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COMPETITION
ACT,2002
Presented by:-
Meenal Gupta
827
WHAT IS COMPETITION?
• The process of rivalry between firms striving to gain sales
and make profits
• Motive: self-interest, but outcome mostly beneficial for the
society
• Competition is not just an event, but a process
• It is not automatic – needs to be nurtured
FAIR TRADE FOR A GREATER GOOD
COMPETITION FOR PROSPERITY
TYPES OF COMPETITION
 Price Competition: Winning customers by lowering price
 Non-price Competition: Winning customers by advertising, offering after-
sales-services, using sale promotion tools, etc.
WAYS OF COMPETITION
 Fair Competition: Fair means such as
producing quality goods, becoming cost-
efficient, optimising the use of resources, best
technology, research & Development, etc.
 Unfair Competition: Unfair means such as
fixing price with the rivals, predatory pricing,
disparaging or misleading advertisements, etc.
BENEFITS OF COMPETITION
Efficiency
Innovation
Check on concentration
Economic growth (wealth and job creation)
Consumer welfare gains:
• Lower prices,
• Better quality,
• Freedom of choice and
• Easy access
COMPETITION ACT,2002
Competition Act 2002 has been enacted to replace the extant law, mrtp Act
1969
Aims to protect process of competition and not competitors
Consist of a set of rules to curb anti competitive practices (acps)
Sets up the competition authority:
• Competition commission of India (CCI) and
• Competition appellate tribunal (COMPAT)
Over 120 countries have adopted competition law
It extends to the whole of India except Jammu and Kashmir.
OBJECTIVES OF THE
COMPETITION ACT
 To shift the focus from curbing monopolies to
promoting competition.
 To ensure fair competition in India.
 To curb negative aspects of competition through
the medium of cci.
 To promote and sustain competition in markets.
 To protect the interest of consumers.
 To ensure freedom of trade carried on by other
participants.
 To create a fund to be called the competition fund.
FOUR AREAS
 ANTI-COMPETITION AGREEMENTS
 ABUSE OF DOMINANCE
 REGULATION OF COMBINATIONS
 COMPETITION ADVOCACY
ANTI COMPETITION
AGREEMENTS
• Section 3 prohibits agreements 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 (AAEC)
within India.
• The Act declares that agreements entered into in contravention of the above
prohibition shall be void.
HORIZONTAL RESTRAINTS :
 CARTELS {FIXING PURCHASE
OR SALE PRICES (EXPORT
CARTELS EXEMPTED) }
 BID-RIGGING (COLLUSIVE
TENDERING)
 SHARING MARKETS BY
TERRITORY, TYPE ETC.
 LIMITING PRODUCTION,
SUPPLY, TECHNICAL
DEVELOPMENT
THE ABOVE ARE “PER SE” ILLEGAL.
VERTICAL RESTRAINTS :
 TIE-IN ARRANGEMENTS
 EXCLUSIVE SUPPLIES
 EXCLUSIVE DISTRIBUTION
 REFUSAL TO DEAL
 RESALE PRICE MAINTENANCE
ADJUDICATION BY RULE OF REASON
Raw Material
Supplier
Raw Material
Supplier
Raw Material
Supplier
Manufacturer Manufacturer Manufacturer
Retailer
Wholesaler WholesalerWholesaler
Retailer Retailer
ABUSE OF DOMINANT
POSITION
Dominance means having authority or control.
Cause of concern is not dominance but its abuse.
Abuse of Dominance:
1. Exploitative practices: excessive pricing, discrimination or tied selling or IPR
abuses
Eg. Monsanto-Mahyco pricing of Bt Cotton seeds
2. Exclusionary practices: predatory pricing and refusal to deal.
Eg. Truck unions not allowing non-member trucks
DETERMINATION OF
DOMINANT POSITION -
FACTORS
 Market share of the enterprise
 Size and resources of the enterprise
 Size and importance of the competitors
 Economic power of the enterprise
 Vertical integration of the enterprises
 Dependence of consumers on the enterprise
REGULATION OF COMBINATIONS
• The Act regulates combinations (merger control) which involves an ex ante assessment of
changes in the structure of the relevant market.
