Challenging the decisions of the Competition Commission of India (CCI) in the courts will become more expensive, as the proposed Competition Amendment Bill seeks to increase the deposits required to initiate such appeals.
The Bill suggests increasing the penalty value to 25% of the deposit amount from the earlier 10% to prevent frivolous appeals by companies.
Legal experts, however, said that the change will affect small firms, especially small and medium enterprises as well as startups with limited cash flow as it may be difficult for them to afford the high deposit amount that will be required if the final orders of the courts are passed. Will be closed until ,
The Centre’s proposed bill also increases the penalty based on calculation on the global turnover of the entity instead of the turnover concerned.
Experts said this change, along with higher deposits for appeals, could create significant burden for companies facing CCI action.
Nisha Kaur Uberoi, head of competition at Trilegal, said the proposed amendments expand the scope of fines in two ways. “Enhancement of penalty on global business, and statutory basis on penalty deposit from existing 10% to 25%, may have inequitable consequences as a pre-condition for exercising the statutory right of appeal, as the Competition Act confers power on CCI .. to impose the highest monetary penalty in the country,” he said.
Pritha Jha, partner, Pioneer Legal, said while major corporations like Google may not be affected, smaller companies and startups may face significant challenges. “It’s one of those changes that was unnecessary. A startup may truly believe it’s on the right side of the law, but may not have the cash flow to make that kind of deposit.”
The new law could potentially deny justice to smaller players, based not on the merits of the case, but on their inability to pay the required deposit, she said.
Under existing rules, CCI orders can be challenged in the National Company Law Tribunal or High Courts and firms can appeal to the top court if they lose a case at the initial stage.
Market participants said the intention behind the proposals is to enhance the quality of appeals, as many companies often appeal to higher judicial forums as a delaying tactic. A section of experts said the amendments could also help in reducing the case burden on appellate tribunals, which handle insolvency appeals and other company law matters.
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