Key Changes Proposed In The Competition Amendment Bill: Deal value test: The CCI will have to precisely define what constitutes substantial business operations. Since different sectors will relate to this expression differently. For eg, for tech platforms, value of operations may lie in the user base or customers located in India, while for an infrastructure company, having plants and equipment itself is valueable even though not operational. Commitment and settlement: a lot will depend on the fine print of the associated regulations that CCI is to come up with. Effect on the compensation claims by persons who have suffered from the anti-competitive will also also have to be seen for parties who have settled the matter. Reduced Timelines: Compressing merger review timelines to 20 days could mean a higher burden on parties to do pre-filing consultations or face repeated questions from the CCI or suffer invalidations.
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The changes proposed in the competition amendment bill are quite significant and far-reaching. One of the driving factors of the amendments proposed is to address concerns in the digital economy. Mergers and acquisitions in the digital economy often escaped scrutiny by the CCI as such transactions were exempt from notification to the competition regulator on account of assets or turnover of the target entity being below specified financial thresholds. The introduction of the deal value threshold would ensure that significant acquisitions in the digital space are scrutinized by the CCI. The intent of the legislature is that only those acquisitions in the digital economy should be notified to the CCI where a party to the transaction has substantial business operations in India. Clarity is awaited from the CCI on what constitutes ‘substantial business operations’ in India. The other issue on which certainty is required is the theory of harm in assessing and analyzing M&A’s in the digital economy as the dynamics of competition in such markets differs from the traditional markets that the CCI has been scrutinizing in the last decade. The existing criteria of assessing M&A’s in the traditional markets may not be relevant or rational in the context of digital markets. The amendments propose to reduce timelines for approval of M&A’s notified to the CCI. On the face of it, such proposal appears to be business friendly. However, such reduced timelines are likely to impose significant burden on the combination department of the CCI and may prove to be counter-productive in the long run. Such reduced timelines are unnecessary considering that the CCI has done a stellar job in the last decade by approving M&A’s within prescribed statutory timelines and in an expedited manner. The bill also proposes to introduce a settlements and commitments mechanism whereby the CCI may accept settlements and commitments from the parties and close investigations quicker. This is beneficial for both the CCI as well as the parties under investigation as it reduces the litigation time and cost. The other significant amendments include provisions for penalizing third parties which may facilitate a cartel such as a ‘hub-and-spoke’ cartel; introduction of a limitation of 3 years; significant increase in maximum penalty for not disclosing facts or giving false information; and, codifying the ‘material influence’ test as the standard for control. Overall, the proposed amendments are significant and are being introduced to further the ‘ease of doing business’ objective of the Government. However, the success of the amendments depend on the regulations to be introduced by the CCI to give effect to these proposed amendments as well as the legal certainty that such regulations would provide to businesses.
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The ITAT has followed its orders for the earlier years to hold that once the Indian entity has been remunerated on arm’s length basis, no further profit attribution can be made in the hands of the non-resident entity by alleging that the Indian entity constitutes a Permanent Establishment (PE) of the non-resident. Moreover, the ITAT has also followed the Supreme Court ruling in E-funds case to hold that the mere fact the Indian entity is a 100% subsidiary of the non-resident or that the non-resident has outsourced its business entirely to the Indian entity cannot lead to a conclusion that there is a PE.
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With the Indian economy currently grappling with mounting non-performing assets (NPA) and creditors including banks, financial institutions and other lenders are left high and dry with sluggish recoveries, pre-packs across jurisdictions are known to plug this wide recovery gap. In fact, pre-pack resolution plans are likely to facilitate adherence to the timelines prescribed under the IB Code. With the increase in threshold to 1 crore, numerous operational creditors especially MSMEs were deprived of remedies under the Code. However, the recent introduction of the pre-packaged insolvency framework is likely to support MSMEs – a major contributor to our GDP and employer to a sizeable Indian population. MSMEs have suffered the most during the pandemic and placing a strict timeline of 120 days on the pre-pack model is likely to soothe the distressed MSMEs. Additionally, the Ordinance is likely to provide a cost-effective and faster resolution process for MSMEs under the debtor in possession model, unlike the normal CIRP where it is RP in possession.
