REVAMPING OF COMPETITION LAW IN INDIA

Rupal Gupta*

Sankshay Babber**

Abstract
Competition Law is a new regime in India. It is an upcoming and new field and hence at
places the inadequacy of the development of competition law is felt. This paper analyses the
competition law in India. It seeks to answer these questions by first evaluating the
predecessor of the modern Competition Law, Monopolies and Restrictive Trade Practices Act
1969 and also the international laws that influenced and contributed in the formation of the
core of the competition law in India. This paper analyses the various amendments and
proposals that has been made since the making of the Competition Act 2002. The paper
evaluates the shortcomings of the modern day competition law with recent case laws which
have emerged due to various factors such as the changes in the pattern of the market due to
technological advances and availability of new resources. The paper also discusses the
drawbacks in the procedural section of the act and the issue of overlapping with other
legislations resulting in failure of its core objectives. After evaluating the different
circumstances the paper seeks to ameliorate the current act by propounding certain changes.

Introduction

Competition has turned into a driving force in today’s globalized village. Measures like
Deregulation, Liberalisation and Privatization are important; however they are not enough to
guarantee the productive functioning of business sectors. Firms while competing with one
another, often adopt unfair means to pre limit competition i.e. price fixing, abuse by dominant
powers, etc. This is where competition law assumes a cardinal role in achieving the targets
of democracy and economic justice. The constitution of India guarantees the fundamental
right to carry on any occupation, trade or business under Article 19(1) (g). 1 Competition law
reinforces this fundamental right by prohibiting preposterous restraints on the exercise of
these rights through anti-competitive practices.

Evolution of Competition Act 2002

The understanding of any economic law in India is incomplete if not placed in in the colonial
context and problematized. More than 200 years of British rule were not marked by social
and political oppression alone, what has left us all scarred the most is the loot and plunder
the Empire caused breaking the backbone of our economy so much that its ghosts still haunt
us. India for the British Empire was a dumping ground from where it would extract raw
materials at cheap rates and sell processed goods at exorbitant prices. India despite being a
large producer of cotton had to import its cotton fabrics from Manchester. The British left us
with a retrograde economy on our Independence. This was strategically countered by the
setting up of the Planning Commission in March, 1950. From the Soviet model of development
the concept of “five-year plans” initiated in the first 5 year plan by K.N. Raj emphasized on
heavy industries whereas in the second 5 year plan2 presided over by P.C. Mahalanobis the
emphasis was on agriculture. In the bipolar world back in the day the economic model for a
country was no more no more a matter of better predicted results but aligning with a

*Third year student of B.A., LL.B.(H), rupalgupta1@gmail.com, Amity Law School Delhi, Guru Gobind Singh
Indraprastha University, Delhi.
**Second year student of B.A., LL.B.(H), shankyybabbar@gmail.com, Amity Law School Delhi, Guru Gobind Singh
Indraprastha University, Delhi.
1 Article 19.1(g) – Constitution of India, 1950.
2 Second 5yr Plan, (June 25, 10 AM) http://planningcommission.nic.in/plans/planrel/fiveyr/welcome.html.
particular ideology and superpower that embodies. The young county India neither chose the
Soviet model of State ownership nor the liberal capitalist “free market economy” of USA. India
chose a “mixed economy” which emphasized on State ownership with reasonable restrictions
in doing free trade.

The history of Indian Competitive Legislation can be traced back to the setting up of the
Monopolies Enquiry Commission in 1964 to investigate concentration of wealth in
unaccounted clandestine hands and in order to oust a feudal, monopolistic and restrictive
trade practices in clamant fiscal activity. The report tendered by this committee was titled as
the Monopolies and Restrictive Trade Practices (MRTP) Bill, 1965 was enacted on 1st June,
1970 as the MRTP Act, 1969.

