 .

“ INTRODUCTION ”
The MRTP Act is based on pre-reform scenario, lacks regulation of combinations,
provides for compulsory registration of agreements, complex in arrangements and
based on size as a factor. The Government of India therefore thought it fit to enact a
new law namely, “ The Competition Act ”.
A/1 “ REASONS ” - for REPEAL of MRTP Act
In view of the Policy shift from curbing monopolies to promoting competition, a
need has been felt to repeal the Monopolies and Restrictive Trade Practices Act.
Hence, the present Competition Law, aims at doing away with the rigidly structured
MRTP Act. The Competition Law is flexible, behavior - oriented, and also explicitly
indicate the parameters which shall be kept in view while deciding the adverse effect on
competition, abuse of dominance or prejudicial combinations.
A/2 “ OBJECT of the Act ”
As per the Preamble, the Act seeks to ensure FAIR COMPETITION in India by
prohibition trade practices which cause appreciable adverse effect on competition in
markets in India, and for this purpose provide for the establishment of Competition
Commission of India ( CCI ) which shall also take up Competition Advocacy - for
creating awareness and imparting training on competition issues.
The Competition Act, 2002 seeks to achieve its “ OBJECTIVES ” by :
(i) Prohibiting - restrictive trade agreements ;
(ii) Preventing - abuse of dominance ;
(iii) Regulating - combinations ; and
(iv) Formulatingapolicy-oncompetition,creatingawarenessandbyimpartingtrainingaboutcompetitionissues.
The Act provides for the establishment of COMPETITION COMMISSION of
INDIA ( CCI ), - which shall be a body corporate manned by a Chairperson and NOT
less than two and not more than 10 other Members. The Commission will be assisted -
by a DIRECTOR GENERAL - for conducting investigations of contravention of any
provision of the Act ( EXCEPT those relating to combinations ) and to conduct cases
BEFORE the Commission. Commission will also be assisted - by the REGISTRAR and
OTHER Officers / Employees.

A/3 “ SALIENT FEATURES ” - of the Competition Act, 2002

(i) Prohibition of anti-competitive agreements ;
(ii) Prohibition of abuse of dominance ;
(iii) Regulation of Combinations ( acquisitions, mergers and amalgamations of
certain size ) ;
(iv) Establishment of Competition Commission of India ( CCI ) ;
(v) Functions and powers of CCI ;
(vi) Repeal of the MRTP Act, 1969 and dissolution of the MRTP Commission ;
(vii) Transfer of provisions relating to Unfair Trade Practices to Consumer Protection
Act, 1986.

A/4 “ EXEMPTION ” - from Application of Competition Act, 2002

The Central Government may, by notification, EXEMPT from the application of this Act,
or any provision thereof, and for such period - as it may SPECIFY in such
NOTIFICATION :-
(a) any class of enterprises - if such exemption is necessary in the interest of security of the
state or public interest ;
(b) any practice or agreement - arising out of and in accordance with any obligation
assumed by India under any treaty, agreement or convention with any other country or
countries ;
(c) any enterprise - which performs a sovereign function on behalf of the Central
Government or a State Government.
***

 . “ DEFINITIONS ” - SEC. 2
Under Section 2 of the Act, important terms and concepts have been defined as
follows :-

B/1 Sec. 2(a) - “ ACQUISITION ” - means

- directly or indirectly, acquiring or agreeing to acquire -
(i) Shares, voting rights or assets of any enterprise ; ( or )
(ii) Control over management or control over assets of any enterprise.
The terms ‘ acquiring ’ or ‘ acquisition ’ - are relevant for “ Regulation of
Combinations ”.

