Outside cp knowledge presentation competition act _2002

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Outside cp knowledge presentation competition act _2002

  1. 1. Provisions of the Competition Act, 2002 Sanjay Bhatt Partner – Litigation Kesar Dass B. & Associates
  2. 2. What is Competition? <ul><li>A market situation, in which sellers independently strive for buyer’s patronage to achieve business objectives such as profits, sales or market share. </li></ul><ul><li>It is the foundation of an efficiently working market system. </li></ul>
  3. 3. Competition – why ? <ul><li>The ultimate objective of competition is to secure the interest of the Consumer - it empowers the consumer, best guarantee for consumer protection. </li></ul><ul><li>It is a means of reducing cost and improving quality. </li></ul><ul><li>It also implies an open market where shortages are rapidly eliminated through the best allocation of resources. </li></ul><ul><li>It accelerates growth and development; preserves economic and political democracy. </li></ul>
  4. 4. <ul><li>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. </li></ul><ul><li>As a sequel to the Report of the Committee, the Competition Act, 2002 to replace MRTP Act was enacted and notified in January, 2003. </li></ul>Competition Act 2002 - Background
  5. 5. Basic objectives of Competition Act, 2002 <ul><li>To prevent practices having adverse effect on competition </li></ul><ul><li>To promote and sustain competition in markets </li></ul><ul><li>To protect the interests of consumers; and </li></ul><ul><li>To ensure freedom of trade carried on by other participants in markets </li></ul>
  6. 6. Establishment of Competition Commission of India (CCI) & its duties <ul><li>Competition Act 2002 provides for establishment of a Commission to prevent practices having adverse effect on competition etc. </li></ul><ul><li>To eliminate practices having adverse effect on competition </li></ul><ul><li>To promote and sustain competition </li></ul><ul><li>To protect interests of consumers, etc. </li></ul>
  7. 7. JURISDICTION OF CCI <ul><li>Enquire into Anti-Competitive Agreements (eg. Cartel, bid-rigging, etc.) [Section 3] </li></ul><ul><li>Enquire into abuse of dominant position (eg. Predatory Pricing, etc.) [Section 4] </li></ul><ul><li>Regulate combinations (Mergers, Acquisitions, etc.), [Section 5 & 6] </li></ul><ul><li>Undertake Competition Advocacy (including advise on policy issues), create public awareness, impart training on competition issues, [Section 49]. </li></ul>
  8. 8. Roadmap to Merger & Acquisition under the Act <ul><li>S ection 5 provides detailed criteria for “combination” falling within its purview </li></ul><ul><li>Section 6 provides for regulation of “combination” having adverse effect on competition by CCI </li></ul><ul><li>“ combination” taken place outside India or party to it outside India also covered under its purview </li></ul><ul><li>Factors such as actual and potential level of competition, degree of consolidation in the market and degree of countervailing power taken into account while determining adverse effect on competition. </li></ul>
  9. 9. continued….. <ul><li>Reporting of such combination by parties to the CCI optional and not mandatory </li></ul><ul><li>CCI also has suo motu power to enquire whether a combination causes or is likely to cause an appreciable adverse effect on competition </li></ul><ul><li>Enterprises with a lower asset value and turnover than threshold are excluded from the purview </li></ul><ul><li>Share subscriptions, financing facilities and acquisitions by public financial institutions, foreign institutional investors, banks and venture capital funds exempted from purview </li></ul>
  10. 10. continued ……. <ul><li>Combinations that are found to have a negative impact on competition are to be rendered void ab initio by CCI </li></ul><ul><li>Unlike abuse of dominance, which demands evidence of actual abuse, combinations that are merely likely to have an adverse effect on competition are prohibited. </li></ul><ul><li>No inquiry by CCI after expiry of one year from the date on which such combination has taken effect. </li></ul><ul><li>Modification to combination permissible during inquiry before CCI </li></ul>
  11. 11. Critical Issues <ul><li>Pre-notification of proposed “combination” voluntary and not mandatory </li></ul><ul><li>Bar to initiate inquiry after expiry of one year from taking effect of a “combination” </li></ul><ul><li>Likely logistical limitations of CCI to take suo motu cognizance of every violative “combination” </li></ul><ul><li>Overlapping of jurisdictions with that of High Courts and SEBI as regard merger/acquisition </li></ul><ul><li>Unrealistic time period for disposal of inquiry </li></ul>
  12. 12. continued ……… <ul><li>Non availability of any residuary/inherent power to inquire into a “combination” not falling within threshold but giving rise to appreciable adverse effect on competition in the relevant market </li></ul><ul><li>No provision empowering CCI to seek co-operation and co-coordination directly from their counter parts abroad. </li></ul><ul><li>Trained/skilled professional manpower </li></ul><ul><li>Infrastructure support system </li></ul><ul><li>Access to updated data-base, information, international developments etc. </li></ul>
  13. 13. Thank you Kesar Dass B. & Associates Corporate & Commercial Lawyers 15, Birbal Road, Jangpura Extn. New Delhi - 110014 Phone: 91-11-41823285-89 Fax: 91-11-41823290-91 E-mail: [email_address] Web: www.kesardass.org

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