prohibits anticompetitive agreements (section 3) prohibits abuse of dominant position (section 4) ...
TRANSCRIPT
Prohibits Anticompetitive Agreements (Section 3)
Prohibits Abuse of Dominant Position (Section 4)
Provides for Regulation of Combinations (Sections 5 & 6)
Enjoins Competition Advocacy (Section 49)
Group 6
03 Tashween Ahluwalia
06 Ayush Bhatia
07 Naresh Bhoravat
11 Amit Das
23 Vinod Iyer
53 Mita Shah
61 Vishal Kalro
66 Vivek Dubey
Competition – Why ? Competition Law –Role in Maintaining Free & Fair Competition Competition Act 2002 – Background MRTP Status of Indian Competition Law Competition Act 2002 V/S MRTP Act Dimensions of Competition Act, 2002 - Prohibits Anticompetitive Agreements (Section 3) - Case - Prohibits Abuse of Dominant Position (Section 4) – Case - Provides for Regulation of Combinations (Sections 5 and 6) – Case Advantages of Competition act Competition Commission of India (CCI) - Duties - Jurisdiction - Legal Status of the Commission - Composition - Mission
Competition Advocacy Competition Appellate Tribunal Suo Moto Inquiry Inquiry Procedure Commission’s Order Penalities CCI Benefits Conclusion
Road Ahead
Markets : promotes efficiency; encourages innovation; leads to higher productivity punishes the laggards; facilitates better governance; boosts choice, improves quality, reduce costs; ensures availability of goods in abundance of acceptable quality at affordable price.
Business : availability of inputs at competitive price, level playing field, redressal against denial of market access and other anti-competitive practices ensures economic democracy
The Consumer : lower prices improved quality better services wider choice.
The Government : Facilitates Economic Growth & Development Generation of Revenue
BUT……………
Competition ….. Why ?
All these benefits are lost if Competition is
UNFAIR or NON-EXISTANT
- Choice of cars in olden days
- MTNL monopoly : The position today
- Airlines : INDIAN AIRLINES: JET : SAHARA
- Indian Railways : The monopoly continues….
Therefore, there is need of Competition Law for free & fair competition
Competition ….. Why ?
Competition Policy – Competition policy is defined as those Government measures that
affect the behaviour of enterprises and structure of the industry. It is to promote efficiency and maximize welfare. (Sum of consumers’ surplus & producers’ surplus and taxes collected by the Government).e.g. Industrial policy, labor policy, trade policy etc.
Competition Law - It is a tool to implement & enforce competition policy & to prevent & punish anti competitive business practices by firms & unnecessary Government interference in the market.
About 106 countries have adopted competition law
Competition Law - Role in Maintaining Free & Fair Competition
First competition law of the country
Came into force on June 1,1970-
Aim was to regulate free and unfettered trade
Aggressive government interventionist policy
Regulated three types of trade practices, which hamper competition in India or are prejudicial to public interest, namely - -
- Monopolistic trade practices
- Restrictive trade practices.
- Unfair trade practices
Government constituted a committee in 1999 to examine MRTP Act, 1969 for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law in line with international developments to suit Indian conditions.
As a sequel to the Report of the Committee, the Competition Act, 2002 was enacted and notified in January, 2003.
Competition Act 2002 – Background MRTP
The Competition Act, 2002 was passed by the Parliament in the year 2002, to which the President accorded assent in January, 2003. It was subsequently amended by the Competition (Amendment) Act, 2007.
(1) This Act may be called the Competition Act, 2002. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It came into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established. The Competition Commission of India is now fully functional with a Chairperson and six members. The provisions of the Competition Act relating to anti-competitive agreements and
abuse of dominant position were notified on May 20, 2009.
Preamble of the Competition Act, 2002 States
“Keeping in view of the economic development of the country”
- to prevent practices having adverse effect on competition, - to promote and sustain competition in markets, - to protect the interests of consumers and - to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
Objectives to be achieved through the establishment of the Competition Commission of India (CCI).
Status of Indian Competition Law
Competition Act 2002 MRTP Act
Aims at promoting competition Aims at curbing monopolies
Focus on effects on competition in the market Focus on size (uptil 1991) and on behaviour from 1991 onwards.
