News & Analysis

Can cartels seek antitrust settlements?

A Parliamentary panel thinks that cartels should also be included in the scheme seeking antitrust settlements outside of courts

The Parliamentary Standing Committee on Finance has urged the government to extend the provisions of settlement under the Competition Amendment Bill to include cartels, indicating that such a move would make the initiative more pragmatic. This comes in the light of several recent orders from the Competition Commission of India (CCI) on suspected cartelization efforts.

The committee, which is headed by former minister of state for finance Jayant Sinha, tabled the latest report in the Lok Sabha on Tuesday. It has also suggested some changes to the transaction value threshold prescribed in the Draft Bill to prevent some mergers and acquisitions (M&A) from coming under the ambit of the CCI. 

 

Not many substantial changes though

However, the committee has not suggested any substantial changes to the deal value threshold that the Draft Bill had set at Rs.2000 crore. What it actually proposes is a series of changes in the way that this number is calculated. Sources in the committee said that the tweaks were in line with the feedback they received from the industry. 

Experts that we reached out to believe that the committee has taken on board suggestions from the industry around the introduction of this threshold number as well as their concerns around the long period of uncertainty that it could lead to in the culmination of these M&A activities. It’s recommendation that the phrase “substantial business operations” refers to the target company’s presence in India is at variance from the original draft wherein it was deemed to mean the presence of the ‘parties’ – or both the entities.

Readers would recall that the deal value threshold was included in the Bill so that mergers and acquisitions of digital companies were brought under the purview of India’s antitrust laws. One such case in point was the acquisition of the Reliance Group of Big Bazaar, a case which is still in the courts over Amazon’s objections. 

 

Can cartelization be part of outside court settlements?

The Competition Amendment Bill was introduced in the Lok Sabha in August. It had proposed special settlement schemes through which certain types of anti-competition measures could be settled by the market participants by paying a fee without actually admitting or denying guilt in the matter. However, it also had a provision that such a settlement process could be used only for “non serious offenses” that clearly excluded cartelization attempts. 

What the Standing Committee now seems to be saying is that even cartelization attempts should fall under the purview of the settlements process as this was a practical solution that represented an easy form of settlement. It held the view that going into long and arduous litigation only stymies business as usual practices of the merged entity. 

The committee says that the settlement provision for cartelization attempts could be taken up on a case-by-case basis for the courts which is why it is recommending that the CCI should consider expanding the scope of such settlements to include cartels as a pragmatic recourse to the whole process. 

The Standing Committee on Finance also said that the timelines for such mergers getting the requisite approvals from the antitrust regulator should remain unchanged. On its part, the government has proposed a cut in the timelines for CCI to form an opinion on such cases to 20 days from the present 30 days. 

The approvals for combinations also are designed to be reduced to 150 days from 210 days. The committee is opposing this cut and believes that the original timelines were good enough. They held the view that the CCI and the other stakeholders would be put in a difficult position if enough time is not given to understand the ramifications of such mergers. 

Leave a Response