CONTENTS

Table of Cases..
****** ss. 1X

Chapter 1
INTRODUCTION
Constitutional Aspect of Elimination of Concentration of Wealth and
Distribution of Resources [Articles 38 and 39].. .1.2
What is Competition?. .1.5
Why Competition. .1.5
What is Competition Law.. ...1.6
What is Competition Policy... I.7

History of Competition Policy in India. ...1.9

Relation between Competition Policy, Competition Law and
Economic Development. - 1.11
Draft National Competition Policy, 2011.. *. 1.12
Object/Objectives of Competition Law/Act. ..1.13

Chapter 2
HISTORY AND DEVELOPMENT
OF COMPETITION LAW
History and Development of Competition Law/Antitrust Law... .2.1
.....
History of Competition Law in India.. .2.2

Monopolies and Restrictive Trade Practices Act, 1969. . 25

Liberalisation and Globalisation... ...2.6

Shortcomings of the MRTP Act, 1969.. .2.7
Raghavan Committee. ..2.8
Competition (Amendment) Act, 2007. .2.12

Competition (Amendment) Act, 2009. ..2.13

Finance Act, 2017. **** .2.14
The Competition (Amendment) Bill, 2012.. .2.14

Overview of Competition Act, 2002.. .2.20

Objectives of the .2.21

Competition Act, 2002.
Salient .2.22
Features of the Competition Act, 2002. *****-«

.24
Constitutionality of the Competition Act, 2002. ******

Extent and Commencement... **°'***

.28

Extra-territorial Reach.
..2.29

2.29
Scheme of the
Act.
**°*°*°* **

.
iv
Competition Law
Definitions (Section 2]....
Important
1. Agreement [Section 2(b)]. .. ee*****se*****4,
2.3
[Section 2()]..
2. Cartel
2.30
3. Consumer (Section 2(f)]...
********°°*°*** ..2.32
4. Enterprise [Section 2(h)]... * ****°*******s ********.3A
....

5. Goods [Section 24)].. ..235

6. Service [Section 2(u)].. ****
2.39
7. Practice [Section 2(m)].. ******** .....
.39
**********irsssn.2.41
8. Market ..
9. Relevant Market Section 2(r)].. ..2.41
******
10. Turnover [Section 2(y)].
°**°°***********s* .44
11. Relevant Turnover.
***************.4 4

Chapter3
ANTI-COMPETITIVE AGREEMENTS
[SECTION 31
Anti-Competitive Agreements [Section 3. °°******
..3.2
General Prohibition [Section 3(1) and Section 3(2)]. ********************

Anti-Competitive Agreements (Section 3(1)). ***°************

33

Agreement Entered in Contravention of Section 3(1) shall be void

Section 3(2)]. ..3.8
Rules Applied in the Interpretation
of Anti-Competitive Agreements. 39

Horizontal Agreements or Agreements which cause an adverse

effect on
Competition [Section 3(3)]... ****°***********
..3.11

lypes of Horizontal Agreement Prohibited under section 3(3)... .3.15

****''***.***
.3.15
(a) Prize-Fixing Agreements [Section 3(3)(a)]..
(b) Limiting or
Controlling Production, Supply etc.
Section 3(3)(6)|.. ***** **********

(c) Market Allocation and *********************

Sharing [Section 3(3)(c) 3.18

(d) Bid Rigging or Collusive Bidding [Section 3(3) (d)| . . ***** ** ***""**

Forms of Bid-Rigging.. .3.21

***************

Cartels.. ... ** *****

Essential
Cartels
Ingredients of
Cartel. **

and the
Competition Act,
burden of
Proof and Standard of 2002.
3.42

* * **

Vertical Proof in a Cartel case. ***..

s

on
Agreements Agreements
or
which caus
adverse effect 344
competition [Section 3(4)).
***°'***° *******

Dstinction between Section

3.47

******

ypes of
Vertical Agreement3(3) and Section 3(4)..
347

1. Prohibited under Section o ********"

47

Tie-in-Arrangement
EXclusive (Section 3(4)(a)l *****
. * * * *******"

3.50

Supply Agreement [Section 3(4)(b)]

. *
 Contents N

3. Exclusive Distribution Agreement [Section 3(4)c)].. ********sinel

..3.52
4. Refusal to Deal |Section 3(4)(d)|..****** * ** ********************'********
..3.52

5. Re-sale Price Maintenance [Section 3(4)(e)].

********* ***********seeene*eseeo
..3.65

How to prove that at agreement is anti-competitive.. .3.66

*************************** *****

4. Exemption/Exceptions [Section 3(5) and proviso to Section 3(3).. 3.68

() Exception for the protection of Intellectual Property Rights

(Section 3(5)(i)]..************°"********************** s******..**
.3.69
************************"

(i) Exception to agreements related to export cartels

Section 3(5%ii).. *************** ****** **** * * * * * * * * * * * * * * * * *.
*.**
**.
**.*
3./5

i) Exemption for joint ventures. *********************************"** 3.75

Chapter 4
REGULATION OF ABUSE OF
DOMINANT POSITION
(SECTION 4)
Abuse of Dominant Position (Section 4).. *****************************
....4.4

Determining Abuse of Dominance. ******************************°******* **** **** ********** ****4.7

....4.7
1. Delineation of "Relevant Market".
2. Dominance in Relevant Market.. * * *** ******* ****.******* 4.8

(1) Ability to Operate Independently of Competitive Forces

in the Relevant Market...**** *********************** *********************************.
....4.10

enterprise to attect its competitors or

(2) Ability of an

consumers or the relevant market in its tavour... * * * * * * * * * * * * 4.11

Factors relevant for determining Dominant Position... ************ ..4.12

.4.13
3. Abuse of Dominance/Abuse of Dominant Position...
448
Kinds of Abuses. ******** ****'********** ****************"**********

.4.48
Predatory Pricing ISection 4(2)0a)
* * * * * * * * * * * * * * * * * * * * * * * * * * * ***** ***** * * * * * * * * * * * * * * *

.4.49
Pre-requisites of Predatory Pricing *********'**** *** ** ********** ************

.4.50
Elements of Predatory Pricing.. ************ '****************** *********************

Chapter 5
REGULATION OF COMBINATIONS

(SECTION 5 AND SECTION 6)

5.2
Combination (Séction 5. ********* ***'*****
****************'***************
********

..5.3
(a) Nature of Transaction... .
************************* .

*******'*****'********

(Threshold Limits). 5.7

n e Values Involved in Transaction .5.9
De Minimis Exemption.
for AcquiSitions.. ******
..5.9
esholds for availing of De Minimis Exemption
.. . 5.10
Meaning of Control.. * * *** *********
'*********************
 Competition Law
vi
Combinations [Section 6.
Regulation of **o*****ss..
.5.11
notice of combination to commission..
Time limit for giving N....esdssoreess 5.11
of Combination [Section 29 and 301.
Procedure for Investigation
5.12
Inquiry into Combinations.. .14
Order of Commission
on Certain Combinations [Section 31]. *nss .16

statement or omission to furnish

Penaltyfor making false
material information..
.5.19
Remedies. 5.19
e********s***eedes.
.5.19
Appeals..
* * * * *

Commission's Order [Section 6(2A)]... e**********************srD.I

Time Limit for
and Section
Exceptions [Section 6(4) 6(5)].. .5.20
**°**********°********v,

to the Transaction of Business Relating to

CCI (Procedure in Regard
Amendment Regulations, 2015... ******************s*. .5.21
Combinations)

Chapter 6
ENFORCEMENT MECHANISMS

Enforcement Mechanisms under the Competition Act, 2002. ******e********* ..6.1

U,.

..6.1
General Provisions Regarding CCL.
***********°*************

Establishment of Competition Commission of India [CCI] [Section 7].

° * * ° * *****°**********
5.2
Vision and Mission of C C I . .
************°******* 6.3
Composition of Commission [Section 8).. .6.6
Duties, Powers and Function of Commission...
.6.6
[Section 18]...
e***********

Duties of theCompetition Commission of India

6./
India.
Powers and Functions of Competition Commission of *************.*6
* *.
*4 1

Director-General [Section 16]. *******.*.*

6 . 4 1

Duties of Director-General [Section 41].. ******************

542

Powers of Director General... .6.43

**********

Appellate Tribunal. ****°°°******a******

..6.44

Appellate Tribunal [Section 53A]. ***************

Appeal to Appellate Tribunal [Section 53B].. ****°***** *

.6.46

49
Awarding compensation [Section 53(N)].. ****°**************
Penalties under Competition Act, 2002 (Section 42 to 48|. 0.49

Contravention of Orders of Commission [Section 42|

.O.57
Compensation in case of Contravention of Orders of Commis
***** * *****

(Section 42A).. and .52

Penalty for failure to comply with directions of Commission a"
***° * ****

Director General (Section

43). ***

O.52
Power to impose penalty for non-furnishing of information O
combinations (Section 43A).. ***

erial
********s***..******
6 " .52

Penalty for making false statement or omission to furnish nlad

information (Section 44)...
 Contents Vi

Penalty for offences in relation to furnishing of information

(Section 45). *****a**** ...6.52

lesser penalty (Section 46).. 6.53

Power to impose
way of penalties to Consolidated Fund
Crediting sums realised by ....6.544
of India [Section 47| .. ************.
Contravention by Companies |Section 48]. *°********°
*******.0 .6.54

Chapter 7
COMPETITION ADVOCACY AND
LENIENCY PROGRAMME
.....7.1
Competition Advocacy in India...
******
**********e***.

Commission of India. .7.4

Advocacy Initiatives by Competition
.7.5
International Engagements. e * * * * * *e* eoo*****o**********

Coordination with other Competition Regulators * * * * * * . 7.6

of CCI.. ...7.6
Foreign Jurisdiction
° ° ° * ° * °*********°°°° **°

*°*********
..78
Effects Doctrine. in India. ******** **

..7.9
Leniency Programme. e*********************
* * * *******°*****°***°

.7.10
Conditions for Leniency ****°*
**°**

10
Quantum of Immunity... *°*******eo**** ********* ***°******°°*

Procedure for Lesser Penalty...

****°* *°****°** ***********°*7 1 1

Confidentiality ... ******s*** e*****eo********* **********

* * *
..7.12

Grant of Leniency. ....7.16

Chapter8
EMERGING TRENDS IN COMPETITION LAW
(NATIONAL AND INTERNATIONAL)
Intellectual Property Rights and Competition Law. ** .8.1|

The Emerging Jurisprudence: IP versus Competition Law..

*°* **************
..8.2

Statutory Analysis.. *************°****°********'***°°****° ***°*********

..8.4
International Trade Law and Competition Law.. 8.6
Contentions of Ericsson..
Il....o********************************** *. * * * * * * o 8.8
Confutation by CCI, Micromax & Intex.****************** ** * ..8.8
Telecom Regulatory Authority of India and Competition Law..*************
...8.14

Constitutionality of the Competition Act, 2002. 8.17

9
3
0

Chapter1
INTRODUCTION
The Constitution of any country serves several purposes. It lays
ideals that form the basis which we as citizens aspire to
out certain
constitutionall
live in. The Indian Constitution also has certain core
articles
values that constitute its spirit and are expressed in its various
embodies 'the
and provisions. The Preamble of Indian Constitution
fundamental values and the philosophy o n which the Constitution is
based'. The Preamble provides a key to unlock and explore the spirit
of
our Constitution. Without it, a proper appreciation of
the objectives and
values that find place in our Constitution seems a remote possibility.
The Preamble to our Constitution reads as follows:

WE, THE PEOPLE OF INDIA, having solemnly resolved to

constitute India into a
soVEREIGN, SOCIALIST SECULAR', DEMOCRATIC,
REPUBLIC and to secure to all its citizens:

JUSTICE, Social, Economic and Political;

LIBERTY of Thought, expression, belief, faith and worship;
EQUALITY of status and of opportunity;
and to promote among them all
FRATERNITY assuring the dignity of the individual
and the unity and integrity' of the Nation;
IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day
of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO
OURSELVES THIS CONSTITUTION.
The 42nd Amendment - inclusion of the term Socialist'Q1
The 42nd Constitutional (Amendment) Act, 1976 amended the
Preamble and changed the description of India from "sovereign

. Added by constitution forty second Amendment Act, 1976.

1 . Elaborate whether Competition Act, 2002 fulfils the constitutional objective of
Socialist States where state is required to accomplish a number of welfare obligations.

1.1
i c e . M a r k e l .

Scil &eCnonie valit

eg va

Competition Law

secular democrai
1.2 socialist These articles reflect the
"Sovereign, "unity
democratic republic"
to a
words "unity of the
nation" to
ity State, and building a just an
the
changed
republic, and also In Central Inland Wate
of the nation" among the (1986) 3 SCC 156, tt
and integrity economic equality Ganguly,
The term
socialist implies socialland 39 of the
Constitutionembod-
absence of discrimination The concept of distr
people. m e a n s the
justice".
in this context connote, interalia,
the remo-
Social equality creed, sex, religion, or
only of caste, colour, from dea
on the grounds has equal status and
everyone injustice resulting
Under social equality, the society.
language.
opportunities.
means that the government In State of Tamil Nadu-
context
in this of a lan
Economic equality
distribution of wealth more equal and upheld the validity
endeavor to make the services in the State on the
standard of living for all. directive principles contain
providea decent
183, the Supreme
AIR 1983 SC scheme meant for the purpo
In D.S. Nakara v. Union of India,
observed that the principal objective of
socialist state is to wipe of wealth; as in the
instar
Court
status and standards of life. Article 3S
inequality in economic conditions, the operation of
out the the role of state is never out of season it observes nationalizatiorn
In a democratic welfare economy,
a planned and
and Our Constitution directs the State to ensure concentration
reason. In State of Karnataka
coordinated social advance in all fields while preventing the Su
The socialist model of development nine-judge bench of
of wealth and power in few hands. of State Policy which direct
to Article 39(b) of the
Com
is well reflected in the Directive Principles " one of the pri
economic and
the State to perform its obligations in order to achieve the material reso
social justice. subserve the co
Constitutional Aspect of Elimination of Concentration of Wealth and Article 39(b) of t-
Distribution of Resources [Articles 38 and 39] principles of Stat
Artic=
The makers of the Indian Constitution being aware of the potential genus of the
the economic or
dangers of concentration of economic power, laid down certain
principles in Articles 38 and 39 of the Constitution, to impress upon and the whole .

material resouro
the governments of the Country about the need of fighting this danger.
such resources,
Articles 38 and 39 of the Constitution of India mandate, inter alia, that
subserve the cor
the State shall strive to promote the welfare of the people by securing
t h e ownership a

may, a social order in which

and
protecting as effectively,
as it
justice In Reliance Natur
SOcial, economic and political-shall inform all the institutions of the
national life, and the State shall, in particular, direct its policy towaras Limited, (2010) 7 SCC
securing The Constitutie
1. that the ownership and control of material resources or u an inequitable
community are so distributed as best to subserve the commo in the hands of
Article 39(6) of
goods; [Article 39(b)] and
2. that the Article 38 of th
operation of the economic system does not result n the affirmative obl-
concentration of wealth and means of production to the commoO of material re-
detriment. [Article 39(c)] heightening of
 Introduction 1.3

