Amendment to the Competition Act

The Union Cabinet has approved a proposal of the Ministry of Corporate Affairs to amend the Competition Act 2002.

Some of major amendments are:

1. revising the definition of ‘turnover’ and ‘group’;
2. reducing the overall time limit for finalising combinations from 210 days to 180 days; and
3. inserting a new Section 5A that will enable the central government to lay down, in consultation with the commission, different thresholds for any class or classes of enterprise for the purpose of examining acquisitions, mergers and amalgamations.

Details of the amendments proposed are not yet in the public domain.

CCI Chairman Reveals it

The Chairman of Competition Commission of India, Mr. Ashok Chawla reveals the following information to the media, reports Business Standard.

1. CCI has initiated a suo motu inquiry against milk retailers for frequent price rise;
2.  Further, Real estate, pharmaceuticals, aviation, telecom and tyre industries are on its radar;
3. The inquiry against tyre companies is in an advanced stage and a decision is expected soon;
4. CCI hinted that it would take note of the increase in petroleum prices by oil companies;
5. A proposal has been mooted to form a cabinet committee on competition under the chairmanship of the prime minister to overcome the disconnect between the government policy and competition law;
6.  CCI has so far investigated about 267 matters relating to violation of Section 3 and 4 out of which final order has been issued in 200 cases imposing penalty when needed. The cases are mainly from the sectors like insurance, automobiles, real estate, pharmaceuticals, financial services and the entertainment industry.

CCI Penalizes Goa Chemist & Druggist Association for anti-competitive practice

The Competition Commission of India (CCI) has discovered the Chemist & Druggist Association, Goa (CDAG) violating the Section 3 of the Competition Act, 2002 ("Act") for indulging in anti-competitive practices and imposed penalty of Rs. 2 Lakhs @10% on the average of the receipts for financial 2008-09, & 2009-10. CDAG'd guidelines that lays down the margins for wholesalers and retailers was found to be anti competitive affecting the interests of the consumers.CDAG had also prescribed a cap on the amount of the discount a wholesaler can give to the retailer and prohibited the retailer from giving any discounts to the consumers. CCI has directed CDAG to remove the clauses in the circulars, MoU and Guidelines and file an undertaking to this effect within 60 days from the date of receipt of the order. Full order of the CCI can be found here.

Revised Combination Regulations

Subsequent to my post on March 5th on Amendment to Combination Regulations , the revised Combination Regulations has been published by CCI and can be found here

Amendment to Combination Regulations

The Competition Commission of India, on 23rd February 2012, has amended the Combination Regulations with a view to provide relief to the corporate entities from making filings for combinations which are unlikely to raise adverse competition concerns, reduce their compliance requirements, make filings simpler and to move towards certainty in the application of the Act and the Regulations.

Following are some of the major changes in the Combination Regulations:

1. To reduce the compliance burden to the companies that are looking for intra-group restructuring, the Regulations have now dispensed with the requirement of filing a notice in respect of intra-group mergers or amalgamations involving enterprises wholly owned by the group companies.

2. Acquisitions of shares or voting rights pursuant to buy backs and acquisition of shares or voting rights pursuant to subscription of rights issue (without the restriction of their ‘entitled proportion’), not leading to acquisition of control, are now included in the list of transactions in Schedule I, that normally would not require a filing with the Commission.

3. The Company Secretary of the company, duly authorised by the Board, has been authorised to sign the Form I or Form II, in addition to those persons specified under the general regulations (i.e. the Managing Director or the Director authorized by the Board).

4. Form I remains the default form, wherein some simplifications have been introduced.

5. In Form I, the distinction for filling up Part I for certain types of transactions and Part II for the remaining transactions has been removed, leading to clarity and uniformity.

6. Form I has been amended and a provision has been introduced for parties to provide details of value of the assets and turnovers for the purpose of Section 5 and to provide a copy of the agreement, board resolution etc. as mentioned in Section 6(2).

7. Parties retain the option of filing Form II, especially in those cases where there may be significant horizontal overlap (>15%) and/or significant vertical relationship (>25%) between the parties.

8. In order to provide certainty about transactions involving asset transfers and calculation of value of assets and turnover for the purposes of Section 5 of the Act, a new provision has been introduced for attribution of value of assets and turnover of a transferor company to the transferee company where assets are transferred to the transferee company for the purpose of effecting a combination.

9. A provision has been made for admission of belated filing of Form III in respect of transactions covered under Section 6(5). Further, Form III would now be filed along with a copy of the loan or investment agreement.

10. The Fee has been increased from INR 50,000 to INR 10,00,000 in respect of Form I and from INR 10,00,000 to INR 40,00,000 in respect of Form II.