Competiton Law Notes

COMPETITION LAW- SEM 8 – CHC8A
COMPETITON LAW
(UNIVERSAL INTRODUCTION)
Healthy competition in the market is an indicator of a vibrant economy. Competition allows
enterprises to increase their work efficiency alongside providing consumers numerous choices
for a product. A competitive market often leads to the rise in innovation and technology and
thereby results in the improvement of quality of the products available in the market. The
Competition Act, 2002 was passed by the Parliament of India with the objective of regulating
modern trade practices that result in an adverse effect on the competition in the market. The
Competition Act, 2002 had replaced the outdated Monopolies and Restrictive Trade Practices
Act, 1969 with the aim of promoting and sustaining competition in the markets, protecting the
interests of the consumers and ensuring the freedom of trade carried on by other participants in
the market. The Act also contains provisions for the establishment of the Competition
Commission of India which ensures the prevention of practices having an appreciable adverse
effect on competition. The provisions of the Act that deal with the regulation of combinations
have been brought into effect from June 1, 2011
ORIGIN OF COMPETITION LAW
UNITED STATES
Competition Law is the key tool to promote competition. Modern ground-breaking
developments in competition laws can be attributed to the United States of America when they
enacted the US Sherman Act, 1890 and to complement it, the Clayton Act in 1914. Anti-trust
law was enacted to combat the malicious workings of trusts (used as a disguise by the larger
businesses to conceal their true motives when in fact, they were operating as a profit-earning
enterprise).
The 20th century with all its wars and conflicts saw a major progression in the enactment of
competition laws in France and Canada in the 1920s. As a consequence of World War II,
regulations regarding cartels and monopolies were implemented in Germany and Japan.
The 1950s witnessed the true chapter of competition laws in the form of The Restrictive Trade
Practices Act introduced in England in 1956 and 1974.
1. The Sherman Anti-Trust Act intended to prevent unreasonable "contract, combination or
conspiracy in restraint of trade," and "monopolization attempted monopolization or conspiracy
or combination to monopolize." Violations against the Sherman Anti-Trust Act can have severe
consequences, with fines of up to $100 million for corporations and $1 million for individuals,
as well as prison terms of up to 10 years.10
Section 1 of the Sherman Act prohibited “every contract, combination or conspiracy” that
restrained interstate or foreign commerce.
Section 2 banned individual firms from monopolizing or attempting to monopolize markets.
Under the act, the Department of Justice (DOJ) could prosecute firms and seek criminal
penalties and treble damages awards. Significantly, private litigants could also bring civil suit
under the law, recoup treble damage awards, and shape legal precedent. This “fee-shifting”
incentivized the use of private litigation to police competitive practices. The problem of
congressional intent has attracted.
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Case: United States v. E. C. Knight Co

In this case, the Court refused to apply the law against the “sugar trust,” a holding company
that controlled more than 90 percent of the nation’s sugar refining capacity. The Court held
that the Sherman Act concerned interstate commerce and not manufacturing, which was instead
a legal issue for state corporation law. Thus E. C. Knight did not violate the Sherman Act
through its “mere existence”; prosecutors must provide evidence of a specific action in restraint
of trade.
Case: United States v. Trans-Missouri Freight Association
In 1897 the Court held that an agreement by eighteen railways to fix rates for the transport of
goods constituted an illegal restraint of trade. The Court refused to hear arguments that
horizontal price fixing could be “reasonable” if its intent was to avoid price wars or “destructive
competition.” While the Court had aimed to protect “small dealers and worthy men,” in reality
its strict interpretation of the Sherman Act incentivized further economic concentration.
Case: United States v. Trenton Potteries (1927)
It was held that explicit price-fixing arrangements violated the Sherman Act regardless of the
reasonableness of the fixed prices
2. The Clayton Antitrust Act : The Clayton Act was enacted in 1914 to plug what many in
Congress saw as loopholes in the Sherman Act. Passage of the Clayton Act was closely linked
to that of the FTC Act. Unlike the Sherman Act, the Clayton Act is not a criminal statute; it
merely declares certain defined practices as unlawful and leaves it to the government or to
private litigants to seek to enjoin those practices. But unlike the FTC Act, the Clayton Act does
spell out four undesirable practices. Violations of the Sherman Act require an actual adverse
impact on competition, whereas violations of the Clayton Act require merely a probable
adverse impact. Thus, the enforcement of the Clayton Act involves a prediction that the
defendant must rebut in order to avoid an adverse judgment.
The four types of prescribed behaviours are these:
1. Discrimination in prices charged for different purchasers of the same commodities.
2. Conditioning the sale of one commodity on the purchaser’s, refraining from using or dealing
in commodities of the seller’s competitors. Clayton Act, Section 3.
3. Acquiring the stock of a competing corporation. Clayton Act, Section 7. Because the original
language did not prohibit various types of acquisitions and mergers that had grown up with
modem corporate law and finance.
4. Membership by a single person on more than one corporate board of directors if the companies
are or were competitors. Clayton Act, Section 8.
Case: Brown Shoe Co. v. United States
The Court invalidated a merger between two shoe producers and retailers because it would
have created a market share of 5 percent that might have tended to “lessen competition
substantially in the retail sale of men’s, women’s and children’s shoes in the overwhelming
majority” of the relevant markets.
The Court expanded on this argument in United States v. Continental Can Co. (1964),
holding that interindustry competition—between glass and metal producers in this case—also
fell within the ambit of the Clayton Act. (vertical agreement maybe)
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3. The Federal Trade Commission Act: Like the Clayton Act, the FTC Act is a civil statute,
involving no criminal penalties. Unlike the Clayton Act, its prohibitions are broadly worded.
Its centre piece is Section 5, which forbids “unfair methods of competition in commerce, and
unfair or deceptive acts or practices in commerce.” According to the Supreme Court, violations
of the Sherman Anti-Trust Act also violate the Federal Trade Commission Act. Therefore, even
though the FTC cannot technically enforce the Sherman Anti-Trust Act, it can bring cases
under the FTC Act against violations of the Sherman Anti-Trust Act.
In Eastern States Retail Lumber Dealers’ Ass’n v. United States (1914) and American
Column & Lumber Co. v. United States (1921), both the cases held that information sharing
among competitors was anticompetitive.
Case: United States v. Trenton Potteries (1927)
It was held that explicit price-fixing arrangements violated the Sherman Act regardless of the
reasonableness of the fixed prices
UNITED KINGDOM
UK Competition Act 1998
It contains two prohibitions. The first (Chapter 1) is modelled on Article 101(1) of the Treaty
on the Functioning of the EU (TFEU), forbidding agreements and practices which have as their
object or effect the restriction of competition. The second (Chapter 2) is modelled on Article
102 TFEU and forbids the abuse of a dominant position. The CA grants the regulator (currently
the CMA) wide powers to obtain information, conduct investigations, and impose penalties for
breaches of the prohibitions.
According to the rules of the Competition Act, 1998 companies cannot:
1. Keep a fixed price, this is an agreement between participants on the same side of the market
who buy or sell a product, service, or commodity only at a fixed price. This will prevent other
companies from competing. It also prevents the public from benefiting from free
competition.(price fixing)
2. Limited production. (Limit production)
3. Agree with companies in the same market to limit production to reduce competition.
4. Open up the market.
5. Companies cannot share the market with their competitors. In other words, they cannot agree
on who will bid on which contract. (bid rigging) For example, we take this contract, you accept
the offer, instead of competing fairly.
6. Competition law applies to all agreements that limit competition. This generally affects large
companies, but the same applies to small businesses.
Enterprise Act 2002 (EA)
The Enterprise Act, 2002 law prevents the creation of commercial business cartels (Part 6). A
cartel is an association of manufacturers or suppliers whose purpose is to keep prices high and
limit competition. Within the cartel, companies do not compete with each other. Doing so will
increase the gross profit by not lowering prices with competitive pricing. These laws give the
Competitive Markets Authority (CMA) the legal authority to investigate the violations and take
action accordingly. Proceedings can range from large fines to the dismissal of businesses,
directors, and even imprisonment. Therefore, non-compliance with these laws can have major
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and serious consequences. It is imperative that companies, large and small, be aware of
competition law and its implications, regardless of which market they operate in.
The EA’s competition provisions modernise UK merger control (Part 3) (which the CA had
not reformed) by restricting ministerial involvement in merger decisions. This was a major
change in the way enforcement decisions are made: it gave primary responsibility to the
OFT(The Office of Fair Trading) and the CC, removing the decision-making powers of
Ministers, save in certain exceptional cases which give rise to a matter of public interest.
EUROPEAN UNION
The Treaty on the Functioning of the European Union came into force on December 1, 2009
following the ratification of the Treaty of Lisbon, which made amendments to the Treaty on
European Union and the Treaty establishing the European Community (TEC). The TFEU is
an amended and renamed version of the TEC. The TFEU includes enhancements to the social
dimension of the European Union. It organises the functioning of the Union and determines
the areas of, delimitation of, and arrangements for exercising its competences. Together with
the Treaty on European Union it constitutes the Treaties on which the Union is founded.
TFEU
Part 1 – Principles
Part 2 - Non-discrimination and citizenship of the Union
Part 3 - Union policies and internal actions
Part 4 - Association of the overseas coutries and territories
Part 5 - External action by the Union
Part 6 - Institutional and financial provisions
Part 7 - General and final provisions
Title VII under Part 3 provides for Common rules on competition, taxation and approximation
of laws.
INDIA
Competition Law for India was triggered by Articles 38 and 39 of the Constitution of India.
These Articles are a part of the Directive Principles of State Policy. Based on the Directive
Principles, the first Indian competition law was enacted in 1969 and was labelled the
Monopolies And Restrictive Trade Practices Act, 1969 (MRTP Act).
One of the main goals of the MRTP Act was to encourage fair play and fair deal in the market
besides promoting healthy competition. They seek to afford protection and support consuming
public by reducing Monopolistic, Restrictive and Unfair Trade Practices from the market
Globalization has the fundamental attributes of relying significantly in the market forces,
ensuring competition and keeping market functioning efficiently.
In the Pre-1991 Reforms period, India’s planned strategic and economic development stressed
the broad policy objectives of
1. The development of an industrial base with a view to achieving self-reliance and
2. The promotion of social justice
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The MRTP Act has become obsolete in certain areas in the light of international economic
developments relating to competition laws and hence focus was shifted from curbing
monopolies to promoting competition
In October, Central government appointed high level committee under the chairmanship of Mr.
Raghavan, the aim of the committee was to formulate the competition law in tune with
economic reforms and international development. The committee presented its report on May
2000, The draft competition law was presented on November 2000. After certain amendments
the parliament passed the new law, called Completion Act 2002. The act came into force on
January 2003
The Act was amended by the Competition Amendment Act, 2007 and became fully operational
from 1 June 2011,
1. The provisions relating to competition advocacy was notified in 2003,
2. The provisions regulating anti-competitive agreements and abuse of dominance were notified
with effect from 20 May 2009
3. The provisions regulating mergers and acquisitions were notified on June 2011
Both the Competition Commission of India (CCI) (which administers the law) and the
Competition Appellate Tribunal (CAT) are operational.
The Framework of Competition Act 2002 has essentially four compartments:
1. Anti- Competitive Agreements [ Section 3]
2. Abuse of Dominance [ Section 4]
3. Combination Regulation [ Section 5 & 6]
4. Competition Advocacy [ Section 49] and advisory [Section 21 & 21 A]
The Competition Act, 2002 was enacted to enacted to fill the gaps left open by the MRTP Act
— certain offending trade practices such as
1. abuse of dominance
2. cartels
3. bid rigging
4. collusive agreements
5. price fixing
6. Predatory pricing, etc.
OBJECTIVES OF THE ACT
1. To eliminate the practices having an adverse effect on competition. (Section 3,4 and 5)
2. Promote and sustain competition in the market. (competition Advocacy – Section 49)
3. Protect the interests of consumers. (Section 3,4 and 5)
4. Ensure freedom of trade in the Indian markets
5. Establish a Commission to prevent practices having adverse effect on competition. To serve as
a forum for complaints and disputes regarding the competition by regulating the operations,
mergers, amalgamations, and acquisitions.
6. Fair business practices, Facilitate & Foster healthy Competition
DUTIES OF THE COMMISSION [Section 18]
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1. Eliminate Practices that have an adverse effect on competition

