Competition Act, 2002

 In line with the international trend and to

cope with changing realities, India has
reviewed
 the Monopolies and Restrictive Trade
Practices Act, 1969 and has enacted the
 Competition Act, 2002 (the Act) with many
innovative features w.e.f. 14.1.03. The Act
 seeks to repeal the M.R.T.P.Act and to
dissolve the M.R.T.P.Commission
 It proposes to control aspects of anti-
competitive agreements, abuse of dominant
position and regulation of competitions.
 All over the world, it was found that private
monopolies can be detrimental to national
economy and control is required.
 It is now felt that fair and free competition is
required for growth of healthy economy.
 The Act is to prevent practices
having adverse effect on
competition, to promote and
sustain competition in markets, to
protect the interests of consumers
and to ensure freedom of trade in
India
 The Act is designed for following purposes –
 (a) Prohibition of anti-competitive
agreements
 (b) Prohibition of abuse of dominant position
and
 (c) Regulation of combinations.
 A quasi-judicial authority named ‘Competition
Commission of India’ will be constituted.
 On receipt of complaint or reference, CCI
can issue order to Director General to
investigate.
 His report will then be considered by CCI.
The CCI will hear the concerned parties and
then pass necessary orders.
 CCI will sit in benches.
 Each bench will consist of at least one
judicial person of rank of Judge of High
Court.
 CCI is empowered to recommend division of
dominant enterprises.
 It can order de-merger in case of
merger/amalgamation that adversely affects
competition.
 Suitable powers are given to Commission
and penalties are prescribed to ensure that
orders of Commission are obeyed.
Jurisdiction of Civil Court is barred and only
appeal to Supreme Court only if substantial
question of law are involved.
 Anti-competitive agreements void - 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. 3(1)
 Any agreement entered into in contravention of the
provisions contained in section 3(1) shall be void.
 Prohibition of anti-
competitive practice
 Prohibition if anti-competitive practice affects competition -
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 in
contravention of section 3(1), if such agreement causes or is
likely to cause an appreciable adverse effect on competition in
India
 Thus, there is no presumption that the act is adversely affecting
competition. In other words, burden is on complainant to prove
that the act is adversely affecting competition.
Prohibition of abuse of
dominant position
 No enterprise shall abuse its dominant
position.
 Note that ‘dominant position’ itself is not
prohibited. What is prohibited is its misuse.
 “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.
 Combinations - Take over is one of the
ways of increasing market dominance. The
acquisition of one or more enterprises by
one or more persons or merger or
amalgamation of enterprises shall be treated
as ‘combination’ of such enterprises and
persons or enterprises in prescribed cases.
Broadly, ‘combination’ can be either by
acquisition or merger in one enterprise or an
enterprise which belongs to a group.
 Regulation over 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.
 The definition and heading of the
section itself means that it is
‘regulation of combination’.
 Thus, combination in itself is not
prohibited. It will be held void only if it
adversely affects competition.
 Competition Commission of India -
Central Government may, by notification,
appoint, a Commission to be called the
“Competition Commission of India”.
 The Commission shall consist of a
Chairperson and not less than two and not
more than ten other Members to be
appointed by the Central Government.
 Director General and Registrar - The
Director General will investigate the
complaints/references on receipt of orders
from Commission and then submit his report
to Commission.
 He will also conduct the cases before CCI.
The Director General cannot conduct
investigation suo motu.
 DG will be appointed by Central
Government.
 MRTP Commission will be abolished.
 Chairman and members will be paid three
months pay as compensation. Staff will go
back to parent cadre.
 Cases pending in respect of Monopolistic
Trade Practices or Restrictive Trade
Practices will be transferred to Competition
Commission.
 All cases of Unfair Trade Practices will be
transferred to National Commission
constituted under Consumer Protection Act.
 National Commission can transfer the cases
to State Commission.
 Cases in respect of disparaging of goods of
MRTP Act] will be transferred to Competition
Commission.
 Investigation pending with Director General
of Investigation and Registration [DGIR] will
be transferred to Competition
Commission/National Commission under
Consumer Protection Act, as applicable.
 Other cases, if pending, will abate.
 The purpose of the Competition Act is
to create an environment conducive to
competition. However, in a significant
departure from the letter and spirit of
the MRTP Act, the Competition Act
does not categorically decry or
condemn the existence of a monopoly
in the relevant market.
 Section 4 enjoins that “no enterprise shall
abuse its dominant position”.
 “Dominant position” is the position of
strength enjoyed by an enterprise in the
relevant market which enables it to operate
independently of competitive forces
prevailing in the market or affect its
competitors or consumers or the relevant
market in its favour.
 Dominant position is abused when an
enterprise imposes unfair or discriminatory
conditions in purchase or sale of goods or
services or in the price in purchase or sale
of goods or services.
 There is also abuse of dominant position
when an enterprise limits or restricts
production of goods or services or technical
or scientific development
 The Competition Commission, either
on its own motion, on receipt of a
complaint or on a reference made to it
by the Center or a State Government
may enquire into any alleged
contravention regarding the nature of
an agreement which is suspected to
be inherently anti-competitive or the
abuse of dominant position.
 The Commission would be required to
be supported by a full-fledged
research department, the members of
which would be entrusted with the
responsibility of continuously reviewing
economic trends
 Thus, the Commission has the power to
enquire into unfair agreements, abuse of
dominant position and combinations even in
situations where an agreement has been
executed outside India if it is of the view that
there is, or there is likely to be, appreciable
adverse effect on competition in the relevant
market in India.
 The Commission has been vested with the
powers of a civil court while trying a suit,
including the power to summon and
examine any person on oath, requiring the
discovery and production of documents and
receiving evidence on affidavits.
 The Act gives the Commission the power to
call upon experts in any relevant field to
assist in any enquiry or proceeding.
 The Commission is also provided with
the authority to review its own orders.