Seeks to prohibit anti-competitive agreements, abuse of dominant position and to regulate combinations
Prohibit monopolistic, restrictive and unfair trade practices
Statutory Authorities can seek CCI’s opinion No provision to seek opinion
Appreciable adverse effect is a key factor – Factors prescribed to determine AAEC
‘Prejudicial to public interest is a key factor –parameters not mentioned in the law
Primary duty to achieve the objectives of the Act devolves on CCI
Act implemented partly by Central Government and partly by the MRTP Commission
Leans heavily on ‘Rule of Reason’ Obsessed with deemed concept
14 per se offences negating the principles of natural justice 4 per se offences and all the rest subjected to rule of reason.
Competition Act 2002 V/S MRTP Act
Competition Act 2002 MRTP Act
Concept of ‘Market’ is rationalized –Relevant Market=Relevant product market + Relevant Geographical market
‘Market’ has not been defined nor factors to determine ‘market’ have been prescribed
Commission to exercise jurisdiction in case of unreasonable restraints exercised in respect of IPRs.
No explicit power with the MRTP in respect of IPRs
Exclusion of jurisdiction in respect of export business Implicit exclusion of jurisdiction in respect of export
Frowns upon dominance Frowns upon abuse of dominance
No combinations regulation Combinations regulated beyond a high threshold limit.
Penalties for offences No penalties for offences
Reactive and rigid Proactive and flexible
Competition Act 2002 V/S MRTP Act
Prohibits Anticompetitive Agreements (Section 3)
Prohibits Abuse of Dominant Position (Section 4)
Provides for Regulation of Combinations (Sections 5 and 6)
Enjoins Competition Advocacy (Section 49)
Dimensions of Competition Act, 2002
Prohibition of Anti-competitive agreements (Section 3)
No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. These Agreements are void.
Horizontal Agreements- Agreements between 2 or more enterprises (including cartels) that are at same stage of the production chain, & in same market. e.g. Agreement between Enterprises dealing in same products.
*Cartels includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services.
Below mentioned agreements shall be presumed to have an appreciable adverse effect on competition (AAEC) -& therefore void
(A) Agreement regarding prices - (for example, discounts or rebates, etc);
(B) Agreements regarding quantities - (for example, setting quotas or levels of output) (C) Agreements regarding Bid rigging or Collusive tendering(D) Agreements regarding Market Sharing
The above are subject to provision of “PER SE” ILLEGALITY, as for most of the horizontal agreements the presumption is that they cannot serve any useful or pro competitive purpose.
*“Bid Rigging" means any agreement, between enterprises or persons engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding
Exemption :
Efficiency enhancing JVs to be examined based on ‘Rule of Reason’ (a test to establish that an agreement is illegal)
Prohibition of Anti-competitive agreements (Section 3)
Vertical Agreements- Agreements betweens enterprises that are at different stages or levels of the production chain, & therefore in different markets. e.g. Agreement between producer & distributor.
Below mentioned agreements shall be void, if such agreement causes or is likely to cause an appreciable adverse effect on competition (AAEC) in India:
(A)Tie-in arrangement agreement (B)Exclusive supply agreement(C)Exclusive distribution agreement(D)Refusal to deal agreement(E)Resale price maintenance agreement
The presumptive rule does not apply to vertical agreements.
The question whether the vertical agreement is causing appreciable adverse effect on competition is to be determined by “Rule of Reason”, which essentially means that the positive as well as the negative impact of such agreement on competition will have to be taken into account before coming to any conclusion.
The rule of reason is applied so that only restraints that have a significant effect on the process of competition are prohibited.
Prohibition of Anti-competitive agreements (Section 3)
The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:-
Creation of entry barriers Driving existing competitors out of the market Accrual of benefits to consumers Improvements in goods and services Increase in Technical development
Prohibition of Anti-competitive agreements (Factors)
The law recognizes intellectual property rights and in order to facilitate their protection, it permits reasonable restrictions imposed by their owners.
(a) The Copyright Act, 1957;(b) The Patents Act, 1970;(c) The Trade and Merchandise Marks Act, 1958 or the Trade Marks Act, 1999; (d) The Geographical Indications of Goods (Registration and Protection) Act, 1999; (e) The Designs Act, 2000; (f) The Semi conductor Integrated Circuits Layout Design Act, 2000.
