New Delhi, Dec. 16: Lawmakers have finally given India a competition policy that clearly defines the concept of dominance in business and paves the way for the creation of a watchdog to vet mergers and acquisitions with a litmus-test to see which pass muster and which don’t.
The Competition Bill, which consigns the Monopoly and Restrictive Trade Practices Commission (MRTPC) to the dustbin of history, was passed today by a voice vote despite serious reservations expressed by Opposition members that it would give carte blanche to multinational corporations to throttle Indian enterprise.
Finance minister Jaswant Singh, who piloted the Bill, asserted that under the new dispensation, MNCs would not be allowed to abuse the market and indulge in unfair trade due to their size and financial muscle.
Singh assured the House that the new measure was aimed at promoting investment and competition and would enable Indian companies to grow in size to become world-class entities.
The Bill adopts a threshold criteria relating to assets or turnover to decide whether a merger or acquisition will go through.
The legislation makes it voluntary for parties to notify their proposed agreement or combinations to the Competition Commission of India (CCI), if the aggregate assets of the combining parties have a value in excess of Rs 1,000 crore or a turnover of over Rs 3,000 crore.
Combinations, as defined by the Bill, include mergers, amalgamations, and acquisitions of shares, voting rights or assets. If one of the merging parties belongs to a group which controls it, the threshold limits are Rs 4,000 crore in terms of assets and Rs 12,000 crore in terms of turnover.
Singh said only 100 of the 6,000 Indian companies were beyond this threshold limit and the new provisions do not prohibit investment size.
Responding to suggestions relating to selection procedure for the proposed CCI, Singh said the government would not keep ministers in the selection committee in deference to recommendations made by the standing committee.
“We will frame rules for the selection committee and make it as broad based as possible,” he said, adding he personally favoured barring the chairperson and members from taking up employment with an adjudicated company after their tenure with the CCI.