These articles reflect the aim of moving India towards a welfare

State, and building a just and equitable society.
In Central Inland Water Transport Corporation v. Brajo Nath
Ganguly, (1986) 3 SCC 156, the Supreme Court held that Article 38 and
39 ofthe Constitution embody the jurisprudential doctrine of "distributive
iustice". The concept of distributive justice in the sphere of law-making
connote, interalia, the removal of economic inequalities rectifying the
and transactions between unequals in
injustice resulting from dealings
the society.
In State of Tamil Nadu v. Abu Kavar Bai, (1984) 1 SCC 516, the court
upheld the validity of a law enacted for the nationalization of transport
services in the State on the ground that it was for giving effect to the
directive principles contained in Article 39(b) and (c). A nationalization
scheme meant for the purpose of distribution or preventing concentration
of wealth; as in the instant case, must have sufficient nexus to attract
the operation of Article 39(b) and. (c). The Tamil Nadu Act is valid as
it observes nationalization policy.
In State of Karnataka v. Ranganatha Reddy, AIR 1978 SC 215, a
nine-judge bench of the Supreme Court observed as follows with regard
to Article 39(b) of the Constitution:
".one of the principal aims of socialism is the distribution of
the material resources of the community in such a way as to
subserve the common good. This principle is embodied under
Article 39(b) of the Constitution as one of the essential directive
principles of State policy. The key word is distribution and the
genus of the Article, as it fulfils the basic purpose of restructuring
the economic order. Each word in this Article has a strategic role
and the whole Article is a social mission. It embraces the entire
material resources of the community. Its task is to distribute
such resources, its goal is to undertake distribution as best to
subserve the common good. It reorganises by such distribution
the ownership and control."
In Reliance Natural Resources Limited v. Reliance Industries
Limited, (2010) 7 SCC 1, the Supreme Court observed as follows:
"The Constitution of India postulates that monopolies, created by
an inequitable distribution of resources and their concentration
in the hands of the few, are inimical to democracy. Consequently,
Article 39(b) of the Constitution should be construed in light of
Article 38 of the Constitution and be understood as placing an
affirmative obligation upon the State to ensure that distribution
of material resources of the community does not result in
heightening of inequalities amongst people and amongstregions.
 Competition Law
1.4
From above discussion, it becomes clear that, the Constitution
India mandates the State to direct its policy towards securing, that th.
ownership and control of material resources of the community are
distributed as to best subserve the common goods; and that the operatio
of the economic system does not result in concentration of wealth ane
means of production to the common detriment." Thus, state interventio
essary to some extent in India to eliminate concentration of wealt
and to effect distribution of resources in equitable manner.
After independence the Indian Government assumed a greate
role for overall development of the country by laying down policie
which aimed at achieving a socialistic pattern of society which promote
equitable distribution of wealth and economic powers. However, th
ghost of British had influence on the policy framework of the Governmen
and thus, the system of control restricted freedom of entry into industr
which led to concentration of economic power in the hands of a fev
individuals and business groups. After this Government appointec
the Monopolies Inquiry Committee (MIC) in 1964 to investigate the
extent and effect of concentration of power in the private sector and te
suggest necessary legislative, or other measures in the light of findings=
The commission in its report held that there was concentration o
economic power in the hands of few industries and they indulged i
monopolistic and restrictive trade practices. Further, big businesses wers
at an
advantage in
securing industrial licenses to open and expanc
undertakings. It intensified concentration as the Government did no
have adequate mechanism to check it.
Following this Parliament chec-
Monopolies and Restrictive Trade Practices (MRTP) Bill in 1969 topassed
concentration of economic power, control the
prevent various trade practices detrimental togrowth of monopolies anC
public interest. The Bil
received the assent of President and came
into force on 1st June, 1970
Thus, the MRTP Act, 1969, India's first
in India on 1st June, 1970. The competition law came into forca
liberalisation of Indian economylegislation
ruled for 33 years, but afte
in 1991 many
became obsolete, like there was no provisions of the AC
acquisition. Thus, Government of Indiaprovision control mergers an
to
appointed a committee under tus
chairmanship of S.V.S. Raghavan to assess
and to suggest a full the relevance of MRTP AC
fledged
recommended the scrapping ofcompetition law in India. The
the MRTP Act and the committe
Competition Law. Thereafter, Parliament adoption of ne
2002. With this brief enacted, the Competition A-
introduction, now the
What is
competition? What is competition law?questions which arise a
and What is
Policy? competiu
2. Article 39(b) of
Constitution of India.
3 Article 39 (c) of
Constitution of India.
 Introduction 1.5
What is Competition?
Generally the consumers
everywhere in the most developed
even
countries, have poor information of the
necessary particulars of
product, including the current market price, the price range or any
the
quality of the suppliers, and comparable products or services. SupplierTs,
who over a period of time, have acquired, on account of various factors,
the power to manipulate the market, do everything in their power to
prevent the development of a market that is free from interference.
One reason for this is their intention of retaining the fixed percentage
of profits, and this can be possible only byrestraining eliminating
or
competition. Eliminating competition altogether is their objective." So,
Competition means a struggle or contention for superiority, and in the
corporate world, the term "competition" is generally understood to mean
a process whereby the commercial enterprises compete with each other
to win over/secure customers for their products and services and in the
process outsmart each other and even eliminate the rivals.
Competition in a commercial sense, is "a situation in a market in
which firms or sellers independently strive for the buyers' patronage
in order to achieve a particular business objective, for
example, profits,
sales or market share."3
In simple word, Competition is the process of rivalry among the
producers to enhance profit and to attract more customers or to get the
patronage of consumers. Thus, Competition represents reverse position
of monopoly.

Why Competition
Competition encourages enterprises to be innovative and bring
out new goods and services for the benefit of consumers. It helps the
consumers to widen their choice. It enables consumers to buy the goods
they want, at the best possible price.
Further, Competition puts producers or manufacturers under
constant pressure to offer the best possible range of goods and the
provisions of services at the best possible prices, because if they don't,
consumers have the choice to shift to interchangeable or substitutable
goods.
The benefits of having competition in the market are lower prices,
better products, wider choice and greater efficiency than those existing
under conditions of monopoly.
4. Pratima Singh, "Dissertation on Anti-Competitive Agreements underlying Concepts &

Principles under the Competition Act, 2002."

5. World Bank (1999) available at: http://www.oecd.org/daf/competition/
prosecutionandlawenforcement/27122227.pdf. (last accessed on August 05, 2017).
. Kulpreet Kaur and Harinder Pal Singh Bhullar, "Growth of Competition and Related
laws in the European Union and India'", Lex Witness, August, 2010 Page
1.6 Competition Law
The positive effectsof competition are well illustrated
by the recen
experiences in India in several sectors such as
automobiles, telecommunicatione-
newspapers and consumer electronics, where there ha
been a fall in real
of
prices/tariffs and marked improvement in the equalit
goods/services. However, in their pursuit to outdo rival
some
producer or manufacturer either adopt fair means enterprises
quality goods, being cost efficient, adopting (producing
technologies,
indulge in unfair practices (using restrictive business etc.) on
practises-such as-
predatory pricing, exclusive dealing, tied selling, collusion,
abuse of dominant
position, cartelisation,
etc.) In order to check such unfair
the Competition law comes in practice
picture.
What is Competition Law

from
Competition law is a law designed to protect business and
anti-competitive behaviour of consumers
manufacturers can be multinational or producers. The producers or
retailers or even
domestic companies, wholesalers,
the
law is the tool neighbourhood shopkeepers. Thus, Competition
the
through which the Government controls and
producers/players in the
market. Most regulates
increase efficiency, enhance consumer welfare,competition
ensure fair
laws seek to
prevent abuse of market
power. The three trading, and
provided for in most areas of enforcement that are
competition laws a r e
() Anti-competitive agreements,
(ü) Abuse of dominance, and
(ii) Mergers which have
The reasons for potential for anti-competitive effect.
these are
adoption of
competition laws vary across
usually on account of countries;
concentration, formation of cartels,concerns
state
about high level of market
deregulation, meeting with the monopolies,
of bilateralprivatization and
trade agreements requirements
and in addition, to take care of
and plurilateral
dimensions and concerns. cross border competition
A strong
competition law can
provide a solution by
anti-competitive agreements and preventing
consumer welfare. It can be improving economic efficiency and
competition law is to protect consumer concluded that the twin
freedom of market welfare as well as the objective or

players. economic
Competition law has
response to the enormousgrown a phenomenal rate in recent years
at

behaviour that have taken changes in political thinking and in

place around the world. economic
Competition law is now
once were
regarded as naturalapplied to many economic activities tha
7. Richard Whish monopolies or the preserve of the
Edition, p. 1.
& David
Bailey, "Competition Law state
Oxford University Pres", h
Seve
 Introduction 1.7

telecommunications, energy, transport, broadcasting, postal services,

sector of the
sDorts, media etc.° Thus, Competition law touches every
economy.
In India, in order to eliminate practices having adverse ettect on
of
Competition; promote and sustain competition, protect interests
ensure freedom of trade in markets in India the
consumers and tO
Competition Act, 2002 was enacted. This Act moved away from the
earlier emphasisof curbing monopolies to a more particular and directed
approach ie. towards promoting competition and thereby increasing
eficiency, innovation and competititveness.
The Competition Act, 2002, provides a formal and legal framework
for ensuring competition and contain following ingredients:
.First, it prohibits all anti-competitive agreements at horizontal
and vertical level which restricts competition and cause consumer
harm by way of allocating markets, limiting production,
distribution of goods and services and fixing prices higher than
normal.
Second, competition law regulates the abusive behaviour of
a dominant firm, who may set unfair and discriminatory
conditions, distort competitive structure of market and makes
consumers accept its terms and conditions.
Third, to safeguard competition market, the competition law
regulates the mergers and acquisition of large corporations.
What is Competition Policy
In simple words, Competition Policy means government measures,
policies, statutes, and regulations including a competition law, aimed
at promoting competitive market structure and behaviour of entities in
an economy.

The World Trade Organisation (WTO) defines competition policy as:

"the full range of measures that may be used to promote
competitive market structures and behaviour, including but not
limited to a comprehensive competition law dealing with anti-
competitive practices of enterprises."
Ihe Competition Policy is regarded as genus, of which, the
petition Law is specie. Competition Law provides necessary
POwers to the Competition Commission to enforce and implement the
Competition Policy.
8. Ibid.
9. CCI Annual
Report 2011-12, P8. 1
1.8 Competition Law

All Government Policies that prefer

affect the functioning of markets and to

can m

canno
Trade Policy
Th
Industrial Policy preser

Disinvestment Polic Competition Policy-a broad proces

concept that seeks to harmonise

FDI Policy all government policies
of goc
innova
Fiscal Policy effecti
LPR Policy to co
Competition of the-
Labour Policy Law
in ord
. others.. dema

econo
Fig. 1: Competition Policy vis-a-vis Competition Lawl0 pay la
Competition Policy is intended to promote efficiency and to
Histor
maximize consumer/social welfare. It also helps to promote creation of
a business environment which improves static and dynamic efficiencies, Ir
leads to efficient resource allocation and in which abuse of market the ea
power was t
is prevented/curbed.
speed
Competition policy essentially comprises two elements: the first
involves putting in place a set of policies that promotes competition in
econo
local and national markets, which includes liberalised trade
openness to foreign investments and economic deregulation;
a
policy,
and tne
and
Practi
second comprises legislation,
judicial decisions and regulations specificauy contro
aimed at preventing anti-competitive business
practices and unnecessary were
government interventions, avoiding concentration and abuse of marke indus
power and thus preserving the competitive structure of markets. 1
element is referred to as
competition/antitrust law. comp
The aim of competition policy in the economy of a country 1is to
mode=
ensure fair competition in the market
by way of regulatory mechanis b e Indus
It is not intended to create restrictions or
constrictions that may o f techn
detrimental to the growth of the indu=
market domination
society.
Its focus is the avoidance
by handful through different modes such as Pi
rice

a
apprc
fixing or market sharing cartels and undue concentration. It
also t the
at promoting
competition as a means of market response and cos partic
from
and
10. Pradeep S. Mehta and Manish Agarwal, "Time for Functional Competitio
econc
Law in India". Cuts Centre for lation
Competition, Investment and use o r A b u s i n
11. Alice Pham,
"Competition law and Intellectual Property: Controlling Abuse
o in 19
Control", Cuts International.
 Introduction 1.9
sO as to ensure ettective and efficient allocation of resources
p r e f

ote an incentive for the economy for innovation'. Companies

and to create

and to
can monopolise
lise their technologies for a limited period of time, but they
the market.
annot maintain a monopoly
over

The central economic goal of the Competition Policy is the

servation and promotion of the competitive process. It is a symbolic
nTOceSs, which encourages efficiency in the productiorn and allocation
orocess, which

of goods
and services over a period of time through its effects on
innovation and adjustment to technological change. In conditions of
effective competition, competitors will be having equal opportunities
to compete for their own economic interest and therefore the quality
resource deployment will be given top priority
of their outputs and
succeed in the market by meeting consumerTs'
in order to sustain and
demand at the lowest possible cost.
Competition Policy should be an integral part of a country's
who will
development plan as it is beneficial to
consumers
economic
pay lower prices for better quality products.