2. Promote & Sustain Competition
3. Protect the interest of Consumers, economy and nature
EXCLUSION FROM JURISDICTION
1. Those right protected as intellectual property [Sec 3(5)]
2. Agreement exclusively for exports
3. Joint Venture – Provisions concerning joint venture agreement [Sec 3(3)] does not apply to
joint venture agreements that increase efficiency in production, supply, distribution, storage,
acquisition or control of goods or provision for services.
SCOPE/ FEATURES OF THE ACT
1. Enquire into Anti-Competitive Agreements [Section 3] : Any individual or enterprises shall
not deal in production supply or distribution that may cause a negative impact regarding
competition in India. Any existence of such agreements is considered illegal.
2. Enquire into Abuse of Dominant Position [Section 4] : : In the event, an enterprise or an
associated individual, it is found to indulge in practices that are unfair or discriminatory in
nature shall be considered an abuse of dominant position. If a party is found to be in abuse of
its position, then they will be subjected to an investigation from the concerned authorities.
3. Regulation of Combination & Mergers [Section 5-6] : As per the act a combination is defined
as terms which lead to acquisitions or mergers. But should such combinations cross the limits
as put forth by the Act, then the parties involved would be under the scrutiny of the Competition
Commission of India.
4. Undertake Competition Advocacy [Section – 49]
5. Competition Commission of India: The Competition Commission of India is an independent
body with the powers to enter into contracts and should the contracts be broken; they can sue
the parties involved. The Commission consists of a maximum of six members who are tasked
with sustaining and promoting the interests of consumers in order to foster an ideal
environment for economic competition.
The other function of the Commission is to advise the Government of India regarding
competition in the economy and create public awareness on the same issue.
OTHER FEATURES THE ACT
1. Jurisdiction: As per Section 18 of the Competition Act, 2002 the Competition Commission of
India has to govern and eliminate such unfair practices having an appreciable adverse effect on
competition in the business environment of India. As per Section 32 of the Competition Act,
2002, the commission has empowered to take actions against the parties located outside India
which has an appreciable adverse effect on competition in the business environment of India.
2. Penalties: Various penalties have introduced under this act. Competition Commission of India
has empowered to penalize any person or enterprise indulges in anti-competition practices or
abusing its dominant position, or any merger, acquisition, the combination having an
appreciable adverse effect on competition in the Indian market.
3. Remedies: Competition Commission of India itself advanced towards reporting the unfair
competition practices to indulge in the market and also Competition Commission of India has
empowered to act suo-moto.
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4. Confidentiality: As per Section 57 of the Competition Act, 2002, any information related to
the person or enterprise received by the commission could be sensitive and could not amount
to disclosure without the prior permission of that enterprise, as it may results in harm to that
enterprise or business.
5. Competition Advocacy to Central/State government: According to Section 49 of the
Competition Act, 2002, before forming any policy related to competition, central or state
government may take references or seek the opinion of the Competition Commission of India
on every possible aspect of that competition policy.
DIFFERENCE BETWEEN MRTP ACT AND COMPETITION ACT
S.No. BASIS MRTP COMPETITION ACT
1. Name of the Monopolies And Restrictive The Competition Act, 2002
Act Trade Practices Act, 1969
2. Base It is based upon Pre- It is based upon Post
Liberalization Liberalization
3. Goal Curbing Monopolies Promoting Competition
4. Objective Prevention of concentration of Promote and sustain competition
economic power. Protect the interests of consumers
Prohibition of monopolistic, and ensure freedom of trade
restrictive and unfair trade carried on by other participants, in
practices. markets in India.
5. Registration Compulsory registration of It does not provide for registration
of agreements relating to of agreement
Agreements restrictive trade practices
6. Dominance Under MRTP, Dominance itself Under Competition Act,
is bad Dominance per se is not but 7.
only abuse of dominance is
considered bad
7. Provisions Does not contain provisions of Competition Act contain
for combination provisions of combination
combination
8. Penalties No provisions for penalties to Specific provisions for imposition
be imposed of penalties for violations under
the Act.
9. Principles Rule of law approach Rule of reason approach
10. Competition No competition Advocacy role CCI has competition advocacy
Advocacy for the MRTP role
11. Exclusion Blanket exclusion of Exclusion of intellectual property
intellectual property rights rights, but unreasonable
restriction covered
12. Provision Provisions was there in MRTP Not included in the new
for Unfair Act (Section 36A) completion Act and now under
Trade purview of Consumer protection
practices Act
13. Opinion No provision for seeking Provisions for seeking opinion

from the opinion from any Govt. from Govt. /statutory bodies by
government
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/statutory bodies by the CCI regarding cases. (S 21 and

MRTPC regarding cases. 21A)
14. Extra- Lacked Extra-territorial Provision for Extra-territorial
territorial approach for cases reach if effect of any such
reach behaviour/conduct of enterprise
has AAEC in India.
ANTI-COMPETITIVE AGREEMENT
Introduction
While doing business in India, parties are
prohibited from executing anti-competitive
Anti- Competitive Agreements
agreements. Generally, the agreements which
cause or are likely to cause appreciable adverse
effect on competition ("AAEC") are anti-
competitive agreements. Such agreements may
be horizontal or vertical.
Vertical Agreements Agreement
• Tie-in Agreemnet Section 2(b) of the Act provides that
• Exclusive Supply agreement "agreement" includes any arrangement or
• Exclusive distribution understanding or action in concert
agreement – (i) whether or not, such arrangement,
• Refuse to Deal understanding or action is formal or in writing;
• Resale price maintenance or (ii) whether or not such arrangement,
understanding or action is intended to be
enforceable by legal proceedings. So, even oral
Horizontal Agreements
arrangement can be anti-competitive.
• Price fixation Arrangement between parties which have not
• Market Division been formalized or if written but not executed or
• Output limitation registered can also be considered anti-
• bid-rigging
competitive if they are found to have AAEC in
India.
Cartel
Cartel is defined in Section 2(c) of the Competition Act. "Cartel" includes an association of
producers, sellers, distributors, traders or service providers who, by agreement amongst
themselves limit, control or attempt to control the production, distribution, sale or price of, or,
trade in goods or provision of services.
Cartels are agreements between enterprises (including a person, a Government department and
association of persons/enterprises) not to compete on price, product (including goods and
services) or customers. The objective of a cartel is to raise price above competitive levels,
resulting in injury to consumers and to the economy. For the consumers, cartelization results
in higher prices, poor quality and less or no choice for goods or/and services. An important
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dimension in the definition of a cartel is that it requires an agreement between competing

enterprises not to compete or to restrict competition.
Case: Re Alleged Cartelization by Cement Manufacturers
MRTP Commission took suo-motu cognizance of this matter, and was later transferred to
Competition Commission under section 66(6). CCI found the act and conduct of the cement
companies to be a ‘Cartel’ as the cement companies were acting together to limit, control and
also attempted to control the production and price of cement in the market in India. Penalty of
Rs. 6307 crore was imposed on the 11 cement companies and their associations, fixed at 50 per
cent of their profits during 2009 -10 and 2010 -11.
Presumption on adverse effect on the Competition
As per Section 3(3) if any agreement determines-
1. directly or indirectly determines purchase or sale prices;
2. limits or controls production, supply, markets, technical development, investment or provision
of services;
3. shares the market or source of production or provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of customers in the market
or any other similar way;
4. directly or indirectly results in bid rigging or collusive bidding,
shall be presumed to have an appreciable adverse effect on competition
While determining whether an agreement has an AAEC under Section 3, CCI shall take into
consideration the following factors under Section 19(3) of the Act:
1. New entrants in the market are confronted with barriers;
2. Excluding existing competitors from the market;
3. The elimination of competition by hindering entry to the market;
4. The accrual of consumer benefits;
5. Production, distribution, or service improvements;
6. Promotion of technical, scientific, and economic development using production or distribution
of goods or provision of services.
Case: Indian Foundation of Transport Research and Training v. Shri Bal Malkait Singh
and Ors.
AIMTC had directed its members to uniformly increase the truck freight (by -15%) due to
increase in price of diesel, thereby harming consumers and causing an AAEC in the market.
CCI Order: Held that the similarity of the press reports by the AIMTC’s President and its
spokesperson respectively indicated that there was a meeting of minds amongst the members
of the AIMTC to fix/increase the freight rates consequent upon the hike in diesel prices. The
CCI additionally held that the agreement had an appreciable adverse effect on competition.
Types of anti-competitive agreements
Horizontal Agreements (Section 3(3))
Horizontal agreements are arrangements between enterprises at the same stage of the
production chain and that is generally between two rivals for either fixing prices or for limiting
production or for sharing markets. In all such agreements, there is a presumption in the Act that
such agreements cause AAEC. Cartel is also a horizontal agreement. This is generally between
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producers of goods or providers of services for price-fixing or sharing of market, and is

