on August 5, 2022. The Bill was referred to the Joint Parliamentary Standing Committee (JPC) on Finance which gave its report on December 13, 2022, suggesting various changes to it. The Bill seeks to amend the Competition Act, 2002 (Act) and bring in various amendments that were proposed by the Competition Law Review Committee (CLRC) in its report in 2019. The CLRC was of the view that certain market practices were not adequately covered by the existing framework of the Act, warranting changes and amendments in the antitrust regulatory structure of India.
Apart from amending the existing provisions in the Indian Antitrust regime, the Bill also brings in specific new provisions, taking inspiration from other mature jurisdictions such as that of the European Union, the United Kingdom, and the United States. Among the various new provisions that the Amendment Act is incorporating into the Indian competition law framework, is the provision for the Settlements & Commitments (S&C) mechanism. The main aim behind introducing the S&C framework is to reduce litigation and ensure the speedy disposal of cases filed before the Commission. The article discusses how the S&C framework will function in the Indian context, with special emphasis on the standing committee’s suggestion regarding the S&C framework. The article then concludes by elaborating upon the way forward with respect to the framework.
2. UNDERSTANDING THE SETTLEMENT & COMMITMENT FRAMEWORK
Sections 48A and 48B of the Bill aim to incorporate the Settlement and Commitment framework respectively into the Indian Competition law regime. As per Section 48A(1) and 48B(2), an application for settlement or commitment can be made by an enterprise against whom an inquiry has been initiated under sub-section (1) of Section 26 for contravention of sub-section (4) of Sections3 or 4 of the Competition Act, 2002. The settlement application can be filed at any time upon receipt of the order of the Directorate General (DG) but prior to passing of an order as per Section 48A (2) and Section 48B(2). Further, the parties against whom anti-competitive allegations are drawn may offer commitments for rectifying their behaviour. The commitment offer under sub-section (1) may be submitted at any time after an order under sub-section (1) of Section 26 has been passed by the Commission but within such time prior to the receipt by the party of the report of the Director General under sub-section (4) of Section 26. As per Section 48A(3) and Section 48 B(3), the final authority to agree to applications of S&C lies with the CCI and the commission may take decisions considering the nature, gravity, impact of the contraventions, and effectiveness of commitments. Section 48A (8) of the bill mandates that all settlement funds realised under this act should be credited to the Consolidated Fund of India.
The Settlement framework is already existing in some foreign jurisdictions but all are governed by different provisions. The European Union has adopted a settlement and commitment procedure as a way of enforcing competition law in the EU. Under the EU’s competition law regime, the European Commission investigates antitrust violations, such as cartels and abuse of dominant market positions. The commission can impose fines and order remedies to restore competition, but it can also accept commitments from companies to address the competition concerns raised by the investigation. They provided for an S&C mechanism through Regulation 1/2003. However, until 2016, when the European Commission issued its first settlement decision pursuant to Article 102 of the Treaty on the Functioning of the European Union following the introduction of said regulation, settlements in the European Union were limited to vertical infringements and cartel cases governed by Regulation (EC) No 622/2008 procedural guidelines. The Settlement mechanism also exists in the United Kingdom (UK) under Rule 9 of the Competition Act, 1998.
3. STANDING COMMITTEE REPORT ON THE BILL
The JPC submitted its report on 13 December 2022 and recommended several wide-ranging changes to the Bill. The JPC while making the report, held consultation with the Ministry of Corporate Affairs, CCI, CLRC, and various other stakeholders such as law firms, practitioners, and industry bodies like the Federation of Indian Chamber of Commerce & Industries (FICCI), etc. The committee proposed several changes to the S&C framework as well. During the discussions with the JPC, stakeholders had raised several concerns such as whether an admission of guilt would be necessary or not, and whether an appeal would be allowed against an S&C order of the CCI, among other issues. Further, there were also calls for the inclusion of cartels within the scope of the proposed framework.
On the issue of admission of guilt, while the Bill was unclear, the JPC has said that prima facie, admission of guilt should not be mandated. Regarding the question of whether an appeal would be allowed against the Commission’s order under the S&C framework or not, the JPC has recommended that no appeal should lie to the NCLAT against an S&C order by the Commission. Further, regarding the most significant and essential aspect of the inclusion of cartels within the framework, the JPC has recommended that cartels must be included under the S&C framework.
4. CONCLUSION & WAY FORWARD
CCI works to provide a level playing field in the market, to ensure that Anti-competitive practices are prevented and adequate action is taken. Once the S&C mechanism is adopted by CCI, it will lead to the speedy disposal of cases and investigative resources will be saved for complex proceedings. Certain provisions recommended by the standing committee can prove to be really efficient if they are accepted by the government. The inclusion of cartels in the S&C will be a welcome step as it will further strengthen the anti-cartel enforcement of CCI. This will allow parties an avenue to seek a reduction in fines, in addition to the present leniency regime. Further, this decision will be in line with international practices. However, the fact that no appeal would lie to the NCLAT from an S&C order remains a problematic one as it may limit the legal means of justice. In the opinion of the authors, an appeal should lie to the NCLAT against an S&C order of the Commission. The report recommends that “admission of guilt should not be mandated”, however, it remains unclear if submitting a settlement or commitment offer would mean admission of guilt. The report contradicts its own provision by permitting compensation offers especially when admission of guilt is not mandated. The report also misses on certain important aspects such as no recommendation regarding the mandatory presence of judicial members during final hearings.
The recommendations of the committee will further enhance the effectiveness of the amendment bill if certain necessary clarifications are made. There should be clarity regarding the aspect of admission of guilt as well as it would lead to the fulfillment of the objectives of the bill. The Bill must incorporate all the changes that have been suggested by the JPC and should also take note of the points mentioned above. When passed, the proposed Bill will introduce the much-needed S&C framework into Indian competition law and ensure faster market corrections.
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