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COMPETITION (AMENDMENT) ACT, 2007

COMPETITION (AMENDMENT) ACT, 2007

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 25^th September, 2007/Asvina 3, 1929 (Saka)

The following Act of Parliament received the assent of the President on the 24^th September, 2007, and is hereby published for general information:—

COMPETITION (AMENDMENT) ACT, 2007

No. 39 of 2007

[24^th September, 2007]

An Act to amend the Competition Act, 2002.

BE it enacted by Parliament in the Fifty-eighth Year of the Republic of India as follows:—

Short tile and commencement

1. (1) This Act may be called the Competition (Amendment) Act, 2007.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

Amendment of section 2

2. In section 2 of the Competition Act, 2002 (hereinafter referred to as the principal Act), after clause (b), the following clause shall be inserted, namely:—

‘(ba) “Appellate Tribunal” means the Competition Appellate Tribunal established under sub-section (1) of section 53A.’.

Amendment of section 4

3. In section 4 of the principal Act,—

(a) for sub-section (1), the following sub-section shall be substituted, namely:—

“(1) No enterprise or group shall abuse its dominant position.”;

(ii) in sub-section (2),—

(a) for the words, brackets and figure “under sub-section (1), if an enterprise”, the words “under sub-section (1), if an enterprise or a group” shall be substituted;

(b) in clause (c), after the word “access”, the words “in any manner” shall be inserted;

(iii) after sub-section (2), in the Explanation, after clause (b), the following clause shall be inserted, namely:—

‘(c) “group” shall have the same meaning as assigned to it in clause (b) of the Explanation to section 5.’.

Amendment of section 5

4. In section 5 of the principal Act—

(i) in clause (a),—

(a) in sub-clause (i), for item (B), the following item shall be substituted, namely:—

“(B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars, including at least rupees five hundred crores in India, or turnover more than fifteen hundred million US dollars, including at least rupees fifteen hundred crores in India; or”;

(b) in sub-clause (ii), for item (B), the following item shall be substituted, namely:—

“(B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars, including at least rupees five hundred crores in India, or turnover more than six billion US dollars, including at least rupees fifteen hundred crores in India; or”;

(ii) in clause (b),—

(a) in sub-clause (i), for item (B), the following item shall be substituted, namely:—

(b) in sub-clause (ii), for item (B), the following item shall be substituted, namely:—

(iii) in clause (c),—

(a) in sub-clause (i), for item (B), the following item shall be substituted, namely:—

(b) in sub-clause (ii), for item (B), the following item shall be substituted, namely:—

Amendment of section 6

5. In section 6 of the principal Act, in sub-section (2),—

(a) for the words “may, at his or its option,”, the word “shall” shall be substituted;

(b) for the words “seven days”, the words “thirty days” shall be substituted;

“(2A) No combination shall come into effect until two hundred and ten days have passed from the day on which the notice has been given to the Commission under sub-section (2) or the Commission has passed orders under section 31, whichever is earlier.”.

Substitution of new section for section 8

6. For section 8 of the principal Act, the following section shall be substituted, namely:—

Composition of Commission

“8. (1) The Commission shall consist of a Chairperson and not less than two and not more than six other Members to be appointed by the Central Government.

(2) The Chairperson and every other Member shall be a person of ability, integrity and standing and who has special knowledge of, and such professional experience of not less than fifteen years in, international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters, including competition law and policy, which in the opinion of the Central Government, may be useful to the Commission.

(3) The Chairperson and other Members shall be whole-time Members.”.

Substitution of new section for section 9

7. For section 9 of the principal Act, the following section shall be substituted, namely:—

Selection Committee for Chairperson and Members of Commission

“9. (1) The Chairperson and other Members of the Commission shall be appointed by the Central Government from a panel of names recommended by a Selection Committee consisting of—

(a) the Chief Justice of India or his nominee……Chairperson;

(b) the Secretary in the Ministry of Corporate Affairs……Member;

(d) two experts of repute who have special knowledge of, and professional experience in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters including competition law and policy……Members.

(2) The term of the Selection Committee and the manner of selection of panel of names shall be such as may be prescribed.”.

