Monopolies and Restrictive

Trade Practices Act, 1970

The British East India Company ruled India for almost 200 years. They
exploited India’s resources for their own selfish purposes and ruined the
indigenous industries prevailing in India at that point of time – handicrafts,
etc. Prior to Independence, there was no competition regime existing in
India. There were only policies and resolutions made by the government that
aimed at just and equitable distribution of resources[1]. However, the World
Wars that took place led to the initial industrialization of the Indian economy.
Although India did not actively participate in the wars it was the major
source for the supply of arms and ammunition to the British army. This led to
the formation of large Business Houses – Tata’s, Birla’s, etc. Initially this was
seen as a positive sign for the blooming Indian economy.

Post Independence, India adopted a centralized planning system – 5 year

plans that laid down how the resources of the country were to be used in the
coming 5 years. During the initial 5 year plans, the primary focus was on
achieving the Industrial and Economic development. In 1956, Industrial
Policy Resolution was passed wherein all the industries of the country were
classified into 3 categories – Schedule A; Schedule B and Schedule C
industries. The government was primarily responsible for the pattern of
industrial development. Most of the laws and policies that were passed
during that time were based on the Principle of Command-and-Control[3].

There was high scale of government intervention in the affairs of the private
industries and businesses. The thrust was to promote the public sector of the
county which only could lead to the growth of the economy. This era is also
termed by many as the period of License Raj wherein, the Private Industries
were required to take approval licenses from the government in order to
function; there were high tariffs and quotas imposed on the import of
goods[4].

The government used to support the Big Business Houses as they largely
contributed to the growth of the economy. For them, obtaining licenses and
permissions became a cakewalk. Soon it led to concentration of economic
power in the hands of few. These monopolistic industrialists started indulging
anti-competitive activities which were detrimental to the general public
interest. It was also against the sacred principles that governed the
formation of the Indian Constitution, the bible of the Independent India[5].

This scenario ultimately led to the formation of the Monopolies and

Restrictive Trade Practices Act, 1969 [MRTP, Act].

Constitutional Background

The introduction of Competition Law in India has been inspired by the

Directive Principles of State Policy [DPSPs] that form the Part IV of the
Indian Constitution. Articles 38 and 39 of the Constitution, inter alia state
that the State shall strive to promote the welfare of its people and shall
secure social, economic and political justice for its people. The state shall
ensure that –

1. The nation’s resources are distributed judicially and effectively in a

manner that best serves the interest of the people.
2. The operation of economic system should not result in the
concentration of wealth in the hands of the few, leading to the
common detriment.[6]

Objective of this Project

This research article aims at the critical analysis of the MRTP, Act from
various aspects. The article studies the performance and the reasons for its
failure which ultimately led to the formation of Competition Act, 2002. The
researcher has also taken the help of various case laws to chart down the
loopholes that emerged in the MRTP, Act which made the legislation
redundant in the current Indian scenario.
Overview of MRTP, Act, 1969
During the reign of Indira Gandhi, there was a reign of socialism that ran
through the country. Big Businesses began to be treated with suspicion. The
government therefore appointed a series of committees all aimed at
formulating a mechanism to check the concentration of power in the hands of
few[7]. Let us take the brief background of committees that helped in
shaping the MRTP Act, 1969 –

1. Hazari Committee (1951) – This committee was appointed under

the Chairmanship of Mr. Hazari to study the licensing procedure
under the Industrial Policy. In its report, the committee found that
Big Businessmen have succeeded in thwarting the Industrial Policy
regulations to meet their own selfish interests. Further, the States
have become biased in granting Industrial Licenses to Big Business
Houses.[8]
2. Subimal Dutt Committee – This committee was appointed to
study the institutional design and the pattern of work of various
Business Houses. The committee in its report found that 73 business
houses were controlling around 56% of the economy; it therefore
suggested introduction of MRTP Bill.[9]
3. Mahanlobis Committee on the Distribution of Income and
Levels of Living (1964) – This committee headed by PC
Mahanlobis also found concentration of wealth and power in the
hands of few wealthy entrepreneurs. It was further observed that
the economic model of the country was planned in such a manner
that only supported the wealthy few and the same should be
reformed.[10]
4. Monopolies Inquiry Commission [MIC] (1965) – This
committee was headed by Justice K.C Das Gupta. It found that
there was high concentration of power in private hands and the
industrial licensing policy as well as IPR was not effective in
addressing the same. Moreover, there was also not any law to
govern and regulate the irregularities that were prevailing in the
market. MIC therefore drafted a bill to curb the monopolistic and
 restrictive trade practices. This Bill later became the MRTP Act,
1969.[11]

The new MRTP Act was greatly influenced by its foreign counterparts such as
Sherman Act and Clayton Act of USA, the MRTP (Inquiry and Control) Act,
1948 and the Resale Prices Act, 1964 of the UK, etc. Following are some
salient features of MRTP Act, 1969.