• No combination can take effect unless the transaction is approved by the CCI.
• Combination Regulations sets out the procedure of filing notice, fee payable and timelines.
• Failure to file notice of a reportable transaction attract penalty.
• ‘Combinations’ include:
- Acquisition of control, shares, voting rights, or assets of another enterprise; or
- Acquisition of control where the acquirer already has control over a similar/identical
business’ or
- Merger or amalgamation of enterprises
where such transactions cross the asset or turnover thresholds set out in
in the Act.
THE COMPETITION COMMISSION OF INDIA
IS ENABLED TO PARTICIPATE IN THE FORMULATION OF
POLICIES AND REVIEWING OF POLICIES RELATING TO
COMPETITION AT THE INSTANCE OF THE GOVERNMENT
IS REQUIRED TO CREATE COMPETITION CULTURE
IS REQUIRED TO ACT AS COMPETITION ADVOCATE
COMPETITION ADVOCACY
EXEMPTIONS
Government by notification may exempt from the competition law:-
A. Any class of enterprises in the interest of national security/public interest.
B. Any practice/agreement arising out of international treaty/agreement
C. Any enterprise performing a sovereign function on behalf of government
Different provisions from different dates if, need be.
RISKS – IMPACT ON
COMPANIES
• High penalties/liability for compensation;
• Possible extra fine and/or imprisonment for breach of CCI
orders;
• Legal Expenses;
• Loss of Reputation;
• Agreements rendered null and void;
• Division of dominant enterprise;
• Loss of business from the harmed parties;
CONCLUSION
• It is only of value against domestic abuse of competition power.
• It is controlled by imposition of fines
• These investigations are expensive to unravel abuses and require
trained personnel.
• Competition enforcement leads to consumer welfare directly and
indirectly
• Stakeholders need to recognise their role in promoting
competition
• Policymakers/Government need to prioritise competition reforms
Competition

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Competition

  • 2. WHAT IS COMPETITION? • The process of rivalry between firms striving to gain sales and make profits • Motive: self-interest, but outcome mostly beneficial for the society • Competition is not just an event, but a process • It is not automatic – needs to be nurtured FAIR TRADE FOR A GREATER GOOD COMPETITION FOR PROSPERITY
  • 3. TYPES OF COMPETITION  Price Competition: Winning customers by lowering price  Non-price Competition: Winning customers by advertising, offering after- sales-services, using sale promotion tools, etc.
  • 4. WAYS OF COMPETITION  Fair Competition: Fair means such as producing quality goods, becoming cost- efficient, optimising the use of resources, best technology, research & Development, etc.  Unfair Competition: Unfair means such as fixing price with the rivals, predatory pricing, disparaging or misleading advertisements, etc.
  • 5. BENEFITS OF COMPETITION Efficiency Innovation Check on concentration Economic growth (wealth and job creation) Consumer welfare gains: • Lower prices, • Better quality, • Freedom of choice and • Easy access
  • 6. COMPETITION ACT,2002 Competition Act 2002 has been enacted to replace the extant law, mrtp Act 1969 Aims to protect process of competition and not competitors Consist of a set of rules to curb anti competitive practices (acps) Sets up the competition authority: • Competition commission of India (CCI) and • Competition appellate tribunal (COMPAT) Over 120 countries have adopted competition law It extends to the whole of India except Jammu and Kashmir.
  • 7. OBJECTIVES OF THE COMPETITION ACT  To shift the focus from curbing monopolies to promoting competition.  To ensure fair competition in India.  To curb negative aspects of competition through the medium of cci.  To promote and sustain competition in markets.  To protect the interest of consumers.  To ensure freedom of trade carried on by other participants.  To create a fund to be called the competition fund.
