Competition

Law
 COMPETITION LAWS STATUTES
US UK India
Sherman Act, 1890 The Monopolies & Restrictive MRTP Act, 1969
Practices (Inquiry & Control)
Act, 1948

Clayton Act, 1914 The Restrictive Trade Competition Act, 2002

Practices Act 1956
The Federal Trade Monopolies and Mergers The Competition (Amendment)
Commission Act, 1914 Act 1965 Act, 2007
Robinson-Patman Act, 1936 Competition Act, 1998 The Competition (Amendment)
Act, 2009

Celler-Kefauver Act ,1950 Enterprise Act, 2002 The Competition (Amendment)

Bill, 2020
The Hart-Scott-Rodino
Antitrust Improvements Act
of 1976
Foreign Trade Anti-trust Protection of Trading Interest S. 32 of Competition Act, 2002
Improvement Act, 1982 Act, 1980
 COMPARING IMPORTANT SECTIONS UNDER THE
ACTS
India US UK
Anti-competitiv S. 3 of S.1 of Sherman S. 2 of
e agreements Competition Act, Act, 1890 Competition Act,
2002 1998
Abuse of S. 4 S.2 of Sherman S. 18
Dominance Act, 1890

Combinations S. 5 & 6 S. 7 Regulation OFT investigates

of Clayton Act, mergers under
1914. Fair Trading Act,
1973.
Investigation S. 19 Ch. III (S. 25-41)
During ‘Rule of Reason ‘Rule of Reason
investigation Analysis is Analysis is
‘Balanced Followed’ Followed’
Assessment’ is
looked into
 Regarding Anti-trust Laws
⚫ Many consumers have never heard of antitrust laws, but enforcement
of these laws saves consumers millions and even billions of dollars a
year. The Federal Government enforces three major Federal antitrust
laws, and most states also have their own. Essentially, these laws
prohibit business practices that unreasonably deprive consumers of
the benefits of competition, resulting in higher prices for products
and services.
⚫ The three major Federal antitrust laws are:
⚫ The Sherman Antitrust Act
⚫ The Clayton Act
⚫ The Federal Trade Commission Act.
⚫ The following information on these laws comes from the Antitrust
Enforcement and the Consumer guide.
The Sherman Antitrust Act
⚫ This Act outlaws all contracts, combinations, and conspiracies
that unreasonably restrain interstate and foreign trade. This
includes agreements among competitors to fix prices, rig bids,
and allocate customers, which are punishable as criminal
felonies.
⚫ The Sherman Act also makes it a crime to monopolize any part
of interstate commerce. An unlawful monopoly exists when
one firm controls the market for a product or service, and it has
obtained that market power, not because its product or service
is superior to others, but by suppressing competition with
anticompetitive conduct.
⚫ The Act, however, is not violated simply when one firm's
vigorous competition and lower prices take sales from its less
efficient competitors; in that case, competition is working
properly.
The Clayton Act
⚫ This Act is a civil statute (carrying no criminal penalties)
that prohibits mergers or acquisitions that are likely to
lessen competition. Under this Act, the Government
challenges those mergers that are likely to increase prices
to consumers. All persons considering a merger or
acquisition above a certain size must notify both the
Antitrust Division and the Federal Trade Commission.
The Act also prohibits other business practices that may
harm competition under certain circumstances.
 The Federal Trade Commission Act & Related
Offences
⚫ This Act prohibits unfair methods of competition in interstate
commerce, but carries no criminal penalties. It also created the
Federal Trade Commission to police violations of the Act.
⚫ The Antitrust Division also often uses other laws to fight
illegal activities that arise from conduct accompanying antitrust
violations or that otherwise impact the competitive process, as
well as offenses that involve the integrity of an antitrust or
related investigation, including laws that prohibit false
statements to Federal agencies, perjury, obstruction of justice,
conspiracies to defraud the United States and mail and wire
fraud. Each of these crimes carries its own fine and
imprisonment term, which may be added to the fines and
imprisonment terms for antitrust law violations.
US – Antitrust Law
• Section 1 of the Sherman Act, 15 U.S.C. § 1
Prohibits contracts, combinations and conspiracies in restraint of
trade.
The Supreme Court has interpreted the Sherman Act to only
prohibit “unreasonable” restraints of trade. Determining what is
unreasonable typically is a complex, granular exercise deeply
impacted by economic analysis.
Certain agreements, however, are per se illegal without any
further analysis. It is generally per se illegal when competitors
engage in price fixing, division of markets, bid rigging or group
boycotts.
US – Antitrust Law Penalties
• Criminal Penalties (Imposed by Sherman Act)
Up to 10 years in prison for individuals
Criminal fines of up to $100 Million for corporations or twice the
loss/gain from the violation (whichever is greater)
Criminal fines of up to $1 Million for individuals or twice the
loss/gain from the violation (whichever is greater)

