Securities, Competition and Economic Laws — Practice

Question 1

In which year did SEBI become a statutory regulator?

Accepted Answer

1992, under the SEBI Act, 1992.

Question 2

Name the three categories of conduct the Competition Act, 2002 regulates.

Accepted Answer

Anti-competitive agreements, abuse of a dominant position, and regulation of combinations.

Question 3

Which type of FEMA transaction alters a person's overseas assets or liabilities?

Accepted Answer

A capital account transaction.

Question 4

A proposed acquisition is valued at Rs. 2,800 crore and the target has substantial business operations in India, though its own assets and turnover are both below the traditional thresholds. Does this transaction require CCI notification?

Accepted Answer

Yes — the deal value of Rs. 2,800 crore exceeds the Rs. 2,000 crore deal-value threshold introduced by the 2023 Amendment, which applies independently of the traditional asset/turnover test, so notification is required despite the target's low assets and turnover.

Question 5

A consumer claim, based on consideration paid, is valued at Rs. 3 crore. Which commission has jurisdiction under the currently applicable 2021 Rules?

Accepted Answer

The National Commission, since Rs. 3 crore exceeds the Rs. 2 crore threshold above which the National Commission has jurisdiction.

Question 6

Explain why the absence of a scheduled offence defeats a money-laundering prosecution under the PMLA, even if the accused clearly possesses unexplained wealth.

Accepted Answer

PMLA's structure requires 'proceeds of crime' to be property derived from a scheduled (predicate) offence specifically listed in the Act. Unexplained wealth alone, without being traced to a listed scheduled offence, does not meet the definition of proceeds of crime, and without proceeds of crime there is no basis for a money-laundering charge under this Act, regardless of how suspicious the wealth may otherwise appear.

Question 7

Explain the policy reasoning behind introducing the deal-value threshold in 2023, using the example of a large technology-platform acquisition.

Accepted Answer

The traditional asset/turnover test measures the SIZE of the entities based on their balance-sheet assets or revenue turnover. A high-growth technology or platform company can be acquired for a very large sum of money while still showing modest assets and low or no revenue turnover (common for pre-revenue or early-stage platforms), meaning such an acquisition could previously have escaped CCI review entirely despite potentially significant competitive implications (for example, a dominant player acquiring a promising early-stage competitor). The Rs. 2,000 crore deal-value test closes this gap by triggering mandatory notification based on the transaction's actual economic size (the price paid), independent of the target's current balance-sheet size, as long as the target has substantial business operations in India.

Question 8

Explain, with an example, how the 2019 Act's shift in valuation basis (from 'goods/services value plus compensation claimed' to 'consideration paid only') combined with the 2021 Rules' lower jurisdiction thresholds to shift many disputes to a lower commission tier.

Accepted Answer

Under the old 1986 Act basis, a consumer who paid Rs. 40 lakh for a service but claimed Rs. 80 lakh in compensation for resulting damages would have had a claim valued at Rs. 1.2 crore (goods/services value plus compensation), placing it in the State Commission's jurisdiction under the old Rs. 1 crore-Rs. 10 crore band. Under the 2019 Act's current basis, the same dispute is valued only at the Rs. 40 lakh consideration actually paid, which — even before considering the 2021 Rules' lower thresholds — already falls below the old Rs. 1 crore District Commission limit, and under the 2021 Rules' current Rs. 50 lakh District Commission limit, it clearly falls within District Commission jurisdiction. Both changes (narrower valuation basis, lower thresholds) independently push disputes toward the lower tiers, and together they compound this effect.

Practice — Securities, Competition and Economic Laws

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