Salient features of MRTP, Act, 1969

As has been explained earlier, this research is aimed at the critical analysis of
the MRTP Act, 1969. However, we cannot correctly analyze a particular
legislation without understanding the principles that run at its core. Therefore
it is important here to analyze in brief, the salient features of the Act.

Primary Aim
MRTP Act came into force on 1 June 1970. The law was enacted with the sole
purpose of –

“Achieving the highest possible production with least damage to people at

large while securing maximum benefit”[12]

Concepts Addressed under the Act

It is important to first understand the salient features that govern the Act in
order to truly understand the scope of their applicability and the practical
difficulties that arose in their implementation. Following are the concepts
addressed under the Act –

 Command and Control Approach – The Act made it mandatory for

enterprises having assets exceeding Rs. 20 crores to take approval
of the Central Government before any kind of corporate
restructuring or takeover. The criterion for identifying the dominant
 undertakings was also fixed. Enterprises having assets of more than
Rs. 1 crore were automatically considered as dominant.[13]
 Monopolistic Trade Practices – MTPs as covered under the Chapter
IV of the MRTP Act are the activities undertaken by Big Business
Houses by abusing their market position that hamper or eliminate
healthy competition in the market. Such practices are anti-
consumer-welfare.
 Restrictive Trade Practices– RTPs are activities that block the flow of
capital or profits in the market. Some firms tend to control the
supply of goods or products in the market either by restricting
production or controlling the delivery. MRTPA discourages and
prevents the firms from indulging in RTPs.[14]
 Unfair Trade Practices – UTP is basically an act of false, deceptive,
misleading or distorted representation of facts pertaining to goods
and services by the firms. Section 36-A of the MRTPA prohibits firms
from indulging in Unfair Trade Practices (UTPs). This provision was
inserted by the landmark 1984 Amendment to the MRTPA.[15]

MRTPA also provided for the establishment of MRTP Commission which shall
be a regulatory authority to deal with the offences under the MRTPA. At the
time of its enactment, the MRTPA being the first legislation addressing the
competition law issues in India seemed to be a perfect law to catch the
defaulters. However, with the passage of time, the wave of globalization that
entered the country changed the whole scenario[16]. There arose a need for
modifications in the existing MRTP Act in order to keep it at pace with the
changing economic scenario. There were many loopholes that arose in the
law. Some of them have been briefly discussed below.

MRTP, Act: A Damaged Legislation in Need of

Repair
Uptil 1984, MRTP was successfully regulating the competition in the Indian
market. However, by 1984, certain amendments were required to update the
act as per the needs of the society. Following are the major amendments
made to the MRTPA –
  1984 Amendment – This amendment was based on the
recommendations of the Sachar Committee. The amendment
inserted Section 36A to the Act to protect the final consumers
against the unfair trade practices so that an effective action can be
taken against them. Thus, claims against false advertisements,
deceptive representation of goods, false guarantees came under the
purview of the Act[17].
 1991 Amendment – This amendment allowed the MRTP Act to be
extended to the public sector and the government owned companies
also. After this amendment, the private players functioning in the
market were no longer required to take special approvals or
permission from the government before carrying out any corporate
reconstruction. This amendment to the MRTPA came to effect in the
light of the New Economic Policy which led to the opening of Indian
economy. The License Raj which restricted the growth of the Indian
economy was thus abolished[18].

It should be noted here that despite the above amendments to remedy the
shortfalls of the MRTP Act, there were many loopholes left which catalyzed its
repeal. Let us have a brief discussion on the same.