B/2 Sec. 2(b) - “ AGREEMENT ” - includes

- any arrangement or understanding or action in concert -
(i) Whether or not, such arrangement, understanding or concert is formal or in
writing ; ( or )
(ii) Whether or not such arrangement, understanding or action is intended to be enforceable by legal
proceedings.
It implies that an arrangement need NOT necessarily be in writing. The term is
relevant - in the context of Section 3, which lists out - certain RESTRICTIVE
AGREEMENTS - prohibited by the Law.
( Refer - MRTP Act, 1969 - Part II - Page 10 - Coverage C/1 ).

B/3 Sec. 2(c) - “ CARTEL ” - includes -

- an association of producers, sellers or distributors, traders or service providers
who, by AGREEMENT amongst themselves, limit control or attempt to control - the
production, distribution, sale or price of or trade in goods or provision of services.
Under the MRTP Act, the term CARTEL was NOT explicitly defined. The implicit
reference to Cartel in Section 33(1)(d) ( Refer - MRTP Act, 1969 - Part II - Page 14 -
Coverage H ) has now been REPLACED by explicit definition of Cartel.

B/4 Sec. 2(d) - “ CHAIRPERSON ” - means

- the Chairperson of Competition Commission of India - appointed under Section
8(1).

B/5 Sec. 2(e) - “ COMMISSION ” - means

- Competition Commission of India - established under Section 7(1).

B/6 Sec. 2(f) - “ CONSUMER ” - means any Person who -

(i) Buys any GOODS - for a consideration which has been pair or promised or partly
paid and partly promised, or under any system of deferred payment and includes
any user of such goods other than the person who buys such goods for
consideration paid or promised or partly paid or partly promised, or under any
system of deferred payment when such use is made with the approval of such
person, - whether such purchase of goods is for resale or for any commercial
purpose or for personal use.
 (ii) Hires or avails of any SERVICES - for a consideration which has been paid or
promised or partly paid and partly promised, or under any system of deferred
payment and includes any beneficiary of such services other than the person who
hires or avails of the services for consideration paid or promised, or partly paid or
partly promised or under any system of deferred payment, when such services
are availed with the approval of the first mentioned person - whether such hiring
or availing of services is for any commercial purpose or for personal use.
Under the MRTP Act, the term “ Consumer ” - is NOT defined and recourse is
made to Consumer as defined under the Consumer Protection Act, 1986. Under THAT
CPAct, 1996, ( Refer - CP Act, 1986 - Page 3 - Coverage B/3 ) the “ CONSUMER ”
includes ONLY such purchasers or buyers who make purchases for their own
consumption. This deficiency has now been made good - by defining CONSUMER as
above u/s.2(f) - under the newly enacted Act.
It may be noted that - under the COMPETITION ACT - even if a Person
purchases goods or avails of services for commercial purpose, - he will be a
CONSUMER, whereas for purposes of CONSUMER PROTECTION ACT, a Person
purchasing goods / availing services for commercial purposes is NOT a consumer and
CANNOT seek relief under THAT Act.

B/7 Sec. 2(g) - “ DIRECTOR GENERAL ” - means

- the Director General appointed under sub-section (1) of Section 16 and
includes any Additional, Joint or Deputy or Assistant Directors.

B/8 Sec. 2(h) - “ ENTERPRISE ” - means

- a Person or a Department of the Government, - who or which is, or has been
engaged in any ACTIVITY, relating to the production, storage, supply, distribution,
acquisition or control or goods or articles or the provision of services, of any kind, or in
investment, or in the business of acquiring, holding, underwriting or dealing with shares,
debentures or other securities of any body corporate EITHER directly or through one or
more of its units or divisions or subsidiaries - WHETHER such unit or division or
subsidiary is located at the same place where the enterprise is located or at different
places.
However, it does NOT include any activity of the CENTRAL GOVERNMENT -
relating to sovereign functions of the Government including all activities carried on by
the Central Government DEPARTMENTS dealing - with atomic energy, currency,
defence and space. As per the EXPLANATION appended to the Section ACTIVITY
includes profession or occupation. ARTICLE includes a new article and service
includes a new service. A UNIT or DIVISION includes a plant or factory established for
production, supply, distribution, acquisition or control of any articles or goods, or any
branch or office established for the provision of any service.
It may thus be noted that SOVEREIGN FUNCTIONS of the Government are
EXCLUDED from definition of Enterprise but Government Departments performing
NON-SOVEREIGN FUNCTIONS - for consideration shall now be subject to jurisdiction
of Commission.

