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Navigating Competition: Unraveling Pricing Dynamics in India’s Legal Landscape

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ABSTRACT: 

The introduction of new technologies promises a number of advantages from the perspective of competition, including more competition, cheaper costs, a greater selection of goods and services, etc. These claims of procompetitive benefits, however, frequently serve as a cover for the potential anti-competitive consequences that these technologies carry. One such invention that should encourage more market competition is pricing algorithms. But these algorithms are frequently just instruments for manipulating market pricing. 

It is now simpler to carry out anti-competitive agreements and avoid legal action because to algorithms. The use of pricing algorithms to carry out price-fixing agreements is now known worldwide for its anti-competitive effects. It is surprising, nevertheless, that the Competition Commission of India disregarded, without conducting a thorough investigation, a similar complaint against Ola and Uber (cab aggregators). The informant said that taxi drivers and cab aggregators fixed market rates for taxi fares by agreeing to use an algorithm to calculate prices. 

This amounts to hub-and-spoke cooperation, which is anti-competitive in nature, claims the Informant. This argument was denied by the Commission, which maintained that a clear agreement between the hub and spokes to coordinate on price is necessary for this kind of collusion. In my opinion, this is essentially predicated on a misinterpretation of the Commission. Given that comparable algorithm-based agreements are currently permeating the market, it is important to give the matter another look in order to guarantee that competition is encouraged in the marketplace. In this essay, I aim to evaluate the Commission’s order and make the case that the contract between taxi aggregators and their drivers tends to stifle competition by setting market rates. An arrangement of this kind is therefore anti-competitive. 

 INTRODUCTION:  

Every day, a new and inventive technology emerges from the market as science advances. These technologies are widely accepted and frequently provide a plethora of benefits and promises. These days, more people than ever use the internet, big data, artificial intelligence, and frequently unknown pricing algorithms. They appear to provide a host of procompetitive benefits, including better quality, price comparison, and a greater selection of goods and services at significantly reduced costs, from the perspective of competition. It is simple to become blindsided by the abundance of procompetitive benefits that are touted and neglect the necessary research into the potential effects that these technologies may have on competition. 

In order to address the Competition Law challenges appearing in this new digital market, this compels us to reconsider and reinterpret the policies pertaining to Competition Law and to implement adjustments that have been badly lacking. 

 UNDERSTANDING THE ALGORITHM:  

There are four ways that algorithms can be used to facilitate collusion, according to the legal literature that is currently available: employing computers as messengers; hub and spoke collusion; implicit cooperation by using computers as predictable agents; and using artificial intelligence as a digital eye.In the first case, algorithms are only employed to carry out the wishes of humans. After humans get into an agreement, computers or algorithms are used to carry it out or keep an eye on it. The easiest type of collaboration to prove is this one. In the second scenario, spokes and a central hub make vertical agreements. 

The spokes do not actually need to agree for this to happen. In the third case, rivals employ a single pricing algorithm with the knowledge that other competitors are following suit. Since the pricing of the products on the market are determined by this algorithm, all competitors will set their prices at the same amount. Nonetheless, there isn’t a clear contract between rivals to set market prices. The artificial intelligence that is being deployed in the final scenario will control prices on its own. There is no requirement for any anti-competitive agreement or intent on the part of the parties. 

The 2015 case of USA v. David Topkins1 was the first recognition of the crime of price-fixing through the use of a pricing algorithm. Topkins entered a guilty plea for manipulating poster pricing on the Amazon Marketplace through the use of complex algorithms2 Since then, there has been a great deal of controversy over the use of pricing algorithms to violate antitrust laws. We need to reconsider the idea that collusion is restricted to discussions in smoky rooms in light of such algorithm-based cartels. 

Since then, there has been a great deal of controversy over the use of pricing algorithms to violate antitrust laws. We need to reconsider the idea that collusion is restricted to discussions in smoky rooms in light of such algorithm-based cartels. The European Commissioner for Competition Margrethe Vestager and the President of the German Federal Cartel Office, Andreas Mundt, have acknowledged in statements that businesses are using algorithms to facilitate collusion and that they shouldn’t be able to use these tools as a cover for breaking anti-competitive laws. 

This leads to the conclusion that, since price fixing agreements are anti-competitive, it makes no difference if they are carried out through intermediaries like pricing algorithms. This is now acknowledged by all legal systems, and the United Kingdom, Singapore, Russia, and the European Union have all reached identical judgements. 

