Indian Competition Law Regime To Undergo A Revamp

• Published date: 10 August 2022
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Corporate and Company Law, Antitrust, EU Competition
• Law Firm: Khaitan & Co LLP
• Author: Khaitan & Co

On 5 August 2022, the Government of India tabled the Competition (Amendment) Bill, 2022 (Bill), in the lower house of the Indian Parliament. The Bill seeks to bring about significant substantive and procedural changes to the existing competition law framework, which last underwent a legislative amendment more than a decade back in 2007. Reforms to the Competition Act, 2002 (as amended) (Competition Act) have been in the spotlight since 2019, when the Government of India had constituted the Competition Law Review Committee to recommend modifications to the existing law to bring it in line with global best practices.

Some of the noteworthy changes proposed in the Bill are as follows:

Merger Control

Introduction of Deal Value Thresholds (DVT)

In addition to the existing value of asset and turnover based thresholds prescribed under the Competition Act, a new deal value threshold is proposed to be introduced. In the event the value of any transaction exceeds INR 20 billion (approx. USD 252 million or EUR 247 million) and the enterprise which is party to such a transaction has "substantial business operations in India", it would be considered a reportable transaction under the Competition Act. If none of the exemptions provided under the law apply, such a transaction would require an approval from the Competition Commission of India (CCI). While the Bill does not clarify what would constitute "substantial business operations in India", guidance is expected to follow from the CCI on the scope and import of this expression. The Bill further clarifies that the value of the transaction will include all consideration including indirect, indirect and deferred.

Our view - For years, it has been felt that transactions in various sectors, where possible competitive harm was apparent in the Indian markets, were escaping scrutiny as the thresholds provided in the Competition Act are fairly high. With the introduction of DVT, India seems to be following in the footsteps of jurisdictions such as Germany and Austria which have had DVT for a few years, leading to a mixed effect and outcome. Interestingly, the de minimis or the small target exemption remains as is for the time being. However, there is speculation that for the DVT to be effective, the de minimis exemption thresholds may also require a revision.

Merger Review Timeline

The Bill proposes to shorten the merger review timeline in phase 1 from the current 30 working day period to a 20-calendar day period. The overall review timeline granted to the CCI under the Competition Act is also to be shortened from 210 calendar days to 150 calendar days.

Our view -...