Competition Commission of India (CCI) - Competition Commission of India (CCI) is an important

statutory body. This article briefly throws light on the objectives, function, composition, and challenges
faced by the Competition Commission of India (CCI).

Competition Commission of India – Objectives

The CCI acts as the competition regulator in India. The Commission was established in 2003, although it
became fully functional only by 2009. It aims at establishing a competitive environment in the Indian
economy through proactive engagement with all the stakeholders, the government, and international
jurisdiction.
The objectives of the Commission are:
-To prevent practices that harm the competition (fair competition)
-To promote and sustain competition in markets (economic efficiency)
-To protect the interests of consumers (consumer welfare)
-To ensure freedom of trade

How was the Competition Commission of India formed?

The CCI was established by the Vajpayee government, under the provisions of the Competition Act 2002.
The Competition (Amendment) Act, 2007 was enacted to amend the Competition Act, 2002. This led to
the establishment of the CCI and the Competition Appellate Tribunal. The Competition Appellate
Tribunal has been established by the Central Government to hear and dispose of appeals against any
direction issued or decision made or order passed by the CCI. The government replaced the Competition
Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.

What is the Competition Act, 2002?

The Competition Act, 2002 was enacted by the Parliament of India and governs the Indian competition
law. The Act received the presidential assent in 2003. The Monopolies and Restrictive Trade Practices
Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002. This was done based on
the recommendations of the Raghavan Committee. The Act:
-Prohibits anti-competitive agreements.
-Prohibits abuse of dominant position by enterprises.
-Regulates combinations (acquisition, acquiring of control, and M&A), which can cause or is likely to
cause an appreciable adverse effect on the competition within India.
-Follows the philosophy of modern competition laws.

Why do we need Competition Laws?

Competition laws perform three main functions in society:
• To uphold free-enterprise: the competition laws have been called the Magna Carta of free
enterprise.
• Security against market distortions: there is a constant risk of various people resorting to
market distortions and abusing their dominant positions to resort to anti-competitive activities,
thus competition laws are required to ensure that the market is safe from the various
distortions.
• Promotion of domestic industries: Competition laws are required to ensure that the domestic
industries do not get suppressed with an increase in globalization. They play a quintessential
role in determining the viability of the domestic industries. However, to keep the Indian
competition laws updated with the businesses of the digital world which include not many
assets, the Indian government has established a Competition Law Review Committee.
Competition Commission of India – Members Composition
The members of the CCI are appointed by the Central Government. The Competition Commission of
India is currently functional with a chairperson and two members.

The Commission used to consist of one chairperson and a minimum of two members and a maximum of
six members. This has further been reduced to three members and one chairperson by the Cabinet. This
move was taken to produce a faster turnaround in hearings and speedier approval, thereby stimulating
the business processes of corporates and resulting in greater employment opportunities in the country.
The chairperson and the members are usually full-time members.

The eligibility for the Commission: The Chairperson and every other Member shall be a person of ability,
integrity, and who, has been, or is qualified to be a judge of a High Court, or, has special knowledge of,
and professional experience of not less than fifteen years in international trade, economics, business,
commerce, law, finance, accountancy, management, industry, public affairs, administration or in any
other matter which, in the opinion of the Central Government, may be useful to the Commission.

Competition Commission of India – Functions

The preamble of the Competition Act focuses on the development of the economy and the country by
avoiding unfair competition practices and promoting constructive competition. The functions of the CCI
are:
• Ensuring that the benefit and welfare of the customers are maintained in the Indian Market.
• An accelerated and inclusive economic growth through ensuring fair and healthy competition in
the economic activities of the nation.
• Ensuring the efficient utilization of the nation’s resources through the execution of competition
policies.
• The Commission also undertakes competition advocacy.
• It is also the antitrust ombudsman for small organizations.
• The CCI will also scrutinize any foreign company that enters the Indian market through a merger
or acquisition to ensure that it abides by India’s competition laws – the Competition Act, 2002.
• CCI also ensures interaction and cooperation with the other regulating authorities in the
economy. This will ensure that the sectoral regulatory laws are agreeable with the competition
laws.
• It also acts as a business facilitator, by ensuring that a few firms do not establish dominance in
the market and that there is a peaceful co-existence between the small and the large enterprise.

Competition Commission of India – Challenges

The CCI faces multiple challenges while implementing the Competition Laws. The challenges can be both
internal and external:
• The constant and continuous change in the way businesses are undertaken and the evolving
antitrust issue is proving to be a significant challenge for the CCI.
• The emerging business models are based on a digital economy and e-commerce. This proves to
be a problem for the CCI as the current competition laws talk only of assets and turnovers.
• The number of benches of the CCI has to be increased to pronounce judgments more speedily
on the competition cases.
• The inclusion of parameters in the competition and antitrust laws such as data accessibility,
network effects, etc. is important to ensure that the Competition laws are relevant in a digital
economy.
Competition Commission of India – Recent News

On November 5 & 6, 2020, the Competition Commission of India organised a virtual Workshop of BRICS
Competition Agencies on Competition Issues in the Automotive Sector. Earlier, BRICS Competition
Agencies had signed a Memorandum of Understanding (MoU) on co-operation in the field of
competition law and policy in May 2016 (In 2020 extended for an open-end period) to enhance co-
operation and interaction.

