THE COMPETITION LAW IN INDIA

1. EVOLUTION OF COMPETITION LAW IN INDIA, DIFFERENCE FROM

THE MRTP ACT

 India adopted its first competition law way back in 1969 in the form of Monopolies
and Restrictive Trade Practices Act (MRTP). The Monopolies and Restrictive Trade
Practices Bill was introduced in the Parliament in the year 1967 and the same was
referred to the Joint Select Committee. The MRTP Act, 1969 came into force, with
effect from, 1 June, 1970. However, with the changing nature of business, market,
economy on the whole within and outside India, there was felt a necessity to replace
the obsolete law by the new competition law and hence the MRTP Act was replaced
with the Competition Act of 2002.

The enactment of MRTP Act, 1969 was based on the socio – economic philosophy
enshrined in the Directive Principles of State Policy contained in the Constitution of
India. The MRTP Act, 1969 underwent amendments in 1974, 1980, 1982, 1984, 1986,
1988 and 1991. The amendments introduced in the year 1982 and 1984 were based on
the recommendations of the Sachar Committee, which was constituted by the Govt. of
India under the Chairmanship of Justice Rajinder Sachar in the year 1977.

The Sachar Committee pointed out that advertisements and sales promotions having
become well established modes of modern business techniques, representations
through such advertisements to the consumer should not become deceptive. The
Committee also noted that fictitious bargain was another common form of deception
and many devices were used to lure buyers into believing that they were getting
something for nothing or at a nominal value for their money. The Committee
recommended that an obligation is to be cast on the seller to speak the truth when he
advertises and also to avoid half truth, the purpose being preventing false or
misleading advertisements.

However, as the times changed, the need was felt for a new competition law. With
introduction of new economic policy and opening up of the Indian market to the
world, there was a need to shift focus from curbing monopolies to promoting
competition in the Indian market.
 In October 1999, the Government of India constituted a High Level Committee under
the Chairmanship of Mr. SVS Raghavan [‘Raghavan Committee’] to advise a modern
competition law for the country in line with international developments and to suggest
legislative framework, which may entail a new law or suitable amendments in the
MRTP Act, 1969. The Raghavan Committee presented its report to the Government in
May 2000.

The committee inter alia noted: In conditions of effective competition, rivals have
equal opportunities to compete for business on the basis and quality of their outputs,
and resource deployment follows market success in meeting consumers’ demand at
the lowest possible cost.

On the basis of the recommendations of the Raghavan Committee, a draft competition

law was prepared and presented in November 2000 to the Government and the
Competition Bill was introduced in the Parliament, which referred the Bill to its
Standing Committee. After considering the recommendations of the Standing
Committee, the Parliament passed December 2002 the Competition Act, 2002.

Hence, the Monopolies and Restrictive Trade Practices Act, 1969 [MRTP Act] was
repealed and was replaced by the Competition Act, 2002, with effect from 1
September, 2009.

2. ANTI-COMPETITIVE AGREEMENTS, VERTICAL AND HORIZONTAL

AGREEMENTS, PREDATORY PRICING
 Section 3(1) of the Act provides a general prohibition on the following to enter into
agreements which causes or is likely to cause an AAEC in India:

Enterprise and enterprise;

Enterprise and association of enterprises;
Two associations of enterprises;
Two persons;
Person and an association of persons;
Between two association of persons;
Person and an enterprise;
Person and an association of enterprise;
Association of persons and enterprises;
Association of persons and association of enterprises
If an agreement is entered between any of the above, it would be void under the Act
and while deciding so they will be examined under the rule of reason1 on a case-to-
case basis.

Now the question that arises here is what would be termed as anti-competitive?
Section 3(2) of the Act says that the key determinant of anti-competitive agreement is
their AAEC within India. It is crucial to note here that section 32 of the Act provides
that even if an agreement has been entered into outside India, the CCI would have
powers to enquire into such an arrangement if such an agreement has an AAEC in
India.

