1. Competition Law inCompetition Law in
India -India -
Journey so farJourney so far
CHANDIGARH JUDICIALCHANDIGARH JUDICIAL
ACADEMYACADEMY
May 16, 2015May 16, 2015 Sukesh Mishra
Director(Law)
Competition Commission of India

2. Fair Competition For Greater GoodFair Competition For Greater Good
o What is Competition?
o It is rivalry among firms to do better than others
o Competition is important
o Consumers (Choice, Quality, Price)
o Economy (Productivity, Growth, Wealth Creation)
o Society (Poverty Alleviation, Innovation)
o Ensures optimum welfare through efficient allocation of
resources
o It is no automatic
o Requires nurturing
o Competition Policy & Competition Law
o Over 120 countries have competition regime

3. Historical Background - Indian CompetitionHistorical Background - Indian Competition
LawLaw
o The Monopolies and Restrictive Trade Practices Act, 1969
o Liberalization - A wave of reforms
– Comprehensive economic reforms since 1991 carried the economy to a new
trajectory(Monetary Policy; Fiscal Policy; Trade and Investment Policies)
– With the introduction of these reforms the MRTP Act became obsolete
– Policy approach shifted from controlling monopolies to promoting competition
o Raghavan Committee
– Constituted in October 1999
– Submitted its report in May 2000
– Recommended repeal of MRTP Act and enactment of a modern Competition Act
in sync with post 1991 economic philosophy
o The Competition Act was enacted in 2002
o Amended in 2007 and 2009
o The enforcement provisions were notified in phases from May, 2009 to
June, 2011

4. The Competition Act, 2002The Competition Act, 2002
 Objectives of the Act
– To provide, keeping in view of the economic development of the country, for the
establishment of a commission to prevent practices have adverse effect on
competition;
– To promote and sustain competition in markets;
– To protect the interest of consumers; and
– To ensure freedom of trade carried on by other participants in markets, in India
 Enforcement Functions [Sections 3, 4, 5 & 6]
– Prohibitions of anti-competitive agreements (Section 3)
– Prohibitions of abuse of dominant position (Section 4)
– Regulation of combinations (Sections 5 & 6)
 Advisory functions [Sections 49(1), 21]
 Advocacy functions [Section 49 (3)]
 Legislative functions [Section 64]

5. Coverage under Competition Act,Coverage under Competition Act,
20022002
o Anti-Competitive Agreements
o Abuse of dominance
o Combination
o Competition neutrality
o Competition Advocacy

6. Defined under Section 2(b) of the Competition Act,
2002, which includes any :
Arrangement
Understanding or
Action in concert
Whether or not
in writing;
intended to be legally enforceable
What is AgreementWhat is Agreement

7. Section 2(h) defines ‘ Enterprise’.
Includes:
Person or Department of Government
Engaged in production, storage, supply,
distribution, acquisition, or control of articles or
goods or provision of services etc.
Excludes:
Sovereign Functions viz. atomic energy, currency,
defence and space.
EnterpriseEnterprise

8. Anti-Competitive Agreements - Classified into two
types:
◦Horizontal Agreements, Section 3(3) – cartel, bid-
rigging etc.
◦Vertical Agreements, Section 3(4) – exclusive supply,
tie in arrangement etc.
Anti-Competitive AgreementsAnti-Competitive Agreements

9.  An agreement entered between two or more enterprises
operating at same level of business. For eg. Agreement
between one cement manufacturer with another cement
manufacturer to control production, supply or
 Directly or indirectly determining purchase or sale price
 ‘Shall presume’ rule applies to Horizontal Agreements
 Burden of proof is on the person or enterprise
Horizontal AgreementsHorizontal Agreements

10. Horizontal Agreements, often termed as Cartels,
considered most pernicious under the Competition
Law;
Penalty : Up to 3 times of profit of contravening
enterprise for each year of the continuance of such
agreement or 10% of its average turnover, whichever is
higher;
Horizontal AgreementsHorizontal Agreements