• Civil Penalties
Treble damages available to a successful plaintiff
Payment of the plaintiff’s attorneys’ fees and costs (on top of
your own attorneys’ fees)
Joint and several liability
⚫ The Federal Trade Commission Act bans "unfair methods
of competition" and "unfair or deceptive acts or practices."
The Supreme Court has said that all violations of the
Sherman Act also violate the FTC Act. Thus, although the
FTC does not technically enforce the Sherman Act, it can
bring cases under the FTC Act against the same kinds of
activities that violate the Sherman Act. The FTC Act also
reaches other practices that harm competition, but that
may not fit neatly into categories of conduct formally
prohibited by the Sherman Act. Only the FTC brings cases
under the FTC Act.
⚫ The Clayton Act addresses specific practices that the Sherman
Act does not clearly prohibit, such as mergers and interlocking
directorates (that is, the same person making business decisions
for competing companies). Section 7 of the Clayton Act
prohibits mergers and acquisitions where the effect "may be
substantially to lessen competition, or to tend to create a
monopoly." As amended by the Robinson-Patman Act of 1936,
the Clayton Act also bans certain discriminatory prices,
services, and allowances in dealings between merchants. The
Clayton Act was amended again in 1976 by the
Hart-Scott-Rodino Antitrust Improvements Act to require
companies planning large mergers or acquisitions to notify the
government of their plans in advance. The Clayton Act also
authorizes private parties to sue for triple damages when they
have been harmed by conduct that violates either the Sherman
or Clayton Act and to obtain a court order prohibiting the
anticompetitive practice in the future.
The Basics – EU Competition Law
• Article 101(1) TFEU prohibits agreements whose
object or effect is the prevention, distortion or
restriction of competition and which appreciably
affects competition and trade between Member States

• Agreements/concerted practices

• Restrictions by object or effect

• Must appreciably affect competition and trade

between member states
• Article 101(3) individual exemption

• If an information exchange contributes to improving products and distribution or promotes

technical and economic progress while sharing benefits with consumers can be granted an
individual exemption

• Examples of pro-competitive information exchange

• Various Block Exemption Regulations: R&D, technology transfer agreement, specialisation

• Horizontal Co-operation Agreement Guidelines

⚫ Domestic Competition Law
• Member States have their own competition laws modelled on the EU laws

• This law applies where the competitive effect of the arrangement is purely domestic

⚫ Relevant Authorities
• The EU Commission is primarily responsible for enforcing EU competition law