B/9 Sec. 2(i) - “ GOODS ” - means

- Goods as defined in the Sale of Goods Act, 1930 and includes :-
(a) Products manufactured, processed or mined ;
(b) Debentures, shares and stocks after allotment ;
(c) in relation to Goods supplied, distributed or controlled in India - goods imported
into India.

B/10 Sec. 2(m) - “ PRACTICE ” - includes

 - any practice relating to carrying on of any trade by a person or an enterprise.
Therefore, a STRAY ACTION cannot be constructed to be a practice. ( Refer - MRTP
Act, 1969 - Part II - Page 11 - C/8 ).

B/11 Sec. 2(o) - “ PRICE ”

- in relation to the sale of any GOODS or to the performance of any SERVICES,
includes every valuable consideration, whether direct or indirect, or deferred, and
includes any consideration, which RELATES to the sale of any GOODS or to the
performance of any SERVICES - although ostensibly relating to any other matter or
thing.

B/12 Sec. 2(q) - “ REGULATIONS ” - means

- the regulations - made by the Competition Commission of India.

B/13 Sec. 2(u) - “ SERVICE ” - means

- service of any description which is made available to a potential users and
includes the provision of services - in connection with BUSINESS of ANY industrial or
commercial matters such as - banking, communication, education, financing, insurance,
chit funds, real estate, transport, storage, material treatment, processing, supply of
electrical or other energy, boarding, lodging, entertainment, amusement, construction,
repair, conveying of news or information and advertising.
It may be noted that under the COMPETITION ACT, the services of
INDUSTRIAL or COMMERCIAL NATURE also fall within the scope of the Act whereas
under the CONSUMER PROTECTION ACT, the services of COMMERCIAL nature or
for BUSINESS or INDUSTRIAL purposes are EXCLUDED - for interpreting deficiency in
the supply thereof ( Refer - CP Act, 1986 - Page 3 - Coverage B/5 ) and for
determining compensation, if any, payable to them.
To this extent, the relief claimable under the Consumer Protection Act, 1986 is
limited in scope. It may also be noted that EDUCATION has been specifically included
in the ambit of service - to set at rest the dispute, if any, about the jurisdiction of
Commission - in such matters.

B/14 Sec. 2(v) - “ SHARES ” - means

- shares in the Share Capital of a Company - carrying voting rights and
includes :-
(i) any SECURITY - which entitles the holder to receive shares with voting rights ;
(ii) Stock EXCEPT - where a distinction between stock and share is expressed or
implied.
This definition of SHARES is much wider - than what is provided under the
Companies Act. It implies that NOT ONLY Shares in the Share Capital of a Company
e.g. Equity or Preference Shares are included in the definition of shares but Debentures
convertible into Shares with voting rights - are also included.

B/15 Sec. 2(x) - “ TRADE ” - means

- any Trade, business, industry, profession or occupation relating to production,
supply, distribution, storage or control of GOODS and includes the provision of any
SERVICES. ( Refer - MRTP Act, 1969 - Part II - Page 10 - Coverage C/5 ).

