WEST BENGAL NATIONAL UNIVERSITY

OF JURIDICAL SCIENCES
(WBNUJS)

Post Graduate Diploma in Business Law (2015 - 16)

1st CONTACT SESSION

PROJECT
COMPETITION COMMISSION OF INDIA

NAME : RAKTIM MUKHOPADHYAY

(IDENTITY NO. - PGDBL 151613)

COMPETITION COMMISSION OF INDIA

INTRODUCTION
Keeping in view of the economic development of the country, The Competition Act, 2002 was
enacted for the establishment of a Commission to prevent practices having adverse effect on
competition, to promote and sustain competition in the markets, to protect the interest of
consumers, to ensure freedom of trade carried on by other participant in the markets in India and
for matters connected therewith or incidental thereto.

Competition Commission of India is responsible for enforcing The Competition Act, 2002
throughout India and to prevent activities that have an adverse effect on competition in India. It
was established on 14 October 2003. It became fully functional in May 2009 with Mr.
Dhanendra Kumar as its first Chairman.

ESTABLISHMENT OF COMMISSION

The Central Government under Section 7 of Competition Act, 2002; by issue of a notification;
has to establish a Commission for the purposes of the act to be known as “Competition
Commission of India”. The Commission is a body corporate under its name. It will have
perpetual succession and a common seal. Subject to the provisions of the act, the commission has
been given the power to acquire, hold and dispose of property both movable and immovable. It
has the capacity to contract and also to sue and be sued in its own name. Thus, all the powers of
a corporate personality have been conferred on the commission. In the premises, the set up of
Commission corresponds to that of Securities and Exchange Board of India constituted under the
SEBI Act, 1992.

The Head Office of the Commission shall be at such place as the Central Government may
decide from time to time. Vide Notification: SO 1198(E) dated 14th Oct, 2003, the Central
Government established the Competition Commission of India having its Head Office at New
Delhi.The Commission has also been authorized to establish its office at other places in India.
Thus, the law provides for setting up of CCI’s offices at places other than that of its Headquarter.

COMPOSITION OF COMMISSION
The composition of the Commission as spelled out under Section 8 of the Act consists of a
chairperson and not less than 2 (two) and not more than 6 (Six) Members. The Chairperson and
the members are to be appointed by the Central Government.

QUALIFICATION OF MEMBERS
As per Section 8(2), the Chairman/Chairperson and every other member have to be a person of
ability, integrity and standing. They must be qualified to be appointed as High Court Judges or
have been so or, in the alternative, they must have special knowledge of and professional
experience for not less than 15 years in International trade, economics, business, commerce, law,
finance, accountancy, management, industry, public affairs, administration or in any other matter
which, in the opinion of the central Government may be useful to the Commission.

According to sub-section 3 of the same, the Chairperson and other members are to be Whole-
Time members.

SELECTION PROCEDURE [SECTION 9]

The Chairperson and other members have to be selected in the manner as may be prescribed in
the rules. This was the only provision in Section 9 before the amendment.

The qualification aspect was challenged in a Writ petition before the Honorable Supreme Court
of India. Rule 3 of the rules framed under the Act was sought to be quashed for the reason it
permitted non-judicial persons to be appointed to a position which required judicial experience.
During the pendency of the petition, the Union of India submitted that the Government of India
was proposing to make certain amendments to the Act and Rule 3 so as to enable the selections
to be made by a Court was of the view that those amendments would naturally be consistent with
the doctrine of separation of powers.

The new Section 9 is as follows:

“Selection Committee for Chairperson and Members of Commission.-(1) The Chairperson

and other Members of the Commission shallbe appointed by the Central Government from a
panel of names recommended by a Selection Committee consisting of –

(a) the Chief Justice of India or his nominee Chairperson;

(b) the Secretary in the Ministry of Corporate Affairs Member;
(c) the Secretary in the Ministry of Law and Justice Member;
(d) two experts of repute who have special knowledge of, and professional experience in
International Trade, economics, business, commerce, law, finance, accountancy,
management, industry, public affairs or competition matters including competition law and
policy members.

