Competition Act,2002

Objectives of the Competition Act, 2002

 The Act seeks to provide the legal framework and tools to ensure
competition policies are met, to prevent anti-competition practices and
provide for the penalisation of such acts.
 The Act protects free and fair competition which protects the freedom of
trade.
 The Act seeks to prevent monopolies and also to prevent unnecessary
intervention by the government.

 The main objectives of the Competition Act, 2002 :

 to provide the framework for the establishment of the Competition
Commission.
 to prevent monopolies and to promote competition in the market.
 to protect the freedom of trade for the participating individuals and
entities in the market.
 to protect the interest of the consumer.

 The Act mainly covers these aspects-

 Prohibition of anti competitive agreements.
 Prohibition of abuse of dominance.
 Regulation of combination (acquisition, mergers, and amalgamation of
certain size)
 Establishment of the competition commission of India.
 Power and functions of the competition commission of India.

Features of the Competition Act 2002:

 1. Anti Agreements: Any individual or enterprises shall not deal in
production supply or distribution that may cause a negative impact
regarding competition in India. Any existence of such agreements is
considered illegal.
 2. Abuse of dominant position: In the event, an enterprise or an associated
individual, it is found to indulge in practices that are unfair or
discriminatory in nature shall be considered an abuse of dominant
position. If a party is found to be in abuse of its position, then they will be
subjected to an investigation from the concerned authorities.
 3. Combinations: As per the act a combination is defined as terms which
lead to acquisitions or mergers. But should such combinations cross the
limits as put forth by the Act, then the parties involved would be under
the scrutiny of the Competition Commission of India.
 4. Competition Commission of India: Its an independent body. The
Commission has the task to sustaining and promoting the interests of
consumers in order to foster an ideal environment for economic
competition.
 Anti competitive agreement

 Any agreement for goods or services which has appreciable adverse

effect on competition in India is prohibited. These kinds of agreements
are known as anti-competitive agreements.
 Anti competitive agreement of entered into shall be void.
 Section 3 of the Act states that no enterprise shall enter into-
 Any agreement with respect to production, supply distribution, storage,
acquisition or control of goods/provision of services which is anti-
competitive is prohibited and void.
 Such agreements must cause or be likely to cause appreciable adverse
effect on competition in a relevant market in India
 The relevant market may be a geographical or a products market.

There are Two kinds of agreements

 1. Horizontal agreements- They are Agreements Between Parties in the
same line of production. Agreement between Manufactures, Agreement
between Distributors.
 2. Vertical agreements-Vertical agreement are those agreements between
Non-Competition undertaking operating at different levels of
manufacturing and distribution process. The agreement between
manufacturers of components, manufactures of products, between
producers and whole- sellers or between producers, whole sellers and
retailers

 Types of Horizontal Agreements-Price Fixing Agreement , Facilitating

practices etc
 Types of Vertical Agreements-Tie-in arrangement, Exclusive supply
arrangement, Exclusive distribution arrangement etc
 Horizontal agreements are presumed to have appreciable adverse effect
on competition in a relevant market in India.
 Vertical agreements, the onus / Burden of proving appreciable adverse
effect on competition in a relevant market in India lies on the
commission.

Following Agreement may be considered as Anti Competitive

 Tie-in arrangement
 Exclusive supply arrangement
 Exclusive distribution arrangement
 Refusal to deal
 Resale price maintenance
 Bid rigging-Agreement between enterprise or person engaged in similar
production or trading of goods or provisions of service which has effect
of eliminating or reduce the competition for bid.
 Predatory pricing-It means the sale of goods or provision of services, at a
price below cost of production to reduce competition or eliminate the
competitors. The main objective of such price is to reduce competition or
to eliminate the competitors.
 Prohibition of abuse of dominance.
 “dominant position” means a position of strength, enjoyed by an
enterprise, in the relevant market, in India, which enables it to—
 (i) operate independently of competitive forces prevailing in the relevant
market; or
 (ii) affect its competitors or consumers or the relevant market in its
favour.
 No enterprise or group shall abuse its dominant position.
  There shall be an abuse of dominant position if an enterprise or a group
—
 directly or indirectly, imposes unfair or discriminatory—
 (i) condition in purchase or sale of goods or service; or
 (ii) price in purchase or sale (including predatory price) of goods or
service.
 An Enterprise or group is said to have abused its dominant position if it
directly or indirectly:
Imposes unfair condition or price
Predatory pricing
 Limit or restrict :
1 Production of goods or provision of services or market
2 Technical or scientific development relating to goods or services
3 Creating barriers to entry
 Denying of market access
 Uses its dominant position in one market to gain advantage in other
market
 Separate provisions exist in case of acquisitions pursuant to loan/
investment agreements of public financial institutions
 Any combination which has an adverse effect on competition can be
declared void by the CCI.
 Any person or enterprise, who or which proposes to enter into a
combination, shall give notice to the Commission, in the form as may be
specified, and the fee which may be determined, by regulations,
disclosing the details of the proposed combination

 CCI. Can-
 Approve Combination .
 Approve with modifications
 Direct that combinations shall not take effect
 To order demerger
COMPETITION COMMISSION OF INDIA

 The objectives of the Act are sought to be achieved through the

Competition Commission of India, which has been established by the
Central Government with effect from 14th October 2003.
 CCI consists of a Chairperson and 6 Members appointed by the Central
Government.
 It is the duty of the Commission to eliminate practices having adverse
effect on competition, promote and sustain competition, protect the
interests of consumers and ensure freedom of trade in the markets of
India.
 The Commission is also required to give opinion on competition issues
on a reference received from a statutory authority established under any
law and to undertake competition advocacy, create public awareness and
impart training on competition issues.

The Chairperson and every other Member shall be a person of ability,
integrity and standing and who has special knowledge of, and such
professional experience of not less than fifteen years in, international
trade, economics, business, commerce, law, finance, accountancy,
management, industry technology, public affairs or competition matters,
including competition law and policy, which in the opinion of the Central
Government, may be useful to the Commission.
 The Chairperson and every other Member shall hold office as such for a
term of five years from the date on which he enters upon his office and
shall be eligible for re-appointment
 The Chairperson or any other Member may, by notice in writing under his
hand addressed to the Central Government, resign his office
 The Central Government may, by order, remove the Chairperson or any
other Member from his office if such Chairperson or Member, as the case
may be,— (a) is, or at any time has been, adjudged as an insolvent; or (b)
has engaged at any time, during his term of office, in any paid
employment; or (c) has been convicted of an offence which, in the
opinion of the Central Government, involves moral turpitude; or (d) has
acquired such financial or other interest as is likely to affect prejudicially
his functions as a Member; or (e) has so abused his position as to render
his continuance in office prejudicial to the public interest; or(f) has
become physically or mentally incapable of acting as a Member.
  The Commission may appoint a Secretary and such officers and other
employees as it considers necessary for the efficient performance of its
functions under this Act.
Duties Powers and functions of the competition commission of India.
 Sec 18,19,20,26,27,28,29,30,31
Functions of CCI
1. Make the markets work for the benefit and welfare of consumers.
2. Ensure fair and healthy competition in economic activities in the country for
faster and inclusive growth and development of economy.
3. Implement competition policies with an aim to effectuate the most efficient
utilization of economic resources.
4. Develop and nurture effective relations and interactions with sectorial
regulators to ensure smooth alignment of sectorial regulatory laws in tandem
with the competition law.
5. Effectively carry out competition advocacy and spread the information on
benefits of competition among all stakeholders to establish and nurture
competition culture in Indian economy.