| Prescribes threshold limit; non-compliance may result in fine |
New norms
For Indian companies the prescribed asset base is Rs 1,000 cr or turnover of Rs 3,000 crore
For global M&As asset base is $500 m or turnover of $1,500 m and Indian presence must have asset base of Rs 500 crore or turnover of Rs 1,500 crore.
The Competition (Amendment) Bill, 2007, introduced in Lok Sabha, makes it mandatory for the companies undertaking mergers or acquisitions in India or overseas above a prescribed threshold limit to inform the Competition Commission of India (CCI) before making such a move. However, for the overseas mergers and acquisitions, a company needs to inform the CCI only if they have a India connection.
Companies will have to inform the CCI in case of mergers and acquisitions within 30 days and can be penalised in case they fail to do so. The Commission could impose a penalty of up to one per cent of the total turnover or the assets, whichever is higher. Threshold limit
The threshold limit for global mergers and acquisitions have been kept as assets of $500 million or turnover of $1,500 million and their Indian presence should have an asset of Rs 500 crore or turnover of Rs 1,500 crore. For an Indian company, the prescribed asset base is Rs 1,000 crore or turnover of Rs 3,000 crore.
The Bill also offers a reprieve for the corporates that fail to comply with the orders of CCI once it becomes fully functional. Against the earlier proposal of treating any non-compliance as a criminal offence, the Bill now proposes that disregard of orders of the CCI or its Appellate Tribunal, at the first instance would be considered a civil offence, leading to monetary penalty, instead of criminal offence.
However, subsequent non-compliance would lead to criminal offence. The Bill seeks to empower the CCI to impose penalty of up to Rs 25 crore or up to three-year imprisonment or both in cases of continued contravention of its orders if the Chief Metropolitan Magistrate of Delhi deems fit.
Mr Prem Chand Gupta, Minister for Corporate Affairs, said: We expect that soon the entire process will be completed paving way for full operationalisation of CCI. 2-way procedure
The Bill also proposes two-way coordination procedures with other sectoral regulators like TRAI. The two options proposed other regulators can make a reference to CCI for its opinion; similarly CCI can seek the advice of other regulators.
The Bill seeks to give statutory powers to CCI, established in 2003, and ultimately replace the existing Monopolies and Restrictive Trade Practices Commission (MRTPC). It provides for the CCI as a market regulator for preventing anti-competitive practices.
It provides for a three-member quasi-judicial Appellate Tribunal to hear appeals against any direction issued by the Commission. MRTPC will continue to deal with the pending cases even two years after the establishment of CCI and will be dissolved thereafter. However, MRTPC would not entertain any new cases after the CCI is constituted.
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