Competition Act 2005

Competition Act 2002 states that Indian traders must do any activity for promoting monopoly. If they
are making any malpractices in price, distribution, and quality then it is void.

Objectives

• To protect the interest of the consumers by providing them good products and services at a
reasonable price

• To promote and sustain healthy competition in the Indian market

• To prevent practices having an adverse effect on competition

• To ensure freedom of trade carried on by the participant in the market

• To prevent anti-competition

• Establishment of the competitive commission of India

• Creating awareness

Scope of the Act

Wide Coverage

In the Act, The term enterprise means a person or a department of the government engaged in all the
activities of the value chain of products and services directly or indirectly.

Anti-Competitive Agreement

It deals with agreement among enterprises, person or association of person which causes or likely to
cause an appreciable adverse effect on competition. The Act deal with the horizontal agreement,
including cartel which fixes prices, limit or control production, supply, etc.

Abuse of Dominance

Unlike MRTP law, the act is not frowned upon by market players. But the abuse of dominance is
prohibited under section 4 of the Act.

Regulation of Combination

Section 5 of the Act deals with the combination. The combination includes the acquisition of share,
acquiring of control, and merger and amalgamation.

Features

• This Act may be called Competition Act 2002.

• It extends to the whole of India.

• It prohibits an anti-competitive agreement.

• It regulates combination that causes or likely to cause an appreciable adverse effect on competition.
• The Act provides various remedies for restoring competition and penalizing the offenders in the case
of contravention of this law.

• Anti-competitive practices committed overseas but having an effect in India has been covered under
Section 32 of the Act.

Competition bill 2020

With a view to updating the competition Act 2002 and the associated regulation, the Indian government
constituted the competition law review committee in October 2018 which submitted its report to the
government on 14th August 2019. The draft bill proposes a significant amendment to the Act.

Based on the recommendation made in the report The ministry of corporate affairs has introduced a
draft competition bill 2020 amending Act.

Definitions

Consumer (section 2F)

Consumer means any person or department of government who buys, hire, or avail of any goods or
services for a consideration which has been paid or promised, partly paid and partly promised, or under
any system of deferred payment

Enterprise (section 2H)

Enterprise means a person or the department of government or the other entity regardless of its legal
form or status including Unit, division, subsidiaries, who or which is, or has been engaged in any
economic activity related to production, storage, supply, distribution, acquisition or control of article or
goods, or the provision of service of any kind: or in investment, or in the business of acquiring, holding,
underwriting or dealing with the shares, debenture or other security of any other body corporate, either
directly or through one or more it’s unit or division or subsidiaries

Party (section 2 KC)

The party includes a consumer or an enterprise or a person or an information provider or a consumer

Association or a trade Association or Central Government or any State government or any statutory
authority, As the case may be, and shall include an Enterprise or a person, against whom any enquiry or
proceeding is instituted: and also include any and include any enterprise or person impleaded by
Commission to join proceeding.

Goods (Section 2I)

Goods means goods as defined in sale of goods Act 1930 and include

• Products manufactured, processed, or mined

• Debentures, stock, and shares after allotment

• In relation to goods supplied, distributed, or controlled in India, goods imported into India

Person (Section 2(1))

• Individual

• Hindu undivided family

• Company

• Firm

• Association of person or body of the individual

• Any Corporation established by or under any Central, state or provincial Act

• Anybody corporate incorporated by or under the laws of country outside India

• A cooperative society registered under any law

• Local authority

Price(Section 2O)

“Price”, in relation to the sale of any goods or to the performance of any services, includes every
valuable consideration, whether direct or indirect, or deferred, and includes any consideration which in
effect relates to the sale of any goods or to the performance of any services although ostensibly relating
to any other matter or thing;

Service (Section 2U)

“Service” means service of any description which is made available to potential users and includes the
provision of services in connection with the business of any industrial or commercial matters such as
banking, communication, education, financing, insurance, chit funds, real estate, transport, storage,
material treatment, processing, the supply of electrical or other energy, boarding, lodging,
entertainment, amusement, construction, repair, conveying of news or information and advertising;

Share (Section 2v)

“Shares” means shares in the share capital of a company carrying voting rights and includes

• Any security which entitles the holder to receive shares with voting rights.