Further, it is crucial to note that section 2(b) of the Act provides that "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. So, even oral arrangement can be anti-competitive. Arrangement
between parties which have not been formalized or if written but not executed or
registered can also be considered anti-competitive if they are found to have AAEC in
India.

Horizontal Agreements
Horizontal agreements are arrangements between enterprises at the same stage of the
production chain and that is generally between two rivals for either fixing prices or for
limiting production or for sharing markets. In all such agreements, there is a
presumption in the Act that such agreements cause AAEC. Cartel is also a horizontal
agreement. This is generally between producers of goods or providers of services for
price-fixing or sharing of market, and is generally regarded as the most pernicious
form of anti-competitive agreement.

Section 3(3) provides that an agreement would have AAEC if there is a practice that
is carried on, or a decision that has been taken, between any of the parties mentioned
above, including cartels, engaged in identical or similar trade of goods or provision of
services, that can either –

Directly or indirectly determine the purchase or sale prices;

Limits or controls production, supply, markets, technical development, investment or
provision of services;
Shares the market or source of production or provision of services by way of
allocation of geographical area of market, or type of goods or services, or number of
customers in the market or any other similar way;
Directly or indirectly results in bid rigging or collusive bidding (effect of eliminating
or reducing competition for bids or adversely affecting or manipulating the process
for bidding).
The section provides an exception to the joint ventures entered into by the parties if
they increase the efficiency in production, supply, distribution, storage, acquisition or
control of goods or provisions of services. Section 3(1) of the Act cannot be invoked
independently and is necessarily to be used along with section 3(3) related to
horizontal agreements or section 3(4) related to vertical agreements. However, it
should be clarified that section 3(1) is not merely a suggestive provision but is
essentially the "genus" of the Act. It should also be invoked independently to serve
the interest of consumers and also cover various other types of agreements which may
not fall under the aegis of section 3(3) or 3(4).

Vertical Agreements
Vertical agreements are between enterprises at different stages of the production
chain, like an arrangement between the manufacturer and a distributor. The
presumptive rule does not apply to vertical agreements. The question whether the
vertical agreement is causing AAEC is determined by rule of reason. When rule of
reason is employed, both positive as well as negative impact of competition is
analyzed. In order to determine whether any agreement is in contravention of section
3(4) read with section 3(1) of the Act, the following five essential ingredients of
section 3(4) have to be satisfied:

There must be an agreement amongst enterprises or persons;

The parties to such agreement must be at different stages or levels of production
chain, in respect of production, supply, distribution, storage, sale or price of, or trade
in goods or provision of services;
The agreeing parties must be in different markets;
The agreement should cause or should be likely to cause AAEC;
The agreement should be of one of the following nature as illustrated in section 3(4)
of the Act:

Tie-in arrangement (includes any agreement requiring a purchaser of goods, as a

condition of such purchase, to purchase some other goods);
Exclusive supply agreement (includes any agreement restricting in any matter the
purchaser in the course of his trade from acquiring or otherwise dealing in any goods
other than those of the seller or any other person);
Exclusive distribution agreement (includes any agreement to limit, restrict or withhold
the output or supply of any goods or allocate any area or market for the disposal or
sale of the goods);
Refusal to deal (includes any agreement which restricts, or is likely to restrict, by any
method the persons or classes of persons to whom goods are sold or from whom
goods are bought);
Resale price maintenance (includes any agreement to sell goods on condition that the
prices to be changed on the resale by the purchaser shall be the prices stipulated by
the seller unless it is clearly stated that prices lower than those prices may be
changed).
Predatory Pricing
The concept of predatory pricing is difficult to define in precise economic terms. In
simple terms it is sacrificing of present revenues for the purpose of driving
competitors from the market with the intent of recouping lost revenues through
monopoly profits thereafter.

