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Competition Law

OPT-IV: Competition Law (Karnataka State Law University)

Studocu is not sponsored or endorsed by any college or university

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Competition Law
Notes by Praveen Kumar

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Contents
UNIT 1 ..................................................................................................................................................... 4
1. Discuss the Salient Features of the Consumer Protection Act. ...................................................... 4
2. Define Consumer, Complaint and Service under the Consumer Protection Act 1986. .................. 7
3. Appeals under Consumer Protection Act ..................................................................................... 10
4. Composition of National Commission, CPA 1986 ......................................................................... 12
5. State Commission, CPA 1986 ........................................................................................................ 15
6. Discuss unfair trade practice under the Consumer Protection Act, 1986. ................................... 18
7. Discuss the Consumer Protection Councils in India ...................................................................... 20
8. What are the Constitutional provisions regulating the trade? ..................................................... 22
9. Objects of Antitrust Laws in India ................................................................................................. 24
10. Explain the statements, objects and reasons of MRTP Act. ..................................................... 27
11. Restrictive Trade Practice ......................................................................................................... 28
12. Differences between MRTP Act and Competition Act. ............................................................. 31
13. Discuss the constitutional Provisions regarding protection of Customers ............................... 33
14. Competition means a struggle or contention for superiority in the commercial world.
Elucidate................................................................................................................................................ 36
UNIT 2 ................................................................................................................................................... 39
1. Discuss the provisions of Sherman Act relating to Monopolistic practices. ................................. 39
2. Explain the provisions of the Clayton Act relating to exclusive dealing and Tying contracts. ...... 43
3. Salient Features of Clayton Act ..................................................................................................... 46
4. Salient Features of Federal Trade Commission Act ...................................................................... 49
5. Mention the powers of Federal Trade Commission (FTC), constituted under the Federal Trade
Commission Act, 1914. ......................................................................................................................... 53
6. Offences and Penalties in FTC ....................................................................................................... 56
7. Write about the Composition of the competition commission of UK. Discuss its powers and
Functions. .............................................................................................................................................. 57
8. Explain the salient features of U.K. Competition Act ................................................................... 59
UNIT 3 ................................................................................................................................................... 62
1. Discuss the objects and Reasons for the competition Act 2002 ................................................... 62
2. Discuss the kinds of Agreements prohibited under the competition Act 2002............................ 64
3. Salient Features of the Competition Act 2002 .............................................................................. 67
4. Dominant Position in Competition Act 2002 ................................................................................ 71
5. Regulation of Combinations.......................................................................................................... 74
Unit 4..................................................................................................................................................... 76
1. Competition Commission of India..................................................................................................... 76

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2. Duties, Powers and Functions of the CCI ...................................................................................... 79

UNIT 5 ................................................................................................................................................... 82
1. Duties of Director General ............................................................................................................ 82
2. Penalties ........................................................................................................................................ 84
3. Competition Advocacy .................................................................................................................. 86
4. Appeals.......................................................................................................................................... 87

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UNIT 1

1. Discuss the Salient Features of the Consumer Protection Act.

The Important Salient Features of the Consumer Protection Act, 1986 are given below:

1. Extent
It applies to the whole of India except the State of Jammu and Kashmir.

2. Coverage
It shall apply to all goods and all services except those which are specially exempted by notification
by the central government.

The term ‘goods’ covers all types of movable property other than money and includes stocks and
shares, growing crops, etc.

Goods may be consumables like wheat flour, salt, sugar, fruit etc. or durable items like television,
refrigerator, toaster, mixer, bicycle etc.

The term ‘service’ means service of any description and includes banking, financing, housing
construction, insurance, entertainment, transport, supply of electrical and other energy, boarding
and lodging, amusement, etc.

The services of doctors, engineers, architects, lawyers etc. are included under the provisions of
Consumer Protection Act.

3. Sectors:
This Act is applicable to all the areas whether private, public or cooperative.

4. Consumer Involvement
The Consumer Protection Act, 1986 sought to provide better protection to the interests of the
consumers and for that purpose made provisions for the establishment of Consumer Protection
Councils and other authorities for resolving consumers’ disputes. The Consumer Protection Councils
would be set up at national and state levels (Section 6 of Consumer Protection Act)

These Councils will have both official and non-official members.

5. Consumer’s Rights:
The Act acknowledges six rights of the consumers:

1. Right of Choice
2. Right to Safety
3. Right to be Informed
4. Right to be Heard
5. Right to Redress, and

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6. Right to Consumer Education

6. Effective Safeguards:
This Act provides safety to consumers regarding defective products, dissatisfactory services and
unfair trade practices.

Under the purview of this Act there is a provision to ban all activities which can cause a risk for
consumer.

The provisions of the Act are compensatory as well as preventive and punitive in nature.

7. Penal Provisions
If a trader or a person against whom a complaint is lodged fails to comply with any order made by any
council, he is punishable with imprisonment for a term which shall not be less than one month but
which may extend to 3 years or with fine shall not be less than Rs. 2000 or may extend to Rs. 10,000
or both.

If circumstances warrant, property of the person who has failed to comply with the order may be
attached.

8. Three-Tier Grievances Redressal Machinery:

(i) At District Level-District Forum:
It is headed by a judicial officer equivalent to Session Judge.

He is assisted by two members.

Cases involving compensation up to Rupees 20 lakhs are entertained in this forum.

(ii) At State Level -State Commission:

It is headed by a judicial officer equivalent to High Court Judge.

He is assisted by two members.

Here cases involving compensation of 20 lakhs to one crore are entertained.

(iii) At National Level – National Commission:

It is headed by a Judge of Supreme Court.

He is assisted by four or more members.

Here cases involving compensation above one crore are entertained.

National Commission has jurisdiction for appeals coming up against orders of State Commission.

Supreme Court is the final deciding authority.

9. Who can file the complaint?

The complaint can be filed by

a consumer or

a society registered under the Societies Registration Act, or

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a company registered under the Companies Act representing consumers or

by the central or

state government.

In terms of the new provisions, in case of death of a consumer, his legal representative can pursue
complaint.

10. Fees:
No court fee is payable for filing an appeal in the State Commission or the National Commission.
However, while filing an appeal from the National Commission to the Supreme Court, there is a
court fee of Rs. 250/-.

11. Provision for transfer of cases.

On the application of the complainant or of its own motion, at any stage of the proceeding, the State
Commission may, in the interest of justice, transfer any complaint from one District Forum to
another District Forum within the State with a view to meet the end of justice, if so required.

On the application of the complainant or of its own motion, at any stage of the proceeding, the
National Commission may, in the interest of justice, transfer any complaint from one District Forum
of one State to another District Forum of another State or from one State Commission to another
State Commission.

12. Time Bound Redressal:

A main feature of the Act is that under this, the cases are decided in a limited time of period. Under
this Act there is provision to settle the complaint within three months of filing it. If the complaint
needs laboratory testing, the period is extended to five months.

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2. Define Consumer, Complaint and Service under the Consumer

Protection Act 1986.

Consumer
A consumer is a person who uses any goods or services.

Under the Consumer Protection Act 1986, the word Consumer has been defined separately for the
purpose of goods and services.

(a) For the purpose of goods, a consumer means

(i) one who buys any goods for consideration; and

(ii) any other user of such goods, provided such use is made with the approval of the buyer.

It shall apply to all goods and all services except those which are specially exempted by notification
by the central government.

The term ‘goods’ covers all types of movable property other than money and includes stocks and
shares, growing crops, etc.

Goods may be consumables like wheat flour, salt, sugar, fruit etc. or durable items like television,
refrigerator, toaster, mixer, bicycle etc.

The expression ‘consumer’ does not include a person who obtains such goods for resale or for any
commercial purpose.

For example, when your father buys an apple for you and you consume them, your father as well as
yourself are treated as consumers.

(b) For the purpose of services, a consumer means

(i) one who hires any service or services for consideration; and

(ii) any beneficiary of such service(s) provided the service is availed with the approval of such person.

The term ‘service’ means service of any description and includes banking, financing, housing
construction, insurance, entertainment, transport, supply of electrical and other energy, boarding
and lodging, amusement, etc.

The services of doctors, engineers, architects, lawyers etc. are included under the provisions of
Consumer Protection Act.

For example, when your father hires a taxi and you go to the college, both of you are consumers.

COMMENTS

(i) The insurance company is not a consumer. Hence the consumer complaint by insurance company
is not maintainable; Savani Road Lines v. Sundaram Textiles Ltd., AIR 2001 SC 2630

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(ii)A licensee to run a phone is not a consumer; Techno combine Associates v. Union of India, I (1994)
CPJ 481: 1994 (I) CPR 298.

(iii) A lottery ticket holder is not “consumer” within the ambit of the definition of “consumer” under
the Act; Jagdish Chand v. Director, Sikkim State Lottery, 1994 (I) CPR213.

(iv) If somebody does not perform his part of the contract, it amounts to deficiency in service; Smt.
Ramala Roy v. Rabindra Nath Sen, 1994 (I) CPR 66.

(v) Undue delay in declaration of examination result is obviously deficiency in service;

Secretary,Board of School Education, Haryana v. Mukesh Chand, 1994 (I) CPR 269.

(vi) The student is a consumer of service of educational institute; Sushant Yuvaraj Rode v; Shri
Ramdeobaba Engineering College, 1993 (III) CPR 624.

Services
The term ‘service’ means service of any description and includes banking, financing, housing
construction, insurance, entertainment, transport, supply of electrical and other energy, boarding
and lodging, etc.

The services of doctors, engineers, architects, lawyers etc. are included under the provisions of
Consumer Protection Act.

Characteristics of Services-
(i) Two party process
There has to be a service provider and service recipient.

(ii) Consideration
It has to be for consideration.
According to the Indian Contract Act, a contract without consideration is void. A party giving
something has to get something in return. It includes- granting, assignment, or surrender of any
right. It should not be free. If it is for free, no service tax can be levied.

(iii) Availability
It may Merely be made available, actual utilization not necessary. If made available, it would be
considered as service. It is not mandatory for the other party to use it.

(iv) Tangibility
It has to be intangible and invisible, i.e., it cannot be seen or touched.
Exception- Report of Consultant on a diskette is visible.

(v) Process
Service is a process. It cannot be stored or transferred. However, there can be pre- storage (refill
cards), or post stored (music disk).

(vi) Manner of Service

by performing (mechanic), by rendering (doctor), by providing, by delivering (courier).

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(vii) Aspects covered-

(i) activity/ performance (employment, professional, marketing)
(ii) Skill (Consulting)
(iii) resources (leasing, financing, renting)
(iv) risk (insurance)

(viii) Happiness
It can be any act resulting in promoting interest or happiness- contractual, legal, statutory, domestic,
public etc.

(ix) ‘Contract of service’ and ‘Contract for service’-

Contract of service- employee can be turned out at any time without any specific reason. He is under
direction and control of employer. Here master can direct what and how to be done.

Contract for Service- master can direct only what and not how. Example- Accountants, Lawyers,
Surgeons, Builders.

(x) Personal Service

It cannot be a personal service.

(c) "Complaint" means any allegation in writing made by a complainant with a view to obtaining relief
from:

(i) Defective Goods

the goods bought by him or agreed to be bought by him suffer from one or more defects;

(ii) Hazardous Goods

goods which will be hazardous to life and safety when used, are being offered for sale to the public
in contravention of the provisions of any law for the time being in force requiring traders to display
information in regard to the contents, manner and effect of use of such goods.

(iii) MRP
a trader has charged for the goods mentioned in the complaint price in excess of the price fixed by
or under any law for the time being in force or displayed on the goods for any package containing
such goods,

(iv) Deficiency of Service

the services hired or availed of or agreed to be hired or availed of by him suffer from deficiency in
any respect;

(v) Unfair Trade Practices

an unfair trade practice or a restrictive trade practice has been adopted by any trader;

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3. Appeals under Consumer Protection Act

Appealable Forums
(1) An appeal can be preferred against the order of the district forum to the state commission;
from the state commission to the national commission and from the national commission to the
Supreme Court.

Time Limits
(2) The appeals should be filed within 30 days of the date of the order.

An appeal may be entertained after the expiry of the said period of 30 days if the appellant shows
that there was sufficient cause for the delay in the filing of the appeal.

In such cases, an application for the condonation of delay must be made along with the appeal and
supported by an affidavit setting out adequate reasons for the delay and accompanied by necessary
evidence.

Procedure
(3) The appellant must enclose the original copy of the order against which an appeal is made.

A memorandum of grounds has to be set out.

Necessary documents supporting objections raised in the appeal have to be provided.

Language
(4) The appeal can be sent in English, Hindi or in the regional language of the State.

Signature
(5) The appeal should be signed by the appellant.

In case somebody else has been authorised to appeal on the behalf of the appellant, then he shall
enclose the authority of the appeal in this behalf.

The person having an authority in this behalf may sign it and indicate the reasons as to why the
appellant himself is not able to sign the appeal. As for example when the appellant is out of India.

Copies
(6) Send four sets of the appeal petition and the accompanying papers when making an appeal to
the State commission;

six sets of the appeal papers including the additional documents when appealing to the National
Commission and

seven sets of the appeal papers along with the documents if the appeal is to be filed in the Supreme
Court.

The number of copies should be increased correspondingly in case there is more than one opposite
party.

Court Fees
(7) No court fee is payable for filing an appeal in the State Commission or the National Commission.
However, while filing an appeal from the National Commission to the Supreme Court, there is a
court fee of Rs. 250/-.

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Compensation
(8) If a person appeals against the order of the District Forum to the State Commission and he is
the party who has to pay the compensation, then the appellant will have to deposit 50 percent of
the amount or Rs. 25,000/-, whichever is less with the State Commission.

If a person appeals against the order of the State Commission to the National Commission and he is
the party who has to pay the compensation, then the appellant will have to deposit 50 percent of
the amount or Rs. 35,000/-, whichever is less with the National Commission.

If the appellant appeals against the order of the National Commission to the Supreme Court of India
and he is the party who had to pay compensation as per the National Commission’s order, then the
appellant will have to deposit 50 percent of the amount or Rs. 50,000/-, whichever is less with the
Supreme Court.

Decision
(9) The stipulated period within which an appeal should be decided is generally 90 days from the
date of the first hearing.

Notes:
Post
(i) Appeal papers can be sent by Registered A.D. Post.

Representation
(ii) One can oneself represent the case at the time of hearing or if he so chooses he can authorize
another person either an advocate or any other person by giving such a person the necessary
authority.

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4. Composition of National Commission, CPA 1986

Section 20, 15, 19A, 22, 22A, 22B, 22C

Composition of the National Commission.
(1) The National Commission shall consist of:

President
(a) A President, a person who is or has been a Judge of the Supreme Court, to be appointed by the
Central Government after consultation with the Chief Justice of India;

Members
(b) Members, not less than four, and not more than, as may be prescribed, and one of whom shall
be a woman.

Qualifications:
Age
(i) Not less than thirty-five years of age;

Educational Qualifications
(ii) A bachelor's degree from a recognised university; and

Experience
(iii) Persons of ability, integrity and standing and have adequate knowledge and experience of at
least ten years in dealing with problems relating to law, economics, commerce, accountancy,
industry, public affairs or administration:

Note:
Not more than fifty per cent of the members should have a judicial background.

Disqualifications:
A person shall be disqualified for appointment if he—

Conviction
(a) has been convicted and sentenced to imprisonment for an offence which, in the opinion of the
Central Government, involves moral turpitude; or

Insolvency
(b) is an undischarged insolvent; or

Unsound Mind
(c) is of unsound mind and stands so declared by a competent court; or

Dismissal
(d) has been removed or dismissed from the service of the Government or a body corporate owned
or controlled by the Government; or

Financial Interests
(e) has engaged at any time, during his term of office, in any paid employment; or

Others
(f) has such other disqualifications as may be prescribed by the Central Government.

