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Rediff.com  » Business » Cabinet clears more teeth for competition watchdog

Cabinet clears more teeth for competition watchdog

December 06, 2002 13:05 IST

The Union Cabinet has cleared amendments to the Competition Bill, proposed by the parliamentary standing committee, including provisions for more powers to the proposed Competition Commission.

The government, however, rejected a proposal to empower the commission with judicial powers.

The proposal was rejected because the Bill envisages the Competition Commission only to be a quasi-judicial body, not required to sue anyone.

The standing committee on home affairs submitted its report on the Bill on August 23 this year with several recommendations to give more teeth to the proposed commission. The Bill seeks to replace the existing Monopolies and Restrictive Trade Practices Act.

Other amendments cleared by the Cabinet include amending the definition of a 'combination' in the Bill, empowering the Competition Commission to grant temporary injunctions restraining any enterprise from importing goods if it is likely to contravene the law, and transfer all funds collected as penalties under this provision to the Consolidated Fund of India.

By changing the definition of "combination", the commission will be empowered to consider the assets or turnover of the acquiring group, along with that of the acquired enterprise, for determining whether the merged entity would attract any inquiry.

This means that all companies entering into merger and acquisition deals will be scrutinised by the commission.

Other suggestions not accepted by the government pertain to appointment of a judge as chairperson of the commission and that the qualification of the chairperson should be different from its other members.

According to the provisions of the Bill, the commission would comprise up to 10 members but it will have no jurisdiction over unfair trade practices, unlike its predecessor, the Monopolies and Restrictive Trade Practices Commission.

The three main aspects of the proposed Bill include checking anti-competitive practices such as cartelisation, collusive bidding and bid rigging, besides abuse of dominance and procedures relating to acquisitions and mergers.

Apart from encouraging competition, the commission will ensure that there is no abuse of dominance.

Also, in the case of a merger of two entities, the commission will be empowered to review the proposal if there are chances of the merged entity becoming a monopoly.

For the purpose, the Bill has set Rs 1,000 crore (Rs 10 billion) assets and Rs 3,000 crore (Rs 30 billion) annual turnover as the thresholds. If the merged entity crosses these threshold, it must take permission from the commission.

BS Economy Bureau in New Delhi