The objectives of the MRTP Act were:

A. Prevention of concentration of economic power to the common detriment

B. Control of monopolies
C. Prohibition of monopolistic trade practices, and
D. Prohibition of restrictive trade practices

“The MRTP Act has become obsolete in certain areas in the light of international economic
developments relating to competition laws. We need to shift our focus from curbing
monopolies to promoting competition. The Government has decided to appoint a committee
to examine this range of issues and propose a modern competition law suitable for our
conditions.”3 Keeping in view the economic developments that have resulted in opening up of
the Indian economy, removal of controls and consequent economic liberalization which
required that the Indian market be mobilized to face competition within the country and
outside, the Competition Act, 2002 was enacted pursuant to Raghavan Committee’s Report. 4
The reforms of 1991 were considered insubstantial, underscoring the need for a new
competition law. The Competition Act 2002 has come into force to replace the MRPT act and
fill the gaps created.

1. Comparative analysis of MRTP Act 1969 and the Competition Act, 20025

Competition Act 2002 was fabricated to fill gaps created by the preceding act and overcome
the drawbacks creating a healthy economic environment.
A. The MRTP Act, 1969 Monopolistic, Restrictive and restricted trade practices were
considered illegal per se. In Competition Act 2002, the Anti-Competitive Agreement
between enterprises and abuse of dominance by enterprises are prohibited but
combination between enterprises is permitted with a regulatory oversight.
B. There is a shift from illegal per se to rule of reason.
C. Competition Advocacy was added under section 49 of the act. Stronger law in respect of
remedying cartels and bids rigging.
D. The Competition Act 2002 introduced Leniency and Dawn raid programs as part of the
statue which strengthened the law in context of Cartel and Bed Rigging.
E. It was more transparent than the preceding act.
F. International Cooperation was now being partially implemented.
G. The DG did not enjoy the suo moto powers in the Competition Act 2002 as did in preceding
act and role got restricted to factual information as per the directions given by the
commission.
H. MRTP ACT, 1969 was enacted in 1969 so legislature could not foresee acts taking place
outside India but having effect on competition in India, thus section 32 of Competition
Act, 2002 has included this provision.

3 Speech by the Finance Minister (June 25, 10:10 AM) https://www.indiabudget.gov.in/ub1999-

2000/bs/bs1.htm.
4 Available at ( June 25, 10:12 AM)

https://www.cci.gov.in/sites/default/files/presentation_document/OECDKoreaCentreIndianCompetitionLaw14No
v2008.pdf?download=1
5 Vishwanath Pingali, Competition Law in India: Perspectives Pg. no 172.
2. The Competition Amendment Act, 2007

The Act couldn’t spur in 2002 due to the writ petition in the Supreme Court even though
it attained assent from the President in 20036. The Petition claimed that The Competition
Commission being a judicial body needs to have a judge chosen by the chief justice as the
chairman. The issue was resolved and the act was set to come into force been signed by
the president. This amendment brought strong prolific regulatory changes in The
Competition Act 2002.
The key changes were:
A. Advisory role and Advocacy functions i.e. commission would be functioning as a market
regulator.
B. Providing Compensation to parties against proven anti-competitive practices.
C. Establishment of a competition Appellate Tribunal with a three-member Quasi-Judicial
body.
D. Notifications of all ‘combinations’ made compulsory.

3. The Competition Act 2009

The Act remained mostly inactive till May 2009. Section 3 and 4 has been brought into
force only from 20 May 2009 and not ex post facto. Hence, actions preceding May 2009
would not be scrutinized under the Act. Though in the case of Kingfisher 7and DLF8,
contradict this and scrutinize the preceding cases under the scanners of this act.

4. The Competition Amendment Bill, 2012 (proposed)

The Bill was introduced in Lok Sabha on December 10, 2012 by the Minister of Corporate
Affairs, Sachin Pilot. The Bill analyzes the problems of the Act and solicits to make
Amendments in the following areas:
A. The Competition Act prohibits any agreement that adversely affects competition in
India. However, the Act cannot restrict rights conferred by certain laws like the Copyright
Act, Patent Act.
B. The Bill extends the protection of rights to include any other intellectual property rights
C. The Bill empowers the central government to specify different value of assets and turnover
for any class of enterprises to further examine and regulate combinations.
D. Any decision made by a statutory authority that could violate the provisions of the
Competition Act may be referred to the CCI. The Bill makes this reference mandatory.
E. Conversely, the Bill requires that CCI decisions contravening the provisions of any other
act should be referred to the relevant statutory authority.
F. Following an inquiry, the CCI can also impose penalties for anti-competitive agreements
and dominant position abuse. The Bill amends the Act to ensure that no penalty can be
imposed without the concerned party having an opportunity to be heard 9
G. Powers of the Director General are derived from the provisions under the Companies Act,
1956 which apply to an inspector.
H. The Bill removes this provision, replacing it with its own definition of the Director
General’s powers. These powers are similar to the inspector’s powers in the Companies
Act.