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Selection Committee
All appointments shall be made by the Central Government on the recommendation of a selection
committee consisting of:

(a) A Chairman - a person who is a Judge of the Supreme Court, to be nominated by the Chief Justice
of India

(b) Member - Secretary of the Legal Affairs Department of the Government of India

(c) Member - Secretary of the consumer affairs Department of the Government of India

Benches
(1A)

(i) The jurisdiction, powers and authority of the National Commission may be exercised by Benches.

(ii) A Bench may be constituted by the President with one or more members.

(iii) if the Members of a Bench differ in opinion on any point, the points shall be decided by
majority, but if the members are equally divided, it shall be decided by the President.

Salary
(2) The salary and terms and conditions of service of the members of the National Commission shall
be such as may be prescribed by the Central Government.

Term
(3) Every member of the National Commission shall hold office for a term of five years or up to the
age of seventy years, whichever is earlier.

The President and members are not eligible for re-appointment.

A member may resign his office in writing under his hand addressed to the Central Government.

2 Jurisdiction of the National Commission

2.1 Pecuniary Jurisdiction
Complaints where the value of the goods or services and compensation, if any, claimed exceeds one
crore, then it comes under the pecuniary jurisdiction of National Commission.

2.2 Territorial Jurisdiction

All over India except Jammu and Kashmir

2.3 Appellate Jurisdiction (Section 15)

If a person appeals against the order of the State Commission to the National Commission and he is
the party who has to pay the compensation, then the appellant will have to deposit 50 percent of
the amount or Rs. 35,000/-, whichever is less with the National Commission.

3. Expeditious hearing of appeal (Section 19 A)

A new section, 19A, has been inserted by the consumer protection (Amendment) Act, 2002. It
provides that endeavour shall be made to dispose of appeals filed before the State Commission or
the National Commission within ninety days from the date of admission. It provided for expeditious
hearing of appeal, quicker decision and restriction of adjournment.

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4. Power and procedure applicable to the National Commission. (Section 22)

(1) The disposal of disputes by the National Commission shall be similar to the disposal of complaints
by the District Forum with such modifications as may be considered necessary by the Commission.

(2) The National Commission shall have the power to review any order made by it, when there is an
error apparent on the face of record.

5. Power to set aside ex-parte order (Section 22A)

Where an order is passed by the National Commission ex parte against the opposite party or a
complainant, as the case may be, the aggrieved party may apply to the Commission to set aside the
said order in the interest of justice.

6. Transfer of cases (Section 22B)

On the application of the complainant or of its own motion, the National Commission may, at any
stage of the proceeding, in the interest of justice, transfer any complaint pending before the District
Forum of one State to a District Forum of another State or before one State Commission to another
State Commission.

7. Place of Functioning (Section 22C)

The National Commission shall ordinarily function at New Delhi and perform its functions at such
other place as the Central Government in consultation with the National Commission may notify in
the Official Gazette from time to time.

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5. State Commission, CPA 1986

Sections 16, 15, 17A, 17B, 19A

1. Composition of the State Commission (Section 16)

Each State Commission shall consist of:

A President
The President shall be a person who is or has been a Judge of a High Court, appointed by the State
Government. His appointment should be made in consultation with the Chief Justice of High Court.

Members
In the state commission, there should be not less than two, and not more than such number of
members, as may be prescribed, and one of whom shall be a woman.

Qualifications of members
Age
(i) Not less than thirty-five years of age;

Educational Qualifications
(ii) A bachelor's degree from a recognised university; and

Experience
(iii) Persons of ability, integrity and standing and have adequate knowledge and experience of at
least ten years in dealing with problems relating to law, economics, commerce, accountancy,
industry, public affairs or administration.

Note:
Not more than fifty per cent of the members should have a judicial background.

Disqualifications of Members Section 16(1)

A person shall be disqualified for appointment if he—

Conviction
(a) has been convicted and sentenced to imprisonment for an offence which, in the opinion of the
Central Government, involves moral turpitude; or

Insolvency
(b) is an undischarged insolvent; or

Unsound Mind
(c) is of unsound mind and stands so declared by a competent court; or

Dismissal
(d) has been removed or dismissed from the service of the Government or a body corporate owned
or controlled by the Government; or

Financial Interests
(e) has engaged at any time, during his term of office, in any paid employment; or

Others
(f) has such other disqualifications as may be prescribed by the Central Government.

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Selection committee for appointment of members (Sec.16 (1A))

All appointments shall be made by the State Government on the recommendation of a Selection
Committee consisting of the following members, namely:
(i) Chairman - President of the State Commission;
(ii) Member - Secretary of the Law Department of the State;
(iii) Member - Secretary of the Consumer Affairs Department of the State.

Circuit Benches:
This is a new provision inserted in the Act by the Consumer Protection (Amendment) Act, 2002.
Section 17 B, provides for establishment of Circuit Benches of State Commission.

Term of Office (Section 16 (3))

Every member of the State Commission shall hold office for a term of five years or up to the age of
sixty-seven years, whichever is earlier

The President and members are not eligible for re-appointment.

A member may resign his office in writing under his hand addressed to the State Government.

2 Jurisdiction of the State Commission

2.1 Pecuniary Jurisdiction
Complaints where the value of the goods or services and compensation, if any, claimed exceeds
rupees twenty lakhs but does not exceed rupees one crore, then it comes under the pecuniary
jurisdiction of State Commission.

2.2 Territorial Jurisdiction

A state Commission has Jurisdiction if:

(a) All parties, at the time of the institution of the complaint, actually and voluntarily resides or
carries on business or has a branch office or personally works for gain in its jurisdiction; or

(b) any one of the opposite parties, is within its jurisdiction and either the permission of the State
Commission is given, or the rest of the opposite parties agree to the jurisdiction or

(c) the cause of action, wholly or in part, arises in its jurisdiction.

2.3 Appellate Jurisdiction (Section 15)

If a person appeals against the order of the District Forum to the State Commission and he is the
party who has to pay the compensation, then the appellant will have to deposit 50 percent of the
amount or Rs. 25,000/-, whichever is less with the State Commission.

Section 15 of the Act gives the right to prefer an appeal to the state commission within a period of
thirty days from the date of order of the District Forum to any person who has been aggrieved by
the order. The time limit may be extended by the state commission on showing sufficient cause.

3. Expeditious hearing of appeal (Section 19 A)

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A new section, 19A, has been inserted by the consumer protection (Amendment) Act, 2002. It
provides that endeavour shall be made to dispose of appeals filed before the State Commission or
the National Commission within ninety days from the date of admission. It provides for expeditious
hearing of appeal, quicker decision and restriction of adjournment.

4. Transfer of cases (Section 17 A)

This section is also inserted by the Consumer Protection (Amendment) Act, 2002. This section
enables the State Commission to transfer a Case from one District Forum to another within the
state. On the application of a complaint or of its own motion, the State Commission may, at any
stage of the proceeding, transfer any complaint pending before the District Forum to another
District Forum within the State if the interest of justice so requires.

5. Place of Functioning
The State Commission shall ordinarily function in the State Capital but may perform its functions at
such other place as the State Government may, in consultation with the State Commission, notify in
the Official Gazette, from time to time.

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6. Discuss unfair trade practice under the Consumer Protection

Act, 1986.

What is unfair trade practice?

The Act defines unfair trade practice under section 2(r).

As per the definition, unfair trade practice means earning profits by deceiving customers.

The practice may be in the form of a statement, (oral or in writing) or by visible representation.

The various practices defined to constitute unfair trade practices are

1. False representation:
1. about composition, grade, quality, quantity, style or model;

2. about the need of, any goods or services;

3. about benefits and performance;

4. about guarantees and warranties;

5. about prices such as offering discounts;

6. of old goods as new goods;

7. about a sponsorship or approval or affiliation which such seller or supplier does not have;

8. of misusing reputed brand names;

9. about the goods, services or trade of another person.

2. Advertisement of a Bargain
Where an advertisement is published in a newspaper or otherwise, where goods or services are
offered at a bargain price, and in fact there is no intention to offer the same at that price for a
reasonable period of time or a reasonable quantity, it shall amount to an unfair trade practice.

The ‘bargain price’, for this purpose means-

The price which any person coming across the advertisement would believe to be better than the
price at which such goods are ordinarily sold.

3. Free Gift Offers and Prize Schemes

The unfair trade practices under this category are:

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1. Creating impression that something is being offered free along with the goods, when in fact the
price is wholly or partly covered by the price of the article sold, or

2. Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill,
with real intention to promote sales or business.

4. Hoarding, Destruction, etc.

Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or provide
any services, with an intention to raise the cost of those or other similar goods or services, shall be an
unfair trade practice.

5. Spurious Goods
Manufacture of spurious goods or offering such goods for sale or adopting deceptive practices in the
provision of services;

6. Non-Compliance of Prescribed Standards

Permits the sale or supply of goods that do not comply with the standards prescribed by a competent
authority;

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7. Discuss the Consumer Protection Councils in India

Introduction:
The Consumer Protection Act, 1986 sought to provide better protection to the interests of the
consumers and for that purpose made provisions for the establishment of Consumer Protection
Councils and other authorities for resolving consumers’ disputes. The Consumer Protection Councils
would be set up at national and state levels (Section 6 of Consumer Protection Act)

Reference: Sections 4-7

The objects of the Central Consumers Protection Council and State Consumers Protection Councils
are to promote and protect the rights of the consumers, such as:
(a) The right to be assured wherever possible, access to a variety of goods and services
at competitive prices.

(b) The right to be protected against marketing of goods and services which are hazardous to life and
property.

(c) The right to be informed about the quality, quantity, potency, purity, standard and price of goods
or services as the case may be so as to protect the consumer against unfair trade practices.

(d) The right to be heard and to be assured that consumers’ interest will receive due consideration
at appropriate forum.

(e) The right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers, and

(f) The right to consumer education.

The objects of a State Consumer Protection Council are to promote and protect within the state
the rights of the consumers.
Consumers’ interests mainly concern with

(i) Regular and uninterrupted supply of products.

(ii) Good quality of goods and services.

(iii) Reasonable prices of the products, and

Composition and Functions of the Councils:

Central Council (Sec. 4):
The Central Council will be composed of following members:

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1. The Minister in charge of Consumer Affairs of the union government will be the chairperson of the
Council.

2. Members official and non-official representing such interests as may be prescribed.

The Central Council meets as and when necessary. At least one meeting shall be held every year. The
time and place of the meeting will be fixed by the Chairman.

The procedure in regard to the transactions of the business shall also be determined by the
Chairman. (Sec 5).

State Council (Sec. 7):

A State Council shall be composed of the following members, namely,
1. The Minister in charge of Consumer Affairs of the state government will act as Chairman.

2. Members official and non-official representing such interests as may be prescribed by the state
government.

The State Council shall meet as and when necessary. At least two meetings shall be held every year.
The time and place of the meeting shall be fixed by the Chairman.

The Council shall observe such procedure regard to the transactions of its business as may be
prescribed by the state government.

District Consumer Protection Council

In order to promote and protect the rights of consumers, within the district, the Consumer Protection
Act, provides for the establishment of a District Consumer Protection Council in every district.

1. The Collector of the district will act as the Chairman.

2. Members official and non-official representing such interests as may be prescribed by the state
government.

It shall meet as and when necessary but not less than two meetings shall be held every year. The
Chairman shall decide the time and place of the meeting.

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8. What are the Constitutional provisions regulating the trade?

Articles 301 to 307 of Constitution of India deals with the constitutional provisions regarding Trade
and Commerce.

Free movement of goods throughout the territory of India is essential for the Economic Unity of the
country which alone could sustain the progress of the country.

The main object of Article 301 is to encourage the free-flow (intercourse)of trade and commerce
throughout the territory of India. The term ‘intercourse’ includes all forms of transportation such as
by land, air or water. The word ‘trade’ means ‘buying’ or ‘selling’ of goods.

Thus, the words intercourse, trade and commerce covers all kinds of activities which are likely to
come under the nature of commerce.

Article 302 of Indian Constitution explains the power of parliament to impose restrictions on trade,
commerce and intercourse. The Parliament may by law impose it. Such restrictions on the freedom
of trade, commerce or intercourse between one state and another or within any part of the territory
of India may be required in the public interest.

Article 303 deals with the restrictions on the legislative powers to impose restrictions in trade and
commerce. It provides against discrimination among States.

But under Clause (2) of this article the parliament may however, discriminate among states. This
may be required in a situation arising from scarcity of goods in any part of the Territory of India. The
question whether there is a scarcity of goods in any part of India is for the parliament to decide.

Article 304 explains State’s power to regulate trade and commerce.

(a) It can impose on goods imported from other states (or the Union Territories) any tax to which
similar goods manufactured or produced in that state are subject. and
(b) impose such reasonable restrictions on the freedom of trade, commerce or Intercourse with or
within that state as may be required in the public interest.

Article 305 saves existing laws and laws providing for state monopolies which the president may
direct.

Article 307 empowers parliament to appoint such authority as it considers appropriate for carrying
out purposes of Articles 301, 302, 303 and 304. It can confer on such authorities such powers and
duties as it thinks necessary.

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Commercial and Industrial Laws

Different commercial and industrial laws have been enacted to play very important role in regulation
of economic activities and creating conductive environment for successful operations of business
and industries:
The Carriers Act, 1865
Indian Contract Act, 1872
Negotiable Instrument Act, 1881
The Sale of Goods Act, 1920
Indian Companies Act,1956

The Carriers Act, 1865

According to the act, carriers denotes persons, other than in government, engaged in the business of
transporting documents or goods. They are made responsible for transporting goods if the public is
ready to pay for freight, etc.

Indian Contract Act, 1872

It is the governing legislation for contracts, which lays down the general principles relating to
formation, performance and enforceability of contracts and the rules relating to certain special types
of contracts like Indemnity and Guarantee; Bailment and Pledge, and Agency.

Negotiable Instrument Act,1881

A Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to
order or to bearer.

The Sale of Goods Act,1930

Law relating to the sales of goods is a branch of contract law which is applicable to contracts for the
sale of goods such as offer and its acceptance, capacity of parties, free consent, consideration and
legality of the object. It applies only to movables other than actionable claims and money.

Indian Companies Act, 1956

It empowers the Central Government to regulate the formation, financing, functioning and winding
up of companies. The Act contains the mechanism regarding organizational, financial, managerial
and all the relevant aspects of a company. It provides for the powers and responsibilities of the
directors and managers, raising of capital, holding of company meetings, maintenance and audit of
company accounts, powers of inspection, etc.

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9. Objects of Antitrust Laws in India

Competition Policy
The principal objective of competition policy is to foster competition as an instrument for
accelerating growth of the economy.

The policy is meant to fuel innovation that offers better products and lower prices thus benefitting
consumers and maximizing welfare.

Competition laws
Competition laws are introduced to regulate the manner in which businesses are conducted in India.
They restrain practices that have an adverse effect on competition.

They create a level playing field with effective competition in the market.
They enable businesses to compete on merit.

In addition, the laws protect consumer interests, and ensure freedom of trade in the market.

Objects of Antitrust Law

(1) Prohibiting anti-competition agreements and practices that harm free trade and competition;

(2) Preventing abuse of dominant position and anti-competitive practices that lead to such a
dominant position;

(3) Regulating mergers and acquisitions.

1. Anti-Competitive Agreements
Examples of anti-competitive agreements are:

(a) Price fixing

Directly or indirectly (for example through distributors), the price level at which their products will
be sold to third parties.

(b) Market sharing

Allocation of territories and customers to each other.