11. In re: Alleged Cartelization by Cement
Manufacturers
 MRTP Commission took suo-motu cognizance of this matter,
and was later transferred to Competition Commission under
section 66(6). CCI found the act and conduct of the cement
companies to be a ‘Cartel’ as the cement companies were
acting together to limit, control and also attempted to
control the production and price of cement in the
market in India
 Penalty of Rs. 6307 crore was imposed on the 11 cement
companies and their associations, fixed at 50 per cent of their
profits during 2009 -10 and 2010 -11.
Horizontal AgreementsHorizontal Agreements

12. In re: Suo Motu case against LPG Cylinder
Manufacturers
Competition Commission took suo-motu cognizance of
manipulation of bids by LPG cylinder manufacturers for
supplying 105 lakh LPG cylinders with safety valves to Indian Oil
Corporation Ltd (IOCL) during 2011.
Commission found that LPG manufacturers had procured order
for supply by quoting identical rates in group.
Collusive action in violation of Section 3(3) (d) of the Act, which
deprived IOCL from getting competitive prices and led to increase
in costs.
Cease and desist orders were passed and penalty of 165.69 crores @
7% of average turnover was also imposed.
Horizontal AgreementsHorizontal Agreements

13. Indian Sugar Mills Assn. v Indian jute Mills
Assn.(IJMA) & Gunny Trade Assn.(GTA)
(Case No. 38/2011)
 It was alleged that the OPs were fixing the price of jute bags for
the members of IJMA and GTA by issuing daily price bulletin.
 The OPs by using their monopoly position were charging
unreasonably high prices for jute bags from the sugar
manufacturers.
 DG upon investigation found that the allegations were true and
substantiated by the evidence gathered during investigation.
 The Commission upon inquiry, held that the OPs have violated
S. 3 (3)(a) read with S.3(1) of the Act by controlling the price of
jute bags through a tacit agreement and imposed 5% penalty on
OPs and their office bearers on their average turnover of last
three years.
Horizontal AgreementsHorizontal Agreements

14. Suo Moto Case No. 3 of 2012 (Cartelization in supply of
spare parts to Indian Railways, Patiala, Punjab)
CCI took suo moto cognizance in the matter based on letter received from
Manager, Diesel Loco Modernization Works, Punjab alleging cartelization in the
tender floated for procurement of Feed Valves used in diesel locomotives.
CCI held that all the 3 OPs were quoted identical rates of Rs. 17,147.54 for the
Feed Valves per piece.CCI also found that all the three OPs have their
manufacturing units located at different parts of India viz. Haryana, West Bengal
and Tamil Nadu with different cost of production cannot quote the identical
rates in the bid unless there is a collusion amongst each other.
All the 3 OPs have violated Section 3(3) of the Competition Act,2002 and
penalty over 60 Crores @ 2% of average Turnover was imposed on the
Companies.
Horizontal AgreementsHorizontal Agreements

15. Agreements between different level of production and
distribution chain are called vertical agreements viz.
Manufacturer-Dealer; Dealer-Supplier and Wholesaler-
Retailer etc.
Following agreements are prohibited under Competition
Act:
◦ Tie-in arrangements
◦ Exclusive Supply Agreement
◦ Exclusive Distribution Agreement
◦ Refusal to Deal
◦ Resale Price Maintenance
Vertical AgreementsVertical Agreements

16. Shamsher Kataria vs. Honda Siel Cars and 13 Ors.
(Case No.03/2011)
 In a first major Order passed under section 3(4) of the
Competition Act,2002, CCI had imposed penalty of more than
Rs.2500 Crores upon 14 major car manufacturers for violating
the Act.
 It was held that all the major auto manufactures were not
allowing its spare parts and diagnostic tools to be sold in the
open car market and forcing the consumers to buy it from their
authorized dealers.
 The CCI relied various judgments while passing the detailed
order.
 Some of the Car Manufacturers have unsuccessfully challenged
the jurisdiction by filing writ petitions in different High Courts
to stop the proceedings before the Commission.
Vertical RestraintVertical Restraint

17. Dominant Position (Explanation to Section 4)
Dominant position is position of strength, enjoyed by
enterprise, which enables it to :
Operate independently of competitive forces in market;
Affect its competitors and/or consumers in its favour.
Dominance itself is not prohibited, its abuse is; and
Dominant position is always defined with context to the
relevant market.
What is DominanceWhat is Dominance