Amendment of section 10

8. In section 10 of the principal Act, in sub-section (1), for the proviso, the following proviso shall be substituted, namely:—

“Provided that the Chairperson or other Members shall not hold office as such after he has attained the age of sixty-five years.”.

Amendment of section 12

9. In section 12 of the principal Act, for the words “one year”, the words “two years” shall be substituted.

Substitution of new section for section 13

10. For section 13 of the principal Act, the following section shall be substituted, namely:—

Administrative powers of Chairperson

“13. The Chairperson shall have the powers of general superintendence, direction and control in respect of all administrative matters of the Commission:

Provided that the Chairperson may delegate such of his powers relating to administrative matters of the Commission, as he may think fit, to any other Member or officer of the Commission.”.

Amendment of section 16

11. In section 16 of the principal Act,—

(a) for sub-section (1), the following sub-sections shall be substituted, namely:—

“(1) The Central Government may, by notification, appoint a Director General for the purposes of assisting the Commission in conducting inquiry into contravention of any of the provisions of this Act and for performing such other functions as are, or may be, provided by or under this Act.

(1A) The number of other Additional, Joint, Deputy or Assistant Directors General or such officers or other employees in the office of Director General and the manner of appointment of such Additional, Joint, Deputy or Assistant Directors General or such officers or other employees shall be such as may be prescribed.”;

(b) in sub-section (2), for the words “such other advisers, consultants and officers,”, the words “such officers or other employees,” shall be substituted;

(c) in sub-sections (3) and (4), for the words “such other advisers, consultants or officers,”, the words “such officers or other employees,” shall be substituted.

Substitution of new section for section 17

12. For section 17 of the principal Act, the following section shall be substituted, namely:—

Appointment of Secretary, experts, professionals and officers and other employees of Commission

“17. (1) The Commission may appoint a Secretary and such officers and other employees as it considers necessary for the efficient performance of its functions under this Act.

(2) The salaries and allowances payable to and other terms and conditions of service of the Secretary and officers and other employees of the Commission and the number of such officers and other employees shall be such as may be prescribed.

(3) The Commission may engage, in accordance with the procedure specified by regulations, such number of experts and professionals of integrity and outstanding ability, who have special knowledge of, and experience in, economics, law, business or such other disciplines related to competition, as it deems necessary to assist the Commission in the discharge of its functions under this Act.”.

Amendment of section 19

13. In section 19 of the principal Act, in sub-section (1), in clause (a), for the words “receipt of a complaint,”, the words “receipt of any information, in such manner and” shall be substituted.

Amendment of section 20

14. In section 20 of the principal Act, in sub-section (2), the words, brackets and figures “or upon receipt of a reference under sub-section (1) of section 21” shall be omitted.

Amendment of section 21

15. In section 21 of the principal Act,—

(a) in sub-section (1), the following proviso shall be inserted, namely:—

“Provided that any statutory authority, may, suo motu, make such a reference to the Commission.”;

(b) for sub-section (2), the following sub-section shall be substituted, namely:—

“(2) On receipt of a reference under sub-section (1), the Commission shall give its opinion, within sixty days of receipt of such reference, to such statutory authority which shall consider the opinion of the Commission and thereafter, give its findings recording reasons thereof on the issues referred to in the said opinion.”.

Insertion of new section 21A

16. After section 21 of the principal Act, the following section shall be inserted, namely:—

“21A.(1) Where in the course of a proceeding before the Commission an issue is raised by any party that any decision which, the Commission has taken during such proceeding or proposes to take, is or would be contrary to any provision of this Act whose implementation is entrusted to a statutory authority, then the Commission may make a reference in respect of such issue to the statutory authority:

Provided that the Commission, may, suo motu, make such a reference to the statutory authority.

(2) On receipt of a reference under sub-section (1), the statutory authority shall give its opinion, within sixty days of receipt of such reference, to the Commission which shall consider the opinion of the statutory authority, and thereafter give its findings recording reasons therefor on the issues referred to in the said opinion.”.

Substitution of new section for section 22

17. For section 22 of the principal Act, the following section shall be substituted, namely:—

“22. (1) The Commission shall meet at such times and such places, and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be provided by regulations.

(2) The Chairperson, if for any reason, is unable to attend a meeting of the Commission, the senior-most Member present at the meeting, shall preside at the meeting.

