Sustainability and Competition Global Practice Guide |
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India |
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(Asia Pacific)
Firm
Shardul Amarchand Mangaldas & Co
Contributors
Pallavi Shroff |
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| Are ESG measures/sustainability agreements included in your jurisdictional competition regime? | In India, the Competition Act, 2002 ("Competition Act") does not expressly contain any reference or exemption for ESG measures or sustainability agreements. However, there are certain enabling provisions in the Competition Act that can be used to defend/promote ESG measures or sustainability agreements. For example, the Preamble to the Competition Act expressly contextualizes its provisions within the broader framework of the ‘economic development of the country' and recognizes consumer interest as one of its goals. Further, the cartel prohibiting provisions provide an opportunity for joint ventures between competitors to demonstrate efficiencies to rebut the presumption of having an appreciable adverse effect on competition ("AAEC") in the market. However, whether these efficiencies include ESG/sustainability measures remains untested. The Competition Act also does not contain a provision for parties/competitors to seek pre-approval of their agreements which may raise competition concerns. The Competition Commission of India ("CCI") assesses all agreements ex-post, and therefore the parties are required to self-assess any collaborations between them. |
| If ESG measures/sustainability agreements are not included in your jurisdictional competition regime, do you foresee any new regulations coming into place in 2022? | Currently, there is no indication that any new regulation that deals with ESG measures or sustainability agreements will be introduced. |
| Has your Authority issued any guidance on the role, if any, of ESG in the competition law analysis applied to mergers or other conduct? | The CCI has not issued any guidance on ESG measures or sustainability agreements as factors to be considered in competition analysis while assessing mergers or any other conduct. |
| Has your jurisdiction issued guidance regarding competitor collaborations or participating in industry working groups, and if so, do they specifically address ESG? | The CCI has not published any guidance regarding competitor collaborations or participating in industry working groups, specifically addressing ESG measures. The CCI’s decisional practice has provided some general guidance on horizontal competitor collaboration, however, the application of such guidance to facilitate ESG measures remains untested. |
| Can parties seek specific guidance from authorities on proposed ESG initiatives? | As mentioned above, the Competition Act does not contain a provision for parties/competitors to seek pre-approval of proposed collaborative agreements which may raise competition concerns. The CCI assesses such agreements ex-post, and therefore the parties are required to self-assess any collaborations between them. |
| How, if at all, does your jurisdiction quantify or calculate the ESG effects? | Currently, the Competition Act does not offer any guidance on a method to calculate ESG effects which may stem from an agreement or a combination. Section 19(3) of the Competition Act, however, sets out a few positive factors to be considered by the CCI to assess whether an agreement would cause an AAEC in the market. These factors include (a) accrual of benefits to consumers; (b) improvements in production or distribution of goods or provision of services; and (c) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. Section 20(4) of the Competition Act sets out a few positive factors which the CCI may consider while assessing whether a proposed combination causes an AAEC in the market. These include (d) nature and extent of innovation; (e) relative advantage, by way of the contribution to the economic development, by any combination having or likely to have an appreciable adverse effect on competition; and (f) whether the benefits of the combination outweigh the adverse impact of the combination if any. Such factors may be argued to include ESG-related defenses, but remain untested. |
| What does your legal authority currently permit even if your agency is not yet active on this topic? | As mentioned above, the cartel prohibiting provisions provide an opportunity for joint ventures between competitors to demonstrate efficiencies to rebut the presumption of having an AAEC in the market. However, whether these efficiencies include ESG/sustainability measures remains untested. |
| Are there precedents that involved ESG/sustainability matters in your country? If so please provide a short description. | Although the Competition Act does not offer any provision or guidance on ESG/sustainability measures, the CCI has taken some non-competition factors into account in a few cases which may extend to expanding ESG defenses in the future. The CCI has shown a sensitivity to broader economic/social goals in its decisional practice but hasn’t recognized the ESG goals of companies specifically. With India being hard hit by the COVID-19 pandemic, the CCI had an opportunity to take the economic hardships of the market in the imposition of penalties on MSMEs, where even clear cartel conduct was not penalized with a fine, and only cease and desist orders were passed. The CCI has also previously considered the broader public interest goals of the government while assessing potential offending conduct to have not violated the Competition Act. |
| Is there specific antitrust regulation in your jurisdiction to be aware of which might give rise to private or class action ESG litigation? | The Competition Act is only enforced by the CCI, and no private action/class action can be initiated with regard to ESG or any other conduct. Section 19(1) of the Competition Act empowers any person, consumer, or their association or trade association to file information with the CCI to facilitate an inquiry into any alleged contravention of the Competition Act. The CCI is also empowered to investigate problematic conduct suo moto i.e., on its on motion. |
Sustainability and Competition Global Practice Guide
India
(Asia Pacific) Firm Shardul Amarchand Mangaldas & CoContributors Pallavi Shroff
Updated 06 Sep 2022In India, the Competition Act, 2002 ("Competition Act") does not expressly contain any reference or exemption for ESG measures or sustainability agreements. However, there are certain enabling provisions in the Competition Act that can be used to defend/promote ESG measures or sustainability agreements.