Why did it fail? Researcher’s Critical Assessment

of the MRTP, Act, 1969
Following are the reasons that led to the failure of MRTP Act, 1969 –

1. Excessive Government Control – Under the MRTP Act, both small

and big businesses were subjected to excessive government control.
It was mandatory for the enterprises to take approvals from the
government before carrying out any kind of corporate restructuring
or takeover. The presence of such complex procedures, many firms
found it difficult to survive, thereby affecting the final consumers.
[19]
2. Vague and ambiguous law – Section 2(o) of the MRTP Act defined
the term ‘restrictive trade practices’ which covered any activity that
 prevented, distorted or restricted competition. There was no specific
provision that defined the various kinds of anti-competitive activities
that would be termed as offences under the Act. Anti – competitive
practices such as cartels, bid rigging, abuse of dominance, collusion,
price-fixing, predatory pricing etc were nowhere defined[20].
Section 2(o) thus included all types of possible offences within its
ambit thereby leading to a large variety of interpretations by various
courts wherein the core essence of the law was lost.
3. Per se rule instead of Rule of Reason  – In the MRTP Act there
were as much as 14 offences that were considered as per se illegal.
The concept of Rule of Reason was not applied. Though the
Supreme Court in the Telco case[21] recognized the Rule of
Reason, but this development was again frustrated by the passage
of the unfortunate 1984 Amendment which mandated that all listed
RTPs under Section 33 shall be treated as per se illegal.
4. Dominance per se  bad  – Under the MRTP Act, dominance was in
itself considered as bad, it didn’t matter whether the party has
abused it or not. There was a mathematical formula for determining
dominance i.e, the undertaking as to have 25% or more control
over market share of goods or services. However, the catch here
was that that if a firm acquired 20% or 23% of the market share at
a particular time; the same was not considered as dominant.[22]
5. Promotion of exports at any cost – Under Section 38 of MRTP
Act, if any project enterprise had a high potential for exports in
future, it would cause the authority to simply blindly approve all its
applications under the Act without considering the any anti-
competitive or monopolistic shadow that it might have. Due to its
excessive stress on exports, it ignored all possible drawbacks that a
project might have. In many cases, it led to more costs being
incurred than the foreign exchange earned through exports.[23]
6. A Policy of Voluntary Disclosure  – The MRTPA machinery was
highly depended upon voluntary disclosures made the enterprises as
there was no agency that could keep a 24*7 check on the market
control and structuring of the companies. This proved as a big
leeway to the companies leading to late registrations or sometimes
 no-registration of any change in the company structure. This acted
as a means to keep the company out of the purview of the Act.[24]
7. Inefficiency of the MRTP Commission  – MRTP Commission was
set up to regulate the anti-competitive practices in the country.
However, even though MRTPC had both administrative and judicial
functions, the members of the Commission were appointed by the
government itself which created a doubt upon the independence of
its functioning. Moreover, the Commission was not able to perform
its functions efficiently and effectively due to –

 Unnecessary delays in replacing the members of the Commission.

 Unwillingness of the government to appoint members promptly or in
opening new branch offices.

Also, the government had the final say on a proposition and it was on the
discretion of the government whether it wanted to refer the matter to the
Commission. It happened that most of the time the government unilaterally
used to pass the decisions without seeking the consultation of the special
expertise body of MRTPC constructed for this purpose. All this led to the body
becoming redundant.[25]

8. Obsolescence – With the dynamic movement of the Indian trade

market towards an open and more globalised economy, especially
after the New Economic Policy Reforms, led to the MRTP Act soon
becoming obsolete. It could not stand the tests of time which
required an overhauling of the competition law policies in India in
consonance with the new issues arising due to the entry of the large
scale foreign firms in India.[26]
9. No Extraterritorial Application – The MRTP Act, had no
extraterritorial application i.e, it could not be applied to business
undertakings outside India even if their anti-competitive conduct
had a detrimental effect o the Indian market, unless one of the
parties were of Indian origin. Thus, when it came to activities such
as international cartels, MRTP Act was impotent.[27]
10. No penalties for offences – Section 12 of the MRTP Act dealt with
the powers of MRTP Commission and the types of orders that it can
 issue in case of taking place of any anti-competitive activities. On a
plain reading of the provision, we can infer that the Commission did
not have the power to impose harsh penalties or fines on the
defaulters. The best it can do is to issue ‘cease and desist’ orders or
charge nominal fines. Jail terms, though provided for, were rarely
imposed.[28]
11. Concurrent Jurisdiction under Consumer Protection Act – Post
1984 Amendment, Section 36A was inserted in the Act with the aim
to protect the customers from UTPs. As a result, the Commission
was soon piled up with consumer complaints for defective goods and
inefficient services which were already provided for in the Consumer
Protection Act. The consumers were thus left with an option whether
to approach the Consumer Court or the MRTP Commission as they
both had concurrent jurisdiction. The majority of the time of the
Commission was spend resolving consumer disputes while in reality
the primary purpose for which the Commission was set up was to
regulate anti-competitive practices. A backlog of these cases was
subsequently transferred to CCI.[29]

