Competition Act 2002, Monopolies and Restrictive Trade Practices Act, 1969, Anti Competitive Agreement, Abuse of Dominant Position, Combination, Competition Commission of India

1. Competition Act
2002
Prepared by-
Dr Ramandeep
Assistant Professor
Deptt. of Commerce
GCW, Sirsa (Haryana)

3. The Monopolies and Restrictive Trade
Practices Act, 1969
• Government of India in April, 1964 appointed a Commission
under the chairmanship of Justice K.C. Das Gupta to determine
the extent and effect of monopolies in the Indian Market.
• The Commission submitted its report on 31st October, 1965.
• On 27th December 1969, The MRTP Bill received the assent from
the President,
• The MRTP Act was intended to curb the rise of monopolistic
Practices.

4. Transformation from
MRTP Act
to
Competition Act 2002

5. Issues in MRTP Act, 1969
• Post 1991 reforms did not prohibit merger, amalgamation and
takeovers in MRTP Act. Many private and public sector companies
were brought under the ambit of MRTPAct.
• The MRPT act didn’t even include certain offending trade
practices, which are restrictive in nature like- Abuse of
Dominance, Cartels, Collusion and Price Fixing, Bid Rigging
and Predatory Pricing.

6. Establishment of Competition Act, 2002
Considering all the issues of MRTP Act 1969, a need
for change in the act arises.
In October 1999 GOI appointed a committee under
Mr. S V S Raghavan.
Committee submitted the report in May 2000 and
parliament passed the new law in December 2002
named “The Competition Act, 2002.

7. Indian Competition Act, 2002
• The Competition Act, 2002 replaced ‘The Monopolies and
Restrictive Trade Practices Act, 1969’
• Extends to whole of India except Jammu and Kashmir.
• The provisions of the Competition Act relating to anti
competitive agreements and abuse of dominant position
were notified on May 20, 2009.
• Competition Commission of India (CCI) was established to
prevent activities that has an adverse effect of
competition in India.

8. MRTPAct vs. Competition Act

9. Applicability of the Act
• This act applies to whole of India except in Jammu
& Kashmir.
• All enterprises whether private, public or
government but does not include- the activities
of central government dealing in Security, Atomic
energy, Currency, Defense and Space.

10. Objectives of the Act
• to prevent practices having adverse effect on
competition
• to promote and sustain competition in markets
• to protect the interests of consumers
• to ensure freedom of trade carried on by other
participants in markets in India

11. The Competition Act

12. Main provision of Competition Act
Competition Act,
2002
Abuse of
Dominant
Position
Regulatiion and
Combination
Prohibition
of Certain
Agreements
Prohibition of

13. Definitions

14. Acquisition (Section 2(a))
"Acquisition" means, directly or indirectly,
acquiring or agreeing to acquire—
(i) shares, voting rights or assets of any
enterprise; or
(ii) control over management or control over
assets of any enterprise;

15. Agreement [Section 2(b)]
"Agreement" includes any arrangement or
understanding or action in concert,—
(i) whether or not, such arrangement, understanding
or action is formal or in writing; or
(ii) whether or not such arrangement, understanding
or action is intended to be enforceable by legal
proceedings.

16. Types of Agreements
Agreements
Horizontal Vertical

17. Horizontal Agreement
Horizontal agreements are those agreements among
competitors operating at the same level in the
economic process i.e. enterprises engaged in the
same activity.
Example: The agreements between producers or
between wholesalers or between retailers,
dealing in similar kind of products.

18. Vertical Agreements
Vertical agreements are those agreements between
Non-competing undertakings operating at different
levels of manufacturing and distribution process.
Example:- The agreements between producers and whole-
sellers or between producers, whole-sellers and retailers.

19. Cartel [Section 2(c)]
"Cartel" includes an association of producers,
sellers, distributors, traders or service
providers who, by agreement amongst
themselves, limit, control or attempt to control
the production, distribution, sale or price of,
or, trade in goods or provision of services.

20. Consumer (Section 2f)
‘consumer’ means any person who buys any goods for
a consideration, which has been paid or promised or
partly paid and partly promised, whether such
purchase of goods is for resale or for any commercial
purpose or for personal use.
Even a person purchasing goods for resale or for any
commercial purpose will also be considered as a
‘consumer’.