History of Competition Policy in India

economic development since
India pursued the strategy of planned
the early 1950s. In the industrial sector, the main objective of the strategy
view to achieve
Was the development of a broad industrial base with a

speedy self-reliance and promise social justice.

of the
Under the Industrial Policy, the commanding heights
to be in the public sector. The Industrial Development
Onomy were
Restrictive Tradde
Act, 1951 and the Monopolies and
Kegulation State the comprehensive
Practices Act 1969 inter alia, gave
(MRTPA), investments. There
the direction, pattern and quantum of
Over concessions in favour
of small scale
re also extensive reservations and
industries. attention on
ne Industrial Policy Statement of 1980 focused and
upgradation
technology
competition
mo n in domestic market,
were taken
o n higher
scale in 1991. The
iernisation. The reforms the attainment of
ndustrial Policy Statement of 1991 emphasised It liberalised
competitiveness.
technolo dynamism and
international
of prior goveernment
with requirement
ng,dispensing undertakings,
registered under
Pproval
approval before effecting expansion
of retorms,
economic
the
MRTPA. The common tnre
common thread running through the and sector
The been to free
the economy
ularly those since 1991, has to
determine

from governmental controls and allow market forces

ce

economic activity. Commerce

18
by the Union Ministry of
Group
established
interaction
between trade and
n1997PErt the
S u d y issues
relating to
 Competition Law
1.10
practices and effect o
competition policy, including anti-competitivehad
and amalgamations on competition
suggested the na
mergers
for a new competition law.
on competition law and polic
Subsequently, a high level committee
which was known as the 'Raghavan Committee, was set up in 1990
to recommend a suitable legislation framework relating to competition
law and policy. The Committee report stressed the need to harmonise
conflict between competition policy and other government policies. The
has its own limitations and
report also highlighted that the MRTPA
fails to satisfy all the requirements of competition law. The Committee
recommended enactment of a new competition act and an enforcement
authority. The Committee observed that "Competition law must emerge
out of a National Competition Policy, which must be evolved to servve
the basic goals of economic microform by building a competitive market
economy.
A need for drafting NCP was recognised in the mid-term appraisal of
the Ninth Plan. It was emphasised in the plan that the NCP is important
in protecting and promoting consumer's interest and society's welfare
and improve competitiveness of domestic industry.
During the mid-term appraisal of the Tenth Plarn, it was recognized
that there is an urgent need for articulating a National Competition
Policy (NCP) in India, which should fully reflect the national resolve
to accelerate economic growth, improve both the quality of life of the
people of the country, national image and self-esteem. It further noted
that NCP would bring about a culture amongst economic
competition
entities to maximize economic efficiency, protect consumer interests and
improve international competitiveness.
The Planning Commission in the context of the formulation
Eleventh Plan, constituted
of
a
Working Group
Competition Policy. The
on
Working Group suggested a need for the Government to adopt a broaa
based, overarching and comprehensive NCP to
promote coherence in tn
reform process; establish uniform competition
principles across ditferer
sectors; and harmonise all other policies keeping in view the
dimensions.
competino
Finally in
2011, Government formulated a National
Policy, with a view to achieve highest sustainable levels Competino
of econom
growth, entrepreneurship, employment, higher standards of ivu
for citizens, protect economic rights for just,
sustainable economic and social equitable, inclusive a
promote economic
democracy and development,
support good governance towards ensuring inclusi
e

growth.
 Introduction 1.11
Relation between Competition Policy, Competition Law and Economic
DevelopmentQ.2

Although competition Law and competition policy are often used

sVnonymously but both are distinct concepts. The distinction between
these two terms as per the Tariff Commission of the Republic of
Philippines is as follows12
Competition law refers to the framework of rules and regulations
designed to foster the competitive environment in a national economy,
it consists of measures intended to promote a more competitive
environment as well as enactments designed to prevent a reduction
in competition. Competition policy, on the other hand, broadly refers
to all laws, government policies and regulations aimed at establishing
competition and maintaining the same. It includes measures intended
to promote, advance and ensure competitive market conditions by the
removal of control, as well as to redress anti-competitive results of public
and private restrictive practices.
Thus, Competition law is a subset of competition policy. Besides
encompassing the law, competition policy includes sectoral regulatory
laws and the various government policies that enhance competition
and consumer welfare. Competition law is, therefore, quite narrow in
its scope, whereas competition policy is broad and comprehensive.
Competition law and Policy relates to matters of competition and
competitiveness so that goods and services are sold at competitive
prices and the consumers have a choice as to the products they wish to
purchase. Competition policy is a comprehensive approach which shall
guide all other policies of the government not just at the level of the
central government but also at the level of the State governments and
at the level of other instrumentalities of the state to bring in efficiency
in the economy by correcting systemic disorders. On the other hand the
competition law is a part of the competition policy framework which has
een specifically legislated to regulate the anti-competitive behaviour of
tne firms thereby investigating and punishing such negative behaviour
y the participants of the market. The goal of competition law and policy
can be equated with that of political democracy i.e. maximisation of
Pubic welfare. Many times, competition law is regarded as the economic
ldcet of the democratic structure. The
Supreme Court in Competition
4Discuss the relation between competition law and competition policy. Elaborate the
relation between competition law, competition policy and economic development.
[D.U, LL.B., 20171
Republic of the Philippines, Tariff Commission Compaction Law and Policy
AVailable at <http//www.tariffcommission.gov.ph/compelit html> (last visited on
13.08.2017
Cuts
International, "Competition and Regulation in ndia, 2007"
1.12 Competition Law

Commission of India v. Steel Authority of India Limited and Others 4

observed as follows:
"Most countries in the world have enacted competition laws
to protect their free market economies, an economic system in
which the allocatiorn of resources is determined solely by supply
and demand. The rationale of free market economy is that the
competitive offers of different suppliers allow the buyers to
make the best purchase. The motivation of each participant in a
free market economy is 'to maximise self-interest but the result
is favourable to society. As Adam Smith observed: "there is an
invisible hand at work to take care of this".
It is said that in the globalization era,
competition is necessary
for developing countries to obtain the benefits promised by trade
liberalization and privatization. Further, it is widely accepted that
competition' contributes to economic development, because competition,
stimulates increased efficiency in innovation, production and resource
use, which in turn, leads to enterprise development and increased
aggregate welfare. Further, competitive markets provide macroeconomic
benefits. Competition provides enterprises with incentives to adjust to
internal and external shocks and these individual
adjustments help
reduce the cost of such shocks to the macro
economy.
Draft National Competition 2011Policy,
In 2011, the (Indian) Ministry of Corporate Affairs constituted a
Committee for framing National
took
a
Corporation Policy. This Committee
feed back from various stakeholders, including chambers of industries,
corporations, law firms, and members of civil society and subsequently
issued a draft National Competition Policy Statement, which aimed at
integrating principles of competition in various economic policies of the
government and, thereby, promoting a
competitive market structure u
the economy.
The Draft Policy also aimed at
promoting good
bringing in greater transparency and accountability. It governance y
where a separate contemplated tna
regulatory arrangement
the functioning of the concerned
is set up in different
sectol
sectoral regulator should be
with the principles competition as far as possible and there consisten
of
should D
an
appropriate coordination mechanism between the CCI and
regulators to avoid overlap in interpretation of sector
concerns. Further, any deviation from competition relattion
the principles of
should be made only to meet desirable compe
social or other national
which should be
clearly objectuv
spelled out. The following initiatives
proposed as part of the Draft Policy:
14. (2010) 10 SCC 744.
15. Amit Singh, "Competition Law and
Policy", Indian Context.
 Introduction 1.13

institutional separation between policy making, operations, and

regulation;
a review of statutes, and regulations of the
existing policies,
Government (which may restrict or undermine competition)
from a competition perspective with a view to removing or

minimizing their competition-restricting effects;

a a procedure for making a competition impact assessment of

proposed policy, law, and regulations before they are finalized;

"competitive neutrality," such as adoption of policies which
establish a "level playing field" where government businesses
compete with private sector;
national, regional, and international cooperation in the field of
competition policy enforcement and advocacy; and
i n order to ensure effective competition, third party access
to essential facilities in the infrastructure sector, owned by a
dominant enterprise, to be provided on reasonable and fair terms.
While the Draft Policy has not yet been put into effect, its mandate
and intent rings loud and clear and any analysis/operation of the
regulatory framework governing a particular sector will implicitly
involve a competition law analysis of the sector with the end goal being8
a pro-competitive structure leading to consumer welfare.

Object/Objectives of Competition Law/Act

The preamble of the Act enumerates the objectives of the Act as follows:
) To prevent practices living adverse effect on competition;
(i) To promote and sustain competition in the markets;
(ii) To protect the interest of consumers;
iv) To ensure freedom of trade carried on by other participants in
the markets in India.
In CCI v. Steel Authority of India, (2010) 10 SCC 744, the Supreme
Court observed as follows:-
As per the Statements of Objects and Reasons, this enactment
IS India's response to the opening up of its economy, removing
control and resorting to liberalization. The natural corollary of this
is that the Indian market should be geared to face competition
within the and Bill sought to ensure
rom country outside. The
fair competition in India by prohibiting trade practices which cause
appreciable adverse effect on the competition in market within
India and for this purpose establishment of a quasi-judicial body
Was considered essential. The other object was to curb the negative
aspects of competition through such a body namely, the 'Competition
Commission of India' (for short. the Commission') which has the
Power to perform different kinds of functions, including passing
 1.14
Competition Law
of interim orders and
awarding compensation and imposino
penalty. (The Director General
even

the Act is appointed under Section 16(1) of

specialized
a
investigating wing of the
short,the establishment of the Commission Commission.
and enactment of
In
Act was aimed at the
preventing practices having adverse effect
competition, to
protect the interest of the consumer and on
to
fair trade carried out
by other participants in the market inensure
and for matters connected India
In short, the
therewith and incidental thereto.
Competition Act seeks to ensure fair competition in India
by prohibiting trade
practices which cause appreciable adverse effect on
competition in markets in India, promote and sustain
markets in India, promote and sustain competition in
the interests of consumers and competition in markets,
protect Histo
ensure freedom of trade carried on TH
other participants in markets in by
markets.16 Unitec
Further, the main objective of competition law is to
promote
efficiency using competition as one of the means of assisting theeconomic
creation
growi
where
of market responsive to consumer preferences. The stocks-
advantages of perfect
competition are threefold. First, allocative efficiency, which ensures the with
effective allocation of resources; second, or ot-
productive
ensures that costs of production are kept at a minimum and which
third,
efficiency,
forme
ynamic efficiency, which promotes innovative practices These factors by 1890,
and large have been accepted all over the world as the trade,
for effective
guiding principles
implementation
of competition law." to ma
Thus, the main objective of the Commission is to promote and which
Sustain competition in the market and to make markets more responsive progr
to consumer preferences. To achieve its objective, the Competition the er
Commission of India endeavours to do the following:- Trade
(a) Make the markets work for the benefit and welfare of consumers Unite
Ensure fair and healthy competition in economic activities in string
(b legisl=
the country for faster and inclusive growth and developmen
were
of economy.
tne
ident
(c) Implement competition policies aim to effectuate
with an a do
most efficient utilization of economic resources. of pr
(d) Develop and nurture effective relations and interactions wI Comp
sectoral regulators laws in tandem with the competition law
(e) Effectively carry out competition advocacy and spread e 1.
information on benefits of competition among all stakehol
2.
to establish and nurture competition culture in Indian econony
3.

ction
S
16. Competition
D.P. Mittal, Taxmann's Comprehensive
Law and Practice A n
Wise Commentary on Law relating to competition Act, 36 (Taxmann ub
(P.) Ltd. New Delhi, 2011).
17, CCI, Annual Report 2011-12, p. 2.
 Chapter 7
COMPETITION ADVOCACY AND
LENIENCY PROGRAMME
COMPETITION ADVOCACY IN INDIA9. 10
The concept of competition advocacy is of recent origin having
gained its acceptance and prominence in developed and developing
economies with the gradual opening up of the erstwhile state monopolies
in sectors such as telecom, electricity, oil, etc. to market economy and
when the beneficial efforts of free competition started emerging
from
these sectors. In most countries, the concept was linked automatically
to the successful implementation of the competition policy coupled with
enforcement of the competition law.
The objective of competition policy is to promote efficiency and
maximize welfare, i.e., to ensure to consumers low prices and high
quality, and to assure fairness-a level playing field for the entrepreneurs
who provide competition.- Elements of such a policy as pointed out in
the Raghavan's Report on Competition Law, are two
1. First, it involves putting in place a set of policies that enhance
competition in local and national markets. These would include
a liberalized trade policy, relaxed foreign investment and
ownership requirements and economic deregulation.
2. The second is, legislation designed to prevent arnti-competitive
business practices and unnecessary Government intervention
competition law.
Raghavan's Report3 further stated as follows:
"The mandate of the Competition Commission of India (CCI)
needs to extend beyond merely enforcing the Competition Law.
9.1. Discuss the concept of 'competition
2002.
advocacy as envisaged in the Competition Act,
ID.U, LL.B., 2017, 2019]
1. Divakar Babu, "Advocacy Role of
Competition Commission of India: An Appraisal", The
Charted Accountant, May 2012.
2. D.P. Mittal, "Competition Law and Practice 3rd edn, pp. 598-599.
3. Report of the High Level Committee on Competition Policy and Competition Law,
2000.
7.1
 Competition Law
7.2 Competition Advocacy and Leniency Programme
It needs to participate more broadly in the formulation f 7.3
affect the abe Government. The opinion is to be
given within sixty days
country's economic policies,which
may adversely competiti
market structure, business conduct and economic performance tive reference.
of the
The
cCI, therefore, needs to assume the role of competition advocat However, the Act falls short of enabling
India (CCI) from giving its opinion on
Competition Commission of
acting proactively to bring about Governmental policies that e ,
lower competition policy on its own, i.e.
barriers to entry, promote deregulation and trade liberalizati without any reference from the government. And what is more
and promote competition in the market place. There is a diro is that the opinion given by the Commission important
under sub-section (1) of
Section 49 1S not
relationshipbetween competition advocacy and enforcement of binding upon the Central Government or the State
Competition Law. The aim of competition advocacy is to fos Government, as the case
may be, in formulating such policy.
condition that will lead to a competitive market
more struch The Commission has also been
assigned the role to take prescribed
and business behaviour without the direct intervention of tho Suitable measures for the
Competition Law Authority, namely the CC ne following:
(a) promotion of competition advocacy,
The Report doesn't stop here but proceeds on and states
that (b) creating awareness about the competition, and
a successful competition advocacy can be viewed in of terms the
following: (c) imparting training about competition issues.
1. CCI must develop relationship with the Ministries and The mandate of the Commission, therefore, extends
beyond merely
Departments of the Government, regulatory agencies and other enforcing the competition law.
bodies that formulate and administer
policies
and supply positions in various markets. Such affecting demand
As the English maxim goes, "Prevention is better than cure", so
facilitate communication and
a search for
relationships will advocacy programmes not only reduce the incidence of anti-competitive
alternatives that are practices but also substantially reduces the need for enforcement action,
less harmful to competition and consumer
welfare. thus saving cost, which is first reflection of a competitive regime.
2. CCI should
encourage debate on
better and more informed economiccompetition
and promote a Advocacy is a perennial endeavour. The competition advocacy needs
decision making. to focus on:
3.
Competition advocacy must be open and transparent to i) elimination of unnecessary complex, time consuming, repetitive
the integrity and
capability of the CCI. When safeguard and avoidable regulations,
required, CCI should publish news releases confidentiality is
and explaining why, (i) to inhitbit growth of unnecessary new regulations which increase
the workload of one and all and at the same time serve no useful
4.
Competition advocacy can be enhanced by the CCI
good media relations and explaining the role and establishing purpose,
1s designed to accomplish legitimate
importance of (i) to ensure that Regulation
Competition Policy/Law as an integral part of the Governmene's regulatory objective.
economic framework.5
complex and difficult and
Competition advocacy is
a process,
Section 49 of
Competition Act, 2002 contains provisions for outright victories are relatively less.
Constant vigilance and constant
advocacy by the Commission. It provides that the competition as will
always be pressures from
take suitable
measures, for the Commission shall efforts are therefore necessary, tnere
creating awareness and imparting promotion of the competition advocacy the sectors having nterests ana
vested
their allies in the regulatory

training ani-competiive activities and

give its opinion on a reterenceabout competition issues
ola
agencies. They will preter mantdln
It shall also to

dtu Such lobbyist need to be advised

on the
possible effect of the competition policyhaving been made to t to resist new competition poucies
a
branch of a tree which
they are riding".
laws related to (including review of
competition) which is in formulation Kalidas isode "Cutting required
would be
d to adopt a
patient but systematic
4. Paragraph 6.4.7 of the
by the Central or efore, CCI o p e n t i o n through competition
and Report of the High Level
Lommittee approach to nurture the spin
Competition Law, 2000. on
Competition Policy
5. Paragraph 6.4.8 of the Report of the High Level advocacy. directly linked ith its acceptability
law is dire
and Competition Law, 2000. Committee on of
i
any
t is applicable or who are affected by it.
6. Section 49(3): The npetition Policy The success

whom it is applicable
Competition Act, 2002. the people
to
of the b ot comneti
e n e t i t s of
benetits competition to one and all is,
by of the
Teaching and preaching
7.4 Competition Law

therefore, imperative to secure and procure "will to abide" from th

Competition Advocacy and Leniency Programm
General (Central Excise),
stakeholders. Directorate

