Competition Act2002

Mod 3DrKK

OUTLINE:ObjectiveBackground of competition actThe competition Act.Competition Commission of IndiaDuties, Powers , Functions and PenaltiesDistinction between MRTP and Competition act

Competition

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”

Benefits of Competition

Companies : Efficiency, cost-saving operations, better utilization of resources, etc.

The Consumer : Wider choice of goods at competitive prices The Government : Generates revenue

BACKGROUND of Competition Law

MRTP Act came into force (1970), limited provisions existed under :–The Indian Contract Act–Directive Principles of State Policy (Non-

enforceable)

The MRTP Act brought in a four-pronged thrust :–Concentration of economic power –Restrictive Trade Practices–Monopolistic Trade Practices –Unfair Trade Practices

Post 1991 policy of Liberalization, Privatization and Globalization introduced.

MRTP Act was found inadequate to meet the challenges of a modern globalize economy.

Government of India in October 1999 appointed a high level Committee on Competition Policy and Law (the Raghavan Committee) to advise on the competition law in consonance with international developments.

Competition Law was Introduced in the year 2002.

Competition law  It extends to the whole of India except the

State of Jammu and Kashmir.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 Law

Competition Law generally covers 3 areas:

1. – Anti - Competitive Agreements, e.g., cartels,

2. – Abuse of Dominant Position by enterprises, e.g., predatory pricing, barriers to entry and

3. – Regulation of Mergers and Acquisitions (M&As).

OBJECTIVES OF COMPETITION LAW

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

Cont…

Ensuring fairness and equity in market place transactions

Protecting the ‘public interest’ including in some cases considerations relating to industrial competitiveness and employment

Protecting opportunities for small and medium business

Anti-competitive agreements• No enterprise or association of

enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.

Abuse of dominant position

• "dominant position" means a 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.

combinations

Regulation of combinations

No person or enterprise shall

enter into a combination which

causes or is likely to cause an

appreciable adverse effect on

competition

EXEMPTIONSEXEMPTIONS GOVT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW

ANY CLASS OF ENTERPRISES IN THE INTEREST OF

NATIONAL SECURITY/PUBLIC INTEREST.

ANY PRACTICE/AGREEMENT ARISING OUT OF

INTERNATIONAL TREATY/AGREEMENT

ANY ENTERPRISE PERFORMING A SOVEREIGN

FUNCTION ON BEHALF OF GOVERNMENT

DIFFERENT PROVISIONS FROM DIFFERENT DATES IF,

NEED BE.

Competition Commission Of IndiaCentral Government has appointed CCI as a

governing Body. The commission shall be a body corporate by the

name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable.

The head office of the Commission shall be at such place as the Central Government may decide from time to time (New Delhi)

CCI (Competition commission of India) may also assign office in other places in India.

Composition of CommissionThe Commission has a Chairperson and six

members.

The Chairperson and other Members of the Commission shall be appointed by the Central Government.

Selection Committee includes Chief Justice of India or his nominee, Secretary in the Ministry of Corporate Affairs

PENALITIESIf any person, without reasonable clause, fails to

comply with the orders or directions of the act, he shall be punishable with fine which may extend to rupees 1 Lac for each day during which such non-compliance occurs, subject to a maximum of rupees 10 Cr, as the Commission may determine.

If any person does not comply with the orders or directions issued, or fails to pay the fine imposed be punishable with imprisonment for a term which may extend to 3 years, or with fine which may extend to rupees 25 CR.

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OLD WINE OR NEW WINE ?OLD WINE OR NEW WINE ?

MRTP ACT

BASED ON PRE-1991 LPG

PREMISED ON SIZE

PROCEDURE ORIENTED

COVERS UNFAIR TRADE PRACTICES (INDIVIDUAL CONSUMER INTEREST)

POLITICAL APPOINTMENTS OF CHAIRPERSON/MEMBERS

NEW LAW

BASED ON POST-1991 LPG

PREMISED ON BEHAVIOUR/ CONDUCT

RESULT ORIENTED.

UNFAIR TRADE PRACTICES EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT)

APPOINTMENTS BY A COLLEGIUM