CONTINUOUS ASSESSMENT – I
COMPETITION LAW (BUSINESS LAW HON’S.)
Answer 1. The need for competition law can be ascertained from the fact that all people have
a fundamental right to practice their trade and business. However, as with all rights, reasonable
restrictions on their exercise is a must to ensure that the rights do not infringe in the domain of
exercise of rights of other people. Applying this in the marketplace, as there are a lot of
businesses operating in the economy, there can be instances of businesses colluding amongst
themselves, or with suppliers or distributors, in order to give undue advantage to themselves in
the market. This is called the appreciable adverse effect on competition (AAEC) under the
Competition Act. The effect of such undue advantage is directly on the consumers – because it
is the competitive conditions prevailing in the economy which drive the businesses to strive for
better quality products, innovation and efficiency. If the competition is not free and fair,
businesses would be discouraged from striving for betterment, leading to an overall fall in the
productivity of economy, and consumers would be left with no avail but to purchase the limited
variety and sb-optimal quality of products.
Thus, there is a need for a regime which protects these competitive conditions in the market.
There can be three benefits of competition law ensuring competitive conditions in the economy:
1. Allocative efficiency, which will ensure the effective allocation of resources.
2. Productive efficiency, which will ensure that costs of production are kept at a minimum.
3. Dynamic efficiency, which will promote innovative practices.
In this manner, the interests of both the consumers and the competitive businesses, and thus,
the economy as a whole, are protected.
DIFFERENCE BETWEEN COMPETITION LAW AND POLICY –
Competition law denotes the predominant statute and related rules and regulations prevailing
in a country. It 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. In this manner, the ambit is specific limited to the Competition Act, and the rules
and regulations published under it.
On the other hand, competition policy has a much broader ambit and covers all policies relating
to competition and trade in the country. It refers to all laws, not just limiting itself to
competition law, as well as includes government policies and regulations which are aimed at
establishing competition and maintaining the same in a country. For instance, section 27 of the
Petroleum and Natural Gas Regulatory Board Act discusses disproportionate gains made or
unfair advantage enjoyed in petroleum and natural gas industry. Any policy in this regard
would also be included under competition policy.
UNFAIR COMPETITION AND ITS HISTORY –
Unfair competition refers to a deceptive or wrongful business practice undertaken by any
enterprise in the market that harms the consumers or other businesses. It involves false or
misleading advertisements, disparagement, offering gifts, product safety standards, etc. which
intend to deceive or confuse the customers.
The notion of unfair competition can be said to have emerged from the concept of unfair trade
practices which were sought to be restricted through the Monopolies and Restrictive Trade
Practices Act, 1969 (MRTP). The MRTP Act came with the object of ensuring that there should
be no concentration of economic wealth, and economic resources should be efficiently
distributed. This suited the needs of that time as a lot of monopolies were emerging at that time.
Therefore, the Act aimed to break them up.
As the economic conditions changed and our market evolved, we came up with the Competition
Act, 2002. However, unfair competition is not covered within the ambit of Competition Act
and is rather dealt with by the Consumer Protection Act, 1986. Competition Act does not cover
it because competition law does not regulate consumers or unfair trade practices, rather it aims
to regulate competition so that there is consumer welfare.
OBJECTIVES OF COMPETITION ACT ARE ALIGNED WITH A MARKET-
DRIVEN ECONOMY –
During the time of the MRTP Act, the needs of economy were different. Primary concern was
to distribute economic wealth and break up monopolies, because of the emergence of a lot of
monopolies in the market.
However, over the next few decades, the market evolved substantially. After the LPG reforms
of 1991, we focussed on globalization, international competitiveness and liberalized various
sectors by doing away with governmental regulation. Thus, the market demanded a new
competition regime. Around the time Competition Act came, we had various international
agreements, and were part of WTO as well. The need of the market was to create an economy
where companies from all over the world can enter and sustain in the Indian market, and
domestic companies are able to survive on their own without any protection. We wanted to
invite foreign players, and provide a conducive atmosphere for them to operate, and to enable
the domestic industries to survive on their own. Moreover, with the overall increase of
consumerism and increased awareness in the market, the consumers demanded better quality
of goods and a wide variety of choices. This could only be possible when there existed a healthy
competition in the marketplace.
In this manner, the market-driven economy led to creation of Competition Act, 2002. The
objectives of Competition Act are the following –
1. To prevent practices having adverse effects on competition.
2. To promote and sustain competition in markets.
3. To protect interests of consumers.
4. To ensure freedom of trade carried by other participants in markets.
Looking at these objectives, we can see a direct alignment with the market-driven economy
discussed above. In the Competition Act as well, we are moving towards total welfare by
sustaining competition and ensuring freedom of trade. We are focusing on economic efficiency,
optimum utilization of resources, freedom of trade, meaning a wholesome understanding of
welfare, which is precisely the need of our market-driven economy.