(2) The term of the Selection Committee and the manner of selection of panel of names shall
be such as may be prescribed.

TERM OF OFFICE [SECTION 10(1)]

As per Section 10(1), the Chairman and other members are to hold office for a term of 5 (Five)
years from the date on which the office is assumed. They are eligible for reappointment. The
maximum age of a Chairperson and other members is to be 65 years.

VACANCY [SECTION 10(2)]

As per Section 10(2), a vacancy caused by the resignation or removal under section 11 or by
death or otherwise is to be filled by a fresh appointment in accordance with the provisions of
Section 8 and 9.

OATH OF OFFICE AND SECRECY [SECTION 10(3)]

According to Section 10(3), the Chairperson and every other member, before entering upon his
office, make and subscribe to an oath of office and of secrecy in such form, manner and before
such authority as may be prescribed.

CASUAL VACANCY IN THE OFFICE OF CHAIRPERSON

According to Sub Section 4 of Section 10, if the office of the chairperson becomes vacant by
reason of his death, resignation or otherwise, the senior most member has to act as the
Chairperson until such time that the vacancy is filled in accordance with the provisions of the
Act.

Where the Chairperson is not able to function by reason of absence, illness or any other cause,
the senior most member has to discharge his functions until such time that he resumes office to
discharge his functions.

RESIGNATION, REMOVAL & SUSPENSION [SECTION 11]

RESIGNATION [SECTION 11(1)]

The chairperson of any other member may resign his office by giving a notice under his hand
address to the central government. The resigning person has to continue to hold his office until 3
months from the date of receipt of notice by the central government. The central Government
may permit him to relinquish his office earlier than 3 months. He may also have to relinquish
earlier than 3 months if the new appointee has assumed office or his term of office otherwise
expires before 3 months.

REMOVAL [S. 11(2)]

The Central Government may remove the Chairperson or any member in the following cases:
(a) Where he has been adjudged insolvent

(b) Where he has been engaged in a paid employment during the term of his office

(c) Where he has been convicted of an offence which in the opinion of the central government
involved with moral turpitude.

(d) Where he has acquired such financial or other interest as will prejudicially affect his
functioning as a member

(e) Where he has so abused his position as to render his continuation in office prejudicial to
public interest.

(f) Where he has become physically or mentally incapable of acting as a member

In cases of acquisition of prejudicial interest under clause D or abuse of position under clause (e)
a reference has to be made to the supreme court for a report on the fact as to whether removal is
necessary.

RESTRICTION ON EMPLOYMENT [SECTION 12]

The section purports to restrain an Ex-Chairperson or members from accepting employment for a
period of 2 years in any enterprises which has been a party to a proceeding under the act. This
disability extends only to a job which is connected with the management or administration of the
Enterprise. This disability also does not apply to a job position in the Central Government or a
State Government or a Local Authority or any Statutory Authority or any Corporation
established by or under any Central, State or Provincial act or a Government Company as
defined in section 617 of Companies Act 1956 or as per the relevant section of Companies Act
2013.

FINANCIAL AND ADMINISTRATIVE POWERS OF MEMBER

A Member of the commission, as per section 13, may be designated by the Central Government
as Member Administration, who shall exercise such financial and administrative powers as may
be vested in him under the rules made by the Central Government.

However the member administration shall have authority to delegate such of his financial and
administrative powers to any other officer of the Commission and he may deem fit subject to the
condition that while exercising delegated powers, official shall continue to act under the
direction, superintendents and control of the Member Administration.

SALARY AND TERMS AND CONDITIONS OF SERVICE

The salary allowances and other terms and conditions of service of the Chairman and other
members including travel expenses, house rent allowance, conveyance facility, sumptuary
allowance and medical facilities shall be such as may be prescribed.

Further to ensure freedom in the functioning of the Chairperson and the Members, section 14(2)
provides that the salary and allowance and other terms and conditions of service of the
Chairperson shall not be varied to his disadvantage after his appointment.