(c) Group Boycott

Boycott of a particular customer(s) or supplier(s).

(d) Limitation
Agreements that limit or control development, production, supply, markets, or services are
considered to be anticompetitive.

(e) Joint commercialisation

Agreements between competitors to jointly purchase, sell, distribute or promote their products may
raise antitrust law concerns

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(f) Exchange of information

It is illegal for competing companies to exchange information which may influence the independent
determination of their individual commercial policies, or information relating to their individual
customers and/or suppliers.

(g) Site visits at competitor’s business

Site visits by or to competitors run the risk of violating antitrust laws. They should be kept to a
minimum and limited to health, safety, environmental and similar operational initiatives and should
not result in disclosing or obtaining commercially sensitive information.

2 Abuse of Dominance:
Dominance is presumed by most antitrust authorities where a market share of 50% or more exists
on a given relevant market.
It is important to keep in mind that, being dominant is not at all problematic under antitrust law;
only the abuse of a dominant position on a given relevant market is prohibited

Examples of Abuse of Dominance behaviour

A dominant company’s pricing should not be excessive, predatory or discriminatory.

(a) Excessive pricing

A dominant firm can abuse its position by charging excessive/unfair prices.

This can be determined by a twofold test:

(i) the margin is excessive and
(ii) the price imposed is unfair when compared to competing products.

(b) Predatory Pricing

Predatory pricing refers to a practice of a dominant firm of driving rivals out of business by selling at
a price below the cost of production.

When the latter have been successfully expelled, the company can raise the prices again and reap
the rewards.

(c) Discrimination in prices or other trading conditions

It is illegal to enforce different prices or trading conditions upon different customers in similar
situations.

Differentiation may be permissible if it is justified on objective grounds.

For example, a higher price may be warranted where a distributor performs additional services not
provided by other distributors, or

A lower price may be warranted where larger volumes are purchased.

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3. Anti-Competitive Combinations
Combinations of enterprises (i.e. where 2 or more entities “combine” together to form a single
entity, thereby reducing the number of players in the market) may result in lessening of competition
within a relevant market.

Remedies
Any contractual provision which infringes antitrust laws is generally void and cannot be enforced in
the courts.

Competition Commission of India can impose fines of up to 10% of the consolidated total turnover of
the Group.

Companies may be sued for damages.

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10. Explain the statements, objects and reasons of MRTP Act.

Current Status of MRTP Act

This act is not in force in India currently as it was repealed and was replaced by Competition Act 2002
with effect from September 1, 2009.

Aims & Objectives of MRTP Act

MRTP Act was enacted in 1969. It extended to all of India except Jammu & Kashmir.

The aims and objectives of this act were:

1. To prevent the concentration of economic power in hands of a few rich people.
2. To provide for the control of monopolies, and
3. To prohibit restrictive trade practices.

Concentration of Economic Power:

It calls for compulsory registration of:
all enterprises which are of a certain size and
those which have more than a certain share of the market.

Companies having assets more than Rs. 100 crores, and units enjoying one-fourth or more of the
market share of a product or service, and having assets of Rs. 1 crore or more, have to register
themselves with the Central Government.

The idea behind registration is that this makes it impossible for registered concerns to make any
further expansion without permission from the Central Government.

Non-applicability of MRTP Act

The MRTP act is not applicable to a:
1. Government Company.
2. Company established by a Central or State Act.
3. Companies owned by registered Cooperative Societies.
4. Any financial institution.
5. Trade Unions

Authorities under the Act:

The main administrative body under the Act is the MRTP Commission.
The MRTP Act lays down provisions detailing the terms of office, conditions of service of members,
and the appointment of directors.
The Commission is a quasi-judicial body, and investigates complaints into monopolistic and restrictive
trade practices.

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11. Restrictive Trade Practice

A restrictive trade practice is a trade practice, which

1. manipulates prices or conditions for delivery or

2. Obstructs the flow of resources into production; or
3. imposes restrictions on consumers; or
4. Prevents, distorts or restricts competition;

Inquiry into Restrictive Practices

The Commission may inquire into any restrictive trade practice
1. Upon receiving a complaint from any consumer, a consumer or trade association.
2. Upon a reference made to it by the Central or State Government or
3. Upon its own knowledge or information

Relief Available
If the practice is prejudicial to the public interest, or to the interest of any consumer the commission
may direct that–

1. The practice shall be discontinued and shall not be repeated;

2. The Commission may permit the party to take steps so that it is no longer prejudicial to the
public interest.
3. The portion of agreement in respect of such restrictive trade practice shall be void and
should be modified.

Unfair Trade Practice

An unfair trade practice is one which, for the purpose of promoting any sale, uses an unfair or
deceptive practice.

Unfair practices may be categorised as under:

1. False Representation
2. Advertisements of Bargains
3. Free Gifts Offer and Prize Schemes
4. Hoarding, destruction, etc.
5. Spurious Goods
6. Non-Compliance of Prescribed Standards

Inquiry into Unfair Trade Practices

The Commission may inquire into any unfair trade practice:
1. Upon receiving a complaint from any consumer, a consumer or trade association.
2. Upon a reference made to it by the Central or State Government or
3. Upon its own knowledge or information or
4. Upon an application to it by the Director General

Relief Available
If the practice is prejudicial to the public interest, or to the interest of any consumer the commission
may direct that–

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i. The practice shall be discontinued and shall not be repeated;

ii. The Commission may permit the party to take steps so that it is no longer prejudicial to the
public interest.
iii. The portion of agreement in respect of such restrictive trade practice shall be void and
should be modified.
iv. All information relating to such unfair trade practice shall be disclosed, and published.

Monopolistic Trade Practices

Unregulated monopolies tend to damage the economy by
(1) Providing fewer alternatives to customers
(2) reducing output and charging higher prices,
(3) providing inferior goods and services and
(4) suppressing innovation, as compared with a competitive situation (i.e., the existence of
numerous, competing suppliers of the good or service).

Inquiry into Monopolistic Trade Practices

The Commission may inquire into Any monopolistic trade practice,

1. Upon a reference made to it by the Central Government or

2. Upon its own knowledge or information
3. Upon an application made to it by the Director General or

Relief Available
1. The Central Government may-

a) Prohibit the owner(s) of the concerned undertaking(s) from continuing to indulge in a monopolistic
trade practice; or

2. The Central Government may also make an order:

a) Regulating the production, storage, supply, distribution, or control of any goods or services by an
undertaking and fixing the terms of their sale (including prices) or supply;

b) Fixing standards for the goods used or produced by an undertaking;

c) Prohibit any act or practice or commercial policy which prevents or lessens competition in the
production, storage, supply or distribution of any goods or services;

Remedies under The Act

The remedies available under this act are-

Temporary Injunction
Where, during any inquiry, the commission is satisfied that any undertaking or any person is carrying on,
any monopolistic, restrictive or unfair trade practice, which is a pre-judicial to the public interest or
consumer, the commission may grant a temporary injunction restraining such undertaking or person
form carrying on such practice until the conclusion of inquiry or until further orders.

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Compensation
Where any monopolistic, restrictive or unfair trade practice has caused damage to any Government, or
trader or consumer, an application may be made to the Commission asking for compensation, and the
Commission may award appropriate compensation.

Where any such loss or damage is caused to a number of persons having the same interest,
compensation can be claimed with the permission of the commission, by any of them on behalf of all of
them.

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12. Differences between MRTP Act and Competition Act.

Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 was revoked and replaced
by Competition Act, 2002. MRTP Act was enacted to deal with monopolistic, restrictive and unfair trade
practices, but due to certain limitations, Competition Act was introduced, which changed the focus from
curbing monopolies to promoting competition.

Both the acts apply to whole India, except the state of Jammu and Kashmir. While the old act belongs to
pre-liberalisation period, the new Act, came into force after liberalization. The arrangement and language
of the new act are much simpler than the old one.

In other words, Competition Act is an improvement over the MRTP Act. So, there are vast differences
between the two regarding scope, focus, purpose, etc.

Key Differences Between MRTP Act and Competition Act

The fundamental points of difference between MRTP Act and Competition Act are given as follows:

General

Motto
1. The basic motto of MRTP Act is to control monopolies. As against this, the Competition Act intends
to initiate and sustain competition.

Reform Period
2. MRTP Act is Based on the pre-reforms scenario (pre-1991) while the Competition Act is based on
Post-reforms scenario (post-1991).

Simplicity
3. MRTP Act is Complex in arrangement and language whereas the Competitive Act is Simple in
arrangement and language.

Rigidity
4. MRTP is Reactive and rigid whereas the Competitive Act is Proactive and flexible

Interests of Consumers
5. MRTP Act focuses on the interest of consumers. Conversely, Competition Act focuses on the interest
of the public at large.

Registration
6. Monopolies and Restrictive Trade Practices (MRTP) Act, requires that the agreement to be
registered. In contrast, the Competition Act is silent on the registration of agreement.

Autonomy of Commissions
7. Very little administrative and financial autonomy is available for the MRTP Commission whereas
Relatively more autonomy is available for the Competition Commission

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Offences
Explicity
8. In MRTP Act offences are implicit or not defined (cartels, bid-rigging etc.), whereas in the
Competitive Act offences are explicit and defined

Natural Justice
9. In MRTP Act, there are 14 offenses (per se offences), which are against the rule of natural justice. On
the contrary, there are only four offenses (per se offences) listed out by the competition act which
violates the principle of natural justice (rest by rule of reason).

Dominance
10. The MRTP Act Frowns upon dominance whereas the Competitive Act Frowns upon abuse of
dominance

11. In Monopolies and Restrictive Trade Practices (MRTP) Act, the dominance of a firm is determined by
its size. On the other hand, the dominance of a firm in the market is determined by its structure in
the case of Competition Act.

Unfair Trade Practices

12. In MRTP, Unfair trade practices are covered whereas in the Competitive Act, Unfair trade practices
are omitted (consumer fora will deal with them)

Regulation of combinations
13. In MRTP Act there is No regulation of combinations whereas in the Competitive Act Combinations
are regulated beyond a high threshold limit.

Penalties
14. MRTP Act is reformatory in nature, whereas Competition Act is punitive.

15. MRTP Commission has the power to pass only "Cease" and "Desist" orders. The Competition Act can
pass an order to prevent and punish such of those activities, which abuses competition.

Administration
16. In MRTP Act, the appointment of chairperson was done by Central Government. On the contrary, in
Competition Act the appointment of chairperson was done by Committee that comprises of retired
judiciary, persons having professional expertise in various fields of trade commerce, industry,
finance etc

Conclusion
In short, the two acts are different in a number of contexts.
MRTP Act has a number of loopholes and the Competition Act, covers all the areas which the MRTP
Act lags.
The MRTP Commission plays only advisory role. On the other side, Commission has a number of
powers which promotes suo moto and levies punishment to those firms which affects the market in
a negative way.

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13. Discuss the constitutional Provisions regarding protection

of Customers

Introduction
When India attained independence, it adopted the Anglo-Saxon system of administration of justice
and most of the legislative enactments continued to operate.

However, a new dimension was provided by the adoption of Constitution in the year 1950.

The Constitution contained various Fundamental rights and guidelines-in the form of ―DirecQve
Principles of State Policy, to be followed and nurtured by the state in its future legislative activities.
The post-independent era has witnessed a large number of enactments meant for the benefit of
consumers.

Fundamental Rights
Right to Equality
Article. 14 of the constitution guarantees equality before law and equal protection of laws.
Therefore, manufacturers, producers, traders, sellers and consumers enjoy equal treatment before
law either for receiving reward or punishment.

Right to Freedom
Art. 19 (1) (g) guarantees a right to all the citizens to carry on any occupation, trade or business.
However, under Art. 19 (2) such a right cannot be enforced where the business is dangerous or
immoral. Such a business may be absolutely prohibited or may be required to be licensed.

Moreover, restrictions can be imposed on business in terms of place and time also. There is no right
to carry on a business at every place or at any time.

There can be reasonable restrictions on 'business on the streets' and any `harmful trade'.
Reasonable restrictions can be imposed for public convenience also.

Protection of life and personal liberty.

Art. 21 of the Constitution, guarantees to every person, life with dignity free from all kinds of
exploitation.

DPSP
Welfare
Further, the consumer is entitled to constitutional Protection under Art. 38, which strives to
promote the welfare of the people by securing justice, social, economic, and political.

Distribution
Under clause (b) and (c) of Article 39, the state is duty bound to direct its policy towards securing the
distribution of the ownership and control of the material resources of the community in such away
as ―to serve the common good.

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Living wage, etc., for workers

Article 43 directs that state shall endeavour to build an economic organization or to make suitable
legislation to ensure a decent standard of life to all the workers who constitute the bulk of the
consumers.

Education and Economic Interests and Exploitation

Article 46 of the Constitution of India mandates that state shall promote with special care the
educational and economic interest of the weaker sections of the people and shall protect them from
social injustice and all forms of exploitation.

The expression ―ProtecQon from all forms of exploitation would when applied in the context of
consumers means that the consumers should be saved from all kinds of harassment and fraud at the
market place.

Public Health
Regarding public health, Art 47 requires the state to take steps to raise the level of nutrition and the
standard of living to improve public health and to prohibit consumption of intoxicating drinks or
drugs which are injurious to health.

Concurrent List
The Constitution has distributed the subjects, relating to products and service regulation, between
the centre and the states for their better quality and efficiency. Most of the subjects concerning
consumer protection have been placed in the Concurrent List of Schedule VII of the Constitution. All
the above provisions of the constitution clearly demonstrate the availability of abundant legislative
and administrative power under the Constitution.

Writ Petitions
A progressive interpretation has been accorded by the judiciary in protecting the basic, essential,
legitimate interest of the consumers. In a fit case, an aggrieved consumer can file a writ petition
before the High Court or Supreme Court under Art 226 or 32 of the Constitution to vindicate his
constitutional right to protection.

To avail the remedy under the Constitution, the consumer has to prove that there is violation of his
fundamental right and the violation is done by the state.

Regulation of Essential commodities

The chronic shortage of certain necessities of life and their non-availability at reasonable rates to
everyone,

the growing tendency in the conduct of unscrupulous traders and distributors to hoard essential
commodities with a view to profiteering,

the absence of competitive market and many other factors like,

the illiteracy, ignorance and the poor purchasing capacity of the vast majority of population
particularly rural folk,

necessitated to empower the Government to regulate production, price, supply and distribution of
essential commodities.

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Legislations
In order to transform the constitutional mandates into reality and fulfil the aspirations of the people
of India, several legislations have been enacted during the post independent era dealing with and
protecting the rights of consumers and other inter-related persons.

In 1955 the essential commodities Act, 1955 was enacted. The objective of the legislation was, and
continuous to be, to regulate the production, supply and distribution of those commodities which
are essential for the people and to ensure that the unscrupulous elements of the trade do not corner
the stocks or unduly inflate the prices which would disable the common people from procuring
them.

The Monopolistic Restrictive and Unfair Trade Practices Act, 1969 (MRTP Act) was the only legislative
device meant for providing relief in respect of monopolistic and restrictive trade practices prejudicial
to public interest or prejudicial to consumers.

The year 1986 may be said to be the golden year for consumers as not only the consumer protection
act, 1986 was enacted in that year, a new legislation namely The Bureau of Indian Standards Act,
1986 was also enacted.

The Consumer Protection Act, 1986 provides an extremely good opportunity to the consumers for
the quick redressal of their grievances and it is rightly considered to be a milestone in the history of
socio-economic legislation in India.

For this purpose, a three tier quasi-judicial machinery was set up at the National, State and District
level to deal with the consumer disputes in the fields of defective goods, deficient services, unfair
trade practices, restrictive trade practices, over changing and hazardous goods, etc.