Answer 2. The Competition Commission of India (“CCI”) was established under the
Competition Act, 2002 (“the Act”) to investigate any cases and/or complaints that come before
it. To fulfil the primary function of the CCI which is to conduct enquiries into contraventions
of any of the provisions of the Act, the Director General (“DG”) is appointed by the Central
Essentially, an inquiry is initially conducted by the CCI either upon receipt of a reference or its
own knowledge or information received in accordance with either Section 19 of the Act for
anti-competitive agreements and cases of abuse of dominance. For combinations, inquiry is
conducted under Section 20 of the Act. The Commission has to form to a prima facie opinion
that an alleged violation of the provisions of the Competition Act case exists and once it comes
to such conclusion it directs the DG to conduct an investigation into the practices of the
enterprise or entity in question.
Section 18 of the Act clearly states that it shall be the duty of the Commission to eliminate
practices having adverse effect on competition, promote and sustain competition, protect the
interests of consumers and ensure freedom of trade carried on by other participants, in markets
Inquiry and Investigation into Anti-Competitive Agreements and Abuse of Dominance
The procedure of inquiry by the CCI is enumerated under Section 19 of the Act i.e. inquiry in
cases of certain agreements alleged to be in contravention of the Act or information alleging
abuse of dominant position by an enterprise, which is to be conducted by the Commission in
the manner explained below:
The CCI upon receipt of reference or its own knowledge or information received under Section
19 with regard to anti-competitive agreement or abuse of dominance, has to come to a prima
facie opinion that a case exists and once it comes to such conclusion, it shall direct the DG to
make an investigation into the matter under S.26(1) of the Act. If the CCI does not find a prima
facie case, it will close the case, pass an appropriate Order and forward the Order to the
DG is required to submit a report on his findings to the CCI within the time as may be specified
by the Order of the Commission such that:
1. If the DG recommends that no case of anti-competitive agreement or abuse of
dominance exists and/or there is no contravention of the provisions of the Act, the CCI
shall invite objections/suggestions from the concerned parties. Upon consideration of
these objections or suggestions if CCI agrees with the DG, it shall close the matter. If
CCI does not agree with the recommendation of the DG, it may order further
investigation by DG or may itself conduct further investigation.
2. If DG in its report recommends, that there is a contravention of the provisions of the
Act and the CCI is of the opinion that a further inquiry is required, it shall investigate
into such contravention in accordance with the provisions of the Act.
The scope of investigation by DG was discussed in the case of Excel Crop Care Limited v.
Competition Commission of India & Another. In this case, the SC was of the view that the
DG should investigate the matter in accordance with the direction given by the CCI. The SC
found that the purpose of a DG investigation is to, “cover all necessary facts and evidence in
order to see as to whether there are any anti-competitive practices adopted by the persons
complained against”. Therefore, “the starting point of the inquiry would be the allegations
contained in the complaint” but during the course of the investigation “if other facts also get
revealed and are brought to light”, according to the SC, “the DG would be well within his
powers to include those as well in his report”.
The SC has decided the above on the basis that at the initial stage, the CCI cannot foresee and
predict whether any violation of the Act would be found upon the investigation and what would
be the nature of the violation revealed through investigation. Accordingly, the SC holds that a
restriction of the investigation process “would defeat the very purpose of the Act”.
Therefore, the order passed by the SC has broadened the boundaries/ paradigm of DG
investigations. The DG is well within its power to investigate other facts regarding a
contravention (not considered by the CCI) which the DG discovers later, during the course of
Appeals from orders of the CCI directing an investigation: CCI v. SAIL – Landmark
Judgment on this issue.
The issue of investigation being ordered by CCI and whether an appeal can be filed against
such an order was also discussed in the landmark judgment of CCI vs. SAIL, where the apex
court held that ― “No appeal can be filed against an order of Competition Commission of
India (CCI), directing an investigation into a complaint received by it”. Thus, this judgment
played a prominent role in ensuring the distribution of power of COMPAT and CCI, such that
they do not disturb the each other in proceeding providing an effective boundary between the
The apex court herein expressed that the direction of CCI to DG to conduct an investigation
under Section 26(1) of the Act is not appealable under Section 53A(1) of the Act, because the
order under section 26(1) does not determine any rights or obligations of the party to the case.
The court reached this after analysing the provisions under the Act and rules of interpretation.
Further, the court stated that the commission has responsibility to base its prima facie opinion
whose terms must be unambiguous, on basis of records furnished by parties and obtained
through complainant and other sources. The Act does not mandate any detailed reasoning but
there must be a “minimum reason” to substantiate the claim of forming prima facie opinion.
Finally, to ensure proper compliance in regard to procedural requirements the following
directions were also given so that the matter could be disposed expeditiously and the same
would be in larger interest of justice. The directions issued are as under:
1. The commission should hold its meeting and record its opinion much before 15 days
(the maximum time provided in the regulations) about its prima facie opinion about
2. The objectives of act must be strictly followed while inquiry and investigation
conducted by DG and commission.
3. If temporary order is passed, the final order must also be passed in short duration (not
later than 60 days).
4. The Director General must submit its report within the period as stated by commission
and not more than 45 days after the direction passed under Section 26(1) of the Act.
5. The confidentiality must be maintained by the commission and its delegates.