2. Competition
Competition is the best means of ensuring that the customers has access to the
broadest range of goods and services at the most competitive prices. Which will
eventually increase the productivity and Competitiveness of the Companies that
lead to overall Growth of the Country.
3. Types of Competition:
• Perfect Competition: In Perfect
Competition many small companies sell
identical products. Because no company
is large enough to control price, each
simply accepts the market price. The
price is determined by supply and
demand.
• Monopolistic Competition: Under
monopolistic competition, many sellers
offer differentiated products—products
that differ slightly but serve similar
purposes. By making consumers aware
of product differences, sellers exert
some control over price.
• Oligopoly: A few sellers supply a sizable
portion of products in the market. They
exert some control over price, but
because their products are similar,
when one company lowers prices, the
others follow.
• Monopoly: There is only one seller in
the market. The market could be a
geographical area, such as a city or a
regional area, and does not necessarily
have to be an entire country. The single
seller is able to control prices.
4. Benefits of Healthy Competition
Promotes innovation and better products at lower
prices.
More competition means greater choice and more
services.
Revitalization of existing players.
Awareness of the product and market penetration.
5. Anti-Competitive Agreements
• Anti-Competitive agreements are agreements among competitors to
prevent, restrict or distort competition. The Competition Act
prohibits agreements, decisions and practices that are anti-
competitive.
• The agreements which cause or are likely to cause appreciable
adverse effect on competition(“AAEC”) are anti-competitive
agreements. such agreements maybe horizontal or vertical.
7. Horizontal Agreements
Directly or indirectly
determines purchase or sale
prices
Limits or control production,
supply
Shares the market or source of
production
Directly or indirectly results in
bid rigging or Collusive bidding
Vertical Agreements
Exclusive Supply Agreement &
refusal to deal
Resale price maintenance
Tie-in-arrangements
Exclusive distribution
agreement
8. APPRECIABLE ADVERSE EFFECT ON COMPETITON (AAEC)
Creation of barriers to new entrants in the
market
Driving existing competitors out of the market
Foreclosure of competition by hindering
entry into the market
Accrual of benefits to the consumers
Improvements in production or distribution of
goods or services
Promotion of technical, scientific and economic
development by means of production or
distribution of goods or provision of services
9. Cartel
A cartel is an organization created from a formal agreement between a
group of producers of a good or service to regulate supply in order to
regulate or manipulate prices.
Example
● Oil cartel Organization of Petroleum Exporting Countries (OPEC)
● Diamond Cartel
10. Price Cartel Specialized Cartel
Quota Cartel
Market Cartel
Parties to the cartel
agree to restrict
themselves to their
own specialized
activities without
interfering in the
specialized activities
of other parties in
the cartel.
Competitors fix
their % market
share in the
same
Geographical
market
Geographical
Division of
Market
Collective Price
Fixation
Price Parallelism
+Conspiracy Factor
Cartel
Price Cartel
Geographical
Division of
Market
Collective Price
Fixation
11. Consumer Includes
Any LAWFUL USER Of such
good(who uses the good with
permission of such buyer)
Whether Such Person Buy
Goods for
Any BENEFICIARY of the
Service
Whether Such Person Hire
The Service For
Personal
Purpose
Personal
Purpose
Commercial
Purpose
Resale
Commercial
Purpose
OR OR
12. Enterprise means
Goods
Sales/Purchase of
shares & Securities
Services
Manufacture
of Goods
Trading of
Goods i.e. Investment
Company
But, does not include government department involved in sovereign functions
Any Person(s) or department of government which is engaged in the
The enterprise carries business through one or more units /division / subsidiaries either
at same place or different places.
13. Means
Goods are defined in
the sale of Good Act.
1930.
‘’GOODS’’ means every kind of movable other
than actionable claims and money and
includes stock and shares, growing crops,
grass, and things attached to or forming part
of the land which are agreed to be severed
before sale or under the contract of sale
Includes
(1)Product manufactured,
processed or mined;
(2) Debenture, stocks and shares
after allotment
(3)In relation to goods supplied,
distributed or controlled in
India, goods imported into India;
GOODS
&
14. Relevant Market
Relevant geographic market
• Means a market comprising the area in which the condition of
competition for supply of goods or provision of services or demands
of goods or services are distinctly homogenous and can be
distinguished from the condition prevailing in the neighbouring
areas
Relevant Product market
• Means a market comprising all those product or services which are
regarded as interchangeable or substitutable by the consumer by
reason of characteristics of the product or services their prices and
intended use
15. Abuse of Dominance- Under Competitive Act.
What is a dominance position
● Dominant position’ means position of strength, enjoyed by an enterprise, in
the relevant market, in India.
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
16. Abuse of that Position
When an industry grows to such an extent that it practically rules out all other
competitors in the market and acquires complete control over the market and
consumers it is said to have acquired dominance. When it uses position of
strength, in the relevant market to:
● Imposing unfair or discriminatory price or condition in purchase or sale
● Limiting production or scientific development to the prejudice of consumers
● Denial of market access in any manner
● Conclusion of contract subject to supplementary obligations
● Use of position in one relevant market to enter into or protect other relevant market
17. Why Anti-competition agreement is bad?
1. Prices are kept artificially high
2. Customers don’t have a real choice
3. Businesses can’t compete on a level playing field
4. Lack of innovation
5. Whole industries can suffer a negative impact
● Anti-competitive behaviours can damage the reputation of entire industries, affecting
jobs and status, both at home and abroad.