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The introduction of the Prepack framework was supposed to coincide with lifting the moratorium on filing fresh cases of Insolvency. Currently, the government has restricted Prepacks provisions for MSME and will extend to other Corporates in some time. Prepacks will help Corporate Debtors to enter into consensual restructuring with lenders and address entire liability side of the Company. The government needs to further augment the NCLT’s infrastructure so that pre-packs can be implemented in time bound manner. The government may consider setting up specific benches looking at Prepack and Insolvency above a certain size to expedite resolution of large cases in time bound manner
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This is a much-awaited amendment to the IBC. The intent of the government appears to be to provide for an alternative and efficient resolution mechanism especially for MSME’s by introduction of a new chapter in the statute. This is certainly a welcome step although it was hoped that such a framework available to non-MSME’s as well. The framework of the chapter does not reduce the role and involvement of NCLT’s very significantly - it is hoped that given that this process can be initiated only by the companies with the consent of 66% of its unrelated financial creditors, the disputes are minimal allowing the process to run more efficiently than the normal CIRP.
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The Hon'ble FM mentioned about the staggering GST collections. This swelling GST collection will certainly help the Government to meet various expenditures as well as reduce the fiscal deficit.
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The law governing data protection in India is prescribed in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (“Rules”). The Rules broadly regulate (a) the collection, receipt, possession, use, storage, dealing in and handling of sensitive personal data or information (SPDI); (b) the transferor disclosure of SPDI; and (c) the security procedures to be adopted for protecting SPDI. SPDI or personal information is defined as any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person and inter-alia includes (i) password; (ii) financial information such as bank account or credit card or debit card or other payment instrument details; (iii) physical, physiological and mental health condition; (iv) sexual orientation; (v) medical records and history; (vi) biometric information. In terms of the Rules, in India, a body corporate (such as Whatsapp in this case) is required to obtain prior consent in writing from the provider of the sensitive personal data or information (in this case its users) regarding the purpose of usage before collection or transfer of such information which we understand is being obtained by clickwrap agreement by Whatsapp. In the present case, the data privacy rights of the Users is not being compromised (by Whatsapp) so long as the other body corporate / Facebook company (whether located in India or outside) to which the data is proposed to be shared/transferred by Whatsapp maintains the 2 same level of data protection as provided in these Rules, and where such User has consented to data transfer. Having said that, it is incumbent on each User to check what the revised privacy policy of Whatsapp encapsulates and what kind of data (of its Users) is Whatsapp proposing to share / transfer with other Facebook companies. In the event the User is not agreeable to the sharing of its data, he/she is free to delete the account by using the “in-app delete account” feature ensuring that all saved data is also deleted thereby withdrawing consent to use/ process/transfer such Users’ data. So long as Whatsapp is in compliance of the Rules, the rights of the Users are being safeguarded within the ambit of the legislation of data protection in India. Prima facie, in India, there is no embargo on transfer/ disclosure of personal data of an individual so long as consent is obtained for the same and the processes mentioned in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 are adhered to by Whatsapp. However, we are not in a position to comment on this aspect vis-à-vis global privacy and data policy regulations. While India presently does not have any express legislation governing data protection or privacy, the relevant laws in India dealing with data protection are the Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules. However, the ever-changing legal and regulatory landscape within India has given rise to the need for having a robust law for the protection of personal data in India. This has paved the way for the birth of the Personal Data Protection Bill, 2019 (“Bill”) which emphasises on the need for increased safeguards vis-à-vis personal data along with stringent penalties. In terms of the Bill, there is increased accountability on the part of the person processing, collecting or using the data, which in turn, increases its risk and exposure to liability unless complied with the provisions of this upcoming law. The Bill is yet to be passed by the Parliament and become a law and it is to be seen in what form and shape it will be enacted.
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