COMPETITION ACT 2002

“When world at large is a single platform for carrying out trade and commerce, the need for

Legal Environment of Business : Group Project on -

INDIAN COMPETITION REGIME 1947 – Command and control , laws, policies, rules, regulation

Strategy of planned economic development - Indian Industrial Policy 1948

Emphasized Growth, social justice and self reliance

Limited licenses in private sector, Government controlled all areas

Restrictions on foreign investments

Free competition in the market was under severe threat

Monopolistic Behavior - Concentration of economic power in few

individuals or business houses.

INDIAN COMPETITION REGIME

Three studies conducted

1. Committee setup in 1960 under Professor Mahalonobis

Distribution and level of Income

2. Monopolies Inquiry commission (MIC), April 1964

Concentration of economic power, restrictive and monopolistic trade practice

3. Committee Chaired by Mr. Hazari, 1965

Industrial licensing process - Disproportionate growth

Articles 38 and 39 of the Constitution of India – Basic principles behind MRTP Act 1969

MRTP VS COMPETITION ACT 2002

MRTP Act Competition Act

1. Based on command and control regime Based on liberalized regime

2. Competition concepts not expressly defined Competition concepts expressly defined

3. No regulation of combinations Provides for regulation of combination

4. Has no advocacy role Provides for advocacy

5. No power to impose penalty Power to impose penalty deterrence factor

6. Government Departments outside its ambit Government Departments within its ambit

COMPETITION ACT - DETAILS

Competition Act Defined:

An act to prevent practices having adverse effect on competition, to promote and sustain competition in markets , to protect the interest of consumers & To ensure freedom of trade on by other participants in the market.

Objectives of the actEstablish a Commission to prevent practices having

adverse effect on competitionPromote and sustain competition in marketsProtect the interests of consumersEnsure freedom of trade in the Indian markets

Benefits:

Consumers Businesses Governments

ANTI-COMPETITIVE AGREEMENTS Agreements that negatively or adversely impact competition (Section 3)

Prohibition on Anti Competitive Agreements

TYPES

Horizontal Agreement Section 3(3): Cartels

Vertical Agreements Section 3(4): Tie in Arrangements Exclusive supply Agreement Exclusive distribution Agreement Refusal to Deal Resale Price Maintenance

ANTI-COMPETITIVE AGREEMENTSUnfair Trade Practices

Subjecting a consumer to undue pressure/ influence to buy  Taking advantage of a consumer’s inability to understand a

transaction   Representing that goods have or have not been used to the extent

that is different from the fact  Representing that goods are available in a particular quantity if they

are not

Restrictive Trade Practices

Any trade practice that tends to block the flow of capital into production and also bring in conditions of delivery to affect flow of supplies leading to unjustified cost.

ABUSE OF DOMINANCE – SECTION 4

3 Stage Process of determining abuse of dominance: Determination of Relevant Market Dominance of the enterprise/group in the relevant market is

ascertained "Abuse" by the dominant enterprise in the relevant market is

determined

Stage 1 - Determination of Relevant Market Relevant Product Market Relevant Geographic Market

Stage 2 - Determination of Dominance What is Dominance Factors determining dominance

ABUSE OF DOMINANCE – SECTION 4

Stage 3 - Determination of Abuse

As per the act, Abuse of Dominance occurs if an enterprise or the group engages in one or more of the following conducts: Imposing unfair or discriminatory price or condition in purchase or sale

Case Example - CCI Case/ DLF Case Predatory Pricing

Case Example – Small retailers vs e-commerce companies Limiting production, technical or scientific development to the prejudice

of consumers Denying Market Access in any manner Using the dominant position in one relevant market to enter into, or

protect, other relevant market.

COMBINATION Combinations include mergers, amalgamations and acquisition of control,

shares, voting rights or assets.

Entering into a combination which causes adverse effect on competition within the relevant market in India is prohibited

Types Of Combination. Horizontal Combination Vertical Combination Conglomerate Combination

Threshold for Combinations under the Act

Combination Notice

COMBINATION THRESHOLD

In India

Applicable To

Assets Turnover

Individual Rs.1,500 cr. Rs.4,500 cr.

Group Rs.6,000 cr. Rs.18,000 cr.

In India &

Outside

Individual Parties

Assets Turnover

Total Minimum

Indian Component

Total

Minimum Indian

Component out of Total

$750 m

Rs.750 cr. $2,250

m Rs.2,250 cr.

Group $3 bn Rs.750 cr. $ 9 bn Rs.2,250 cr.

COMPETITION ADVOCACYThe aim is to foster conditions that will lead to a more competitive market

structure and business behaviour.

A successful competition advocacy can be viewed in terms of the following efforts from CCI:

Develop relationship with the Ministries and Departments of the Government / regulatory agencies that formulate policies affecting demand and supply in various markets.

Encourage debate on competition and promote a better and more informed economic decision making

Competition advocacy must be open and transparent to safeguard the integrity and capability of the CCI

Establish good media relations and explain the importance of Competition Policy as an integral part of the Government’s economic framework

COMPETITION ADVOCACYInitiatives taken by the CCI

Engaged in undertaking advocacy with ministries, regulators, &

State governments

Given its opinion on the draft of many Bills

E.g. the Shipping Trade Practices Bill

The Commission has given its views on regulatory policies and

practices in the fields of banking, telecommunications and

intellectual property rights.