Predatory pricing
In order to prevail as a matter of law, a plaintiff must at least show that either (1) a
competitor is charging a price below his average variable cost in the competitive
market or (2) the competitor is charging a price below its short-run, profit-maximizing
 price and barriers to entry are great enough to enable the discriminator to reap the
benefits of predation before new entry is possible. 1

It was further clarified that, the standard of profit maximization price should be
applied only when the barriers to entry are extremely high i.e. if the barriers for an
entry in a specified are lower the firm set the price closer to the marginal cost. For
instance, Entry barriers for setting food outlet are very low, hence the prices charged
for edible food at these food outlet is nearly close to the marginal cost.
3. ABUSE OF DOMINANCE
 Section 4 of the Competition Act, 2002 prevents any enterprise or group from abusing
its dominant position. The Act also provides circumstances under which there is abuse
of dominant position. Section 4(2) of Act prevents following acts resulting in abuse of
dominant position:

1. Impose unfair or discriminatory condition or price in sale and purchase of goods or

services;

2. Limit or restrict;

3. Production of goods or services

4. Technical or scientific development relating to goods or services to the prejudice of

consumers;

Indulges in practice resulting in denial of market access;

1. Make conclusion of contracts subject to acceptance by other parties;

2. Use its dominant position in one market to enter into other relevant market;

Definition of Dominant position and Predatory pricing

According to the Act, dominant position means a position of strength, enjoyed by an
enterprise in the relevant market in India which enables it to:

1. Operate independently of competitive forces in relevant market

2. Affect competitors, consumers or relevant market in its favour

Predatory price means sale of goods or services at a price which is below the cost as
may be with the view to reduce competition or eliminate competitors.

The term abuse of dominant position refers to anticompetitive business practices in

which a dominant firm may engage in order to maintain or increase its position in the
market.

Judicial Dicta on Abuse of Dominant Position

What does dominant position imply?
In the case of, Shri Neeraj Malhotra, Advocates v. North Delhi Power Ltd., the CCI
observed that Section 4 of the Competition Act does not prohibit an enterprise from
holding a dominant position in a market, it does place a special responsibility on such
enterprises, in requiring them not to abuse their dominant position. The CCI further
held that Section 4 does not contain an exhaustive list of activities that would amount
to contravention of its provisions. The actions, practices and conduct of an enterprise
in a dominant position have to be examined in view of the facts and circumstances of
each case to determine whether or not the same constitutes an abuse of dominance in
terms of Section 4 of the Competition Act.

In substance, `dominant position’ means the position of strength enjoyed by an

enterprise that enables it to act independently of competitive forces prevailing in the
relevant market. Such an enterprise will be in a position to disregard market forces
and unilaterally impose trading conditions, fix prices, etc. The abuse may result in the
restriction of competition, or the elimination of effective competition.

How to examine dominant position of an enterprise?

In a recent case Fast Track Call Cab Pvt. Ltd. and Meru Travel Solutions Pvt. Ltd v.
ANI Technologies Pvt. Ltd., the CCI while determining whether the OP (OLA) held a
dominant position in relevant market or not remarked that abuse of dominant position
under Section 4 would be attracted only when the entity under scrutiny holds a
dominant position in the relevant market. CCI also elaborated on the concept of
dominant position and stated dominant position as a position of economic strength
enjoyed by the enterprise in the relevant market, which enables it to operate
independently of competitive forces prevailing in the relevant market or affect its
 competitor or consumer or the relevant market in its favour. Such ability of the
enterprise to behave independently of competitive forces needs to be assessed in light
of all relevant circumstances and the factors enlisted under Section 19(4) of the Act.
The CCI in the case while determining dominance of OLA took the following factors
into consideration:

Market shares of OLA;

Its competitors in relevant market;
Annual and monthly number of trips in the relevant market during the period of
investigation;
What is relevant market?
While discussing the concept of dominant position, one of the most intriguing
questions which lingers our minds what does relevant market connote? ‘Relevant
market’ is one of the primary concerns while determining dominant position as well
as abuse of dominant position by an enterprise.

Section 2(r) of the Competition Act renders an exclusive definition for the term
‘relevant market’. It states that it 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 markets.
4. COMBINATIONS AND ITS REGULATIONS

 Section 5 of the Competition Act explains combination as:

‘ACQUISITION OF ONE OR MORE ENTERPRISES BY ONE OR MORE

PERSONS OR MERGER OR AMALGAMATION OF ENTERPRISES SHALL BE
A COMBINATION OF SUCH ENTERPRISES AND PERSONS OR
ENTERPRISES’.