 SCENARIO IN THE INDIAN MARKET:  

Despite the fact that pricing algorithms have an anti-competitive effect that is becoming widely acknowledged, India appears to be lagging behind in this regard. The Competition Commission of India issued an order in November 2018 dismissing the claim that Ola and Uber (collectively, the Cab Aggregators) colluded using pricing algorithms.3 

In this instance, the informant maintained that the Indian Competition Act’s provisions are broken by the Cab Aggregators and the drivers’ sharing of a hub and spoke collusion to fix the cab fare in the market. The commuter and the driver are connected via mobile applications by the Cab Aggregators. The motorist that is closest to the commuter receives an automatic ride offer via the application. The commuter makes an offer, which the driver can accept or reject without having to haggle over. The offer is made to the next nearest driver if the driver does not take it within 15 seconds. This process keeps going until a driver decides to accept the offer. 

The Cab Aggregators determine the rate for the ride based on a number of variables, including time, distance, surcharges, and tolls, using a particular pricing algorithm. Here, drivers agree to accept the fare determined by the pricing algorithm by signing the Drivers Terms and Conditions. There is no room for negotiation on the part of the commuter or the driver. The informant maintained that the drivers and the taxi aggregators are fixing pricing by doing this. Section 3(3)(a) in conjunction with Section 3(1) of the Competition Act is violated as a result, as agreements that “directly or indirectly determine purchase or sale prices” are forbidden. But the Commission dismissed the case after rejecting this kind of accusation.  

The Commission claims that a hub-and-spoke arrangement necessitates an explicit pricing-fixing conspiracy. Here, sensitive data is shared between the hub and spokes via a third-party platform. In the case of ride-sourcing or ride-sharing services, a hub-and-spoke cartel will need the platform to coordinate prices amongst the drivers or an agreement to set prices through the platform.But in this instance, the price is established by the Cab Aggregators’ pricing algorithm, which takes into account the rider’s specific information as well as other factors like traffic, time of day, and so on. According to the Commission, there isn’t a formal agreement between the drivers to set costs, thus there isn’t any hub-and-spoke collusion. But it appears that this interpretation of the Commission is incorrect. 

Three conditions must be satisfied, under the Indian Competition Law, in order to prove that a cartel is anti-competitive. First, a coordinated action that suggests a conspiracy must be taken; second, this agreement must result in market price fixing; and third, this agreement must have the goal of limiting or completely eliminating competition in the market.4 It is further contend that these conditions are met in the Uber and Ola case. 

 PRICE FIXING AND RESTRICTION IN THE MARKET:  

Price-fixing cartels pose a serious risk to the level of market competition. Consequently, certain jurisdictions adhere to what is commonly referred to as the per se norm. This means that a price-fixing cartel’s very existence is anti-competitive in and of itself.5 Nonetheless, the rule of reason—which states that the effect a price-fixing agreement has on market competition determines its legality—is upheld by Indian jurisprudence. 

The nature of the restriction and its real or expected effects must be examined in order to comply with the rule of reason.6 The onus is on the Opposing Party (in this example, Uber and Ola) to prove that the existence of a price-fixing agreement has no anti-competitive effects once it has been established. 

The primary issue with pricing algorithms is that they make it simple to monitor and enforce anti-competitive agreements that are impossible to carry out in any other way. Algorithms essentially facilitate the execution of anti-competitive agreements and legal evasion. This was seen in the Competition and Markets Authority (CMA) dispute involving Trod and GB Eye Limited. 

According to the European Commission, it is anti-competitive to use price algorithms to limit market competition. Four UK firms forced their online retailers to pay minimum or fixed retail pricing. Algorithms for price fixing were employed to enforce the same. The manufacturers limited the retailers’ ability to compete with one another by imposing this agreement on them, so limiting market competition.7 

The manufacturers effectively limited competition in the market by enforcing the same agreement on the retailers through price fixing algorithms, which the Commission deemed to be an anti-competitive price fixing agreement. This case underscores the potential threat posed by pricing algorithms because it is simple to enforce anti-competitive agreements without leaving significant evidence. 