Since exports do not impact markets in India, agreement between exporters, in spite of being horizontal, are exempted.
Exemptions:
Prohibition of Abuse Of Dominance Position (Section 4)
“ Mere dominance is not an offence, abuse of dominance is prohibited ”
“Dominant position" means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to—
(i) operate independently of competitive forces prevailing in the relevant market; or
(ii) affect its competitors or consumers or the relevant market in its favor.
ABUSE OF DOMINANCE ARISES IF AN ENTERPRISE :
(A) Directly or indirectly, imposes unfair or discriminatory
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or service; or
*Predatory price- sale of goods or provision of services, at a price which is below the cost to reduce competition or eliminate the competitors.
(B) Limits or Restricts
(i) production of goods or provision of services or market therefore; or
(ii) technical or scientific development relating to goods or services to the prejudice of consumers; or
(C) Indulges in practice or practices resulting in denial of market access; or
(D) Concludes Contracts subject to obligations having no connection with the subject of the contracts; or
(E) Uses its dominant position to enter into, or protect, other relevant market.
* Relevant Market = Relevant Product Market + Relevant Geographic Market
Prohibition of Abuse Of Dominance Position (Section 4)
Relevant Market = Relevant Product Market + Relevant Geographic Market
“Relevant Geographic Market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas;
The Commission shall, while determining the "relevant geographic market", have due regard to all or any of the following factors, namely:-
(a) regulatory trade barriers; (b) local specification requirements;
(c) national procurement policies; (d) adequate distribution facilities;
(e) transport costs; (f) language;
(g) consumer preferences; (h) need for secure or regular supplies or rapid after-sales services.
“Relevant Product Market" means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use;
The Commission shall, while determining the "relevant product market", have due regard to all or any of the following factors, namely:-
(a) physical characteristics or end-use of goods; (b) price of goods or service;
(c) consumer preferences; (d) exclusion of in-house production;
(e) existence of specialized producers; (f) classification of industrial products.
Relevant Market
The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following factors, namely:-
(a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
(d) economic power of the enterprise including commercial advantages over competitors;
(e) vertical integration of the enterprises or sale or service network of such enterprises;
(f) dependence of consumers on the enterprise;
(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise;
(h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers;
(i) countervailing buying power;
(j) market structure and size of market;
(k) social obligations and social costs;
(l) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition;
(m) any other factor which the Commission may consider relevant for the inquiry.
Prohibition of Abuse Of Dominance Position (Factors)
Case Studies-Abuse Of Dominance Position
Shri Sanwar Mal Agarwal (Informant) v/s Punjab national Bank (Opposite party)
The informant owns SSI engaged in the business of manufacturing and sale of steel utensils
Its is banking with PNB, which provides him with credit facilities
The informant entered into derivative transaction in 2007 against his export orders to hedge against the foreign exchange fluctuations
In 2008, the informant had to cancel various export orders on account of sudden levy of export duty by the GOI, due to the adverse movement of USD prices he incurred huge losses amounting to Rs 1.40 crores
The bank took substantial time for a decision and arbitrarily rejected the proposal that the losses are not related to the business of the informant.