18. ◦ Relevant Market [Section 2(r)] - Comprises of
either/or both relevant geographic market and relevant
product market
◦ Relevant Geographic Market [Section 2(s)] - Area
in which conditions of competition for supply or
demand of goods/services are homogenous and can be
distinguished from other areas;
◦ Relevant Product Market [Section 2(t)] - Market
comprising all goods/services which are substitutable by
reason of characteristics, usage and prices.
Concept ofConcept of Relevant MarketRelevant Market

19.  Imposing, directly or indirectly, unfair or discriminatory conditions
or price in purchase or sale of goods/services;
 Limiting or restricting production of goods/services or technical
development to the prejudice of customers;
 Indulging in practices resulting in denial of market access;
 Imposing conditions not relevant to subject of the contract or
disadvantageous to the other party;
 Using dominant position in one relevant market to enter or protect
other relevant market
Abuse of DominanceAbuse of Dominance

20. Belaire Owner’s Association vs. DLF
M/s Magnolia Flat Owners Association & Anr. vs. DLF
Universal and Others
 DLF imposed several clauses in Buyer’s Agreement viz. action of
cancelling allotments, forfeiting deposits, keeping buyers in the dark
about the eventual shape, size, location, earnest money, instalments,
timely payments, delivery of possession, alternations and additional
constructions etc. of the apartments was held unfair
 DLF enjoyed dominant position in relevant market i..e. Relevant
Product Market - Provision of services of development of high end
residential flats & Relevant Geographical Market was Gurgaon, Haryana.
Competition Commission of India held:-
 Cease and desist orders passed against imposition of such conditions
 Modify such detrimental conditions 3 months
 Penalty of Rs 630 crores was imposed based on turnover for last 3 years
 COMPAT recently upheld the order of CCI
Abuse of DominanceAbuse of Dominance

21. Maharashtra State Power Generation Co.
against Coal India Ltd. & other connected
matters
 CCI has recently imposed a penalty of Rs.1773.05 crore
on Coal India for abusing its dominant position under
section 4 of the Competition Act.
 It was found that the CIL operates independently of
market forces through its subsidiaries and enjoys
dominance in the relevant market of production and
supply of non-coking coal in India.
 It was also found that the CIL and its subsidiaries are
imposing unfair/discriminatory conditions in the supply
of non-coking coal to the power producers through Fuel
Supply Agreements (FSA).
Abuse ofAbuse of
DominanceDominance

22. Indian Exhibition Industry Assn. vs. Indian
Trade Promotion Org.(ITPO)
 ITPO is the leading exhibitions/events organizer in Delhi
established by the Govt. of India.
 CCI found that ITPO being a dominant player in the
relevant market viz. provision of venue for holding
international and national exhibitions in Delhi.
 CCI also found that the ITPO is abusing its dominance
by putting several discriminatory and arbitrary conditions
on the third party event organizers such as unreasonable
time gaps between the events, preferential treatment to its
own fairs over competing fairs etc.
 CCI imposed a penalty of Rs. 6.75 crores on ITPO for
violation of section 4 of the Competition Act,2002.
Abuse of DominanceAbuse of Dominance

23. Faridabad industries Assn. vs. Adani Gas Ltd.(Case
No.71 of 2012)
 Allegation of abuse of dominance against Adani by way of
putting unfair conditions in the Gas Sales Agreement (GSA)
for supplying and distributing Natural Gas to industrial
consumers in Faridabad
 DG investigated and found that the allegations were correct in
so far as many clauses of the GSA were arbitrary and abusive.
 The Commission agreed with the DG findings and concluded
that many clauses in the GSA were highly restrictive, arbitrary,
one-sided and heavily loaded in favour of Adani.
 Penalty of Rs. 25.67 Crores was imposed @ 4% of the Annual
turnover.
Abuse of DominanceAbuse of Dominance

24. Regulation ofRegulation of
CombinationsCombinations
Combination includes: merger and
amalgamation, acquisition of control, shares, voting
rights or assets
 High thresholds
 Mandatory pre-notification before combination
 As a matter of practice CCI usually decides
Combination in 30 days (self-imposed limit)
 CCI must decide in 210 days else combination
deemed to be approved (Deeming clause)

