INDIA BUSINESS WORLD SEPTEMBER (1st - 15th) 2007
The Month that was ...
LOK SABHA CLEARS COMPETITION BILL
THE Lok Sabha has passed the Competition Amendment Bill, paving the way for establishment of a powerful competition regulator. The Bill, which seeks to provide statutory powers to the Competition Commission of India (CCI), would be sent to the Rajya Sabha now.
Crucial amended provisions like those relating to regulatory review of mergers and acquisitions from the competition angle would be effective after these are notified by the government after Parliament's approval. Sources said framing rules and regulations and appointing members of the body would be the next priority.
"We are trying to have the CCI to be fully operational by mid-2008," said a ministry of corporate affairs official. The Bill is likely to be passed by the Upper House soon," said the official.
One of the major changes the government has brought from an earlier Bill is that it would be mandatory for all mergers and acquisitions - including between two overseas companies - to notify the competition regulator if the combined entity meets a specified threshold. Different thresholds are prescribed for individual and group companies depending on whether they are present in India alone or have overseas business too.
The government also introduced the concept of territorial nexus - minimum presence in Indian market for any two globally merging companies - to seek CCI's blessings. The threshold for this is Rs 500 crore assets and Rs 1,500 crore turnover for the combined entity.
Another major change introduced is the power to imprison and fine. Violation of CCI's orders would be a criminal offence from the second instance. Contravention of the order in the first instance will be a civil offence with monetary penalty. Corporate affairs minister Prem Chand Gupta told the Lok Sabha that the changes were brought about considering the recommendations of a parliamentary panel and the legal challenges (to some provisions of the existing law). The modifications are expected to make CCI fully operational on a sustained basis, the minister said.
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