PNB sanctioned a loan of Rs 625 lakh in Dec 2008, the loss of 1.40 crore escalated to Rs 10.25
crores by end of the year
The informant again approached PNB seeking compensation alleging that the losses increased due to inordinate delay on the part of PNB in sanctioning the restructioning its proposal
Case 1
Shri Sanwar Mal Agarwal (Informant) v/s Punjab national Bank(Opposite party)
The informant has alleged that PNB by abusing its dominant position not only rejected the informant’s claim for compensation but also debited its account for the losses and declared the business unit as NPA and declared informant’s unit as sick
The informant has alleged that PNB has violated the provisions of section 4 of the Competition act 2002 abusing its dominant position
The commission has considered the material placed on the record and given the below verdict
No concrete material has been placed by the informant to infer that PNB is in the dominant position
PNB failed to take decision regarding extending the credit limit and cancelling the derivative future transaction entered by the informant
The unconscionable delay on the part of PNB cannot be considered as violation of section 4 of the competition act
The informant was not able to provided relevant data that PNB was enjoying a dominant position in the relevant market and also has used that position to indulge in violating section 4 of the competition act
Case 1
Cinergy Picture (P) Ltd.(Informant) v/s ETC Network Ltd (Opposite party)
Informant is the producer of the film name ‘Rann’
The opposite party is one of the leading television broadcaster
ETC is promoted by the Zee network which has a dominant position in the television entertainment and has the capacity to influence the consumer opinion
The informant alleged that because it did not advertise trailers of its movie Rann with ETC channel and therefore the opposite party in its programme ‘Movie Meter’ rated the movie poorly before its release by awarding it 3 points out of 10 points and on the other hand gave higher rating to the movie ‘Ishqiya’ which had given its trailer for advertisement to them, because of which the perception about the film was negative and degraded by the audience
.
Case 2
Cinergy Picture (P) Ltd.(Informant) v/s ETC Network Ltd (Opposite party)
The informant has alleged that ETC has violated the provisions of section 4 of the Competition act 2002 abusing its dominant position
The commission has considered the material placed on the record and asked for the below clarification
- What is the evidence that the opposite party was in the dominant position?
- Whether the informant and the opposite party are in the same line of business in order to be
competitors?
On examining the entire matter in depth the below verdict was given
The informant was not able to establish that the opposite party enjoys dominant position in the broadcasting or television entertainment
No concrete material has been placed before the commission to arrive at a conclusion
The informant was not able to demonstrate that due to the low rating awarded to the movie ‘Rann’ in the ETC movie meter, the opposite party has limited or restricted the promotion of the movie
The informant had made full publicity by advertising the movie on other channels and alternate mediums
Thus neither the market access is denied to the informant neither it has curtailed , reduced or restricted the viewership of the movie
Case 2
Combinations (Section 5 )
Mergers
Combinations (Section 5 ) Any combination which causes or is likely to cause appreciable adverse effect on competition (AAEC) is void
Combination is a broad term which includes - Merger - Acquiring control
- Acquisition - Amalgamation
Combinations that cause or are likely to cause an adverse effect on competition are under focus (e.g., horizontal mergers between competitors; vertical merger by dominant player with firm in adjacent market, etc.)
Threshold limits that would invite the scrutiny are specified below:
ENTITY GROUP
IN INDIA IN INDIA OR OUTSIDE INDIA IN INDIA IN INDIA OR OUTSIDE INDIA
Assets > Rs. 1000 crores
OR
Turnover > Rs.3000 crores
Assets >US$ 500 million, including at least Rs.500 crores in India,
OR
Turnover > US$ 1500 million, including at least Rs.1500 crores in India;
Assets > Rs. 4000 crores
OR
Turnover > Rs.12000 crores
Assets >US$ 2 billion, including at least Rs.500 crores in India,
OR
Turnover > US$ 6 billion, including at least Rs.1500 crores in India;
Thresholds limits deliberately high to allow small Indian companies to combine to become active international players
Regulation of combinations (Section 6)
High threshold limits – only big ticket combinations subject to regulation
Acquisition of share by public financial institution, foreign institutional investor, bank or venture capital fund do not fall within Section 5 & 6
In case of public financial institution, foreign institutional investor, bank or venture capital fund filing of notification is mandatory within 7 days of acquisition.
Mandatory notification regime, notice to be filed within 30 days, non filing of notice attract deterrent penalty – 1% of turnover or assets whichever is higher.
Commission to decide in 210 days from the day of filing valid notice, else combination is Deemed Approved.
Commission can take, upon its own knowledge or information, action within 1 yr from the date the combination is effected.
Regulation of combinations (Section 6)
Cases
ISPAI allege that DoT has imposed discriminatory restrictions on ISPs in providing internet telephony services, whereas UASL, BSO and CMTS has been given no restrictions for the same.
UASL, BSO and CMTS are not launching internet telephony services for fear of bringing down call charges and thus affecting their revenues.
Possible competition has been prevented from ISPs by not allowing them connectivity to regular land lines or mobile phones.
