BL Lecture 22

8/8/2019 BL Lecture 22

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The Competition Act, 2002


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OBJECTIVESOBJECTIVES

1.Establish a Commission to prevent practices having

adverse effect on competition.2.Promote and sustain competition and protect the

interests of consumers.

4.Ensure freedom of trade carried on by other

participants in markets, in India.

Core function areas

. Prohibition of nti!competitive greements.

". Prohibition of buse of #ominant Position.

C. $egulation of Combinations

%ote& the competition commission is not yet fully

functional,


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ANTI-COMPETITIVE AGREEMENTS ANTI-COMPETITIVE AGREEMENTS

'his ct, sought to replace the ($'P ct.

"asic $ule& )*.+ %o enterprise, person or associationshall enter into any agreement in respect of

production, supply, distribution, storage, ac-uisition

or control of goods or provision of services, hich

causes, or is likely to cause an appreciable adverseeffect on competition in India. n agreement that

contravenes the above $ule is void.

greement includes any arrangement or

understanding& /i0 hether or not the same is formal

or in riting or /ii0 hether or not the same is

intended to be enforced.


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ANTI-COMPETITIVE AGREEMENTS ANTI-COMPETITIVE AGREEMENTS

•Enterprise means any person /individual, Indian

foreign company, authority etc.0 or government.E3cluding sovereign functions of the overnment,

including activities relating to atomic energy,

currency, defence and space.

)*. +/+0 ! 'he folloing agreement/s0 presumed tohave appreciable adverse effect on competition

5determines purchase or sale prices.

5limits or controls production, supply, markets,technical development, investment or provision of

services.


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ANTI-COMPETITIVE AGREEMENTSANTI-COMPETITIVE AGREEMENTS

5allocation of geographical area of market, or typesof goods or services, or number of customers in the

market or any other similar ay.

5results in bid rigging or collusive biddings

E3ception to the above rule&

n agreement entered into by ay of 6oint

ventures if such agreement increases efficiency in

production, supply, distribution, storage, ac-uisitionor control of goods or provision of services.


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Anti-competitive Agreements Anti-competitive Agreements

[S. 3(4)] The following shall be considered anti-

competitive if it causes or is liel! to cause an

appreciable adverse effect on competition in "ndia.

#Tie-in arrangement $ re%uiring to purchase some

other goods as a condition.

#&'clusive suppl! agreement $ restraint dealingwith goods of an! other person.

* &'clusive distribution agreement $ to limit

restrict or withhold output or suppl! of goods orallocate an! area or maret for the disposal or sale

of the goods.


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Anti-Competitive Agreements Anti-Competitive Agreements

#efusal to deal $ to restrict from whom goods ma! bebought or sold.

#esale price maintenance $ prescribing the price atwhich the goods ma! be resold unless it clearl! statesthat a lower price ma! be charged.

&'ceptions to Section -3

#ight of an! person to restrain an! infringement ofintellectual propert! rights -cop!right trademars

patents designs geographical indications etc.

#ight of an! person to e'port goods from "ndia tothe e'tent to which the agreement relates e'clusivel!to the production suppl! distribution or control of

goods or provision of services for such e'port.


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Abse o! "omin#nt Position Abse o! "omin#nt Position

S. 4(*) -+o enterprise or group shall abuse its dominant position.

•,roup means two or more enterprises which directl!or indirectl! are in a position to/ (i) e'ercise 012 ormore of the voting rights in the other enterprise or (ii)appoint more than 52 of the members of the 6oard of

7irectors of the other or (iii) control the managementor affairs of the other enterprise.

#ominant position ! a position of strength en6oyed by

an enterprise, in the relevant market, in India, hichenables it to 7 operate independently of competitive

forces prevailing in the relevant market or affect its

competitors or consumers or the relevant market in its

favour.


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Abse o! "omin#nt Position Abse o! "omin#nt PositionThere shall be an abuse of dominant position if anenterprise or group does an! of the following/

# imposes unfair or discriminator!

(i) condition in purchase or sale of goods or servicesor (ii) price in purchase or sale (including predator!

price ) of goods or service.

