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CCOMPETITIONOMPETITION AACTCT, 2002, 2002

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Competition

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(World Bank, 1999)

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POWERS OF COMPETITION COMMISSION AS REGARDS

AGREEMENTS

After the inquiry into theAgreement,CompetitionCommission can:

y direct parties to discontinue the agreement

y prohibit parties from re-entering such agreement

y direct modification of the agreement

y impose penalty upto 10% of average turnover of the

enterprise

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PROTECTION OF INTELLECTUAL PROPERTY

RIGHTS

CompetitionAct

The prohibition on horizontal and vertical agreements do

not restrict the right of any person to impose reasonable

restrictions to protect any of his rights under the

CopyrightAct, the PatentsAct, the Trade and

Merchandise MarksAct, DesignsAct

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ABUSE OF DOMINANCE

Dominant position is defined as a position of strength which

enables the enterprise

y to operate independently of competitive

forces in the market, or

y to affect its competitors or consumers in its

favor.

No mathematical or statistical formula is adopted to measure

dominance

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ABUSE OF DOMINANT POSITION

Includes practices like:

Unfair or discriminatoryconditions or prices,

Limiting orrestricting production or

technical/scientific development,

Denial ofmarketaccess,and

Predatory pricing.

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POWER OF THE COMPETITION

COMMISSION

y After inquiry into abuse of dominant position, the

Competition Commission can order:

discontinuance of abuse of dominant position

impose a penalty upto 10% of the average

turnover of the enterprise

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COMBINATIONS REGULATION

Combinations, in terms of the meaning given to them in theAct,

include mergers, amalgamations, acquisitions.

in order to establish whether the higher concentration in the market

resulting from the merger will increase the possibility of collusive

or unilaterally harmful behavior, it must first be established as to

what the relevant market is

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CONTD

Horizontal Mergers

Vertical Mergers

Conglomerate Mergers

Pre-Notification

The requirements for prior notification

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RELEVANT PRODUCT MARKET

Physical characteristics or end-use of goods

Price of goods or service

Consumer preferences

Exclusion of in-house production

Existence of specialized producers

Classification of industrial products

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FACTORS TO BE CONSIDERED WHILE DETERMINING

DOMINANCE

Dominant position linked to a host of factors

Market share of enterprise

Size and resources of enterprise

Size and importance of competitors

Commercial advantage of enterprise over competitors

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RELEVANT GEOGRAPHIC MARKET

Relevant geographic market can be

defined as the area in which productsare available at approximately the

same price given transport costs and

any increase in demand can be metfrom neighboring areas profitably

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MERGERS AND ACQUISITIONS

Commission is expected to regulate Combinations, i.e.,

large mergers, acquisitions, etc. likely to have appreciable

adverse effect on competition.

Threshold:

For single enterprise

Assets > Rs.1000 crores

Turnover > Rs.3000 crores

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MERGERS AND ACQUISITIONS

Threshold:

For group of enterprises

Assets > Rs.4000 crores

Turnover > Rs.12000 crores

Similarly, threshold is provided for overseas groups.

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MERGERS & ACQUISITIONS

Notification ofCombination to Commission is voluntary

If notified, Commission to take a decision within 90 days on the

combination. Decision may allow, disallow, modify, etc. thecombination.

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POWERS OF COMMISSION

Cease and desist order

Impose penalty up to 10% of turnover.

In case of cartel, penalty can be 10% of turnover or 3 times of

profit illegally gained from cartel activity, whichever is higher.

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POWERS OF COMMISSION

Recommend to Government the division of dominant Enterprise

Various penalties ranging from Rs.1 lac upto Rs.1 crore are also

provided for failure to comply with direction/order of

Commission.

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COMPETITION ADVOCACY

The Competition Commission of India, in terms ofadvocacy provisions in the Act, is enabled to participate

in the formulation of the countrys economic policies and

to participate in the reviewing of laws related to

competition at the instance of the Central Government.

Commission is required to take measures for promotion

of Competition Advocacy, creating Awareness and

imparting Training about competition issues [Section

49(3)]

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CONTD

Advocacy means competition promotion through non-enforcement measures

For promotion of competition advocacy and creation of

awareness about competition issues, the Commissionmay:-

i) Undertake appropriate programmes / activities etc.;

ii) Encourage and interact with the organizations ofstakeholders, academic community etc. to undertakeactivities, programmes, studies, research work, etc. oncompetition issues;