CCI’s New Regulations Ushers a New Era of Transparency and Accountability

What’s in today’s article?

• Why in News?
• What is the Competition Commission of India (CCI)?
• The Competition (Amendment) Act 2023
• Draft CCI (Settlement) Regulations and the CCI (Commitment) Regulations 2024

Why in News?

• In a significant move aimed at enhancing regulatory oversight and compliance, the Competition Commission of India (CCI) has proposed new regulations to monitor the settlements and commitments of industry giants.
• With the release of these draft regulations, the CCI hopes to bring in a new era of transparency and accountability for the technology sector.

What is the Competition Commission of India (CCI)?

• Working as the chief national competition regulator in India, the CCI is a statutory body (established on 14 October 2003 but became fully functional in May 2009) within the Ministry of Corporate Affairs, Government of India.
• It is responsible for enforcing the Competition Act 2002 to promote competition and prevent activities that have an appreciable adverse effect on competition in India.
• The CCI looks into cases and investigates them if the same has a negative impact on competition.
• CCI also approves combinations so that two merging entities do not overtake the market.

The Competition (Amendment) Act 2023:

• Background:
  • The Government of India constituted Competition Law Review Committee (CLRC) in 2018, to examine and suggest the modifications in the Competition Act, 2002.
    • These modifications were needed as there is a significant growth of Indian markets and a paradigm shift in the way businesses operate.
  • After reviewing the recommendations of the CLRC, the 2002 Act was amended in 2023.
  • The amended Act makes a number of changes to the Competition Act 2002, with the aim to strengthen competition regulation, streamline operations, and foster a business-friendly environment.
• Introduction of Settlements and Commitments Mechanism: The Amendment Act introduces a 'Settlement & Commitment' framework to reduce litigation.
  • Settlement:
    • The settlement mechanism would apply to alleged contraventions related to certain anti-competitive agreements and abuse of dominance.
    • An application for settlement may be filed only after receipt of the investigation report but prior to such time as may be prescribed by Regulations, before the passing of final order by the CCI.
    • CCI may impose certain conditions which may include settlement amount.
  • Commitment:
    • The Commitment framework enables parties to offer commitments for certain types of anti-competitive agreements and abuse of dominance (as available for settlements).
    • It empowers CCI to accept commitments on such terms and the manner of implementation and monitoring, as may be specified by Regulations.

Draft CCI (Settlement) Regulations and the CCI (Commitment) Regulations 2024:

• Need: Fair trade regulator CCI has sought stakeholder comments on the proposed amendments to the CCI (General) Regulations 2009, following recent changes to the Competition Act.
• About the draft regulations:
  • The CCI’s draft regulations have introduced a comprehensive framework for the appointment of independent agencies -
    • To ensure that industry giants adhere to their commitments and
    • Do not exploit loopholes to evade regulatory scrutiny.
  • The CCI retains the authority to suspend or terminate the engagement of these agencies if they fail to meet the stipulated standards.
• Independent agencies to ensure unbiased monitoring of compliance:
  • The proposed regulations empower the CCI to appoint a range of independent agencies, including accounting firms, management consultancies, professional organisations, etc.
  • These agencies will be tasked with the critical responsibility of monitoring the implementation of the CCI’s orders, ensuring that the terms of engagement are strictly followed.
  • To maintain integrity and impartiality, the agencies must confirm their independence from the parties involved and disclose any potential conflicts of interest.
• Key responsibilities of monitoring agencies: The agencies will
  • Inform the CCI of any instances of non-implementation or non-compliance with the orders,
  • Adequately disclose any direct/ indirect interest, that could prejudice their performance, and
  • Submit periodic reports related to the monitoring of order implementation, as directed by the Commission.
• Implications of the new regulations:
  • The CCI aims to ensure greater transparency, accountability and compliance in the tech industry, thereby reinforcing its role as a vigilant watchdog in the evolving market landscape.
  • By instituting a robust and independent monitoring mechanism, the CCI aims to prevent big tech firms from circumventing regulatory orders and ensure that they adhere to their commitments in letter and spirit.

Source: CCI proposes amendments to general rules, seeks feedback from stakeholders

HBL