2026 | Vol 2(5) | May
The Competition (Amendment) Act, 2023
2026CURRENT ISSUE
The Competition Act, 2002 marked a shift from the earlier Monopolies and Restrictive Trade Practices (MRTP) regime to a more modern competition law system. However, over time, several limitations were identified. The existing thresholds for merger regulation did not capture transactions involving digital companies with high market value but low physical assets. Additionally, lengthy approval timelines and procedural complexities affected business efficiency.
The government, through policy discussions and expert recommendations, recognized that competition law must evolve alongside economic changes. The Competition (Amendment) Act, 2023 is therefore designed to address these gaps while maintaining the core objective of promoting fair competition.
Key Features of the Competition (Amendment) Act, 2023
1. Introduction of Deal Value Threshold
One of the most important changes introduced by the Amendment Act is the concept of a deal value threshold for combinations (mergers and acquisitions). Under the earlier framework, transactions were assessed based on asset value and turnover.
The Amendment provides that transactions exceeding a specified value must be notified to the Competition Commission of India (CCI), provided the enterprise has substantial business operations in India. This ensures that high-value transactions, especially in the digital sector, are subject to regulatory scrutiny even if traditional thresholds are not met.
This provision reflects the government’s intent to address modern market realities where data, technology, and user base play a critical role in determining market power.
2. Reduction in Approval Timeline
The Amendment Act reduces the overall timeline for approval of combinations from 210 days to 150 days. This change aims to make the regulatory process more efficient and predictable.
A shorter timeline benefits businesses by reducing uncertainty and facilitating faster completion of transactions. It also aligns India’s competition law procedures with international practices, thereby improving the country’s investment climate.
3. Introduction of Settlement and Commitment Mechanism
The Act introduces a framework for settlement and commitment in certain cases of anti-competitive conduct.
Commitments can be offered by enterprises during the investigation stage.
Settlements can be proposed after the investigation but before a final decision is made.
This mechanism allows parties to resolve disputes without undergoing lengthy litigation. It enhances efficiency and enables quicker correction of market distortions, which ultimately benefits consumers and businesses alike.
4. Penalties Based on Global Turnover
Another significant reform is the provision allowing penalties to be calculated based on the global turnover of an enterprise.
Previously, penalties were linked to the relevant turnover within India, which sometimes resulted in lower penalties for large multinational corporations. By considering global turnover, the Amendment ensures that penalties are more proportionate and act as an effective deterrent against anti-competitive practices.
5. Expansion of Scope of Anti-Competitive Agreements
The Amendment expands the scope of anti-competitive agreements to include entities that may not be directly engaged in identical or similar trade but are involved in facilitating anti-competitive conduct.
This includes recognition of indirect forms of collusion, ensuring that modern business arrangements that distort competition are effectively regulated. The provision strengthens the enforcement capability of the CCI in dealing with complex market structures.
6. Strengthening the Competition Commission of India
The Amendment Act enhances the efficiency and effectiveness of the Competition Commission of India.
It provides the Commission with greater flexibility in procedures and empowers it to regulate markets more effectively. The reforms also aim to ensure quicker disposal of cases and improved transparency in decision-making.
7. Decriminalization and Procedural Changes
The Amendment introduces certain procedural reforms, including the decriminalization of specific offences. Instead of criminal penalties, monetary penalties are emphasized in many cases.
This reflects a shift toward a compliance-based regulatory approach, reducing the burden on businesses while maintaining accountability.
Significance of the Amendment
The Competition (Amendment) Act, 2023 holds considerable significance in the context of India’s economic development.
First, it addresses the challenges posed by the digital economy, ensuring that new-age business models are effectively regulated. The inclusion of deal value thresholds is particularly important in this regard.
Second, the Act improves the ease of doing business by simplifying procedures and reducing timelines. Faster approvals and settlement mechanisms contribute to a more business-friendly environment.
Third, the enhanced penalty framework strengthens deterrence, ensuring that enterprises comply with competition law.
Fourth, the Act promotes fair competition, which is essential for innovation, efficiency, and consumer welfare. By preventing anti-competitive practices, it ensures that markets function efficiently.
Finally, the reforms align India’s competition law with global standards, thereby enhancing investor confidence and supporting economic growth.
Challenges and Concerns
While the Amendment Act introduces several positive changes, certain challenges may arise in its implementation.
The interpretation of terms such as “substantial business operations in India” may require clarification through regulations or guidelines.
Increased regulatory scrutiny may impose compliance burdens on businesses, particularly smaller enterprises.
The expanded powers of the CCI require careful exercise to avoid excessive intervention in markets.
Addressing these concerns will be crucial to ensuring the effective implementation of the Act.
Conclusion
The Competition (Amendment) Act, 2023 represents a comprehensive and forward-looking reform of India’s competition law framework. By addressing the limitations of the earlier law and introducing modern regulatory tools, it ensures that the legal system remains relevant in a rapidly changing economic environment.
The Act strengthens enforcement, promotes fair competition, and supports economic development. While certain challenges remain, its overall impact is expected to be positive, contributing to a more competitive and dynamic market economy.
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Gyan Manjhi, Advocate