Ceneral Financial
75
It is important for an effective competition advocacy in India that a
Directorate

(International
(Serious Fraud Investigation). Taxation) and Intelligence Unit
clear distinction should be made between the enforcement and advocacv Directorate General
Transparency enhances the effectiveness of advocacy by building publie dvocacy programme in
Academic Institutions: The
of CCI would a relatively
being a relativel new Law,
support. Credibility and political neutrality help in Law
advocacy programmes wereCompetition
acceptance of its opinion and suggestions. in various institu

about the Competition

including judicial academies to conducted
Act, role and create awareness
ADVOCACY INITIATIVES BY functions of CCI.
COMPETITION COMMISSION OF INDIA dvocacy programmes
Deaoramme,
in Economic
the Commission Research: Under the ambit
Advocacy with Central Government: The Commission under its
Or daton (IDF), Gurgaon, Haryana, toentrusts to the
India
advocacy mandate is making definitive forays in advocating competition Found
set up a Development
Dedicated
assessment of Central Government's rules, regulations and policies so
Jnit. An agreement has been executed
between Research
CCI and IDF to set
as to inhibit the potential harm they may cause to competition and
dhe dedicated Research Unit (DRU) at IDF on 22.10.2012. up
overall economic interest of the country. During the year, CCI organises Competition related Sectorial/Regulatory
preliminary meetings with key policy makers of Ministry of Surface Market Studiesand research impact assessment;
projects carried out by the Commission:
Transport& Highways, Department of Pharmaceuticals, Defence Research Tn pursuance of the mandate under section 49, sub-section
3 of the
and Development Organisation, Department of Higher Education and Competition Act, 2002, the Competition Commission
of India (CCI)
Ministry of Health & Family Welfare. ninued to undertake projects and programmes for the
Advocacy with Trade Associations: CCI continued the initiatives
promotion of
competition advocacy, creating awareness and imparting training on the
with trade associations to generate awareness among trade associations competition related issues.
and their members to adopt competition compliance programme (CCP).
International Engagements
This will not only help to avoid penalties and damage to reputation,
In the contemporary era of
but also inculcate good governance in their associations and respective globalization, cooperation and
constituents. During the year, CCI organises workshops for the executive
knowledge sharing among nations and international organizations has
committee of four trade associations viz., All India Organisation of
become indispensable. Competition regulatory bodies thus cannot be an
exception. In the global competition
Chemist& Druggist (AIOCD), Automotive Component Manufacturers fraternity CCI has assumed a place
of reckoning by virtue of its activities and action as per the mandate of
Association of India (ACMA), All India Glass Manufacturer's
the Competition Act, 2002.
Federation (AIGMF) and Automotive Tyre Manufacturers' Association
CC has regularly been participating in various workshops,
(ATMA).
Advocacy with States:CCI claims to engage with the States to generate conterences, seminars meetings etc. organised by International
awareness among their key policy-makers about the provisions of the Act. Competition bodies viz. ICN, OECD, Global Competition Forum,
During the year, two workshops were organized for the key functionaries UNCTAD, BRICS etc. Exposures at such platforms provides vital
inkages and inputs and help developing synergies for participating
of Government of NCT of Delhi to sensitize them about the need to
of countries.
adopt competition friendly policies and comply with the provisions Since CCI has an extra territorial mandate it has been an endeavor
the Act as the all enterprises irrespective of their
Act is applicable to
to strengthen the cooperation with various mature compeition
ownership. jurisdictions. In this direction MOUs with Russian and Amencan
to
Advocacy meetings with view
Investigative Agencies:
build synergy, CCI organized an interactive meeting with investigative
With a
Anti-Trust Agencies viz. Federal Antimonopoly Service and Federal
rade Commission respectively were signed. Besides CCI also actvely
agencies, viz., Directorate General of Income Tax (Investigation),
pated in the trade negotiations on Competition Chapter in kre
tor Broad Based
Agreements. CCI is also involved in negotiations
7. Sandeep Kapoor, "Effectioe Competition Advocacy: Apre-requisitefor Binding Competinon T and Union as well
Investment Agreements (BTLA) with European
Culture". ac
4S
European Free Trade Association (EFTA).
 Competition Advocacy and Leniency
7.6 Competition Law Programme 7.7
with an increasingly globalised market
Coordination with other Competition Regulators fficult to tackle a
dingly diffic place, the CCI may find it
The CCI is also looking to increase interaction and cooperation
exce
competition
actio offirms located overseas at the
problem which arises from
with global competition law regulators. The CCI signed an antitrust expense of jeopardising diplomatic
relations
between countries.
memorandum of understanding ("MOU) with the Federal Antimonopoly
Earther, given that corporate actions like
Service (Russia) on December 16, 2011. The U.S. Federal Trade
aduce
acquisitions and mergers
different synergies in different countries,
Commission and the Department of Justice also signed a MOU with there is a strong
P that a transaction produces
the Government of India, Ministry of Corporate Affairs, and the CCI to ch
lators
conflicting
views between the
promote increased cooperation and communication among competition
competition regulat having jurisdiction. Implementation of its orders
in such Istances will be challenging Therefore Competition Act,
agencies in both countries. On June 3, 2013, the CCI signed a similar
MOU with the Australian Consumer and Competition Commission. The
nn02 under Section 32 has provided for extraterritorial
jurisdiction to
CCI and also empowers CCI to enter into bilateral/multilateral
CCI also signed an MOU with the Directorate General for Competition
aoreements with other competition regulators under Section 18 of the
of the European Commission (DG, Competition) on Cooperation in the
field of competition laws Act.
In addition to these MOUs, the CCI is actively engaging with Acts taking place outside India but having effect on Competition
several competition law authorities from the United Kingdom, Japan, in India [Section 32]
Korea, and others to enter into arrangements for cooperation in the Section 32 of the Competition Act, 2002 reads as follows
field of competition law. This greater coordination between the CCI The Commission shall, notwithstanding that
and global competition regulators will significantly impact global cartel
(a) an agreement referred to in section 3 has been entered outside
investigations and cross-border M&A merger control notifications. India; or
Foreign Jurisdiction of CCI
Or (b) any party to such agreement is outside India; or

Extra-Territorial Jurisdiction of CCI (c) any enterprise abusing the dominant position is outside India;
Or or

Effects Doctrine in India (d) a combination has taken place outside India; or
[Section 321 (e) any party to combination is outside India; or
established to
Competition Commission of India has been
The ( any other matter or practice or action arising out of such
prevent practices having adverse effect
o n competition, promote and
to

sustain competition in markets, to protect the interests of consumers

agreement or dominant position or combinatiorn is outside
in India,
and to e n s u r e freedom of trade carried on by other participants
markets in India, and for matters connected therewith or incidental have power to inquire in accordance with the provisions contained
thereto. The competition laws and authorities across the globe primarily in sections 19, 20, 26, 29 and 30 of the Act into such agreement or
abuse ot abuse of dominant position or combination if such agreement or
prohibit three activities namely anti-competitive agreements, dominant position or combination has, or is likely to have, an appreciable
dominant position by enterprises, and regulate combinations, consisting
to ensure that adverse effect on competition in the relevant market in India and pass
of mergers, amalgamations and acquisitions with a view
there is no adverse effect on competition and markets. Such orders as it may deem fit in accordance with the provisions of
economic this Act.
In the era of globalisation and liberalisation, the effects of
limits. There
actions are not restricted by the political or geographical Section 32 of the Competition Act, 2002 is based on what is commonly
that any firm having any agreement beyond the limits to extend
may be possibility
business environment of that country nown as the "effects doctrine", which empowers regulations
of one country, adversely affect the urisdiction beyond the "principle of territoriality",
due to the anti-competitive effects of the agrement/combination.
A Comparative
Shankarlal Yadav, "Effects Doctrine & Competition Regulators 9.
8.
Study". International Journal of Commerce, Business and Management (ICJEM) Kartik Maheshwari and Simone Reis, "Extra Territorial Application
Competition Act and its Impact", Competition Law Reports, January 2014
o
No. 1, Feburary 2014.
ISBN 2319-2828, Vol. 3,
 Competition Advocacy and Leniency Programme 7.9
7.8 Competition Law form an export cartel by virtue of
ands
other to
togeth membership
Section 32 of Competition Act, 2002 them. According to the
greement a m o r

complainant, ANSAC
Commission of India (CC) to inquire into empowers Competiti cartel Amercian ash soda producers and was likely to affect
of Am
any agreemernt or ab as n c e of prices at reasonable and realistic levels in India and with
of dominant position or combinatio if such abuse
agreement
was

naintenance
or
position or combination that has, or is likely to have, an
apm ominan view to adverse ffect the local production and availability of the
adverse effect on competition in the relevant market in sodaa s h . 1 h e MRTP mmission instituted an enquiry and passed an
such orders as it may deem it in accordance with the
India and ciable odainiunction which was subsequently confirmed by it, directing
provisions
Act. the intnot to
ANSACnot indulge
in the practice of cartelisation by soda
exporting
The power has been coupled along with the dia in the form of cartel directly or indirectly.
power to toIndia
enquiry as well the procedure tor investigation under sections nduct Gimultaneously, separate petition, the All India Float Glass
in a
26, 29 and 30 of the Act, which lays down the power as
19 20,
well as acturers' (AIFGMA) (Haridas Exports case) filed a
Association

procedure to be followed by the CCI in its inquiry into any alleoaethe Manu
somewh lar complaint against three Indonesian companies. The
similar

anti-competitive agreements or any abuse ot dominant positionged MRTP Commission instituted an enquiry and passed an ad interim
any acquisition or
acquiring of control or merger or amalgamationor iniunction which was subsequently confirmed by it.
and inquire into whether such an
caused is
agreement/combination hac Aggrieved by the order passed by the MRTP Commission, both cases
or likely to cause an
apprecable adverseeffect on
competition to the Supreme Court, the Appellants being ANSAC in the
in India. went in appeal
case, and Haridas Exports in the second case. TheSupreme Court of
Keeping in mind the shortcomings of extraterritorial
Arst the grounds
cases and set aside both the injunctions
and the hiccups involved in the enforcements of jurisdiction India clubbed both
In the case of the AIFGMA,
on

private international hat the MRTP

Commission lacked jurisdiction.
law, section 18 of the Act also empower the CCI to enter into no extra-territorial operation, and the
memorandum or arrangement with the prior approval of the
an the Court held
the MRTP Act had

Central with respect to a restrictive trade

Government, with any agency of any effects doctrine became applicable only
toreign country in order to were imported into India. Whereas in the
discharge its duty under the provision of this Act."10 practice (RTF) after the goods
ANSAC case theCourt ruled that the MRTP Commission's reach could
Effects Doctrine in India not extend to the formation of a foreign cartel unless a member of the
The "effects doctrine" is a product of a judicial intervention established cartel carries out business in India.
in the case of US v. Aluminum Company of America, 148 F. 2d 416
Therefore, to overcome this shortcoming under the MRTP Act,
popularly known as the "Alcoa case" where the U.S. Court of Appeals in the
it appears that section 32 has been categorically incarporated
for the Second Circuit held "that any State may the basis of
impose liabilities, even Act allowing it to exercise extraterritorial jurisdiction on
upon persons not within its allegiance, for conduct outside its borders the effects doctrine, thus removing the restriction which prohibited
that has consequences within its borders" and thus laid down or set out the MRTP Commission to act in the Haridas Case. Therefore, CCI
a test of intended and actual effects on commerce within the US that had similar situation.
now has power to take action against a foreign entity in a
to be in that US jurisdiction be asserted over the foreign
satisfied order
company. The court held a Canadian corporation in violation of Sherman Leniency Programmell
Leniency programme is a type of whistle-blower protection, i.e.,
an
Act for agreeing with European aluminum producers of the world to
official system of offering lenient treatment to a cartel member who
allocate
world markets and not supply to the American Markets. The
effects doctrine was given statutory recognition in the US in 1994 by the Teports to the Commission about the cartel. It is a protection to those who
International Antitrust Enforcement Assistance Act. Come forward and submit information honestly, who would otherwise
have to face stringent action by the Commission if existence of a cartel
The concept of "Effects Doctrine" was first raised in India when
is detected. Parties availing the leniency programme are rewarded by
the Alkali Manufacturers Association of India filed a complaint and
tor their
also an application for grant of temporary injunction before the MRI a reduction of or complete amnesty from penalty in exchange
help in discovering the cartel.
Commission alleging that American Natural Soda Ash Corporation
11. Fair
(ANSAC), consisting of six producer of natural soda ash, had joined Play, Volume 13, pg. 23-24.
.Write short note on Leniency ID.U, LL.B, 2019)
Programme.
10. Ibid.
 Competition Adv acy and
7.10 Competition Law Leniency
Programme 7.11
the first to make vital
disclosure
and neitherestablishing
Section 46 of the Act, provides for leniency provisions. To effectuate of Section 3 of the Act contravention
the leniency programme, the Commission has made Competition Director General had sufficient the Commission nor the
Commission of India (Lesser Penalty) Regulations, 2009. contravention. evidence to establish such a
Conditions for Leniency Benefit of reduction in
The applicant must:
penalty upto or equal to 100% will only
be considered, if at the time
of the
application,
no other
by the Commission. applicant
has been granted such benefit
provide the information before the receipt of the report of
investigation directed under section 26 of the Act The second or third
be applicant in the priority status may also
provide vital disclosure in respect of violation under section 3 granted benefit of reduction in
penalty upto 50% and 30%
of the Act. Vital disclosure means full and true disclosure of respectively of the full leviable penalty
by submitting evidence, which provide making added
on a disclosure
information or evidence by the applicant to the Commission,
to the alreadyavailable
significant value
which is sufficient to enable the Commission to form a prima evidence with the Commission or
facie opinion about the existence of a cartel or which helps to Director General for establishing the contravention.
establish the contravention of the provisions of Section 3; Procedure for Lesser Penalty
cease to further participate in the cartel from the time of its The applicant can make an
disclosure unless otherwise directed by the Commission;
application containing information
specified in the Schedule to the Lesser Penalty Regulations either
provide all relevant information, documents and evidence, as orally, or through e-mail or fax to the designated authority
may be required by the Commission; (Secretary of the Commission).
co-operate genuinely, fully, continuously and expeditiously The designated authority shall within 3 working days put up
throughout the investigation and other proceedings before the the matter before the Commission for the consideration.
Commission; and The Commission shall mark the priority status of the applicant
not conceal, destroy, manipulate or remove the relevant and the designated authority shall convey the same to the
documents in any manner, which may contribute to the applicant. However, mere acknowledgement shall not entitle
establishment of a cartel. the applicant for grant of lesser penalty.
The reduction in monetary penalty will depend upon following - If the application and necessary documents are not received