The Consumer Protection Act, 1986 deals only with the problems of an individual consumer.

It does not deal with the issue and problems related to ―maintaining or increasing supplies of any
essential commodity or for securing their equitable distribution, and availability at fair prices or
dealing with persons indulging in hoarding and black-marketing of, and profiteering in, essential
commodities and with the evil of vicious inflationary prices for which the Essential Commodities
(Special Provisions) Act 1981, and ―PrevenQon of Black-Marketing and Maintenance of Supply of
Essential Commodities Act, 1980 were enacted and are in operation.

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14. Competition means a struggle or contention for

superiority in the commercial world. Elucidate

Introduction
When man invented the wheel, an opportunity for business emerged. This was the first ever
innovative opportunity for man and he used his invention to earn profits in whichever way he could,
at that time.

In the beginning, there was a monopoly in the selling of his invention but with the passage of time,
more people began selling the same product. There were few people who began manufacturing the
invention and few who just sold the end product.

With the introduction of more sellers/manufacturers into the market, the ultimate benefit was to
the people who were buying the product, i.e., the consumers. Thus, a new concept emerged which
came to be known as competition.

Definition
Competition means a struggle or contention for superiority. In the commercial world, it means a
striving for customer business at the market place.

Effects of Competition
Profit Margin
There are desirable effects that follow from perfect competition. The price at which goods or
services is sold never rises above the marginal cost of production. In this case costs for this purpose
include a sufficient profit margin to encourage the producer to invest his capital in the industry in
the first place but no more than that.

Innovation
In the competitive market, it is said that producers will constantly innovate and develop new
products as part of the continuing battle of striving for consumer business. Thus, competition may
have the desirable dynamic effect of stimulating important new technological research. These
beneficial effects would flow from a state of perfect competition if such a state could ever exist.

Competition
What perfect competition means is that on any particular market, there is a very large number of
buyers and sellers all producing identical or similar products and that consumers have perfect
information about market conditions. Also, that resources can freely flow from one area of
economic activity to another and that there are no barriers to entry which might prevent the
emergence of new competition nor barriers to exit which might hinder firms wishing to leave the
industry.
The consumer is said to be sovereign

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Equilibrium
In the long run the tendency of this will be to force producers to incur the lowest cost possible in
order to be able to earn any profit. Eventually the point will be reached where price and the average
cost of producing goods necessarily coincide and this will mean that price will never rise above cost.
If on the other hand price were to fall below cost, there would be an exit of capital from that
industry and as the output would therefore decrease price would be restored to a competitive level.

Competition Theory
Competition occurs when there is a fight among firms for customers by offering them a better of
price, quality, range, reliability and associated services. According to Michael Porter there are 5
basic forces on which the competition depends:

Forces Governing Competition in Industry

1. Competitive Rivalry. This looks at the number and strength of the competitors. Where rivalry is
intense, companies can attract customers with aggressive price cuts and high-impact marketing.
In markets with lots of rivals, the suppliers may decide to move to another Market.

On the other hand, where competitive rivalry is minimal, healthy profits are expected.

2. Supplier Power.
The more the suppliers to choose from, the easier it will be to switch to a cheaper alternative.
But the fewer suppliers there are, the stronger their position and their ability to charge you
more.

3. Buyer Power.
When there are only a few savvy customers, they have more power, but decreases if there are
many customers.

4. Threat of Substitution. This refers to the likelihood of customers finding a different way of doing
a thing. For example, An electrical bicycle instead of a moped. A substitution that is easy and
cheap to make is a threat.

5. Threat of New Entry. If the market is easy to enter, there is a threat from new entries.

Competition Policy
Man has never been satisfied with the existing societal norms and is greedy to earn a little more.
This ‘little more’ is achieved by suppressing the buyers by either rigging bids, increasing prices and
other anti-competitive activities.

This is where the law and policy come into existence in order to curb the human greed. But this
policy has to cover various aspects and finally promoting competition in the end. This is the end aim
of any competition law and policy.

1. Definition of Competition Policy

A possible definition is “the set of policies and laws which ensure that competition in the
marketplace is not restricted in a way that is detrimental to society”.

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2. Objectives of Competition Policy

-establishing a competitive order as an end in itself to safeguard economic freedom,

-maintaining a competitive order to foster economic efficiency and technological and economic
progress,

-providing for a level playing field of fair competition, which implies prohibition of deceptive and
fraudulent practices, threat, extortion and blackmail as well as unfair advantages through
government subsidies,

-maintaining a decentralized structure of supply because small and medium-sized enterprises are
considered as the backbone of a democratic society.

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UNIT 2

1. Discuss the provisions of Sherman Act relating to Monopolistic

practices.

Introduction
The Sherman Antitrust Act is a landmark federal statute in the history of United States.
It allowed competitive business activities and investigated trusts.
It allows "Innocent monopoly", or monopoly achieved solely by merit.
It allows competitors to make honest profits from consumers.
It protects consumers from abuses.
It does not allow the artificial raising of prices by restriction of trade or supply.

Trusts
In the general sense, a trust is a form of a contract whereby one party entrusts its property to a
second party. These are commonly used to hold inheritances for the benefit of children.

The sense used in law refers to a type of trust which combines several large businesses for
monopolistic purposes – to exert complete control over a market.

The most infamous of the trusts was the Standard Oil Trust, which was formed in January 1882. At
that time, Standard Oil and its affiliates controlled more than 90 percent of the oil industry.

Trusts were also established in numerous other industries, some of the largest of which were sugar,
tobacco, railroads, steel and meatpacking.

Elimination of Competitors
Trusts used a number of techniques to eliminate competitors, including
(1) buying them out,
(2) temporarily undercutting their prices,
(3) forcing customers to sign long-term contracts
(4) forcing customers to buy unwanted products in order to receive the products they wanted and
(5) dispatching thugs to use intimidation and violence when all other means of persuasion failed.

Monopolies
A monopoly is a situation in which there is a single supplier or seller of goods or services for which
there are no close substitutes.

Unregulated monopolies tend to damage the economy by

(1) Providing fewer alternatives to customers
(2) reducing output and charging higher prices,
(3) providing inferior goods and services and
(4) suppressing innovation, as compared with a competitive situation (i.e., the existence of
numerous, competing suppliers of the good or service).

The Sherman Act

Sherman was an expert on the regulation of commerce and was the chief author of the Sherman
Antitrust Act.

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The Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit
abusive monopolies.

The Sherman Antitrust Act authorized the Federal Government to dissolve the trusts.

It began with the statement: "Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is
declared to be illegal."

And it established penalties for persons convicted of establishing such combinations: ". . . shall be
punished by fine up to $10,000,000 if a corporation, or, if any other person, $350,000, or by
imprisonment up to three years, or by both said punishments, in the discretion of the court."

Structure and Scope

Section 1 of the Sherman Act prohibits any “contract, combination . . ., or conspiracy, in restraint of
trade.”

This prohibition applies only to agreements between firms and is primarily aimed at preventing
injury to competition from collusion—arrangements designed to eliminate competition among
competitors to their mutual benefit.

Section 2 sets forth three offenses, commonly termed “monopolization,” “attempted

monopolization,” and “conspiracy to monopolize.”

The test for monopolization, articulated in United States v. Grinnell Corp., consists of two elements:

(1) the possession of monopoly power in the relevant market and

(2) the wilful acquisition or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business acumen, or historic accident.

Courts and agencies have identified important indicators of monopoly power, including the
defendant’s market share and barriers to entry.

The second requirement is “an element of anticompetitive conduct” that contributes to the
acquisition or maintenance of monopoly power.

Section 2 also proscribes “attempts to monopolize.”

Attempted monopolization requires proof

(1) that the defendant has engaged in predatory or anticompetitive conduct with
(2) a specific intent to monopolize and
(3) a dangerous probability of achieving monopoly power.

Goals of Remedies
Three central goals are

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1. terminating defendant's wrongful conduct,

2. preventing its recurrence, and
3. re-establishing the opportunity for competition in the affected market.

A remedy is neither a chance to fix all perceived competitive problems in an industry nor an
opportunity to punish the defendants.

Types of Remedies
Prohibitory
Prohibitory remedies are generally the least costly to implement and supervise and also the least
disruptive.

Monetary
The availability of monetary remedies encourages private enforcement efforts and thus supplements
injunctive relief by providing deterrence.

Divestment
When warranted by the circumstances, divestiture (A divestiture or divestment is the reduction of
an asset or business through sale, liquidation, exchange, closure, or any other means for financial or
ethical reasons. It is the opposite of investment.) or other structural relief may be sought.

In each case, the chosen remedy preserves and protects competition and does more good than
harm.

Methods of Enforcement
Overview
Enforcement is by three types of plaintiffs:
The Federal Trade Commission and the Antitrust Division,
State enforcers, and
Private parties.

At the federal level, the United States Attorney General, can bring claims under the Sherman Act.

The FTC may issue a cease and desist order and seek enforcement of that order, including civil
penalties and injunctive relief.

Civil remedies include injunctive relief and treble damages for harm suffered by the United States.

At the state level, state attorneys general may seek injunctive relief against loss or damage.

Private parties may sue in federal court for treble damages, injunctive relief, and reasonable
attorneys’ fees.

While consumers and competitors of the alleged antitrust violator are the most common private
plaintiffs, any class of persons— including distributors, wholesalers, retailers, sellers, suppliers, and
end users may bring suit, subject to certain limitations.

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Case Laws
In a seminal 1904 decision, the Supreme Court upheld the Federal Government's suit under the
Sherman Antitrust Act to dissolve the Northern Securities Company (a railroad holding company) in
State of Minnesota v. Northern Securities Company.

Then, in 1911, after years of litigation, the Court found Standard Oil Company of New Jersey in
violation of the Sherman Antitrust Act because of its excessive restrictions on trade, particularly its
practices of eliminating competitors by buying them out directly and by driving them out of business
by temporarily slashing prices in a given region.

The most successful application of the Sherman Antitrust Act during the second half of the 20th
century was the breakup of the American Telephone and Telegraph (AT&T) monopoly. This
enforcement had profound effects not only on the telecommunications industry but also on the
economy as a whole.

The Act was also used in the attempt to attempt to rein in the allegedly abusive monopolistic
practices by Microsoft Corporation, with a trial that began in 1998. However, many observers feel
that the government failed to take sufficiently strong corrective measures despite winning both the
original trial and an appeal. This is widely attributed to politics rather than the merits of the case.

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2. Explain the provisions of the Clayton Act relating to exclusive

dealing and Tying contracts.
Introduction
The Clayton Act:
(1) is against price discrimination;
(2) is against tying and exclusive dealing practices;
(3) is against anticompetitive mergers.
(4) Allows private parties to sue and obtain triple damages; and
(5) permits union organizing;

Tying and Exclusive Dealing

Tying
Tying is when one party sells a product on the condition that the buyer also purchases a different (or
tied) product.

Requirements
Success on a tying claim typically requires proof of four elements:
(1) two separate products or services are involved;
(2) the purchase of the tying product requiring purchase of the tied product;
(3) the seller has sufficient market power for the tying product;
(4) a substantial amount of the tied product market is affected.

Types
Horizontal tying is the practice of requiring consumers to pay for an unrelated product or service
together with the desired one.
A hypothetical example would be for Bic to sell its pens only with Bic lighters.
Vertical tying is the practice of requiring customers to purchase related products or services from
the same company.
For example, a company might mandate that its automobiles could only be serviced by its own
dealers.
Cases
The tying of Apple products is an example of commercial tying. When Apple initially released
the iPhone in 2007, it was sold exclusively with AT&T contracts in the United States.
To enforce this exclusivity, Apple employed a type of software lock that ensured the phone would
not work on any network besides AT&T's. Any user who tried to unlock or otherwise tamper with the
locking software ran the risk of rendering their iPhone permanently inoperable.

The FTC challenged a drug maker that required patients to purchase its blood-monitoring services
along with its medicine to treat schizophrenia.
The drug maker was the only producer of the medicine, but there were many companies capable of
providing blood-monitoring services to patients using the drug.
The FTC claimed that tying the drug and the monitoring services together raised the price of that
medical treatment and prevented independent providers from monitoring patients taking the drug.
The drug maker settled the charges by agreeing not to prevent other companies from providing
blood-monitoring services.

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Exclusive Dealing Arrangements

An exclusive dealing occurs, for example, when a manufacturer allows only one distributor to sell its
products in a market area.

Exclusive dealing also occurs when a party agrees to purchase all his requirements only from only
one particular manufacturer or distributor.

Rule of Reason
These arrangements are tested under a rule of reason.
These include:
legitimate business justifications.
the duration of the contracts;
the presence of actual or likely anticompetitive effects;
whether exclusivity has the potential to raise costs;
the degree of foreclosure from the market;
the defendant’s market power; and
barriers to entry;

Justification
A free-riding problem can be reduced by an exclusive dealing.
For example, suppose that two manufacturers A and B, want to sell similar products through a
distributor in a market area.
Further suppose that manufacturer A invests a considerable sum of money training the staff of the
area distributor.
Consumers gain from an informed distributor as they become aware of quality of a product.

It follows that manufacturer A may have to charge a higher price for his product to cover the training
and advertising costs and the establishment and updating the customer list.

Disadvantages
Restrictions can potentially harm consumers. In terms of exclusive dealings, consumers may be
harmed if rival manufacturers are foreclosed from offering their products through the distributor in
a market area.
Competition is limited and product prices raised.

The Clayton Act - Section 3

It deals with Tying and Exclusive dealing arrangements.

The tying provision of the Clayton Act was passed in response to the Supreme Court's decision
in Henry v. A.B. Dick & Co. (1912). The Court had found no violation when A. B. Dick required users of
its mimeograph machines (an early form of copy machine) to purchase all their paper and ink from
that company as well.

Congress believed that firms like A.B. Dick used such "tying arrangements" to expand one monopoly
into two. In this case, the company already had a monopoly on its patented mimeograph machine.
By requiring everyone who used the machine to use its paper and ink, the company could also
monopolize the market for paper and ink used in those machines.

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Today most economists and others interested in antitrust law believe this practice is rarely
competitively harmful. In fact, A.B. Dick may have had good reasons to tie paper and ink. For
example, its machine might work better when its own paper and ink are used, making consumers
happier.

In its 1984 decision in Jefferson Parish Hospital v. Hyde, the Supreme Court made unlawful tying
more difficult to prove. That case approved an arrangement under which the hospital required all
surgical patients to use its own approved anesthesiology firm. Competition was not harmed, the
Supreme Court concluded, because the hospital admitted only 30 percent of the patients in the area,
meaning there was ample room for other anesthesiologists to practice their profession.

The other practice that section 3 of the Clayton Act occasionally condemns is exclusive dealing,
which occurs when a firm insists that retailers handle its brand exclusively.

In Standard Oil of California v. United States (1949), the Supreme Court found it unlawful for
Standard to require its gasoline stations to sell Standard's gasoline exclusively.

In more recent years we are inclined to think decisions like this are harmful, because they limit a
manufacturer's power to control the quality of its products.

For example, in Krehl v. Baskin-Robbins Ice Cream Co. (1982), the court held that Baskin-Robbins
could require its stores to sell only Baskin-Robbins ice cream. Otherwise, customers might be
deceived into buying cheaper brands when they thought they were getting the real thing. Today
most, but not all, exclusive dealing is legal.

