Sumbitted by:-
Aastha Garg Priyanka Yadav Anjali Mishra
Is a situation in a market in which firms or sellers independently strive for the buyers patronage in order to achieve a particular business objective for example, profits, sales or market share
An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
Competition
act, 2002 passed in january2003 Competition commission of india established under act in october,2003 with one member/ acting chairman Enforcement provision not notified due to legal challenge leading to process of amendments Competition act,2007 passed in october2007-stage set for full activation of commission
OBJECTIVES OF COMPETITION
LAW
&
POLICY
Promoting economic efficiency in both static and dynamic sense protecting consumers from the undue exercise of market power facilitating economic liberalization, including privatization. Deregulation and reduction of external trade barriers Preserving and promoting the sound development of a market economy
Is
foundation of efficiently working market system: Maximizes consumer welfare. Lower prices, wider choice and better services. Accelerates economic growth; higher efficiency/ productivity. Generates innovation; dynamic efficiency. For enterprises provides level playing field , redressal against anti competitive practices.
Prohibits AntiCompetitive Agreements
Competiti on Advocacy
Prohibits Abuse of Dominan ce
Provides for Regulation of Combinations
These are agreements which cause or are likely to cause an appreciable adverse effect on competition within India: Horizontal Agreements: These are between and among competitors who are at the same stage of production, supply, distribution, etc.
These are presumed to be illegal Examples: cartels, bid rigging, collusive bidding, sharing of markets, etc.
Vertical Agreements:
Vertical Agreements are between parties at different stages of production, supply, distribution, etc.
These are not presumed illegal; are subject to rule of reason. Examples: tie-in arrangements, exclusive supply/distribution agreements, refusal to deal.
Dominant position is defined as a position of strength which enables the enterprise
No mathematical or statistical formula is adopted to measure dominance .
to operate independently of competitive forces in the market, or
to affect its competitors or consumers in its favor.
Includes practices like:
Predatory pricing
Unfair or discriminatory conditions or prices,
Limiting or restricting production or technical/scien tific development,
Denial of market access,
After inquiry into abuse of dominant position, the Competition Commission can order:
discontinuance of abuse of dominant position impose a penalty upto 10% of the average turnover of the enterprise
Combinations,
in terms of the meaning given to them in the Act, include mergers and acquisition, acquiring of control and acquisition of shares , voting right, assets.
order to establish whether the higher concentration in the market resulting from the merger will increase the possibility of collusive or unilaterally harmful behavior, it must first be established as to what the relevant market is
in
Notification
of Combination to Commission is
voluntary. If notified, Commission to take a decision within 90 days on the combination. Decision may allow, disallow, modify, etc. the combination. Combination assessed on rule of reason based on 14 factors. Combination can take suo motu action within 1year after combination.
Commission is expected to regulate Combinations,
i.e., large mergers, acquisitions, etc. likely to have
appreciable adverse effect on competition. Threshold: For single enterprise
Assets > Rs.1000 crores Turnover > Rs.3000 crores
Threshold:
For group of enterprises
Assets > Rs.4000 crores Turnover > Rs.12000 crores
Similarly, threshold is provided for overseas groups
FTC,US successfully opposed (1997) Mergers Between Staples and Office Depot- Two Office Supplies Super Stores: Court accepted office supplies super stores as relevant market used economic tool e.g. CR, HHI, Brown Shoe indices Court recognized benefits to consumers by firms. But found reasonable probability that proposed merger may substantially lessen competition ; rejected efficiency argument Issues involves predicting future structure/conduct factors
Cease and desist order Impose penalty up to 10% of turnover.
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
Various penalties ranging from Rs.1 lac upto Rs.1 crore are also provided for failure to comply with direction/order of Commission.
The Competition Commission of India, in terms of advocacy provisions in the Act, is enabled to participate in the formulation of the countrys economic policies and to participate in the reviewing of laws related to competition at the instance of the Central Government. Commission is required to take measures for promotion of Competition Advocacy, creating Awareness and imparting Training about competition issues [Section 49(3)]
Advocacy means competition promotion through nonenforcement measures
For promotion of competition advocacy and creation of awareness about competition issues, the Commission may:i) Undertake appropriate programmes / activities etc.;
ii) Encourage and interact with the organizations of stakeholders, academic community etc. to undertake activities, programmes, studies, research work, etc. on competition issues;
Creation of barriers to entry
Driving existing competitors out of market
Benefits to consumers Benefit to Scientific and technical knowhow
Before MRTP Act came into force (1970), limited provisions existed under :
The Indian Contract Act Directive Principles of State Policy (Nonenforceable)
The MRTP Act brought in a four-pronged thrust :
Concentration of economic power Restrictive Trade Practices Monopolistic Trade Practices Unfair Trade Practices
Under the Competition Act :
No provision for Unfair Trade Practices Only Consumer Courts will have jurisdiction Pending cases will be continued by MRTPC for 2 years After 2 years : All cases (except Disparagement Cases) will be transferred to National Commission under CPA All Disparagement Cases will be transferred to Competition Commission
