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It's a new day at work
By: Sumedha Dutta and Devika Chadha
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 ("Act") was notified by the Ministry of Law and Justice and has come into effect from 23 April 2013. The Act aims at providing a safe, secure and enabling environment for working women.
To Compete or Not to Compete
A laissez faire economy is characterized by the absence of non-market pressures such as taxes, subsidies, tariffs, though the very definition of a free market economy has been the subject of vociferous debate. In a free market/economy, individuals are free to contract, where the only regulations, in theory, would be to safeguard against coercion and theft. Certain economists have postulated that competition would thrive in a free market economy, perhaps even through a praxeological approach. However, given the different theoretical models of free-market economies and the opposing practical reality(ies); class differences, income inequities and the resultant dominating powers do allow for a powerful class to emerge and skew market conditions through monopolies and the abuse of dominant positions.
A parallel may be drawn between the unfettered right of an individual to enter into a contract for any legally valid consideration/object with the opportunities that a free market economy has to offer, and the barriers to entry that monopolistic entities/dominating powers may enforce. The barriers to entry that dominant market participants can enforce, by way of furthering their own interests, including monopolization, cartelization, predatory pricing and other abuses of dominant positions. This seems be the rational of legislatures of over a hundred countries to adopt and enact completion/antitrust laws.
The intention of competition law is to regulate restrictive trade practices so as to ensure the equitable allocation of resources and optimum utilization of market strength. In this regard, the Competition Act, 2002 ("Act") was enacted, and notified in 2003, replacing the archaic Monopolistic and Restrictive Trade Practice, 1969 and comparatively encompassing a wider scope of competition governance.
The Union Cabinet has passed the Competition (Amendment) Bill, 2012 ("Bill"), however this is yet to be notified in the official gazette, which is a precondition to give any bill its legal sanctity. The Bill contains several key provisions which proposes to widens the scope of the Act, including by way of regulating not only trade in products, but also the provision of services, in relation to tie-in arrangements, exclusive supply agreements, exclusive distribution agreements, refusal to deal and resale price mechanisms - a lacunae that had been evident since the promulgation of the Act.
In its current form, the Act prohibits the abuse of dominant positions by an enterprise or a group. However, the Act is silent as to whether this is applicable to members of a group collectively or singularly. The Bill seeks to do away with this ambiguity, and proposes to amend the relevant section by introducing "jointly or singly" thereof. The definition of an ‘enterprise' in the Act expressly relates to a structural linkage between entities/enterprises, the intention behind this proposed amendment purports to include economic linkages between enterprises, as economic dependence between entities may not come within the ambit of structural linkages.
The Act regulates combinations, including mergers and acquisitions by way of prescribing pre-clearance by the Competition Commission of India ("CCI") for combinations which exceed the statutory specified threshold. Currently, the Act prescribes threshold limits, including pecuniary limits, for such combinations, whether taking place in India and overseas. Mergers and acquisitions taking place above this limit are required to file for such pre-clearance. The Bill proposes to introduce Section 5A, through which the Central Government, in consultation with the CCI, may specify difference value of assets and turnover of any class of classes of enterprise for pre-clearance norms. In the event that reduced threshold limits are notified for such pre-clearance, this may have an adverse effect on small-scale mergers and acquisitions, given the additional time required to obtain the said pre-clearance from the CCI. Further, the danger of ad-hoc notifications, in this regard, cannot be ruled out. However, on the other hand, this does provide the CCI with a wider scope of operation and regulation through such notifications and may facilitate in market equilibrium.
Further, in relation to pre-clearance stipulations, the Act defines ‘group' as two or more enterprises which directly or indirectly are in a position to exercise 26% or more of the voting rights in the other enterprise. The Bill seeks to increase this percentage to 50% or more of the voting rights. In combination with the proposed amendment to notify specify difference value of assets and turnover of any class of classes of enterprise for pre-clearance norms, and the stipulation regarding the increase of the voting rights required to file for pre-clearance, it appears that notifications may be promulgated in the future that regulate smaller-scale mergers and acquisitions/combinations. Again, as mentioned above, the danger of ad-hoc notifications should not be overlooked. Moreover, the Bill seeks to reduce the timelines from 210 days to 180 for deemed approvals from the CCI. This reduction of timelines for approvals may be viewed as a pro-industry step, given the necessity for fast turn-around in the mergers and acquisitions arena.
Presently, in circumstances involving proceedings before a statutory authority, where an issue is raised by a party to such proceedings, in relation to any decision taken by such statutory authority may be contravening the provisions of the Act, the statutory authority may make a reference to the CCI in this regard. The Bill proposes to amend this provision by providing that where an issue arises, instead of an issue raised by a party to such proceedings, along with making it mandatory for the statutory authority to make a reference to the CCI. Though this may involve longer lead-time to resolve such an issue, the certainty vis-à-vis the statute(s) and the issue in question, is of immense benefit.