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3. Salient Features of Clayton Act

Introduction
The Clayton Act:
(1) is against price discrimination;
(2) is against tying and exclusive dealing practices;
(3) is against anticompetitive mergers.
(4) Allows private parties to sue and obtain triple damages; and
(5) permits union organizing;

Price Discrimination – Section 2

"It shall be unlawful ... to discriminate in price between different purchasers of commodities ...
where the effect of such discrimination may be to substantially lessen competition or tend to create
a monopoly." The drafters of the Clayton Act believed that large firms such as Standard Oil
perpetuated their monopolies by engaging in selective, or discriminatory predatory pricing. For
example, Standard might be charging ten cents per gallon for its fuel oil in towns where it had a
monopoly. It might then cut the price to below cost in a competitive town until it drove the
competitors out of business, using the high profits from the monopoly towns to finance the below-
cost prices in the competitive town. Section 2 was intended to prevent this strategy by forbidding
Standard from charging two different prices in two sets of towns if the result was to extend
Standard's monopoly.

Tying and Exclusive Dealing- Section 3

It deals with Tying and Exclusive dealing arrangements.

This provision of the Clayton Act was passed in response to the Supreme Court's decision in Henry v.
A.B. Dick & Co. (1912). The Court had found no violation when A. B. Dick required users of its
mimeograph machines (an early form of copy machine) to purchase all their paper and ink from that
company as well.

Congress believed that firms like A.B. Dick used such "tying arrangements" to expand one monopoly
into two. In this case, the company already had a monopoly on its patented mimeograph machine.
By requiring everyone who used the machine to use its paper and ink, the company could also
monopolize the market for paper and ink used in those machines.

Today most economists and others interested in antitrust law believe this practice is rarely
competitively harmful. In fact, A.B. Dick may have had good reasons to tie paper and ink. For
example, its machine might work better when its own paper and ink are used, making consumers
happier.

In its 1984 decision in Jefferson Parish Hospital v. Hyde, the Supreme Court made unlawful tying
more difficult to prove. That case approved an arrangement under which the hospital required all

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surgical patients to use its own approved anesthesiology firm. Competition was not harmed, the
Supreme Court concluded, because the hospital admitted only 30 percent of the patients in the area,
meaning there was ample room for other anesthesiologists to practice their profession.

The other practice that section 3 of the Clayton Act occasionally condemns is exclusive dealing,
which occurs when a firm insists that retailers handle its brand exclusively.

In Standard Oil of California v. United States (1949), the Supreme Court found it unlawful for
Standard to require its gasoline stations to sell Standard's gasoline exclusively.

In more recent years we are inclined to think decisions like this are harmful, because they limit a
manufacturer's power to control the quality of its products.

For example, in Krehl v. Baskin-Robbins Ice Cream Co. (1982), the court held that Baskin-Robbins
could require its stores to sell only Baskin-Robbins ice cream. Otherwise, customers might be
deceived into buying cheaper brands when they thought they were getting the real thing. Today
most, but not all, exclusive dealing is legal.

Private Lawsuits – Section 4

Both the United States government and individual states have the power to enforce antitrust laws.
Yet 90 percent of lawsuits are brought by private parties such as consumers or business firms.

Section 4 of the Clayton Act states: An injured person can recover threefold the damages sustained
by him, the cost of suit, including a reasonable attorney's fee.

For example, suppose that a compact disc (CD) manufacturer fixes the price of music CDs at $18
while the true price is $15. $3 is the "overcharge". Suppose you had purchased twelve CDs. Your
"actual" injury would then be $3 times 12, or $36. However, under the antitrust laws this number
would be trebled to $108.

The Labour Exemption - Section 6

One thing that surprised many Progressives in the United States was the degree to which the
Supreme Court permitted use of the antitrust laws to break labour strikes. A labour strike is an
agreement among laborers that they will not work unless they get paid a certain wage.

Economically, this agreement is identical to a price fixing agreement in a product such as a CD.
Because section 1 of the Sherman Act did not distinguish between price fixing in goods and price
fixing in labour, the Supreme Court held that labour strikes were just as unlawful as cartels.

Section 6 was intended to change these outcomes by immunizing labour strikes from antitrust suits.

"The labour of a human being is not a commodity or article of commerce.

Labour organizations or the members thereof, shall not be held or construed to be illegal
combinations or conspiracies in restraint of trade, under the antitrust laws."

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Mergers - Section 7
A merger occurs when one company buys another and the two firms become one.
For example, Chrysler Motors at one point acquired Jeep, Inc. Later, Chrysler was itself acquired by
Daimler-Benz, the maker of Mercedes-Benz automobiles. As a result, Jeeps, Chrysler cars such as
Dodge and Plymouth and Mercedes-Benz cars are all manufactured today by the same very large
company.

Most mergers are legal, and in general economists think they benefit the economy by enabling
manufacturers to produce or distribute goods more cheaply.

A few mergers are anticompetitive, however. They might create a monopoly or make price fixing
much easier than it was before the merger occurred.

Section 7 of the Clayton Act provides that mergers that tend to create a monopoly or lessen
competition are not allowed.

Only acquisitions involving fairly large firms, however, are typically found to be unlawful.

A good example is Federal Trade Commission v. Heinz, Inc. (2001), which prohibited a merger
between two manufacturers of baby food. Gerber, Heinz, and Beech-Nut were the three major
producers of baby food in the United States. Heinz offered to purchase Beech-Nut so the two would
become a single firm.

Under the law, large mergers have to be reported to the Department of Justice or the Federal Trade
Commission, the two federal agencies that enforce the antitrust laws. In this case the Federal Trade
Commission challenged the merger.

The court accepted its evidence that with three firms in the market there was a significant amount
of competition in the baby food market, and this tended to keep prices low. If the merger were
permitted, the market would have only two firms and these would not compete as fiercely as firms
in a three-firm market. As a result of the court's decision, Heinz abandoned the merger plans and the
market continued to have three major baby food producers.

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4. Salient Features of Federal Trade Commission Act

Introduction
The Federal Trade Commission Act was originally passed in 1914 by President Woodrow Wilson.
The act states that "unfair methods of competition ... and unfair or deceptive acts affecting
commerce, are hereby declared unlawful."
The statute created a new government agency, the Federal Trade Commission (FTC), a five-member
board with broad authority to regulate unfair and deceptive business practices.
No more than three of the FTC members can be from the same political party, and they are
appointed for overlapping seven-year terms.
This was intended to limit the amount of control that any particular president and his political party
have over the FTC.
Background
The inspiration and motivation for this act started in 1890, when the Sherman Act was passed.

This era in time was an antitrust movement to prevent manufacturers from joining price-fixing
cartels.

After the case Northern Securities Co. v. United States, which dismantled a J. P. Morgan company,
antitrust enforcement became institutionalized.

Soon after, Roosevelt created the Bureau of Corporations, an agency that reported on the economy
and businesses in the industry. This agency was the predecessor to the Federal Trade Commission.

In 1914, President Wilson expanded on this agency by passing the Federal Trade Commission Act
along with the Clayton Antitrust Act.

The Federal Trade Commission Act was designed for business reform. Congress passed this Act with
the hopes of protecting consumers against methods of deception in advertisement, forcing the
business to be upfront and truthful about items being sold.

Support for the FTC

Many political groups including the Progressive Party supported the creation of the commission.
They believed that the courts were too conservative about condemning anticompetitive practices
and tended to side with big business.
Further, court processes were cumbersome and took a long time. Often, many years went by from
the filing of a complaint until a final decision.
By contrast, an administrative agency was not obligated to follow strict rules of evidence and did not
have to use juries.
The commissioners themselves could listen to evidence and then issue "cease and desist" orders
telling firms that certain practices must be stopped.
Even businesses largely supported the FTC because of cumbersome court procedures and the
inconsistent results of jury trials in many different courts.

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Many businesses believed that a single commission could clarify and give them advance notice of the
kinds of practices that were unfair.

Branches
The FTC is divided into two bureaus, or branches.
The Competition Bureau deals with "unfair methods of competition."
The Consumer Protection Bureau deals with "unfair or deceptive practices."

Competition Bureau
The FTC's Bureau of Competition and Department of Justice enforce the antitrust laws.
Sherman Act
The FTC has the power to enforce the Sherman Act and some additional practices that might not
violate the Sherman Act.
Example:
Under the terms of the Sherman Act, price fixing must be done by agreement for the practice to be
considered illegal.

But Economists know, however, that there are some markets called "oligopolies" in which firms can
achieve cartel-like results without ever agreeing with each other.

For example, if there are four gasoline stations on a busy intersection, each one of them can see
what the other ones are charging for gas. If one station puts up its price in the morning, each of the
others can match the price, acting entirely on its own. The four stations may effectively fix the price
at a higher level without ever formally agreeing with each other to do anything.

Although this would not be a Sherman Act violation, the FTC has taken the position since the 1940s
that it could be an "unfair method of competition" under the Federal Trade Commission Act
(Triangle Conduit and Cable Co. v. FTC [1948]).

Since the early 1980s, however, the courts have cut back the FTC's power to condemn oligopoly
pricing unless there is a fairly explicit agreement among the parties.

The FTC also enforces the Clayton Act provision against anticompetitive mergers.

In general, the merger laws come into play when a merger either creates a monopoly or makes it
more likely that the firms will engage in price-fixing or oligopoly behaviour.

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If a market contains several dozen firms of roughly the same size, then price fixing is unlikely. The
concern for possible price fixing gets stronger as the number of firms in the market falls below seven
or eight. This is because price-fixing agreements tend to work better when the number of
participants in the agreement is fairly small.

Consumer Protection
The FTC’s Bureau of Consumer Protection is concerned with deceptive practices.

False and Misleading Advertisements

One division of this Bureau is concerned with false and misleading advertising.

Health Claims
The FTC also has always paid very close attention to health claims, particularly for products that are
said to be "miracle" drugs or to cause dramatic weight loss.

Telemarketing and Internet

Increasingly the FTC has become involved in enforcement against fraudulent practices by
telemarketers as well as practices by sellers over the Internet, including complaints about spam, or
unsolicited e-mails.

Car Miles and Mileage

The FTC has also established rules regarding how car dealers must report features such as the miles
that a used car has been driven or its gasoline mileage.

Credit Practices
One division is concerned with misleading credit practices by lenders.

Procedure
If the commission finds an unfair practice, it ordinarily issues a "cease and desist" order, telling the
company that it must stop that practice.
The company can either agree or appeal the FTC's order to a court.
If the court agrees with the FTC, it will "enforce" the order.
If it disagrees it will "vacate" the order and either let the company off entirely or else send the case
back to the FTC so that the FTC can consider other issues it may have overlooked.

Effectiveness
The FTC has made many rules governing the aspects of business behaviour.
These rules, simple and straightforward, have protected the average consumer from unfair business
practices for decades.
Examples:
Advertising
Advertising must tell the truth and not mislead consumers.

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For example, a lease advertisement for an automobile that promotes "$0 Down" may be misleading
if significant and undisclosed charges are due at lease signing.

Warranties
If your ad uses phrases like "satisfaction guaranteed" or "money-back guarantee," you must be
willing to give full refunds for any reason. You also must tell the consumer the terms of the offer.

Website
Although the FTC is a large government agency, it encourages consumers to file complaints when
they believe they have been the victim of a false or misleading claim. The FTC actively maintains a
web site for this purpose.

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5. Mention the powers of Federal Trade Commission (FTC),

constituted under the Federal Trade Commission Act, 1914.
Introduction
The powers may be categorised into the following:
I. Investigative Powers
a) General
b) Specific

II. Enforcement Powers

Consumer Protection and Antitrust
1. Administrative Enforcement
a) Adjudication
b) Rule Making

2. Judicial Enforcement

III. Litigating Powers

I. Investigative Powers
General
Sec. 3
The Commission may" process any inquiry in any part of the United States".

Sec. 6(a)
The Commission can investigate any person, partnership, or corporation.

Specific Investigative Powers

1. Section 6 of the FTC Act
Section 6(b) empowers the Commission to ask for "annual or special reports or answers to specific
questions" from individuals, partnerships and corporations".

In addition, the Commission may commence a suit in a Federal court under Section 10 of the FTC
Act, against any party who fails to comply with a 6(b) order after receiving a notice of default from
the Commission.

After expiration of a thirty-day grace period, the defaulting party is liable for a penalty for each day
of noncompliance.

Section 6(f) allows the Commission to share confidential information with foreign law enforcement
agencies.

Section 6(j) allows the Commission to conduct investigations to help foreign law enforcement
agencies.

2. Section 9 and Section 20

The FTC Act authorizes the Commission to call for the attendance, testimony of witnesses and the
production of all such documentary evidence by means of a subpoena or "civil investigative
demands" ("CIDs").

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If a party fails to comply, the Commission may seek enforcement in the courts.

Refusal to comply with a court enforcement order is subject to penalties for contempt of court.

II. Enforcement Powers - Consumer Protection and Antitrust

Following an investigation, the Commission may initiate an enforcement action if it has "reason to
believe" that the law is being or has been violated.

1. Administrative Enforcement
(a) Adjudication - Section 5(b)
By the Commission
When there is "reason to believe" that a law violation has occurred, the Commission may issue a
complaint setting forth its charges.

If the respondent elects to settle the charges, he may sign a consent agreement and waive all right
to judicial review.

If the Commission accepts such a proposed consent agreement, it places the order on the record for
thirty days for public comment before making the order final.

By the Administrative Law Judge

If the respondent elects to contest the charges, the complaint is adjudicated before an
administrative law judge ("ALJ").

The prosecution of a consumer protection matter is conducted by FTC "complaint counsel," who are
staff from the Bureau of Consumer Protection or a regional office.

Upon conclusion of the hearing, the ALJ issues an "initial decision", recommending either entry of an
order to cease and desist or dismissal of the complaint.

Appeals
Either complaint counsel or respondent, or both, may appeal the initial decision to the full
Commission.

If the court of appeals affirms the Commission's order, the party losing may seek review by the
Supreme Court.

Enforcing Final Orders

A Commission order becomes final 60 days after it is served, unless the order is stayed by the
Commission or by a reviewing court.

If a respondent violates a final order, he is liable for a civil penalty for each violation.

The court may also issue "mandatory injunctions" and "such other and further equitable relief" as is
deemed appropriate.

(b) Rulemaking
Under Section 18 of the FTC Act, the Commission prescribes specific rules which are unfair or are
deceptive acts and practices affecting commerce.

Anyone who violates the rule with actual or implied knowledge is liable for civil penalties for each
violation.

In addition, any person who violates a rule (irrespective of the state of knowledge) is liable for injury
caused to consumers by the rule violation.

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The Commission may pursue such recovery in a suit for consumer redress under Section 19 of the
FTC Act.

2. Judicial Enforcements - Section 13(b):

for obtaining preliminary injunctions against corporate acquisitions, and campaigns of deceptive
advertising pending completion of FTC administrative hearings.

for obtaining permanent injunctions in cases of basic consumer fraud and deception.

to obtain monetary relief for past violations.

to obtain a freeze of assets and imposition of temporary receivers.

III. Litigating Powers

The Commission has independent authority to litigate some cases in its own name, by its own
attorneys.

Section 16 of the FTC Act, specifically authorizes the Commission to represent itself by its own
attorneys in cases of:
(1) suits for injunctive relief;
(2) suits for consumer redress;
(3) petitions for judicial review of FTC rules or cease and desist orders issued;
(4) suits to enforce compulsory processes.

In any civil action, the Commission may represent itself if the Attorney General does not agree to do
so after 45-days’ notice.

In the Supreme Court, the Commission may represent itself

if it requests authority to do so from the Solicitor General within 10 days of the lower court
judgment;

if the Solicitor General, within 60 days after the judgment authorizes the Commission's appearance;

or declines to represent the Commission; or

fails to respond to the request.

The Department of Justice may appoint Commission attorneys to represent the United States in
litigation conducted by it.