generally regarded as the most pernicious form of anti-competitive agreement.
Types of Horizontal Agreements
1. Price Fixing Agreement (Section 3(3)(a)): Agreements through which companies mutually
set prices that they want to charge in the market.
i. Agreement to raise or stabilize the price.
ii. Establish uniform discount or eliminate the discount.
iii. Set uniform price as a starting point for negotiation.
iv. Discontinue free service.
v. Impose mandatorily surcharge.
vi. Restrict price advertising.
Case: Re Cartelisation in respect of zinc-carbon dry cell batteries market in India
Panasonic, Everready and Nippo entered into an agreement by which they determined the
prices of the zinc-carbon dry cell batteries. Panasonic would increase the price of the battery,
and Everready and Nippo would also increase the battery price in the pretext of following the
market leader.
2. Output Limitation: Limits or controls on production, supply, markets, technical

development, investment, or provision of services (section 3(3)(b)): Here the competitors
control production, supply, markets, technical development, investment, or provision of
services thereby controlling the entire market.
3. Market Division: (section 3(3)(c)): Agreement where the competitors agree to divide the
market amongst themselves. Specific territories, customers or products. They are restrictive in
nature and leave no room for competition.
This sharing may happen in a variety of ways such as allocating that the market in a particular
geographical area shall be covered only by a particular enterprise/person, or by allocating that
particular type of goods or services shall be dealt with only by a particular enterprise/person,
or by allocating a certain number of customers in the market to an enterprise/person, or any
other similar way.
For Example, an Agreement that prevents a retailer from selling products outside South India.
Such Agreements harm consumers as it limits their choices. For instance, they are no longer in
a position to decide which retailer in their geographical area they wish to purchase from. The
retailer is the sole competitor in their allocated area can also abuse their monopoly in that area
by charging high prices as consumers have nowhere else to purchase from, and the retailer
knows that other retailers will not compete with him because of their Agreement.
These Agreements can also harm the enterprises/persons. For instance, by preventing
manufacturers from exploiting the benefits of economies of scale such as lower production
costs.
4. Bid rigging or collusive bidding (section 3(3)(d)) : Bid rigging refers to the process in
which a number of bidders illegally forms a consortium to fix the winner of the bid. The
technique eliminates healthy competition by manipulating the bid price to keep it at a
predetermined level.
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Conspiracy is more likely when there is frequent bidding for similar offerings or only a
few participants in the bidding process. During such situations, it is easy for bidders to
collude and inflate the tender offer.
An Agreement that has ANY of the following effects amounts to bid-rigging:
i. Eliminates Competition for bids.
ii. Reduces Competition for bids.
iii. Adversely affects the bidding process.
iv. Manipulates the bidding process
Types of Bid-Rigging
i. Complementary/Cover/Courtesy bidding: It occurs when some competitors agree to submit
bids that are either too high to be accepted or contain special terms that will not be acceptable
to the buyer. Such bids are not intended to secure the buyer’s acceptance, but are merely
designed to give the appearance of genuine competitive bidding. They are most frequently
occurring forms of bid rigging and they defraud purchasers by creating the appearance of
competition to conceal the security of the inflated prices.
ii. Bid Rotation: In bid rotation, the team of bidders conspiring will continue to participate in the
future tenders; however, the intended bid winner will change each time.
iii. Bid Suppression: In bid suppression schemes, one or more competitors who otherwise would
be expected to bid, or who have previously bid, agree to refrain from bidding or withdraw a
previously submitted bid so that the designated winning competitor’s bid will be accepted.
iv. Non-Conforming Bid: In the non-conforming bid, bidders furnish bid submission that does
not meet the qualifying criteria’s.
v. Phantom Bidding: Phantom bidding takes place with the help of accomplices to trigger
qualified bidders to quote a high value. The bid price is artificially raised due to this plan.
vi. Subcontracting: Subcontracting arrangements are often part of a bid rigging scheme.
Competitors who agree not to bid or to submit a losing bid frequently receive subcontracts or
supply contracts in exchange from the successful low bidder. In some schemes, a low bidder
will agree to withdraw its bid in favor of the next low bidder in exchange for a lucrative
subcontract that divides the illegally obtained higher price between them.
Case: In Re A.R. Polymers
The COMPAT overturned the CCI decision on the grounds that CCI and the DG failed to give
due weightage to the nature of the market for jungle boots, manner in which the tender is
conducted, and execution of the rate contract to arrive at finding of bid rigging solely on the
grounds of identical pricing.
Vertical Agreements (Section 3(4)
Vertical agreements are agreements that are entered amongst enterprise or persons at different
stages of the production chain.
e.g., an agreement between an input supplier and a manufacturer of a product using the
input or agreements between principals and dealers etc. These are agreements that operate at
different levels of trade.
The presumptive rule does not apply to vertical agreements. The question whether the vertical
agreement is causing AAEC is determined by rule of reason. When rule of reason is employed,
both positive as well as negative impact of competition is analysed. In order to determine
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whether any agreement is in contravention of section 3(4) read with section 3(1) of the Act, the
following five essential ingredients of section 3(4) have to be satisfied:
1. There must be an agreement amongst enterprises or persons;
2. The parties to such agreement must be at different stages or levels of production chain, in
respect of production, supply, distribution, storage, sale or price of, or trade in goods or
provision of services;
3. The agreeing parties must be in different markets;
4. The agreement should cause or should be likely to cause AAEC;
5. The agreement should be of one of the following nature as illustrated in section 3(4) of the Act:
Types of Vertical Agreements

1. Tie-in arrangement : Section 3(4)(a): Agreement which requires a purchaser to purchase
some other goods as a condition to purchase the goods that he wants to purchase.
A seller sells one desirable product on a pre-condition that buyers shall purchase a second less
desirable product or service. The former product shall be known as a tying product and the
latter as a tied product. It is not essential that all tying and tied products must be identical. It
can cause abuse in view of Section 4(2)(d) of the act.
Case: Northern Pacific Railway Co. V. United States
The Court observed that the tying arrangements deny competitors free access to the market for
the tied product, not because the party imposing the tying requirements has a better product or
a lower price but because of his power or leverage in another market. At the same time, buyers
are forced to forgo their free choice between competing products. For these reasons, tying
arrangements fare harshly under the laws forbidding restraints of trade.
2. Exclusive supply agreement: Section 3(4)(b):agreement that restricts a purchaser in any
manner, directly or indirectly, from acquiring or dealing in the goods other than those of the
seller or any of the other person.
Illustration: if a dealer/distributor is prohibited from dealing with goods of the suppliers’
competitors. Exclusive supply agreements have been held to be permissible, where objectively
justified - such as to protect from free riding, to ensure safety of investment and ensure quality
of supplies.
Case: Jindal Steel v. SAIL
An exclusive supply agreement through a memorandum of understanding (MOU), was entered
into between Indian Railways and Steel Authority of India (SAIL) to supply rails on a
continuous basis. Jindal Steel and Power Limited alleged that the said MOU resulted in
foreclosure of the relevant market for it. It was held that the MOU was not hit by Sec. 3(4) and
hence, not anti-competitive.
3. Exclusive distribution agreement: Section 3(4)(c):agreement which limits, restricts or
withholds the output or supply of any goods or allocates the area or market for disposal or sale
of the goods.
4. Refusal to deal: Section 3(4)(d): Any agreement that restricts or is likely to restrict any person
or class of persons, by any method, to or from whom the goods can be sold or brought.
Listed as an unfair trade practice in Consumer Protection Act, 1986 and MRTP Act,1969.
The main feature of such agreements is that the manufacturer or supplier agrees to supply
certain goods for resale to only one party, the exclusive distributor within a defined territory
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and no other party will be supplied with the goods within that area by the supplier. Exclusive
dealing is a way of restraining Interbrand competition
Case: Re Bajaj Case