Combination within the Competition Law is the merger between two or more
enterprises or firms or the business sector acquisitions (such as companies or firms)
by other business enterprises. The Government controls combinations or mergers and
acquisitions within the country to promote competition and thereby seeing to that
small scale establishments are not overshadowed and swallowed by more reputed
industries. This is because the merger of big shot companies not only reduce
 competition but also make it difficult and almost impossible for smaller firms to grow
or profit from their business. The accumulation of wealth in certain sectors of
business and the consumer concerns can lead to major economic and social
discrepancies within the nation.

Regulation of Combinations
A merger or a combination can be held valid under the purview of the Competition
Act 2002 and its regulation policies only if the newly acquired or merged enterprise
passes the threshold pertaining to the assets and the turnover mentioned in the Act. If
not confined to the criteria then the attractancy of the new enterprise will be nil as far
as the provisions of the Competition Act are concerned. Sections 5 and 6 of the
Competition Act cover the definition and regulation of combinations.

5. POWERS AND FUNCTIONS OF COMPETITION COMMISSION OF INDIA,

APPELLATE AUTHORITIES, COMPETITION ADVOCACY
 Powers and Functions of the Commission

1. To eliminate practices having adverse effect on competition, promote and sustain

competition, protect interests of consumers and ensure freedom of trade by other
participants
2. Inquire into certain agreements and dominant position of enterprise– It provides
that the Commission may either suo moto or on receipt of any information of
alleged contravention of Section 3 (prohibits anti-competitive agreements) may
inquire into the same.
3. Inquiry into combinations– Section 20 of the Act entrusts the Commission with the
power to inquire into any information relating to acquisition and determine whether
such combination or acquisition may have an appreciable adverse effect on
competition (AAEC).
4. Reference of an issue by a statutory authority to the Commission– Section 21 of the
Act enumerates that in the course of a proceeding if any issue is raised that any
decision of a statutory authority will be in conflict with the provisions of the
Competition Act, 2002, the statutory authority shall make a reference in this regard
to the Commission.
5. Reference by Commission– Section 21A of the Act provides that if in the course of
proceeding an issue is raised by any party that any decision taken by the
Commission is in contravention of the provisions of Competition Act, whose
authority is entrusted to a statutory authority then the Commission may make a
reference in respect of the issue to the statutory authority.
6. Power to issue interim order– Section 33 of the Act empowers the Commission to
issue interim orders in cases of anti-competitive agreements and abuse of dominant
position, thereby temporarily restraining any party from carrying on such an act.
7. Competition Advocacy– Section 49 of the Act provides for competition advocacy
and enumerates that the Central or the State Government may while formulating
any policy on Competition or any other matter may make reference to the
Commission for its opinion on possible effect of such policy on Competition.
However, the opinion given by the Commission is not binding on the Central
Government.

Competition Appellate Tribunal (COMPAT)