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6. Offences and Penalties in FTC

Section. 10
Attendance
Any person who shall neglect or refuse
1. to attend and testify, or
2. to answer any lawful inquiry or
3. to produce any documentary evidence,
shall be guilty of an offense and shall be punished by a fine in between $1,000 to $5,000, or by
imprisonment up to one year, or both.

Documents
Any person who wilfully makes:

false entries in documents kept by any person, partnership, or corporation, or

who wilfully neglects or fails to make,

full, true, and correct entries in such documents or

who mutilates or alters them, or

who refuses to submit them to the Commission or to any of its authorized agents, for the purpose of
inspection and taking copies, or

who removes them out of the jurisdiction of the United States,

shall be deemed guilty of an offense and shall be subject, to a fine between $1,000 and $5,000, or to
imprisonment for a term of up to three years, or both.

Filing Reports
If any person, partnership, or corporation is required to file any annual or special report and fails to
do so within the time fixed by the Commission for filing the same, a notice of thirty days is given.

After that on default, the corporation shall forfeit a sum of $100 for each and every day of the
continuance of such failure, which forfeiture shall be payable into the Treasury of the United States.

Publication of Information
An employee of the Commission shall not make public any information without the commission’s
authority unless directed by a court.

The punishment is a fine up to $5,000, or by imprisonment up to one year, or both.

Recovery
It shall be the duty of the various United States attorneys, under the direction of the Attorney
General of the United States, to prosecute for the recovery of the forfeitures.

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7. Write about the Composition of the competition commission of

UK. Discuss its powers and Functions.

The Monopolies and Mergers Commission was replaced by the competition commission in the UK in
1998.

On 1 April 2014, the Competition Commission and the Office of Fair Trading merged to form the new
Competition and Markets Authority (CMA).

Competition Act 1998

Schedule 7
The Competition Commission
Part I
General

Membership of the Commission

The Commission is to consist of—
Members appointed by the Secretary of State to form panels to look after its general functions and
appeals;
The kinds of members are—
(a) a reporting panel member;
(b) a specialist panel member
(c) an appeal panel member.

Chairman and Deputy Chairmen

The Commission is to have a chairman and one or more deputy chairmen appointed by the Secretary
of State from among the reporting panel members.
President
The Secretary of State must appoint one of the appeal panel members as the President. This is done
with consultation the Lord Chancellor or Lord Advocate.
The President discharges functions in relation to appeals.

Qualifications
(a) He has a ten-year general qualification as per the acts in force.

(b)He is an advocate in Scotland of at least ten years’ standing, or

(c)is—

(i)a member of the Bar of Northern Ireland of at least ten years’ standing, or

(ii)a solicitor of the Supreme Court of Northern Ireland of at least ten years’ standing,

and have appropriate experience and knowledge of competition law and practice.
The Council
The Commission has a management board known as the Council.

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The Council consists of—

(a)the Chairman;

(b)the President;

(c) the secretary; and

(d) such other members as the Secretary of State may appoint.

The Council may determine its own procedure including, in particular, its quorum.

The Chairman has a casting vote on any question being decided by the Council.

The Commission’s powers

The Commission has power to do anything (except borrow money)—

(a)calculated to facilitate the discharge of its functions; or

(b)incidental or conducive to the discharge of its functions.

Staff
Subject to obtaining the approval of—
(a)the Secretary of State, as to numbers, and
(b)the Secretary of State and Treasury, as to terms and conditions of service, the Commission may
appoint such staff as it thinks appropriate.
Procedure
Subject to any provision made by or under this Act, the Commission may regulate its own procedure.
Accounts
The Commission must—
(a)keep proper accounts and proper records in relation to its accounts;

(b)prepare a statement of accounts in respect of each of its financial years; and

(c)send copies of the statement to the Secretary of State and to the Comptroller and Auditor General
annually.
Part II
Performance of the Commission’s General Functions
Discharge of certain functions by groups
Any general function of the Commission must be performed through a group selected for the
purpose by the Chairman.
Procedure
Each group may determine its own procedure w.r.t:
Quorum;
Who may be present or heard by themselves or by their representatives;
Cross-examination of witnesses;
Whether the sittings are to be held in Public

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8. Explain the salient features of U.K. Competition Act

Introduction
The United Kingdom has two major Acts of competition law, The Competition Act 1998 and
the Enterprise Act 2002.
The Competition Act addresses two key areas of anti-competitive behaviour:
1. Anti-competitive agreements
2. Abuse of dominant market position
On 1 April 2014, the UK Office of Fair Trading and the Competition Commission merged to form the
new Competition and Markets Authority (CMA).
The Act is enforced by the Competition & Markets Authority (CMA).
1. Anti-Competitive Agreements
Chapter 1
The Act prohibits agreements which prevent, restrict or distort competition.
These are primarily in the form of horizontal agreements.
Horizontal agreements are collusion agreements between firms such as retailers or wholesalers who
are on the same level of the supply chain.
Types of agreement caught
An agreement is assessed on the basis of its objective, or its effect on competition, rather than its
wording or form.

This means that verbal and informal 'gentlemen's agreements' are equally capable of being found to
be anti-competitive as formal, written agreements.

Examples:
Price Fixing
agreements which fix prices;

Market Share
agreements which share markets or sources of supply;

Limitation
agreements which limit production, markets, technical development or investment; and

Discrimination
agreements which apply dissimilar conditions to similar transactions, placing other trading parties at
a disadvantage.

Exemptions
Agreements may be exempted under a 'block exemption' or a group exemption.

Certain criteria have to be met in order for an agreement to be block exempted.

An agreement may be exempted on the grounds that the restrictions of competition are outweighed
by its beneficial effects.

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For example, an agreement between two pharmaceutical companies to develop a new drug
together as opposed to independently is generally not allowed.

However, the benefits for consumers resulting from such co-operation i.e. more investment, leading
to better drugs which reach the market faster, may be considered sufficient to off-set any anti-
competitive effects.

2. Abuse of Dominant Market Position

Chapter 2
Dominance
To be dominant, a business must have the ability to act independently of its competitors and
consumers.

As a general rule, if a business has a 50% market share there is a presumption that it is dominant.

Type of behaviour caught

Having a dominant position does not in itself breach competition law.

It is the abuse of that position that is prohibited.

Examples:
Charging Higher prices
a Monopoly is able to set high prices. The (Office of Fair Trading) OFT may consider this abuse of
monopoly power if it leads to excess profits.

Predatory Pricing
selling below cost with intention of forcing a rival firm out of business

Tying
A buyer wishing to purchase one product must also purchase a second product.

Unfair trading terms,

such as exclusivity.

Vertical Restraints
Firms pay lower prices to suppliers, e.g. Supermarkets have been criticised for paying low prices to
farmers.

Exemptions
A dominant company may be able to show a justification in certain circumstances.

For example, a company may refuse to supply to a particular customer based on its poor credit
rating, which would amount to the protection of legitimate business interests and not, therefore, to
abusive conduct.

Investigation
The OFT investigates 2 main types of behaviour:

1. Collusive Behaviour
2. Abuse of Market Power

Collusive Behaviour
This occurs when firms enter into agreements to fix prices and or output. This enables firms to make
higher profits at the expense of consumers.

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Abuse of Market Power

If a firm has more than 50% of market share it is considered to have market power. The OFT are
more likely to investigate firms with a dominant market position. Though they can also investigate
people with less market share.

Merger Policy
The OFT can recommend mergers to be referred to the Competition Commission – to see whether
the merger is in the public interest.

Penalties
Firms engaged in activities which breach these provisions can face fines of up to 10% of group global
turnover;

Damages can be claimed from customers and competitors who can show they have been harmed by
the anti-competitive behaviour; and

Individuals can be disqualified from being a company director and lead to criminal sanctions.

Consequences of breach - Chapter I

Agreements which breach provisions are void and unenforceable;

Individuals prosecuted for a cartel may be liable to imprisonment for up to five years and/or the
imposition of unlimited fines.

Consequences of breach – Chapter 2

Conduct in breach can be stopped by court injunction;

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UNIT 3

1. Discuss the objects and Reasons for the competition Act 2002

Introduction
On December 16, 2002, the MRTP (Monopolies and Restrictive Trade Practices) Act, 1969 was
replaced by the Competition Act, 2002.

The Act was amended in 2007, 2009 and 2012.

An industry having assets of Rs. 1,000 crores or more or having an annual turnover of Rs. 3,000
crores come under the purview of the Act.

The Act provides for the constitution of Competition Commission of India (CCI) which is a corporate
body with quasi-judicial powers.

The Commission shall be headed by a Chairman and there would not be more than 10 members of
the Commission to be appointed by the Government of India.

The order of this Commission can be challenged only in the Supreme Court.

Objectives:

The Act focuses on:

(i) Prohibition of anti-competitive agreements:
To promote healthy competition in the market.
To prevent those practices which are having adverse effect on competition.
(ii) Prohibition of dominance
To prevent abuses of dominant position in the market actively.
(iii) Regulation of Combinations
Regulating the operation and activities of acquisitions, mergers and amalgamation.
(iv) Establishment of Competition Commission of India
To protect the interests of concerns in a suitable manner.
To ensure freedom of trade in Indian markets.
(v) Awareness
Creating awareness and imparting training about the competition Act.

Non-Applicability of Competition Act:

Competition Act is not applicable in the following cases:
1. Public Financial Institutions.

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2. Foreign Institutional Investors (FIIs).

3. Venture capital Funds (VCFs).
4. Agreements related to intellectual property rights (IPRs) such as trademarks, patents, copyrights
etc.
5. Central Government has the authority to exempt any class of enterprises from the provisions of
Act in the common interest of national security or public interest.

Main Features of Competition Act, 2002:

Following are some important features of the competition Act:
1. Competition Act has replaced MRTP Act.
2. Competition Act is a very compact and smaller legislation which includes only 66 sections.
3. This Act restricts agreements having adverse effect on competition in India.
4. This act prevents abuse of dominant position.
5. This Act suitably regulates acquisitions, mergers and amalgamation of enterprises.
6. Competition commission of India (CCI) is constituted under the Act.
7. The central Government appoints a director General for conducting detailed investigation of anti-
competition agreements.
8. Civil courts do not have any jurisdiction to entertain any suit which is within the purview of this
Act.
9. This Act possesses penalty provision.

Conclusion to the Competition Act:

It can now be concluded that the competition Act, 2002 is landmark legislation.
The main aim of this Act is to promote competition and curb all anti-competitive agreements.
This Act restricts the abuses of dominant enterprises.
It can also regulate any kind of combinations beyond a particular size. Thus, this Act does not curb
monopolies rather it curbs abuses of monopolies.
Thus, the competition Act helps prevent monopoly and restrictive trade practices, protects the
interest of the small and medium industries in the country besides giving consumers more powers to
redress their grievances.

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2. Discuss the kinds of Agreements prohibited under the

competition Act 2002

Introduction
Parties are prohibited from executing anti-competitive agreements.

Agreements which cause appreciable adverse effect on competition ("AAEC") are anti-competitive
agreements.

Such agreements may be horizontal or vertical.

The Act recognizes intellectual property rights and facilitates their protection.

Similarly, the Act exempts agreements between exporters as exports do not impact markets in India.

The Competition Commission of India ("CCI") has been established for this purpose.

It has the authority to direct any enterprise or person to modify, discontinue and not re-enter into
anti-competitive agreements.

It can impose penalties, which can be 10% of the average of the turnover for the last three years.

What are Anti-Competitive Agreements.

Section 3(2) of the Act says that Agreements which cause appreciable adverse effect on competition
("AAEC") in India are anti-competitive agreements.

Section 32 of the Act says that agreements entered into outside India, which cause appreciable
adverse effect on competition ("AAEC") in India are anti-competitive agreements and the CCI would
have powers to enquire into such an arrangement.

Section 2(b) of the Act says that:

An oral agreement or

An Informal Agreement not registered can also be considered anti-competitive if they are found to
have AAEC in India.

Who cannot enter into anti-competitive agreements

Section 3(1) of the Act says the following entities or combination of entities cannot enter into
agreements which causes an AAEC in India:

Any Combination of Enterprises, Persons, Association of enterprises and Association of persons.

Any such Agreement would be void and will be examined under the rule of reason on a case-to-case
basis.

Kinds of Agreements
The Act deals with following kind of agreements.

Horizontal Agreements
Horizontal agreements are agreements between enterprises on the same level of the production
chain. A Cartel is a horizontal agreement.

Section 3(3) says AAEC is present if there is:

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Price Fixing
A Fixing of prices Directly or indirectly;

Market Sharing
Sharing the market, or source of production by geographical allocation, or type of goods or services,
or the number of customers in the market;

Limiting Production
Limiting production, supplies, markets, technical development, investment;

Rigging
If there is bid rigging or collusive bidding Directly or indirectly.

Exceptions
Exceptions are provided to joint ventures if they increase the efficiency in production, supply,
distribution, storage.

Vertical Agreements
Vertical agreements are between enterprises on different levels of the production chain, like an
arrangement between the manufacturer and a distributor.

Essential Ingredients
Section 3(4) says five essential ingredients have to be satisfied:

There must be an agreement amongst enterprises or persons;

The parties to such agreement must be at different levels of the production chain;

The agreeing parties must be in different markets;

The agreement should cause AAEC;

The agreement should be one of the following:

Tie-in arrangement;

Exclusive supply agreement;

Exclusive distribution agreement;

Refusal to deal;

Resale price Maintenance.

Additional grounds
Section 19(3) of the Act says the following having to be considered:

Rule of Reason
Justifications
Improvements in development, technical, scientific and economic.

Improvements in production or distribution of goods;

Accrual of benefits to consumers;

AAEC
Foreclosure of competition;

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Barriers
Driving existing competitors out of the market;

Creation of barriers to new entrants in the market;

Enquiry by the CCI

Section 19(1) says that the CCI may enquire into any alleged contravention

on its own or

on receipt of any information from any person, consumer or their associations or

trade associations

upon payment of the fees and in the manner prescribed.

The CCI may also act if a reference is made to it by the central government or a state government or
a statutory authority.

The CCI proceeds with enquiry only when there exists a prima facie case and then it directs the
director general to cause an investigation in the matter.

Orders
The CCI can pass all or any of the following orders:

Direct the parties to discontinue and not to re-enter such agreement (cease and desist);

Direct to modify the agreement and in the manner as may be specified in the order of the CCI;

Impose a penalty up to 10% of the average turnover of the last three preceding financial years;

In case of a cartel, a penalty up to three times of its profit for each year of the continuance of such
agreement or 10% of its turnover, whichever is higher;

It can also pass interim orders under section 33 of the Act

Conclusion
The Act aims to prevent practices by parties that have AAEC in India.

This can ensure freedom of trade and would protect the interest of all the parties, including
consumers.

It is important for the parties not to keep any anti-competitive element in the agreements between
them.

Enterprises should be proactive and diligent in identifying the existing anti-competitive elements
from their current agreements.

The employees should be trained to understand the implications of anti-competitive agreements

and how to avoid that.

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3. Salient Features of the Competition Act 2002

Introduction
Competition Law was triggered by Articles 38 and 39 of the Constitution of India.

The MRTP Act has metamorphosed into the new law, Competition Act, 2002.

Salient features of competition act

A. Objectives
The Act seeks to –

1. prohibit anti-competitive agreements.

2. prohibit abuse of dominance.
3. regulate combinations that causes or likely to cause appreciable adverse effect on competition.
4. Constitute the Competition Commission of India.
5. Undertake the responsibility of competition advocacy, awareness and training about
competition issues.

B. Wide coverage of the Act

The Act is not limited to regulation of commercial acts of private parties.

Section 2(h) - “Enterprise” means a person or a department of government engaged in the activities
of production of goods and services directly or indirectly.

Even statutory authorities are covered under the ambit of the Act.

