The Competition (Amendment) Act, 2023 received the assent of the President of India on 11 April 2023, following passage by the Lok Sabha on 29 March 2023 and the Rajya Sabha on 3 April 2023. The amendment introduces sweeping changes to India's competition law framework, including a new deal value threshold for merger control, an expanded definition of control, enhanced investigation powers for the Director General, and revised timelines for combination approvals.
Background
The Competition Act, 2002 had remained substantially unamended since its enactment, despite significant evolution in the Indian economy and the global competition law landscape. The amendment was necessitated by the emergence of digital markets, where acquisitions of high-value targets with low revenues could escape the existing asset-and-turnover based merger control thresholds.
The Competition (Amendment) Bill, 2023 was introduced in the Lok Sabha during the Budget Session based on the recommendations of the Competition Law Review Committee, which had submitted its report in 2019. The Committee identified several gaps in the existing framework, including the absence of a deal value threshold that had allowed significant transactions in the digital economy to bypass Competition Commission of India scrutiny.
Key Provisions
The Amendment Act introduces the following principal changes:
Deal value threshold: A new combination notification trigger based on the value of a transaction. Transactions where the deal value exceeds Rs. 2,000 crore and the target enterprise has "substantial business operations in India" will require mandatory notification to the CCI, regardless of whether asset or turnover thresholds are met.
Redefined control: The definition of "control" has been amended to mean the ability to exercise "material influence" over the management, affairs, or strategic commercial decisions of an entity. This broadens the scope beyond the previous formulation and aligns with international practice.
Shortened combination timelines: The time period within which the CCI must issue a prima facie order on a combination notification has been reduced from 30 to 20 working days. The overall approval timeline has been compressed from 210 to 150 calendar days.
Expanded DG powers: The Director General's investigation powers have been expanded to include the authority to retain documents, seek information from past employees, in-house legal advisors, and auditors, and record statements on oath. These provisions significantly strengthen the CCI's enforcement capabilities.
Commitment and settlement mechanism: The Amendment introduces a framework for settlements and commitments in cases involving anti-competitive agreements and abuse of dominance, allowing parties to resolve proceedings without a full adjudication.
Penalty framework: The basis for computing penalties has been revised. Penalties will now be calculated on the basis of global turnover derived from Indian operations, rather than total turnover.
Implications for Practitioners
The deal value threshold fundamentally changes how M&A practitioners evaluate transaction notification obligations. Legal advisors must now assess not only the conventional asset-and-turnover tests but also whether the deal value exceeds Rs. 2,000 crore and the target has substantial Indian operations. This dual assessment will become standard in transaction due diligence.
The expanded definition of control as "material influence" creates interpretive challenges. Practitioners advising on minority stake acquisitions, joint ventures, and strategic investments must carefully evaluate whether the rights obtained confer material influence, even where majority control is not acquired.
For competition litigation practitioners, the commitment and settlement mechanism offers a new strategic option for clients facing CCI proceedings. The availability of a negotiated resolution pathway may significantly alter litigation strategy in anti-competitive agreement and dominance cases.