21. Goods [Section 2(i)]
"Goods" means goods as defined in the Sale of
Goods Act, 1930 and includes—
(A) products manufactured, processed or mined;
(B) debentures, stocks and shares after allotment;
(C) goods imported into India.

22. Anti Competitive
Agreement
(Section 3)

23. Anti Competitive Agreement
Any agreement which is having appreciable
adverse effect on competition (AAEC) will
be termed as anti-competitive agreement.

24. Anti Competitive Agreement
Any agreement entered into b/w enterprises or associations of enterprises shall be
presumed to have an appreciable adverse effect on competition (AAEC),
which—
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical development,
investment or provision of services;
(c) shares the market or source of production or provision of services by way of
allocation of geographical area of market, or type of goods or services, or
number of customers or any other similar way;
(d) directly or indirectly results in bid rigging or collusive bidding.

25. AAEC Factors

26. Case

27. Case
• Jet Airways, IndiGo and Spicejet together were accused of
concerted actions in fixing and revising Fuel Surcharge
(FSC) for Transporting Cargo.
• CCI imposed fines of Rs 258 Crores, on them for contravening
Section 3 of the Competition Act, 2002
• According to CCI, such anti-competitive ways in the air cargo
industry have a detriment effect on end-consumers and
undermines economic development of the country.

28. Agreement at different stages in different markets
1. Tie- up Agreement:
Condition to purchase one good for purpose of buying another good.
2. Exclusive Supply Agreement:
Putting condition on purchaser not to buy goods from another person.
3. Exclusive Distribution Agreement:
Putting condition not to sale goods beyond particular local limit,
municipal limit etc. i.e. putting condition on area of distribution.

29. Types of Anti Competitive Agreement
4. Refusal to Deal:
Putting condition restraining to deal with any particular person.
5. Resale Price Maintenance:
Putting condition for maintaining minimum price for sale. In
other words minimum price below which goods cannot be sold.

30. Case
Ajay Devgan Films Pvt. Ltd. vs Yash Raj Films Pvt. Ltd.

31. Restriction of rights under some Acts
Nothing contained in this section shall restrict the right of any person to
impose reasonable conditions for protecting any of his rights under—
(a) the Copyright Act, 1957;
(b) the Patents Act, 1970;
(c) the Trade Marks Act, 1999;
(d) the Geographical Indications of Goods Act, 1999;
(e) the Designs Act, 2000;
(f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000;

32. Abuse of Dominant
Position
(Section 4)

33. Abuse of Dominant Position
There shall be abuse of dominant position if an enterprise or a
group-
(a) directly or indirectly, imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or services; or
(ii) price in purchase or sale (including predatory price)
of goods or service, or

34. Abuse of Dominant Position
(b) limits or restricts—
(i) production of goods or provision of services or
market; or
(ii) technical or scientific development relating to
goods or services to the prejudice of consumers; or
(c) indulges in practice or practices resulting in denial of
market access in any manner; or

35. (d) makes conclusion of contracts which, by their
nature or according to commercial usage, have no
connection with the subject of such contracts; or
(e) uses its dominant position in one relevant market
to enter into, or protect, other relevant market.
Abuse of Dominant Position

36. Factors determining Dominant position
The Dominant position will be determined by
-Market share :
-Size and resources :
-Size and importance of competition;
-Economic power including commercials advantages over competitions;
-vertical integration;
-dependence of consumers;
-Monopoly (dominant position due to Statue)

37. Factors determining Dominant position
-entry barriers including barriers such as
regulatory barriers,
high capital cost of entry,
marketing entry barriers,
technical entry barriers,
economies of scale;
-countervailing buying power;
-market structure and size of market;

38. Combination
(Section 5)

39. Combination
The acquisition of one or more enterprises
by one or more persons or merger or
amalgamation of enterprises shall be a
combination of such enterprises and
persons or enterprises,

40. Type of
combination
vertical combination occurs
When a firm acquires another
firm which produces raw
materials used by it or getting
closer to the customer.
Example
• Tyre manufacturer acquires
rubber manufacturer,
• Car manufacturer acquires
a steel company,
• FMCG company acquiring
an advertising company or a
retailing outlet etc.
Horizontal combination
occurs when to two firms
operating in same industry
combining together.
• Acquisition of Times
Bank by HDFC Bank,
• Bank of Madura by
ICICI Bank,
• Kotak Mahindra Bank
by ING Vysya Bank.
Conglomerate combination
occurs when two firms
operating in industries
unrelated to each other.
• A watch manufacturing
company acquiring a
cement manufacturer,
• A steel manufacturer
acquiring
a software company etc.
Example Example