B/16 Sec. 2(y) - “ TURNOVER ” - includes

- VALUE of SALE of GOODS or SERVICES.
The definition of the term TURNOVER, intra-alia, is relevant and significant in
determining whether the combination of merging entities EXCEEDS the threshold limit
 of the turnover specified in Section 5 of the Act. It is also relevant - for the purpose of
imposition of fines - by the Commission.
Section 2 further provides that the words and expressions USED but NOT
defined in the Competition Act, 2002 and defined in the Companies Act, 1956 shall
have the same meaning respectively - assigned to them in the Companies Act, 1956.
***

 . “ COMPETITION COMMISSION OF INDIA ” ( CCI )

The Competition Act provides for an adjudicating relief machinery - by way of
establishing the Competition Commission of India ( CCI ) which would be body
corporate having perpetual succession and common seal. CCI will have a Chairperson
and not less than two and more than ten other members to be appointed by the Central
Government. The Law provides that the Commission may establish offices at other
places ( other than Head Office ) in India.
A quasi-judicial authority named ‘Competition Commission of India’ will be
constituted. The Commission will consist of judicial as well as non-judicial persons to
give Competition Commission of India (CCI) an overall perspective.
On receipt of complaint or reference, CCI can issue order to Director General to
investigate. His report will then be considered by CCI. The CCI will hear the concerned
parties and then pass necessary orders.
CCI will sit in benches. Each bench will consist of at least one judicial person of
rank of Judge of High Court. CCI is empowered to recommend division of dominant
enterprises. It can order de-merger in case of merger / amalgamation that adversely
affects competition. Suitable powers are given to Commission and penalties are
prescribed to ensure that orders of Commission are obeyed. Jurisdiction of Civil Court is
barred and only appeal to Supreme Court only if substantial question of law are
involved.

C/1 “ ESTABLISHMENT ” - of CCI - Sec. 7

With effect from such date as the Central Government may, by notification,
appoint, there shall be established, for the purposes of this Act, a Commission to be
called the “Competition Commission of India”. [ Section 7(1) ].
The Commission shall be a body corporate by the name aforesaid having
perpetual succession and a common seal with power, subject to the provisions of this
Act, to acquire, hold and dispose of property , both movable and immovable, and to
contract and shall, by the said name, sue or be sued. [ Section 7(2) ].
The head office of the Commission shall be at such place as the Central
Government may decide from time to time. [ Section 7(3) ].
The Commission may establish offices at other places in India. [ Section 7(4) ].
Section 64 empowers Commission to make regulations. [Note -Sections 7 and 64
have been brought into effect on 19-6-2003.

C/2 “ POWERS ” - of CCI

The CCI will have the following Powers :
- to issue Cease and Desist Orders ;
- to grant such interim relief as would be necessary in each case ;
- to award compensation ;
- to impose fines upto 10 % of the average turnover of the enterprises for the last 3
years upon each of such person or enterprises which are parties to
such agreement or abuse ;
 - to order division of dominant undertaking ;
- power to order de-merger ;
- power to order costs for frivolous complaints.
In addition to the adjudicating function, the CCI will have the roles of Competition
advocate which includes creating awareness and imparting training about competition
issues.
The Statutory Regulatory Authorities can make reference to CCI for advice.

C/3 “ COMPOSITION of COMMISSION ” - Sec. 8

The Commission shall consist of a Chairperson and not less than two and not
more than ten other Members to be appointed by the Central Government. Provided
that the Central Government shall appoint the Chairperson and a Member during the
first year of the establishment of the Commission. [ Section 8(1) ].
[ Effective from 31-3-2003 ].
The Chairperson and every other Member shall be a person of ability, integrity
and standing and who has been, or is qualified to be, a Judge of a High Court or has
special knowledge of, and professional experience of not less than fifteen years in
international trade, economics, business, commerce, law, finance accountancy,
management, industry public affairs, administration or in any other matter which, in the
opinion of the Central Government, may be useful to the Commission. [ Section 8(2) ].
The Chairperson and other Members shall be whole- time Members. [ Section
8(3) ].
[ Effective from 31-3-2003 ].
***

 . “ DIRECTOR GENERAL & REGISTRAR ”