  • 8. FOUR AREAS  ANTI-COMPETITION AGREEMENTS  ABUSE OF DOMINANCE  REGULATION OF COMBINATIONS  COMPETITION ADVOCACY
  • 9. ANTI COMPETITION AGREEMENTS • Section 3 prohibits agreements 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 (AAEC) within India. • The Act declares that agreements entered into in contravention of the above prohibition shall be void.
  • 10. HORIZONTAL RESTRAINTS :  CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) }  BID-RIGGING (COLLUSIVE TENDERING)  SHARING MARKETS BY TERRITORY, TYPE ETC.  LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT THE ABOVE ARE “PER SE” ILLEGAL. VERTICAL RESTRAINTS :  TIE-IN ARRANGEMENTS  EXCLUSIVE SUPPLIES  EXCLUSIVE DISTRIBUTION  REFUSAL TO DEAL  RESALE PRICE MAINTENANCE ADJUDICATION BY RULE OF REASON
  • 11. Raw Material Supplier Raw Material Supplier Raw Material Supplier Manufacturer Manufacturer Manufacturer Retailer Wholesaler WholesalerWholesaler Retailer Retailer
  • 12. ABUSE OF DOMINANT POSITION Dominance means having authority or control. Cause of concern is not dominance but its abuse. Abuse of Dominance: 1. Exploitative practices: excessive pricing, discrimination or tied selling or IPR abuses Eg. Monsanto-Mahyco pricing of Bt Cotton seeds 2. Exclusionary practices: predatory pricing and refusal to deal. Eg. Truck unions not allowing non-member trucks
  • 13. DETERMINATION OF DOMINANT POSITION - FACTORS  Market share of the enterprise  Size and resources of the enterprise  Size and importance of the competitors  Economic power of the enterprise  Vertical integration of the enterprises  Dependence of consumers on the enterprise
  • 14. REGULATION OF COMBINATIONS • The Act regulates combinations (merger control) which involves an ex ante assessment of changes in the structure of the relevant market. • No combination can take effect unless the transaction is approved by the CCI. • Combination Regulations sets out the procedure of filing notice, fee payable and timelines. • Failure to file notice of a reportable transaction attract penalty. • ‘Combinations’ include: - Acquisition of control, shares, voting rights, or assets of another enterprise; or - Acquisition of control where the acquirer already has control over a similar/identical business’ or - Merger or amalgamation of enterprises where such transactions cross the asset or turnover thresholds set out in in the Act.
  • 15. THE COMPETITION COMMISSION OF INDIA IS ENABLED TO PARTICIPATE IN THE FORMULATION OF POLICIES AND REVIEWING OF POLICIES RELATING TO COMPETITION AT THE INSTANCE OF THE GOVERNMENT IS REQUIRED TO CREATE COMPETITION CULTURE IS REQUIRED TO ACT AS COMPETITION ADVOCATE COMPETITION ADVOCACY
  • 16. EXEMPTIONS Government by notification may exempt from the competition law:- A. Any class of enterprises in the interest of national security/public interest. B. Any practice/agreement arising out of international treaty/agreement C. Any enterprise performing a sovereign function on behalf of government Different provisions from different dates if, need be.
  • 17. RISKS – IMPACT ON COMPANIES • High penalties/liability for compensation; • Possible extra fine and/or imprisonment for breach of CCI orders; • Legal Expenses; • Loss of Reputation; • Agreements rendered null and void; • Division of dominant enterprise; • Loss of business from the harmed parties;
  • 18. CONCLUSION • It is only of value against domestic abuse of competition power. • It is controlled by imposition of fines • These investigations are expensive to unravel abuses and require trained personnel. • Competition enforcement leads to consumer welfare directly and indirectly • Stakeholders need to recognise their role in promoting competition • Policymakers/Government need to prioritise competition reforms