The Amendments of 2007 and 2023

The Competition Act has been amended substantially twice. The amendment of 2007 was constitutional in character: it separated the regulator from the adjudicator after the litigation in Brahm Dutt v. Union of India, (2005) 2 SCC 431, and it made the merger regime mandatory. The amendment of 2023 was practical: after a decade of enforcement the Commission's caseload had grown, its proceedings had become long, and the digital economy had produced transactions and conduct the statute did not anticipate. Between them these two Acts account for most of what the statute now looks like.

1. The Competition (Amendment) Act, 2007

The Act of 2002 had contemplated a single body which would both inquire into contraventions and decide them, headed by a person selected by the executive. That design was challenged in Brahm Dutt on the ground that a body discharging adjudicatory functions must be headed by a judicial person, and during the hearing the Union informed the Court that it proposed to amend the Act. The amendment of 2007 gave effect to that statement and made three further changes.

1. Separation of functions. The Commission was reconstituted as an expert body which inquires into contraventions and passes orders, and a separate Competition Appellate Tribunal was created under Chapter VIII-A, headed by a person who is or has been a judge of the Supreme Court or the Chief Justice of a High Court, to hear appeals against the orders of the Commission and to award compensation under Section 53N.
2. A mandatory and suspensory merger regime. As originally enacted, notification of a combination was voluntary. The amendment made it mandatory for a transaction crossing the thresholds in Section 5, required notice within the prescribed period, and provided that the combination shall not take effect until the Commission has passed an order or the statutory period has expired.
3. The investigative arm. The office of the Director General was placed in the structure as the Commission's investigating agency, with the powers in Section 41, so that inquiry and investigation were separated within the institution as well.
4. Composition and selection. The provisions on the composition of the Commission and on the selection committee were recast, and the number of Members fixed at not less than two and not more than six besides the Chairperson.

Two events completed the transition. Sections 3 and 4 were notified with effect from 20 May 2009 and the MRTP Act was repealed with effect from 1 September 2009; Sections 5 and 6 were notified with effect from 1 June 2011. The Competition Appellate Tribunal itself was abolished by the Finance Act, 2017, and its jurisdiction was transferred to the National Company Law Appellate Tribunal with effect from 26 May 2017.

2. Why a Further Amendment Was Needed

The Competition Law Review Committee, which reported in 2019, identified the difficulties that the amendment of 2023 addresses. Proceedings took too long, both because every case ran to a final order and because there was no mechanism by which a party could offer to change its conduct and end the matter. The merger thresholds, expressed in assets and turnover, missed acquisitions of digital enterprises with many users and little revenue. The merger review period of two hundred and ten days was long by international standards. The presumption in Section 3(3) reached only enterprises at the same level of the chain, which left the coordinating platform or distributor outside it. And penalties computed on Indian turnover alone understated the gain in the case of a global enterprise.

3. The Competition (Amendment) Act, 2023

4. The Four Changes That Matter Most

4.1 Settlement and commitment

These are the most significant additions, because they change the shape of a proceeding. A commitment under Section 48B is offered early, after the direction to investigate and before the Director General's report, and the party offers to modify its conduct without any finding of contravention. A settlement under Section 48A comes later, after the report but before a final order, and involves the party accepting the finding and paying a settlement amount. Neither route is available in a cartel case, where the object of enforcement is deterrence rather than the correction of conduct, and where leniency already provides an incentive to come forward. The orders made on settlement or commitment are not appealable, and the procedure is governed by regulations framed by the Commission.

4.2 The deal value threshold

The old thresholds asked what the parties owned and what they earned. An acquisition of a young digital enterprise with a large user base, little revenue and few assets escaped notification entirely, even where the target was the acquirer's most plausible future competitor. The new threshold asks what the acquirer was willing to pay, on the footing that the price reveals the value of what is being bought. The qualifying condition, that the target must have substantial business operations in India, prevents the provision from catching every large global transaction with an incidental Indian connection, and the content of that expression is supplied by the combination regulations.

4.3 Hub and spoke arrangements

Section 3(3) raises its presumption against agreements between enterprises engaged in identical or similar trade. A platform, a distributor or a trade association that passes information between competitors and coordinates their conduct is not engaged in the same trade, and could argue that the presumption did not touch it. The amendment closes that gap by providing that an enterprise which actively participates in furthering such an agreement is presumed to be a party to it, even though it operates at a different level of the chain.

4.4 Penalties on global turnover

Before the amendment the base for a penalty was contested. In Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47 the Supreme Court held that where a multi-product enterprise contravenes the Act in respect of one product, the penalty is to be computed on the relevant turnover, meaning the turnover of the product to which the contravention relates, and not on the total turnover of the enterprise, since a penalty must be proportionate. The amendment of 2023 defines turnover as global turnover derived from all products and services, which enlarges the maximum, and the Commission has issued guidelines under which the penalty is determined by reference to relevant turnover and then adjusted, so that proportionality is preserved within a larger ceiling.

5. What the Amendment Did Not Do

• It did not create a separate regime for digital markets, of the kind the Committee on Digital Competition Law examined; a draft Digital Competition Bill has been circulated but is not law.
• It did not alter the substantive tests in Sections 3 and 4, which remain as enacted.
• It did not introduce criminal sanctions or private damages actions independent of a finding by the Commission; compensation under Section 53N still follows a finding.
• It did not resolve the relationship between the Commission and sectoral regulators, which continues to rest on Sections 21, 21A and 62 and on the decision in Competition Commission of India v. Bharti Airtel Ltd., (2019) 2 SCC 521.

6. Related Topics and Provisions