• Stock except where a distinction between stock and share is expressed or implied.

Statutory Authority (Section 2W)

“Statutory authority” means any authority, board, corporation, council, institute, university or any other
body corporate, established by or under any Central, State or Provincial Act for the purposes of
regulating production or supply of goods or provision of any services or markets therefor or any matter
connected therewith or incidental thereto.

Trade (Section 2X)

It means any trade, business, industry, profession or occupation relating to the production, supply,
distribution, storage or control of goods and includes the provision of any services.

Turnover (Section 2y)

It includes value of sale of goods or services.

Competitive commission of India

Composition

• Chairperson

• Not less than two and not more than 06 members who shall be appointed by the centre.

• Currently, the CCI has a chairperson and two members.

• The commission’s chairperson and other members shall be full-time members.

Eligibility: The chairperson and every other member should be a person of ability, integrity, and standing
and who, has been, or is qualified to be a judge of a High court, or has special knowledge of, and
profession experience 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. The chairperson and
every other member shall hold office for a term of five years and it shall not hold office on attaining the
age of 65 years. The chairperson and a member shall be eligible for reappointment.

Director General

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.

Functions of commission

1. To promote and sustain competition in the market and eliminate practice having adverse effect of
competition.

2. To protect the interests of consumers and it ensure freedom of trade in markets of India.

3. It ensures fair and healthy competition in economic activity with the intention of economic
development of the country.

4. To implement competition policy with an aim to achieve the most efficient utilization of economic
resources.

5. To Act as competition regulator and safeguard the interest of smaller organization that are unable to
defend themselves against the larger corporation.

6. To carryout competition advocacy and spread the information related to benefit of competition.

7. It has authority to notify organization that is sell to India, if it feels that influence the competition in
Indian market.
8. To develop and retain close association with other structural regular so as to ensure the alignment of
sector regulatory is law.

9. To carry out to competition advocacy and spread the information related to benefit of competition
and develop competition culture in Indian economy.

Components of Completion Act

Anti competitive practice (Section 3)

The Competition Act, 2002 defines anti-competitive agreements as such in section 3 where it states, “No
enterprise or association of enterprises or individuals or association of individuals may enter into an
agreement regarding production, supply, distribution, storage, acquisition or control of goods or
provision of services which may adversely affect the competition in the Indian market”.

• Directly affects purchase or sale prices

• Indirectly affects purchase or sale prices

• Limits production

• Limits supply

• Limits technical development

• Limits service provision in the market

• Leads to the rigging of bids

• Leads to collusive bidding

Beside horizontal agreement there is vertical agreement also. These are agreement between producer
and supplier or between producer and distributor. It is also undermine competition in the market. These
include

• Tie in arrangements

• Exclusive supply agreement

• Exclusive distribution agreement

• Refusal to deal

• Resale price maintenance

Abuse of dominant position

Section 4 of the Act mentioned that no enterprise shall abuse its dominant position. A dominant
position means a position of strength enjoyed by the Enterprise in the relevant market in India. There
shall be an abuse of dominant position if an enterprise indulges into the below mentioned activities,

• Directly or indirectly imposing discriminatory

• Conditions in the purchase or sale of goods or service.

• Setting prices in the purchase or sale (including predatory pricing) of goods or services

• Limiting or restrict

• The production of goods or provision of services or market therefore; or limiting

• Technical or scientific development relating to goods or services to the prejudice of customers

• Indulging in practice or practices resulting in the denial of market access.

Regulation of combination

That is designed to regulate the operation and activities of combination. Combination means acquisition
of control share water right or asset direct or indirect control over another enterprise engaged in
competing business. Combination that exceeds the threshold limit is specified in the Act in terms of
asset or turnover which courses is likely to course and appreciable adverse impact on competition
within the relevant market in India can be scrutinized by commission.