D/1 “ DIRECTOR GENERAL ” - Sec. 16
The Competition Act provides for the post of Director General ( and a host of his
duties in various places) to assist the Competition Commission in its inquiries. Unlike in
MRTP Act, the Director General will NOT have powers to initiate investigations suo
moto.
The Director General will investigate the complaints / references on receipt of
orders from Commission and then submit his report to Commission. He will also
conduct the cases before CCI. The Director General cannot conduct investigation suo
motu. DG will be appointed by Central Government. Registrar will be in charge of
administration side of Commission. He and his staff will be appointed by Commission,
i.e. CCI.
APPOINTMENT of “ Director General ” - The Central Government will appoint a
Director General and as many Additional, Joint, Deputy or Assistant Directors General
or such other advisers, consultants, or officers, as it may think fit, for the purposes of
assisting the Commission in conducting inquiry into contravention of any of the
provisions of this Act and for the conduct of cases before the Commission and for
performing such other functions as are, or may be, provided by or under this Act.
[ Section 16(1) ].
Every Additional, Joint, Deputy and Assistant Directors General or such other
advisers, consultants or officers shall exercise his powers, and discharge his functions,
subject to the general control, supervision and direction of the Director General.
[ Section 16(2) ].
The salary, allowances and other terms and conditions of service of the Director
General and Additional, Joint, Deputy and Assistant Directors General or such other
 advisors, consultants or officers shall be such as may be prescribed by rules. [ Section
16(3) ].
The Director General, and Additional, Joint, Deputy and Assistant Directors
General or such other advisors, consultants or officers shall be appointed from amongst
persons of integrity and outstanding ability and who have experience in investigation,
and knowledge of accountancy, management, business, public administration,
international trade, law or economics and such other qualifications as may be
prescribed. [ Section 16(4) ] [ Effective on 31-3-2003 ].
Section 2(g) provides that Director General includes any Additional, Joint,
Deputy or Assistant Director. Thus, the powers of Director General has specified in the
Act can be exercised by Additional / Deputy / Joint / Assistant Director also. [ Effective
on 19-6-2003 ].
DIRECTOR GENERAL - to INVESTIGATE CONTRAVENTIONS - The Director
General shall, when so directed by the Commission, assist the Commission in
investigating into any contravention of the provisions of this Act or any rules or
regulations made thereunder. [ Section 41(1) ].
The Director-General shall have all the powers as are conferred upon the
Commission under Sec.36(2). [ Section 41(3) ].
Sections 240 and 240A of the Companies Act, 1956 (1 of 1956) shall apply to an
investigation made by the Director General or any other person investigating under his
authority, as they apply to an inspector appointed under that Act. [ Section 41(3) ].
[ This section NOT yet made effective, but given here to give idea of functions of
Director General ]
***
D/2 “ REGISTRAR and OFFICERS and OTHER EMPLOYEES of COMMISSION ” - Sec.
17
The Commission may appoint a Registrar and such officers and other
employees, as it considers necessary for the efficient performance of its functions under
this Act. The salaries and allowances payable to and other terms and conditions of
service of the Registrar and officers and other employees of the Commission and the
number of such officers and employees shall be such as may be prescribed. [ Section
17 ] [ Effective on 31-3-2003 ].

 . “ COMPETITION ADVOCACY ”
The provisions relating to Competition Advocacy have been spelled out under
Chapter VII of the Act.
As per the provisions of Section 16 of the Act, in the course of formulating a
POLICY on the Competition, the Central Government may make a reference - to the
Commission for its opinion - on possible effect of such a policy on the competition. On
receipt of such a reference, the Commission shall, give its opinion to the Central
Government, within a period of sixty days of making such a reference and the latter may
formulate the POLICY as it deems fit. Thus, the role of the Commission is ADVISORY
and the opinion given by the Commission shall NOT be binding - upon the Central
Government - in formulating such a policy.
The Commission has also been ASSIGNED the ROLE to take prescribed suitable
MEASURES for the :-
(a) promotion of competition advocacy ;
(b) creating awareness about the competition ; and
(c) imparting training about competition issues.
 The creation of awareness - about the benefits of competition and imparting
training on competition issues is expected to generate conducive environment - to
promote and foster competition - which is sine-qua-non for accelerating economic
growth.
***

