Competition Act, 2002

-MRTP Act, 1969

- In view of Globalization Government
removed controls and resorted to the
policy of liberalization.
-The focus was shifted from curbing
monopolies to promoting competition.
- Policies and requirement of Legal
enactment was felt to face competition
from within and outside the country.

COMPETITION
- Promotes Efficiency;
- Encourages Innovation;
- Punishes Laggards;
- Facilitates Better Governance;
- Boosts Choice, Improves Quality, Reduces
Cost;
- Ensures Availability of Goods in Abundance of
acceptable quality at affordable price.

UNIQUE FEATURES OF
COMPETITION
We teach and preach competition but
invariably do not practice
Competition does not have a human face
Competition kills competition
Competition is unstable
Nature has created monopolies

-Competition is an evasive term

- It is not defined in the Act
- It refers to economic rivalry amongst economic enterprises
to control greater market share
-Economic enterprises compete to outsmart their competitors and
in the process sometimes eliminate rivals.
-Level of Competition does not depend upon number of players
in an industry but degree of contestability.

History of
Competition Law
In 1980, less than 40 countries had Competition
Law, currently over hundred countries have
Competition Law. Over 30 countries are in the
process of enacting Competition Law.

The shepherd drives the wolf for which sheep

thanks the shepherd as his liberator while wolf
denounces him for same act as destroyer of
liberty. In plain words, the sheep and wolf are
not agreed upon the definition of Liberty.
ABRAHAM LINCOLN

Competition Act seeks to modernize

competition regime
The Act provides for repeal of the M.R.T.P.
Act, 1969 and the dissolution of the M.R.T.P.
Commission.
The Act provides for transfer of
Restrictive Trade Practices enquiry to
the Competition Commission of India
and Unfair Trade Practices enquiry to
the
Forums
under
the
Consumer
Protection Act, 1986

Cartel was not

explicitly
defined
under the MRTPC
Act, 1969

Cartel has been explicitly

defined under the Competition
Act, 2002 . It includes an
association
of
producers,
sellers, distributors, traders
or service providers who by
agreement amongst themselves
limit, control or attempt to
control
the
production,
distribution, sale or price of,
trade in goods or services.
The scope of term Enterprise
has been amplified and Govt.
Departments performing nonSovereign functions has been
brought within its ambit.

 The term Consumer

was not defined under
MRTP ACT. Consumer
was referred to as one
defined in Consumer
Protection Act, 1986

Under Competition Act,

2002,
the
term
Consumer has been
explicitly defined.
It
includes buyer of goods
or one who avails of
services
for
consideration
irrespective whether
it is for commercial
use or personal use.

Under the M.R.T.P. Act there

are
following
deemed
Restrictive Trade Practices
- Refusal to deal
- Tie in sale
- Exclusive agreement
- Differential discount
- Resale Price Maintenance
- Allocation of market
- Restriction on mfg. process
- Cartel
- Predatory pricing
- Restraint on bids
- Any agreement notified as
such by Central Govt.
- Agreement to enforce
restrictive agreement

In the Competition Act, there

are only 9 anti-competitive
agreements out of which 4 are
deemed only. These are:Fixation of price
Limiting production
Allocation of market
Bid rigging or Collusive
tendering.

The other 5 Anti-competitive

agreements
which
are
not
deemed but are to be judged by
Rule of Reason are
Tie in Sale
Exclusive supply agreement
Exclusive distribution
agreement
Refusal to deal
Resale Price Maintenance

Monopolistic Trade Practices is

generally referred to as a trade
practice of (i)
Maintaining
cost/price
at
unreasonable
level;
(ii) Lessening/preventing competition;
(iii)Limiting technical development,
increasing unreasonably the costs
or prices of goods to be sold or
services rendered.

Under the Competition Act:

The CCI has been empowered to impose penalty which

can be up to 10% of the average turnover for the
last three
preceding financial years upon each such
enterprise who
are parties to Anti-competitive
agreements or abuse of
dominant position.

In case of cartel, the Commission shall impose a penalty

equivalent to three times of the amount of profits made
out or 10% of average turn over whichever is more.

Cartel is generally a secret understanding. It can be burst

conveniently with the assistant of a member of cartel.

Law empowers Commission to impose lesser penalty on a

member of cartel if a member discloses information before
investigation/enquiry is taken up and who
makes first
disclosure which is full, true and vital.

Statement of Objects Of the

Competition Bill, 2002
(i) In the pursuit of globalization, India has
responded by opening up its economy,
removing controls and resorting to
liberalization. The natural corollary to this
is that the Indian market should be geared
up to face competition from within the
country and outside the country.
(ii) The Competition Act, 2002 seeks to ensure
fair competition in India by prohibiting
trade
practices
which
cause
appreciable
adverse
effect
on
competition in markets within India.