• Member States competition authorities enforce domestic competition law but also enforce EU
competition law in association with the EU Commission.
Key Changes in Competition Bill 2022
⚫ A board with part-time members to supervise CCI activities.
⚫ This would bring its regulatory architecture at par with that of financial
regulators.
⚫ CCI to mandatorily issue penalty guidelines and give reasons in case of any
divergence.
⚫ It will give much-needed certainty in regulatory environment
⚫ CCI could engage in structured negotiations with parties and arrive at
mutually-workable solutions without having to go through lengthy formal
proceedings.
⚫ This will bring powers of CCI on par with Sebi, which has been passing
settlement orders for over a decade.
⚫ Previously CCI was only empowered to take action for abuse of dominance
or anti-competitive agreements in the form of final orders in proceedings
before it.
⚫ CCI can make appeals to the National Company Law Appellate Tribunal
conditional on a pre-deposit of up to 25% of the penalty imposed by the
CCI.
⚫ Shortening of the merger review period from 210 to 150 days
⚫ Introduction of a green channel for merger applications: Certain categories
of mergers that had to wait for CCI approval would be allowed to attain full
consummation without any standstill obligation under the new
green-channel process.
⚫ Previously, only those agreements are allowed if agreements made between
businesses at the same level of production (such as competitors that form a
cartel) or businesses that are in a directly upstream or downstream market
(such as agreements between a manufacturer and distributor).
⚫ If the parties do not fall in either of these brackets, anti-competitive
agreements between them can go unchecked.
⚫ But the bill also recognizes other forms of cartels such as hub-and-spoke
cartels, it also has a catch-all provision to enable the CCI to deal with
anti-competitive pacts irrespective of the structural relationships between
parties.
 IPR and Competition Law
⚫ Broadly, IPRs-related competition issues include:
⚫ Exclusionary terms in the licensing of IPRs, specifically the
inclusion in licensing contracts of restrictive clauses such as
territorial restraints,
⚫ exclusive dealing arrangements, tying or grant-back
requirements.
⚫ Use of IPRs to reinforce or extend the abuse of dominant
position on the market, unlawfully;
⚫ IPRs as an element of mergers and cooperative arrangements;
and
⚫ Refusal to deal.
⚫ Compulsory license and parallel imports, however, remain
debatable issues which lie on the delicate interface between
IPRs policy and competition rules.
⚫ Innovators or IPRs holders are rewarded with a temporary
monopoly by the law to recoup the costs incurred in the
research and innovation process. As a result, IPRs holders earn
rightful and reasonable profits, so that they have incentives to
engage in further innovation.
⚫ Competition law, on the other hand, has always been regarded
by most as essential mechanism in curbing market distortions,
disciplining anticompetitive practices, preventing monopoly
and abuse of monopoly, inducing optimum allocation of
resources and benefiting consumers with fair prices, wider
choices and better qualities. It, therefore, ensures that the
monopolistic power associated with IPRs is not excessively
compounded or leveraged and extended to the detriment of
competition.
 Framing the Competition-IPRs
Relationship
⚫ Only when alternative technologies are not available,11 IPRs can be
said to grant their holders monopolistic positions in the defined
relevant markets. And even then that alone does not create an
antitrust violation. Antitrust/ competition law recognises that an
IPR.s creation of monopoly power can be necessary to achieve a
greater gain for consumers. Moreover, antitrust/ competition law
does not outlaw monopoly in all circumstances. For example,
monopoly achieved solely with .superior skill, foresight, and
industry does not violate the antitrust/competition law. It is only
when monopoly is acquired or maintained, or extended through
unlawfully anti-competitive means that it can be ruled unlawful
⚫ From a theoretical perspective, IP is a quid pro quo for competition.
HUB-AND-SPOKE ARRANGEMENTS
⚫ In the current competition law regime, the investigations to prove the
presence of a cartel arrangement focuses heavily on determining the
presence of collusion either at a horizontal level or at a vertical level. This
leads to a difficulty in dealing with what is popularly known as
“hub-and-spoke arrangements,” which operate in the form of a hybrid of
the horizontal and vertical arrangements. Hub-and-spoke agreements
operate through the coming together of actors operating at one horizontal
level of the economic process (the spokes) controlled through a common
agent operating at a different level (the hub), thus creating a space wherein
the exchange of information is facilitated through the common agent
between the various parallel and competing horizontal actors resulting in
facilitation of collusions in the market.1 Hub-and-spoke cartels can have the
same negative effect in the markets as is achieved though the horizontal
agreements without the information ever getting transferred directly bet
ween the competitors situated on the same horizontal plane, thus making it
difficult for the investigators to prove the presence of a collusion among the
competing businesses.