25. Combination OrdersCombination Orders
Holcim-Lafarge
Merger approved subject to divesture of two cement
plants
One plant in Jharkhand and other plant in Chhattisgarh
Monitoring agency appointed
Once buyers are proposed – CCI will examine the same
Sun Pharma - Ranbaxy
Merger approved subject to divesture of products
relating to seven relevant markets for formulations
All products divested to approved third party buyer
Transaction has been completed
Jet - Etihad
Approved the composite combination comprising equity
acquisition and cooperation in operations
Appeal before COMPAT dismissed
Writ Petition before Delhi high Court also dismissed

26. Advisory FunctionsAdvisory Functions
The Central Government/ State Government may,
in formulating a policy on competition including
review of laws related to competition or any other
matter, make a reference to CCI for its opinion on
possible effects of such policy on competition
[Section 49(1)]
CCI to give its opinion within sixty days of such
reference
The opinion of CCI is not binding upon the
Government
The Commission shall give its opinion on a
reference made by statutory authority [Section 21]

27. Advocacy FunctionsAdvocacy Functions
CCI is mandated to take suitable measures:
 to promote competition advocacy
 to create public awareness
 to impart training about competition issues
Awareness amongst stakeholders will promote
compliance, less intervention.
Evolving complex economic law.
Focus on Advocacy with Central/State
Governments, regulators and statutory
authorities to promote pro-competition laws,
policies, practices.

29. COMPETITION COMMISSION
OF INDIA
CHAIRPERSON & SIX
MEMBERS
Advocacy
Division
Investigation
Division
Economic
Division
Combination
Division
Legal
Division
Antitrust
Division
Secretariat
Capacity Building
Division
DG OfficeDivisions

31. Section 36 of the Competition Act, 2002
In discharge of its functions, Commission guided by :
 Principles of Natural Justice
 Rules made by Central Government; and
 Its own procedure.
Principles of natural justice to ensure procedural fairness and fair
decision:
 The Bias Rule: Nemo Judex in Causa Sua
 The Hearing Rule: Audi Alteram Partem
 The Evidence Rule: Reasoned decision reached after taking
into account all relevant facts and circumstances
PRINCIPLES OF NATURAL JUSTICEPRINCIPLES OF NATURAL JUSTICE

32. Commission entrusted with certain powers of Civil Court
under Section 36(2), viz.
Summoning & enforcing attendance and examination
on oath;
Discovery and production of documents
Receiving Evidence on Affidavit
Issuing Commission for examination of witnesses and
documents
Requisitioning of Public Records under Indian
Evidence Act.
POWERS OF COMPETITION COMMISSIONPOWERS OF COMPETITION COMMISSION

33. ProcedureProcedure
• Existence of prima facie case
• Direction to Director General for Investigation
• Interim Order
• Circulation of Investigation Report to the parties
• Inquiry and Final Order
• Power of Civil Court under Code of Civil Procedure
• Reference to Sectoral Regulators
• Confidentiality
• Appeal to Competition Appellate Tribunal
• Leniency Provisions
• Competition Advocacy
• Exclusion of Courts

35.  Role of the Director General - To assist the Commission
in investigating into any contravention of the provisions of the
Act. (Section 16)
 No power to investigate Suo-Moto unlike MRTP Commission
 Only after receiving directions under Section 26(1) and
thereafter, if required
 Submit report to the Commission with findings on each and
every issue raised in information as well as in section 26(1)
direction.
 Powers of Civil Court
Investigation by Director GeneralInvestigation by Director General

36.  Cease and desist order
 Penalty upto 10% of average turnover for last three preceding
financial years
 In case of cartels, penalty upto 10% of turnover or three times
of profit for each year of continuance of such agreement,
whichever is higher.
 Agreements having AAEC void
 Modification of anti-competitive agreements
 In case of dominant position, order for division of enterprise
 Power to issue interim orders
 In case of combination-can be approved, approved with
modification or refused approval.
POWERS OF COMPETITION COMMISSION OF INDIA