By imposing the same agreement on the retailers using price-fixing algorithms, the manufacturers effectively reduced competition in the market. The Commission considered this to be an anti-competitive price-fixing agreement. Because it is easy to enforce anti-competitive agreements without leaving significant proof, this case highlights the potential threat posed by pricing algorithms. 

The drivers would be able to engage in pricing competition to foster a healthy level of competition8 But rather than doing this, Uber uses its pricing algorithms to set fares for the drivers. An agreement to fix prices like this is intended to limit market competition. The competition is significantly harmed by this. Thus, it can be deduced that the Cab Aggregators employ these algorithms in an effort to eradicate market rivalry. 

 LANDMARK CASES:  

  • Coal India Ltd & Anr. v. Competition Commission of India & Another (Supreme Court – June 2023): Context: After a ten-year legal battle, the Supreme Court clarified that the provisions of the Competition Act, 2002, apply to Coal India Ltd (CIL) and similar public sector undertakings. Significance: This decision confirmed the Competition Commission of India’s (CCI) jurisdiction to investigate and take measures against statutory monopolies (like CIL) in abuse of dominance case. 
  • Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Another (Delhi High Court – July 2023): Context: The Delhi High Court held that disputes related to allegations of anticompetitive conduct in patent licensing cannot be examined under the Competition Act but should be addressed under the Patents Act, 1970. 
  • Institute of Chartered Accounts of India v. Competition Commission of India & Others (Delhi High Court – June 2023): Context: The CCI’s jurisdiction was challenged regarding its authority to examine decisions made by other statutory regulators.Outcome: The Delhi High Court ruled that the CCI does not have jurisdiction to review decisions made by other regulators, emphasizing the need for clarity on overlapping jurisdictions. Impact: This decision effectively barred the CCI from examining disputes related to patent licensing terms and conditions. Licensees must now approach the Controller of Patents for such issues. 

 WAY FORWARD:  

The Competition Act states that an agreement does not have to be official, written, or expressed. As a result, the concept of an agreement is extremely inclusive. The standards in the event of a hub-and-spoke collusion are further relaxed. The hub of a hub and spoke collaboration must carry out a single, unlawful scheme. The hub and spokes come to an agreement for this. It is not necessary for the spokes to come to an agreement with one another. It is presumed that the spokes agreed to and took part in the hub’s strategy as they engage into an agreement with the hub knowing that additional spokes will follow suit. 

The drivers are the spokes in the Uber and Ola models, and the Cab Aggregators are the hub. The drivers consent to utilise the hub’s pricing algorithms, aware that other market spokes have already consented to use the same algorithm. This will be considered a legitimate agreement between the Cab Aggregators and its drivers in accordance with current jurisprudence on hub and spoke collusions. 

The Cab Aggregators’ pricing algorithms are used to determine market rates for fares. This is an all-inclusive fare. The commuter and the driver must agree on this fare price. This is definitely a price-fixing pact, no question about it. It appears that the Commission has acknowledged that Cab Aggregators utilise the algorithm to set market rates. The main point of contention in this topic is how such a price-fixing agreement hurts competition. 

The current situation was not comprehended by the Commission. It found that there cannot be collusion in the absence of an explicit agreement and emphasised the necessity of having one. Furthermore, a hub-and-spoke collusion eluded the Commission as well. The agreement between the hub and spokes to share confidential data via a third-party platform is considered a kind of collusion. In order to use the platform to set market prices, all drivers must also agree to do so. This, as was previously mentioned, is untrue. To encourage more competition in the market, it is important that the Commission gains a deeper comprehension of the matter. 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 

 Written By Riddhi S Bhora

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A way towards transparency : CCPA on dark patterns

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Introduction :

Dark patterns are a consumer tactic that is used to manipulate the choices of the user. For example, when someone is purchasing from an online store, the price of the product is exclusive of the taxes and delivery charges. The price the consumer opted for is more than what was shown in the initial stage. Dark pattern is a blanket term in which the user has to deliberately make a choice to consume what they need. There are many circumstances where exploitation of the consumer takes place due to these underlying dark patterns. Examples include unnecessary pop-up boxes which automatically drive the consumer away from the product or service they require[1].

The government of India has legislated the use of these patterns in the guidelines issued by the Consumer Protection Authority of India called the “Guidelines for Prevention and Regulation of Dark Patterns, 2023”

Other authorities on Dark Patterns :

In India, the major shield consumers have against any exploitation is the Consumer Protection Act, of 2019. Section 2(9)[2] defines consumer rights and it includes the right to be protected against harmful marketing and, right to be informed about the nature of the goods or services. The act of tricking a consumer into buying something or not providing the whole truth initially can be labelled as a violation of consumer rights along with unfair trade practices dealt with under Section 47[3] of the Act.

In the event of a violation of consumer rights, the Central Consumer Protection Authority issues guidelines to prevent unfair trade practices. Noncompliance with any orders passed by CCPA can lead to imprisonment of 6 months or a fine of up to Rs.20 lakhs or both[4]. In addition, the CPA punishes creating deceptive or misleading advertisements that harm customers’ interests. Penalties include up to two years in prison and a fine of up to Rs 10 Lakh. Moreover, a maximum sentence of five years in prison and a maximum fine of Rs.50 lakh may be applied for repeat offences. These penalties can also be applied for each additional violation[5].

The E-commerce Rules, 2020 is a regulatory framework which governs the goods and services bought online. It prohibits all sorts of unfair trade practices causing the dominant position of one particular company. Rule 4(3)[6] provides that “ No e-commerce entity shall adopt any unfair trade practice, whether in the course of business on its platform or otherwise.”

On June 15, 2023 the Advertising Standards Council of India, a self-regulatory body released the guidelines called the “Guidelines for Online Deceptive Design Patterns in Advertising”. It aimed to prevent drip pricing, which is the concept of deceiving the consumers from the actual prices at the end. The practice of baits in online advertisements were also prohibited by the guidelines or providing alternative products instead of the original one. Alongside these prohibitions, the guidelines also focussed on preventing disguised advertisements from other sites in the product page.

Guidelines for Prevention and Regulation of Dark Patterns, 2023

The central consumer protection authority exercises of its powers under Section 18 of the Consumer Protection Act, 2019[7] and issued the guidelines on November 30th, 2023. The guidelines define dark patterns as :

“ “Dark patterns” shall mean any practices or deceptive design patterns using UI/UX (user interface/user experience) interactions on any platform; designed to mislead or trick users into doing something they originally did not intend or want to do; by subverting or impairing the consumer autonomy, decision making or choice; amounting to misleading advertisement or unfair trade practice or violation of consumer rights;”[8]

Under Section 5 of the guidelines, if any person or platform does something that is under Annexure I, will be said to have engaged in dark patterns. Annexure I of the guidelines contains the specified dark patterns which are strictly prohibited. There are in total 10 specified dark patterns which are prohibited.

Specified Dark Patterns :

The CCPA has outlined specific deceptive designs or illustrations as to what constitutes a dark pattern, they are[9] :

  1. False Urgency : It means falsely implying the product is running out of stock or creating a sense of urgency to mislead a user into buying the product. For example, A website showing only 2 are in stock while 30 others are looking to buy the same thing falsely is prohibited.
  2. Basket sneaking : It means the inclusion of additional products which was not added by the user during checkout wherein the total amount payable has increased as a result. However, in the proviso it was mentioned that providing complementary samples is not basket sneaking.
  3. Confirm Shaming : It means when the provider uses shame, guilt or fear in the user for not buying or using their product. For example, A platform that adds a charity in the basket using a phrase “charity is for rich, I don’t care.” would be deemed as a dark pattern.
  4. Forced Action : It means when the user is forced to take some action which would require them to buy an additional product or sign up for a service. Eg: Forcing the user tp subscribe to a newsletter to purchase a product.
  5.  Subscription trap : This occurs when the user is unable to cancel their subscription or when the process is too lengthy or elaborate. It also includes forcing auto-debits without easy cancellation policy.
  6. Interface interference : It means designing a feature wherein the user is manipulated into doing something they normally wouldn’t do if not for the feature. For example, An ‘X’ icon on the top-right corner of a pop-up screen leads to opening-up of another ad rather than closing it.
  7. Bait and Switch : It refers to the practice of advertising a particular outcome based on the user’s action but deceptively serving an alternate outcome. Eg : A seller offers a quality product at a cheap price but when the consumer is about to pay/buy, the seller states that the product is no longer available and instead offers a similar looking product but more expensive.
  8. Drip Pricing : Means when the prices are changed or different while checkout would be referred to as a dark pattern.
  9. Disguised advertisement : It means a practice of posing, and masking advertisements as other types of content such as user-generated content or new articles or false advertisements.
  10. Nagging : It refers to when a website causes a lot of interruptions while browsing such as requests, options, information which are unrelated to the purchase disrupting the intended transaction. Eg : Websites asking a user to download their app, again and again.