situations: within a period days of the first contract or such

of 15 further
the stage at which the applicant comes forward with the period as extended
by the Commission, the applicant may forfeit
its claim for priority status and the benefit of grant of lesser
disclosure
the evidence already in possession of the Commission; penalty.
The date and time of receipt of the application by the
Commission
the quality of the information provided by the applicant; and
shall be the date and time as recorded by the designated
the entire facts and circumstances of the case.
authority.
Quantum of Immunity Unless the evidence submitted by
the first applicant has been
Benefit of reduction in penalty under Section 27 of the Act upto shall not be considered by the
evaluated, the next applicant
or equal to 100% is available to the applicant if it is the first to Commission.
make a vital disclosure enabling the Commission to form a prima Commission to reject
Lack of continuous cooperation entitles the to
facie opinion regarding the existence of a cartel which is alleged due opportunity of hearing
to have violated Section 3 of the Act and the Commission did
the application after providing
not, at the time of application, have sufficient evidence to form
that applicant. the
status of first applicant,
such an opinion. Atter rejection of the priority order of priority
for
shall move up in
Benefit of reduction in penalty upto or equal to 1 00% is available Subsequent applicants Commission.
status by the
even if the matter is under investigation but the applicant 1s 8rant of priority
7.12 Competition Law
mpetition Advoca and
The decision of the Commission of niency Programm
granting or rejecting the
application for lesser penalty shall be communicated to the rigging/collusive
3(1) read with bidding contravening the
7.13

applicant. Act.
Section 3(3)(c) and provisions of Section
3(3)(d) of the
Confidentiality (ii) Section 3(3) of the
Competition
The identity of the applicant and information obtained shall
be
Competition Act, 2002 lists certain
horizontal agreements
treated as confidential and will not be disclosed
except:-
including cartels, which are types toof
cause appreciable adverse
-

when the disclosure is required enterprise, which was or is effect on

competition presumed
in India. An
law; or by member
a
when the applicant has agreed to such disclosure in
reduction of penalty under Section of cartel, may apply fora

writing; and the Lesser 46 of

there has been a public disclosure by the applicant.
or
Penalty Regulations (LPR). the Competition Act
Gii) Section 46 of the
LEADING CASE lesser penalty on Competition Act
provides for
In Re: Cartelization
a member
of a cartel who imposition of
in respect of tenders floated and vital disclosure in makes
for
by Indian Railways respect of the cartel. Under thefull,Lesser
true
supply of Brushless DC Fans and Other Electrical Items Penalty Regulations, the first party to make
Suo Moto Case No. 03 of 2014 the CCI can benefit from a such disclosure to
if the reduction in
penalty of up
Facts: The Competition Commission of India
(CCI) initiated a s disclosure enables the CCI eitherto
to 100%,
moto inquiry based on an information
received by the Central Bureau of opinion regarding the existence of a cartel,(a) orfrom a establish
prima facie
Investigation, alleging cartelisation among three firms, namely Pyramid cartel in a matter under (b) a

(Opposite Party 1, in short OP1), Kanwar Electrical (Opposite Party 2, in have sufficient evidence investigation where the DG/CCI did not
to dothe time of the
so at
short OP2) and M/s Western Electric and
Trading
application.
Subsequent applicants for lesser penalty may also secure
Party 3, in short OP3). Based on this, the CCI passedCompany
a
prima
(Opposite
facie order
50% or 30% reductions,
respectively,
up to
if they disclose evidence
directing the Office of the Director General (DG) to investigate. Following that
provides significant added
value to the evidence
the receipt of a notice from the DG, already in
possession of the CCI/DG. Further, leniency applicant
under Section 46 of the
Pyramid filed a leniency application a
must
Competition Act read with the Competition co-operate until the completion of the proceedings before the
Commission of India (Lesser Penalty) CCI/DG, in order to secure a reduction in penalty.
Regulations, 2009 (Lesser Penalty
Regulations). In support of its leniency application, Pyramid argued that (iv) In this case, Pyramid (Opposite Party 1, in short OP1) the
it played a vital role in
explaining the functioning of the cartel to the Applicant, has filed an application under Section 46 of the
DG, and had marshalled cogent evidence which disclosed the modus
operandi of the cartel in detail, providing the "missing links" in the
Competition Act, read with Regulation 5 of the Lesser Penalty
DG's investigation. Regulations (Leniency Application) during the course of the
Pyramid also stated that it (a) would continue to investigation of the DG. The CCI noted that the Applicant was
co-operate with the CCI/DG; (b) had ceased further participation in the the first and only party to accept the existence of a cartel/
cartel; and (c) had not taken any steps to coerce others to bid rigging in tenders for railways for Brushless DC Fans.
in the cartel. In contrast to participate
Pyramid's
contested the existence of the cartel
stand, the other Opposite Parties The evidence submitted by OP 1 also supported the evidence
altogether. provided by CBI and played a significánt role in revealing the
Issue: Whether there was existence of the cartel? modus operandi of the cartel. The CCI noted that it was satisfied
with the cooperation offered by OPl and acknowledged that
Decision/Order:
the evidence and cooperation provided by it have strengthened
(i) The Competition Commission of India (CCI) after considering the CCI's investigation in establishing in existence of a cartel.
the investigation report and the supplementary report prepared
by the DG and the submissions of the However, more specifically, the CCI has stated in its order that
OPs, concluded that the at the time of submission of the Leniency Application. the CCI
(OPs) had shared the market
by way of allocation of tenders the CBI, on
of Indian already ossessed the email evidence furnished by
Railways
for Brushless DC fans
amongst themselves which the case was premised.
under an
agreement/arrangement and had indulged in bid reduction under the
(V) In terms of determining the appropriate
the CCI emphasised that
Lesser Penalty Regulations (LPR),
 Competition Law Competition Advocacacy and
Leniency Programm
7.14 7.15
of the cartel.
existence supply agreement, that the
first to disclose the parties had
although OP1 was
was submitted
at a later stage in the information in order to maintain price exchanged commercially sensitive
the Leniency Application
these factors, the CCI granted a dry cell batteries. parity
with respect to the sale of
investigation. Considering as opposed to

75% reduction in
the penalty to the Applicant, Issue: Whether the parties were involved in
of 100% that may otherwise
have been available of section 3 of the Act? price-fixing in violation
the maximum
to it. Decision: The CCI upheld the DG's findings and held that the
were involved in price-fixing
in violation of section 3 of parties
Comment the Act. The
Commission of India (CCI) has CCI observed
that the officers of the
Manufacturers regularly discussed
In this case, the Competition
in granting: a 75% reduction in andagreed when to0 give effect to the price increase during
exercised its discretion judiciously the personal
in mind the stage at which the meetings or meetings held under the aegis of the Association of India
penalty as opposed to 100%, bearing in its possession, at Cell Manufacturers (AIDCM). Eveready being the Dry
made, and the evidence market leader would
leniency application was This also signals that the take the lead by issuing press release to announce increase in
the time of receipt of. the leniency application. price of
its zinc-carbon dry cell batteries. Thereafter, Nippo and Panasonic would
to granting a greater reduction, including a
CCI would not be averse respond to it immediately with corresponding increase in price of their
where the leniency application enables the
complete waiver of penalty, about the cartel. batteries on the pretext of following the market leader.
CCI to form a prima facie opinion
Zinc Carbon In addition to the co-ordinated price increase, the CCI noted that
In Re: Cartelization in respect of the agreement amongst the Manufacturers also extended to include
Batteries Market in India,
Dry Cell monitoring and controlling of prices at all levels so as to exclude 'price
[Suo Moto Case No. 03 of 2014]
competition' in the entire distribution chain of zinc-carbon dry cell
on the basis of a leniency
Facts: The CCI initiated an investigation batteries. The rationale was that price competition in the distribution
application filed by Panasonic Corporation, Japan (Panasonic Japan) chain would have rendered the price co-ordination agreement between
on behalf of itself,
Panasonic India and their respective office-bearers the Manufactures ineffective.
The leniency applicant
and employees under the Leniency Regulations. The CCI also noted that whenever deviations were observed or
submitted that Eveready Industries India Limited (Eveready), Indo
in the business of inter the Manufacturers faced problem in the actual implementation of the
National Limited (Nippo) and Panasonic, enaged
cell batteries, (collectively increased price in the market, corrective measures would be undertaken
alia manufacture and supply of zinc-carbon cry also regularly share
'manufactures'), had formed a cartel in violation of
the provisions of by the Manufacturers. Besides, the Manufacturers
rates, wholesale
section 3(3) read with section 3(1) of the Act;
Panasonic revealed that the amongst them information regarding operating margin also control
and
to raise the maximum office price etc. prevailing in various geographic areas
cartel was set up by the Manufacturers in 2013 of batteries. The
and thereby improve supply in the market to establish higherbased prices
retail price of the zinc-carbon dry cell batteries geographic areas
realizations. Further, it revealed that the top management and Manufactures also used to allocate market on
the was
meet and on and types of batteries.
employees of the manufacturers used to regularlymanufactureragree of zinc- Panasonic and Godrej have
the price increase, which was usually led by one
Based on the above, CCI found that in
the pretext conduct of price co-ordination,
carbon dry cell batteries and followed by the others under indulged in the anti-competitive section 3(3)(a) read with section 3(1)
stated that the Manufacturers of
of following the market leader. It was also Contravention of the provisions
channel/distribution partners
agreed not to push sales through their of the Act.
amongst themselves. Based on the factors, the CCI imposed a penalty
on
aggressively to price
avoid was
Considering all the relevant of
information provided by Panasonic in its leniency application, the CC the profit for each year
of corntinuance

of section 19 of the Panasonic India at 1.5 times and consequently

taking suo motu cognizance under the provisions the cartel. The CCI considered
the small size of Geep of
turnover tor the period
Director-General (DG) to cause an investigation into
Act, directed the 4% of its
of mposed a penalty at only w e r e in
the matter. The Director-General (DG) after examining the conduct of Panasonic India
and Geep who
evidence Contravention. The officers at 10%
companies were penalised
sufficient
Panasonic India and Geep, concluded that there was respective
their
in the form of e-mails and the terms and conditions
of the product charge of the affairs of three financial years.
Or their average income for the past
7.16
Competition Law
Grant of Leniency
The CCI noted that the
leniency application filed by Panasonic Japan
made true and vital disclosures, which
enabled the CCI to form a
facie opinion regarding the existence of the cartel. Further, the CCI prima
that Panasonic India noted
provided crucial evidence regarding the modus
operandi of the cartel and extended full and continuous
Taking into account all these factors, the CCI granted a 100%cooperation.
reduction
in penalty
imposed on Panasonic India and its directors, officers and
employees.
 Chapter8
EMERGING TRENDS IN
COMPETITION LAW
(NATIONAL AND INTERNATIONAL)
Intellectual Property Rights and Competition Law1
Intellectual Property Rights (IPRs) and Competition Law have
evolved as two separate systems of law each seeking to protect its
subject. However, there is an interesting point between the two as one
bestows monopoly rights and the other condemns the same. In recent
years, competition authorities and courts have prohibited conduct
by intellectual property owners which was otherwise lawful under
intellectual property rights legislation, because it contravened the rules
of competition law.
Competition law operates towards protection of practices, whichh
help in furtherance of the smooth functioning of the markets.2 On the
other hand, IPRs operate to give exclusive rights over a
broadly it can be inferred that intellectual property property.
Thus,
seeks to protect
individual interest and competition protects the market. The non-
excludable character of intellectual property that causes the deadlock
between the two essentially creates the interface and connection between
IPRs and competition law. Thus, this tussle boils down to the conflict
between the IPR law and the competition law, which needs to be
amicably resolved
However, there 'have been wide changes in both laws in the recent
times. On one hand, competition law is emerging as a law designed
Q. 1. How can intellectual property right holders exercise their exclusive rights within the
confines of competition law, given that they are virtually monopolies? Discuss.
[D.U., LL.B., 20171
1. Rudolf Peritz, edited by Steven D. Anderman, "The lnterface between Intellectual
Property Rights and Competition Policy", Cambridge University Press, 2007.
2. K. Maskus, 'Competition Policy and Intellectual Property
Rights in Developing
Countries: Interests in Unilateral Initiatives and a WTO Agreement' (1999), at

http://siteresources.worldbank.org/DEC/Resources/847971251813753820/64157
39-1251814020192/maskus.pdf (Last accessed 1 March 2014).
3. W.R. Cornish, Intellectual Property, Sweet and Maxwell, 2003
4. Supra note 1, atp. 10.
8.1
8.2 Competition Law

for regulation of economic powers and on the other hand expansion

of IPR coverage to wide range of markets and products along with the
emergence of IPR driven markets in various jurisdictions is taking place.
Thus, the latest trend and dispute has shifted from conflict between
the domain of IPRs and competition law to the exercise of rights in
intellectual property affecting competition law. This flows from the fact
that both are intended towards furthering innovation and consumer
welfare.7 But their direct objectives seem to be in conflict. Whereas
intellectual property focuses on the reward of inventive effort and the
inventor's incentives to innovate by conferring an exclusive right on the
use of the invention, competition law emphasises the dissemination of
innovation by ensuring diffusion and access. IP regime aims at achieving
economic efficiency in the short run by conferring limited monopoly
rights on the IP owners. The competition regime aims at ensuring

efficiencyin the long

run by combatinganticompetitive practice and
dominant
by regulating the position.
From the competition point of view, IPR may be viewed
as a means

to reduce competition. since the IPR gives the

holder of the right, an
the product in
exclusive monopoly while hindering others from offering
the market. Also IPR may be used as a weapon to restrict competition
between licensees of a particular product."
The Emerging Jurisprudence: IP versus Competition Law
and IPR is not new and
The tension between competition policy
since the Statute of Monopolies,
has been a bone of contention ever
but permitted
1624 was enacted in England. It prohibited monopolies, incentivize
Intellectual property rights protect, and
patent monopolies. over the invention for a
limited
innovation along with a monopoly right
law protects and
of time. On the other hand, competition
period
in the market. The aim of the competition
prevents unfair competition in the market by
is to e n s u r e fair competition
policy in a country It is not intended to create
restrictions
mechanisms.
way of regulatory the society.
detrimental to the growth of
constraints that may be
or
limited period of
their technologies for a
monopolize
Companies can
the market. Intellectual
time, but they cannot maintain a monopoly over

Oxford University Press, 2005.

