CCI seen as ‘accommodative’ towards antitrust violations by MSMEs instead of imposing fine: Report

Ease of Doing Business for MSMEs: While the CCI’s approach towards SMEs is understandable, for supporting the latter in the recovery process as penalties could hamper their post-Covid growth, the antitrust body must ensure that it doesn’t weaken the deterrence, according to legal experts, the report noted.

CCI seen as ‘accommodative’ towards antitrust violations by MSMEs instead of imposing fine: Report
The government had earlier this month introduced the Competition (Amendment) Bill, 2022 in the Lok Sabha proposing multiple amendments.

Ease of Doing Business for MSMEs: With small businesses continuing to recover from the Covid impact and economic challenges, the antitrust regulator Competition Commission of India (CCI) is seen as taking an ‘accommodative’ approach toward MSMEs involved in antitrust violations, according to a report by The Economic Times. Even as CCI has come down heavily on large firms violating antitrust laws through steep fines, it has let off MSMEs with only a ‘cease and desist’ order – a warning against repeating such violations.

While the CCI’s approach towards SMEs is understandable, for supporting the latter in the recovery process as penalties could hamper their post-Covid growth, the antitrust body must ensure that it doesn’t weaken the deterrence, according to legal experts, the report noted.

“While imposing penalties, the CCI has been conscious of striking a balance between the need to deter anticompetitive conduct and keeping the markets competitive instead of killing an enterprise and wiping off competition,” said Vaibhav Choukse, head of competition practice at law firm JSA. “However, the stance should not dilute the deterrent effect of the competition law.” 

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The government had earlier this month introduced the Competition (Amendment) Bill, 2022 in the Lok Sabha proposing multiple amendments including a new criterion for determining whether an acquisition or merger requires mandatory notification to CCI, reducing the time required for reviewing mergers, widening the scope of anti-competitive agreements, introducing a settlement framework, and more. The Competition Act was enacted in 2002. 

Meanwhile, to boost MSMEs competitiveness and overall recovery post-pandemic, the government had announced incentives under the Atmanirbhar package including the Rs 5 lakh crore ECLGS scheme, Rs 20,000 crores Credit Guarantee Scheme for Subordinate Debt, Self-reliant India Fund for equity infusion of Rs 50,000 crore in MSMEs, and more apart from revising the MSME definition to pass on the benefits of MSME schemes to businesses up to Rs 250 crore turnover.

Also read: Listed SMEs have better profitability ratios, higher return on assets but lower liquidity: RBI paper

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