The Amendment made to the Act in 2007, casts an obligation upon the Central
Government 316 to establish Competition Appellate Tribunal (COMPAT), which
shall be a three member quasi –judicial body to Hear and dispose of appeals
against any direction issued or decision made or the Order passed by the
Commission; Adjudicate on any claim for compensation that may arise from the
findings of the Commission or the Orders of the Appellate Tribunal in an appeal
against any finding of the Commission or under section 42A or sub-section (2) of
section 53Q 317of this Act, and pass Orders for the recovery of compensation
under section 53N of the Act. The Competition Appellate Tribunal will be guided
by principle of natural justice and it can regulate its own procedure. COMPAT can
dismiss a petition for default or decide it ex parte and such order of dismissal or ex
parte order can be set aside. The proceedings before COMPAT are deemed to be
judicial proceedings. If Appellate Tribunal cannot execute its order, it will be sent
to Court within whose local jurisdiction the registered office of the company or
place of residence of the person is situated. Order of the COMPAT will be executed
as a degree of court. COMPAT can directly send the order to a civil court for
execution. The order will be executed by that Court as if it is a decree of that Court.
The appeal can be filed with COMPAT by Central Government, State Government
or enterprises or any person who is aggrieved by decision, direction or order of
CCI. Appeal should be filed within 60 days in prescribed form. Delay in filing the
appeal can be condoned by COMPAT if sufficient cause is shown. The COMPAT
will endeavour to dispose of the appeal within six months from receipt of appeal.
Thus, the time limit of six months is not mandatory. In the event that the orders of
Competition Appellate Tribunal are contravened without any reasonable ground
punishment of imprisonment up to three years and penalty up to Rs. One crore can
be imposed by Chief Metropolitan Magistrate, Delhi. Appeal against the order of
COMPAT can be made to Supreme Court which should be filed within 60 days, but
Supreme Court can condone the delay.

Competition advocacy

Competition advocacy has been an important area of activity of several competition

authorities both in terms of creating general awareness about the law amongst the
enterprises and thereby promoting self compliance and also in terms of influencing
government and regulatory policies in a pro-competition direction. The aim of the
Competition Advocacy is to foster conditions that will lead to a more competitive
market structure and business behavior without the direct intervention of the
competition authority. In recognition of the importance of the various stakeholders,
the Act lays emphasis on competition advocacy initiatives of CCI at three levels,
namely; the policy makers (Central and State Governments), sectoral regulators and
the public at large.

In India, competition Advocacy is regarded as one of the element of the

Competition Law, perhaps the most important one. The CCI shall take suitable
measures, for the promotion of competition advocacy, creating awareness and
imparting training about competition issues, and activities that could strengthen the
competition culture in the market. The role of the Competition Advocacy depends
upon country s legal and economic circumstances. The CCI apart from merely
enforcing the competition law needs to participate more broadly in the formulation
of the country s economic policies which may adversely affect competitive market
structure, business / conduct and economic performance. The CCI therefore
assumed the role of competition advocacy, acting proactively to bring about
 governmental policy that lower barriers to entry, promote de-regulation and trade
liberalization and thus, ultimately promote competition in the market. While the
competition law targets more towards the commercial activities of public and
private players, advocacy targets more towards the policy making powers of the
government besides creating awareness. Therefore, it is often said, that law
enforcement and competition advocacy complement each other.

