The Competition Commission of India (CCI) is set to release a new set of merger regulations, according to CCI Chairperson Ravneet Kaur. These regulations will implement amendments to the competition law that were passed last year. Over the past year, the CCI has been working on developing a regulatory framework under the Competition (Amendment) Act, 2023, which aims to address the challenges to competition in the market by incorporating global best practices.
The new regulations cover various aspects, including negotiated settlements with businesses involved in anti-competitive practices, regulations for mergers and acquisitions based on deal value, and an expanded leniency program to encourage cartels to confess. The next step in the process is the introduction of merger regulations. Kaur stated, “We are now in the process of notifying the new merger control regulations.”
Key Features of the Proposed Merger Regulations
The proposed merger regulations will clarify how the value of a transaction should be assessed to determine whether it requires CCI approval. Additionally, these regulations will streamline the merger review process by reducing the maximum time allowed for a decision from 210 days to 150 days. This provision was also introduced in the law last year.
The regulations are expected to be released after the model code of conduct is lifted following the polls. The government needs to notify certain provisions of the amended law. Under the amendments made to the competition law last year, CCI approval is required for any transaction valued at more than ₹2,000 crore, even if the deal does not meet the asset and sales threshold for merger regulations. The amendments also establish that CCI must provide an initial assessment of a deal within 30 days; otherwise, it will be considered approved.
Revamping Competition Laws in the Digital Economy
Chairperson Kaur highlighted how the emergence of new-age markets, particularly the digital economy, has prompted a global overhaul of competition laws. The complexities arising from the digital economy have challenged traditional competition law frameworks. Countries and economic blocs worldwide have responded by adapting domestic laws or introducing new regulations specifically targeting digital markets. There has been an increased focus on scrutinizing digital technology companies globally.
In line with this, the Ministry of Corporate Affairs in India is currently working on a Digital Competition Bill that will establish a set of guidelines for systemically important digital economy firms. The public consultation on the draft bill has concluded, and inter-ministerial consultations will take place over the next few months before it is presented to parliament.
Market Study on Artificial Intelligence
In addition to the proposed merger regulations and the Digital Competition Bill, the CCI is initiating a market study on artificial intelligence (AI). Kaur emphasized that while AI has the potential to drive competition, there are also concerns about its impact. The study aims to develop a comprehensive understanding of the emerging competition landscape in relation to AI. Kaur expressed the need for regulation in digital markets to prevent a scenario where a small number of companies dominate the market, often referred to as a “winner-takes-all” situation. Companies that accumulate significant amounts of data also raise concerns about competition, as control over large datasets can create barriers to entry.
Attorney General’s Perspective
During an event commemorating the 15th foundation day of the CCI, Attorney General for India R. Venkataramani acknowledged the importance of data and the internet as the new currency. He highlighted the actions taken by competition regulators worldwide against data gatekeepers. In India, the current debate revolves around the draft Digital Competition Bill, where the CCI must decide between two methods of regulatory action: investigation and sanctions, or bans and prohibitive rules.
The initiatives undertaken by the CCI, such as the new merger regulations, the Digital Competition Bill, and the market study on AI, demonstrate India’s commitment to adapting competition laws to address the challenges posed by the digital economy and emerging technologies.
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