5. Richard Whish, Competition Law, Antitrust Analysis
in
'Some Economic Aspects of
Schmalensee,
6. D. Evans and R. books/
Industries' (2001), at http://www.nber.org/
Dynamically Competitive
accessed 2 March 2014).
innovation2/evans5-1-01.pdf (Last
Cases and Materials,
and Brenda Sufrin, EU Conpetition Law: Text,
7. Alison Jones (2006), Available at books.google
Online r e s o u r c e centre 789
Oxford Publications,
c o . i n / b o o k s ? i s b n = 0 1 9 9 5 7 2 7 3 9 , (Last
accessed 5 March 2014).
1576 (Fed Cir 1990).
v. Nintendo of
Am Inc. 897 F. 2d 1572,
8. Atari Games Corp. and Competition
between Intellectual Property
"The Inevitable Connection 2013.
9. K.D. Raju, Vol. 18, March,
and Iessons for India". JIPL
Law: Emerging Jurisprudence
 Trends in Law (National and International) 8.3
Emerging Competition
property protection per se is not abusive and ironically is only serving
its legitimate purpose,
namely, to create incentive for further innovation,
when it dominates the market. However, when companies refrain from
licensing their intellectual property to competitors, they undermine
the basic tenets of competition law as well as the spirit of intellectual
property protection.
To understand the difficulties in applying competition law and
intellectual property law, it is essential to look into the systems of various
countries, their practices and provisions as they deal with competition
and intellectual property. While developed countries like the US, adopted
legislations on competition much earlier and have been pursuing a new
agenda, newly-open economies like India are still experimenting with
the new legislations. There are lessons to be learned and experiences to
be shared.
Previously, patent protection and licensing activities were carried
out under the strict surveillance of competition law and patents were
considered monopolies.0 Later in the 1970s, a new series of anti-trust
laws emerged as a result of proper economic analysis of intellectual
property protection by scholars, like Posner. These laws recognized
that not all IPRs are monopolies but acknowledged that some may be,
in certain circumstances.
The increased protection along with increased incentives for R&<D
investmernts produced larger cumulative innovation in high technology
intensive sectors like software. Some of the huge companies capitalized
on this enhanced IPR protection scenario and utilized it for individual
market leadership. The recent Microsoft case revealed that the market
share of the Windows operating system was 94 per cent of all Intel
chip personal computers worldwide. It also revealed that the market
share of MS Word was 90 per cent as compared to Word Perfect and
that Microsoft's Internet Explorer had captured more than 80 per cent
of the web browser market from its rival Sun Microsystems's Netscape
Navigator during 2003 (ref, 21). This accumulation and monopolization
of the market invited competition action in US as well as in the EUJ
against Microsoft, to enquire into its arnti-competitive practices. This
conflict is inevitable and necessary when somebody wants to abuse the
dominant position in the market due to IP protected technology and
wealth created through market monopoly.
To stay at par with the rapid growth and economical liberalization
which subsequently gave rise to analyze the role of intellectual property
10. Motion Pictures Patents Company v. Universal Film Company Manufacturing
Company, 243 US 5502 (1917).
11. R. Posner, Antitrust law: An Economic perspective (University of Chicago Press,
Chicago), 1976.
8.4 Competition Law
ingreat depth as cases of misuse of IPR was rising at a sharp pace. Thus,
India enacted its competition law in 2002.

Statutory Analysis
The Competition Act, 2002
passed by the Indian legislature is
in synchronization with the
principles of economic efficiency and
liberalization. With the opening of trade barriers and rapid flow from
international markets, a need was felt for robust regulation of the same.
Thus, initially an open market policy was formulated in India. Later
on keeping
in mind the new
challenges, Competition Act was enacted
which seeks to fulfill its objectives vide prohibition of the following:12
(a) Anti-competitive agreements;
(b) Abuse of dominant position by the enterprises in the market;
and
(c) Regulation of combinations that exceed the threshold limits
against the prescribed assets or turnover.
The Statement of
Objects and Reasons states clearly that the
Competition Act is being enacted inter alia, to prevent practices which
have an adverse effect on
competition and to promote and sustain
competition in the markets. First, section 3 of the Competition Act,
dealing with anti-competitive agreements, has made an exception for
IPRs. It preserves the
rights of the IPR holder to prevent infringement
and protect these rights, as
long as the restrictions imposed by the
agreement are reasonable, ensuring that competition policy does not
interfere with the reasonable use of IPRs. Section 4 of the
Act deals with abuse of dominant Competition
and not the existence of a dominant
position. It is clear that it is the abuse
position, which is prohibited by law.
The exception under section 3 allows for reasonable
conditions to be
imposed by the IPR holder to protect the rights granted by the relevant
IP law. This is to that the IP protection is not vitiated. At the same
see
time, the exception is only allowed for the purpose of protection of
the rights to the extent
granted by the IP law; hence the requirement
of reasonableness. On the other hand, such an
carved in section 4 for a number of exception has not been
reasons. First, IPRs may not confer a
dominant position in the market; as
explained earlier, the legal monopoly
conferred by IPRs may not necessarily lead to an
economic monopoly
and it is the latter that the
even if IPRs do
competition law is concerned with. Secondly,
grant dominant position, mere existence of market
a
power is not prohibited under Section 4. Therefore, section 4 makes no
exception for IPR-sourced market power.5 Competition Commission has
12. D.P. Mittal,
Competition Law & Practice, Taxmann
Publications, 2008, p. 3.
13. See Rahui Dutta, Critical
at
Analysis: Reflection of IP in Competition Law of India, available
http://www.indlaw.com/display.aspx74674, (Last visited on
February 14, 2011).
 Emerging Trends in Competition Lauw (National and International) 8.5

also endorsed this view and it has stated that there is need to balance
ePevention
protection of rights of the holders of intellectual property with the
of abuse of market power. It further explains that this balance
may be struck by differentiating between the existence of a rignt ana
exercise During the exercise of a right, if an abusive practice is in
evidence, which is detrimental to competition, it must be assailed under
Competition law. Therefore, under Section 3, IPRs have been protected to
the extent that
they are reasonable. Unreasonable conditions contained
n an agreement will not be thus protected. On the other hand, when an

enterprise enjoys a dominant position and is thus covered by Section 4,

it
enjoys no
immunity for its IPRs. But it is quite desirable that the
Act
makes it explicit to what is reasonable and what is
as
unreasonable.
There have been various landmark judgments pertaining to the
conflict between IPR and the competition law. Various authorities and
agencies are continuously deliberating and debating over this contentious
issue. Aamir Khan Productions Pvt. Ltd. v. Union of
India, 2010 (112)
Bom LR 3778, is a landmark
Court wherein the Court while
judgment
delivered the by Bombay High
dealing with
issue-of IPR held that CCI has the
a matter pertaining to the
jurisdiction to deal with all cases
concerning competition law and IPR. In Kingfisher v. Competition
Commission of India, Writ Petitions no. 1785 of 2009, also, the Court
reiterated that the CCI is competent to deal with all the issues that
come before the
Copyright Board. Such cases enumerate the fact that the
Indian Courts are ready for dealing with
emerging cases of competition
law involving IPR.
Microfibres Inc v. Giridhar & Co., RFA (OS) No. 25/2006
decided on 28 May 2009, the Court observed that:
(DB),
"The legislative intent was to grant a higher
protection to pure
original artistic works and lesser protection to the activities that are
commercial in nature. Thus, the intent of the legislature is
explicitly
clear that the protection provided to a work that is commercial
in nature is at lower pedestal and not to be
equated with the
protection granted to a work of a pure artistic nature.
The Delhi High
Court in the case of Hawkins Cookers
Limited v.
Murugan Enterprises, 2008 (36) PIC 290 (Del), held that a well known
mark cannot be permitted to create the monopoly in the market on
the basis of being well known mark by
controlling the ancillary and
incidental market. This is considered as abuse of dominant
position and
is prohibited." In this case the plaintift alleged that the defendants
used
plaintiffs trademark HAWKINS in defendant's product, pressure cooker
14. Madivalappa Motolli, "Regulationof Anti-competitive
Trade Practices Associated
with IPRs under the Competition Act, 2002; Legal News and View," vol. 28, No.
2, February 2014.
8.6 Competition Law

gasket. The claim of the plaintiff was disputed by the defendant on the
ground that the gaskets were being sold under their own trademark
and the use of the word Hawkins' by the defendant on their products/
gaskets was to inform the purchasers that the gaskets being manufactured
by the defendant were suitable for Hawkins pressure cookers.
The defendant argued that the plaintiff wanted to monopolize the
sale of gaskets which are used in pressure cookers in the market. The
defendant manufactured gaskets which can be used for different types
of pressure cookers including the pressure cookers manufactured by
the plaintiff. The defendant claimed that it was a common knowledge
that there was always a second line of manufacturers of spare parts,
accessories and replacement items of machines, articles of everyday use,
domestic appliances and even for automobiles for every description,
which is known as ancillary industry. The case was decided against the
plaintiff in this case.
In Entertainment Network (India) Limited v. Super Cassette
Industries Ltd., MANU/SC/2179/2008,2008(5) OK, 719, the Hon'ble
Supreme Court in length stated the interface between
competition law
and effect of IPR on competition in the market. Refusal to deal is one such
limb of anti-competitive practices that is covered under the competition
law. The Court observing the same held that, though the proprietor of
a copyright exercises absolute monopoly over it, but the same is limited
in the sense that any transaction with unreasonably tainting or limiting
competition would amount to refusal. Undoubtedly, IPR owners can
enjoy the fruits of their labour via royalty by issuing licenses but the
same is not absolute.

Finally, it can be said that the interaction between intellectual

is it aimed at
property and competition policy is neither conflicting
nor
replacing the other. Rather the two streams of law are complementary
and supplementaryto each other. The courts have now settled the
and competition in the
principle that the 'interest of the consumer sacrificed at the cost
market' is of supreme importance and cannot be
of the right holder.

International Trade Law and Competition Law

The relationship between trade and antitrust/competition policies
is a matter of considerable academic debate amongst economists. Some
believe that liberalization of restrictions on trade and foreign investment
thus serves
exposes domestic producers to international competition, and
as an effective substitute for competition law for the purpose of curbing
market
business practices such as cartels and abuse of
anti-competitive
dominance. Others, however, believe that many of these practices are
shielded from foreign competition because they involve locally-provided
 Emerging Trends in Competition Lauw (National and International) 8.7
aded services, whether in the distribution chain for tradable goods,
non-t

monopolies' such as
' n a t u r a l .

power, transport and telecommunication

of
or
Many
ces. Man of these infrastructural services were earlier
SeoWnership, when at least their prices were restrained. Butunder
after
vatization, the new owners can use their
inherited control of supply
PAistribution networks to retain a dominant position, raising prices to
and
are $atisfactory return to investors. Moreover, foreign competition
itself be limited by the monopoly power of global corporation,
mlhusjve
may
or behaviour in the form of international cartels, which have
collusive beha
Drevalent in various industries since the late 19th century and
been
been found to be operating even in recent years. It is also pointed
have
out
that, in order to generate confidence in foreigners to do business,
ntries with a legacy of arbitrary state intervention which are opening
their markets to competition from imports or foreign investment
eed to signal that they now have a stable and predictable law-governed
nee

domestic regulatory regime. A modern competition law is thus regarded

as complementary to liberalizing economic reforms.15
LEADING CASES

Telefonaktiebolaget L.M. Ericsson (PUBL)

.

Competition
Commission of India & Anr.
[Writ Petition (Civil) No. 464/2014
Facts: Telefonaktiebolaget L.M. Ericsson is a Swedish Multinational
company and is the registered owner of eight patents pertaining to AMR
technology, 3G technology and Edge technology in India. It is amongst
the largest patent holders in the mobile
phone industry along with
Qualcomm, Nokia and Samsung The patents owned by Ericsson are
considered to be Standard Essential Patents. (SEP's). Standard Essential
Patents are those patents that form a of technical standard that
part a
must exist in a
product as a part of the common design of such products.
The
dispute in the present case pertains to Ericssons' SEP's for which
Ericsson had tried to
negotiate a Patent Licencing Agreement (PLA)
With Micromax and Intex on Fair Reasonable and Non Discriminatory
KAND) terms but its efforts were unsuccessful.
cSson initiated infringement proceedings alleging thatSubsequently,
the products
ctured and dealt with by Micrormax and Intex violate its patents
a t Ericsson
was entitled to royalties in respect of the SEPs held
by
atya Bhattachariea, "Trade, Development and Competition Lauw; India and Canada
Q. Lompiled", 5(1) Trade L., 4Dev. 43 (2013).
Explain the interfa
terface between intellectual property rights and competition law in
India
analyse the order of CCI in Telefonaktiebolager LM Ericsson case.
D.U., LL.B, 2019]
 Competition Law Emerging Trends in
Competition Law (National and
8.8
Intex fild
International) 8.9
suits, both Micromax and fasue: Whether Competition
it. In response
to the infringement
Commission of India (CCI) allegine
Commission of India (CCT) has
jurisdiction to entertain
complaints before the Competition
account of it demanding Competition Act.
complaints of Micromax and Intex under the
abuse of dominant position
by Ericsson on
and Intex. The CCI noted that the
royalty from
unfair
Micrormax DDecision: Delhi High Court held that orders
passed by
an
Enicsson were discriminatory and contrary to without jurisdic and observed as CCI were
practices adopted by directed the Director General (DG)
not follows:
FRAND terms, and consequently, of the Competition Act.
i) Ericsson is an
"enterprise' within the
violation of the provisions meaning of Section 2(h) of
to investigate any
filed a writ petition before Delhi High
the Competition Act as it
possesses a
large number of patents
Aggrieved this order, Ericsson
by and engaged developing technologies and acquiring
in

