Competition is a situation in market, in which firms or sellers independently strive for

buyer’s patronage to achieve business objectives viz. profits, sales or market shares (World
Bank, 1999)

A contestable market is a market structure where there is freedom of entry and exit It is a
market structure which must have low sunk costs' (non recoverable costs eg. advertising)

Constitutional Aspects: Arts. 38 and 39

According to John Stuart Mill (a classical economist), the market has two predominant
functions - allocation of resources and income distribution - and markets are efficient in
allocation of resources but not in income distribution. So the State needs to intervene
Competition law and policy is one of the ways of governmental intervention in free market
operations, but it is not directly concerned with income re-distribution.

Articles 38 and 39 embody the principle of 'distributive justice ' which connote the removal
of economic inequalities rectifying the injustice resulting from transactions between unequals
in society.

Competition law can be considered as an act of Government which prohibits conduct which
is anti-competitive and tends to interfere with the free enterprise because if competition or
free enterprise is unprotected by the Government, it sometimes produces, in some areas of
business, practices which are anti-competitive or monopolistic leading to inefficiencies in the
market.

In an open market economy, however, some enterprises may undermine the market by
resorting to anti-competitive practices for short-term gains. These practices can completely
nullify the benefits of competition.

Competition law not only ensures competition in the market, it also actively checks practices
that are harmful to the competitive process.

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Goals of Competition Law

Competition law believes in the premise that the unrestrained interaction of the competitive
forces in the market will yield the best allocation of economic resources, lower prices,
improve qualify and maximum material progress for the citizens. These benefits come from
the pressure competition places on firms to be efficient, innovative and customer focused in
order to survive and thrive. Thus the principal objective of the Competition Law is to make
the market economy work better by stopping vested interests from obstructing markets The
purpose, therefore is to maintain and protect the competition process - for the benefit of
economic growth and consumer welfare '

The mam objective of competition law is to promote economic efficiency using competition
as one of the means of assisting the creation of market responsive to consumer preferences

Economic (allocative efficiency, productive efficiency, dynamic efficiency) and social goals
(protect interests of consumers)

In Shri Shamsher Kataria v Honda Siel [2014] Comp LR 001 (C CI), the Competition
Commission of India observed: ‘ The role of antitrust can best be understood in terms of a
fundamental standard ‘ the standard of consumer choice.’ The antitrust laws are intended to
ensure that the marketplace remains competitive so that worthwhile options are produced and
made available to consumers, and this range of options is not to be significantly impaired or
distorted by anti-competitive practices. Antitrust certainty does not recognize that the number
of options be maximized. Nor does antitrust prevent all conduct or transactions that have the
effect of reducing the number of options available to consumers. Nor does the law
affirmatively require the creation of options. Rather, it prevents business conduct that
artificially limits the natural range of choices in the market place.”

The Competition Act, 2002, seems to maintain a balance between the consumer welfare
standard and efficiency standard. On the one hand, it stands for efficiency by granting
exemption from the presumption (of adverse effect on competition) to the joint venture
agreements if they promote efficiency under Sec. 3(3); on the other hand, it provides for ‘
presumption’ under the same section, which casts heavy burden on the companies involved in
horizontal agreements having appreciable adverse effects on competition to show an
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efficiency justification for their behaviour. The 2002 Act thus endeavours to balance the two
standards by benefiting consumers and promoting efficiency.

BRAHM DUTT v UNION OF INDIA [AIR 2005 SC 730]

[The Apex Court held that for the purpose of regulatory and advisory functions relating to
competition in market, ‘Competition Commission of India’ be established and for the purpose
of adjudicatory functions, ‘Competition Appellate Tribunal’ be established.]

Essentially, the writ petition in this case was for striking down Rule 3 of the Competition
Commission of India Rules, 2003, concerning selection of chairperson and other members of
the Commission.

The Apex court refrained from giving a judgment as affidavits were filed by the Union of
India stating that there has been proposed some amendments to the effect so as to enable the
Chairman and the members to be selected by a Committee presided over by the Chief Justice
of India or his nominee.

We may observe that if an expert body is to be created as submitted on behalf of the Union of
India consistent with what is said to be the international practice, it might be appropriate for
the respondents to consider the creation of two separate bodies, one with expertise that is
advisory and regulatory and the other adjudicatory. This followed up by an appellate body as
contemplated by the proposed amendment, can go a long way, in meeting the challenge
sought to be raised in this writ petition based on the doctrine of separation of powers.

In this backdrop, the Government passed a Competition (Amendment) Bill 2006 in the light
of the above judicial dicta of the Supreme Court. The Bill was passed and the necessary
changes were made under the Competition Act, 2002 vide the Competition (Amendment) Act
2007, which provides for the establishment of Competition Appellate Tribunal (COMPAT)
for adjudicating claim for competition and for hearing appeal against the direction or
decision made or order passed by the Competition Commission.

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Object: In Competition Commission of India v Steel Authority of India (2010), the Apex
Court explained the objective and reasons for the enactment of the Competition Act, 2002:
“The decision of Government of India to liberalize its economy with the intention of
removing controls persuaded the Indian Parliament to enact laws providing for checks and
balances in the free economy. The laws were required to be enacted, primarily, for the
objective of taking measures to avoid anti-competitive agreements and abuse of dominance as
well as to regulate mergers and takeovers which result in distortion of the market Most
countries in the world have enacted competition laws to protect their free market economies-
an economic system in which the allocation of resources is determined solely by supply and
demand. The rationale of free market economy is that the competitive offers of different
suppliers allow the buyers to make the best purchase. The motivation of each participant in a
free market economy is to maximize self-interest but the result is favorable to society. As
Adam Smith observed: "there is an invisible hand at work to take care of this. ” The present
Act is quite contemporary to the laws presently in force in the United States of America as
well as in the United Kingdom.”

In a significant departure from the letter and spirit of the MRTP Act, the Competition Act
hinges on the “Effect Theory” and does not categorically decry or condemn the existence of a
monopoly in the relevant market, rather the use of the monopoly status such that it operates to
the detriment of the potential and actual competitors is sought to be curbed. The Competition
Act provides for the prohibition of anti-competitive practices and not monopolies per se.

Object: Excel Corp. case: Competition law in India aims to achieve highest sustainable
levels of economic growth, entrepreneurship, employment, higher standards of living for
citizens, protect economic rights for just, equitable, inclusive and sustainable economic and
social development, promote economic democracy, and support good governance by
restricting rent seeking practices.