Bajaj was allocating areas of business to all its dealers – found to be an exclusive dealership
agreement under Section 3(4)(c) of the Act – however, no AAEC found, therefore, no violation.
5. Resale price maintenance: Section 3(4)(d): Any agreement that in which the price for resale
by the purchaser is stipulated by the seller unless it is clearly stated that the prices lower than
those prices can be charged.
Illustrations: A manufacturer Y and its distributor Z may agree that the distributor will sell
Y’s products at certain prices, at or above a price floor (Minimum RPM) or at or below a price
ceiling (Maximum RPM). If Z refuses to maintain prices due to whatever reason, Y may stop
doing business with it
Case: Fx Enterprises v. Hyundai Motor India Limited
Allegations: Hyundai entered into exclusive supply agreements and refusal to deal
arrangements with its distributors. Further, by prescribing maximum permissible discounts to
its dealers, it was alleged that it was engaging in resale price maintenance. Additionally, it was
alleged that it tied sale of CNG kits, lubricants, oils and car insurance.
CCI Order: No exclusive supply or refusal to deal since the agreement only required
dealers to take prior permission from Hyundai prior to dealing with competitors. Hyundai had
never refused permission as no one had approached.
Case: Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors
In the case, the informant claimed that the Opposite Parties (OPs) had anti-competitive
practices whereby the genuine spare parts of cars produced by some of the OPs were not readily
made available on the open market and most of the OEMs (original suppliers of equipment)
and the authorized dealers had provisions in their agreements requiring the authorized dealers
to supply spare parts on the open market.
CCI's final decision: The Commission found that such agreements were exclusive supply
agreements, exclusive distribution agreements and refusal to deal pursuant to Section 3(4) of
the Act, and it was therefore appropriate for the Commission to decide that such agreements in
India would have an AAEC.
Exceptions to Anti-Competitive agreements.
1. Joint Venture: The section provides an exception to the joint ventures entered into by the
parties if they increase the efficiency in production, supply, distribution, storage, acquisition or
control of goods or provisions of services. Section 3(1) of the Act cannot be invoked
independently and is necessarily to be used along with section 3(3) related to horizontal
agreements or section 3(4) related to vertical agreements
2. Export cartels exemption: The Act provides that restrictions relating to anticompetitive
agreements, including cartels, do not apply to the right of any person to export goods from
India to the extent that agreements relate exclusively to production, supply, distribution or
control of goods or provision of services. This exemption may be read to exclude export cartels
(i.e., cartelisation in markets outside India).
13
3. Intellectual Property: Also, the Competition Act, 2002 does not recognize those agreements
which impose reasonable restrictions that restrict or protect infringement of rights as
guaranteed under the Intellectual Property laws.
The relationship shared between intellectual property rights and competition law plays a very
vital role in ensuring the maintenance of a competitive and dynamic economic market. They
have many similarities and are often complementary to each other and are two sides of the
same coin.
Case: Shri Ashok Kumar Sharma v. Agni Devices Pvt. Ltd
It was held that a mere restriction on the use of the trademark would not be held as anti –
competitive within the meaning of Section 3 or 4 of the Act.
Nature of IP and Competition laws.
Intellectual property may be found all over the place. Intellectual property refers to the results
of invention, new goods, and technology that are protected in order to succeed in the
marketplace. Intellectual property not only provides protection, but it may also help small,
medium, and large businesses succeed commercially. Intellectual property provides the
protection to creators, inventors for their work in the market and sometimes it constitutes
monopoly in the market, and that nature of IPR is contrary to the Competition law.
Competition law is designed to encourage and give a fair opportunity for healthy competition
among market rivals, as well as to safeguard the interests of consumers. It is a branch of
economic law to regulate the conduct of enterprise/market participants and ensure that
producers of goods and services compete fairly with each other. Its goal is to create a better
market for customers, safeguard against anti-competition impacts, and promote healthy and
fair competition.
Relationship between IP and Competition laws.
It is simple to look into the common aspects of both competition law and intellectual property
law as they both relate to the consumer market. However, it can also be argued that they are
like fire and water and are entirely different. Competition law seeks to eliminate any practices
that restrict trade and generally discourage monopoly. Intellectual property law on the other
hand seeks to give a benefit to the owner of intellectual property rights to freely use his right
and maintain exclusivity.
Though intellectual property law gives exclusive control of intellectual assets to its rightful
owners, competition law strives to avoid market barriers by encouraging competition among
various suppliers of goods, services, and technologies to ensure maximum benefit to
consumers.
Case: Aamir Khan Productions Pvt. Ltd. v. Union of India
The Bombay HC held that CCI has jurisdiction to hear all the matters vis-à-vis competition law
and IPR. CCI also held that IPR related right is not sovereign in nature but merely a statutory
right granted under a law.
Case: Entertainment Network (India) Limited v. Super Cassette Industries Ltd.
The Supreme Court reiterated on the issue related to conflict between two laws. The court
observes that even though the copyright holder has full monopoly but the same is limited in the
sense that if such monopoly creates disturbance in smooth functioning of the market will be in
violation of competition law and same was in relation to refusal of license. Undoubtedly, IPR
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owners can enjoy the fruits of their labour via royalty by issuing licenses but the same is not
absolute.
Case: Union of India v. Cyanamide India Limited &Another
It was held by the court that charging excessive prices on life saving drugs is within the ambit
of price control and CCI has jurisdiction over such matter. In case of scarcity of substitutes
there is always a peril of creation of monopolies which disturbs the economic efficiency in the
market. Further, in different jurisdiction same principle was reiterated.
Conflicts
The anti-competitive practices that involve the use of both IPR and Competition law and bring
out the differences between the two are:
1. Abuse of dominant position: Section 4 states that no enterprise shall abuse its dominant
position. In this aspect, India has many cases that go to show that there exists a conflict in the
area of IPR in relation to competition law. These issues were then decided to be dealt with by
the Competition Commission of India (CCI) to resolve the same. This was stated in Aamir
Khan Productions Pvt. Ltd. V. Union of India. CCI further said intellectual property laws do
not have any absolute overriding effect on competition law.
2. Refusal to License: This concept is based on the complementary goals of the intellectual
property system and competition law. The right holder can prevent others from exploiting the
limited period right given by law but cannot prohibit its development. In the case of
Entertainment Network (India) Limited v. Super Cassette Industries Ltd, the relationship
between IPR and Competition law in this aspect was discussed. It was held that the owner of
the copyright exercises freedom of monopoly, but with unreasonable terms, it would amount
to refusal. This refusal to license was viewed as anti-competitive.
3. Excessive Pricing: The concepts of excessive pricing and predatory pricing are closely related
to refusal to license. Predatory pricing is considered by the Monopolies and Restrictive Trade
Practices Act, 1969 (MRTP Act) as a restrictive trade practice. Overpricing of any patented
product is, however, non-violative of any competitive provisions. After looking into a number
of cases, CCI observed that charging differently for the same product under different kinds of
licenses is common in any market. It is necessary to strike the right balance between IP
protection and the competition-related policy in any market as a playing field for any upcoming
industry.
4. Tying agreements: Section 3(4) of the Competition Act prohibits tying agreements. This type
involves a seller agreeing to sell a highly usable product or service only on the condition that
the buyer also purchases a less important product or service. In conclusion, the aims and
objectives of patent and antitrust laws may not always go hand in hand, they are complementary
with common goals encouraging areas of innovation, industry, and competition.
Recommendations To Overcome The Conflicts
i. IPR cannot be dealt with in isolation from Competition Law. The conditions imposed by
competition law may help to resolve the conflict. The following are some of the
recommendations to help resolve the conflict:
ii. Defining the market clearly by assessing the implications and regimes
iii. Ensuring coordination between the competition law authorities (CCI) and IPR authorities
iv. Granting compulsory licenses in cases of refusal to deal
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v. Using the flexibilities allowed by the TRIPS agreement to determine the grounds of granting
compulsory licenses to remedy anti-competitive practices relating to IPRs
ENQUIRY BY THE CCI (Remedies)
Section 19(1) of the Act provides that the CCI may enquire into any alleged contravention of
section 3(1) of the Act
i. on its own or
ii. on receipt of any information from any person, consumer or their association or
iii. trade association upon payment of the fees and the manner prescribed, or
iv. a reference is made to it by the central government or a state government or a statutory
authority.
The CCI proceeds with enquiry only when there exists a prima facie case and then it directs
the director general to cause an investigation in the matter. In cases where after enquiry CCI
finds that the agreement is anti-competitive and have AAEC, it may pass all or any of the
following orders, apart from any interim orders that it can pass under section 33 of the Act:
i. Direct the parties to discontinue and not to re-enter such agreement (cease and desist);
ii. Impose such penalty as it may deem fit which shall not be more than 10% of the average of the
turnover for the last three preceding financial years upon each of the party;
iii. In case of a cartel, each producer, seller, distributor, trader or service provider included in that
cartel can be imposed a penalty up to three times of its profit for each year of the continuance
of such agreement or 10% of its turnover for each such year, whichever is higher;
iv. Direct to modify the agreement and in the manner as may be specified in the order of the CCI;
v. Pass any such order or issue such directions as it may deem fit.
LENIENCY PROGRAMME
What is Leniency Programme?
i. Leniency programme is a type of whistle-blower protection, i.e. an official system of offering
lenient treatment to a cartel member who reports to the Commission about the cartel.
ii. Competition authorities have framed various leniency programmes to encourage and
incentivize various actors connected with the commission of such competition infringements
to come forward and disclose such anticompetitive agreements and assist the competition
authorities in lieu of immunity or lenient treatment.
iii. Leniency programme is a protection to those who come forward and submit information
honestly, who would otherwise have to face stringent action by the Commission if existence
of a cartel is detected by the Commission on its own.
Rationale of Leniency Programme
It is an incentive to those cartel members who choose to share information and cooperate with
the Commission.
Leniency Provisions under the Act
The leniency policy in India is governed by Section 46 of the Act read with the Leniency
Regulations, which set out the requirements for qualification, the procedure to be followed for
the imposition of a lesser penalty and the benefits available.
The Lesser Penalty Regulations, in line with the global anti-trust jurisprudence aim to provide
benefit, in terms of lesser penalty to Applicants who come forward and report anti-competitive
16
practices (cartels) to the CCI. As per the Regulations2, the CCI has the discretion to award
lesser penalty of up to 100% to the first applicant, up to 50% to the second applicant and up to
30% to the third and all subsequent applicant(s).
The lesser penalty shall not be imposed by the Commission in in the following cases:
i. Where the report of investigation has been received before making such disclosure.
ii. If the person making the disclosure does not continue to co-operate with the Commission till
the completion of the proceedings before the Commission.
In India, with increasing awareness of competition laws and the active role of the CCI, this
program is gaining importance, slowly but surely. Though the intention of the CCI is right,
however there are several areas of concern which the CCI must take into account in order to
promote and exploit the benefits of this program.
Confidentiality
Under the Competition Commission of India (Lesser Penalty) Regulations, 2009, it has been
specifically mentioned that the identity of the applicant as well as information obtained from it
shall be treated as confidential and it shall not be disclosed save under the three situations stated
below –
i. when the disclosure is required by law; or
ii. when the applicant has agreed to such disclosure in writing; or
iii. when there has been a public disclosure by the applicant.
Such an arrangement of maintaining confidentiality would encourage submission of
vital information with the Commission.
Case: Re: Anticompetitive conduct in the dry-cell batteries market in India
the Commission initiated an investigation pursuant to Panasonic's leniency application wherein
there existed a bi-lateral ancillary cartel between Panasonic's controlled entity in India with
another battery manufacturer in relation to institutional sales. The Commission concluded that
there was a cartel and gave a 100% reduction in penalty to Panasonic while penalizing Godrej
and Boyce Manufacturing
Case: Re: Anticompetitive conduct in the Dry-Cell Batteries Market in India
this case takes que from the 1st dry cell battery case. In this case, the opposite parties were
contract manufacturers and thereafter entered into a formal agreement by way which it was
agreed that they would not compete with each other and not indulge in price wars. The CCI
after evaluating the leniency application filed by the 1st applicant, granted a 100% reduction
in penalty.
Case: Re: Alleged cartelization in flashlight market in India
the Commission concluded that in the absence of cogent evidence, it cannot be concluded that
the parties formed a cartel. However, the order does give a flavour that there was an exchange
of commercially sensitive information, however the alleged exchange did not establish that
there was any agreement upon the terms of increasing or determining prices.
ABUSE OF DOMINANT POSITION
‘Dominance per se is not illegal, but the abuse of the position of dominance is illegal’.
The Competition Act, 2002 focuses to strengthen the competition, safeguard the interests of
the consumers and ensure freedom of trade in markets in India. It permits a healthy competitive
17
culture that encourages the business to be competitive, innovative and fair. This increases
consumer welfare and aids in economic growth.
In accordance with the explanation added to section 4 of the Competition Act, 2002, dominant
position means the strength of an enterprise in the relevant market in India which allows the
enterprise to (i) operate independently of competitive forces prevailing in the relevant market
and (ii) to affect its market or competitors or consumers or the relevant market in its favour.
Case: M/s. Maharashtra State Power Generation Company Ltd. v. Coal India Ltd.
The CCI held that since CIL through its subsidiaries operates independently of market forces
and enjoys undisputed dominance in the relevant market of production and supply of non-
coking coal in India they are in contravention of section 4(2)(a)(i) of act for imposing
unfair/discriminatory conditions in fuel supply agreement(FSAs) with the power producers for
supply of non-coking coal
Case: Adani Gas Case
CCI found that Adani has imposed unfair conditions on the buyers by way of Gas Supply
Agreement (GSA)
Case: Re Pankaj Kumar
the Commission opined that dominant position would be one in which the enterprise would
have the ability to operate independently of competitive forces in the relevant market.
Abuse of Dominant Position involves:
1. The imposition of unfair price or conditions
2. Limiting the market or production
3. Predatory pricing
4. Creating barriers to entry and applying dissimilar conditions to similar transactions.
The Act expressly lays down factors that are to be taken into account to determine dominant
positions in section 19(4) of the Act.
Dominance: Section 4(1) of the Competition Act, 2002 prohibits the abuse of a dominant
position by any enterprise or group. Sub-section (1) says that no enterprise or group shall abuse
its dominant position.
Abuse Of Dominant Position