For example, the Preamble to the Competition Act expressly contextualizes its provisions within the broader framework of the ‘economic development of the country' and recognizes consumer interest as one of its goals.
Further, the cartel prohibiting provisions provide an opportunity for joint ventures between competitors to demonstrate efficiencies to rebut the presumption of having an appreciable adverse effect on competition ("AAEC") in the market. However, whether these efficiencies include ESG/sustainability measures remains untested.
The Competition Act also does not contain a provision for parties/competitors to seek pre-approval of their agreements which may raise competition concerns. The Competition Commission of India ("CCI") assesses all agreements ex-post, and therefore the parties are required to self-assess any collaborations between them.
Currently, there is no indication that any new regulation that deals with ESG measures or sustainability agreements will be introduced.
The CCI has not issued any guidance on ESG measures or sustainability agreements as factors to be considered in competition analysis while assessing mergers or any other conduct.
The CCI has not published any guidance regarding competitor collaborations or participating in industry working groups, specifically addressing ESG measures. The CCI’s decisional practice has provided some general guidance on horizontal competitor collaboration, however, the application of such guidance to facilitate ESG measures remains untested.
As mentioned above, the Competition Act does not contain a provision for parties/competitors to seek pre-approval of proposed collaborative agreements which may raise competition concerns. The CCI assesses such agreements ex-post, and therefore the parties are required to self-assess any collaborations between them.
Currently, the Competition Act does not offer any guidance on a method to calculate ESG effects which may stem from an agreement or a combination.
Section 19(3) of the Competition Act, however, sets out a few positive factors to be considered by the CCI to assess whether an agreement would cause an AAEC in the market. These factors include (a) accrual of benefits to consumers; (b) improvements in production or distribution of goods or provision of services; and (c) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.
Section 20(4) of the Competition Act sets out a few positive factors which the CCI may consider while assessing whether a proposed combination causes an AAEC in the market. These include (d) nature and extent of innovation; (e) relative advantage, by way of the contribution to the economic development, by any combination having or likely to have an appreciable adverse effect on competition; and (f) whether the benefits of the combination outweigh the adverse impact of the combination if any.
Such factors may be argued to include ESG-related defenses, but remain untested.
As mentioned above, the cartel prohibiting provisions provide an opportunity for joint ventures between competitors to demonstrate efficiencies to rebut the presumption of having an AAEC in the market. However, whether these efficiencies include ESG/sustainability measures remains untested.
Although the Competition Act does not offer any provision or guidance on ESG/sustainability measures, the CCI has taken some non-competition factors into account in a few cases which may extend to expanding ESG defenses in the future.
The CCI has shown a sensitivity to broader economic/social goals in its decisional practice but hasn’t recognized the ESG goals of companies specifically. With India being hard hit by the COVID-19 pandemic, the CCI had an opportunity to take the economic hardships of the market in the imposition of penalties on MSMEs, where even clear cartel conduct was not penalized with a fine, and only cease and desist orders were passed.
The CCI has also previously considered the broader public interest goals of the government while assessing potential offending conduct to have not violated the Competition Act.
The Competition Act is only enforced by the CCI, and no private action/class action can be initiated with regard to ESG or any other conduct.
Section 19(1) of the Competition Act empowers any person, consumer, or their association or trade association to file information with the CCI to facilitate an inquiry into any alleged contravention of the Competition Act. The CCI is also empowered to investigate problematic conduct suo moto i.e., on its on motion.