Exceptions
The activities of the Government related to sovereign functions and

The departments of atomic energy, space, defence and currency are kept out of the purview of the
Act.

C. Anti-competitive agreements
Section 3(2) of the Act says that Agreements which cause appreciable adverse effect on competition
("AAEC") in India are anti-competitive agreements.

Section 32 of the Act says that agreements entered into outside India, which cause appreciable
adverse effect on competition ("AAEC") in India are anti-competitive agreements and the CCI would
have powers to enquire into such an arrangement.

Section 2(b) of the Act says that:

An oral agreement or

An Informal Agreement not registered can also be considered anti-competitive if they are found to
have AAEC in India.

Kinds of Agreements
The Act deals with following kind of agreements.

Horizontal Agreements
Horizontal agreements are agreements between enterprises on the same level of the production
chain. A Cartel is a horizontal agreement.

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Section 3(3) says AAEC is present if there is:

A Fixing of prices Directly or indirectly;

Limiting production, supplies, markets, technical development, investment;

Sharing the market, or source of production by geographical allocation, or type of goods or services,
or the number of customers in the market;

If there is bid rigging or collusive bidding Directly or indirectly.

Exceptions are provided to joint ventures if they increase the efficiency in production, supply,
distribution, storage.

Vertical Agreements
Vertical agreements are between enterprises on different levels of the production chain, like an
arrangement between the manufacturer and a distributor.

The agreement should be one of the following:

Tie-in arrangement;

Exclusive supply agreement;

Exclusive distribution agreement;

Refusal to deal;

Resale price Maintenance.

D. Abuse of dominance
Definition
Section 4 – “Dominance‟ means the strength of an enterprise to:
a. Work independently of competitive forces; and/or
b. affects its competitors or consumers in its favour.

Determination
Dominance is determined by:
Market share of the enterprise concerned,
Its size and resources.

Examples of Abuse:
Exclusionary practices
limiting or restricting technical or scientific development
limiting or restricting production
Predatory pricing,
Use of dominance in one market to enter into other relevant markets.
Barriers to Entry.

Exploitative practices
Discriminatory pricing and conditions of trade,
conclusion of main contract contingent upon accepting supplementary obligations unrelated to the
main contract.

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E. Regulation of combinations
Section 5- Combination includes acquisition of shares, acquiring of control and mergers or
amalgamations.

The salient features of combination regulations are –

Threshold
a. The Act has set very high threshold limit based on turnover or assets of the enterprises involved.

1000 Crores assets or 3000 crores turnover

The objective is to encourage small enterprises to grow.

Notification
b. The notification of combination to the Commission is mandatory.

Disposal of Notification
c. Such notification has to be disposed of by the Commission within 90 working days, failing which
the same is deemed to be approved.

Suo Moto
d. The commission also has the suo moto enquiry power.

Exemptions
e. Limited exemption is given to combinations involving public financial institutions, foreign
institutional investors and venture capital funds.

F. Extra territorial application

Section 32 of the Act covers Anti-competitive practices committed overseas but having effect in
India.

G. Remedies in Competition Act.

Sections 27 and 28 of the Act provides various remedies. They are –

cease and desist orders

- passing “cease and desist order‟

Void Agreements
-providing agreements having appreciable adverse effect on competition to be void

Modify Agreements
- directing modifications to agreements

Impose Penalties
- imposing penalty up to 10% of the turnover or 3 times of cartelised profit, whichever is higher

Impose Damages
- awarding compensation or damages.

Modify Combinations
Approvals, Rejections or Modifications of combinations may be ordered.

Division of Dominant Enterprises

- A division may be recommended.

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H. Other salutary features of the Act

Jurisdiction
a. Jurisdiction of civil courts to adjudicate issues relating to competition matters have been expressly
excluded.

Representation
b. Chartered accountants, company secretaries, cost accountants and advocates have been made
eligible to cause appearance for and on behalf of their respective clients.

Appeals
c. Every order passed by the Commission is appealable.

Reviews
d. Review and rectification of orders of Commission have been provided for.

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4. Dominant Position in Competition Act 2002

Introduction
The Competition Act, 2002 prohibits
anticompetitive agreements,
abuse of dominant position by enterprises, and
regulates combinations (mergers, amalgamations and acquisitions) with a view to ensure that there
is no adverse effect on competition in India.

Meaning of Dominant position

Section 4 – “Dominance‟ means the strength of an enterprise to:
a. Work independently of competitive forces; and/or
b. affects its competitors or consumers in its favour.

Factors that Determine Dominant Position 19(4)

These include:
TAM
a) market structure and size of the market;
b) market share,
c) the size and resources of the enterprise;
d) size and importance of competitors;
Advantage
e) Commercial advantage over competitors;
Justifications
f) source of dominant position viz. whether obtained due to statute etc.;
g) social costs, obligations and contribution to economic development.
Barriers
h) extent of entry and exit barriers in the market;
Consumers
i) dependence of consumers on the enterprise;

Abuse of Dominance
Dominance is not considered bad per se, but its abuse is.
Section 4 (2) of the Act specifies the following practices as abuses:

Exclusionary practices
limiting or restricting technical or scientific development
limiting or restricting production
Predatory pricing - “predatory price” means “the sale of goods or provision of services, at a price
which is below the cost, with a view to reduce or eliminate competitors”
Use of dominance in one market to enter into other relevant markets.
Barriers to Entry.

Exploitative practices
Discriminatory pricing and conditions of trade,
conclusion of main contract contingent upon accepting supplementary obligations unrelated to the
main contract.

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Inquiry into Abuse of Dominance

In a case of abuse of dominance, the Commission shall direct the Director General to cause an
investigation and furnish a report.

The Commission has the powers vested in a Civil Court under the Code of Civil Procedure in respect
of matters like
summoning of any person,
examining him on oath,
receiving evidence on affidavit and
requiring discovery and production of documents.

The Director General, in addition has the powers to conduct ‘search and seizure’.

Remedies
Sections 27 and 28 of the Act provides various remedies. They are –

cease and desist orders

- passing “cease and desist order‟

Void Agreements
-providing agreements having appreciable adverse effect on competition to be void

Modify Agreements
- directing modifications to agreements

Impose Penalties
- imposing penalty up to 10% of the turnover or 3 times of cartelised profit, whichever is higher

Impose Damages
- awarding compensation or damages.

Combinations
Approvals, Rejections or Modifications of combinations may be ordered.

Dominant Enterprises
- A division may be recommended.

Interim Orders
Under section 33 of the Act, during the pendency of an inquiry, the Commission may temporarily
restrain any party from continuance with the alleged offending act until conclusion of the inquiry.

Appeals
The Competition Appellate Tribunal (COMPAT) is established under section 53A of the Act, to hear
and dispose of appeals.

An appeal has to be filed within 60 days of receipt of the order / direction / decision of the
Commission.

Compensation [Section 53N]

A person may apply to COMPAT to claim compensation.

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Essential Facilities Doctrine

The compulsory sharing by a dominant enterprise of "its facility which is essential to other
competitors" is known as the essential facility doctrine (EFD).

Any application of the EFD should satisfy the following:

The facility must be controlled by a dominant firm;
Competing enterprises/persons cannot reproduce the facility;
Access to the facility is necessary in order to compete in the relevant market; and;
It must be feasible to provide access to the facility;

IPRs And Abuse of Dominance

Intellectual Property Rights and Competition laws are generally considered as contradictory to each
other as IPRs grant exclusivity which hinders competition.

But in reality, they both focus on same goal, i.e., innovations and general welfare.

Therefore, IPRs are given special treatment under competition laws.

Reasonable use of IPRs stand exempted.

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5. Regulation of Combinations

Introduction
The Competition Act, 2002 prohibits
anticompetitive agreements,
abuse of dominant position by enterprises, and
regulates combinations (mergers, amalgamations and acquisitions) with a view to ensure that there
is no adverse effect on competition in India.

The provisions of the Act relating to regulation of combinations have been enforced with effect from
1st June 2011.

What is a Combination?
Broadly, combination means acquisition of
Assets, or
Control, or
Shares, or
Voting rights.

It also means mergers of enterprises when the combining parties exceed the assets/turnover
thresholds set in the Act.

A combination which causes an appreciable adverse effect on competition is prohibited and such
combination shall be void.

Thresholds for Combinations Under the Act

It is presumed that in the case of small size combinations, there is less likelihood of appreciable
adverse effect on competition.

The Act provides for sufficiently high thresholds in terms of assets/turnover, for mandatory
notification to the Commission.

An industry having assets of Rs. 1,000 crores or more or having an annual turnover of Rs. 3,000
crores come under the purview of the Act.

The Act also provides for revision of the threshold limits every two years by the government.

Combination Notification
After a proposal of merger arises and it is approved, a notice should be given to the Commission
within 30 days of the approval.

After Notification, the commission is expected to take a maximum of 210 days to take a decision of
Approval or Rejection.

If approved, the combination takes effect after the Approval.

If an order is not passed within 210 days, the combination shall be deemed to have been approved.

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If not notified, the Commission has the power to inquire into it within one year of the combination
taking effect.

Exemption Notifications
If the acquired firm has assets less than INR 250 crore or a turnover of less than INR 750 crore for a
period of five years, a notification need not be given.

Acquisition of PFIs, VCFs etc.

In case of any acquisition of a public financial institution, foreign institutional investor, bank or
venture capital fund, details of such acquisition are required to be filed with the Commission within
seven days from the date of acquisition.

Procedure for Investigation of Combinations

The Commission shall form its prima facie opinion as to whether the combination is likely to cause or
has caused appreciable adverse effect on competition within 30 days from the receipt of the notice.

If yes, it shall issue a notice to show cause to the parties as to why investigation in respect of such
combination should not be conducted.

On receipt of the response, the Commission shall deal with the notice as per the provisions of the
Act.

Evaluation of ‘Appreciable Adverse Effect on Competition’ by Combinations Section 20(4)

Some of the Factors considered:
Market Combination
(a) level of combination in the market;
(b) market share, of the persons in a combination, individually and as a combination;
Justification
(c) relative advantage, by way of the contribution to the economic development, by the
combination;
(d) whether the benefits of the combination outweigh the adverse impact of the combination, if any.
Barriers
(e) likelihood that the combination would result in the removal of competitors in the market;
Consumers
(f) likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase profit margins;

Penalty
The Commission can then impose a fine of up to one per cent of the total turnover or the assets of
the combination, whichever is higher.

Appeals
An appeal to Competition Appellate Tribunal (COMPAT) may be filed within 60 days of receipt of the
order /direction/decision of the Commission.

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Unit 4

1. Competition Commission of India

Chapter III
Sections 7 – 17
Establishment of Commission Section 7.
The Competition Commission of India, having its head office at New Delhi was established by the
Central Government with effect from 14th October 2003.

The Commission is a corporate body having

perpetual succession and a common seal
with power to acquire, hold and dispose of property, both movable and immovable, and
to contract and
can sue or be sued.
Composition of Commission Section 8.
Members
(1) The Commission shall consist of a Chairperson and two to six Members to be appointed by the
Central Government.

Qualifications
(2) They shall be persons of ability, integrity and standing.

The Chairperson and every other Member shall be professionals with an experience of greater than
fifteen years in a relevant field like trade, commerce etc

Full Time
(3) The Chairperson and other Members shall be whole-time Members.

Selection Committee for Chairperson and Members of Commission – Section 9

(1) They shall be selected from a panel of names recommended by a Selection Committee consisting
of –

a) the Chief Justice of India or his nominee - Chairperson;

b) the Secretary in the Ministry of Corporate Affairs - Member;
c) the Secretary in the Ministry of Law and Justice - Member;
d) two experts of repute who have special knowledge of, and professional experience in
international trade, economics etc - Members.

Term of office of Chairperson and other Members – Section 10.

Term
(1) The term is for five years or an age of sixty-five years. They shall be eligible for re-appointment.

Oath
(2) The Chairperson and Members shall, before entering upon his office, take an oath of office and
secrecy.

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Acting Chairperson
(3) In case of a vacancy in the office of the Chairperson by reason of his death, resignation or
otherwise, the senior- most Member shall act as the Chairperson, until a new Chairperson enters
upon his office.

(4) In case the Chairperson is unable to discharge his functions owing to absence, illness or any other
cause, the senior-most Member shall discharge the functions of the Chairperson until the date on
which the Chairperson resumes the charge of his functions.

Resignation, removal and suspension of Chairperson and other members - Section 11

Resignation
(1) The Chairperson or any other Member may, by notice in writing under his hand addressed to the

Central Government, resign his office. Three Months’ notice is normally required.

Removal
(2) The Central Government may, remove the Chairperson or any other Member from his office if
he:

Conviction
(a) has been convicted and sentenced to imprisonment for an offence which, in the opinion of the
Central Government, involves moral turpitude; or

Insolvency
(b) is an undischarged insolvent; or

Unsound Mind
(c) is of unsound mind and stands so declared by a competent court; or

Financial Interests
(d) has engaged at any time, during his term of office, in any paid employment;

Restriction on employment of Chairperson and other Members– Section 12

The Chairperson and other Members shall not, for a period of two years from the date on which
they cease to hold office, accept any employment in any enterprise which has been a party to a
proceeding before the Commission under this Act.

Administrative powers of Chairperson – Section 13

The Chairperson shall have the powers of general superintendence, direction and control in respect
of all administrative matters of the Commission.

The Chairperson may delegate such of his powers relating to administrative matters of the
Commission, as he may think fit, to any other Member or officer of the Commission.

Salary and allowances and other terms and conditions of service of Chairperson and other
Members – Section 14.
(1) The salary, and the other terms and conditions of service, of the Chairperson and other
Members, including travelling expenses, house rent allowance and conveyance facilities, sumptuary
allowance and medical facilities shall be such as may be prescribed.

(2) The salary, allowances and other terms and conditions of service of the Chairperson or a Member
shall not be varied to his dis advantage after appointment.

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Vacancy, etc. not to invalidate proceedings of Commission – Section 15.

No act or proceeding of the Commission shall be invalid merely by reason of—
(a) any vacancy in, or any defect in the constitution of, the Commission; or
(b) any defect in the appointment of a person acting as a Chairperson or as a Member; or
(c) any irregularity in the procedure of the Commission not affecting the merits of the case.

Appointment of Director General, etc.- Section 16

Appointment
(1) The Central Government may, by notification, appoint a Director General for the purposes of
assisting the Commission in conducting inquiries and for performing other functions as required.

(1A) The number of other Additional, Joint, Deputy or Assistant Directors General or such officers or
other employees in the office of Director General and the manner of appointment shall be as
prescribed.

Qualifications
(4) They 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.

Salary and Allowances

(3) Their salary, allowances and other terms and conditions of service shall be as prescribed.

Powers and Functions

(2) They shall exercise their powers, and discharge their functions, subject to the general control,
supervision and direction of the Director General.

Appointment of Secretary, experts, professionals and officers and other employees of Commission
– Section 17
Appointment
(1) The Commission may appoint a Secretary and such officers and other employees as it considers
necessary.

Qualifications
(3) Professionals of integrity and outstanding ability, who have special knowledge of, and experience
in, economics, law, business or such other disciplines related to competition.

Salaries
(2) The salaries and other terms and conditions of service shall be such as may be prescribed.

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2. Duties, Powers and Functions of the CCI

CHAPTER IV
DUTIES, POWERS AND FUNCTIONS OF COMMISSION
Section 18 - Section 40

Section 18. Duties of Commission

It shall be the duty of the Commission to
promote and sustain competition,
eliminate practices having adverse effect on competition,
protect the interests of consumers and
ensure freedom of trade.