6. BRIEF CONCEPT OF THE DEVELOPMENT OF COMPETITION LAWS IN

USA AND UK
 US
Sherman Act, 1890
Sherman Act declared illegal all contracts, combinations or conspiracies in restraint
of trade or commerce among the states or territories or with foreign nations. The basic
requirement is that there should be an agreement or mutual commitment to engage in
a common course of anticompetitive conduct. Monopolize and Conspiracy to
monopolize: Section 2 of the Sherman Act outlawed
(a) Monopolization
(b) attempt to monopolize
(c) conspiracies to monopolize
This section has two basic elements
1.) Possession of monopoly power in relevant market
2.) The willful acquitsion or maintenance of the power.
A person is not guilty of monopolization unless he has monopoly power i.e. power to
control prices and exclude competition. Therefore offence of monopolization requires
monopoly power and intention to monopolize, but there is no monopolization if the
defendant‘s monopoly power grows as a consequence of superior product, business
acumen or historical accident. The competition act has included monopolization but it
has not included conspiracy to monopolize. Sherman Act proscribes even attempt to
monopolize.
The difference between actual monopolization and attempt to monopolization is that
in actual monopolization general intent to do act is required but in attempt to
monopolize specific intent, which can be established by evidence of unfair tactics on
part of defendant, is required.
To establish conspiracy to monopolize three basic things are to be proved:
(a) proof of conspiracy
(b) specific intent to monopolize
(c) An overt act in furtherance of conspiracy and there is no need to establish the
market power.
Price Fixing Competition Act has included the term association of price i.e. price
fixing but it hasn‘t elaborated the vertical and the horizontal price fixing. If a
manufacturer, by using his dominant position, fixes the price with retailer then it is
vertical price fixing but if manufacturer fixes price with other manufacturer then it is
horizontal price fixing. Vertical price fixing is also knows as price maintenance e.g.
Agreement between a film distributor and exhibitor is illegal.
A patentee cannot control its resale price through price maintenance agreements.
Generally prices are fixed when they are agreed upon. Section 1 of Sherman Act also
mentions that dissemination or exchange of price information does not itself establish
a violation of section 1 rather price information coupled with criminal intent to fix the
price violates section 1 of Sherman act. However a combination or conspiracy within
section 1 is established where an agreement exists between competitors to furnish
price information upon request.
Tying Agreement The Competition Act, 2002 has not elaborated the various sorts of
tying agreement. It has only defined tie-in agreements as "tie-in arrangement"
includes any agreement requiring a purchaser of goods, as a condition of such
purchase, to purchase some other goods.
But in the Sherman Act it has been very well explained. Sherman Act defines Tying
Agreements as an agreement by a party to sell one product but only on the condition
that the buyer also purchase a different product or agree that he will not buy that
product from another supplier.
Tying agreements are not illegal per se. An illegal tying agreement takes place when
a seller requires a buyer to purchase another, less desired or cheaper product, in
addition to the desired product, so that the competition in the tied product would be
lessened. Sherman act also pointed out that there should be separateness of products
which are tied because if the products are identical and market is same then there is no
unlawful tying agreement. Group Boycott Sherman Act has a special category under
refusal to deal called as Group Boycott.
Under the Competition Act, 2002 refusal to deal is defined in section 3(4)(d) as
“refusal to deal” includes any agreement which restricts, or is likely to restrict, by any
 method the persons or classes of persons to whom goods are sold or from whom
goods are bought.
However Sherman Act has explained various conditions of Group Boycott. In case of
Horizontal restraints per se rule is applicable but in case of Vertical restraints majority
court view is that per se rule is not applicable.
There are many sorts of Group Boycott:
 Group Boycott of competitor i.e. joint effort by a firm with dominant market position
to disadvantage competitors violates section 1 of Sherman Act.
 An agreement among competitors to stop selling to certain customers is illegal.
 Boycott by physicians, doctors, advocates of a particular customer is unlawful.
Customer boycott of supplier may or may not, on the basis of circumstances, violate
Sherman Act.
 Amalgamation Competition Act has used the word amalgamation many times but it
hasn‘t explained much about it. As per the Sherman Act an Amalgamation is unlawful
in two ways firstly if the amalgamation eliminates substantial competition and
secondly if it created a monopoly. Basically there are two types of amalgamation
horizontal and vertical. In Horizontal amalgamation for example two companies are
major competitive factors in a relevant market.
a merger or consolidation between them violates the Sherman Act if such action ends
competition. However if a company is losing money and has decided to wind up then
its horizontal amalgamation is not illegal.
In vertical amalgamation it is not illegal unless its illegality turns on:
(a) The purpose or intent with which it was conceived
(b) The power it creates in the relevant market.
Clayton Act
After the Sherman Act to supplement the Sherman Act there was another act enacted
in 1914 named as Federal Antitrust Laws: Clayton Act.
This act has defined vertical and horizontal mergers. Vertical merger is a merger of
buyer and seller and Horizontal merger is a merger which is of direct competitors. A
merger which is neither vertical nor horizontal is conglomerate merger.
Competition Act has not mentioned about the conglomerate mergers. As per the
Clayton Act a pure Conglomerate merger is one in which there is no relationship
between the acquiring and the acquired firm. Amalgamations Clayton Act has also
defined the horizontal and vertical, amalgamations, product extension mergers and
joint ventures. Amalgamations between firms performing similar functions in the
production or sale of comparable goods and services are known as the Horizontal
Amalgamation.
Now Clayton Act has also mentioned about the burden of proof in Horizontal
Amalgamation. It points out that by showing that a horizontal acquisition will lead to
undue concentration in the market for a particular product in a particular market; the
government establishes a presumption that the transaction will lessen the competition.
The burden of producing evidence to rebut this presumption then lies with the
defendants. Clayton Act does not outlaw all vertical amalgamations but it forbids
those whose effect may be substantially to lessen competition or tend to create
monopoly in any line of commerce in any ection of the country.
The acquisition of the largest producer, in product extension mergers, by a firm
dominant in positioning producing other products violates the Clayton Act because it
reduces the competitive structure of the industry by raising entry barriers and
dissuading the smaller firms from aggressive competition and because it eliminates
the potential competition of the acquiring firm. Competition Act, 2002 holds that joint
ventures are legal as far as they increase efficiency in production, supply, distribution,
storage, acquisition or control of goods or provision of services. In Clayton Act it is
given consideration whether the joint venture eliminated the potential competition of
the corporation that might have remained at the edge of the market continually
threatening to enter. Intention Competition Act, 2002 has not given any place to
intention or motive whereas both Sherman Act and Clayton Act has mentioned about
the intention of the parties. As per Sherman Act good intentions of parties is no
defence to a charge of violating the act and thus will not validate an otherwise
anticompetitive practice.
Similarly according to Clayton Act it is not required to show that lessening of
competition or a monopoly was intended.