Shortcomings in the Competition Act

Even though there has been quite an evolution of competition law in the country there are
still certain shortcomings in the Competition Law regime which hampers in the process of
administering justice and in turn promoting economic and social welfare and hence
revamping is required to correct these flaws.

6 Brahmn Dutt v. Union of India. AIR 2005 SC 730.

7 Kingfisher Airlines Limited & anr v. CCI & ors. LAWS-(BOM) 2010-3-261.
8 Belaire Owners Association v. DLF Ltd. 2011 CompLR 239 (CCI).
9 Faridabad Industries v. M/s Adani Gas Ltd. 2014 CompLR 185 (CCI).
1. Dispute regarding jurisdiction
Need for competition law is felt especially in industries such as automobiles,
pharmaceuticals, telecommunication, IT etc. However, for these industries certain Special
Acts already exist.
Like in the case of CCI v. Bharti Airtel10 where there was a dispute whether the matter should
be dealt by CCI or TRAI it was held that it should be dealt by TRAI as it is a special act. It
was further held that even if the matter can be dealt by CCI it would be possible only after
TRAI gives is findings. A special act always prevail over a general law11 and even if both of
them can be considered as special acts then also TRAI will prevail as, as per the facts,
circumstances and the subject matter TRAI will be more appropriate.
Such matters create friction in the functioning of CCI which further lead to delayed litigation
hence delayed justice. Although, Sections 60 and 61 of the Competition Act 2002 provide
exclusive jurisdiction to the CCI to decide anti-competitive practices and civil courts’
jurisdictions are barred by law.
2. Unsuccessful litigation due to irregular investigation and procedures
The NCLAT passed an order which set aside the penalty of 87 crores imposed on Hyundai
Motors by the Competition Commission of India. 12 One of the main reasons for the setting
aside was the Commission’s failure to appreciate the evidence as the impugned order was
solely based on the opinion of the Director General (hereinafter ‘DG’) in his report and not on
any specific evidence. The order laid emphasis on the non-binding nature of the DG report
under section 26(2) of the Competition Act and rebuked the CCI for failing in its duty to make
an autonomous analysis based on evidence brought on record. The NCLAT pointed out that
the Commission had merely repeated what the ‘DG’ had observed in his report and as
observed that “The report of the DG is only recommendatory in nature.” 13

The COMPAT had directed the DG to initiate a similar kind of investigation to assess Uber’s
dominance in the market for taxi services in the National Capital Region of Delhi after CCI
had refused such an investigation.14 Uber later challenged this decision before the Apex
Court, citing a “jurisdictional flaw” in the Tribunal’s power to order such an investigation.
The first ‘Dawn Raid’ proceedings15 initiated by the authority could not meet the objectives
due to procedural infirmities.
CCI needs to be made more prepared and armed with powers and procedures for
investigation.16
In the case against Board of Control for Cricket in India (BCCI)17, the CCI did not allow BCCI
to refute all the charges it later presented in court, when its penalty was challenged. Similarly,
in its case against Adani Gas18, when the CCI found questioning of the proof it had by the
court, CCI presented new documents as evidence. The appellate court did not accept these
documents and ordered CCI must first share and hear the company’s rebuttal, before
presenting any further evidences. These all instances prove how CCI lacks at technological
as well as personnel level.
3. Unfeasible framework

10CCI v. Bharti Airtel AIR 2019 SC 113.

11 Maharashtra Tubes Ltd. v. State Industrial & Investment Corporation of Maharashtra Ltd., (1993) 2 SCC 144;
Sarwan Singh v. Kasturi Lal, (1977) 1 SCC 750; Allahabad Bank v. Canara Bank, (2000) 4 SCC 406; Ram Narain
v. Simla Banking & Industrial Co. Ltd., AIR 1956 SC 614.
12 Hyundai Motors India Limited v Competition Commission of India, Competition Appeal (AT) No 6/2017.
13 M/s Gulf Oil Corp. Ltd. v. CCI & others, 2013 CompLR 409(CompAT).
14 Meru Travels Solutions Private Limited v. Competition Commission of India, Appeal No.31/2016, COMPAT order

dated 7 December, 2016.

