The proposed regulations will clarify how to assess the value of a transaction for the purpose of deciding whether it requires CCI approval or not.
The Competition Commission of India (CCI) is in the process of notifying the new merger control regulations, CCI Chairperson Ravneet Kaur said on May 20.
In the past year, the competition regulator was engaged in preparing the regulatory framework to operationalise the Competition Amendment Act, 2023, which was conceived by the need to address emerging challenges and align our framework with international best practices.
The new regulations issued include those relating to negotiated settlements with businesses on anti-competitive practices, regulating mergers and acquisitions based on the deal value and an expanded scheme on leniency meant to encourage cartels to come clean. The next in the pipeline is merger regulations. “We are now in the process of notifying the new merger control regulations," Kaur added.
A person informed about the watchdog’s work explained that the proposed regulations will clarify how to assess the value of a transaction for the purpose of deciding whether it requires CCI approval or not. The regulations will also explain how CCI will speed up merger regulation by cutting down the maximum allowed time for a decision on a transaction from 210 days to 150 days, a provision that was also introduced in the law last year, explained the person, who spoke on condition of anonymity.
As per amendments introduced to the competition law last year, CCI approval is needed for any transaction if the value of it is more than ₹2,000 crore (approx. $240 million), even if the deal does not otherwise meet the asset and sales threshold for merger regulations. The amendments also said CCI has to make a first impression of a deal within 30 days, failing which it will be deemed to be approved.
Kaur also explained that the emergence of new-age markets has led to a revamp in competition laws around the world, as digital economy adds to the complexities.
“In fact, the digital economy has challenged traditional competition law frameworks worldwide. Countries and economic blocks have responded by either adapting domestic lows or introducing new regulations specifically targeting digital markets. There has been a marked increase in scrutiny of digital technology companies around the world,"
Kaur said.
The control of digital platforms over large datasets can create barriers to entry for new players, compromise platform neutrality, and lead to algorithmic collusion, noted Chairperson of the CCI. The digital market has the tendency towards market concentration, and many digital platforms benefit from network effects, where value of the services rise as more users join the platform. This can quickly lead to a winners-take-all scenario, where one or a few companies can dominate the market.
Attorney general for India R. Venkataramani, who was also present at an event to mark the 15th foundation day of the Competition Commission of India, said it is old news that data or the internet is the new currency. "By now, you have seen the action taken by a number of competition regulators worldwide against the gatekeepers of data," he said. The current debate around this issue in India is about the draft Digital Competition Bill, where the CCI has to decide between two methods of regulatory action – investigation and sanctions, or bans and prohibitive rules, said Venkataramani.
Sources: Mint, The Indian Express