No act or proceedings of the Commission shall be invalid merely because there is any vacancy in
the Commission or defect in the Constitution of the Commission or any defect in the
appointment of Chairperson or a member or any irregularity in the procedure of the Commission
not affecting the merits of the case.

APPOINTMENT OF DIRECTOR GENERAL [SECTION 16]

Director General is an important functionary under the act. He is to assist the Commission in
conducting enquiry into contravention of any of the provisions of the act and for performing such
other functions as are or may be provided by or under the act.

Sub Section 1 of Section 16 empowers the Central Government to appoint a Director General
and such number of additional, Joint, Deputy or Assistant Director Generals or Advisors or
Consultants or Officers for the purposes of assisting the Commission in conducting enquiry into
the contravention of any provision of the act.

Additional, Joint, Deputy, Assistant Director Generals, other Advisors Consultants and Officers
shall however exercise powers and discharge function subject to the general control, supervision
and direction of the Director General.

The salary, allowances and other terms and conditions and service of Director General,
Consultants, Advisors, or other Officers assisting him shall be such, as may be prescribed by the
central government.

The Director-General, Advisors, Consultants and Officer assisting him are to be appointed from
amongst the persons of integrity and outstanding ability and who have experience in
investigation, and knowledge of Accountancy, Management, Business, Public Administration,
International Trade Law or Economics and such other qualifications as may be prescribed.

The Commission may appoint a Secretary and such Officers and other employees as it considers
necessary for the efficient performance of his functions under the act. The Commission may
engage in accordance with the procedure specified by regulations such number of Experts and
Professionals of integrity and outstanding ability who have special knowledge of, and experience
in Economics, Law, Business or other disciplines related to Competition as it deems necessary to
assist the Commission in the discharge of its functions under the act.
DUTIES OF COMMISSION [SECTION 18[

As per section 18 of the Act, duties of the CCI are

A. To eliminate practices having adverse effect on Competition

B. To promote and sustain competition
C. To protect interests of consumers and
D. To ensure freedom of trade carried on by other participants in market in India.

Section 18 empowers the Commission to enter into any Memorandum or arrangement with the
prior approval of the Central Government, for the purpose of discharging the duties and
functions under this act with any agency of any foreign country. This will enable the CCI to have
extra territorial reach and shall facilitate exchange of information and enforcement of its order.

ENQUIRY INTO AGREEMENTS AND DOMINANT POSITION

Anti Competitive Factors

The Commission can enquire into any contravention of section 3(1) or 4(1). It can do so on its
own motion or on receipt of any information from any person, consumer or Trade Association.
The information has to be received in prescribed manner and with requisite fee. References can
also been made by the Central or State government or any Statutory Authority. In the meaning
whether an agreement has an appreciable adverse effect on Competition, Commission has to
have regard to the following factors:

 Creation of barriers to the new entrants in the market.

 Driving existing competitors out of the market.
 Foreclosure of competition by hindering entry into the market.
 Accrual of benefits to consumers.
 Improvements in production or distribution of goods or services.
 Promotion of Technical scientific and economic development by means of production or
distribution of goods or provision of services.

FACTORS AS TO DOMINANT POSITION [S. 19(4)]

In considering whether enterprise enjoys a dominant position the commission has to have regards
to all or any of the following factors:
 1. Market share of the Enterprise.

2. Size and resources of the Enterprise.

3. Size and importance of competitors.

4. Economic power of the enterprise including commercial advantages over competitors.

5. Vertical integration of the Enterprises or sale or service network of such Enterprises.

6. Dependence of consumers on the Enterprise.

7. Monopoly or dominant position acquired as a result of any Institute or by fortune of

being a Government Company or a Public Sector Undertaking or otherwise

8. Entry barriers including barriers such as a regulator in various financial Risk, high cost of
substitute goods or services for consumer.