Under competition law in any jurisdiction, Dominance is not considered bad, however, it has
been globally accepted that the abuse of such dominance establishes an anti-competitive
practice. The acts of abuse of dominant position are set out in section 4(2) of the act which are
as follows :
1. Limitation of scientific or technical or product development.
2. Limiting market share.
3. Denial of access to market, barriers to expansion or entry.
4. Imposing supplementary obligations.
5. Usage of a dominant position in one relevant market to enter another relevant market.
6. limits or restricts production of goods or provision of any services in any form.
7. The imposition of discriminatory or unfair price or conditions also containing predatory
pricing.
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Types Of Abuse Of Dominant Position

1. Predatory Pricing: As per section 4(b) of the Act it explains how the practice with which the
sale of goods or the provision of services is carried out at a price rate lower than the cost price
in order to reduce competition or eliminate competitors.
Predatory pricing is the illegal act of setting prices low to attempt to eliminate the
competition. The preliminary object of predatory pricing is to capture and dictate the terms of
market. Predatory pricing occurs when a company cuts its price in order to drive out or
discipline a competitor and enjoy higher profits from reduced competition . Though there is a
chance of recoupment on long-run, the predator has to sacrifice a lot initially, further the returns
of such arrangement are also uncertain. Practically speaking this strategy involves a high risk
and is feasible for dominant players alone. Thus, majority of the jurisdictions view predatory
pricing as a form of abuse of dominance.
Predation is exclusionary behaviour and can be indulged in only by an enterprise having a
dominant position in the concerned relevant market. The major elements involved in the
determination of predatory behaviour are:
i. Establishment of dominant position of the enterprise in the relevant market Pricing below cost
for the relevant product in the relevant market by the dominant enterprise.
ii. Intention to reduce competition or eliminate competitors. This is traditionally known as the
predatory intent test.
2. Refusal to supply: This practice involves purposefully withholding the supply of the product
or service thus increasing the demand for it and thus forcing customers to purchase the product
or service at a higher price, thus manipulating the customer's needs . This refusal has a
significant negative impact on the state of fair competition in the relevant market.
3. Limiting Supply: The practice of limited supply of products of luxurious and precious nature
thus having the advantage of raising the price because of its scarcity. The appropriate example
for this is the diamond market, though large quantities of them are in kept in storage, only a
small quantity is only polished and made available to the customers, thus resulting in its high
price.
4. Barriers to entry or denial of the market assess: Barriers to entry includes patent as well as
strategic first mover advantages.
5. A group of collusion multiple suppliers appreciably affecting the relevant market. One such
case being Ajay Devgan Films,
Case: Ajay Devgn Films v. Yash Raj Films

the informant alleged that the opposite party is tying up two of its films and is forcing single-
screen theatres to buy either two or none.
The CCI noted that as per the information available in public domain, in Bollywood itself, 107
and 95 films were released in 2011 and 2012 (till now), respectively. Apart from that, the
opposite side produced only two or four films each year. It cannot be said that this also means
domination in the Bollywood industry, leaving aside the film industry in India. The case was
closed pursuant to Section 26(2) of the Act.
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Steps for Determination of Abuse of Dominant Position.
Step 1: Determine the relevant market

Section 2(r) ‘relevant market means the market which may be determined by the commission
with reference to the relevant product market or the relevant geographic market or with
reference to both the markets’
The relevant market is bifurcated into two segments, i.e., Relevant Geographic market
(RGM) and Relevant Product market (RPM) which are further defined under sections 2(s) &
2(t) of the act.
Relevant Geographic market: section 2(s) “relevant geographic market” means a market
comprising the area in which the conditions of competition for supply of goods or provision of
services or demand of goods or services are distinctly homogenous and can be distinguished
from the conditions prevailing in the neighbouring areas;
The definition of geographic market takes account of the relevant company’s location and the
nature of the relevant product. The most important element in the definition of a geographic
market is the homogeneity of competition parameters across different geographical areas.
Section 19 (6) of the act states that the commission shall, while determining RGM shall have
due regard to the following factors:
1. Regulatory trade barrier
2. Local specification requirement
3. National procurement policy
4. Adequate distribution facilities
5. Transport costs and, etc
Case: BijayPoddar v Coal India Ltd.

Relevant geographic markets could be local or national depending upon the facts in each case,
but it cannot be global.
Case: Atos Worldline v Verifoneindia

The intention of the consumer may also be used in defining the relevant geographical boundary.
In a case of purchase and allocation of apartments, the Commission upheld "geographic region
of Gurgaon" to be the relevant market because it observed that it was the intention of the buyer
to buy an apartment in Gurgaon because it had developed a unique brand image over the years,
a characteristic which other regions did not share.
Relevant Product market: section 2(t) “relevant product market” means a market comprising
all those products or services which are regarded as interchangeable or substitutable by the
consumer, by reason of characteristics of the products or services, their prices and intended
use;
A relevant product market covers all of the products and/or services which are deemed as
interchangeable or substitutable by the consumer, for the products' characteristics, their prices
and their area of use.
Section 19 (7) provides that the commission shall, while determining the RPM shall have due
regard to all or any of the factors:
1. End-use of good
2. Consumer preferences
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3. Exclusion of in-house production

4. Classification of industrial products
Case: Surinder Singh Barmi v BCCI Atos Worldline v Verifoneindia

the Competition Commission of India (CCI), held that the relevant product market is to be
looked at from both demand and supply perspective based on the characteristics of the product,
its price and intended use.
Case: Atos Worldline v Verifoneindia

product market has been defined to comprise all those products or services that are regarded as
interchangeable or substitutable by the consumer, because of characteristics of the products or
services, their prices and intended use.
Step 2: Determine dominance in the relevant market

The next step is to determine whether the enterprise enjoys a dominant position in the relevant
market. Factor given under section 19 (4) are to be considered while determining the dominant
position.
Section 19 (4) of the act states few factors to be kept in the mind by the commission while
enquiring into the dominant position of an enterprise, have due regard to all or any of the
following factors, namely:
i. market share of the enterprise;
ii. size and resources of the enterprise;
iii. size and importance of the competitors;
iv. economic power of the enterprise, including commercial advantages over competitors;
v. vertical integration of the enterprises, or sale or service network of such enterprises, etc.
Case: M/s ESYS Information Technologies Pvt Ltd v. Intel Corporation (Intel Inc) &Ors.
Along with the market share commanded by Intel, the Commission recognized various other
factors- like consumer preference owing to the brand name, the existence of strong entry
barriers in the relevant market, the significant intellectual property rights of Intel and the scale
and scope enjoyed by Intel.
Step 3: Determine the abuse of dominant position

Now the last step is to determine whether the enterprise is abusing its dominant position. Thus,
section 4 (2) of the competition act, 2002 provides a list of abusive conducts by the enterprise
which shall amount to abuse of a dominant position. Abuses specified under section 4 (2) of
the competition act, 2002 falls into two categories:
1. Exploitative Practices: where the enterprise uses the tactic of price discrimination, which
includes predatory pricing. The ultimate aim of the enterprise is to exploit the customers.
In Belaire owner’s Association v. DLF Ltd. and the case of Pankaj Aggarwal v. DLF
Gurgaon home developers private limited, Commission concluded the one-sided term and
conditions which were only in favour of the opposite party (DLF) in the buyer’s agreement to
be highly exploitative and abusive under section 4(2)(a)(i)
2. Exclusionary Practices: where the enterprise indulges in exclusionary practices. For eample
denial of market access.
Case: Shamsher Kataria v. Honda Siel cars, Pvt Ltd
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The CCI found automobile manufacturers to be guilty of contravention under section 3 and
section 4 of the competition act as they were engaged in the anti-competitive agreement such
as: Restricting authorised service providers from selling spare parts to independent service
providers; Restricting original equipment suppliers (OESs) from selling spare parts directly in
the market; Restricting the availability of diagnostic tools in the open market.
Who can Enquiry