• 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.

• Subject to the provisions contained in sub-section (1), any person or enterprise, who or which
proposes to enter into a combination, may, at his or its option, give notice to the Commission, in the
form as may be specified, and the fee which may be determined, by regulations, disclosing the details of
the proposed combination, within seven days of-

1. Approval of the proposal relating to merger or amalgamation, referred to in clause (c) of section 5, by
the board of directors of the enterprises concerned with such merger or amalgamation, as the case may
be;

2. Execution of any agreement or other document for acquisition referred to in clause (a) of section 5 or
acquiring of control referred to in clause (b) of that section

• The Commission shall, after receipt of notice under sub-section (2), deal with such notice in
accordance with the provisions contained in sections 29, 30 and 31.

• The provisions of this section shall not apply to share subscription or financing facility or any
acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund,
pursuant to any covenant of a loan agreement or investment agreement.

• The public financial institution, foreign institutional investor, bank or venture capital fund, referred to
in sub-section (4), shall, within seven days from the date of the acquisition, file, in the form as may be
specified by regulations, with the commission the details of the acquisition including the details of
control, the circumstances for exercise of such control and the consequences of default arising out of
such loan agreement or investment agreement.

Competition advocacy

The aim of competition advocacy is to foster condition that will lead to more competitive market
structure and business behaviour. The commission shall take suitable measures for the promotion of
competition advocacy, creating awareness and imparting training about to competition issues.

Competition Appellate Tribunal

The central government established a competition appellate Tribunal in connection with the
competition Act. The headquarters of Tribunal shall be place which is notified by Central Government
and now it is office at Delhi. The CAT is:

1. To hear that feel against any direction issued or decision made or order passed by the commissioner

2. To adjudicate on claim for compensation that may arise from the finding of commission or the order
of applet Tribunal is an appeal against the finding of commission and pass order for recovery of
compensation.

Establishment

National commission law appellate Tribunal constituted under Section 410 of companies Act 2013 for
and from the commencement of part XIV of chapter 6 of finance Act, replaced competition Appellate
Tribunal with the national commission law Appellate Tribunal 2017. Session 53C to 53 m of competition
Act 2002 is omitted by finance Act 2017.

Appeal

Central Government or State government or local authority or enterprise or any person aggrieved by
any direction or decision or order of commission can prefer an appeal to Tribunal. It should be filed with
period of 60 days from the date of receipt of certified copy of direction decision or order, appealed
against. The appeal may be entertained after 60 days if sufficient course are there for the delay. Every
memorandum of appeal shall be accompanied with the prescribed fee.

The appeal shall be accompanied by certified copy of order of the commission appealed against. It
should be supported by affidavit in support of statement of fact contained in the appeal. The register
after satisfying that everything is in order shall register the appeal. On scrutiny, if the appeal is found to
be defective, the appellant would be advised to rectify the defect

On receipt of appeal the Tribunal give an opportunity of the brief period to parties of appeal and pass
order the on confirming, modified or setting aside the direction decision or order appealed against.

The Tribunal may after the enquiry into the allegation mentioned in the application was an order
directing the enterprise to make payment to applicant If the amount determined by it has realizable
from the enterprise as compensation for the loss of damage caused by the applicant.

Execution of order of tribunal

Every order made by the Appellate Tribunal shall be enforced by it in the same manner as if it were a
decree made by a court in a suit pending therein, and it shall be lawful for the Appellate Tribunal to
send, in case of its inability to execute such order, to the court within the local limits of whose
jurisdiction As in the case of company, the registered office of the company is situated and in case of any
other person the place where the person voluntarily result for carries on business or personally work for
gain is situated.

Appeal to Supreme Court

The Central Government or any State Government or the Commission or any statutory authority or any
local authority or any enterprise or any person aggrieved by any decision or order of the Appellate
Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of
the decision or order of the Appellate Tribunal to them: Provided that the Supreme Court may if it is
satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said
period, allow it to be filed after the expiry of the said period of sixty days.