 . “ COMPETITION FUND ” - SEC. 51

The Competition Act provides for a Competition fund which shall be utilised inter
alia for promotion advocacy, creating awareness about competition issues and training
in accordance with the rules that may be prescribed.
Section 51 says that there shall be constituted a fund called “ COMPETITION
FUND ” - for meeting the establishment and other expenses of the Competition
Commission - in connection with the discharge of its functions and for the purposes of
the Act.
The following shall be “ CREDITED ” - to the COMPETITION FUND :-
(a) all government grants received by the Commission ;
(b) the monies received as costs from the parties to the proceedings before the
Commission ;
(c) the fees received under the Act ;
(d) the interest accrued - on the amounts referred to under clauses (a) to (c) above.
A COMMITTEE of the Members of the Commission, as may be determined by
the Chairperson, shall administer the fund. The Committee appointed by the
Chairperson shall spend monies out of the Fund - ONLY for the OBJECTS - for which
the Fund has been constituted.
***

 . “ ACCOUNTS & AUDIT ” - SEC. 52

Under Section 52, proper accounts and other relevant records shall be
maintained by the Commission and an ANNUAL STATEMENT of ACCOUNTS - shall
be prepared by it in such form as may be prescribed by the Central Government - in
consultation with the COMPTROLLER and AUDITOR GENERAL of INDIA ( CAG ). The
CAG shall specify the intervals with which the accounts of the Commission shall be
audited by him. The explanation appended to Section 52(2) clarified that the orders
passed by the Commission, being matters appealable to the Supreme Court, shall NOT
be subject to audit by the CAG. The EXPENSES, if any, incurred in connection with
such AUDIT - shall be payable by the Commission - to the CAG.
The CAG or any Person appointed by him in connection with the Audit of the
Accounts of the Commission - shall have SAME rights, privileges and authority in
connection with such audit as CAG has in connection with the audit of Government
accounts and, shall have the RIGHT to demand the production of books, accounts,
connected vouchers and other documents and papers and to INSPECT any of the
offices of the Commission.
The Accounts of the Commission - as certified by the CAG or any other Person
authorised by him in his behalf together with the AUDIT REPORT thereon shall be
forwarded to the Central Government and the Government shall cause it to be laid
BEFORE each House of the Parliament.
***

 . “ POWER OF CENTRAL GOVERNMENT - TO MAKE RULES”

Section 63(1) made effective on 31-3-2003 gives powers to Central Government
to make rules to carry out the provisions of the Competition Act. Parts of Section 63(2)
 brought into effect on 31-3-2003 give powers to Central government to make rules for
specified matters -
(a) manner in which Chairperson and other members of Commission shall be
selected u/s 9
(b) form and manner in which and authority before whom oath of office and secrecy
shall be made and subscribed u/s 10(3)
(c) Salary and terms and conditions, allowances and facilities of Chairperson and
members of Competition Commission u/s 14(1)
(d) Salary and other terms of Director General, Additional/joint/Deputy / Assistant
Director General, advisers, consultants etc. u/s 16(3)
(e) Qualifications for appointment of Director General, Additional/joint/Deputy /
Assistant Director General
(f) Salary, allowances and other terms for appointment of Registrar and other
employees.
Under these powers, Competition Commission of India (Selection of Chairperson
and Other Members of the Commission) Rules, 2003 have been notified on 4-4-2003. As per these
Rules, a three member Committee shall be constituted. The committee shall recommend a person or
panel of not more than three persons.
***
. “ COMPARISON - OF MRTP ACT, 1969 & COMPETITION
ACT, 2002 ”
( Refer - Page 27 - MRTP Act, 1969 - PART - II )
******