The panel headed by Corporate Affairs Secretary Injeti Srinivas was constituted last September to review the Competition Act , 2002. The committee handed its report to the Finance Minister on Wednesday
A high-level government panel constituted last September to review the Competition Act , 2002, has recommended a green channel route for automatic approval of the Competition Commission of India (CCI) for specific merger and acquisition cases, including those under the Insolvency and Bankruptcy Code.
"Parties to the combination [mergers and acquisitions] may self-assess, based on specified criteria and pre-filing consultation with the CCI, whether they qualify for notification under the Green Channel," the Competition Law Review committee headed by Corporate Affairs Secretary Injeti Srinivas said in its report. Under the Competition Act, mergers and acquisitions beyond a certain threshold require the CCI's nod.
The report, handed to Finance Minister Nirmala Sitharaman on Wednesday, has been uploaded on the website of the Ministry of Corporate Affairs. According to the panel, the Green Channel route should be the de facto route for merger notification and approval for majority cases and the government can formulate detailed eligibility criteria in consultation with the CCI. "The aim is to move towards disclosure based regime with strict consequences for not providing accurate or complete information," the ministry said in a statement.
"The mandatory 30-day timeline for completion of the first phase of review of combination cases should be included in the Act itself," the report said, adding that this timeline would continue to govern combinations that are not eligible for the proposed Green Channel. It further suggested that all permissible time exclusions from the 210-day timeline for merger assessments ought to be codified in the Act to provide certainty and transparency in the process.
The panel - tasked to look into international best practices in the competition fields, especially anti-trust laws and merger guidelines, apart from studying other regulatory regimes, institutional mechanisms and government policies that overlap with the Act - has recommended a slew of other changes as well. A key suggestion is that the regulator's power be enhanced to impose penalty for false statement. A ranking system for states on the basis of competitiveness of their laws and policies in the context of competition was also floated.
Here are some more key recommendations:
Introducing a dedicated bench in National Company Law Appellate Tribunal (NCLAT) for hearing appeals under the Competition Act.
Introduction of express provisions to identify 'hub and spoke' agreements as well as agreements that do not fit within typical horizontal or vertical anti-competitive structures to cover agreements related to business structures and models synonymous with new age markets.
Additional enforcement mechanism of 'Settlement & Commitments" in the interests of speedier resolution of cases of anti-competitive conduct.
Enabling provisions to prescribe necessary thresholds, inter alia, deal-value threshold for merger notifications.
CCI to issue guidelines on imposition of penalty to ensure more transparency and faster decision making which will encourage compliance by businesses.
Strengthening the governance structure of CCI with the introduction of a Governing Board to oversee advocacy and quasi-legislative functions, leaving adjudicatory functions to the Whole-time Members. The panel suggested a board comprising a chairman, six whole-time and six part time members.
Merging the Director General's (DG) Office with CCI as an 'Investigation Division' as it aids the competition watchdog in discharging an inquisitorial rather than adversarial mandate. However, the panel clarified that functional autonomy must be protected.
Opening of CCI offices at regional level to carry out non-adjudicatory functions such as research, advocacy etc. and interaction with State Governments and State regulators.
Other members of the committee included Ashok Kumar Gupta, CCI Chairperson, Insolvency and Bankruptcy Board of India (IBBI) Chairperson Dr. M.S. Sahoo, Haigreve Khaitan from Khaitan & Co., Pallavi Shardul Shroff, managing partner at Shardul Amarchand Mangaldas & Co, and Delhi School of Economics Professor Dr. Aditya Bhattacharya, among others.
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