The Bill proposes two other significant amendments. The first being that post-inquiry by the CCI into agreements or abuses of dominant positions, the CCI shall not levy any penalties without providing an opportunity to be heard to the producer, seller, distributor, trader or service provider, as the case may be. However, the second proposed amendment seeks to empower the Director General of the CCI to carry out search and seizure operations. Presently, a Magistrate's order is required to carry out such an operation, though; the Bill seeks to do away with this requirement. It should be noted that Directorate of Revenue Intelligence, Director General and Commissioner of Income Tax and the Central Bureau of Investigation have been vested with this power, though only in exceptional circumstances. It appears that the Bill seeks to provide an opportunity for the other side to be heard, i.e. audi alteram partem, and on the other hand intends to vest the Director General of the CCI with search and seizure powers without obtaining a Magistrate's orders. These do appear to slightly conflicting provisions, given that audi alteram partem flows from the principles of natural justice and that obtaining a Magistrate's order is currently in line with procedural requirements mandated by law. The raison d'être behind obtaining such an order prior to conducting a search- and-seizure operation, the exceptions to the rule being the Income Tax Authorities and the Central Investigation Bureau, and entrusting such power to the CCI; this does leave a lot to think about.
It appears that the amendments proposed by the Bill do intend to rectify certain lacunas and widen the scope of operations. Through the experience gained by the regulators while keeping their ears closed to the ground and based on constant feedback from the industry and consultants, the Bill does propose to address the issues and concerns of stakeholders in one way or the other. Lots more to see in the near future as the competition laws in the country continue to shape up.
Sumedha Dutta, is a senior associate at HSA Advocates, and Rohan Dang, is an associate at the firm. They can be contacted at email@example.com
Certain important and recent case laws in this area are set out below.
Citimake Builders Pvt. Ltd. vs. Samata Sahakari Bank Ltd.
Citimake Builders Pvt. Ltd. (the ‘Complainant') opened a current account with Samata Sahakari Bank Ltd. (the ‘Opposite Party') in the year 2004 and the said account was operated by Naresh Jain and Abdul Wahid Abdul Gafoor Khatri, authorized persons/partners. On scrutiny of Complainant's record on November 8, 2008, it was found that the Complainant's account was debited for various amounts on the basis of cheques that had forged and fabricated signatures of the authorized persons/partners. Without any consent, knowledge and information to the Complainant by the Opposite Party, the Opposite Party's concerned officers intentionally and wilfully encashed and honoured about 53 cheques of the Complaint without verifying signatures which were prima facie forged and had neither been issued nor signed by them. The concerned officers of the Opposite Party having been in collusion and conspiracy with the erring persons wilfully encashed forged cheques. The Complainant thus filed the present consumer complaint alleging that the Opposite Party is service provider and on account of deficiency in service, the Complainant claimed the aforesaid amount from the Opposite Party. The Complainant also filed criminal complaint against the Opposite Party on July 8, 2009 and the same was under investigation by Oshiwara Police Station.
Certain important and recent enactments, legal developments and case laws in this area are set out below.
Income Tax, 1961 ("Act")
Accounting Standards Notified by the Central Board of Direct Tax
Section 145(2) of the Income-Tax Act, 1961 ("ITA") provides that the Central Government may notify Accounting Standards ("AS") for any class of assessees or for any class of income. The Central Board of Direct Tax ("CBDT") constituted a Committee comprising of departmental officers and professionals in December, 2010 to, inter alia, suggest AS for the said purpose.
Certain important legal developments in this area are set out below.
New Model Concession Agreement for Highway Projects
The Cabinet Committee on Infrastructure ("CCI") on August 17, 2012 has approved two important Model Concession Agreements ("Model Agreements"): Model Agreements for the Engineering, Procurement and Construction ("EPC") contracts and the Model Agreements for Operate-Maintain-Transfer ("OMT") contracts. The Model Agreements are aimed at smooth implementation of the road projects by setting standards with a fair degree of certainty relating to costs and time and should ultimately lead to a higher level of road user satisfaction.
INDIA UNVEILS BIG BANG REFORMS TO REVIVE GROWTH
Kapil Wadhwa & Ors vs. Samsung Electronics Co. Ltd & Anr
In an earlier matter before the Delhi HC, Samsung Electronics Co. Ltd. and its Indian subsidiary ("Respondents") had sued Kapil Wadhwa ("Appellant"), who was previously an authorized dealer of the Respondent, for sale without the permission of the Appellant of Samsung printers imported from foreign markets into India.
Certain important and recent legal developments in this area are set out below.
Prime Minister Relaxes Transfer of Land Requirements
The Prime Minister has relaxed the land transfer policy of the GoI which earlier necessitated approval of the Cabinet of India (‘Cabinet') for transfer of government land so that infrastructure projects are not held up due to procedural delays.
Certain important legal developments and case laws in this area are set out below.
FDI in Broadcasting
The GoI has raised the limit for FDI in Direct-to-Home ("DTH") broadcasting and cable service infrastructure from 49 percent to 74 per cent. To bring out uniformity in broadcasting carriage service, the 74 percent FDI limit will now apply to DTH, Head-End In the Sky, Multi-Service Operators and cable television. However, FDI through automatic route would continue only up to 49 percent. Approval of the Foreign Investment Promotion Board ("FIPB") would be required for investment beyond 49 percent up to 74 percent.
Certain important and recent legal developments in this area are set out below.
1. Anti Dumping Duty ("ADD") on Soda Ash
ADD has been imposed on soda ash originating or exported from China, EU, Kenya, Iran, Pak, Ukraine and USA for a period of five years vide Notification dated July 3, 2012.