Thus it was clear that MRTP Act, 1969 failed in fulfilling the object for which it
was created in the first place. The Commission did not have many powers
and was most engaged in consumer cases. Moreover, the various
amendments that took place weakened and liberalized the government’s
attitude towards monopolistic and anti-competitive practices, rather than
strengthening it.

Judicial Attitude towards MRTP Act: A Study of

Important MRTP Cases
In order to understand the true context of the limitations of MRTP Act, 1969
that led to its abolishment, we need to study these landmark cases that
exhibit the judicial attitude towards these loopholes –
Tata Engineering and Locomotive Co. Ltd vs. Registrar of
Restrictive Trade Practices Agreement[30]

Facts – In this case, TELCO entered into an agreement with its dealers
wherein the dealers were assigned certain fixed territories within which they
had to sell Tata’s vehicles. This territorial restriction was challenged to be a
‘restrictive trade practice’.

Held – Supreme Court in this case for the first time in India applied the Rule
of Reason and held that such territorial restriction was not an anti-
competitive practice as it was meant for equal distribution of goods
throughout the country. The positive effect of this judgment was undermined
by the 1984 Amendment, Section 33 of which made territorial allocation a
per se RTP.

Director General of Investigation and Registration [DG (IR)]

vs. Modi Alkali and Chemicals Ltd[31]

Facts – The Commission received an anonymous complaint that some

enterprises have formed a cartel to create virtual scarcity of goods and the
prices of chlorine gas and hydrochloric acid have risen by 200% in last 4
months. After investigation, DG reported that there was no case of cartel and
no action should be taken. MRTPC then conducted further enquiry.

Held – Even though the term ‘Cartel’ was not defined under the MRTP Act, it
was laid down that “cartel is an association of producers who by an
agreement among themselves attempt to control production, sale and prices
of the product to obtain a monopoly in any particular industry or
commodity”.  Although in this particular there was not enough evidence to
hold anyone liable so the case was dismissed. However, this case brought
into light an important category of anti-competitive agreements which were
till now not even identified in India.
Sirmur Truck Operator’s Case[32]

 Facts – In this case, the company fixed high freight rates for non-member
truck operators while the rates were much lower for the members. This thus
increased the cost of transportation for non-members. They alleged that this
was an RTP.

Held – It was held that this was indeed an RTP under Section 2(o) of the Act.
The MRTPC issued ‘cease and desist’ orders. This case however brought into
light the fact that the Commission did not have powers to impose penalty or
high monetary fines. The best it could do was to issue cease and desist
orders.

American Natural Soda Ash Corporation (ANSAC) vs. Alkali

Manufacturers Association of India (AMAI) and others[33]

Facts – ANSAC were trying to export soda ash consignments to India. AMAI
filed a complaint with MRTPC to prevent these cartelized consignments from
being shipped into Indian Territory.

Held – SC held that MRTPC cannot exercise extraterritorial jurisdiction and
therefore it cannot take any action against foreign cartels unless the anti-
competitive agreement involves an Indian party. This case thus highlighted
another loophole in the MRTP Act.

Thus, it can be very well inferred from these cases that the shortfalls of the
MRTP Act were inescapable even from the eyes of Indian Judiciary. This is
what ultimately led to the formation of the Current Competition Law.

Conclusion and Recommendations

When problems arose in the functioning of MRTP Act, 1969 there arose a
need for a new, revised competition law policy. However, the question that
arose was that whether we need to amend the MRTP Act itself or there was a
need to create an altogether new legislation. For this purpose, many
committees were set up. The most important among them is the Committee
headed by S.V.S Raghavan.