(3) All questions which come up before any meeting of the Commission shall be decided by a majority of the Members present and voting, and in the event of an equality of votes, the Chairperson or in his absence, the Member presiding, shall have a second or casting vote:

Provided that the quorum for such meeting shall be three Members.”.

Omission of sections 23, 24 and 25

18. Sections 23, 24 and 25 of the principal Act shall be omitted.

Substitution of new section for section 26

19. For section 26 of the principal Act, the following section shall be substituted, namely:—

“26. (1) On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter:

Provided that if the subject matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information.

(2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be.

(3) The Director General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission.

(4) The Commission may forward a copy of the report referred to in sub-section (3) to the parties concerned:

Provided that in case the investigation is caused to be made based on a reference received from the Central Government or the State Government or the statutory authority, the Commission shall forward a copy of the report referred to in sub- section (3) to the Central Government or the State Government or the statutory authority, as the case may be.

(5) If the report of the Director General referred to in sub-section (3) recommends that there is no contravention of the provisions of this Act, the Commission shall invite objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be, on such report of the Director General.

(6) If, after consideration of the objections or suggestions referred to in sub-section (5), if any, the Commission agrees with the recommendation of the Director General, it shall close the matter forthwith and pass such orders as it deems fit and communicate its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be.

(7) If, after consideration of the objections or suggestions referred to in subsection (5), if any, the Commission is of the opinion that further investigation is called for, it may direct further investigation in the matter by the Director General or cause further inquiry to be made in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act.

(8) If the report of the Director General referred to in sub-section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act.”.

Amendment of section 27

20. In section 27 of the principal Act,—

(i) in clause (b), for the proviso, the following proviso shall be substituted, namely:—

“Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent of its turnover for each year of the continuance of such agreement, whichever is higher.”;

(ii) clauses (c) and (f) shall be omitted;

(iii) in clause (g), for the word “order”, the words “order or issue such directions” shall be substituted;

(iv) after clause (g), the following proviso shall be inserted, namely:—

“Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group.”.

Amendment of section 28

21. In section 28 of the principal Act,—

(a) in sub-section (1), for the words, brackets, letter and figures “Central Government, on recommendation under clause (f) of section 27”, the word “Commission” shall be substituted;

(b) clause (d) of sub-section (2) shall be omitted.

Amendment of section 29

22. In section 29 of the principal Act,—

(a) in sub-section (1), after the words “Where the Commission is of the”, the words “prima facie” shall be inserted;

(b) after sub-section (1), the following sub-section shall be inserted, namely:—

“(1A) After receipt of the response of the parties to the combination under sub-section (1), the Commission may call for a report from the Director General and such report shall be submitted by the Director General within such time as the Commission may direct.”;

(c) in sub-section (2), after the words “parties to the combination”, the words, brackets, figure and letter “or the receipt of the report from Director General called under sub-section (1A), whichever is later” shall be inserted.

Substitution of new section for section 30

23. For section 30 of the principal Act, the following section shall be substituted, namely:—

“30. Where any person or enterprise has given a notice under sub-section (2) of section 6, the Commission shall examine such notice and form its prima facie opinion as provided in sub-section (1) of section 29 and proceed as per provisions contained in that section.”.

Amendment of section 31

24. In section 31 of the principal Act, in sub-section (11),—

(a) for the words, brackets and figures “ninety working days from the date of publication referred to in sub-section (2) of section 29”, the words, brackets and figures “two hundred and ten days from the date of notice given to the Commission under sub-section (2) of section 6” shall be substituted;

(b) in the Explanation, for the words “ninety working”, the words “two hundred and ten” shall be substituted.

Amendment of section 32

25. In section 32 of the principal Act, after clause (f),—

(a) after the words “have power to inquire”, the words and figures “in accordance with the provisions contained in sections 19, 20, 26, 29 and 30 of the Act” shall be inserted;

(b) after the words “relevant market in India”, occurring at the end, the words “and pass such orders as it may deem fit in accordance with the provisions of this Act” shall be inserted.

