Competition Act, 2002

By: Anuj Aggarwal

 Monopoly or MRTP firms with assets above Rs 100 crore.

 Dominant undertaking is the one that controls atleast one fourth of

production or market of a product.

 Restrictive Trade Practice means a trade practice which has, the

effect of preventing, distorting or restricting competition. For ex
dumping of goods.

 Monopolistic Trade Practice (1984 amendment) is the one which

could unreasonably increase the cost of production or price of
goods/services or profits or prevents competition. For instance drug
company increasing price of an essential drug manifold.

 Unfair Trade Practice – supply of substandard goods, publication of a

false statement, made orally or in writing, hoarding etc. For instance
supply of adulterated petrol.
Benefits of Competition:

 The Company : Efficiency, cost-saving operations,

better utilization of resources, etc.

 The Consumer : Wider choice of goods at competitive

prices

 The Government : Generates revenue

 Causes  Effects

- Scope in licensing regime - Erodes the Competitive

Attributes of the Market.
- Loopholes in Administrative
Machinery - It Harms Social Welfare

- Strains social and political

life.
 It is a tool to implement and enforce competition policy
and to prevent and punish anti-competitive business
practices by firms.

 Competition Law generally covers 4 areas:

 Anti - Competition Agreements, e.g., cartels,

 Abuse of Dominant Position by enterprises, e.g.,

predatory pricing, barriers to entry

 Combinations Regulation - regulates mergers and

Acquisitions (M&As).

 Competition Advocacy
 Before MRTP Act came into force (1970), limited
provisions existed under :
 The Indian Contract Act

 Directive Principles of State Policy (Non-enforceable)

 The MRTP Act brought in a four-pronged thrust :

 Concentration of economic power

 Restrictive Trade Practices

 Monopolistic Trade Practices

 Unfair Trade Practices

 Status of the Competition Commission

• It is a body corporate

• It has Regulatory and quasi-judicial powers;

functions through Benches

• Each Bench shall consist of at least two

Members and one of such Members must be a
judicial Member
 Anti-competitive Agreements
These are agreements which cause or are likely
to cause an appreciable adverse effect on competition:

 Horizontal Agreements:
These are among competitors who are at the same stage of
production, supply, distribution etc.

These are presumed to be illegal

Examples: cartels, bid rigging, collusive bidding etc.

 Anti-Competitive Agreements

Vertical Agreements:

• Vertical Agreements are between parties at different

stages of production, supply, distribution, etc.

• These are not presumed illegal; are subject to rule of

reason.

Examples: exclusive supply/distribution agreements.

 “Dominant position” is defined as a position of
strength which enables the enterprise
 to operate independently of competitive

forces in the market, or

 to affect its competitors or consumers in its

favor.

 No mathematical or statistical formula is

adopted to “measure” dominance.
 Abuse of Dominant Position

Includes practices like:

 Unfair or discriminatory conditions or prices,

 Denial of market access, and

 Predatory pricing.
 Combinations include mergers, amalgamations,
acquisitions.

 CCI is responsible to find out whether the

proposed merger or acquisition would result in
higher concentration in the market and increase
the possibility of collusive or unilaterally harmful
behavior.
 The Competition Commission of India, in terms of
advocacy provisions in the Act, is enabled to participate
in the formulation of the country’s economic policies
and to participate in the reviewing of laws related to
competition.

 Commission is required to take measures for promotion

of Competition Advocacy, creating Awareness and
imparting Training about competition issues.
 Advocacy means competition promotion through non-
enforcement measures

 For promotion of competition advocacy and creation of

awareness about competition issues, the Commission
may:-

i) Undertake appropriate programmes / activities etc.;

ii) Encourage and interact with the organizations of

stakeholders, academic community etc. to undertake
activities, programmes, studies, research work, etc. on
competition issues;
MRTP Act, 1969
1. Its focus was on controlling
the concentration of economic
power.
2. It considered dominance as
bad.
3. Registration of agreement is
compulsory.
4. It did’nt define competition
offences, had no penalty for it.
5. Rigid and Reactive
6. Covers unfair trade practices.
7. Had little administrative and
financial autonomy.
Competition Act, 2002
1. Its focus is on ensuring free
and fair competition in markets.
2. It considers abuse of
dominance as bad.
3. Registration of agreement is
optional.
4. It defines competition
offences, has no penalties for it.
5. Flexible and Proactive
6. Does’nt cover unfair trade
practices.
7. Has more administrative and
financial autonomy.