(iii) Establishment of a Quasi Judicial body

Competition Commission of India (CCI) which
shall (a) ensure fair competition by prohibiting
trade practices which cause appreciable
adverse effect on competition;
(b) Undertake Competition Advocacy by
creating awareness and imparting training on the
competition issues.
(c) Look into violations of the any
provisions of the Act, a task which could be
undertaken by the commission based on its
own knowledge or complains received and

(d) The Commission can grant interim relief

or any
other appropriate relief and compensation
or an order imposing penalties of not more
than 10 % of a companys average
turnover for the last 3 Financial years.
(e) The CCI can also order division of any
dominant enterprise or demerger in case of
mergers that adversely affect competition.
(f) Curb negative aspects of competition.
(iv) Create the Competition Fund. The
grants given by the Central Government,
Costs realized by the Commission and fee

(viii) The Bill aims to repeal Monopolistic &

Restrictive Trade Practices Act, 1969 (MRTPC
Act) and dissolution of MRTPC Commission.

COMPETITION ACT, 2002

OBJECTIVES
To prevent practices having appreciable adverse
effect on competition;
to promote and sustain competition in trade
and industry;
to protect the interest of consumers;
to ensure freedom of trade carried on by the
participants in market in India;
Establishment of the Competition Commission
of India.

Sec 1. Applicability of the Act

The Act is applicable to the whole of India
except the state of J&K.

Sec 2. Definitions
Sec 2 (a) Acquisition means directly or
indirectly, acquiring or agreeing to acquire
(i) shares, voting rights or assets of any
enterprise; or
(ii) control over management or control over
assets of any enterprise.

Sec 2 (c) Cartel includes an association of

producers, sellers, distributors, traders
or service provides who by agreement
amongst themselves, limit, control or
attempt to control the production,
distribution, supply or price of or trade
in goods or provision
of services.

Sec 2 (l) person includes(i) an individual;

(ii) HUF;
(iii) a Company;
(iv) a Firm;
(v) an association of person or a body of
individuals, whether incorporated or not, in India or
outside India;
(vi) any corporation established by or under
Central, State or Provincial Act or a Government
company;
(vii) any body corporate incorporated by or
under any laws of a country outside India
(viii) a Co-operative society registered under
any law relating to the co-operative societies.
(ix) a local body
(x) every artificial juridical person, not falling
within any of the preceding sub-clauses.

The three important Concepts incorporated in the Act

are:
1. Prohibition of Anti Competitive Agreements
2. Prohibition of Abuse of Dominant Position
3. Regulation of Combinations

The Act is in line with international trend.

Agreement
Sec 3 (1) No enterprise or person shall enter
into any agreement in respect of production,
distribution, supply, storage, acquisition or
control of goods or provision of services,
which causes or is likely to cause an
appreciable adverse effect on competition
within
India.
This
rule
applies
to
association
of
enterprises and association or persons
while
entering
into
such
agreement.
Sec 3(2) An agreement in contravention of
the
provisions
of

Sec 3 (3) Adverse effect on

competition
Any agreement entered into between
enterprises or association of enterprises or
persons or association of persons or
between any person and enterprise or
practice carried on, or decision taken by,
any association of enterprises or
associations of persons, including cartels,
engaged in identical or similar trade of
goods or provision of services, which(a) directly or indirectly determines
purchase or sale prices;

(c) shares the market or source of

production or provision of services by way
of allocation of geographical area of
market, or type of goods or services, or
number of customers in the market or any
other similar way;
(d) directly or indirectly results in bid
rigging or collusive bidding;
shall be presumed to have an appreciable
adverse effect on competition.

Provided that nothing contained in this subsection shall apply to any agreement
entered into by way of joint ventures if
such agreement increases efficiency in
production,
supply,
distribution,
storage, acquisition or control of goods
or provision of services.