Conclusion

This guideline can act as a step towards transparency in the e-commerce market regime of India. However, it also requires the authorities to keenly ensure companies follow it and in the right circumstances curb these actions. The objective of the guidelines is to provide a better online experience to users and prevent them from exploitation. The same can only be brought into reality if there is proper enforcement.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by- Sanjana Ravichandran

[1] Gargi Sarkar, Govt Issues List of 13 Dark Patterns Plauging Ecommerce Websites, INC42 (Dec 04, 2023) https://inc42.com/buzz/govt-issues-list-of-13-dark-patterns-plaguing-ecommerce-websites/

[2] The Consumer protection Act, 2019 No. 36, Acts of Parliament, 2019 (India)

[3] Sec 47, “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice. The Consumer protection Act, 2019 No. 36, Acts of Parliament, 2019 (India)

[4] Advait Luthra, Ananya Mishra, India: ASCI Guidelines On Dark Patterns And The Way Forward, MONDAQ, (Aug 29, 2023) https://www.mondaq.com/india/dodd-frank-consumer-protection-act/1358384/asci-guidelines-on-dark-patterns-and-the-way-forward#:~:text=Dark%20patterns%20are%20basically%20user,for%20reviews%2C%20and%20so%20on.

[5] The consumer Protection (E-commerce) Rules, 2020.

[6] The consumer Protection (E-commerce) Rules, 2020.

[7]  Guidelines for Prevention and Regulation of Dark Patterns, 2023

[8] Section 2(6) of Guidelines for Prevention and Regulation of Dark Patterns, 2023.

[9] Annexure 1 of  Guidelines for Prevention and Regulation of Dark Patterns, 2023.

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Challenges and Opportunities under the Competition Amendment Act 2023 in India

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Introduction  

   

The Competition Amendment Act 2023 in India has ushered in significant changes to the country’s competition law landscape. As the government aims to create a more competitive and fair marketplace, it is crucial to understand the challenges and opportunities that this amendment presents. In this article, we will delve into the key provisions of the Competition Amendment Act 2023, exploring the implications for businesses, consumers, and the legal community. 

 

Historical Background 

   

The competition law journey in India began with the Monopolies and Restrictive Trade Practices Act (MRTP) of 1969, aimed at curbing monopolistic practices and promoting fair competition. However, over time, it became evident that the MRTP Act couldn’t adequately address the changing economic landscape. In 1999, the Indian Government established a committee to recommend a modern competition legislation in line with global trends. The Raghavan Committee, which reviewed competition laws from around the world, submitted its findings in May 2000, leading to the enactment of the Competition Act in 2002.[1] This Act was designed to promote fair competition, protect consumers from anti-competitive practices, and establish the Competition Commission of India (CCI) to enforce its provisions.  

   

Since its inception, the Competition Act has undergone several amendments, including provisions for mergers and acquisitions in 2007 and increased penalties for anti-competitive behavior in 2009. In 2023, another amendment act was passed to enhance enforcement mechanisms and penalties for non-compliance with CCI orders. The Competition (Amendment) Act, 2023 is a response to instances of anti-competitive conduct by major corporations, particularly in the technology industry. It draws inspiration from similar laws in other countries, such as Europe’s Digital Markets Act and Australia’s legislation requiring tech giants to compensate news publishers for their content.[2] This Act would significantly impact the operations of large corporations in India and promote a more level playing field for all businesses. 

 

Major Objectives of the Act 

 

The Act introduces changes like expanding the definition of anti-competitive agreements, increasing penalties for such behavior, reducing the CCI’s merger review time frame, introducing a new framework for case settlements, penalizing based on global turnover, using Deal Value for M&A notifications, and setting a 3-year limitation period for filing information. 

 

Old Law vs. New Law: A Brief Comparison 

 

Under the previous law, the Competition Act of 2002 prevented parties from entering combinations that might have an appreciable adverse effect on competition.[3] Threshold limits[4], such as gross assets and turnover values[5], triggered the application of competition law. The 2023 Act expands the scope by considering not only the value of the parties involved but also the transactional value, focusing on what one party is willing to pay for the target. This addresses deals in the technology sector where the target may not have significant assets or revenue but is valued for data or innovation.  

   

The Act also reduces the time for CCI to make decisions from 210 days[6] to 150 days, which may put pressure on the CCI but aims to expedite decision-making. It eliminates the 30-day limit for forming a prima facie opinion[7] and reduces it to 20 days from the date of application.  

   

The Act introduces flexibility in notifying the CCI about deals, moving away from a fixed timeline to case-by-case determination. It also refines the definition of “control” to be more specific, focusing on the ability to influence strategic decisions.  

   

In terms of anti-competitive agreements, the Act extends regulation to non-competitor and non-market participant enterprises engaged in different business activities but intending to participate in cartel activities. This aligns with international “hub and spoke” arrangements.  

   

The introduction of settlement and commitment options allows for faster resolution of proceedings, encouraging compliance with rules. Additionally, the Act replaces fines with penalties for certain offenses, aligning punishment with the severity of contraventions.  

   

The inclusion of “global turnover” in penalty calculations may lead to higher penalties for global businesses. However, it also raises concerns about the impact on smaller divisions within companies.  

   

Expanding the definition of “relevant market” to consider products and services interchangeable by both consumers and suppliers offers a more comprehensive perspective. The Act also adjusts the appointment process for the Director General and CCI members, with CCI having a role, subject to central government approval.  

 

Key Highlights of the 2023 Amendment Act 

 

The 2023 Act introduces several significant changes, including:   

   

Merger Control Provisions 

   

Introduction of Deal-Value Based Thresholds  

 

  • The Amendment has introduced a new criterion, known as the ‘deal value’ threshold (DVT), alongside the existing asset value and turnover-based criteria for assessing the requirement to notify the Competition Commission of India (CCI). Under this criterion, the CCI can review transactions if: (i) the global deal value exceeds INR 2,000 crore; and (ii) the party involved has ‘substantial business operations in India,’ subject to exemptions.  

 

  • This move aligns India with several other countries in adopting the DVT in their merger control regulations. It expands the CCI’s oversight to transactions involving ‘asset lite’ and ‘low revenue’ companies. The Amendment defines ‘value of transaction’ to encompass all valuable considerations, whether direct, indirect, or deferred. The specific tests for determining ‘substantial business operations in India’ will be detailed in forthcoming regulations/guidelines.  

   

Procedural Merger Control Timelines  

 

  • The Amendment accelerates merger review timelines by reducing the time for forming an initial view on competition law concerns (from 30 working days to 30 calendar days) and for reaching a final decision on a transaction (from 210 calendar days to 150 calendar days). This change means quicker approvals for non-problematic transactions. Parties are now encouraged to engage in pre-filing consultations with the CCI to avoid potential notification issues.  

 

Widening the Scope of ‘Control’  

 

  • The Amendment redefines ‘control’ to its lowest standard, ‘material influence,’ aligning with the CCI’s evolving interpretation of ‘control.’ This change means that even transactions involving minority investments with certain investor protection rights may require prior CCI notification if the acquirer gains ‘material influence.’  

 

Exemption from Standstill Obligations in Certain Cases  

 

  • The Amendment exempts open market purchases and transactions on regulated stock exchanges from the standstill obligations of the merger control regime, provided the transaction is timely notified to the CCI and the acquirer refrains from exercising ownership or beneficial rights in the shares or securities until CCI approval. This change simplifies the process for transactions involving listed companies, facilitating time-sensitive market-related purchases without stringent regulatory requirements.  

 

Extending the Ambit of Gun-Jumping Provisions  

 

  • In line with the proposed DVT introduction, the Amendment empowers the CCI to penalize parties up to 1% of the ‘deal value’ of a transaction for gun-jumping, expanding beyond the existing asset value and turnover-based thresholds.[8]  

 

Antitrust Provisions 

 

Penalties Based on ‘Global Turnover’  

 

  • The Amendment broadens the basis for imposing penalties from ‘relevant turnover’ (as per the Excel Crop Case[9]) to ‘global turnover derived from all products and services.’[10] This change may lead to larger penalties for multi-product/service conglomerates with global operations for similar anti-competitive behavior, potentially raising concerns about proportionality and fairness.  

 

Expanding the Scope of Cartel Prosecution  

 

  • The Amendment extends cartel prosecution to hybrid anti-competitive agreements (e.g., hub-and-spoke cartels) and individuals who ‘intended to participate’ in the cartel but did not. This change broadens the CCI’s authority to treat cartel facilitators and agreements across different value chain levels as anti-competitive.  

 

Commitments and Settlements  

 

  • The Amendment introduces a mechanism for commitments and settlements, allowing parties to propose commitments or settlements in antitrust cases (excluding cartels). Parties can propose commitments after the investigation begins but before the Director General’s report, while settlements can be offered after the report but before the CCI’s final decision. Additionally, the Amendment enables compensation claims even after Supreme Court orders.  

 

  • The CCI must invite objections/suggestions from informants, DG, settlement applicants, and third parties before adopting a commitment or settlement proposal, and such orders are not appealable. This mechanism aims to correct anti-competitive practices swiftly, reduce CCI investigations, and ease its resource burden.  

 

Enhancing the Leniency Regime  

 

  • The Amendment introduces a ‘leniency plus’ policy, allowing leniency applicants in one cartel to disclose another cartel and receive a reduced additional penalty for the cartel already under investigation. The CCI can impose the full penalty if leniency applicants fail to comply with conditions or provide false evidence.  

 

  • Parties can withdraw leniency applications, but the CCI may use the information provided as part of its investigation. This ‘leniency plus’ policy enhances the existing leniency regime, encourages cooperation, and helps uncover multiple cartels.[11]  

 

Miscellaneous Provisions 

 

Public Consultation for Regulations/Guidelines  

 

  • The Amendment mandates transparency in making regulations/guidelines, requiring the CCI to publish drafts, invite public comments, and issue a general statement of response. Certain situations exempt public consultation.  

 

Enhanced Penalty for False Information or Omission  

 

  • The Amendment increases penalties for furnishing false information or failing to provide material information in transactions requiring CCI approval. Penalty guidelines will be published to ensure proportionality in penalty computation.  

 

Director General Appointment Process  

 

  • The CCI gains the power to appoint the Director General with prior Central Government approval, ensuring a checks and balances mechanism.  

 

Widened Powers of the Director General  

 

  • The Amendment grants the DG expanded investigative powers, including examining agents, seeking information from third parties, and retaining information/documents for up to 360 days.  

 

Introduction of Limitation Period and Res-Judicata  

 

  • The Amendment introduces a three-year limitation period for filing information or references related to antitrust violations and allows the CCI to reject information based on the same or similar facts and issues addressed in previous CCI orders.  

 

Partial Penalty Amount Deposit Before the Appellate Tribunal  

 

  • The Amendment mandates the deposit of 25% of the penalty amount for appeals by erring companies at the National Company Law Appellate Tribunal (NCLAT).  

 

Conclusion 

 

While it introduces several challenges for businesses and regulators, it also presents numerous opportunities for promoting fair competition, protecting consumer interests, and strengthening enforcement mechanisms. Notably, the recognition of hub-and-spoke cartels and mandatory public consultation for regulations/guidelines are significant developments. 

   

To thrive in this evolving legal landscape, businesses must proactively assess their practices and ensure compliance with the amended competition law. The legal community should be prepared to navigate the complexities of the new provisions and provide guidance to clients in adapting to the changing regulatory environment. 

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 

 

Written by – Ananya Chaudhary 

[1] The Competition (Amendment) Act, 2023: A Game Changer for Mergers and Acquisitions, SCC Online Blog (Jun. 5, 2023), https://www.scconline.com/blog/post/2023/06/05/the-competition-amendment-act-2023-a-game-changer-for-mergers-and-acquisitions/#fn5.

[2] Id.

[3] Competition Act, 2002, S. 3.

[4] Competition Act, 2002, S. 5.

[5] Competition Act, 2002, S. 5.

[6] Competition Act, 2002, S. 6 (2A).

[7] Competition Act, 2002, S. 29.

[8] Competition (Amendment) Act, 2023 Comes Into Effect ‘Partially’ (Jun. 1,2023)https://www.mondaq.com/india/cartelmonopolies/1323342/competition-amendment-act-2023-comes-into-effect- partially.

[9] Excel Crop Care Ltd. v. CCI, (2017) 8 SCC 47.

[10] Competition (Amendment) Act, 2023, S. 27.

[11] Supra note 8.