With the introduction of the Competition (Amendment) Bill, 2022, the Indian competition law regime is expected to undergo a significant overhaul in the coming months. In its current form, the Bill aims to promote ease of doing business and protect consumers’ interests. However, there are some gaps that must be filled before implementation. Furthermore, a Digital Markets Unit (DMU) and a Digital India Act may be included in the digital ecosystem to establish an ex-ante regime for digital businesses in India. To avoid the risk of imposing a stringent compliance burden on digital players, the feasibility of these regulations must be assessed in relation to the ever-changing Indian market and policy landscape.
The Dialogue hosted a roundtable discussion on ‘Antitrust 2.0: Competition (Amendment) Bill, 2022 and Other Changes’ to provide recommendations and deliberate on India’s antitrust regime’s future. The panel’s discussion resulted in some preliminary recommendations from industry experts, including:
- It must be ensured that the Bill goes through an extensive consultation process, with key stakeholders discussing the complexities of Bill’s implementation and enforcement.
- To align with the Act’s ethos, allegations of abuse of the dominant position should be subjected to an effects-based test.
- It should also be considered to extend the Intellectual Property Rights (IPR) exemption to cases of abuse of dominance.
- The Act must include the necessary guidance to ensure that the deal value threshold and local nexus requirements are implemented consistently.
- The feasibility of the ex-ante framework in the context of Indian policy and market realities must be considered, as well as whether this framework is required.
Ms Nirupama Soundararajan, Economist and CEO of the Pahle India Foundation, began by stating that the competition regime must not be a carbon copy of another country’s regulation. “It is critical to keep market realities in mind when developing these laws, rather than being stringent and rigorous.” Because Indian markets are constantly changing, regulatory arbitrage based on the size and origin of a company’s capital should be avoided. “The fundamental antitrust principles should be agnostic to sectors, company size, company origin, or any other such parameter,” she added.
“IPR exception should be built in explicitly in Section 4 of the Bill,” said Mr Rahul Rai, Partner and Co-Founder of Axiom5 Law Chambers. In the absence of such a provision, the Commission lacks the statutory authority to consider reasonable and necessary restrictions imposed by IPR holders while investigating allegations of abuse of dominance. The Commission has frequently used a literal interpretation of the Competition Act to condemn perfectly reasonable and necessary restrictions imposed by IPR holders when commercializing their intellectual property. Continued use of this strategy would stifle innovation and entrepreneurship.”
“We already have protections in place to ensure IPR is upheld through a parallel IPR regime,” said Mr Samir R. Gandhi, Partner and Co-Founder of Axiom5 Law Chambers. The competition act must provide patent holders with the right to protect their monopoly for a limited time, and the IPR exception must be incorporated into Section 4 of the Act.” “A supranational regulation like the DMA may be appropriate for the EU, where there are multiple national competition authorities, but it may not be necessary for India, where there is already a single federal CCI with both regulatory and adjudicatory powers,” he added.
Dr Assimakis Komninos, Competition Law Partner at White & Case LLP, concluded, “The DMA is an ex-ante regulation, not ex-post competition law enforcement.” It is only applicable to corporations that exceed a certain threshold, thereby becoming gatekeepers. The goal of DMA is to promote fairness and competition. However, there are some advantages and disadvantages. For example, it is inflexible because it will be applied ex-ante, preventing businesses from accounting for efficiencies. India could either borrow heavily from the DMA or develop its own regulations tailored to its local conditions and give itself a 4-5 year evaluation period.”
In its current form, the Bill also proposes a deal value threshold, above which transactions worth more than Rs. 2000 crores must be notified to the Competition Commission of India (CCI) before taking effect. The amendment will allow the CCI to analyze global mergers and acquisitions involving parties with significant business operations in India, also known as the local nexus test. While this is a positive step, it is critical that parties have clarity on the scope and mode of implementation of the deal value threshold and the local nexus test to avoid uncertainty and administrative burden for the CCI.
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