On Tuesday, Finance Minister Nirmala Sitharaman will introduce the Competition (Amendment) Bill, 2022 in the Lok Sabha for consideration and passing. The proposed legislation seeks to amend the Competition Act, 2002 with the objective of expanding the scope of cartel prosecution. Specifically, the Bill aims to bring hybrid anti-competitive agreements, such as hub and spoke cartels, within the purview of the Competition Commission of India (CCI).
The Bill also intends to enable the CCI to treat cartel facilitators, who actively participated in the anti-competitive agreement, on par with the cartel participants.
The Competition Act, 2002, was enacted to promote competition and prohibit anti-competitive practices in India. The Act provides for the establishment of the CCI to prevent practices that adversely affect competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade.
The proposed amendment seeks to address the issue of hybrid anti-competitive agreements that have been a challenge to prosecute under the existing provisions of the Act. Hybrid anti-competitive agreements are a combination of horizontal and vertical agreements, where one or more firms at different levels of the supply chain coordinate to fix prices, control output, or divide markets. Hub and spoke cartels, a type of hybrid anti-competitive agreement, involve a central player (the hub) coordinating with several smaller players (the spokes) to engage in anti-competitive conduct.
Currently, under the Competition Act, of 2002, only horizontal agreements between competitors and vertical agreements between firms and their suppliers or distributors are explicitly prohibited. However, hybrid anti-competitive agreements are not explicitly covered, making it difficult to prosecute them. The proposed amendment seeks to address this gap by bringing hybrid anti-competitive agreements within the ambit of the Act.
Furthermore, the Bill aims to ensure that cartel facilitators, who actively participate in anti-competitive conduct, are treated at par with cartel participants. This will discourage firms from facilitating cartels by providing them with necessary services or resources in this present day, the proposition of an amendment is put forth with the intention of bolstering competition within the market and preventing any instances of anti-competitive conduct.
Simultaneously, the Minister of the Environment, Bhupender Yadav, will present the Biological Diversity (Amendment) Bill, 2022, to the Lok Sabha for contemplation and enactment. The bill aims to make adjustments to the Biological Diversity Act, of 2002.
which provides for the conservation of biological diversity, sustainable use of its components, and fair and equitable sharing of the benefits arising from the use of biological resources.
The proposed amendment aims to exclude “codified traditional knowledge” practitioners from seeking prior permission or intimation of state diversity boards before accessing biological resources. This amendment intends to promote the local economy based on traditional knowledge by exempting practitioners of codified traditional knowledge from seeking prior permission.
Codified traditional knowledge refers to traditional knowledge that has been documented, recorded, or digitized. The current provisions of the Biological Diversity Act, of 2002, require all persons, including practitioners of traditional knowledge, to seek prior permission or intimation of state biodiversity boards before accessing biological resources for any commercial or research purpose.
This requirement has been a hindrance to the local economy based on traditional knowledge. The proposed amendment seeks to promote the use of traditional knowledge by exempting practitioners of codified traditional knowledge from seeking prior permission or intimation. The exemption will encourage the use of traditional knowledge for commercial or research purposes, leading to the growth of local economies.
In conclusion, the proposed amendments to the Competition Act, of 2002, and the Biological Diversity Act, of 2002, seek to address the challenges faced in prosecuting hybrid anti-competitive agreements and promoting the local economy based on traditional knowledge. The amendments will help promote competition in the market and the use of traditional knowledge for commercial or research purposes, respectively.
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