Raghavan Committee Report, 1999[34]

Raghavan Committee was set up to suggest changes in the Competition

Policy in India. It gave the following recommendations –

1. Setting up of CCI and winding up of MRTPC.

2. Bring Government monopolies, foreign companies under the ambit
of Competition Law.

 Setting up of new limits and rules governing mergers, predatory

pricing and abuse of dominance.

1. Transfer of all pending MRTPC cases to CCI

Enactment of Competition Law, 2002

Competition Law, 2002 was announced by the then Finance Minister of India
in his budgetary speech of 1999. The new law covers all the major loopholes
that were present in the old MRTP Act. The Competition Act, 2002 primarily
deals with these aspects –

 Anti – Competition Agreements

 Abuse of Dominance
 Combinations Regulation.
 Competition Advocacy

The new Act also provided for establishment of a quasi-judicial body called
Competition Commission of India (CCI) for registering of all the complaints
and also a Competition Appellate Tribunal (COMPAT) to hear the appeal
cases against CCI orders.[35]

Brahm Dutt v Union of India[36]

In this case, the constitutional validity of the appointments made under
newly enacted Competition Law, 2002 were challenged. It was contended
that since CCI had adjudicatory functions as well, then the Chairman of CCI
should be a retired judge of Supreme Court or High Court and not an expert
in any field as provided for under the Act.

It was held by the Supreme Court that the practice of appointing an expert
as the Chairman of the Committee was a set practice across many
jurisdictions. Moreover, the Competition Act also provided for an appellate
body – COMPAT which was presided over by a retired judge. So in case a
party is not satisfied with the orders of CCI, they can approach the appellate
tribunal. The writ petition was thus dismissed.

Future Scope and Recommendations

As has been rightly said the positive effects of any law can only be realized
when it is effectively enforced. A weak enforcement of law would be no
different than not having the law itself. The same applies for the newly
enacted Competition law whose jurisprudence is currently at its very nascent
stage. However, as a researcher, I would like to give some of my own
suggestions –

1. CCI should try to focus more on the competition law violations that
affect the common majority of people. Most of the cases that this
authority has decided till now involve niche markets that are mostly
controlled by the richest 10% of the country.
2. It should also strongly deal with anti-competitive activities of the
firms located abroad and the ill effects it has on the Indian market.

Thus we can conclude that we need a good competition policy and an

efficient and effective competition law in order to confidently face the
challenges posed by globalization in Indian markets.
Aims & Objectives of MRTP, Act:

 Prevention of concentration of economic power.

 Prohibition of monopolistic trade practices.
 Prohibition of restrictive trade practices.
 Prohibition of unfair trade practices.

Aims & Objectives of Competition, Act:

 To promote fair means and prevent unfair means.

 Competition improves economic efficiency of the country therefore we
cannot remove competition.
 Prevent and sustain competition.
 Prevent practices bearing an appreciable adverse affect on
competition.
 Protect the interest of consumers.
 Ensure freedom of trade.

Features:

The focus of the new law is towards the following areas affecting competition
namely:

1. Prohibition of certain agreements, which are considered to be anticompetitive

in nature. Such agreements [namely tie in arrangements, exclusive dealings
(supply and distribution), refusal to deal and resale price maintenance] shall be
presumed as anti- competitive if they cause or are likely to cause an appreciable
adverse effect on competition within India.

2.Prohibition of Abuse of dominant position- If an enterprise by imposing unfair

or discriminatory conditions or limiting and restricting production of goods or
services or indulging in practices resulting in denial of market access or through
in any other mode are prohibited.

3. Regulation of combinations which cause or are likely to cause an appreciable

adverse affect on competition within the relevant market in India is also
considered to be void.

4. Entrust Competition Commission of India the responsibility of

undertaking competition advocacy, awareness and training about
competition issues.

Other Features
 i. The MRTP Commission was brought to an end with effect from October
14, 2009.
ii. Pending cases of MTP, RTP & UTP shall stand transferred to NCLAT.

iii. Competition Act is a very compact and smaller legislation which

includes only 66 sections.

iv. Competition commission of India (CCI) is constituted under the Act.

v. This Act restricts agreements having adverse effect on competition in

India.

vi. This Act suitably regulates acquisitions, mergers and amalgamation of

enterprises.

vii. Under the purview of this Act, the central Government appointed
director General for conducting detail investigation of anti-competition
agreements for arresting CCI.

viii. This Act is flexible enough to change its provisions as per needs.

ix. Civil courts do not have any jurisdiction to entertain any suit which is
within the purview of this Act.

x. This Act possesses penalty provision.

xi. Competition Act has replaced MRTP Act.

xii. Under this Act, “Competition Fund” has been created.

