The Act is designed for following purposes Prohibition of anticompetitive agreements Prohibition of abuse of dominant position Regulation of combinations

s Competition advocacy opinion to Central / State Government on effect on competition while Government is forming a policy.

(a) to prevent practices having adverse effect on competition. (b) to promote and sustain competition in markets. (c) to protect the interests of consumers. (d) to ensure freedom of trade carried on by other participants in markets in India, and (e) for matters connected therewith or incidental thereto. Thus, main purpose of Act is to ensure free and fair competition in market by prohibiting anti-competitive agreements, abuse of dominant position and by regulating competition.

An authority named Competition Commission of India (CCI) has been constituted under section 7 of Act, consisting of Chairperson and members. Powers of CCI It is empowered to order division of dominant enterprises. It can order that a combination (acquisition, amalgamation, merger etc.) will not be effective. It can order discontinuance of anti-competitive agreement or discontinue abuse of dominant position. It can award compensation It can impose penalties and fine under different sections of the Act Appeal against order of CCI - Appeal to Competition Appellate Tribunal (CAT) has been provided. Appeal to Supreme Court can be made against order of CAT.

No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, 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. Any agreement entered into in contravention of the provision shall be void. Anti-competitive agreements are specified in the Act in two categories (a) Presumed anti-competitive agreements - here burden is on defendant to prove that the practice is not anti-competitive and (b) Anti competitive if agreement affects competition - here the burden is on appellant (who is alleging anti-competitive practice) to prove that the practice is anti-competitive.

Any agreement entered into between person, enterprises, associations thereof engaged in identical or similar trade of goods or provision of services, which (a) directly or indirectly determines purchase or sale prices (b) limits or controls production, supply, markets, technical development, investment or provision of services (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. Nothing contained in this sub-section 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.

Agreement where the appellant has to prove that the practice is anti-competitive are (a) tie-in arrangement (b) exclusive supply agreement (c) exclusive distribution agreement (d) refusal to deal (e) re-sale price maintenance. Enterprises to whom the Provisions applies - the provisions relating to anti-competitive agreement apply to all enterprises.

-Enterprise means a person or a department of the Govt, who or which is, or has

been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space. There is no exemption to Public Sector Undertakings (PSU) or enterprises controlled by Government.

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) re-sale price maintenance shall be an agreement affecting competition , if such agreement causes or is likely to cause an appreciable adverse effect on competition in India. Thus, there is no presumption that the agreement is adversely affecting competition. In other words, burden is on complainant to prove that the agreement is adversely affecting competition.

No enterprise or group shall abuse its dominant position. Note that dominant position itself is not prohibited. What is prohibited is its misuse. The abuse cam be by an enterprise or group. Group - 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. Dominant Position - 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. Relevant Market - Relevant market means the market which may be determined by the commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets.

There shall be an abuse of dominant position if an enterprise or group follows any of the following practices. (No further proof of any damage or loss is required). (a) Unfair or discretionary conditions in purchase/sale - Directly or indirectly, imposing unfair or discriminatory (i) condition in purchase or sale of goods or services; or (ii) price in purchase or sale of goods or service is abuse of dominant position. However, it shall not include such discriminatory conditions or prices which may be adopted to meet the competition . (b) Limiting or restricting production or development - Limiting or restricting (i) production of goods or provision of services; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers, is abuse of dominant position . (c ) Denial of market access - Indulging in practice or practices resulting in denial or market access in any manner, is abuse of dominant position.

(d) Supplementary obligations unconnected to main contract - Making conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject to such contracts, is abuse of dominant position. (e) Using dominant position to enter another market - Using dominant position in one relevant market to enter into, or protect, other relevant market is abuse of dominant power. For example, Microsoft used its dominant position in Disk Operating System to dominate browser market and ruined Netscape. Division of enterprise enjoying dominant position - The Competition Commission may direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position. [section 28(1)] (Section 28 has been brought into force from 20-5-2009).

The Competition Commission may inquire into any alleged contravention of the provisions contained in the Act either on its own motion or (a) on receipt of any information, in such manner and accompanied by such fee as may be determined by regulations from any person, consumer or their association or trade association; or (b) on a reference made to it by the Central Government or a State Government or a statutory authority.