&'ception/ such unfair or discriminator! conditionsor prices adopted to meet the competition.

,8redator! price means the sale of goods or provision

of services at a price which is below the cost as ma!be determined b! regulations with a view to reducecompetition or eliminate competitors.


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Abse o! "omin#nt Position Abse o! "omin#nt Position

•limits or restricts (i) production of goods or provision

of services or maret thereof or (ii) technical or

scientific development relating to goods or services to

the pre9udice of consumers.

#"ndulges in practice or practices resulting in denial of

maret access in an! manner.#:aes contracts sub9ect to acceptance b! other

parties of supplementar! obligations which b! their

nature and commercial usage have no connection with

the sub9ect of such contracts.

#;ses its dominant position in one relevant maret to

enter into or protect other relevant maret.


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CCI’s decisionsCCI’s decisions

If the CCI finds the agreement or action of an

enterprise in dominant position to be in contraventionof la, it may pass orders like 7

/i0 direct discontinuation of such agreement or

discontinuation of such abuse of dominant position

/ii0impose penalty

/iii0 direct modification of agreements

/iv0 other directions including payment of costs

/v0pass such other orders or directions as appropriate.

'his ct shall be in addition to and not in derogation

of any other la.


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Regulation of CombinationsRegulation of Combinations

[S. ] (a)The ac%uisition of one or more enterprises b!

one or more persons or (b) :erger or amalgamation ofenterprises shall be a ,combination if an! of the

specified parameters are met.

The specified parameters relate to value of ,assets and

,turnover of the entities or group involved $ includingthat in "ndia.

[S. 1]+o person or enterprise shall enter into a

combination which causes or is liel! to cause anappreciable adverse effect on competition within the

relevant maret in "ndia and such combination shall be

void.


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Regulation of CombinationsRegulation of Combinations [S. 1]


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Regulation of CombinationsRegulation of Combinations

8er S.1(0) +o combination shall come into effect until

e'pir! of 0*5 da!s from the date of notice to ==" oruntil ==" has passed appropriate orders whichever is

earlier.

==" after detailed in%uir! ma! approve suggest

modifications or re9ect a =ombination.

"n addition u>S. 0? the ==" has powers to order

division of enterprise in order to ensure that such

enterprise does not abuse its dominant position.


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Aeals and Ot!e" P"o#isionsAeals and Ot!e" P"o#isions

# directions> decisions of the =="

within 15 da!s to the =ompetition


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Simulated exercises

•$%A manufactu"e" of elect"ical goods

stiulated to !is "etaile"s t!at t!e& s!ould

not sell t!e goods belo' t!e minimum "ice(no" abo#e t!e ma)imum "ice no" 'it! an&

#a"iation in t!e stiulated "ice% *oes t!is

amount to "esale "ice maintenance+


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Exercises......

,% A deale" ag"ees to issue ne' gas

connections 'it! t!e sale of gas sto#es

onl&% *oes it in#ol#e anti-cometitionag"eement+


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Exercises ........

•% A ban. "e/ui"es a custome" to .ee a

fi)ed deosit '!ile allotting !im a loc.e"%

*oes t!is amount to anti-cometitionag"eement+


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Exercises.....

•An automobile deale"( '!ile selling !is

"oduct( includes t!e "ice of a

com"e!ensi#e insu"ance olic& and a

safet& de#ice in t!e "ice of t!e #e!icle%

*oes t!is affect cometition la'+


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Exercises.......

•A deale" in "essu"e coo.e"s "e/ui"es t!e

u"c!ase"s( as a "econdition to sale of t!e

"essu"e coo.e"s( to u"c!ase containe"s

and sea"ato"s along 'it! t!e "essu"e

coo.e"s% *oes t!is amount to #iolation of

cometition la'+

BL Lecture 22

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Transcript of BL Lecture 22