Comparison between MRTP Act and Competition Act:

MRTP Act, 1969 Competition Act, 2002

1. Based on the pre-reforms Based on the post-reforms

scenario. scenario.

2. Based on size as a factor. Based on structure as a factor.

3. Competition offences implicit or Competition offences explicit

not defined. and defined.

4. Complex in arrangement and Simple in arrangement and

language. language and easily
 comprehensible.

5. 14 per se offences negating the 4 per se offences. All the rest

principles of natural justice. subjected to rule of reason.

6. Frowns upon dominance. Frowns upon abuse of

dominance.

7. Registration of agreements No requirements of registration

compulsory. of agreements.

8. No regulation on combinations. Combinations regulated behind

a high threshold limit.

9. MRTPC appointment by the CCI selected by a Collegium.

Government.

10. Very little administrative and Relatively more autonomy for

financial autonomy for MRTPC. the CCI.

11. No Competition Advocacy role for CCI has competition advocacy

the MRTPC. role.

12. No penalties for offences. Penalties for offences

13. Reactive and rigid. Proactive and flexible.

14. Unfair trade practices covered. Unfair trade practices omitted

(consumer forum deal with
them).

Anti Competitive agreements:

https://www.legalbites.in/anti-competitive-agreements-competition-law/

Predatory pricing

https://legaldictionary.net/predatory-pricing/

Abuse of Dominant position

https://www.legalbites.in/abuse-dominant-position-competition-law/

Combination

Section 5 deals with combination of enterprises and persons. 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 atleast
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 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; or

(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 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 dollars, including at least
rupees fifteen hundred crores in India; or
(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; or

(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 fourthousand
crores or turnover more than rupees twelve thousand crores; or

(B) in India or outside India, the assets of the value of more than two billion US
dollars, including at least rupees fifteen hundred crores in India or turnover more
than six billion US dollars, including at least rupees fifteen hundred crores in
India.

Regulation of combinations (Section 6)

As per this section, 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.

Protection of Consumer

https://www.toppr.com/guides/business-studies/consumer-protection/intro-and-importance-
of-consumer-protection/
 Module 3:

Structures and functions of CCI.

Establishment of Commission (Section 7)

Section 7 provides for the establishment of the Competition Commission of

India. The Commission shall be a body corporate by the aforesaid name having
perpetual succession and a common seal with power to acquire, hold and
dispose of property and to contract and shall sue or be sued. The place of head
office of the Commission shall be decided by the Central Government. Further,
the Commission may establishment offices at other places in India.

Composition of Commission (Section 8)

The Commission shall consist of the 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 then 15 years in international trade, economics, business, commerce,
law, finance, accounting, 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 other
members shall be whole time members.

Selection Committee for Chairperson and other Members of the commission

(Section 9)

The Chairperson and other Members of the Commission shall be 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 (Members)

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.
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 of Chairperson and other Members (Section 10)

The Chairperson and every other Member shall hold office for a term of five
years from the date on which he enters upon his office and shall be eligible for
reappointment. However, no Chairperson or other Member shall hold office as
such after he has attained the age of sixty-five years.

Resignation, removal and suspension of Chairperson and other members

(Section 11)

The Chairperson or any other Member may, by notice in writing under his hand
addressed to the Central Government, resign his office.

Restriction on employment of Chairperson and other Members in certain cases

(Section 12)

The Chairperson and other Members shall not, for a period of two years from the
date on which they cease to hold office, accept any employment in, or be
connected with the management or administration of, any enterprise which has
been a party to a proceeding before the Commission.

Administrative powers of Chairperson (Section 13)

The Chairperson shall have the powers of general superintendence, direction and
control in respect of all administrative matters of the Commission. The
Chairperson

may also delegate such of his powers relating to administrative matters of the
Commission, as he may think fit, to any other Member or officer of the
Commission.

Salary and allowances and other terms and conditions of service of Chairperson
and other Members (Section 14)

The salary, and the other terms and conditions of service, of the Chairperson
and other Members, including travelling expenses, house rent allowance and
conveyance facilities, sumptuary allowance (expenses of living) and medical
facilities.