Substitution of new section for section 33

26. For section 33 of the principal Act, the following section shall be substituted, namely:—

“33. Where during an inquiry, the Commission is satisfied that an act in contravention of sub-section (1) of section 3 or sub-section (1) of section 4 or section 6 has been committed and continues to be committed or that such act is about to be committed, the Commission may, by order, temporarily restrain any party from carrying on such act until the conclusion of such inquiry or until further orders, without giving notice to such party, where it deems it necessary.”.

Omission of section 34

27. Section 34 of the principal Act shall be omitted.

Amendment of section 35

28. In section 35 of the principal Act, for the words “complainant or defendant”, the words “person or an enterprise” shall be substituted.

Substitution of new section for section 36

29. For section 36 of the principal Act, the following section shall be substituted, namely:—

Power of Commission to regulate its own procedure

“36. (1) In the discharge of its functions, the Commission shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules made by the Central Government, the Commission shall have the powers to regulate its own procedure.

(2) The Commission shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:—

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(d) issuing commissions for the examination of witnesses or documents;

(e) requisitioning, subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872, any public record or document or copy of such record or document from any office.

(3) The Commission may call upon such experts, from the fields of economics, commerce, accountancy, international trade or from any other discipline as it deems necessary, to assist the Commission in the conduct of any inquiry by it.

(4) The Commission may direct any person—

(a) to produce before the Director General or the Secretary or an officer authorised by it, such books or other documents in the custody or under the control of such person so directed as may be specified or described in the direction, being documents relating to any trade, the examination of which may be required for the purposes of this Act;

(b) to furnish to the Director General or the Secretary or any other officer authorised by it, as respects the trade or such other information as may be in his possession in relation to the trade carried on by such person, as may be required for the purposes of this Act.”.

Omission of section 37

30. Section 37 of the principal Act shall be omitted.

Substitution of new section for section 39

31. For section 39 of the principal Act, the following section shall be substituted, namely:—

Execution of orders of Commission imposing monetary penalty

“39. (1) If a person fails to pay any monetary penalty imposed on him under this Act, the Commission shall proceed to recover such penalty, in such manner as may be specified by the regulations.

(2) In a case where the Commission is of the opinion that it would be expedient to recover the penalty imposed under this Act in accordance with the provisions of the Income-tax Act, 1961, it may make a reference to this effect to the concerned income-tax authority under that Act for recovery of the penalty as tax due under the said Act.

(3) Where a reference has been made by the Commission under sub-section (2) for recovery of penalty, the person upon whom the penalty has been imposed shall be deemed to be the assessee in default under the Income-tax Act, 1961 and the provisions contained in sections 221 to 227, 228A, 229, 231 and 232 of the said Act and the Second Schedule to that Act and any rules made thereunder shall, in so far as may be, apply as if the said provisions were the provisions of this Act and referred to sums by way of penalty imposed under this Act instead of to income-tax and sums imposed by way of penalty, fine and interest under the Income-tax Act, 1961 and to the Commission instead of the Assessing Officer.

Explanation 1.—Any reference to sub-section (2) or sub-section (6) of section 220 of the Income-tax Act, 1961, in the said provisions of that Act or the rules made thereunder shall be construed as references to sections 43 to 45 of this Act.

Explanation 2.—The Tax Recovery Commissioner and the Tax Recovery Officer referred to in the Income-tax Act, 1961 shall be deemed to be the Tax Recovery Commissioner and the Tax Recovery Officer for the purposes of recovery of sums imposed by way of penalty, under this Act and reference made by the Commission under sub-section (2) would amount to drawing of a certificate by the Tax Recovery Officer as far as demand relating to penalty under this Act.

Explanation 3.—Any reference to appeal in Chapter XVIID and the Second Schedule of the Income-tax Act, 1961, shall be construed as a reference to appeal before the Competition Appellate Tribunal under section 53B of this Act.”

Omission of section 40

32. Section 40 of the principal Act shall be omitted.

Amendment of section 41

33. In section 41 of the principal Act, the following Explanation shall be inserted, namely:—

‘Explanation.—For the purposes of this section,—

(a) the words “the Central Government” under section 240 of the Companies Act, 1956 shall be construed as “the Commission”;

(b) the word “Magistrate” under section 240A of the Companies Act, 1956 shall be construed as “the Chief Metropolitan Magistrate, Delhi”.

Substitution of new section for section 42

34. For section 42 of the principal Act, the following section shall be substituted, namely:

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