9. Countervailing buying power.

10. Market structures and size of market.

11. Social obligation and social cost.

12. Relative advantages by way of contribution to economic development by the enterprise

enjoying a dominant position having or likely to have appreciable adverse effect on
competition; and

13. Any other factors which the commission may consider necessary for the enquiry

The Director General is not vested with her right to move an application for Institution of an
enquiry relating to anti competitive agreements or abuse of dominance.

Proceedings before the Competition Commission of India are not barred by existence of an
arbitration clause in the agreement between the parties. Competition Commission of India is not
a court. The scope and nature of proceedings before the Commission and Arbitration Tribunal
are entirely different.

ORDER BY COMMISSION AFTER ENQUIRY

Where after enquiry, the Commission finds that any agreement referred to in Section 3 or action
of an enterprise enjoying Dominant Position is in contravention of Section 3 or Section 4 as the
case may be, it may pass all or any of the following orders namely,

A. Direct any Enterprise or Association of Enterprises or person or Association of persons as the

case may be involved in such agreement, or abuse of dominant position, to discontinue and not
to re enter agreement or discontinue such abuse of dominant position as the case may be.

B. Impose such penalty as it may deem fit which shall be not more than 10 % of the average of
the Turnover for the last three proceeding financial years upon each of such person or
Enterprises which are parties to such agreements or abuse.

Provided that in case any agreement referred to in Section 3 has been entered into by a Cartel,
the commission may impose upon each producer, seller, distributor, trade or service provider
included in Bid Cartel, a penalty of up to 3 times of its profit for each year of the continuance of
such agreement or 10 % of its turnover for each year of the continuance of such agreement
whichever is higher

C. Direct that the agreement shall stand modified to the extent and in the manner as may be
specified in the order by the commission. Example - DLF case

D. Pass other order or issue such other directions as it may deem fit

Provided that while passing orders under this Section, if the commission comes to finding that an
enterprise in contravention to Section 3 or Section 4 the act is a member of our group as defined
in clause of the explanation to Section 5 of the Act and other members of such a group are also
responsible for or have contributed to such a contravention, then it may pass orders under this
section against such members of the group.

ENFORCEMENT OF ORDER
Enforcement of order of CCI can be done in the same manner as Income Tax recovery procedure
Acts taking place outside India but having an effect on competition in India, the Commission can
pass orders on those things too. This is known as Extraterritorial Jurisdiction of Competition
Commission of India

COMPETITION ADVOCACY [SECTION 49]

The Central Government may in formulating a policy on Competition or on any other matter and
a State Government in formulating policy on Competition or on any other matters as the case
may make a reference to the Commission for its opinion on possible effects of such policy on
competition and on the receipt of such a reference the Commission shall within 60 days of
making such a reference to the Central Government or the State Government which may there
after take further action as it deems fit.
The opinion given by the Commission under sub section 1, shall not be binding upon the Central
Government or the State Government as the cases may be in formulating such policy.

MEETING OF COMMISSION [SECTION 22]

The Commission has to meet at such times and places and has to observe rules of procedure for
transaction of business as its meetings as may be prescribed by a regulations. If the chairman is
for any reason not able to attend a meeting, the senior most members present at the meeting have
to preside. Matters before the commission have to be decided by a majority of the members
present and voting. In case of equality of vote, the Chairman or member presiding is to have
casting vote. Quorum of meeting is 3 members.

REFERENCE BY COMMISSION TO STATUTORY AUTHORITY [SECTION 21 A]

Where in the course of a proceedings before the Commission and an issue is raised by any party
that any decision of the Commission whose implementation is entrusted to a Statutory Authority
would be contrary to the provisions of the act; the commission may make a reference in respect
of it to the Statutory Authority. Such reference may be made Suo Motu also. The Statutory
Authority has to give its opinion within 60 days. The commission may then decide the matter in
the light of the opinion.