Vacancy, etc. not to invalidate proceedings of Commission (Section 15)

Appointment of Director General, etc. (Section 16)

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.
The number of other Additional, Joint, Deputy or Assistant Directors General or
such officers or other employees in the office of Director General and the
manner of appointment of such Additional, Joint, Deputy or Assistant Directors
General or such officers or other employees shall be such as may be prescribed.

Duties

Duties of Commission (Section 18)

This section provides that it shall be the duty of the Commission to

eliminate practices having adverse effect on competition, to promote and
sustain competition in markets in India, to protect the interests of
consumers and to ensure freedom of trade carried on by other
participants in markets in India. The Commission may for the purpose of
discharging its duties or performing its functions under this Act, enter into
any memorandum or arrangement, with the prior approval of the Central
Government, with any agency of any foreign country.

Powers and Functions of the Commission

1. To eliminate practices having adverse effect on competition,

promote and sustain competition, protect interests of consumers
and ensure freedom of trade by other participants
2. Inquire into certain agreements and dominant position of
enterprise– It provides that the Commission may either suo
moto  or on receipt of any information of alleged contravention of
Section 3 (prohibits anti-competitive agreements) may inquire into
the same.
3. Inquiry into combinations– Section 20 of the Act entrusts the
Commission with the power to inquire into any information relating
to acquisition and determine whether such combination or
acquisition may have an appreciable adverse effect on competition
(AAEC).
4. Reference of an issue by a statutory authority to the
Commission– Section 21 of the Act enumerates that in the course
of a proceeding if any issue is raised that any decision of a statutory
authority will be in conflict with the provisions of the Competition
Act, 2002, the statutory authority shall make a reference in this
regard to the Commission.
 5. Reference by Commission– Section 21A of the Act provides that if
in the course of proceeding an issue is raised by any party that any
decision taken by the Commission is in contravention of the
provisions of Competition Act, whose authority is entrusted to a
statutory authority then the Commission may make a reference in
respect of the issue to the statutory authority.
6. Power to issue interim order– Section 33 of the Act empowers
the Commission to issue interim orders in cases of anti-competitive
agreements and abuse of dominant position, thereby temporarily
restraining any party from carrying on such an act.
7. Competition Advocacy– Section 49 of the Act provides for
competition advocacy and enumerates that the Central or the State
Government may while formulating any policy on Competition or
any other matter may make reference to the Commission for its
opinion on possible effect of such policy on Competition. However,
the opinion given by the Commission is not binding on the Central
Government.

Regulatory note of CCI.

Competition Commission of India (CCI)

The CCI is a statutory body corporate that was established by the

government on 14th October 2003. So it is an artificial person that has
perpetual succession. The Central Government will appoint all its six
members and the Chairperson forming the Board.

Now the main aim of the CCI is to implement the modern competition laws
and philosophy of the Competition Act, 2002. It ensures that there are no
unfair practices in the market that have a negative impact on healthy
competition. This is because healthy competition is good for the consumers
of a market. Monopolistic competition or other unfair practices have an
adverse effect on economic growth.

Objectives of the CCI

Prevent policies and practices which have an adverse effect on constructive

competition in the economy
Promote and help sustain healthy competition in the market

Look after the interest of the consumers

Create awareness and advocate for fair competition practices

And finally, ensure freedom of trade in the market

Role of the CCI

The preamble of the Competition Act focuses on the development of the

economy and the country by avoiding unfair competition practices and
promoting constructive competition. To achieve these objectives, the CCI
attempts to do the following activities and practices,

 Ensure that the markets work for the benefits of the consumers, so the
welfare of the consumers is the main priority.

 Economic activities are promoting fair competition in the market for

growth and prosperity.

 Implement the competition practices and policies of the Competition

Act. The aim is the best possible utilization of resources by embracing
these policies.

 Another role of the CCI is to ensure interaction and cooperation with

the other regulating authorities in the economy. This will ensure that
the sectoral regulatory laws are in agreeable with the competition
laws.

 One important role of the CCI is to carry out advocacy about

competition and competition laws. It aims to educate ministries, state
governments, regulators, and other authorities about the modern
concepts of competition. And it does so by conducting workshops,
seminars, publishing papers, etc.