Section 19(1) of the Act provides that the CCI may enquire into any alleged contravention of
section 4(1) of the Act
i. on its own or
ii. on receipt of any information from any person, consumer or their association or
iii. trade association upon payment of the fees and the manner prescribed, or
iv. a reference is made to it by the central government or a state government or a statutory
authority.
After an abuse of dominance is established under Section 4 of the Act, CCI may pass the
following orders under section 27 of the Act:
iii. Order discontinuance of such abuse of dominant position by way of a cease-and-desist order.
iv. Impose a penalty which shall not be more than 10% of the average turnover for the last three
preceding financial years.
v. Pass such other orders or issue such directions as it may deem fit.
vi. Under section 28 of the Act, CCI may also direct division of an enterprise enjoying dominant
position to ensure that such enterprise does not abuse its dominant position.
vii. Pass Interim Orders. (Section 33)
REGULATION OF COMBINATION
(Sec. 5 –combination, Sec. 6 r/w Secs. 29,30 and 31- procedure for regulation of combinations)
Under the meaning of the Competition Act, 2002 a combination refers to the direct or indirect
acquisition of the shares, voting rights or assets or the control over management or control over
assets of one or more enterprises by one or more persons, or, a merger or amalgamation
between enterprises, when the combining enterprises jointly exceed certain thresholds set under
Section 5 of the Act.
Thus, a merger or amalgamation or an acquisition would be categorized as a combination only
in case where such merger/amalgamation or acquisition exceeds the financial thresholds
contained in Section 5 of the Competition Act, 2002 and such combinations would be subject
to regulations provided in Section 6 of the Act.
The Government of India regulates combinations to ensure that there exists healthy
competition in the market. Any combination that causes an adverse appreciable effect in the
relevant market are deemed to be void under the Competition Act, 2002.
TYPES OF COMBINATIONS:
1. Horizontal Combinations: Horizontal Combinations refer to combinations where the

combining enterprises are competitors having an identical level of production process and
produce substitute goods. These are friendly combinations between enterprises dealing with
the production of substitute goods. Such combinations are beneficial for the combined
22
enterprise as it reduces the competition in the market, improve the market share of the product
manufactured and result in performance growth and business gains.
However, horizontal combinations often lead to monopolistic tendencies in the market.
The combined businesses tend to increase their cost margins by reducing their personnel
leading to large scale unemployment, and the reduced competition in the market often leads to
higher pricing of products by the enterprises having dominant position in the market causing
problems to the consumers.
2. Vertical Combinations: Vertical Combinations refer to combinations where the combining

enterprises are engaged in different levels of the manufacture and production process and such
enterprises unite into an interacting whole. Such combinations improve the efficiency and
effectiveness of the production process, increase the combination’s competitiveness in the
market and also result in reduction in cost of production of the product as there is restructuring
of the production and supply chain of the product.
3. Conglomerate Combinations : Conglomerate Combinations refers to the combination of

enterprises that are engaged in business markets that are completely unrelated to one another.
Such combinations take place when two enterprises providing different products in varying
sectors of business are integrated together. Conglomerate combinations occur when enterprises
seek to gain a stronger position in varying markets and improve their profit margins, which is
unlikely to happen if they do not combine. Conglomerate merges can lead to ascend in “market
share, synergy and cross selling”. Conglomerate combinations often result in the
monopolization of an enterprise in various markets and might result in a loss of quality of the
product produced.
THRESHOLDS FOR COMBINATIONS1
Applicable to Assets Turnover

In India Individual Rs.2,000 Cr. Rs.6,000 Cr.
Parties
Group Rs.8,000 Cr. Rs.24,000 Cr.
In India and ASSETS TURNOVER
Outside Total Minimum Indian Total Minimum Indian
Component out of Component out
Total of Total
Individual USD 1 bn. Rs.1,000 Cr. USD 12 bn. Rs.3,000 Cr.
Parties
Group USD 4 bn. Rs.1,000 Cr. USD 3 bn. Rs.3,000 Cr.
REGULATION OF COMBINATIONS
Once any merger, amalgamation or any merger has been categorized as a combination, it has
to follow the regulations provided in Section 6 of the Competition Act, 2002. Section 6(1)
prohibits the formation of combinations that are likely to have an appreciable adverse effect on
1
https://taxguru.in/corporate-law/competition-advocacy-competition-
compliance.html#6_ABUSE_OF_DOMINANCE
23
competition in the relevant market in India and further declares that such combinations should
be deemed void.
Section 6 of the Act provides for the law relating to regulating Combinations. It prescribes
that all transactions qualifying as a Combination should be notified to the Competition
Commission of India in Form I (short form application) or Form II (long form application) as
applicable.
Now subject to the prohibition laid down in Section 6(1) of the Competition Act, if any
person or enterprise wishes to form a combination, formation of a combination is possible with
the approval of the Competition Commission India. The following procedure is required to be
followed before the Competition Commission of India passes an order of approval or rejection
with respect to the proposed combination:
STEP 1: Submission of Notice to CCI

As per Section 6(2) of the Competition Act, any person or enterprise who proposes to enter
into a combination has to mandatorily provide a notice to the Commission. The notice has to
in the format prescribed and it should be accompanied by the prescribed fee and such notice
has to disclose all the information of the proposed combination. The notice has to be given to
the Commission within thirty days of receiving approval from the board of directors of any
enterprise seeking to enter into a merger or amalgamation, or within thirty days of execution
of any agreement or other document for the acquisition of any enterprise or for acquiring the
control of any enterprise.
However, no combination can come into effect unless 210 days have passed from the date
on which the Commission had received notice from the enterprise under Section 6(2), or the
date on which the Commission has passed any order on the combination under Section 31 of
the Competition Act (which deals with orders of the Competition Commission of India on
combinations), whichever comes earlier.
Any new enterprise to be considered by the CCI will have to abide by the section 6(2) of
the Competition Act read with Regulation 5 and Regulation 8 of the Combination Regulation
(2016).
STEP 2: Inspection of the Notice

The CCI is to scrutinise the notice for defects or incompleteness on the premises of Regulation
14 of the CCI Amendment Regulation,2016. After the process the parties to the merger are
asked to remove the defects if any.
STEP 3: Disposal of Notice by CCI
ORDERS BY THE COMMISSION

The CCI can either by itself or through a director General Conduct an investigation to
determine if the proposed combination is likely to cause appreciable adverse effect on the
competition with India.
No AAEC: After investigation has taken place, if the Commission is of the opinion that any
combination does not, or is not likely to have an appreciable adverse effect on competition, it
shall by order approve the combination under Section 31(1).
AAEC: On the other hand, after investigation, if the Commission is of the opinion that the
combination has, or is likely to have an appreciable adverse effect on competition in the
24
relevant market then the Commission will direct that the combination shall not come into effect
and such combination will be deemed null and void under Section 31(2).
Modifications: However, if the Commission is of the opinion that the combination has, or is
likely to have, an appreciable adverse effect on competition but such adverse effect could be
removed by making certain modifications to the proposed combination, it might propose
appropriate modifications to the combination Section 31(3).
Parties who Accept the Modification: The parties to the combination who accept such
modifications, have to make such modification within the time specified by the Commission
according Section 31(4).
If the parties to the combination, who have accepted the modification fail to carry
out the modification within the specified time, such combination shall be deemed to have an
appreciable adverse effect on competition in the relevant market and the Commission shall deal
with such combination in accordance with the provisions of this Act. [Section 31(5)]
Parties who do not Accept the Modification: In this case such parties can, within thirty
working days of the modification proposed by the Commission, submit amendments to the
modifications proposed by the Commission. [Section 31(6)]
If the Commission is satisfied with the amendments submitted by the parties it
will approve the combination by making an order. [Section 31(7)]
However, if the Commission does not accept the amendments proposed by the
parties to combination, then the parties are allowed a further period of thirty working days
within which such parties will have to accept the modifications initially proposed by the
Commission If the parties still fail to accept the modification proposed by the Commission, the
combination shall be deemed to have an appreciable adverse effect on competition.
Other Orders: If the Commission has ordered a combination to be void, the acquisition or
acquiring of control or merger or amalgamation, will be dealt with by the authorities under any
other law for the time being in force as if such acquisition or acquiring of control or merger or
amalgamation had not taken place and the parties to the combination shall be dealt with
accordingly.
Penalty: After any person or enterprise who fails to give notice to the commission, the
commission shall impose on such person or enterprise a penalty which may extend to 1% of
the total turnover or the assets, whichever is higher of such combination.
If any person, being a party to the combination makes a statement which is false or
knowingly omits to state any material of importance then such person shall be liable to a penalty
which shall not be less than Rs.50 lakhs but which may extend to Rs.1 Crore as may be
determined by the Commission.
EXEMPTIONS TO COMBINATION REGULATION

In exercise of the powers conferred by Section 54(a), the Central Government, in public
interest, has exempted from notification:
i. such combinations where the value of assets being acquired, taken control of, merged or
amalgamated is not more than rupees three hundred and fifty crores in India or turnover of not
more than rupees one thousand crores in India.
ii. A banking company in respect of which the Central Government has issued a notification under
Section 45 of the Banking Regulation Act, 1949, from the application of the provisions of
Sections 5 and 6 of the Act for a period of five years.
25
The regulations on combinations as provided in Section 6 of the Competition Act, 2002

are not applicable to share subscription, or financing facility or any acquisition by a public
financial institution, foreign institutional investors, bank, or venture capital fund pursuant to
any covenant of a loan agreement or investment agreement.
However, these institutions still have to provide certain necessary information to the
Commission. Section 6(5) states that the public financial institution, foreign institutional
investor, bank or venture capital fund, has to file information with the Commission within 7
days of the date of acquisition and the filing has to done in the prescribed manner.
COMPETITION COMMISSION OF INDIA

Competition Commission of India (CCI) is the Competitive regulatory of India. It is a statutory
body of the Government of India liable for upholding The Competition Act, 2002 and
advancing rivalry all through India, and forestalling exercises that have an appreciable adverse
effect on competition in India. It was established on 14th October 2003. It became fully
functional in 20th May 2009 with Dhanendra Kumar as its first Chairman. It aims at establishing
a competitive environment in the Indian economy through proactive engagement with all the
stakeholders, the government, and international jurisdiction. The objectives of the Commission
are:
i. To prevent practices that harm the competition.
ii. To promote and sustain competition in markets.
iii. To protect the interests of consumers.
iv. To ensure freedom of trade.
How was the Competition Commission of India formed?

