Competition Act, 2002
( an up gradation to the MRTP Act 1969)
Introduction & Interpretation
An act to provide, keeping in view of the economic development of the
country, for the establishment of a commission 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 trades carried on by other participants in markets, in India, and for
matters connected therewith or incidental thereto.
- The Competition Act, 2002, Opening
COMPETITION ACT , 2002
• Predecessor : MRTP Act, 1969.
• Followed by : Competition ( Amendment) Act
Some of the objectives of Competition Act are as follows :• Establishment of a Commission to prevent adverse effect on
• Promotion and sustenance of competition in the market.
• Protection of consumers’ interests.
• Freedom of trade.
Economic Reforms , 1991
• Post 1991 was seen with the introduction of policies of
Liberalization, Privatization and Globalization.
• MRTP was found inadequate to meet the challenges of a modern globalized
• Government of India in October 1999 appointed a high level Committee on
Competition Policy and Law (the Raghavan Committee) to advise on the
competition law in consonance with the international developments.
Competition Act,2002 v/s MRTP Act,1969
• Competition concepts
• Competition concepts not defined
• Provisions for regulation of
• No provisions for regulation of
• Power to impose penalty.
• No power to impose penalty.
• Statutory authority can seek
•No authority to seek opinion.
Competition Act,2002 v/s MRTP Act,1969
• Based on post reforms
• Based on structure as factor.
•Relatively more autonomy for
the Competition Commission.
• Penalties for offences.
• Proactive & Flexible.
•Based on pre-reforms scenario.
• Based on size as a factor.
•Very little financial and administrative
• No penalties for offences.
• Reactive and Rigid.
Activities Prevented Under Competition Act
• Price fixing :
If two or more supplier fixes the same price for supplying the goods then it
will be restricted practice.
• Bid rigging :
If two or more supplier exchange sensitive information of bid, then it will also
be restricted practice and against competition.
• Re-sale price fixation :
If the producer sells the goods to the distributors on the condition that he will
not sell on any other price which is not fixed by the producer.
• Exclusive dealing :
This is also restricted practice. If the distributor purchases the goods on a
condition that supplier will not supply the goods to any other distributor.
All the above activities promote monopoly and will not be entertained by
Scope Of Competition Act
• Fundamental principle of free market economy – free and fair
promoted. On the basis of such principle stimulates
productivity, innovation, improvised quality and efficient usage of
• The Act provides adequate safeguards to all the players in the
market with the help of a regulatory authority called the Competition
Commission of India (CCI).
Prohibition of Certain Agreements, Abuse of
Dominant Position & Regulation of Combinations
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 effect on competition within India.
-The Competition Act , 2002, Section 3(1)
• Also known as anti-trust competition.
• Section 3 provides that no enterprise or person 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
• The anti-trust agreements that the companies enter into are of two
types, viz. Horizontal & Vertical. These are in contravention of the
provisions of the Competition Act, 2002.
• These are agreements made between
two or more competing firms. Basically
called as formation of CARTEL.
- Any agreements violating the above
Sec.3(1) are void.
The reasons are –
• Directly or indirectly determines the sale
or purchase prices,
• Limits or controls
production, supply, markets etc.
• Shares the market or source of
production of services by way of
allocation of geographical area etc.
• Directly or indirectly involves in bid
rigging or collusive bidding.
• These are agreements between firms
relating to actual or potential relationship of
purchasing or selling to each other with a
purpose of dominating the market.
- Any agreements violating the above
Sec.3(1) are void.
The reasons are –
• Tie-in arrangement,
• Exclusive supply agreement,
• Exclusive distribution agreement,
• Refusal to deal,
• Resale price maintenance.
Prohibition of Abuse of Dominant Position
• A dominant position implies that a company, is so overriding that the
competitors are unable to match its actions or control the prices.
• Sec.4 of the Competition Act prohibits such activities which include:
i. Directly or indirectly imposes unfair or discriminatory Conditions/Price in
purchase or sale of goods or service.
ii. Limits or restricts
- production of goods or provision of services or market thereof,
- technical or scientific development relating to the goods or services
to the prejudice of consumers.
iii. Indulges in practices that result in denial of market access in any manner.
iv. Uses its position to enter into relevant market or protect the relevant
This Act does not block companies from being leader or dominant in an
Regulation of Combinations
• Competition Act, 2002, Sec.5
• The Act is not against any combinations of acquisition, merger or
• but, they prevent such activities with an intention to beat competition
and establish monopolies which is illegal.
COMPETITION COMMISSION OF INDIA (CCI)
(1) With effect from such date as the Central Government may, by
notification, appoint, there shall be established, for the purposes of this Act, a
Commission to be called the „Competition Commission of India‟.