15 Section 41(3) of the Competition Act 2002.
16 Smriti Parsheera, Ajay Shah and Avirup Bose, National Institute of Public Finance and Policy New Delhi,

Competition Issues in India’s Online Economy, 194 (2017).

17 Sh. Surinder Singh Barmi v. BCCI, 2013 CompLR 297(CCI).
18 Faridabad Industries Association vs. Adani Gas Limited, 2014 CompLR 185(CCI).
CCI’s mode of functioning has been largely precedence based rather than deliberations on
the economic situation and effects in each case. The irregularity of cases delving into larger
aspects of competition law creates information discontinuities. The application of the rule of
precedence also includes the risk of wrong economic explanations and flawed reasoning
overpowering the economic justifications.
Even while applying precedents, there has been a lack of consistency by the Commission. In
the Hiranandani Hospital case19, the Commission had passed an order finding a violation of
Section 3(1) without coupling it with either of Section 3(3) or Section 3(4) of the Act. This was
irregular to an earlier order where it was of the view that “Section 3(1) of the Act should not be
evoked independently.”20 Further, the order in the Aditya Birla case21, the CCI ruled against
the precedent set by the COMPAT in the Lamborghini case22 for the satisfaction of the group
test under section 5 as the relevant parameter to qualify as a single economic entity for
Section 3 offences. Owing to the rule of precedence, the CCI reproduced this irregular and
ignorant approach in the Rail Coach Factory23 case as well.
The inherent flaw with reliance on precedents in Competition law is that it ignores the
economically exclusive nature of every offence. There should be an independent economic
analysis in every case with respect to the market structure, competitors, and consumers.
Hence, reduction of precedents to merely-support well-accepted economic theories should be
employed.
4. Clash of interests in patent rights and interest of Competition Law
Although patents are essential to further dynamic efficiency, the exercise of patent rights
might negatively affect competition. 24 A patent holder that commands decent market power
may tend towards adopting exclusionary or exploitive practices to fortify or expand its position
in the market, which will adversely affect fair competition in the market. The patent holder
will attempt to use the exclusive right granted by the patent right as a means to restrict
competition in the market. Therefore, giving patent holders a free control and command could
disturb the competitive process of the market. 25

It may appear that one body of law creates and protects monopoly power, while the other
seeks to prohibit it.26 Both the systems should act complementarily, as both are aimed at
encouraging innovation, industry, and competition. 27

5. Other shortcomings
The dispute in India as to what roles and functions of the Commission matter in respect of
‘market behaviour’ and ‘market structure’ still continues. Some believe it is ‘regulatory’ while
others strongly believe that enforcement matters are adjudicatory; hence, it is a mix of the
two.28

Considering the variety of goals used to guide antitrust enforcement and that many of them
are incompatible, it is highly essential for an enforcing authority to frame its guiding policy
in a clear and transparent manner. Such transparency will allow the enforcement process to
be stable, predictable, and most importantly accountable. When these aspects are lacking,
enforcement of antitrust laws could be susceptible to nepotism especially in developing
countries.29

19 Shri Ramakant Kini v. Hiranandani Hospital, Powai, Mumbai, Case 39/2012 (CCI).
20 Govind Agarwal v ICICI Bank Ltd, Case 2/28 (CCI).
21 Delhi Jal Board v Aditya Birla Chemicals India Ltd, Case 3/2013 & 4/2013 (CCI).
22 Exclusive Motors Pvt Ltd v Automobili Lamborghini, Case 52/2012 (CCI).
23 Shri DK Shrivastava v Daulat Ram Engineering and Services Pvt Ltd, Reference Case 4/2014 (CCI).
24 Olav Kolstad, Competition Law and Intellectual Property Rights – Outline of an Economics – Based

Approach, Research Handbook on Intellectual Property and Competition Law, 6(2008).