Presentations on Competition law and policy to Ministries

Held a series of lectures/ seminars/ conferences dedicated to

competition related issues

AMENDMENTS TO THE ACTNeed for Amendment : The composition of the CCI Establishment of Competition Appellate Tribunal Imposing of penalty and other administrative powers/

changes Competition Commission to issue its order within 210 days

from making of the application Provide for continuation of the MRTP commission for 2 years

to deal with the pending cases under the MRTP act

COMPETITION COMMISSION OF INDIA (CCI) Administration and enforcement of competition law and

competition policy to enable economic efficiency and consumer welfare

Involvement proactively in government policy formulation to ensure that markets remain fair, free open flexible and adaptable.

COMPAT adjudicates appeals against the orders of the Competition Commission of India and also adjudicates the claims of compensation that may arise from the findings of CCI or itself.

COMPETITION APPELLATE TRIBUNAL

CONSEQUENCES OF CONTRAVENTION OF COMPETITION ACTInfringement Fine/Penalty Who is liable? Anti-competitive agreements

Penalties of up to 10% of

turnover (or 3x cartelized profits)

Enterprises who enter into

an anti-competitive agreement

Directors/officials also liable

Abuse of dominance

Penalties of up to 10% of

turnover Division of dominant enterprise

Enterprises abusing

dominant position Directors/officials also

liable

Failure to notify a reportable combination

Fine of up to 1% of combined

turnover/assets

Person or enterprise Directors/officials also

liable

Failure to comply with directions of CCI

Fines and/or imprisonment as prescribed

Compensation can also be awarded by Appellate Tribunal for loss/damage suffered by any person

Person failing to comply Directors/officials also

liable

BRICS

BRICS is a group of five major emerging economies of the world viz: Brazil, Russia, India, China and South Africa.

BRICS countries periodically review the competition regimes in their region & represent a fundamental change in international competition enforcement

The BRICS countries represent 3 billion people accounting for about 43 percent of the world population and 25 percent of the

world's GDP. Trade within the group amounts to about 17 percent of global commerce.

CASE STUDIES : Case 1 The Competition Commission of India ("CCI") imposed one fine—

INR 52.24 Crore fine against the Board for Control of Cricket in India for an alleged abuse of dominance.

This case was initiated on the basis of information filed by Sh. Surinder Singh Barmi, a cricket fan from New Delhi

The allegations leveled by the informant centre on the following three dimensions of organization of Indian Premier League (IPL), a Twenty 20, professional cricket league tournament conducted by BCCI:

○ Irregularities in the grant of franchise rights for team ownership. ○ Irregularities in the grant of media rights for coverage of the

league. ○ Irregularities in the award of sponsorship rights and other local

contracts related to organization of IPL.

CASE STUDIES : Case 2 Builders’ Association of India Vs Cement

Manufacturers’ Association &Ors.

In cartel cases, the CCI has the power to fine parties up to three times of its profit for each year of the continuance of the cartel or 10% of its turnover for each year of the continuance of the cartel, whichever is higher.

Compat granted a stay regarding the collection of INR 63.07 billion ($1.04 billion) in fines imposed on 11 cement manufacturers for coordinating prices and reduced the original fine of INR 600 million by 90%

Company

ACC Ltd.

Ambuja Cements Ltd.

Binani Cements Ltd.

Century Textiles Ltd.

India Cements Ltd.

J.K. Cements Ltd.

Lafarge India Pvt Ltd.

Madras Cement Ltd.

Ultra tech Cement Ltd.

Jai Prakash Associates Ltd

CASE STUDIES : Case 3

Belaire Owners Association vs. DLF Limited & Ors. DLF had used its position of strength in dictating the terms of the

Apartment Buyers Agreement ("Agreement') and imposed unilateral and one-sided clauses

Relevant market : the market for services of developer/builder in respect of high-end residential accommodation in Gurgaon

DLF had the highest market share (45%), vis-a-vis the market share of the nearest competitor (19%) which was more than twice of its competitor, leading to hardly any competitive constraints.

CCI  imposed penalty of Rs. 630 Crores on DLF Ltd. under section 27(b) of the Act, at the rate of 7% of the average turnover of DLF for the last three financial years

LATEST INFORMATION

Hiranandani Hospital under CCI lens for monopoly abuse

First instance of the anti-trust regulator turning its gaze towards the under-regulated healthcare sector in India

Lady was refused maternity services by Hiranandani during the 38th week of her pregnancy because she declined to avail the stem cell banking services offered by Cryobanks International India, with which the hospital had an exclusive partnership.

Dominant player in the field of maternity services abused its dominance by restricting the patient choice. 

STATISTICAL DATA

Enforcement Activities

STATISTICAL DATA

Office of the Director General

CONCLUSION

Competitive markets are backbone for economic growth

Competition Act: A perfect blend for liberalized India

Multilateral Competition vital for protection of competition

Scope & Objective of competition policy are both inter-

related

The elements of competition policy take care of all facets

Thus competition law is an important institutional pillar for

thriving a market economy like India