Bid rigging" means any agreement,

between enterprises or persons referred
to
in
sub-section
(3)
engaged in identical or similar production
or trading of goods or provision of
services, which has the effect of
eliminating or reducing competition for
bids
or
adversely
affecting
or
manipulating the process for bidding

Sec 3(4). Any agreement amongst enterprises

or persons at different stages or levels of the
production chain in different markets, in respect
of production, supply, distribution, storage, sale
or price of, or trade in goods or provision of
services,
including
(a) tie-in arrangement;
(b) exclusive supply agreement;
(c) exclusive distribution agreement;
(d) refusal to deal;
(e) resale price maintenance,
shall be an agreement in contravention of subsection (1) if such agreement causes or is likely

agreement requiring a purchaser of goods, as a

condition of such purchase, to purchase some
other
goods;
(b) "exclusive supply agreement" includes
any agreement restricting in any manner the
purchaser in the course of his trade from
acquiring or otherwise dealing in any goods
other than those of the seller or any other
person;
(c) "exclusive distribution agreement"
includes any agreement to limit, restrict or
withhold the output or supply of any
goods or allocate any area or market for
the
disposal
or
sale
of
the
goods;

(d) "refusal to deal" includes any agreement

which restricts, or is likely to restrict, by any
method the persons or classes of persons to
whom goods are sold or from whom goods are
bought;
(e) "resale price maintenance" includes any
agreement to sell goods on condition that the
prices to be charged on the resale by the
purchaser shall be the prices stipulated by the
seller unless it is clearly stated that prices lower
than those prices may be charged.

Sec 3 (5). Non Applicability of Sec. 3

Nothing contained in this section shall restrict
the rights of any person under(i) Copy rights under the Copyright Act, 1957
(ii) Patents granted under the Patent Act, 1970
(iii) Designs registered under the Designs
Act, 2000
(iv) Layout - design registered under the
Semiconductor Integrated Circuits Layout
Design Act,
2000
2. Rights of any person to export goods to
the extent to which the agreement relates
exclusively to the production, supply,

Abuse of Dominance
Existence of dominance is
not bad.
Exercise of dominance if it
falls amongst Abuses, is
only frowned upon
Dominance means position
of strength which enables
an entity or a group to
operate independent of
competitors, consumers or
relevant market in its
favour

Prohibition of abuse of dominant

position
Sec 4. (1) No enterprise or group shall abuse
its dominant position.
(2) There shall be an abuse of dominant position
under sub-section (1), if an enterprise or a group
(a) 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.

(b) limits or restricts

(i) production of goods or provision of
services or market ; or
(ii) technical or scientific development
relating to goods or services to the
prejudice of consumers; or
(c) indulges in practice or practices
resulting in denial of market access in
any manner; or

(d) makes conclusion of contracts subject to

acceptance by other parties of supplementary
obligations; or
(e) uses its dominant position in one relevant
market to enter into, or protect, other relevant
market.
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.
(b) "predatory price" means the sale of goods or provision of
services, at a price
which is below the cost, as may be determined by regulations, of
production of

Sec 5. Regulation of combinations

The acquisition of one or more enterprises by one or
more persons or merger or amalgamation of
enterprises shall be a combination of such enterprises
and persons or enterprises, if
(a) any acquisition where
(i) the parties to the acquisition, being the acquirer
and the enterprise, whose control, shares, voting rights
or assets have been acquired or are being acquired
jointly have,
(A) either, in India, the assets of the value of more
than rupees one thousand crores or turnover
more than rupees three thousand crores; or

(B) In India or outside India, in aggregate, the assets of

the value
of more than five hundred million US dollars,
including at least rupees five hundred crores in
India, or turnover more than fifteen hundred million
US dollars, including at least rupees fifteen
hundred crores in India; or
(ii) the group, to which the enterprise whose control,
shares, assets or
voting rights have been acquired or are being acquired,
would belong after the acquisition, jointly have or would
jointly have,
(A)either in India, the assets of the value of more than
rupees four
thousand crores or turnover more than rupees
twelve thousand crores; or
(B) In India or outside India, in aggregate, the assets of

(b) acquiring of control by a person over an

enterprise when such person has already direct or
indirect control over another enterprise engaged in
production, distribution or trading of a similar or identical
or substitutable goods or provision of a similar or identical
or substitutable service, if
(i) the enterprise over which control has been acquired
along with the enterprise over which the acquirer already
has direct or indirect control jointly have,
(A) Either in India, the assets of the value of more than
rupees one thousand crores or turnover more than rupees
three thousand crores; or
(B) In India or outside India, in aggregate, the assets of
the value of more than five hundred million US dollars,
including at least rupees five hundred crores in India, or
turnover more
than fifteen hundred million US dollars, including at least

(ii) the group, to which enterprise whose control

has been acquired, or is being acquired, would
belong after the acquisition, jointly have or would
jointly have,
(A) Either in India, the assets of the value of
more than rupees four thousand crores or
turnover more than rupees twelve thousand
crores; or
(B) In India or outside India, in aggregate, the
assets of the value of more than two billion US
dollars, including at least rupees five hundred
crores in India, or turnover more than six billion
US dollars, including at least rupees fifteen
hundred crores in India.