37.  Duties of the Commission (Section 18) – as reflected in the Preamble
of the Act
 Reference by Statutory Authority (Section 21)
 Reference by Commission (Section 21A)
 Procedure for Inquiry (Section 26)
 Extra Territorial jurisdiction(Section 32)
 Interim Orders(Section 33)
 Appearance before the Commission( Section 35)
 Rectification of Orders (Section 38) – No power to amend
substantive part
 Leniency Provisions (Section 46)
 Competition Advocacy (Section 49)
Miscellaneous ProvisionsMiscellaneous Provisions

38.  Execution of Orders (Section 39) – Through
Regulations or through Reference to Income Tax
Authority
 Contravention of Directions and Orders of
Commission (Section 42) – Fine which may be
extended to Rs. 1 lakh per day subject to
maximum of Rs. 10 crores. In case of non-
compliance of said order, CMM Delhi can impose
the punishment with imprisonment for 3 years or
fine of Rs. 25 crores or both.
Miscellaneous ProvisionsMiscellaneous Provisions

39. Confidentiality
 Section 57 read with Regulation 35 of CCI (General)
regulations, 2009, deals with confidential treatment, either suo-
moto or on basis of request made by party.
 The order specifies the time period for which confidential
treatment is granted.
 Normally confidential treatment granted to the documents
containing trade secrets, costing details, IPR related
information etc.
 Personal details of the Parties kept confidential upon request
and if desirable.
 Regulation 35 provides the procedure relating to
confidentiality.
Miscellaneous ProvisionsMiscellaneous Provisions

41.  Headed by retired Supreme Court Judge and two Members
 Only those orders are appealable which are specifically provided under
Section 53A(a) – CCI vs. SAIL (SC)
 Before COMPAT, CCI is necessary party in suo-moto cases and proper
party in other cases
 Appeal to be filed within 60 days
 Further appeal in Supreme Court (Section 53T)
 Power to award compensation
 Power to punish for contempt (Section 53U) – same power as High Courts.
Competition Appellate TribunalCompetition Appellate Tribunal
(COMPAT)(COMPAT)

42.  DLF-Recently upheld the order passed by
CCI.{Case No.19 of 2010 & connected cases}
 Excel Crop Ltd.-Upheld the findings of
CCI against collusive bidding by the 3 bidders
but reduced the penalty by applying relevant
turnover.{Suo Moto Case No.2 of 2011}
 PES Installations Pvt. Ltd.-Upheld the
findings of CCI for contravening section 3(3)
(d) of the Act but reduced the penalty amount
from 5% to 3% of the annual turnover.{Case
No.43 of 2010}
Important Orders of COMPATImportant Orders of COMPAT

43. SUPREME
COURT
COMPETITION APPELLATE
TRIBUNAL
COMPETITION COMMISSION
OF INDIA
HIGH
COURT
S

44. CCI andCCI and
JudiciaryJudiciary

45.  Judicial Review
Under Articles 226/227 of the Constitution of India
Under Article 32 for the Constitution of India
 Exclusion of Jurisdiction of Civil Courts (Section 61)
 Jurisdiction of Civil Courts is barred in respect of any matter
which Commission or COMPAT is empowered by or under the
Act to determine;
 No injunction shall be granted by any court or other authority in
respect of any action taken or to be taken in pursuance of any
power conferred by or under the Act.
CCI and JudiciaryCCI and Judiciary

46. ◊ Act to have overriding effect: (non-obstante clause -
Section 60)
The provisions of the Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law for
the time being in force.
◊ Application of other laws not barred: (Section 62)
The provisions of the Act shall be in addition to, and not in
derogation of, the provisions of any other law for the time being
in force.
CCI and JudiciaryCCI and Judiciary

47. Competition Commission of India v. Steel Authority of India Ltd.,
(2010) 10 SCC 744; Supreme Court held:
 Order of Competition Commission taking a prima facie view and issuing direction
to Director General for investigation not appealable.
 No statutory duty on Competition Commission nor any party can claim right to
notice and/or hearing at stage of formation of prima facie opinion under Section
26(1).
 The power to issue interim orders has to be exercised by the Commission sparingly
and under compelling and exceptional circumstances.
 The Commission is expected to record at least some reason(s) even while forming
a prima facie view.
 Commission to pass speaking orders while passing directions and orders dealing
with the rights of the parties in its adjudicatory and determinative capacity.
CCI and JudiciaryCCI and Judiciary