DoT also has a conflict of interest as it has it’s own unit BSNL who’s revenues may get affected by internet telephony.
By giving ISPs permission the consumers will benefit immensely as well as service providers.
TRAI has recommended that ISPs be allowed to provide unrestricted internet telephony services.
Internet Service Providers Association of India (ISPAI), New Delhi Vs.
Department of Telecommunications (DoT),New Delhi
Case 3
V/s
The following case has been made by ISPAI:
1. An enquiry be made into (i) violations of the provisions of Section 4 by DoT; (ii) violation of the provisions of Section 3(1) and 3(3) of the Competition Act,2002 by DoT and the UASL/CMTS service providers.
2. DoT to discontinue and not to re-enter into anti competitive agreements/arrangements and to discontinue the abuse of dominant position.
The outcome of the case:
1.DoT is not covered under the definition of “enterprise” as contended by ISPAI. Licensing by DoT is done under the Indian Telegraph Act,1885 and this is a “Sovereign function”.
2.As per Section 4 of Indian Telegraph Act,1885 the Central Government has exclusive privilege and power to grant license.
3. The licenses for different products cannot be compared with each other.
4. There is nothing on record to support the argument that UASL/CMTS/BSO licensees is not providing adequate internet telephony service to the consumers.
5. The government should take an early decision on recommendations made by TRAI to DoT.
Internet Service Providers Association of India(ISPAI),New Delhi Vs.
Department of Telecommunications (DoT),New Delhi
Case 3
Jet Airways V/S Kingfisher Airlines
The scope of the strategic alliance between Jet and Kingfisher, announced in October 2008, includes code-sharing on both domestic and international flights and joint fuel management with a view to reducing expenses.
Besides, common ground-handling, cross-selling of flight inventories using a common global distribution system platform and cross-utilization of crew on similar aircraft types are the other key areas of the proposed agreement.
A frequent flier, whose name the CCI refused to divulge, has filed a case with the Competition Commission of India against the proposed agreement.
The complainant said if such an agreement was inked then the two airlines would dominate the market leading to cartel formation.
According to the complainant this could (result in) an abuse of dominance as the two would control market share of close to 60 per cent
Case 4
Colgate Palmolive Company V/S Anchor Health And Beauty Care Pvt. Ltd.
"Soon after Colgate launched a new look can for their toothpowder in August 2002 comprising the red and white colour combination with splashes of yellow, Anchor almost immediately came out with its own look-alike version of toothpowder packaging,"
Colgate’s perception: Have been in prior, long and continuous use of the mark. Anchor has entered the market much later. There has been no delay in filing of the suit for grant of the ex parte injunction. The trademark has become so distinctive and identical with the goods of the plaintiff that it has imprinted upon the minds
of the public at large that the goods belong to us There is an element of dishonesty on the part of the anchor to pass off his goods as that of us on the premise of
deceptive similarities.
Colgate’s action….. Colgate sought an interim injunction against the Anchor for use of the trade dress and colour combination of red and
white in relation to identical products
Case 5
V/S
Colgate Palmolive Company V/S Anchor Health And Beauty Care Pvt. Ltd.
Anchors’ Comment
The shape of the container cannot be monopolized by the plaintiff unless and until it is registered under the Designs Act.
The shape of packaging or any combination thereof do not fall within the ambit of mark or trademark as envisaged in the TMM Act, 1958.
That the use of red and white colour combination is neither distinctive nor capable of identifying the goods with the plaintiff nor business of the plaintiff nor capable of secondary significance.
That the plaintiffs have abandoned the colour combination of red and white and have used various other colour combinations in respect of different ranges of products and, therefore, the claim of the distinctiveness or uniqueness of the colour combination is unfounded.
The colour combination red and white in respect of dental care products is descriptive in nature and has a direct reference to the character or quality of the goods, gum and teeth. This combination is common to the trade and is being used by large number of manufacturers.
Case 5
Colgate Palmolive Company V/S Anchor Health And Beauty Care Pvt. Ltd.
Judgment:
Colgate did not succeed in getting ad interim injunction from adopting the same colour
scheme and layout mainly for the reason that the trademarks used by the parties were
not the same, hence there is no likelihood of confusion and deception.
Case 5
Creates an environment conducive to competition.