(2) The Commission shall be a body corporate by the name aforesaid having
perpetual succession and a common seal with power, subject to the provisions of
this Act, to acquire, hold and dispose of property, both movable and
immovable, and to contract and shall, by the said name, sue or be sued.
The head office of the Commission shall be at such place as the Central
Government shall decide from time to time.
The Commission may establish offices at other places in India.
- The Competition Act, 2002, Sec.7,(1-4)
Composition of the Commission
• The chairperson and other six members of the Commission are
appointed by the Central Government.
• The term of office is for five years.(Sec.9-11)
• Selection Committee includes Chief Justice of India or his
nominee, Secretary in the Ministry of Corporate Affairs.
Duties and Powers of CCI
• Sec.18-20 deals with the duties.
- Summary of the duties are :
• Eliminate practices having adverse effect on competition.
• Promote and sustain competition.
• Protect the interests of the consumers.
• Ensure freedom of trade carried on by other participants in the
• Conduct enquiry into cases of abuse of dominant position and
( Sec.26 of the Act)
On receiving a receipt from any Statutory Authority like Central
or State Govt. Director General(DG) starts commences
DG submit report to CCI.
CCI forwards a copy to concerned parties.
Under DG’s report if there is no contravention of Competition
Act, the CCI invites objections from the Statutory Authority or as
the case maybe.
If these agree, then the case is closed.
Time limit for the enquiry is one year.
(Sec. 36 of the Act)
• It has powers to regulate its own procedure.
• It shall be guided by the principles of natural justice and the rules
and regulations of the central government.
• It will exercise the same power as a civil court under the Code of
Civil Procedure 1908.
(Sec. 42-48 of the Act)
• If any person, without reasonable clause, fails to comply with
the orders or directions of the act, he shall be punishable with
fine which may extend to Rs.1 lakh for each day during which
such non compliance occurs, subject to a maximum of rupees
10cr, as the Commission may determine.
• Further if any person does not comply with the orders or
directions issued, or fails to pay the fine imposed be
punishable with imprisonment for a term which may extend to
3 years, or with fine which may extend to Rs.25cr.
Competition appellate tribunal
• To hear and dispose of appeals against any direction issued or decision
made or order passed by the Commission.
• To forward appeal against any finding of the Commission and pass orders
for recovery of the compensation under the report of CCI.
• The appeal should be made within a period of 60 days from the date on
which a copy of the direction or decision or order made by the Commission
is received by the Central government or State government or a local
authority or enterprise accompanied by such fee as may be prescribed.
Benefits of Competition Act
- wider choice or goods.
- Better quality and improved value of money.
- Redressal against anti competitive practices.
- Competitively priced inputs.
Governments (Central & State)
- Savings of public money in procurement
- Enhanced availability of resources for social sector.
• Free market economy is the new world order, i.e. ‘free & fair’ .
• Transparency is the best policy.
• Competition advocacy is the new mantra.
• Market dominance is an outdated idea.
Case study : 1
(Relating to the Dominance abuse and Appellate function)
Relating Yash Raj films and “Son of Sardar”
The tassel between Yash Raj films and Ajay Devgan Films
- Case no. 66 of 2012
- Ajay Devgan Films
- Yash Raj films
• The informant’s grievance :
Opposite party released a mega starrer film ’
Ek Tha Tiger’ on 15th August 2012.
Meanwhile, they were also contemplating
release of the film ‘Jab Tak Hain Jaan’ during
They have put a condition on single
screen and multiplex owners that if they
wanted to exhibit ETT then they would have
to simultaneously agree to exhibit the other
•Claim highlights :
Abuse of dominance
Violation of Sec 3 and Sec 4 of the CCI
iii. Informant feared that he will not get enough theatres for his own
film ‘Son of Sardar’
iv. Tie in arrangement and vertical agreements
• Result of the case :
CCI did not find any misgivings on the opposition’s side.
iii. Fit for closure under section 26 (2) of the act.
• Reasons for Closure :
Tie in arrangements are not violative of Sec. 3, if it does not cause
appreciable adverse effect on competition of India.
ii. Market cannot be constricted to EID and Diwali. Market is considered as a
whole throughout the year.
iii. Sec. 4- domination of market not defined.
Case study : 2
(Relating to the Bid Rigging and Price Fixation)
Aluminium Phosphate tablets Manufacturer’s Case
- Case no. 02/2011
- Food Corporation of India (FCI)
- United Phosphorous Limited
- Sandhya Organic Chemicals Pvt. Ltd.
- Excel Crop Care Limited
- Agrosynth Chemicals Limited
- During last 8 years the opposite parties had quoted identical rates
and negotiations are also reduced to same rate.
- The manufacturers of the ALP tablets have formed a cartel.
- One of the manufacturers is using its dominance to compel others to
quote at same rates.