Take over, amalgamation, merger etc. are some of the ways of increasing market dominance. Competition Act intends to exercise control over such mergers and amalgamations, with a view to ensure that such amalgamations and mergers are not anti-competitive. The provisions are contained in sections 5 and 6. These sections have not been made effective till July, 2009. Summary of combinations - Broadly, combination can be either by acquisition or merger in one enterprise or an enterprise which belongs to a group. Various limits of assets/turnover have been fixed, depending on whether the enterprise being acquired/merged has similar product/services or dissimilar product/services. Summary of combinations are as follows

Type of Combination

Assets / turnover in India

Assets / turnover in or outside India

Acquisition by a single acquirer Joint Assets over Rs 1,000 Joint Assets over US $ 500 million, including at but different goods/services crores or turnover over Rs 3,000 least Rs 500 crores in India or turnover over US $ crores 1,500 million including at least Rs 1,500 crores in India Acquisition by a group but Group Assets over Rs 4,000 Group Assets over US $ 2 billion including at dissimilar goods/services crores or turnover over Rs least Rs 500 crores in India or turnover over US $ 12,000 crores 6 billion including at least Rs 1,500 crores in India Acquisition by a single acquirer Joint Assets over Rs 1,000 Joint Assets over US $ 500 million or turnover with similar or identical or crores or turnover over Rs 3,000 over US $ 1,500 million substitutable goods/services crores Acquisition by a group with Group Assets over Rs 4,000 Group Assets over US $ 2 billion or turnover similar or identical or crores or turnover over Rs over US $ 6 billion substitutable goods / services 12,000 crores Merger or amalgamation of two Combined Assets over Rs Combined Assets over US $ 500 million or enterprises [goods/services may 1,000 crores or turnover over Rs turnover over US $ 1,500 million be similar or different] 3,000 crores Merger or amalgamation in a Combined Assets over Rs Combined Assets over US $ 2 billion or turnover group [goods/services may be 4,000 crores or turnover over Rs over US $ 6 billion similar or different] 12,000 crores

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 as prescribed by regulations, disclosing the details of the proposed combination, within thirty days of (a) approval of the proposal relating to merger or amalgamation, by the board of directors of the enterprises concerned with such merger or amalgamation, as the case may be or (b) execution of any agreement or other document for acquisition or acquiring of control . Notice within 30 days is mandatory. Cooling period of 210 days There is cooling period of 210 days after such notice is given. Combination cannot become effective during the cooling period.

Procedure at Commission after receiving notice - The Commission shall, after receipt of notice, shall examine the notice and form prima facie opinion and then proceed as per provisions of Act. The Commission has to form a prima facie opinion whether a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India. If it forms such an opinion, it shall issue a notice to show cause to the parties. Thus, if Commission forms prima facie opinion that the combination will not adversely affect competition, it need not proceed further. Deemed approval if Commission does not issue orders in 210 days - If the Commission does not, on the expiry of a period of 210 days from the date of notice given to Competition Commission, the combination shall be deemed to have been approved by the Commission .

CCI is an expert body which functions as regulator for preventing anticompetitive practices in the country. It also has advisory and advocacy functions in its role as a regulator . Its decisions will be based on majority. Meetings of Commission - Meetings of CCI are ordinary and special. Ordinary meetings relates to a statutory inquiry or investigation, or other proceeding, to be conducted by the Commission, as per provisions of the Act, or the rules or regulations made thereunder. Special meetings relates to all other functions not covered by the ordinary meeting. Ordinary meetings relate to inquiry or investigation, where parties can present their case. Ordinary meeting shall be held at least once a month to review compliance of its orders. Special meeting is only amongst members of Commission where outsiders are not involved. Secretary shall inform matters of non-compliance for information and further orders .

Presentation of case by parties - At each ordinary meeting, each party to proceedings may be granted opportunity to present its case as deemed appropriate by Chairperson. Commission may direct any party to file written submissions which will be considered along with reply of other parties to the proceedings. Commission may grant oral hearing to any party. Commission can adjourn the meeting . Appearance before Commission - A person or an enterprise or the Director General may either appear in person or authorise one or more practicing chartered accountants/company secretaries/cost accountants, legal practitioners or any of his or its officers to present his or its case before the Commission.

Appeal against order of Competition Commission can be filed with Competition Appellate Tribunal (CAT). Who can file appeal - Appeal can be filed with CAT by Central Government, State Government or enterprise or any person who is aggrieved by decision, direction or order of CCI. Time limit for filing appeal - Appeal should be filed within 60 days in prescribed form. Delay in filing appeal can be condoned by CAT if sufficient cause is shown. Hearing and order by Tribunal The Tribunal shall give opportunity of hearing to parties and pass such orders thereon as it thinks fit, confirming, modifying or setting aside the direction, decision or order appealed against. Copy of order shall be sent to parties to appeal and also to CCI . Time limit to decide appeal CAT will endeavor to dispose of the appeal within six months from receipt of appeal . (Time limit of six months is not mandatory).

MRTP Act has been repealed w.e.f. 1-9-2009 and MRTP Commission has been abolished on 14-10-2009. After 14-10-2009, cases pending under MRTP Act has been transferred to Competition Appellate Tribunal constituted under Competition Act . All cases of Unfair Trade Practices (except those relating to disparaging of goods) pending before MRTP Commission 1-9-2009, are transferred to National Commission constituted under Consumer Protection Act. Cases in respect of disparaging of goods pending with MRTP Commission as on 14-10-2009 will be transferred to Competition Appellate Tribunal. Investigation pending with Director General of Investigation and Registration [DGIR] are transferred to Competition Commission/National Commission under Consumer Protection Act, as applicable.

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