48.  In a landmark verdict, Division Bench of
Allahabad High Court dismissed the appeal filed
by NMPL.
 NMPL has challenged the proceedings initiated by
CCI under Section 26(1) of the Act.
 CCI contended that the writ petition is not
maintainable since no prejudice caused to the
petitioner.
 After surveying the case laws on the subject, the
HC found no merits in the contentions of the
petitioner.
Namrata Marketing Pvt. Ltd. vs CCINamrata Marketing Pvt. Ltd. vs CCI
MANU/UP/2018/2013MANU/UP/2018/2013

49.  The Delhi High Court recently directed the CCI to use
the findings recorded by DG in so far holding
contravention of section 4 against the petitioner for
making a fresh reference under section 19 of the Act.
 The DG caused an investigation and found no violation
of section 3 of the Act. However, DG investigated
further and observed that the petitioner has violated
section 4 of the Act.
 The High Court viewed that the DG was not right to
examine the conduct of the party under section 4 since
CCI directed DG to investigate the matter only under
section 3 of the Act.
 CCI challenged the same before DB and appeal is still
pending.
Grasim Industries vs. CCI-WP No.4159 ofGrasim Industries vs. CCI-WP No.4159 of
20132013

50.  The petitioner/informant has challenged the action
of CCI for not giving the opportunity of hearing on
DG report before making a direction for further
investigation under section 26(7) of the Act.
 The CCI contended that the petitioner has failed
any cause of action by challenging its order for
further investigation.
 Accepting CCI’s contention, HC has dismissed the
writ. The court recorded that there is no difference
between direction for an investigation or direction
for further investigation and rejected the fallacious
arguments of alleged violation of natural justice.
South East Asia LPG. Vs CCI-WPSouth East Asia LPG. Vs CCI-WP
No.4602 of 2013-DHCNo.4602 of 2013-DHC

51.  Recently Madras High Court has disposed of the writ petitions
by directing them to approach the COMPAT.
 The main contention of the petitioners was that the DG has
erroneously investigated the conduct of the petitioners. The
CCI while forming the prima facie view has directed DG to
investigate only against the three car manufactures and
subsequently, DG has taken the permission of Commission to
investigate against others including the petitioners.
 The HC has rejected the arguments of the petitioner and held
that except where there is a violation of natural justice,
fundamental rights etc. writ petition is not maintainable.
 However, the HC has committed serious error while referring
the matter to COMPAT as the direction under section 26(1)
cannot be challenged before the COMPAT in view of law laid
down by the Supreme Court in SAIL Matter.
Nissan Motors & Anr. vs CCI-WP No.26488 of 2013Nissan Motors & Anr. vs CCI-WP No.26488 of 2013
and connected matters-MHCand connected matters-MHC

52. Competition AdvocacyCompetition Advocacy
 Competition Advocacy is one of the main pillars of modern
competition law which aims at creating, expanding and
strengthening awareness of competition in the markets.
 Under Section 49(3), CCI is mandated to take suitable
measures for the promotion of competition advocacy, creation
of awareness and imparting training about competition issues.
 Central/State Government may make references to the CCI
on competition policy and law issues. CCI is required to give
opinion in 60 days.
 Enforcement and advocacy are reinforcing activities and
complement each other

53. Objectives and Outreach ofObjectives and Outreach of
Competition AdvocacyCompetition Advocacy
o Objectives
o Promote competition culture
o Create awareness of competition law
o Train stakeholders on competition issues
o Periodical meetings to discuss issues affecting competition
o Outreach
o Government Departments
o Industries and associations viz. FICCI, CII, PHD etc
o Premier educational institutions viz., IIMs, NLUs, etc
o Training academies viz. LBS, NADT, and others
o High Court and Judicial academies
o Consumer organizations
o Others viz. World Bank, NGOs etc

54. BenefitsBenefits
Fair and Efficient Competition will lead-
o Wider choice for consumers
o Efficiencies in the market
o Better utilization of resources
o Saving public money in procurements

55. Thank QThank Q