UK
The Fair Trading Act, 1973
This act was passed in England with a view to provide an environment for free
competition. This act basically focused on the restriction of monopoly. There is
monopoly when a person or group of persons to secure the sole exercise of any known
trade throughout the country. However there are certain monopolies authorized by the
statute e.g. Post office with respect to carrying of letters. If there is an agreement
which gives control of trade to an individual or group of individuals then it creates a
monopoly calculated to enhance prices to an unreasonable extent. It is no monopoly if
the control is lawfully obtained by particular persons on particular places or kinds of
articles for which a substitute is available.
The Competition Act, 1998
The competition Act of 1998 repealed the Fair Trading Act, 1973. This act was
divided into two parts firstly as the
Chapter 1 prohibitions and
secondly as the Chapter 2 prohibitions.
Chapter 1 prohibitions prohibits the agreements which fix prices, control production,
share market or sources of supply, apply dissimilar conditions to equivalent
transactions and make the conclusion of contracts subject to acceptance by other
parties of supplementary obligations which by nature of commercial usage have no
connection with the subject of such contracts. All such agreements are unlawful.44
Chapter 2 prohibitions:
Any undertaking which amounts to the abuse of dominant position is prohibited if it
consists in:
 Imposing unfair purchase or selling prices
 Limiting production, market or technical development
 Applying dissimilar conditions to equivalent transactions with other trading
parties. Making the conclusion of contracts subject to acceptance by other
parties of supplementary obligations having no connection with the subject of
contracts.
Investigation under this act Director General of fair trading may conduct an
investigation if he has reasonable grounds to believe that Chapter 1 and 2 prohibitions
are infringed. However no such power is given to director of CCI. The concept of
privileged communication as provided under Section 30 of the U.K Competition Act
is also not included in the Indian Competition Act.
This non inclusion can affect the right of the undertakings or legal or natural persons
who are undergoing investigation. In India we have sectoral regulators as well as
Competition law enforcement authorities, now it raises a serious concern as to the fact
of handling of affairs of cross sectoral issues.
For example undertaking may be regulated by one agency on a certain aspect and by
CCI on the competition aspects. In such situations businesses are afraid that in such
instances there may be conflicting directions from different regulators. There are also
fear that they need to comply with double regulations will result in increased business
costs. In India there is no framework for coordination between the sectoral regulations
and the Competition Commission of India. On the other hand in U.K a number of
sectoral regulators have power to apply the Competition Act concurrently with other
legislations. The Competition Act 1998 (Concurrency) Regulations 2000 have been
made for the purpose of coordinating the exercise of the concurrent powers and the
procedures to be followed. For example in U.K they have concurrence party, where
all regulators and the competition authority sit and decide on the best agency to deal
with the case.