The CCI was established by the Vajpayee government, under the provisions of
the Competition Act 2002.
1. The Competition (Amendment) Act, 2007 was enacted to amend the Competition Act,
2002.
2. This led to the establishment of the CCI and the Competition Appellate Tribunal.
o The Competition Appellate Tribunal has been established by the Central Government to
hear and dispose of appeals against any direction issued or decision made or order passed by
the CCI.
o The government replaced the Competition Appellate Tribunal (COMPAT) with
the National Company Law Appellate Tribunal (NCLAT) in 2017.
Need of CCI
i. Promote free enterprise: Competition is important for the preservation of economic
freedom and our free enterprise system.
ii. Protect against market distortions: The need for competition law arises because markets
can suffer from failures and distortions, and various players can resort to anti- competitive
activities such as cartels, abuse of dominance etc. which adversely impact economic
efficiency and consumer welfare.
iii. Promotes domestic industries: During the era in which the economies are moving from
closed economies to open economies, an effective competition commission is essential to
ensure the continued viability of domestic industries, carefully balanced with attaining the
benefits of foreign investment increased competition.
26
iv. Ensure no abuse of dominance by big players in the market.

v. Establishment of a regulative control over economic activities.
Competition Commission of India – Members Composition
The members of the CCI are appointed by the Central Government. The Competition
Commission of India is currently functional with a Chairperson and two members.
i. The Commission used to consist of one chairperson and a minimum of two members and a
maximum of ten members.(section 8)
ii. The chairperson and the members are usually full-time members.
iii. The eligibility for the Commission: The Chairperson and every other Member shall be a
person of ability, integrity, and who, has been, or is qualified to be a judge of a High Court, or,
has special knowledge of, and professional experience of not less than fifteen 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.
Composition: Section 10 - The Chairperson and every other Member shall hold office as such
for a term of five years from the date on which he enters upon his office and shall be eligible
for reappointment upon certain conditions. [Provided that the Chairperson or other Members
shall not hold office as such after he has attained the age of sixty-five years.]
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.
Case: Brahma Dutt v. Union of India

CCI was a Quasi-Judicial body but the procedure to appoint its members was entirely in the
hand of the government. It contradicted the doctrine of Separation of Power essential to the
constitution
This contention was brought before the Supreme Court. To counter these arguments the Union
of India argued that CCI being a regulatory body, its chairperson needs to be a person with
experience in the field and not judges. But before any judgment could be given by the bench,
the Act was amended in 2007, acknowledging the biased selection procedure.
Powers of the CCI

1. Inquiry of Anti-Competitive Agreements and Abuse of Dominant Position: (Section19) –
Analyse determinants whether an agreement cause an AAEC, relevant market
2. Orders by Commission after inquiry into agreements or abuse of dominant position:
(Section 27) – parties in such agreement, or abuse of dominant position, to discontinue and not
to re-enter such agreement or discontinue such abuse of dominant position, as the case may be.
Impose penalty, not more than ten per cent of the average of the turnover for the last three
preceding financial years.
Direct the enterprises concerned to abide by other orders as the Commission may pass
and comply with the directions, including payment of costs.
Pass such other order or issue such directions as it may deem fit.
3. Power to issue interim orders: (Section 33)- If the Commission is satisfied that an act in
contravention of section 3(1) or section 4(1) or section 6, the Commission may, by order,
27
temporarily restrain any party from carrying on such act until the conclusion of such inquiry or
until further orders, without giving notice to such party, where it deems it necessary.
4. Inquiry into combination by Commission: (Section 20) - inquire into whether a combination
has caused or is likely to cause an appreciable adverse effect on competition in India.
5. Division of enterprise enjoying dominant position: (Section 28)- direct division of an
enterprise enjoying dominant position to ensure that such enterprise does not abuse its
dominant position
6. Orders of Commission on certain combinations [Section 31] (refer page 24)
7. Acts taking place outside India but having an effect on competition in India: (Section 32)
- The Commission shall, have power to inquire (sections 19, 20, 26, 29 and 30) into such
agreement or abuse of dominant position or combination if such agreement or dominant
position or combination has, or is likely to have, an appreciable adverse effect on competition
in the relevant market in India and pass such orders as it may deem fit.
8. Power of Commission to impose penalties : (Section 42)- If any person, without reasonable
clause, fails to comply with the orders or directions of the Commission issued under sections
27, 28, 31, 32, 33, 42A and 43A of the Act, he shall be punishable with fine which may extend
to Rs.1 Lakh for each day during which such non-compliance occurs, subject to a maximum of
Rs.10 Crore, as the Commission may determine.
9. Crediting sums realised by way of penalties to Consolidated Fund of India: (Section 47)-
All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund
of India.
10. Competition Advocacy : (Section 49) - The Central or State Government may, in formulating
a policy on competition (including review of laws related to competition) or any other matter,
as the case may be, make a reference to the Commission for its opinion on possible effect of
such policy on competition and on the receipt of such a reference, the Commission shall, within
sixty days of making such reference, give its opinion.
The opinion given by the Commission shall not be binding upon the Central
Government or the State Government, in formulating such policy.
The Commission shall take suitable measures for the promotion of competition
advocacy, creating awareness and imparting training about competition issues.
Case: Re Google Case

CCI imposed a fine of ₹10 million upon Google in 2014 for failure to comply with the
directions given by the Director General (DG) seeking information and documents.
Case: Re Cement Cartelisation Case
CCI imposed a fine of ₹63.07 billion (US$910 million) on 11 cement companies

for cartelisation in June 2012. It claimed that cement companies met regularly to fix prices,
control market share and hold back supply which earned them illegal profits.
Functions of 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. The
functions of the CCI are:
1. Ensuring that the benefit and welfare of the customers are maintained in the Indian Market.
28
2. An accelerated and inclusive economic growth through ensuring fair and healthy competition
in the economic activities of the nation.
3. Ensuring the efficient utilization of the nation’s resources through the execution of
competition policies.
4. The Commission also undertakes competition advocacy.
5. It is also the antitrust ombudsman for small organizations.
6. The CCI will also scrutinize any foreign company that enters the Indian market through a
merger or acquisition to ensure that it abides by India’s competition laws – the Competition
Act, 2002.
7. CCI also ensures interaction and cooperation with the other regulating authorities in the
economy. This will ensure that the sectoral regulatory laws are agreeable with the competition
laws.
8. It also acts as a business facilitator, by ensuring that a few firms do not establish dominance
in the market and that there is a peaceful co-existence between the small and the large
enterprises.
9. To eliminate practices having adverse effects on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade in the markets of
India.
The Competition Commission of India takes the following measures to achieve its objectives:
• Consumer welfare to make the markets work for the benefit and welfare of consumers.
• Ensure fair and healthy competition in economic activities in the country for faster and
inclusive growth and development of the economy.
• Implement competition policies with an aim to effectuate the most efficient utilization of
economic resources.
• Develop and nurture effective relations and interactions with sectoral regulators to ensure
smooth alignment of sectoral regulatory laws in tandem with the competition law.
• Effectively carry out competition advocacy and spread the information on benefits of
competition among all stakeholders to establish and nurture competition culture in Indian
economy
Duties of CCI (Section 18)

The Competition Act, 2002 was enacted to ensure the development of the economy via fair and
constructive competition practices. To this extent The Competition Commission of India must
do the following:
1. To eliminate the practices having an adverse effect on competition. (Section 3,4 and 5)
2. Promote and sustain competition in the market. (competition Advocacy – Section 49)
3. Protect the interests of consumers. (Section 3,4 and 5)
4. Ensure freedom of trade in the Indian markets
5. Establish a Commission to prevent practices having adverse effect on competition. To serve
as a forum for complaints and disputes regarding the competition by regulating the operations,
mergers, amalgamations, and acquisitions.
6. Fair business practices, Facilitate & Foster healthy Competition
Competition Commission of India – Challenges
The CCI faces multiple challenges while implementing the Competition Laws. The challenges
can be both internal and external.
29
2. The constant and continuous change in the way businesses are undertaken and the evolving
antitrust issue is proving to be a significant challenge for the CCI.
3. The emerging business models are based on a digital economy and e-commerce. This proves
to be a problem for the CCI as the current competition laws talk only of assets and turnovers.
4. The number of benches of the CCI has to be increased to pronounce judgments more speedily
on the competition cases.
5. The inclusion of parameters in the competition and antitrust laws such as data accessibility,
network effects, etc. is important to ensure that the Competition laws are relevant in a digital
economy.
PENALITIES UNDER COMPETITION ACT
1. Penalty for contravention of orders of Competition Commission