The operation of the act is not confined to transactions strictly within the boundaries of India but also such transactions involving entities existing or established overseas.
Explicit definitions and criteria have been specified in order to access whether a practice has an appreciable adverse effect on competition.
It is the intention of our legislators that provisions of the act in its extant form should not be considered to be immutable and unchangeable. The intention is promotion of competition advocacy, creating awareness and imparting training about competition issues.
Advantages of Competition Act
Competition Commission of India (CCI) shall be a body corporate having
- Perpetual succession
- A common seal
- Power to acquire, hold & dispose of property
Duties of the Competition Commission of India (CCI). [Section 18 of the Act]
- Eliminate practices having adverse effect on competition
- Promote and sustain competition
- Protect consumers’ interests
- Ensure freedom of trade carried on by other participants in markets in India
Introduction
For achieving the foresaid duties, the Commission has jurisdiction to:
Enquire into Anti-Competitive Agreements (e.g. Cartels, bid-rigging, etc.) [Section 3]
Enquire into abuse of dominant position (e.g. Predatory Pricing, etc.) [Section 4]
Regulate combinations (Mergers, Amalgamation, Acquisition of shares or control), [Sections 5 & 6]
Undertake Competition Advocacy (including advice on competition policy issues), create public awareness, impart training on competition issues, [Section 49]
Jurisdiction
Legal Status of the Commission
Commission has regulatory and quasi-judicial powers.
It is to function through Benches [Section 22(1)].
Bench Composition [Section 22(3)].
Constituted by Chairperson At least 2 Member’s At least one Judicial member ( Qualified Judge of High Court)
* “ Judicial Member ”means a Member who is, or has been, or is qualified to be, a Judge of a High Court.
The Bench over which the Chairperson presides shall be the Principal Bench and the other Benches
shall be known as the Additional Benches.
Chairperson Member between 2 & 10 appointed by GOI Chairperson & it’s Members shall be whole-time Members & maximum term of 5 years Maximum age for;
– Chairperson: 65 years– Member: 65 years
In Chairperson's absence, Senior most Member , is the acting Chairperson
Suspended By Central Government– Insolvent– Engaged in alternate Paid Employment– Convicted of an office involves Moral Turpitude– Abused his position– Physically or mentally incapable to discharge duties
Composition
Make the markets work for the benefit and welfare of consumers
Ensure fair and healthy competition in economic activities in the country for development of economy.
Implement competition policies for the most efficient utilization of economic resources
Participate in formulation of country's economic policies.
Alignment of sectoral regulatory laws in tandem with the competition law.
Effectively carry out competition advocacy.
Spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in Indian economy.
Overview
Under the competition advocacy initiative, the Commission organizes interactive meetings, seminars, etc with different trade organizations, consumer associations, stakeholders and the public at large to spread awareness about the Competition Law and the Commission.
Objectives of Competition Advocacy
Spread awareness about Competition Act
Familiarize business enterprises, central government ministries, state government ministries, central/state PSUs about the importance and benefits of fair competition and ensure compliance of the provisions of Competition Act by all
Sensitize departments / ministries of central / state governments, and PSUs about nuances of competition law, to facilitate competition audit of their respective laws on different subjects
Take confidence building measures among business enterprises and other stakeholders associated with competition
Formed in 19th Oct 2009
Besides, the Chairperson, the Appellate Tribunal shall consist of not more than two Members to be appointed by the Central Government.
The Appellate Tribunal shall have, for the purposes of discharging its functions under the Act, the same powers as are vested in a civil court under the Code of Civil Procedure,1908.
Formed for
- Hearing grievances against the decisions and remedies given by the CCI
- Outstanding cases before Monopolies and Restrictive Trade Practices Commission (MRTPC)
- Cases on Unfair Trade Practices (UTP), Restrictive Trade Practices (RTP) & Monopolistic Trade Practices (MTP)
Cases on ‘Disparaging Advertisements’ transferred to National Consumer Disputes Redressal Commission.
If any person contravenes, without any reasonable ground, any order of the Appellate Tribunal, he shall be liable for a penalty
of not exceeding Rupees one crore or imprisonment for a term up to three years or with both as the Chief Metropolitan
Magistrate, Delhi may deem fit.