18. The Competition Act, 2002
1. The Competition Act, 2002 was enacted by the Parliament of India and
governs Indian competition law
2. The Competition bill, 2001 was introduced in Lok Sabha by Finance Minister
Arun Jaitley on 6 August 2001.
3. It replaced the archaic The Monopolies and Restrictive Trade Practices
Act(MRTP Act), 1969.
4. Under this legislation, the Competition Commission of India was established
to prevent the activities that have an adverse effect on competition in India.
5. It is a tool to implement and enforce competition policy and to prevent and
punish anti-competitive business practices by firms and unnecessary
Government interference in the market.
19. Objectives of the Act
It is an act to establish a commission, protect the interest of the consumers
and ensure freedom of trade in markets in India. The other objectives of the
act are: -
❏ To prohibit the agreements or practices that restricts free trading and
also the competition between two business entities.
❏ To ban the abusive situation of the market monopoly.
❏ To prevent the interests of the smaller companies or prevent the abuse of
dominant position in the market.
❏ To provide the opportunity to the entrepreneur for the competition in the
market.
❏ To prevent from anti-competition practices and to promote a fair and
healthy competition in the market.
20. Competition Commission of India (CCI)
● Competition Commission of India is a statutory body of the Government of India.
● CCI are authorized to pass the law and take the decision on the behalf of state or
country.
● CCI is an expert body regulating anti competitive practices in the country. That is
when companies were found or accused of unfair trade practices.
● CCI has been given the authority to direct any enterprise or person to modify,
discontinue and not re-enter into anti-competitive agreement and impose
penalty, which can be 10% of the average of the turnover for the last three
years.
● CCI is established under Competition Act, 2002 which was later amended in 2007.
● CCI was established for administration, implementation and enforcement of the act.
21. CCI Members
● CCI consists of a Chairperson and not less than 2
and not more than 6 Members appointed by the
Central Government.
● Ashok Kumar Gupta is the current Chairperson of
the CCI and Dhanendra Kumar being first.
● The chairperson and every other member shall
hold office for a term of five years.
22. Objectives of CCI
● To regulate the competition act and ensure freedom of trade.
● To prevent practices having adverse effectc on competition.
● To promote and sustain competition in markets.
● To protect the interests of consumers.
Some Notable Cases by CCI
❖ On Feb 2013, CCI imposed a fine of INR 52.2 crores on the BCCI for misusing it dominant
position. The CCI found that IPL team ownership agreements were unfair and discriminatory and
that the terms of the IPL franchise agreements were loaded in favor of BCCI and franchises had
no say in the terms of the contract.
❖ In May 2017, CCI ordered a probe into the functioning of the Cellular Operators Association of
India following a complaint filed by Reliance Jio against the cartelization by its rivals Bharati
Airtel, Vodafone India and Idea cellular.
23. Duties of CCI
To achieve its objectives, the Competition Commission of India attempts to do
the following:
● Make the markets work for the benefit and welfare of consumers.
● Ensure fair and healthy competition in economic activities in the country for
faster and inclusive growth and development of the economy.
● Implement competition policies with an aim to operate the most efficient
utilization of economic resources.
● Effectively carry out competition advocacy and spread the information on
benefits of competition among all stakeholders to establish and nurture
competition culture in Indian economy.
24. COMPETITION APPELLATE TRIBUNAL (CAT)
● Statutory Organization formed under the Competition Act 2002.
● To hear & dispose appeals against any direction issued or decision made or
order passed by CCI . It also adjudicate on claims for compensation that
may arise from the findings of CCI or the Tribunal .
Chairperson- Person who is or has been a judge of SC or the Chief Justice of a
High court + Maximum of 2 other members
● A person preferring an appeal to the tribunal may appear in personal or
authorize any CA/ CS / Cost Accountant / Legal practitioners/ officers to
represent the case.
25. • The tribunal holds the same power as exercised by a high court in
case of its contempt under the provision of Contempt of Courts
Act 1971.
• The CAT has now conferred to National Company Law Appellate
Tribunal (NCLAT).
26. NCLAT(National Company Law Appellate Tribunal)
NCLAT was constituted under Section 410 of the
Companies Act, 2013 .
•To hear appeals against the orders of National Company Law Tribunal with
effect from 1st June, 2016.
•To hear appeals against the orders pass of the Insolvency and Bankruptcy
Code with effect from 1st December, 2016.
•It became the Appellate Tribunal to hear and dispose appeals against
Competition Commission of India under the Finance Act, 2017, with effect
from 26th May, 2017.
Functions of
NCLAT
27. CASE FILED BY MCX STOCK EXCHANGE LIMITED ON NSE (2014)
NSE announced a transaction fee waiver in respect of all Currency
Derivatives executed on its platform .