A group of 15 startup founders held a virtual meeting with the Competition Commission of India (CCI)
recently to appraise the regulator about Google’s anti-competitive policies in India. The discussion
involved Google’s recent imposition of its Play Store billing system on Indian developers, as well as the
30% commission the company charges for selling digital goods and services through the system.

Considering restrictions placed on physical movement, CCI immediately allowed flexibility within its
procedures—including electronic filing of antitrust cases as well as combination notices including Green
Channel notifications and deferment of non-urgent cases. CCI also made the Pre-Filing Consultation
(PFC) facility for combinations available through video conferences. A dedicated helpline was set up to
attend to the queries of stakeholders during the pandemic. Relevant public notices were regularly put
on the website of CCI for information of the relevant stakeholders. CCI has also put in place a
mechanism to conduct proceedings through video conferencing to avoid physical contact and presence.

Q1. What is the work of the Competition Commission of India?

CCI consists of a chairperson and 6 Members appointed by the Central Government. It is the duty of the
Commission to eliminate practices having adverse effects on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade in the markets of India.

Q2. What are anti-competitive agreements?

Anti-competitive agreements are agreements among competitors to prevent, restrict or distort
competition.

Q3. What is Competition Act 2002 India?

The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law.
It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969. 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.

Q4. What is CCI approval?

The Mergers, amalgamations and acquisitions in India are regulated by the Competition Commission of
India (CCI). CCI is the statutory authority responsible for reviewing combinations and assessing whether
or not they cause or are likely to cause an appreciable adverse effect on competition within the relevant
market(s) in India. CCI approval is required for combinations where the parties involved exceed the
assets/turnover thresholds set out in section 5 of the Competition Act.

Q5. What is the penalty amount for anti-competitive agreements?

The Competition Commission of India (“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.
1. Role and Importance of Industry Regulation
Industry regulation refers to the establishment of laws, rules, and policies by government authorities to
oversee the operations of businesses in specific sectors, ensuring that they comply with standards
related to safety, quality, pricing, competition, and ethical practices.
Key Roles and Importance:
• Maintaining Fair Competition:
o Prevents monopolies and anti-competitive practices such as price-fixing, collusion, and
market manipulation.
o Ensures that businesses compete fairly, promoting efficiency and innovation.
• Consumer Protection:
o Safeguards consumers from exploitation, ensuring the quality and safety of products
and services.
o Protects consumers from unfair pricing, misleading advertisements, and harmful
products.
o Implements consumer rights regarding product recalls, warranties, and service quality.
• Market Stability:
o Industry regulation helps stabilize markets by monitoring excessive price fluctuations,
supply chain disruptions, and speculative activities.
o Ensures smooth functioning of financial markets, such as controlling insider trading and
preventing speculative bubbles.
• Environmental and Social Responsibility:
o Regulates the environmental impact of industries, ensuring compliance with pollution
control norms, waste management, and conservation practices.
o Encourages businesses to adopt sustainable practices, minimizing their ecological
footprint.
• Promoting Ethical Business Practices:
o Ensures that companies adhere to ethical standards in terms of employee welfare,
product quality, and corporate governance.
o Establishes frameworks for corporate social responsibility (CSR), encouraging businesses
to contribute positively to society.
• Encouraging Innovation and Growth:
o Regulation can create a level playing field, enabling small and medium-sized enterprises
(SMEs) to compete with larger corporations.
o Standardized rules and intellectual property protections can foster innovation,
encouraging new products, technologies, and services.
• Preventing Market Failures:
o Addresses cases of market failures such as public goods (e.g., clean air), externalities
(e.g., pollution), and information asymmetry (e.g., deceptive advertising).
o Ensures efficient resource allocation and prevents exploitation of consumers or workers.
• Public Interest Protection:
o Guarantees access to essential goods and services (e.g., healthcare, education, utilities)
for the entire population, irrespective of socioeconomic status.