(c) Any merger or amalgamation in which

(i) the enterprise remaining after merger or the
enterprise created as a result of the amalgamation, as
the case may be, have,
(A) either in India, the assets of the value of more than
rupees one thousand crores or turnover more than
rupees three thousand crores; or
(B) In India or outside India, in aggregate, the assets of
the value of more than five hundred million US dollars,
including at least rupees five hundred crores in India, or
turnover more than fifteen hundred million US dollars,
including at least rupees fifteen hundred crores in India;
or

(ii) the group, to which the enterprise remaining after

the merger or the enterprise created as a result of the
amalgamation, would belong
after the merger or the amalgamation, as the case may
be, have or
would have,
(A) Either in India, the assets of the value of more than
rupees
four-thousand crores or turnover more than rupees
twelve thousand crores; or
(B) In India or outside India, in aggregate, the assets of
the value of more than two billion US dollars, including
at least rupees five hundred crores in India, or turnover
more than six billion US dollars, including at least
rupees fifteen hundred crores in India.

"group" means two or more enterprises which,

directly or indirectly, are in a position to
(i) exercise twenty-six per cent or more of
the voting rights in the other enterprise; or
(ii) appoint more than fifty per cent of the
members of the board of directors in the
other enterprise; or
(iii) control the management or affairs of the
other enterprise.

Sec 6. Regulation of combinations

No person or enterprise shall enter into a
combination which causes or is likely to cause
an appreciable adverse effect on competition within
the relevant market in India and such a combination
shall be void.
Sec. 6 (2) Subject to the provisions contained in subsection (1), 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, within thirty days of approval of the
proposal relating to merger or amalgamation or
execution of any agreement relating to acquisition.

Sec 2 A. No combination shall come into effect until two

hundred and ten days have passed from the day on
which the notice has been given to the Commission or
the Commission has passed orders whichever is
earlier.
(ii) The provisions of this section shall not apply to share
subscription or financing facility or any acquisition, by a
public financial institution, foreign institutional investor,
bank or venture capital fund, pursuant to any covenant
of a loan agreement or investment agreement.

(iii) The public financial institution, foreign

institutional investor, bank or venture capital
fund shall, within seven days from the
date of the acquisition, file, in the form as
may be specified by regulations, with the
Commission the details of the acquisition
including the details of control, the
circumstances for exercise of such control
and the consequences of default arising out
of such loan agreement or investment
agreement, as the case may be.

Competition Commission of
India

Sec 7. The Central Government shall

constitute the Competition Commission of
India.
The Commission shall be a body corporate
by the name aforesaid having perpetual
succession and a common seal with power,
subject to the provisions of this Act, to
acquire, hold and dispose of property, both
movable and immovable, and to contract
and shall, by the said name, sue or be sued.

Sec 8. Composition of Commission

The Commission shall consist of a Chairperson and
not less than two and not more than six other
Members to be appointed by the Central Government.
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, 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

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,
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:
Provided that the Chairperson or other Members shall
not hold office as such after he has attained the age
of sixty-five years.

The
Central
Government
may,
by
notification, appoint a Director General for
the
purposes
of
assisting
the
Commission in conducting inquiry into
contravention of any of the provisions of this
Act and for performing such other functions
as are, or may be, provided by or under this
Act.

Sec 18. DUTIES, POWERS AND FUNCTIONS OF

COMMISSION

It shall be the duty of the Commission to eliminate practices having adverse effect
on competition,
promote and sustain competition;
protect the interests of consumers;
ensure freedom of trade carried on by
other participants, in markets in India.
Undertake Competition Advocacy

Sec 28. Division of enterprise Abusing

dominant position
The Commission may, by order in writing,
direct division of an enterprise enjoying
dominant position to ensure that such
enterprise does not abuse its dominant
position.

Sec 53 A. COMPETITON APPELLATE

TRIBUNAL
The Central Government shall, by notification,
establish an Appellate Tribunal to be known as
Competition Appellate Tribunal to hear and
dispose of appeals against any direction
issued or decision made or order passed by
the Commission.
Appeals to the Competition Appellate Tribunal
are required to be filed within 60 days from
the order of the CCI. However the Appellate
Tribunal may condone the justified delay if
any.

Sec 53 T. Appeal to the Supreme

Court
The Central Government or any State Government or
the Commission or any statutory authority or any
local authority or any enterprise or any person
aggrieved by any decision or order of the Appellate
Tribunal may file an appeal to the Supreme Court
within
sixty
days
from
the
date
of
communication of the decision or order of the
Appellate Tribunal to them.
Provided that the Supreme court may, if it is satisfied
that the applicant was prevented by sufficient
cause from filing the appeal within the said period,
allow it to be filed after the expiry of the said
period of sixty days.