Section 19. Inquiry into certain agreements and dominant position of enterprises
The Commission may inquire into any alleged contravention
on its own motion or
on receipt of any information, from any person, consumer or their association or trade association;
or
a reference made to it by the Central Government or a State Government or a statutory authority.

Inquiry into combination by Commission - Section 20.

(1) on its own motion within one year from the date on which a combination has taken effect.
(2) on receipt of a notice from the parties to the combination.

Reference by statutory authority - Section 21.

On receipt of a reference from a statutory authority, the Commission shall, after hearing the parties
to the proceedings, give its opinion within sixty days to the statutory authority.

Reference by Commission – Section 21A.

Same as above with Commission and Statutory body interchanged.

Meetings of Commission – Section 22

Procedure
(1) The Commission shall
meet at such times and places,
shall observe such rules and procedure
as may be provided by regulations.

Acting Chairperson
(2) The Chairperson, if for any reason, is unable to attend a meeting of the Commission, the senior-
most Member present at the meeting, shall preside at the meeting.

Voting
(3) All questions which come up before any meeting of the Commission shall be decided by a
majority of the Members present and voting, and in the event of an equality of votes, the
Chairperson or in his absence, the Member presiding, shall have a second or/casting vote. The
quorum for such meeting shall be three Members.

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Sections 23 – 25 are Omitted by the Competition (Amendment) Act, 2007]

Procedure for inquiry under section 19 – Section 26

If there is a prima facie case, the CCI directs the Director General to investigate into the matter.
He submits a report.
If the report indicates no contraventions, the CCI calls for objections from the parties concerned.
If the report indicates contraventions, the CCI may call for further investigations if required.
It takes a decision to close the matter or further investigate.

Orders by Commission after inquiry into agreements or abuse of dominant position - Section 27.
After inquiry, the Commission may pass all or any of the following orders, namely:

a) Cease and Desist Orders

b) Ask for modification of the agreements as required
c) Impose a penalty which may be 10% of the average turnover for the last 3 financial years,
Or in case of a cartel, triple damages i.e., a penalty equivalent to three times of the amount of
profits made out of such agreement by the cartel.

Division of enterprise enjoying dominant position - Section 28

(1) The Commission may by order in writing, direct division of an enterprise enjoying dominant
position to prevent abuse.

(2) The order may involve:

(a) the transfer of property, rights, liabilities or obligations;

(b) the surrender or cancellation of any shares, stocks or securities;
(c) the adjustment of contracts;

Procedure for investigation of combination - Section 29.

If there is a prima facie case against a combination, the commission shall issue a show cause notice.

After receipt of the response, the Commission may call for a report from the Director General.

After the receipt of the report the parties to the said combination are required to publish the details
of the combination.

Objections are received in writing.

Any additional information from the combination is called for if required.

The commission now takes a decision.

Procedure in case of notice of a combination – Section 30.

Where any person or enterprises has given a notice of a combination, the Commission shall examine
such notice and form its prima facie opinion and proceed as per above section.

Orders of Commission on certain combinations – Section 31.

The Commission may approve, reject or call for a modification of a combination.

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If there is no communication from the commission after a notice for 210 days, it is deemed to be an
approval.
In case of a rejection, the combination is declared void and action taken as per law in existence.
In case of a modification, the parties to the combination may request for amendments.
After consideration the Commission takes a call what has to be implemented by the combination.
An extension of time may be requested.

Acts taking place outside India but having an effect on competition in India - Section 32.
If there is an AAEC, THE Commission has the power to pass such orders as it may deem fit.

Power to issue interim orders – Section 33.

The Commission may, by order, temporarily restrain any party from carrying on an act until the
conclusion of an inquiry or until further orders.

Section 34 – Omitted by Competition (Amendment) Act, 2007

Appearance before Commission – Section 35.
A person or an enterprise may either appear in person or authorise one or more chartered
accountants or company secretaries or cost accountants or legal practitioners.

The Director General may either appear in person or any of his officers may present a case before
the Commission.

Power of Commission to regulate its own procedure – Section 36.

(1) The Commission shall have the powers to regulate its own procedure subject to the other
provisions of this Act and of any rules made by the Central Government.
In the discharge of its functions, the Commission shall be guided by the principles of natural justice.

(2) The Commission shall have, the same powers as are vested in a Civil Court under the Code of Civil
Procedure, 1908 (5 of 1908):

(3) The Commission may call upon such experts, from any discipline as it deems necessary to assist
the Commission in the conduct of any inquiry by it.

Section 37. [Omitted by Competition (Amendment) Act, 2007]

Rectification of orders – Section 38.

Rectification of mistakes are made by the Commission by an amendment.
The mistakes may be found on its own motion or brought to its notice by any party.

Execution of orders of Commission imposing monetary penalty – Section 39.

In case of a default in payment of penalty, it may be recovered as per regulations or by the Income
tax authorities.

Section 40. [Omitted by Competition (Amendment) Act, 2007]

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UNIT 5

1. Duties of Director General

Chapter V
Duties of Director General

Director General to investigate contravention - Section 41.

Inquiry
(1) The Director General shall, when directed by the Commission, investigate into any contravention.

Powers under CPC

(2) The Director General shall have all the powers as are vested in a Civil Court under the Code of
Civil Procedure, 1908 (5 of 1908):

(a) summoning and enforcing the attendance of any person

(b) examining him on oath;
(c) requiring the discovery and production of documents;
(d) receiving evidence on affidavit;
(e) issuing commissions for the examination of witnesses or documents;
(f) requisitioning, any public record or document from any office.

Powers under the Company Act

(3) Sections 240 and 240A of the Companies Act, 1956 (1 of 1956), shall apply.

240. Production of documents and evidence.

Books
1) It shall be the duty of all officers, employees and agents of the company:

(a) to preserve and to produce all books and papers which are in their custody and
(b) to give all reasonable assistance to an inspector.

(1B) These books and papers may be kept for six months and then returned.

Examining on Oath
(2) An inspector may examine on oath-

(a) any officer or employee of the company; and

(b) with the previous approval of the Commission, any other person, in relation to the affairs of the
company.

Penalty for Refusal

3) If any person fails or refuses to comply with the above, he shall be punishable with imprisonment
up to six months, or with a fine up to two thousand rupees, or with both.

And also with a further fine up to two hundred rupees per day till compliance.

Examination Notes
5) Notes of any examination shall be taken down in writing and shall be read over to or by, and
signed by, the person examined, and may thereafter be used in evidence against him.

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240A. Seizure of documents by inspector.

Application
(1) If the inspector has reasonable ground to believe that any books and papers may be destroyed,
mutilated, altered, falsified or secreted, an application can be made to a Magistrate having
jurisdiction.

Authorisation
(2) The Magistrate may authorise the inspector--

(a) to enter the place where such books and papers are kept;

(b) to search the place; and

(c) to seize books and papers necessary for investigation.

Return of Books
(3) The inspector shall keep in his custody the books and papers seized till the conclusion of the
investigation and thereafter shall return the same to the company.

Code Applicable
(4) Every search or seizure made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1898, relating to searches or seizures.

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2. Penalties

Chapter VI
Penalties
Sections 42 - 48

Contravention of orders of Commission – Section 42.

Inquiry
(1) The Commission may make an inquiry into compliance of its orders or directions.

Non-Compliance 1st Instance

(2) Punishment for non-compliance is a fine extending up to Rs. 1 lakh per day of non-compliance up
to a maximum of rupees ten crores.

Non-Compliance 2nd Instance

(3) Failure to pay the fine imposed above shall be punishable with imprisonment up to three years,
or with a fine which may extend to rupees twenty-five crore, or with both.

Compensation in case of contravention of orders of Commission- Section 42A.

Compensation can be claimed from the Appellate Tribunal for loss and damages suffered due to
non- compliance of the commission’s orders.

Penalty for failure to comply with directions of Commission and Director General- Section 43.
Penalty for non-compliance is a fine extending up to Rs. 1 lakh per day of non-compliance up to a
maximum of rupees ten crores.

Power to impose penalty for non-furnishing of information on combinations – Section 43A.

Penalty for not giving notice of a combination may extend to one percent, of the total turnover or
the assets, whichever is higher.

Penalty for making false statement or omission to furnish material information – Section 44.
The penalty will be rupees fifty lakhs and may up to rupees one crore.

Penalty for offences in relation to furnishing of information – Section 45.

The Penalty for wilfully altering, suppressing, or destroying a required document is punishable with a
fine which may extend to rupees one crore.

Power to impose lesser penalty - Section 46.

The Commission may impose a lesser penalty, if it is satisfied that any producer, seller, distributor,
trader or service provider included in any cartel:

has made a full and true disclosure in respect of the alleged violations and such disclosure is vital.

The disclosure has been made before the investigation report has been received.

The person continues to cooperate with the Commission till the completion of the proceedings.

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Crediting sums realised by way of penalties to Consolidated Fund of India - Section 47.
All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund of
India.

Contravention by companies - Section 48.

(1) If a contravention is done by a company, every person who, at the time the contravention was
committed, was in charge of the company, as well as the company, shall be deemed to be guilty.

They are not liable to any punishment if they prove that the contravention was committed without
their knowledge or that they had exercised all due diligence to prevent the commission of such
contravention.

(2) If it is proved that the contravention has taken place with the consent or connivance of, or is
attributable to any neglect on the part of, any director, manager, secretary or other officer of the
company, such director, manager, secretary or other officer shall also be deemed to be guilty of that
contravention and shall be liable to be proceeded against and punished accordingly.

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3. Competition Advocacy
Chapter VII
Competition Advocacy - Section 49.
While formulating a policy on competition, the Central or State Governments can make a reference
to the Commission.
The commission shall give its opinion within sixty days.
The opinion given by the Commission is not binding.
The Governments are then free to take further action as they deem fit.

The Commission shall undertake Awareness and Training Programmes.

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4. Appeals
Chapter VIIIA
Competition Appellate Tribunal
Sections 53A-U

Establishment of Appellate Tribunal: Section 53A.

Functions
(1) The Central Government shall, by notification, establish an Appellate Tribunal to be known as
Competition Appellate Tribunal –

(a) to hear and dispose of appeals against decisions / directions / orders passed by the Commission;

(b) to adjudicate on claims for compensation.

Headquarters
(2) The Headquarters of the Appellate Tribunal shall be notified by the Central Government.

Appeal to Appellate Tribunal: Section 53B.

Appeal Period
All appeals should be filed within a period of sixty days.
An appeal after the expiry of sixty days may be entertained if it has sufficient cause.
It shall be in such form and be accompanied by such fee as may be prescribed.

Decision
After hearing both sides, the Appellate Tribunal may confirm, modify or set aside the decision,
direction or order appealed against.

Time Period for decision

The appeal should be disposed within six months.

Copies
The Appellate Tribunal shall send copies of its orders to the Commission and the parties to the
appeal.

Composition of Appellate Tribunal: Section 53C.

The Appellate Tribunal shall consist of a Chairperson and not more than two other members to be
appointed by the Central Government.

Qualifications for appointment of Chairperson and Members of Appellate Tribunal: Section 53D.
(1) The Chairperson should have been a Judge of the Supreme Court or the Chief Justice of a High
Court.

(2) A member shall be a person of ability, integrity and standing having a professional experience of
more than twenty-five years in, competition matters.

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Selection Committee 53E.

(1) The Central Government appoints persons from a panel of names recommended by a Selection
Committee consisting of –

(a) the Chief Justice of India or his nominee ………. Chairperson;

(b) the Secretary in the Ministry of Corporate Affairs………. Member;
(c) the Secretary in the Ministry of Law and Justice ………. Member.

Term of office of Chairperson and Members of Appellate Tribunal 53F.

The term is 5 years.
The Maximum Age Limits are:
(a) in the case of the Chairperson, sixty-eight years;
(b) in the case of a member, sixty-five years.
They are eligible for re-appointment:

Terms and conditions of service of chairperson and Members of Appellate Tribunal 53G
As prescribed.
Will not varied to their disadvantage after their appointment.

Vacancies 53H.
If, a vacancy occurs, the Central Government shall appoint another person and the proceedings may
be continued from the stage at which the vacancy is filled.

Resignation of Chairperson and Members of Appellate Tribunal 53I.

They may resign by giving a notice in writing under his hand addressed to the Central Government.
The General period of notice is three months, which may be waived by the Central Government.
They can also relinquish their office earlier if a replacement has been appointed or their term of
office expires.

Member of Appellate Tribunal to act as its Chairperson in certain cases 53J.

In case of a vacancy in the office of the Chairperson by reason of his death, resignation or otherwise,
the senior- most Member shall act as the Chairperson, until a new Chairperson enters upon his
office.

In case the Chairperson is unable to discharge his functions owing to absence, illness or any other
cause, the senior-most Member shall discharge the functions of the Chairperson until the date on
which the Chairperson resumes the charge of his functions.

Removal and suspension of Chairperson and Members of Appellate Tribunal 53K.

Conviction
(a) has been convicted and sentenced to imprisonment for an offence which, in the opinion of the
Central Government, involves moral turpitude; or

Insolvency
(b) is an undischarged insolvent; or

Unsound Mind
(c) is of unsound mind and stands so declared by a competent court; or

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Dismissal
(d) has been removed or dismissed from the service of the Government or a body corporate owned
or controlled by the Government; or

Financial Interests
(e)Has acquired such financial or other interest as is likely to affect prejudicially his functions; or

Abuse
(f) has so abused his position as to render his continuance in office prejudicial to the public interest.

(2) For offences specified in clauses (e) or (f) an inquiry is required to be made by a Judge of the
Supreme Court.
Reasonable opportunity of being heard will be given.

Restriction on employment of Chairperson and other Members of Appellate Tribunal in certain

cases 53L.
They shall not, for a period of two years after they cease to hold office, accept any employment in,
any enterprise which has been a party to a proceeding before the Appellate Tribunal.
This does not apply to employment in Government Companies

Staff of Appellate Tribunal 53M.

(1) The Central Government shall provide officers and other employees as it may think fit.

(2) They shall discharge their functions under the general superintendence and control of the
Chairperson of the Appellate Tribunal.

(3) Their salaries and allowances and other conditions of service will be as prescribed.

Awarding compensation 53N.

All applications for compensation shall be accompanied by the findings of the Commission, and fees
as may be prescribed.
A joint application on behalf of aggrieved persons may be made.

The Appellate Tribunal may, after an inquiry, pass an order for compensation as determined by it.

The Appellate Tribunal obtains the recommendations of the Commission before passing an order.

Procedures and powers of Appellate Tribunal 53O.

The Appellate Tribunal shall have power to regulate its own procedure including the places at which
they shall have their sittings.
The Appellate Tribunal shall be guided by the principles of natural justice.

The Appellate Tribunal shall have the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908.

All proceedings shall be deemed to be judicial proceedings and the Appellate Tribunal shall be
deemed to be a civil court.

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Execution of orders of Appellate Tribunal 53P.

All orders shall be enforced by it.
In case of its inability to execute an order, the order may be sent to a civil court which has
jurisdiction over the parties to be enforced.

Contravention of orders of Appellate Tribunal 53Q.

For contravention, a fine of up to rupees one crore or imprisonment up to three years or both may
be imposed.

Vacancy in Appellate Tribunal not to invalidate acts or proceedings 53R.

All proceedings shall be valid even in the existence of any vacancy or defect in the constitution of the
Appellate Tribunal.

Right to legal representation 53S.

A person may appear on his own or authorise another person.
The Central/State Government / enterprise/ Commission may authorize one or more persons
prescribed to present their case.

Appeal to Supreme Court 53T.

Any aggrieved person/party may file an appeal to the Supreme Court within sixty days.
A period greater than sixty days may be allowed if the SC is satisfied with the reasons.

Power to Punish for contempt 53U.

Same as a High Court.

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