Commission has suo moto power to inquire whether an anti-competitive agreement or abuse of dominant position causes or is likely to cause an appreciable adverse effect on competition [Section 19(1)]
Commission has suo moto power to enquire whether a combination causes or is likely to cause an appreciable adverse effect on competition [Section 20(1)] .
This power must be exercised within one year from the date combination has taken effect [Proviso to section 20(1)]
Suo Moto Inquiry
Inquiry u/s 19
Complaint OR State/Central/Statutory Authorities
Director General (DG) Submits inquiry Finding to CCI
Complaint Rebut Findings of DG
Dismiss Complaint Prima facie Further Inquiry
In case of abuse by dominant enterprise, may recommend
division of the enterprise to the Central Government
Compensation to the parties
Penalty < 10 % of Annual T/o of last 3 preceding years
Orders of Commission
Modify Agreements
Inquiry into Anti Competitive Agreements & Abuse of Dominant Position
Cartel: Penalty of 3 x Total profits OR 10 % of Annual T/o
of last 3 preceding years - Transfer OR Vesting of rights, Liabilities, Property or Obligations- Adjustment of Contracts By Discharge/Reduction of Liabilities/Obligation- Creation/Allotment/Cancellation of Shares/Stocks/Securities- Compensation to the affected enterprise/person- Winding up of enterprise- Amendments to MoA or AoA
Dissolve Combination Approve Combination
If not accepted, parties to submit modificationswith 30 days
OR 90 Day’s extension period
Adverse effect
No
Modifications
Yes
Inquiry into Combinations
If modifications accepted, combination will beallowed
Orders of Commission
Order equivalent to decree/order by High Court OR Principal Civil Court.
Self rectification of Order.
Appeal against decision of the Commission can be filed to the Appellate Tribunal within 60 days from the date of communication of the direction, decision or order to him.
A further Appeal can be made against the order of the Appellate Tribunal, before the Supreme Court within 60 day’s from the date of communication of the direction.
Commission’s Order
Penalties for non-compliance with Commission’s orders:-
Penalty not less than Rs. 10 lacs [Section 42(1)]
For failure to comply with a direction of Commission or DG – Rs 1 lac per day of failure [Section 43]
If party to a combination makes a false statement or omits a material particular – not less than Rs. 50 lacs up to Rs. 1 crore [Section 44]
For willfully omitting to furnish information – penalty up to Rs. 10 lacs [Section 45]
Penalities
Benefits to Centre & State Governments bodies
Savings for exchequers, accrue to central and state governments by virtue of adhering to fair competition norms
Fair competition among suppliers
Small enterprises, self-employed and micro-retailers are protected against abuse of dominance by bigger enterprises
Helping to sensitize their procurement officers to the harmful effects of anti competitive practices by suppliers, contractors or manufacturers
Helping identifying areas where bid-rigging, cartelization or abuse of dominance
Familiarizing with the legal remedies available in competition law
Helping them develop competition compliance programs
Providing competition advise.
Helping Nodal Officers at state level in overseeing the task of ensuring fair competition
CCI Benefits
With the enactment of the new law, the competition regime in India has undergone a complete overhaul.
Though it is difficult at this early stage to tell how effective or efficient the new legislation would be, it is certainly a sincere attempt to meet the needs of the global business community.
CCI has been proactively carrying out the work of competition advocacy since its establishment but now faces a huge challenge and task ahead.
It is hoped that the CCI shall be able to overcome any shortcomings in the Act and iron out any difficulties in enforcement.
Thus, many developments in this field are expected.
Conclusion
References
Book : Competition Act 2002 - Law, Practice & Procedure
- Adi P Talati & Nahar S. Mahala. Websites :− http://www.cci.gov.in− http://compat.nic.in/− http://www.supremecourtofindia.nic.in/speeches/speeches_2009/
Com.App.Tribunal.pdf− http://www.business-standard.com/india/news/is-competition
commissionindiajinxed-body/403229/− http://www.dnaindia.com/money/report_competition-
commissionsettles-24-cases-in-a-year_1404516− http://www.barandbench.com/index.php?page=brief&id=657&full=
References
Thank You