Competition act 2002

https://www.slideshare.net/Narayan92/competition-act-2002-54368706

INTRODUCTION

In an open market economy, some enterprises may hinder the market by resorting to anti-
competitive practices for short-term gains. These practices can completely nullify the benefits
of competition. It is for this reason that, while countries across the globe are increasingly
embracing market economy, they are also re-inforcing their economies through the enactment
of competition law and setting up competition regulatory authority.

Hence / And this perfectly emphasizes the Importance of this work. In fact, this paper will
give a general view on the competition act 2002 which is considered to be equipped enough
to tackle competition aspect of the Indian economy

WHAT IS COMPETITION?

• The competition can be defined in many ways but for the next we will refer to the
definition of the world bank which

• Competition is defined as ‘ A situation in the market under which firms or sellers

independently strive for the buyers patronage in order to achieve a particular business
objective ’ (Competition Act-Sec 2).

• In other words, it is process of rivalry between firms striving to gain sales and make
profits which is considered to be the foundation of an efficiently working market
system. •

This competition can be seen in different types and can be done in different ways also

Types of Competition

Price Competition: Winning customers by lowering price

Non-price Competition: Winning customers by advertising, offering after- sales-services,

using sale promotion tools, etc.

Ways of Competition
 Fair Competition: Fair means such as producing quality goods, becoming cost-efficient,
optimising the use of resources, best technology, research & Development, etc.

Unfair Competition: Unfair means such as fixing price with the rivals, predatory pricing,
disparaging or misleading advertisements, etc.

BENEFITS AND IMPORTANCE OF COMPETITION

The benefits of the competition act can be seen in 3 dimension which are the 3 agents
operating in the economy

Concerning the customer, if the market is in competition, goods will be sold at lower price
and at a wider variety which can be favorable for them.

In addition to that, in the concept of competition, companies will become automatically

efficient if they want to survive. As a result, they will be able to produce more and a lower
cost

But it is also beneficial for the government since it can generates more revenue.

HISTORY OF THE COMPETITION ACT

• The competition act was born to replace the MRTP (Monopolies and Restrictive
Trade Practices Act, 1969 ) because MRTP 1969 Act was found inadequate to meet
the challenges of a modern globalize economy.

Therefore The 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 which result in the introduction of the
bill in 2001

• As a sequel to the Report of the Committee, the Competition Act, 2002 was enacted
and notified in January, 2003 to govern the Indian competition law

• It was commenced on 31st March 2003 by Mr. Arun Jaitley.

• The Competition Act, 2002 was amended by The Competition Act, 2007 and again by
The Competition Amendment Act, 2009.
OBJECTIVES

The objective of this act is clear and specific enough.

In fact, the competition act 2002 contributes to not only the promotion of healthy competition
in the market but also the elimination of practices having adverse effect on competition.

In addition to that, its main aim is also to sustain competition by taking into account the
interest of the customer.

But there is more to it than that, it is there to ensure freedom of trade carried on by other
participants in markets in India

IMPORTANCE

This act is very important for certain reason.

Firstly, it is very useful since not only do the Civil Courts not have any jurisdiction to
encertain any suit which is within the purview of this act but it is also flexible enough
to alter its provisions as per the needs.

Secondly under this new act, an authority capable of giving penalty has been
appointed

RESTRICTIONS

The Competition Act Stops the following Practices because they can promote monopoly
and will not be entertained by competition commission. These practices are called the
evil of competition and they are:

• Price Fixing: If two or more supplier fixes the same price for supplying the goods
then it will be restricted practice

• