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OpinionsCompetition Commission of India Establishes a new benchmark

Competition Commission of India Establishes a new benchmark

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By Shivanand Pandit

In a significant effort to bolster regulatory oversight and ensure compliance, the Competition Commission of India (CCI) has proposed new regulations to monitor settlements and commitments by industry giants. The CCI's recently issued consultation paper and draft regulations promise to usher in a new era of transparency and accountability within the sector. These draft regulations introduce a comprehensive framework for appointing independent agencies to oversee the implementation of the Commission's orders. This initiative aims to ensure that industry giants adhere to their commitments and donot exploit loopholes to evade regulatory scrutiny.

These draft regulations, released by the competition regulator on June 6, 2024, aim to overhaul the regulatory framework established by the CCI in 2009, updating it in line with the latest amendments to the Competition Act passed by the government in April 2023. According to the draft regulations, “Where the Commission believes that the implementation of its orders passed under Section 31, Section 48A, Section 48B, or any other provisions of the Act, and regulations made thereunder need monitoring, it may appoint agencies to oversee such implementation, on such terms and conditions as deemed fit by the Commission.” The sections mentioned pertain to mergers, commitment, and settlement applications.

As the primary competition regulator in India, the CCI is a statutory body established on October 14, 2003, and became fully operational in May 2009. Functioning under the Ministry of Corporate Affairs, Government of India, the CCI is responsible for enforcing the Competition Act 2002. Its main objectives are to promote competition and prevent activities that significantly harm competition in India. The CCI investigates cases that may negatively impact competition and approves mergers to ensure that merging entities do not monopolize the market.

The Government of India, in 2018, established the Competition Law Review Committee (CLRC) to review and suggest modifications to the Competition Act, of 2002. These modifications were necessitated by the significant growth of Indian markets and the evolving business landscape. After considering the CLRC's recommendations, the Act was amended in 2023. The amended Act introduces several changes to strengthen competition regulation, streamline operations, and foster a business-friendly .

One major change is the introduction of a ‘Settlement & Commitment' framework aimed at reducing litigation. The settlement mechanism applies to alleged violations involving certain anti-competitive agreements and abuse of dominance. Parties can file for settlement after receiving the investigation report but before a final order is issued by the CCI, within a timeframe prescribed by Regulations. The CCI may impose conditions, including a settlement amount.The commitment framework allows parties to offer commitments for certain anti-competitive agreements and abuse of dominance, similar to the settlement mechanism. It empowers the CCI to accept these commitments on specified terms, including the manner of implementation and monitoring, as outlined in the Regulations.

 

Dawn of a fresh era

The proposed regulations grant the CCI authority to designate various independent entities, spanning accounting firms, management consultancies, professional organizations, and individual practitioners like chartered accountants, company secretaries, and cost accountants. These entities will bear the crucial responsibility of overseeing the execution of CCI directives, ensuring strict adherence to engagement terms. To uphold integrity and impartiality, these entities must affirm their autonomy from involved parties and divulge any potential conflicts of interest. This step aims to forestall undue influence and guarantee impartial oversight of compliance.

To ensure the integrity and impartiality of regulatory agencies, it is imperative that they establish and maintain independence from any parties involved and transparently disclose any potential conflicts of interest. This practice serves to prevent undue influence and guarantee unbiased oversight of compliance. Under the new regulations, agencies appointed by the commission will be responsible for enforcing its orders, promptly notifying the CCI of any instances of non-implementation or non-compliance, and fully disclosing any direct or indirect financial or non-financial interests that may impact their performance. They will also be required to submit regular reports on order implementation monitoring as directed by the commission.

Furthermore, these agencies must uphold the highest standards of confidentiality regarding any information obtained or collected during their duties. Additionally, they are obligated to fulfil any other duties outlined in their engagement terms or instructed by the commission. To enhance accountability, the CCI retains the authority to suspend or terminate the engagement of these agencies if they fail to meet specified standards. Such action may be taken following the terms of their engagement or, if deemed necessary by the commission, for reasons documented in writing. Importantly, any decisions made by the CCI in this regard cannot be legally contested, ensuring swift and decisive action.

According to the proposed regulations, the expenses associated with these monitoring agencies will be covered by the party that has applied under the relevant regulations of the CCI, such as the Competition Commission of India (Settlement) Regulations, 2024, or the Competition Commission of India (Commitment) Regulations, 2024. In cases where the application falls under the Combination Regulations or any other pertinent regulation, the responsibility for payment will be determined by the commission. This approach guarantees that the financial burden does not rest on the regulatory body but rather on the parties seeking settlement or commitment, promoting fairness and equity in the process.

The proposed regulations represent a significant turning point in how regulatory compliance will be upheld in India, particularly within the dynamic realm of the technology sector. Through the establishment of a robust and independent monitoring mechanism, theCCI seeks to address the potential for large tech companies to evade regulatory directives and ensure their unwavering adherence to both the and the spirit of regulatory mandates.

This proactive stance by the CCI to bolster oversight through these fresh regulations is poised to establish a precedent for rigorous regulatory enforcement. With the rollout of these measures, the CCI endeavours to foster a climate of heightened transparency, accountability, and adherence within the technology industry. By doing so, it aims to strengthen its position as a vigilant guardian in the continually evolving market landscape, steadfastly committed to safeguarding fair competition and consumer interests.

As a final point, while the procedural changes are quite ordinary, the proposed amendment enhances the authority of the CCI and rightly so. In the past, we have seen too many comments that the CCI is toothless, etc.These amendments allow for the CCI to receive comments from all avenues and monitor orders that are being passed by them. The draft regulation for procedures for inquiry under Section 26 has also changed, allowing for a supplementary investigation report with views from Central or State governments.  The Commission can consider such views either for closure of the information or for further investigation. The proposed regulations now provide for some form of limitation — if the information is filed three years from the date of cause of action, it would have to be accompanied by a condonation of delayed application. The information now must also contain a statement that specifies if the said info with similar facts and issues has already been tested or decided by the CCI. An affidavit is now mandatory to verify the contents of the information.  The primary objective of this amendment is to simplify and expedite procedural requirements, thereby facilitating a more efficient process. Additionally, it seeks to guarantee that every party involved has a fair and equal chance to participate and have their interests adequately represented and considered. Hope these changes will significantly improve the overall effectiveness and fairness of the process.

 

The writer is a tax specialist, financial adviser, guest faculty and public speaker based in Goa. He can be reached at panditgoa@gmail.com or 9822983420

 

Northlines
Northlines
The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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