REPORT OF DIRECTOR GENERAL

The Director General has to submit a report on his findings within the time specified by the
Commission. The Commission may forward a copy of the report to the parties concerned. If the
reference was received from the Central or State Government or a Statutory Authority, the
Commission has to forward a copy of the report to the party concerned. If the report of the
Director General is that there has been more contravention of the provisions of the act, the
commission has to invite objections or suggestions. After consideration of objections and
suggestions agrees with the Recommendation of the Director General it has to close the matter
forthwith. It may pass appropriate Orders and communicate the same to the parties concerned. It
may direct are further investigation also.

APPROVAL OF COMBINATIONS

Where the Commission is of the opinion that a combination does not or is not likely to have an
Appreciable Adverse Effect on Competition, it may pass an order approving such combinations,
including combinations about which a notice has been given under section 6.
If the combination is likely to have an adverse affect the commission may direct that the
combination shall not take effect.
The commission may direct the combination for modification. If the parties agreed to do so they
would have to carry out the modifications within the specified period. If the parties do not show
the combination will be declared to be one with adverse effects and could be dealt with
accordingly.

If the parties do not accept the modification issued within 30 days, inform the Commission of
any amendments would wish to make to the modifications. The Commission may accept the
amendments and approve the combination.
If the commission does not accept the amendments the parties are to be allowed further 30
working days time to accept the original modifications.
If the party is still fail to do so the combination is to be deemed of Adverse nature and is to be
dealt with accordingly.

Where the combination does not come to be approved apart from penalties and prosecution under
the act the commission may order that the proposed acquisition of shares control majority or an
amalgamation shall not be given effect to. In appropriate circumstances the commission may
frame asking for implementing its orders

Where from the date of publication of the details of a combination, the commission, within 210
days from the date of notice to Commission under section 6(2), does not pass any order issue any
directions the communication shall be deemed to have been approved by the commission.

Where the party obtains an extension, the 90 days period will be reckoned after deducting such
period.

Where are communication is declared to be void the acquisition of shares or control or merger or
amalgamation has to be dealt with by appropriate authority is under other laws in the way as if
nothing of the sort had taken place. The parties to the combination have also to be dealt with
accordingly.

POWER TO REGULATE PROCEDURE [SECTION 36]

The Commission is not bound by the procedure laid down by the Code of Civil Procedure 1808.
It shall be guided by the principles of natural justice, the other provisions of the act and the rules
made by the Central Government.

The Commission has the power to regulate its own procedures including the place of sitting
duration of oral hearings and times of enquiry. Any respect of the following matters the
commission has the powers of a Civil Court under the Civil Procedure Code:

A. The summoning and enforcing the attendance of any person and examining him on oath
B. Requiring Discovery and production of documents
C. Receiving evidence on affidavits
D. Issuing Commission for examination of witnesses
E. Subject to the provisions of section 123 and 124 of Indian Evidence Act 1872 requisitioning
any public record or document or copy of such records or documents from any office.

The commission can call exports from the fields of Economics, commerce, accountancy,
international trade or from any other disciplines as may be necessary to assist the commission in
the conduct of any enquiry or proceedings before it.

The Commission may direct any person to produce before the Director General or the Secretary
or an Officer authorized by it, such books or other documents in the custody or under the control
of such persons so directed and maybe specified are described in the direction being documents
relating to any trade the examination of which may be required for the purposes of this act; to
furnish to the Director General or the secretary of any other officer authorized by it as respect the
trade or other information as may be in his possession in relation to the trade carried on by such
person as may be required for the purposes of the act.

The commission has power to review its order, to rectify its orders and also powers of
enforcement of its orders.

ACKNOWLEGEMENT

In making this project, I have taken resources from the Bare Act, study material issued by The
Institute of Company Secretaries of India (ICSI), “Fundamentals of Business Law” written by
Mr. Avtar Singh. I have also collected some information from Wikipedia, Manupatra and from
some other websites.

________________________________ ______________________________
(SIGNATURE OF THE EXAMINER) (RAKTIM MUKHOPADHYAY)

DATE: 11th October, 2015

PLACE: Howrah