Due to this MCX- SX the other player also had to waive transaction fee
in CD segment and thus suffered huge losses.
Therefore MCX-SX filed a case against NSE for abusing its dominant
position by indulging in predatory pricing .
The CAT found NSE guilty and upheld the decision of Competition
Commission of India to impose a penalty of Rs 55.50 crores.
It rejected the NSE argument that the relevant market was “ Stock
Exchange services for only CD segment ."
28. The Penalty imposed can be up to 10 percent of average
annual turnover of the enterprise found guilty.
So if the relevant market would have been only CD
segment the Penalty that NSE had to pay would have
been much less .
The Tribunal declared “ The relevant market should
consider entire stock exchange services .” as NSE does
not deals with a specific product . It deals with an
entire range of services .
It is one of the iconic cases of CAT as it led to the
determination of relevant product market in similar cases
heard by CCI .
TOTAL
TURNOVER
Maximum
Penalty
29. The CCI will consider a few criteria[3] before sanctioning or approving a combination. These criteria
are:
Regulation by CCI (Limiting M&A)
What will be the actual level of imports in the market after the combination takes place.
The total market share of the new entity formed through the combination the concentration of
market share in the entity.
Whether other competitors will make any unilateral effort to remain in the competition after
the combination takes place, or will all efforts stop.
Whether the resulting entity from the combination will create barriers to entry in the relevant
market. Or even if they will stop other competitors expansions.
In case of horizontal mergers, whether there is any overlap in the markets and other factors.
30. These are just some of the factors which have to be very carefully considered by the
CCI before approving any combination. This is because it falls on to the CCI to ensure
that no one exploits or tries to control the economy to suit their needs.
Whether or not there is a chance of alternative suppliers and if there are substitute products existing in
the market.
The likelihood under which it is possible for the combination of getting a substantially large profit after
combination.
Whether or not the benefits of the combination outweigh the adverse effects of it.
If the mere existence of the combination will curb other competition.
The nature and extent of innovation coming into the market after the combination.
If the mere existence of the combination will curb other competition.
31. Competition Act Can’t restrict these Act’s
The Copyright Act,
1957
The Patent Act, 1970
The Trade and
Merchandise Marks
Act, 1958
The Geographical
Indication of Good
(Registration and
Protection) Act, 1999
The Design Act, 2000
The Semi-conductor
Integrated Circuits
Layout-design Act,
2000
The right of any person to export good From
India to the extent to which the agreement
exclusively to the production, supply,
distribution or Control of good or provision of
services of such exports
32. Cases where CCI Allowed M&A
Vodafone - Idea Merger-After the advent of the telecommunication
service of Reliance Jio, many telecom companies have been forced to
slash their prices and to bring about new offers.
Along with this is comes the merger of telecom giants Vodafone and Idea.
Individually both these companies had dominant position in the market.
Thus, the question that arises is why this combination was allowed by the
Competition Commission of India. The answer to this lies within the
analysis of the industry. After looking at the position of the industry after
Jio, it could be seen that Jio was also in a position to abuse dominant
position in the market. The merger was allowed to ensure that
competition continues
33. Tata Steel - Bhushan Steel Takeover-Tata is already a giant in the steel
industry and has near monopoly in most sectors of the steel market.
Bhushan steel was the leading company in the field of auto-grade steel.
Though having stable operations, it was a non-performing asset. It was up
for takeover. Tata Steel won the bid and then this has become known as
Tata Steel BSL. This takeover has allowed Tata Steel to gain dominant
position in the one steel field where it was not a leader. This opens avenue
for a near monopoly in the steel market. Yet, the CCI allowed this takeover,
because not only did it allow the economy to continue, but increased
revenue in the market.
34. Need for Competition Commission for regulating
malpractices
1.MakeMyTrip (MMT)-GoIbibo and OYO:
•CCI found that the merger of MMT and GoIbibo had led to
its dominance in the relevant market of online travel agency,
which had empowered MMT-Go to operate independent of
the competitive forces prevailing in the relevant market.
•MMT-Go had imposed a term in the contract with hotels,
whereby the latter was not allowed to sell its room at any
other platform or on its own online portal at a price below
which it was being offered on MMT-Go’s platform.
•OYO facilitates and markets budget accommodation on its
platform.
35. • to promote freedom of trade
and competition in the market
• to protect interest of
consumers.
• to regulate and stop
malpractices in the markets.
This is why
there is a
need of
Competition
Commission
2.Amazon,
Flipkart
• CCI ordered a probe
against Amazon and
Flipkart for including
deep discounting and tie-
ups with preferred seller
• engaging in predatory
pricing
36. Conclusion:
• It can now be concluded that the Competition Act, 2002 is a
momentous legislative act. The main purpose of the Act is to
promote competition and to prevent all anti-competitive
agreements.
• The Act prohibits the abuse of large businesses. It can also control
any type of combination that exceeds a certain size. The Act
therefore does not prohibit monopolies oppression but rather
prohibits the exploitation of monopolies.
• Competition law is expected to play a significant role in changing
regulatory and regulatory trading practices and is expected to
protect the interests of small and medium enterprises without
giving consumers more power to resolve their grievances.