Section 42 provides penalty for contravention of orders of Competition Commission
(‘Commission’ for short) The Commission may cause an inquiry to be made into compliance
of the orders or directions made in exercise of its powers under this Act. If any person fails to
comply with the orders or directions of the Commission issued under-
a. Section 27 – Orders by Commission after inquiry into agreements or abuse of dominant
position;
b. Section 28 – Division of enterprise enjoying dominant position;
c. Section 31 – Orders of Commission on certain combinations;
d. Section 32 – Acts take place outside India but having an effect on competition in India;
e. Section 33 – Interim orders issued by Commission;
f. Section 42A – Compensation in case of contravention of order of Commission;
g. Section 43A – Order for penalty for non-furnishing of information on combination.
He shall be punishable with fine which may extend to ₹ 1 lakh for each day during which such
noncompliance occurs, subject to a maximum of ₹ 10 crore, as the Commission may determine.
If any person does not comply with the orders or directions issued, or fails to pay the
fine imposed under this section, he shall be punishable with imprisonment for a term which
will extend to three years, or with fine which may extend to ₹ 25 crores or with both, as the
Chief Metropolitan Magistrate, Delhi may deem fit.
This action is without prejudice to any proceedings to be taken under Section 39, which
deals with execution of orders of Commission imposing monetary penalty. The Chief
Metropolitan Magistrate, Delhi shall not take cognizance of any offence under this section save
on a complaint filed by the Commission or any of its officers authorized by it.
2. Penalty for failure to comply with directions of Commission and Director General
Section 36 (2) provides that the Commission shall have, for the purposes of discharging its
functions of this Act, the same powers as are vested in a Civil Court under the Code of Civil
Procedure, 1908 while trying a suit.
Section 36(4) provides that the Commission may direct any person
i. 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 person so directed as may
30
be specified or described in the direction, being documents relating to any trade, the
examination of which may be required for the purpose of this Act;
ii. to furnish to the Director General or the Secretary or any other officer authorized by it, as
respects the trade or such 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 this Act.
Section 41(2) provides that the Director General shall have all the powers as are conferred
upon the Commission under Section 36(2) of the Act.
Section 43 provides that if any person fails to comply without reasonable cause, with a
direction by the Commissioner under Section 36(2) and Section 36(4) and the directions of the
Director General while exercising his powers under Section 41(2), such person shall be
punishable with fine which may extend to ₹ 1 lakh for each day during which such failure
continues subject to a maximum of ₹ 1 crore as may be determined by the Commission.
3. Penalty for non-furnishing of information on combination

Section 43A provides that if any person or enterprise who fails to give notice to the Commission
under Section 6(2) of the Act, the Commission shall impose on such person or enterprise a
penalty which may extend to 1% of the total turnover or the assets, whichever is higher, of such
a combination.
4. Penalty for making false statement or omission to furnish material information

Section 44 provides that if any person, being a party to a combination makes a statement which
is false in any material particular or knowing it to be false or omits to state any material
particular knowing it to be material, such person shall be liable to a penalty which shall not be
less than ₹ 50 lakhs but which may extend to ₹ 1 crore, as may be determined by the
Commission.
5. Penalty for offences in relation to furnishing of information

Section 45 provides that without prejudice of the provisions of Section 44, if a person, who
furnishes or required to furnish any particulars, documents or any information
i. makes any statement or furnishes any document which he knows or has reason to believe to be
false in any material particular; or
ii. omits to state any material fact knowing it to be material; or
iii. wilfully alters, suppresses or destroys any document which is required to be furnished as
aforesaid,
such person shall be punishable with fine up to ₹ 1 crore as may be determined by the
Commission. Further the Commission pass such order as it deems fit.
6. Power to impose lesser penalty

Section 46 gives powers to the Commission to impose lesser penalty than specified in the
provisions meant for imposing penalties.
(Refer Page No. 16)
7. Crediting sums realised by way of penalties to Consolidated Fund of India:

Section 47 provides that All sums realised by way of penalties under this Act shall be credited
to the Consolidated Fund of India.
31
8. Contravention by companies
Section 48 provides that where a person committing contravention of any of the provisions of
this Act or of any rule, regulation, order made or direction issued there under is a company,
every person who at the time of the contravention was committed, was in charge of and was
responsible to the company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the contravention and shall be liable to be preceded
against and punished accordingly.
If such person proves that the contravention was committed without his knowledge or
that he had exercised all due diligence to prevent the commission of such contravention then
he will not be punishable.
COMPETITION ADVOCACY
Advocacy means, “public support of an idea, plan, or way of doing something”. Competition
Advocacy, henceforth, is the means to ensure compliance with the Competition law by gaining
public support for competition laws and policies.
The International Competition Network defines Competition Advocacy as “activities
conducted by the competition agency, that are related to the promotion of a competitive
environment by means of non-enforcement mechanisms, mainly through its relationships with
other governmental entities and by increasing public awareness in regard to the benefits of
competition.”
Therefore, CCI has to deliver two roles,
i. first, of a consultant to government and other regulatory agencies concerning legislations and
regulations that implicate the competition policy, and
ii. second, as a proponent for increased public understanding and acceptance of competition
principles.
According to the Organisation for Economic Co-operation and Development (OECD),
the need for Competition Advocacy measures is more so important for developing nations, like
India, due to the “fundamental changes” faced by the economies of developing nations because
of privatization, liberalization etc. Since, the economic policies and markets are constantly
undergoing changes, it is crucial to consider competition aspect of our laws and policies so that
we do not tend to over-regulate our markets.
Rationale of competition advocacy

The rationale for adopting Competition Advocacy measures can be ascertained from the
underlining reasons:
1. Reduces harm of regulation on competition- Government intervention in the marketplace
often hampers competition. Competition Advocacy, hence becomes necessary “to bring about
government policies that lower barriers to entry, promote deregulation and trade liberalization,
and otherwise minimize intervention in the marketplace.”
2. Awareness- It is expedient to create awareness regarding the importance of fair competition in
our markets. This will ensure ready compliance with the competition law and policies by the
business community, and at the same time, the public which is a major stakeholder in markets
being the consumer of goods and services would be able to help in law enforcement as well as
contribute towards policy making.
3. Persuasive- They are persuasive rather than coercive in nature, and therefore, help in obtaining
easy acquiescence to policies, laws and regulations pertaining to competition matters.
32
4. Discourages lobbying- Private firms often influence government regulations in a manner that
suits them, although it may be harmful to healthy competition. Competition Advocacy may
discourage lobbying by such influential groups.
5. Consumer welfare- The ultimate beneficiary of competition advocacy methods are the
consumers, who benefit from low marginal costs, higher efficiencies, and fine quality goods
and services made available at best prices.
Objectives of competition advocacy

1. Spreading awareness and familiarizing business enterprises, government departments,
ministries, and Public Sector Undertakings (PSUs) regarding the importance of fair
competition, thereby ensuring observance of law by them.
2. Sensitizing the different departments and ministries of the governments about the nuances of
competition law, to facilitate in competition audits of their respective laws on different
subjects.
3. It also aims at enactment of pro-competition legislations and regulations.
4. It is an objective of CCI to build its reputation amongst the stakeholders by showcasing its
efficiency and achievements.
5. The foundation of fair competition lies in providing equality of opportunity to various
competitors in the market at the starting level. Hence, it is the duty of government to enable a
level playing field to all the competitors in the market.
Legal provisions
The Raghavan Committee in its report had suggested that:
“The CCI needs to assume the role of competition advocate, acting proactively to bring about
Governmental policies, that lower barriers to entry, promote de-regulation and trade
liberalization and promote competition in the market place.”
The Competition Act, 2002, also recognizes the role of CCI as a competition advocate
under Section 18.
Section 49 provides that the Central or State Government may, in formulating a policy
on competition (including review of laws related to competition) or any other matter, as the
case may be, make a reference to the Commission for its opinion on possible effect of such
policy on competition and on the receipt of such a reference, the Commission shall, within sixty
days of making such reference, give its opinion.
The opinion given by the Commission shall not be binding upon the Central
Government or the State Government, in formulating such policy.
The Commission shall take suitable measures for the promotion of competition
advocacy, creating awareness and imparting training about competition issues.
Initiatives By Competition Commission

Several initiatives have been undertaken by CCI in its endeavour to foster competition culture
in our economy. Some of its initiatives are highlighted hereunder:
1. Booklet on competition advocacy.
2. Collaboration with academia (seminars, essay competitions, moot court competitions)
3. Internships
4. Media (radio campaign against cartelisation, has a YouTube Channel)
33
5. National Conferences
6. Collaboration with Government (meetings, workshops with various departments of govt.,
training programs for public officers.)
7. Collaboration with business organizations
8. Collaboration with investigative agencies- meetings with DG of Income Tax, Central Excise)
9. Research & Development
10. International engagements.
34

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COMPETITION LAW- SEM 8 – CHC8A

Case: United States v. E. C. Knight Co

1. Eliminate Practices that have an adverse effect on competition

13. Opinion No provision for seeking Provisions for seeking opinion

/statutory bodies by the CCI regarding cases. (S 21 and

dimension in the definition of a cartel is that it requires an agreement between competing

producers of goods or providers of services for price-fixing or sharing of market, and is

2. Output Limitation: Limits or controls on production, supply, markets, technical

Types of Vertical Agreements

Case: Re Bajaj Case

Abuse Of Dominant Position

Types Of Abuse Of Dominant Position

Case: Ajay Devgn Films v. Yash Raj Films

Steps for Determination of Abuse of Dominant Position.

Step 1: Determine the relevant market

Case: BijayPoddar v Coal India Ltd.

Case: Atos Worldline v Verifoneindia

3. Exclusion of in-house production

Case: Surinder Singh Barmi v BCCI Atos Worldline v Verifoneindia

Case: Atos Worldline v Verifoneindia

Step 2: Determine dominance in the relevant market

Step 3: Determine the abuse of dominant position

Who can Enquiry

1. Horizontal Combinations: Horizontal Combinations refer to combinations where the

2. Vertical Combinations: Vertical Combinations refer to combinations where the combining

3. Conglomerate Combinations : Conglomerate Combinations refers to the combination of

THRESHOLDS FOR COMBINATIONS1

Applicable to Assets Turnover

STEP 1: Submission of Notice to CCI

STEP 2: Inspection of the Notice

STEP 3: Disposal of Notice by CCI

ORDERS BY THE COMMISSION

EXEMPTIONS TO COMBINATION REGULATION

The regulations on combinations as provided in Section 6 of the Competition Act, 2002

COMPETITION COMMISSION OF INDIA

How was the Competition Commission of India formed?

iv. Ensure no abuse of dominance by big players in the market.

Case: Brahma Dutt v. Union of India

Powers of the CCI

Case: Re Google Case

Case: Re Cement Cartelisation Case

CCI imposed a fine of ₹63.07 billion (US$910 million) on 11 cement companies

Duties of CCI (Section 18)

PENALITIES UNDER COMPETITION ACT

1. Penalty for contravention of orders of Competition Commission

3. Penalty for non-furnishing of information on combination

4. Penalty for making false statement or omission to furnish material information

5. Penalty for offences in relation to furnishing of information

6. Power to impose lesser penalty

7. Crediting sums realised by way of penalties to Consolidated Fund of India:

Rationale of competition advocacy

Objectives of competition advocacy

Initiatives By Competition Commission

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