Investment and Competition Laws

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
BA LLB
(Sixth Semester)
INVESTMENT AND COMPETITION LAWS
Subject code:308
BA LLB
(Sixth Semester)
INVESTMENT AND COMPETITION LAWS
Subject code:308
COMPETITION ACT 2002
By: Ms. Satinder Kaur
Assistant Professor
(Law)

OBJECTIVE OF THE ACT
The Preamble of the Competition Act provides for the establishment of the
commission to:
•Promote and sustain competition
•To eliminate anti competitive practices
•Protect the interest of the consumers
•Ensure freedom of trade carried on by the other participants in the market
•Eliminating practices having adverse impact on the competition

FEATURES OF THE ACT
I. The act prohibits anti competitive agreements-Section 3
II. It prohibits abuse of dominance by the big business houses-Section 4
III. It provides for the regulation of combinations-Sections 5 and 6
IV. It talks about competition advocacy-Section 49

SHORTCOMINGS OF THE MRTP ACT
1. The MRTP Act did not apply to undertaking either owned by government
or by government owned company until 1991
2. It did not apply to an undertaking controlled by a composition set up
under any central or state law.
3. The act excluded the operation of its provision to banking and insurance
companies
4. The word competition was not often used in the act
5. There was lack of precise definition in the act.
6. Limited powers was given to the civil courts
7. Remedial powers were recommendatory in nature
8. Provision regarding unfair trade practices overlapped with the
Consumer Act

Scheme of the competition act
The at has been split into nine chapters.
•Chapter 1 contains preliminary provision like short title, definition and
extent of the act.
•Chapter 2 provides for substantive laws like anti competitive agreements,
abuse of dominance and regulation of combinations
•Chapter 3 talks about competition commission
•Chapter 4 talks about the powers, duties and functions of the commission
•Chapter 5 talk about duties of director General
•Chapter 6 talks about penalties.

DefinitionS
2. In this Act, unless the context otherwise requires,—
(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;
(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;

(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;
(j) “Member” means a Member of the Commission appointed under
sub- section (/) of section 8 and includes the Chairperson
(r)“relevant market” means the market which may be determined by the
Commission with reference to the relevant product market or the relevant
geographic market or with reference to both the markets;
(s) “relevant geographic market” means a market comprising the area
in which the conditions of competition for supply of goods or provision of
services or demand of goods or services are distinctly homogenous and
can
be distinguished from the conditions prevailing in the neighbouring
areas;

anti competition agreementS
Firms enter into agreements, which may have the potential of restricting
competition. A scan of the competition laws in the world will show that
they make a distinction between horizontal and vertical agreements
between firms. The former, namely the horizontal agreements are those
among competitors and the latter, namely the vertical agreements are
those relating to an actual or potential relationship of purchasing or selling
to each other. A particularly pernicious type of horizontal agreements is
the cartel. Vertical agreements are pernicious, if they are between firms in
a position of dominance. Most competition laws view vertical agreements
generally more leniently than horizontal agreements, as, prima facie,
horizontal agreements are more likely to reduce competition than
agreements between firms in a purchaser - seller relationship.

Abuse of DominAnce
Dominant Position has been appropriately defined in the Act in terms of the
position of strength, enjoyed by an enterprise, in the relevant market, in
India, which enables it to (i) operate independently of competitive forces
prevailing in the relevant market; or (ii) affect its competitors or consumers
or the relevant market, in its favour. Section 4 enjoins, No enterprise shall
abuse its dominant position.

The Competition Act also is designed to regulate the operation and activities of
combinations, a term, which contemplates acquisitions, mergers or amalgamations.
Thus, the operation of the Competition Act is not confined to transactions strictly
within the boundaries of India but also such transactions involving entities existing
and/or established overseas.
Herein again lies the key to understanding the Competition Act. The intent of the
legislation is not to prevent the existence of a monopoly across the board. There is a
realisation in policy-making circles that in certain industries, the nature of their
operations and economies of scale indeed dictate the creation of a monopoly in
order to be able to operate and remain viable and profitable.
combinAtions RegulAtion

competition ADvocAcy
In line with the High Level Committee's recommendation, the Act extends the mandate
of the Competition Commission of India beyond merely enforcing the law (High Level
Committee, 2000). Competition advocacy creates a culture of competition. There are
many possible valuable roles for competition advocacy, depending on a country's legal
and economic circumstances.
The Regulatory Authority under the Act, namely, Competition Commission of India
(CCI), in terms of the advocacy provisions in the Act, is enabled to participate in the
formulation of the country's economic policies and to participate in the reviewing of
laws related to competition at the instance of the Central Government.

WoRlD tRADe oRgAnistions (Wto)
There should be necessary provision and teeth to examine and adjudicate
upon anti-competition practices that may accompany or follow
developments arising out of the implementation of WTO Agreements.
Particularly, agreements relating to foreign investment, intellectual property
rights, subsidies, countervailing duties, anti-dumping measures, sanitary
and psytosanitary measures, technical barriers to trade and Government
procurement need to be reckoned in the Competition Policy/Law with a
view to dealing with anti-competition practices. The competition law should
be made extra territorial.

THANK YOU

Investment and Competition Laws

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