Court and contended

as
follows:
which fall under the wide definition patents
of 'goods' under the Sale of
Contentions of Ericsson
Goods Act, 1930, and movable property under Generai Clauses
nature of the Indian Act, 1897. Therefore, the proceedings initiated
Ericsson contended that owing to the special by the CC1 for
(1) claim of royalty by violation of Section 4(1) of the Competition Act could not, at
Patents Act, licensing practices
including
of the the threshold, be held to be without jurisdiction on account of
in relation to patents is outside the scope
a patentee
Competition Act, 2002; Ericsson not being an 'enterprise' within the meaning of Section
2(h) of the Competition Act.
under the purview of an 'enterprise' as
(2) Ericsson does not come
defined under Section 2(h) of the Competition Act, in furtherance (ii) The Patents Act is a special act vis-a-vis the Competition
Act, 2002 would not apply Act. However, since there is no irreconcilable repugnancy or
of which Section 4 of the Competition
to Ericsson; conflict between the
Competition Act and the Patents
thus, in absence of any irreconcilable conflict between the wo
Act
the abuse of dominance/dominant position,
(3) Matters pertaining to legislations, the jurisdiction of CCI to entertain complaints for
of licensing, should be addressed
by a patentee in respect patent under the Competition Act, 2002; abuse of dominance in respect of Patent rights cannot be ousted.
under the Patents Act and not
no jurisdiction (ii) The remedies provided under Section 27 of the Competition Act
Commission of India (CCI) had
(4) Competition the royalties for patented for abuse of dominant position are materially different from the
determine the reasonableness of
to
in that regard remedies as available under Section 84 of the Patents Act. The
technologies or to entertain any complaint matter was pending remedies under the two enactments are not mutualy
exclusive
the same subject
particularly when a suit on and of one is not destructive of the other.
before this Court. grant
between the two
iv) In the absence of any irreconcilable contlict
Micromax & Intex complaints tor
Confutation by CCI, legislations, the jurisdiction of CCI to entertain
to the decision of the could not be
(1) The Writ is not maintainable pursuant abuse of dominance in respect ot patent rights
Commission of India v. Steel
Supreme Court in Competition was held that an order under ousted.
where it
Authority of India Ltd., was in the nature of
a that disputes between the parties being
the
Section 26(1) of the Competition Act (v) The contention
entertained by
and hence suits could not be
subject matter of pending
no
show cause notice (administrative, not judicial) under the Competition Act
writ petition was maintainable; CCI, is rejected. The proceedings lis and that the
addition to before the CCI are not in
the nature of a private
Act were in
(2) The provisions of the Competition the suits filed by
Ericsson and the proceedings
law and Section 60 of the proceedings in that
and not in derogation of any other exclusive. It is not necessary
that the provisions of before CCI are not mutually necessarily
Competition Act expressly provided Ericsson CCI would
by
the Competition Act to have effect notwithstanding
anything adverse finding against
by Intex or Micromax
an
praved tor
Thus Competition Act relief as
inconsistent contained in any other law. result in the grant of be limited to
before CCI would obviously
to prevail over Patents Act; enquiry
of and, it so
T h e scope
dominant position
would either abused its 27
nothing in the Patents Act which whether Ericsson has under Section
(3) There was
orders as contemplated
impliedly or expressly expel CCI's jurisdiction. CCI may
Tound,
issue
Act.
of the Competition
 Emerging Trends in
Competition Law (National and International)
8.11
Competition Law
2002. However,
the COMPAT
8.10 Act, substantially reduced the penalties
whether there is any
abuse of dominance is solely sed on
the
Appellants
from
approximately INR 3180 million
(vii) The question Act and a civil court cannot impo million, holding that penalties imposed on enterprises
to
within the scope of the Competition having
multiple products shoul be based on the turnover derived from the
has abused its dominant position
decide whether an enterprise under Section 27 of the under
inquiry, ie., the relevant turnover.
and pass orders as are contemplated
product/service

Competition Act. The Appellants as well as the CCI approached the Supreme Court
certain reliefs sought by
Micromax and Intex hile the Appellants challenged the findings of the COMPAT
in appeal. Whi
(vii) Merely because available in proceedings
under the Patents
in
arits, the CCI's appeal was limited to the question of imposition
before CCI are also
exclude the subject matter of the complaints of
onalties.
pe The Appellants argued that the purported bid rigging
Act also does not of dominant
Act. An abuse h 2009 i.e.,
place in March
prior to 20 May 2009, the date of the
from the scope of the Competition is
took
Act not a cause enforcement of Section 3 of the
position under Section
4 of the Competition Competition Act and the Competition
matter of a suit or proceedings before not apply to the conduct. The Supreme
Court held that even
that can be made a subject Act did
though the bids were submitted before 20 May 2009 the bid was not
a civil court.

The CCI be faulted for proceeding on the

cannot
basis that completed by 20 May 2009 and since the effects of the infringerment
(ix) it asserts it holds. At any rate, continued post the enforcement of the Competition Act, the statute was
Ericsson holds the SEP's that oni

Ericsson cannot be heard to complain against

CCI proceeding plicable and the CCI did have jurisdiction over the conduct of the
effects.
on such basis. Appellants and its
(x)The Court held that a
direction passed under Section 26(1) of the The Appellants also challenged the jurisdiction of the Director
not outside the scope of judicial and the CCI to investigate the boycott of the 2011 tender
Competition Act to the DG is General (DG)
Constitution of India. the FCI had not complained about that tender.
scrutiny under Article 226
of the by the Appellants since
ie.
The Court reasoned that an order
under Section 26(1) of the Act, Issue: What is the correct parameter for imposing the penaltv
'relevant turnover it should be
facie opinion, has the effect subjecting party whether penalty should be based on
of a or
after forming
a prima
process. There may
be a scenario where an order is based on 'total turnover of a person or enterprise?
to an investigative
of mind. Additionally, in a correct parameter for
ex-facie tenacious or without the application of appeal is
Decision: The Supreme Court held that the
rather than the "otal
scenario where such an order is not passed, remedy by way imposing penalty should be the "relevant turnover"
and not to the party under investigation. The Court observed as follows:-
only available to the informarnt has to be amenable to the
turnover" of a person or enterprise.
with such wide implications of a complaint
Thus, an order
(i) When the CCI forms a prima facie opinion receiptthe CCI cannot
on
writ jurisdiction of a High Court.
and directs the DG to conduct the investigation,
added that the
scope of judicial review of the Competition Act that
However, the Court also foresee and predict every violation
of the Competition Act is Thus, the investigation
of the directions issued under Section 26(1) would be found upon investigation.
of the allegations. would defeat the very
limited and does not extend to examining the merits be restricted so that it
process must not
Act.
Excel Care Ltd. v. Competition Commission of India
Crop. purpose of the Competition
CCI has the
(2017) 8 SCC 47] Under Section of the Competition Act, the
27(b)
(ü) that contravene Section
on enterprises
April 2012, CCI found three Aluminium Phosphide
Facts: On 23 power to impose penalties
agreement) and/or
Section 4
Tablet (APT) manufacturers, (collectively Appellants) guilty of 3 (prohibition on anti-competitive
of the Competition
of India (FCI) for the of dominant position)
rigging tenders issued by the Food Corporation (prohibition on abuse
this Section, the CCI has been given
the
procurement of APT. The CCI had imposed penalties of approximately Act. Further, under
10% of the average
turnover

INR 3180 million on the Appellants, calculated at 9% of the average

'total
discretion to impose
a penalty up to financial
the preceding three
turnover of each of the Appellants for the preceding 3 years. On appeal,
of contravening enterprises for
29
Appellate Tribunal (COMPAT), in its order dated
contraventions.
the Competition to such
years in relation term turnover
under
October 2013, upheld the CCl's finding on merit that the Appellants clarified that the turnover,
Court
(1) The Supreme 'relerant
were guilty of collusive-tendering and bid-rigging the supply of APT to Section must be interpreted
27(b),
as meaning

FCI, in violation of Section 3(3) read with Section 3(1) of the Competition
8.12
Competition Law Emerging Trends in
Competition Law (National and lnternational)
In addition to 8.13
i.e., only the turnover from the relevant product/service in setting out
the
the jurisprudence
of penalties by the on the
Supreme Court, in this imposition
is committed. The Court CCI,
respect of which the contravention has also clarified the
emphasized the 'doctrine of proportionality' in the imposition of judgment,
penalties, to hold that penalties imposed on 'total turnover would investigations and setjurisdictional
out key
scope of the CCI's
inquiries/
have inequitable and disproportionate results. The Court also rigging, collusive tendering and reflections on the law of
cartelization in India.
bid-
applied the 'principle of strict construction' of penal provisions (vi) Retrospective application: Court held
that the
to hold that there would be no justification for including other no
retrospective application, ie., agreements Competition Act has
or conduct
to the enforcement of the
products/services of an enterprise when imposing penalties
for contraventions committed in respect of only one product/ would fall outside its Competition Act on 20 May prior 2009
scope. However, where the effect of the
service. Therefore, the Court has imputed relevant turnover as agreement or conduct
continues after 20 May 2009, it would fal
the meaning of turnover under Section 27(b) of the Competition within the purview of the
Act and observed the importance of a link between the damage Competition Act;
(vi) Prior practices of cartelization can be relied
caused and the profits which accrue from cartel activity. Court upon-. In this case, the
held that there must be a relationship between the nature of
investigative wing of the CCI, i.e., the Director General (DG),
had relied on bid-prices
offence and benefits derived from it, and that this co-relation quoted by the Appellants in tenders
issued to other customers prior to the enforcemeDt of
must be kept in mind while imposing penalties. The Supreme the
Court accordingly upheld the COMPAT's decision on the
Competition Act, to establish the practice of collusive tendering
by the Appellants. The Supreme Court held that though the
reduced penalties imposed. behavior of the Appellants in bids preceding the enforcement of
(iv) The Supreme Court observed that though penalties for the Competition Act cannot be an
infringement, it can highlight
competition law infringements in other jurisdictions such as the Appellants' history of quoting identical prices in bids and
in the European Union and the United Kingdom are levied can be used to support the finding of collusion. Therefore, while
considering 'total turnover, these jurisdictions have also enacted, conduct that precedes the enforcement of the Conmpetition Act
detailed guidelines for calculation of penalties, which ensure cannot amount to a contravention, such conduct can be used to
that any penalties imposed are not disproportionate. The Court impute a companys behavioural patterns;
observed that, in the absence of any similar guidelines in India, (vii) Scope of DG's investigation: In addition to the identical prices
the consideration of 'total turnover under Section 27(b) of the
quoted by the Appellants in FCI tenders, the DG also
Competition Act could have disastrous results. investigated an FCI tender of 2011 which the Appellants had
(v) Justice N.V. Ramana, in a separate but concurring judgment collectively boycotted. This collective boycott was also to
held
delivered in this case, noted that the interpretation of Section amount to collusive tendering by the CCI and was further
DG's
27(b) of the Competition Act requires indigenous consideration, upheld, by the COMPAT. The Appellants challenged the
rather than reliance on foreign jurisprudence. He held that 2011 FCI tender, given that it not
power to investigate the
was

any discretion afforded to the CCI under Section 27(b) of the the subject of FCI's complaint to the CCI.
Competition Act must be regulated and accordingly set out a based on the scope
In this context, the Supreme Court held that,
two-step calculation for imposition of penalties: the DG to investigate under Section
of the CCI's order directing
Step 1: Determination of relevant turnover, which is based on 26(1) of the Competition Act. Prima facie the DG can examine
Act as well. In
the turnover of the entity from the products/services that have other incidences of violations of the Competition
Order was held to be
been affected by the contravention; and this case, the language of the prima facie until
DG to investigate all facts
Step 2: Determination of an appropriate percentage based on broad enough to empower the
was completed.
aggravating and mitigating factors (such as, nature, gravity the investigation against the Appellants
and extent of contravention, ring-leader status, duration of the clarified that the purpose
of the DG's
The Supreme Court also
facts and evidences to
assess

agreement/conduct, loss/damage suffered, profits derived from investigation is to cover all necessary
of an investigation,
contravention, etc.). If in the process
anti-competitive practices. of the Competition
Act
contravention
other facts which
show a
 da

Emerging Trends in
Competition Lauw (National and International) 8.15
Competition Law
defined at the outset.
However, there can be cases with issues that
8.14 to include such
within his power ll within the domain of both the
DG is well sectoral regulator and competition
are revealed, the Therefore, actions that do
DG investigation report. uthorities, an example being the Telecom Regulatory Authority
actions in the still be investigated by of India
a complaint may
not strictly
form part of
of the CCI
Order
(TRAI) and Competition Law.
DG based on prima facie
the As per section 11(1)ív)
of the TRAI Act, 1997, the
the The Supreme functions of the
and bid rigging:
betveen collusive bidding and bid atthority shall be to make
recommendations on 'measures to facilitate
(ix) No differenceclarified that, the terms 'collusive bidding' eampetition and promote efjiciency in the operation of telecommunication
Court also
and that the explanation
given to
rigging' are interchangeable Act would ceTices so as to faciliate growth in such service.8 While this provision
under the Competition
the term bidding rigging' both of which are does not mandate TRAI to undertake the role of competition regulator,
'collusive bidding, it enables TRAI to take steps towards promoting competition in the
to the term
equally apply
anti-competitive activity. tolecom sector. Under the Competition Act, section 21 and section 21A
aimed at illegal
nermit a statutory body to make reference to the CCI and empowers it
Comment
has delivered a
landmark judgment limiting the to make reference to a statutory body in a case." However, neither of
Court Commission
The Supreme the provisions is binding on either authority. Similarly, the laws under
that can be imposed by the Competition
extent of penalties Court has TRAI or the Act do not clarify boundaries of potential overlaps between
in this judgment, the Supreme
of India (CCI). Additionally, under the Competition the roles of two authorities. They also do not spell out a sequence of
scope of inquiries
clarified, the jurisdictionalsound conceptual framework
for assessing iurisdiction in the event an issue falls at the intersection of sectoral
out a
Act, 2002, and set and cartelization in India. Further, regulation and competition.20
collusive tendering
bid-rigging, needed clarity on
Court provides much The Supreme Court of India has recently settled the jurisdiction tussle
this decision of Supreme the CCI. It will
the imposition of penalties
(based on turnover) by between the Competition Commission of India ("CCI') and Telecom
that have been
those multi-product enterprises Regulatory Authority of India ("TRAI"). The Supreme Court recognised
also provide relief to since such enterprises are
based on their total turnover, that the TRAI is sector specific regulator and has expertise to deal with
penalized appeal. Further,
reduced on
to have such penalties significantly the issues in the telecom sector, which arise from the Telecom Regulatory
likely and currently being investigated
enterprises having multiple products to lower potential liabilities if a Authority of India Act, 1997. Further, the TRAI is empowered to look
before the CCI, will also be subjected into the jurisdictional issue first and then if there are evidences to prove
contravention is found. that the anti-competitive practice exists, the jurisdiction of the CCI can
India and Competition Law be enforced according to the relevant provisions of the Competition Act.
Telecom Regulatory Authority of
enforcement, both, work Also if the TRAI takes an action against the anti-competitive practice
Sector regulation and competition
the functioning of a healthy of the parties, the decision would be limited to the applicability of the
towards a common goal of ensuring
market. While sector regulation is aimed at fixing different types of Telecom Authority of India Act, 1997.
Regulatory
of products and services, with
market failures, ensuring safety and quality Supreme Court further held that the CCI is delegated
The
interests such practices in the relevant
ensuring consumer interest, and furthering special public an important role to curb anti-competitive
markets of India and this responsibility delegated to CCI should
consumer not
as redistribution, competition
law is aimed at safeguarding
welfare against the anti-competitive conduct
of enterprises.b To that be washed away completely and "the 'comity between
the CCI and
ante application in checking the TRAI is to be maintained". Therefore, the jurisdiction of the
CCI is
not
end, sector-specific regulation has an ex
has an ex post function in ousted completely with regard to telecom sector but
the CCls jurisdiction
performance of enterprises and competition law
and abuse of dominance by the issue is decided by the
checking anti-competitive agreements IS pushed out to the later phase, once

enterprises. TRAI
the role
Running on the common objective of consumer welfare,
of sectoral regulators and competition authorities seems to be clearly 16, http://ijt.in/wp-content/uploads/2015/09/TRA-Act-1997.pdt

htp://www.ci.gov.in/sites/default/files/cci_ pdf/competitionact2012.pdf
16.
http://www.epw.in/journal/2018/38/market-power-and-competitionpolicy/ U. http://www.epw.in/journal/2018/38/market-power-and-competiton-policy/

contict-between-regulation-and.html
17. Tbid. conflict-between-regulation-and.html
 1Alca