42. Threshold in Combination

43. Exception in Section 5 of Combination
As per notification if a company being acquired does not
exceed-
Assets of 350 crores
or
Turnover of 1000 Crores
In that case it is exempt from Requirement of Section 5
(combination)

44. Competition Commission of
India (CCI)

45. Competition Commission of India (CCI)
It’s a Body corporate established by Central Government.
FUNCTIONS -
• Protect interest of consumers.
• To control practices against competition
• Promote competition
• Ensure freedom of Trade

46. Composition of Commission [Section 8]
The Commission shall consist of the
Chairperson and not less than 2 and not
more than 6 other Members, to be appointed
by the Central Government.

47. Qualification
He/she shall be a person of ability, integrity and
standing and
He/she has been or is qualified to be a Judge of a
High Court or has special knowledge and
professional experience of not less than 15 years in
International trade, economics, business, commerce,
law, finance, accountancy, management etc.

48. Selection Committee
Selection Committee
Constitution:
• Chief Justice of India or his Representative - Chairperson
• Secretary of Ministry of Law - Member
• Secretary of Ministry of Corporate Affairs - Member

49. Term of office for CCI
• Maximum 5 Years
• Can be re-appointed for any number of times
• Maximum age of 65 years.
• Casual Vacancy of Chairperson by death, resignation or otherwise:
the senior-most Member shall act as the Chairperson.
• When the Chairperson is unable to discharge his functions: owing
to absence, illness or any other cause, the senior-most Member
shall discharge the functions of the chairperson.

50. Powers of Commission
Inquire into anti competitive and abuse of dominant position
Determine whether agreements has any adverse effect on competition
Examine whether combination has any adverse effect on competition
Granting interim relief as would be necessary in a particular case
Imposing Fines and Penalties
Awarding Compensation
Order Division of dominant undertaking or demerger

51. Resignation, removal and suspension of Chairperson
and other members [Section 11]
(a) is, or at any time has been, adjudged as an insolvent; or
(b) has engaged during his term of office, in any paid employment, or
(c) has been convicted of an offence involves moral turpitude; or
(d) has acquired such financial or other interest as functions as a
Member; or
(e) has so abused his position prejudicial to the public interest; or
(f) has become physically or mentally incapable of acting as a
Member.

52. Powers of Commission to impose Penalty
• Cease and desist order
• Impose penalty up to 10% of turnover of the average of the
turnover for the last 3 preceding financial years.
• In case of cartel, penalty can be 10% of turnover or 3 times of
profit illegally gained from cartel activity, whichever is higher.
• Recommend to Government the division of dominant
Enterprise.

53. Director General to investigate contravention
• Appointed
investigation, proceedings of enquiries
by Central Government for
in
relation to matters which are referred by the
CCI.
is made on the basis of
ability, knowledge and field
• Appointment
outstanding
experience

54. Penalty for contravention of orders of Commission and
Director General
• Penalty for failure to comply with directions of
Commission and Director General –
The Commission may impose on such person a
penalty of rupees 1 lakh for each day during
which such failure continues, subject to a
maximum of rupees one crore.

55. • Power to impose penalty for non-furnishing of
information on combinations –
The Commission shall impose on such person or
enterprise a penalty which may extend to 1% of
the total turnover or the assets, whichever is
higher, of such a combination.

56. • Penalty for making false statement or omission
to furnish material information –
sSch person shall be liable to a penalty which shall
not be less than rupees 50 lakhs but which may
extend to rupees one crore, as may be determined
by the Commission.

57. Chairperson
Two other
members
appointed by CG
Competition Appellate Tribunal
Composition & Qualification
Shall be the Judge of the
Supreme Court or theChief
Justice of a High Court
A Person of integrity and standard
having professional experience of
not less than 25 Years in
competition matters

58. Appeal Process in Tribunal
Person Aggrieved
File an appealwithin
60 days of receipt of
the order
Tribunal may
entertain the
appeal even
after 60 days if
it thinks fit
Tribunal has to close
the appeal within 6
months timeframe
Tribunal may
entertain the
appeal even
after 60 days if it
thinks fit

59. Stages of Appeal
Competition Commission of
India
Competition Appellate
Tribunal
Supreme Court
60
Days
60
Days

60. Thank you