2. Regulation of National Monopoly

A national monopoly occurs when a single company dominates an entire market or sector, controlling
the supply of a product or service without any meaningful competition.
Key Aspects of Regulation:
• Price Control:
o Regulators may impose price ceilings or price floors to prevent monopolies from
exploiting their market power and charging excessively high prices.
o In essential sectors (e.g., electricity, water), pricing regulation ensures services remain
affordable and accessible to all.
• Ensuring Public Service Obligations:
o Monopolies, especially in sectors like utilities and transportation, may be required to
provide universal access to services, ensuring even remote or underserved areas are
catered to.
o They are also expected to maintain high standards of service and efficiency.
• Preventing Abuse of Market Power:
o Regulators monitor monopolies to prevent anti-competitive practices such as price
gouging, predatory pricing, or exclusionary tactics that harm competition.
o Ensuring that monopolists do not hinder new entrants or discourage innovation by
controlling the supply chain.
• Promoting Economic Efficiency:
o Even with monopoly control, regulations encourage the monopolist to operate
efficiently, reducing waste and unnecessary costs while maintaining quality.
o Regulatory bodies often encourage technological upgrades and improvements to
benefit consumers.
• Regulation and Antitrust Laws:
o Governments may use antitrust laws to break up or restructure monopolies if their size
or dominance harms competition and consumer welfare.
o Examples include splitting up large companies or imposing restrictions to limit their
market power.
• Monitoring and Reporting:
o Continuous oversight is necessary to ensure that monopolistic firms remain compliant
with regulatory norms and do not exploit their dominant position.
o Regular audits and transparency requirements are set in place for effective monitoring.

3. Antitrust Legislation and Indian Industries: Antitrust laws (also called competition laws) are designed
to promote fair competition by preventing anti-competitive practices such as monopolies, cartels, and
abuse of market power. (CCI in India)

4. Social Concerns and Advertising

Advertisement is a tool used by businesses to promote products and services, but it can also raise
various social and ethical concerns.
Key Social Concerns in Advertising:
• Deceptive and Misleading Ads:
o Advertisements that provide false or exaggerated claims can mislead consumers about
the quality or benefits of products, leading to consumer harm.
o Regulatory bodies like the Advertising Standards Council of India (ASCI) work to curb
misleading advertisements.
• Targeting Vulnerable Audiences:
o Ads often target children, the elderly, and other vulnerable groups who may not have
the capacity to critically evaluate advertising claims.
o Concerns include promoting unhealthy products like junk food, sugary beverages, and
 tobacco to children.
• Sexualization and Objectification:
o Ads often depict unrealistic body images and sexualize individuals, which can contribute
to body dysmorphia, low self-esteem, and gender stereotypes.
o Calls for more ethical and responsible portrayals of people in advertising are growing.
• Cultural Sensitivity:
o Advertisements that ignore cultural, religious, or social sensitivities can cause offense
and backlash.
o Companies are encouraged to be more mindful of diverse audiences and avoid cultural
appropriation or insensitivity.
• Promoting Unhealthy Lifestyles:
o Many ads for fast food, alcohol, and tobacco products encourage unhealthy habits that
can lead to long-term health issues like obesity, addiction, and heart disease.
o Governments often impose restrictions on such ads, especially targeting children or
aired during prime time.
• Environmental Impact of Advertising:
o Advertising encourages over-consumption, leading to waste, environmental
degradation, and unsustainable lifestyles.
o There is growing awareness of the need for sustainable advertising practices that
promote responsible consumerism.
Regulation of Advertising:
• Government Oversight:
o Regulatory bodies, like the ASCI in India, set guidelines and standards for advertising to
ensure ethical practices and prevent exploitation.
• Corporate Social Responsibility (CSR) in Advertising:
o More companies are adopting CSR in their advertising, promoting messages of
sustainability, inclusivity, and social good to appeal to conscious consumers.
• Transparency in Sponsored Content:
o Increasing focus on transparency in digital advertising, especially with influencer
marketing and social media promotions, ensuring that consumers can distinguish
between organic and sponsored content.

Horizontal Mergers: Mergers between companies operating in the same industry and at the same stage
of production. For e.g., Two car manufacturing companies merging to become a larger entity in the
automobile industry.
• Objective: To increase market share, reduce competition, and achieve economies of scale.
• Advantages:
o Enhanced market power.
o Increased efficiency and cost savings.
o Broader customer base.
• Disadvantages:
o Risk of reduced competition leading to monopolistic practices.
o Regulatory scrutiny due to anti-trust laws.
Vertical Mergers: Mergers between companies at different stages of the production process within the
same industry. For e.g., A car manufacturer merging with a parts supplier.
• Objective: To streamline operations, control the supply chain, and reduce costs.
• Advantages:
o Better control over the supply chain and distribution.
 o Reduced production costs and dependency on external suppliers.
o Improved coordination between production stages.
• Disadvantages:
o Integration challenges between different stages of production.
o Risk of inefficiency if the company lacks experience in new areas.
Conglomerate Mergers: Mergers between companies in unrelated industries, operating in different
markets. Fir e.g., A technology company merging with a food and beverage company.
• Objective: To diversify risk, expand into new markets, and achieve financial synergies.
• Advantages:
o Risk diversification by entering unrelated sectors.
o Potential for cross-industry innovations.
o Improved financial stability.
• Disadvantages:
o Lack of expertise in the new industry.
o Complexity in management and operations.
o Difficult to achieve synergies due to differences in business models.