Emerging Trends in Competition Law (National and International) 8.17

Competitionm Law
foresaid aspects of the disputes were to be decided by TRAI in the first
8.16 instance. These were jurisdictional aspects. The High Court was right in
LEADING CASE
of India v.
Bharti Airtel Ltd., eoncluding that the concepts of "subscriber", "test period", "reasonable
Competition
Commission

AIR 2019 SC 113

demand", étc, arising out of TRAI Act and
the policy so declared, are
(RJIL) application
filed an she matters within the
jurisdiction of TDSAT under the TRAI Act. Only
Infocomm Limited hen the jurisdictional facts in the present matter were determined
Facts: Reliance Jio Act, 2002, alleging abuseof
section 19(1) of the Competition Idea Cellular hu the TRAI against the respondents, the next
to whether it was a result of any concerted question
under Bharti Airtel, would arise
and cartelization by Cellular
dominant position and the agreement the
espondents. It would be at that stage the CCI can go into between
Limited (collectively,
the DOs)
Vodafone India
Limited, section 3 & section 4 of the res the question
in violation of
Association of India o whether violation of the
Operators of the Act and prima facie as provisions of TRAI Act amounts to 'abuse
order under section 26(1) of dominance' or anti-competitive agreements'
Act. The CCl passed case for investigation
and directed the
came to
conclusion that there is b)Whether TRAI has the exclusive jurisdiction to deal with
in the case. Aggrieved thereby,
Director-General to cause investigation
before the Bombay High Court. matters involving anti-competitive practices to the exclusion of CCI
respondents filed writ petitions that the CCI had altogether?
aside CCI's Order and held
The High Court set
sector as in the instant case the The function that is assigned to CCI is distinct from the. function
no jurisdiction
in the matters of telecom
to TRA the telecom sector regulator. Further, of TRAI. It is within the exhaustive domain of CCI to find out as to
matter was also referred
TRAI sector specific regulator and it is ether a particular agreement will have an appreciable adverse effect
the High Court held that the
a
with the said issues in the telecom on competition within the relevant market in India. Such functions not
technically well equipped to deal order only come within the domain of CCI, but TRAI is not at all
sector. Furthermore, the prima facie passed by the CCI was not equipped
therefore the CCI should have waited for to deal with the same.
an administrative order and
the final decision of the TRAI before passing prima facie Order against
a The Court, thus, did not agree with the appellants that CCI could
the anti-competitive practices. CCI and Jio aggrieved by the impugned have dealt with this matter without availing the inquiry by TRAI. It also
Order of the High Court challenged it before the Supreme Court by way did not agree with the respondents that insofar as the telecom sector
of special leave petition. is concerned, the jurisdiction of the CCI under the
totally ousted.
Competition Act is
Issue: The width and scope of the powers of the CCI under the
Competition Act, 2002 pertaining to telecom sector vis-a-vis the scope In incidental issues, the Court decided that the petitions field
of the powers of TRAI under the TRAI Act, 1997. by
other companies before the Bombay High Court were maintainable.
Decision: A two judge Bench comprising of A.K. Sikri and Ashok When such jurisdictional issues arise, the writ petition would clearly
Bhushan, JJ of the Supreme Court resolved the conflict of jurisdiction be maintainable. In view of the above discussion, the Court dismissed
between Competition Commission of India ('CCI) and Telecom the appeal while upholding the decision of the High Court.
Regulatory Authority of India (TRAI) and the interplay of roles of two
regulators. CCI is a sector-agnostic regulator authorised to "promote Constitutionality of the Competition Act, 2002
and sustain competition in markets of India", whereas, TRAI is sector In Mahindra Electric Mobility Ltd. and Ors. v. Competition
specific regulator delegated to "promote and ensure orderly growth of Commission of India & Ors., W.P. (c) 11467/2018, the constitutional
telecom sector". The legislative intent behind both the validity of certain provisions of the Competition Act, 2002 ('Act) and
to ensure
legislations is
fair-competition in the market of India. Though both the associated regulations, specifically, Sections 8, 9, 15, 17, 22, 26, 27(b),
regulators have a common goal, they differ in their inquiry procedure 17, 36, 53A, 53B, 53C, 53D, 53E, 53F, 53T, 55, 56 and 61 of the Act and
and mandates.
Regulations 37, 41, 44, 45 and 48 of the Competition Commission of
The Supreme Court then considered the matter on following India (General) Regulations, 2009 ('General Regulations') (lmpugned
points: Provisions) were challenged, along with two orders of the Competition
(a) Jurisdiction of CCI:After noting salient features of Commission of India dated April 26, 2011 and August 25, 2014
('CI)
Act and TRAI
Act, the Court concluded that as TRAI is Competition Was challenged before Delhi High Court.
expert regulatory body which constituted as an
specifically governs the telecom sector, the
 Competitiom Law Emerging Trends in Competition Law (Natiomal and International)
8.19
8.18
delineated six issues for
determination.21 Exclusion of the scrutiny of High Courts (Section 53T of the
The High Court functions: The Act): Section 53T, which provides for
is a Tribunal exercising judicial the appelate tribunal to be made appeal from an order of
an
i. Whether CCI which performs purely judicial directly to the
(excluding scrutiny by the High Court altogether), Supreme
unlike a Tribunal Court
Bench held that administrative, expert (when was held to be
that is in part valid. While the Bench acknowledged that there
functions, CCI is a body and quasi-judicial (when
and advocacy functions) in allowing an appeal from a decision of
may be some merit
discharging advisory liabilities of parties by way of issuine the appellate tribunal
and to the High Court, the same is
it determines the rights after the conclusion of the insufficient to hold a section
directions and penalties, unconstitutional.
final decisions,
and does not perform exclusively adjudicatory
DG's investigation), Composition of CCI (Section 8 of the Act): Under the Act, CCI is
functions.
of CCI violates the constitutional
presently required to be comprised of members with qualifications
i. Whether the composition and expertise in diverse fields (including legal). It is not mandatory
of powers: The Bench held that
to examine
principles of separation for CCI to have a judicial member. The Bench held that this does
whether a particular law
violates the 'separation of powers' principle,
not satisfy the test of constitutionality as set
to examine if the executive branch or by the Supreme Court
the Court would be required in State of Gujarat v. Utility Users Welfare
branch usurps an essential judicial
function. Based on the Association which
any other that there was no violation of
requires the presence and participation of a judicial member at all
reasons provided below,
the Bench held
times when adjudicatory orders (especially final orders) are made
the separation of powers principle in the present case:
by CCI. Accordingly, the Bench read into Section 8 of the Act the
Comparison with other regulatory bodies: The Bench made requirement for CCI to mandatorily have a judiial member at all
reference to other commissions andTribunals, including the times.
Securities and Exchange Board of India ('SEBI), the Telecom
India and the Central Electricity Selection procedure of CCI Members (Section 9 of the Act):
Regulatory Authority of (TRAI),
that different The Bench observed that under section 9 of the Act, the selection
Regulatory Commission ('CERC'). It observed committee consists of five members, including the Chief Justice
bodies follow different models, and there is no 'one
specialized of India (or his nominee) as the Chairman, and two outside
size fits all' approach or a tipping point, where regulatory models
are considered ideal Accordingly, the Bench held
that since independent experts. Accordingly, the Bench held that the Act
CCI performs multiple tasks as stipulated by the Act (advisory, provided sufficient safeguards to ensure that the executive does
not dominate the selection process of CCI members, by mandating
advocacy, investigation and adjudication), it is not necessary for the 5-member selection committee to be chaired by the Chief Justice
CCI or the appellate tribunal to necessarily comprise entirely of
of India (or his nominee) and two independent experts.
lawyers or those possessing judicial experience or those entitled to
hold office as judges, to conform with the Constitution (however, Tenure of CCI Members and supersession by the Central
please see the point on composition of CCI below). Government (Sections 11, 55 and 56 of the Act): The Petitions had
of
Exclusion of jurisdiction of Civil Courts (Section 61 of the alleged that Sections 55 and 56 of the Act violated the principle
Government
separation of powers since they allowed the
Central
Act): The Bench noted that CCI does not decide a traditional lis
event the Central
to issue directions to CCI and supersede it in the
(dispute), which is premised on an adversarial proceeding, like a functions.
Court. Therefore, no party has the absolute right to demand that Government perceives that CCI is unable to discharge its
a dispute is to be adjudicated only by a Civil Court. The Bench The Bench stated that similar provisions have been
made by the
and therefore Sections
relied on a previous judgement of the Supreme Court that had Parliament in other regulatory enactments,
to the Act. Further, section 11(3) of the
examined similar considerations in relation to the Securitisation 55 and 56 were not specific
members from any arbitrary
and Reconstruction of Financial Assets and Enforcement of Security Act safeguards the tenure of the CCI
Central
Government as it requires the
Interest Act, 2002, and found it to be constitutional. For these removal by the Central betore
Court
of the Supreme
reasons. Section 61 was held valid. GOvernment to seek the permission

21. https://www.azbpartneres.com/bank/delhi-high-court-rules-on-the

constitutionality-of-certain-provisions-of-the-competition-act-in-its-auto-parts-
decision/
22. 2018 (6) SCC 21
 Competitiom Law
8.20 held to Trends in
member. Accordingly, section
11 was ho
Emerging Competition Law (National and
International)
removing a CCI 8.21
valid. minimum quorum of three members (including the Chairman) for
Tribunal (Section 53D of the Act. any meeting of CCI where an
Constitution of the Appellate the appellate tribunal adjudicatory decision is made.
that the Chairman of .With respect to the 'revolving door
The Bench has opined Court judge or a Chief Justice of a policy' that section 22(3) of
the Act permitted, the Bench held that the
should be a former Supreme the application of a mere
possibility of
will sufficiently guarantee abuse of power is not a ground to hold a
High Court which issues brought before provision of a law as
principles to the arbitrary. Determination of whether
judicial mind, and judicial observed that the provisions
a concerned party has been
that Appellate Tribunal.
The Bench also
prejudiced by 'revolving door would depend
a
on the facts and
Tribunal contained in regulatory enactments circumstancesof each case.
relating to Appellate securities etc.) Referring to
the facts of the case, the
electricity, airports, Bench held that the mere fact that another
in various sectors (telecom, subsequent member
follow an identical pattern. participated in two intervening hearings, but was not a
selection.committee of the Appellate Tribunal final decision, did not in itself amount to a violation ofparty to the
Composition of the
drew a distinction between the Appellate
of natural justice. Having so concluded, the Bench was principles
(Section 53E): The Bernch of the opinion that a hearing by a
nevertheless
from other regulatory tribunals, larger body and decision by
Tribunal for competition law a smaller number (tor
ability to not merely adjudicate on compeling reasons or
undesirable and possibly avoidable situations.otherwise)
the
finding that the former has for damages. The Bench
leads to
To address this,
appeals, but to also award compensation committee has to be the Bench issued certain directions to CCI and
held that the composition of the selection
Central Government (set out in point vii below). suggestions to the
in accordance with the law laid down by the Supreme Court in
in Swiss Ribbons Pvt. iv. Whether the First Order,
the two Madras Bar Association cases,
and expanding the scope of. the inquiry
Ltd. v. Union of India2, i.e., the Chief Justice or her/his nominee and notice under section 26{1), was
passed in an illegaland in an
should have a final say in the matter of selection, with the right to overboard' manner: The Bench relied on the
Supreme Court's decision
have a casting vote. Accordingly, the Bernch held that section 53E in Excel Crop Care Limited v.
Competition Commission of India5
of the Act, as it. stood, before the amendment by the Finance Act, ("Excel Crop) to observe that it is well within the DG's powers to
2017 (Finance Act), is unconstitutional since it renders the Chief investigate against persons not mentioned in the information or a prima
the Bench facie order under section 26(1) of the Act. This is because the
Justice a minority in the selection committee. However, subject
determinative and is matter included in the prima facie order includes not
has clarified that this observation was not only the issues
Central Administrative alleged, but other allied and' unspecified issues as well. The Bench
subject to the Supreme Court's decision in
also noted that at the prima facie stage, CCI
Tribunal v. Union of India24- where certain provisions of the may not necessarily have
Finance Act have been challenged. all information or material in respect of the parties' conduct which
affects competition in the market, and therefore it is within CCI's
ii. Whether the CCI's decision-making process under section power to expand the scope of inquiry to include other allied issues and
22(3) and the revolving door practice (whereby any members of
parties
CCI can participate in any proceeding at any given point of time) is
unconstitutional: v. Whether Section 27(b) of the Act, which empowers CCI to
The Benchnotedlead
that casting vote (by the CCI chairman), which
a impose a penalty as 'Tt may deem fit', is unconstitutional and the Final
may potentially to result is unconstitutional.
an adjudicatory Order arbitrary since no separate hearing on penalty was provided to
It held that the principle of giving equal weight to the decisions of the petitioners: Differentiating the petitioners' allegation (that the Final
Order was arbitrary since there was no separate hearing on penaltly)
each participant of a quasi-judicial tribunal is destroyed by section rom previous Supreme Court precedents, the Bench held that the need
22(3) of the Act, and therefore declared it to be void. The Bench
however upheld the proviso to sectiorn 22(3), which mandates a for a separate hearing on penalty is undermined in the present case
since CCI followed all the steps indicated in the statute, and did not
adopt an unfair procedure in not granting a separate hearing on penaly
23. 2019 SCC Online SC 73. he Bench stated that at the time of submitting their written and oral
24. W.P.(C) 640/2017.
25. Civil No. 2480 of 2014.
Appeal
8.22 Competition Law

arguments on the DG's report, the parties are aware of the range of
findings and/or sanctions that CCI can impose, as well as the statutory
cap (of not more than 10 percent) on the quantum of penalty. The Bench
further stated that the statute did not compel CCI to adopt an unfair
procedure (i.e., the absence of a second specific hearing before imposition
of penalty). Therefore, section 27 could not be held as arbitrary or
unconstitutional.