• Result of the Case:
- CCI decides to impose penalty at a rate of 9% on average of three
year turnovers of the three companies.
- This works out to Rs 252 crores for UPL, Rs 63 crores for Excel Crop
Care and Rs 1.57 crores for Sandhya Organics.
Case study : 3
(Relating to the Cartel Formation and Price manipulation)
Advertising Agencies Guild
Indian Broadcasting Foundation & its members
- Case no. 35 of 2013
- Advertising Agencies Guild
- Indian Broadcasting foundation &
its members (IBF)
- Opposite parties were forcing the advertising agencies to agree
to the new mechanism of billing (Gross Billing To Net Billing)
- They collectively boycotted and did not broadcast
advertisements on their Channels for two days viz. 01.05.2013
- Violation of section 3(3)
Result of Case
• Case was dismissed.
• IBF wasn't found to be abusing their dominance.
• The agreement deadline was increased to one month.
Reasons for Closure
Billing system has no restriction under competition Act.
Competition Act is applicable only to price fixation, market
sharing collusive bidding etc..,
The boycotting was pre-mentioned by the so formed committee
Case study : 4
(Relating to the Price fixation and cartel formation)
Relating Indian Glycols limited and
IOCL, BPCL, HPCL, ISMA & three Ministries”
- Case no. 14 of 2012
- Indian Glycols Ltd.
Indian Oil Corporation Ltd (IOCL).
Hindustan Petroleum Corporation Ltd
Bharat Petroleum Corporation Ltd (BPCL).
Indian Sugar Mills Association (ISMA).
And the corresponding ministries..
• THE INFORMANT’S GRIEVANCE :
- The fixing of price of Ethanol to Rs27/ltr by
Indian Sugar Mills Association (ISMA) with
the collaboration of Cabinet Committee of
- Enforcement of agreement of Cartelization
on the government body by the president
- The price fixation by the four OMC’s and by
various suppliers who are in horizontal
relationship with each other.
- The chain from ISMA to certain Ministries
and then to OMCs were inter related in
the fixing the prices.
Act of price fixation
Section 3 (3) (a), (b) & (c) are violated.
Act of abuse of dominant position.
Section 4 (2) (a) & (e) are violated.
I. Case was dismissed.
II. The Commission did not find any violation in the section 3 and 4 of
III. The order was given under section 26 (2) of the competition
IV. All the opposite parties came out clean in the case.
The price fixed by the Cabinet Committee of Economic Affairs
(CCEA), for the procurement of Ethanol cannot be considered as anti
competitive in nature as it is set up to encourage the farmers to produce
more sugarcane as ethanol comes from molasses in sugarcane.
II. The Formation of cartelization was not found.
III. Sec. 4- domination of market not defined.
Case study : 5
(Relating to Predatory pricing by use of Dominance)
(Transparent Energy Systems Pvt. Ltd.)
TECPRO Systems Ltd.
- Case no. /2012
- M/s Transparent Energy Systems Pvt.
• Opposite Parties:
- TECPRO Systems Ltd.
•Allegations under section 4 of Competition Act,2002:1.
Quoted all bids at prices as low as Raw Material Cost (RMC)
TECPRO was Dominant Player with 50% market share in WHR
market of India
•Further allegations were:
- Opposite party(OP) had large economic strength compared to
- OP was a renowned player in coal, ash handling etc.
- OP also catered to various sectors like cement, steel etc.
- Low prices quoted by OP could not be justified as per the standard
norms of working out cost.
- OP abused its dominance in collaboration with major chinese
- OP also indulged in non-price predatory behaviour by hiring its key
• Question of Dominance:
- There were five players in the relevant market and OP only
entered the WHR market in 2011.From one year data given by the
informant, it cannot be concluded that OP was dominant player.
- The dominance of OP in other markets cannot be a ground to
consider OP as dominant in WHR market.
- OP has not completed successfully any projects till date.
Therefore it cannot be considered a successful player
• Question of Predatory Pricing :
The Act was enacted with the intention to promote and sustain
competition, to protect interest of consumers and provide freedom of
trade. It doesn’t envisage the protection of any competitor from stiff
• Under section 4 (b) explanation, predatory price is defined as :
“Predatory price” means the sale of goods or provision of services, at
a price which is below the cost, as may be determined by regulation, of
production of the goods or provisions of services, with a view to reduce
competition or eliminate the competitors.”
• In predatory pricing, there is always a significant planning to
recover the losses once the competitors have been forced out.
• But OP not being Dominant company, cannot have inclination
and resources to finance such a strategy.
• The commission cannot consider the prices quoted by the OP
as Predatory only because the bidder continuously got many
• It is only a case of competitive bidding by the competitor which
is not a case of Predatory Pricing.
• Thus the case was considered fit to be closed.