25 Mark A Lemley, A New Balance between IP and Antitrust, Southwestern J L Trade Americas 237(2007).
26 United States v Westinghouse Electric Corp. 648 F.2d 642, 646 (9th Cir 1981).
27 Atari Games Corp v Nintendo of America Inc 897 F.2d 1572, 1576 (Fed Cir 1990).
28 CCI v. SAIL, [2010] 10 SCC 744.
29 Waked, D. I., Antitrust goals in developing countries: Policy alternatives and normative choices, Seattle

University Law Review, 6(2015).

The Commission faces challenges with regard to lack of awareness amongst all important
stakeholders about the competition law or newer methods of implementing the law.
Competition organizations must assume the role of a competition advocate30, acting
proactively to bring about government policies that lower barriers to entry, promote
deregulation and trade liberalization, and otherwise minimize unnecessary government
intervention in the marketplace.31

Comparative Analysis with Competition Laws followed Internationally

A crucial part of the Competition Act, 2002 has been borrowed from the Sherman Act 1890
Federal Anti-Trust; Clayton Act 1914 thus these are the basic sources of the Competition Act
2002 and it is important to analyze these acts and make modifications accordingly.
Competition Act 2002 has failed to subsume some important parts of these acts which will
be discussed below.

1. Sherman Antitrust Act 1890

The Sherman Antitrust Act is landmark 1890 U.S. legislation which outlawed trusts,
monopolies and cartels to increase economic competitiveness and acted as a mean to
regulate interstate commerce. It attempted to address the use of trusts as a tool for placing
the control of a number of key industries into the hands of a limited number of individuals.

A. Sherman Act, 1890 declared illegal all contracts, combinations or conspiracies in

restraint of trade or commerce among the states or territories or with foreign nations. The
basic requirement is that there should be an agreement or mutual commitment to engage
in a common course of anticompetitive conduct. The Act outlawed attempt to
monopolization in Section 229 of the Sherman Act, 1890. The Act gives an important
position to intention and holding a monopolizing factor that is if a company monopolizes
due to the superiority of its product then it won’t be a violation of the act which comes
under the ‘rule of reason’ 32that says that it will be considered illegal only if it is to
unreasonably restrain the trade. This law was developed in the ruling of Addyston Pipe
and Steel Co. V. United States 33 .The competition act has included monopolization but it
has not included conspiracy to monopolize. Sherman Act prohibits even attempt to
monopolize.34
B. The Competition Act, 2002 has only defined tie-in agreements as "tie-in
arrangement"35includes any agreement requiring a purchaser of goods, as a condition of
such purchase, to purchase some other goods and has made no further elaboration on
the other side the Sherman Act defines Tying Agreements as an agreement by a party to
sell one product but only on the condition that the buyer also purchase a different product
or agree that he will not buy that product from another supplier.36Tying agreements are
not illegal per se. An illegal tying agreement takes place when a seller requires a buyer to
purchase another, less desired or cheaper product, in addition to the desired product, so
that the competition in the tied product would be lessened. 37 Sherman act also pointed
out that there should be separateness of products which are tied because if the products
are identical and market is same then there is no unlawful tying agreement.
C. Competition Act has used the word amalgamation many times but it hasn‘t explained
much about it. As per the Sherman Act an Amalgamation is unlawful in two ways firstly
if the amalgamation eliminates substantial competition and secondly if it created a
monopoly. For example if two companies who both have a crucial impact on the market

30 Section 49, Competition Act, 2002.

31 The World Bank, OECD: A Framework for the Design and Implementation of Competition Law and Policy,
Chapter 6, at 93, 1998.
32 Sherman Act, 1890, Sec.3.
33 Addyston Pipe and Steel Co. v. United States, 175 U.S. 211 (1899); Standard Oil Co. of New Jersey v. United

States, 221 U.S. 1 (1911).

34 Sherman Act, 1890, Sec.3.
35 Competition Act, 2002, Sec 3.
36 Sherman Act, 1890, Sec.1.
37 International Business Machine Corp v. United States 298 U.S. 131, 1936.
 have a merger which ends up the competition then that is a violation of the act. Basically
it elaborates on the Horizontal and Vertical amalgamation.

2. Clayton Act 1914

The Clayton Antitrust Act was passed by the U.S. Congress in 1914. It defines unethical
business practices, such as price fixing and monopolies, and upholds various rights of
labour.38

A. Competition Act, 2002 has not given any place to intention or motive. According to
Clayton Act it is not required to show that lessening of competition or a monopoly was
intended that is good intention is no defence to it.39
B. The Clayton Act defines a Conglomerate merger 40 in which there is no relationship
between the acquiring and the acquired firm. The Conglomerate merger is the third kind
of merger according to the act (first and second being vertical and horizontal).Competition
Act has not mentioned about the conglomerate mergers.
C. Clayton Act has also defined the horizontal and vertical amalgamations, product
extension mergers and joint ventures. It has also mentioned about the burden of proof in
Horizontal Amalgamation. It points out that by showing that a horizontal acquisition will
lead to undue concentration in the market for a particular product in a particular market;
the government establishes a presumption that the transaction will lessen the
competition. Clayton Act only forbids those whose effect may lead in lessening of the
competition or tend to create monopoly.
D. Predatory Pricing is the practice of making products available at a very cheap price to
destroy or eliminate competition. U.S. antitrust law recognizes that so-called “predatory
pricing” should not be discouraged because it is almost always a symptom of a properly
performing competitive market, and that price discrimination often has beneficial effects
on the performance of a market. The Competition Act 2002 has declared predatory pricing
illegal. 41
3. The European Commission

The European Commission is an institution of the European Union, responsible for proposing
legislation, implementing decisions, upholding the EU treaties and managing the day-to-day
business of the European Union.

A. The European Commission vests the commission with the power to inspect the
associations of the undertakings and for this purposes the officer can inspect and
investigate in the required way. In the competition act 2002 no such provision is
provided.42
B. The European Commission talks about the concept of periodic penalty 43 compelling the
undertaking to abide by its decision but no such compelling mechanism is provided under
Competition Act 2002.

Conclusion

With time the importance of competition law is increasing. Hence, it has become very
essential to improve the Competition Law regime in the country.

38 (Last accessed June 25 11 AM) https://www.ftc.gov/enforcement/statutes/clayton-act.

39 (Last accessed at June 25 11:30 AM) https://www.lockelord.com/-
/media/files/newsandevents/news/2007/09/antitrust-101-for-young-lawyers---section-7-of-t__/files/section-7-
clayton/fileattachment/weber_article1.pdf.
40 Clayton Act, 1914, Sec.7.
41 Brooke Group v. Brown & Williamson Tobacco Corp, 509 U.S. 209 (1993) ; Matsushita Electric Industrial Co. v.

Zenith Radio Corp., 475 U.S. 574 (1986).

42Article 20 & 21 - European Commission; (Last accessed at June 25 10:40PM)

http://www.europarl.europa.eu/factsheets/en/sheet/25/the-european-commission
43 Article 7,8,9,17,18(3),20(4) – European Commission ; (Last accessed at June 25 10:40PM)

http://www.europarl.europa.eu/factsheets/en/sheet/25/the-european-commission
 The members of the commission can be experts in different industries so that the cases
involving a special law and competition law can be dealt by the CCI only and there is no
delay in litigation or dispute in jurisdiction. This would also improve the decision-making
process which will reduce the number of appeals.

The Commission has recognized the importance of clear, unambiguous evidence and
limiting their interventions based on such evidence. 44 To make their decisions
economically sound dependence on precedents should be limited to general propositions.

Overruling of decisions of the CCI by the appellate authority has usually been procedural
or administrative45 ignoring completely the economic aspect.

Certain, proposals given in the Competition Amendment Bill, 2012 (Proposed) such as
empowering Central Government to ascertain value of assets should be brought into
practice.

Lastly, a lot can be taken from the Sherman act, Clayton act and other acts of European
nations as they are more balanced legislations on the Competition Law.

Improvement in the Competition Laws of the country would benefit not only the business
houses but the consumers as well as the government as it will result in economic and
social welfare.

44 Google Inc. v Competition Commission of India, LPA 733/2014 & Writ Petition (Civil) 7084/2014 (Delhi High
Court).
45 The Board of Control for Cricket in India (BCCI) v Competition Commission of India, [2015] Comp AT 541; All

India Organization of Chemists and Druggists v Competition Commission of India, [2014] Comp AT 83.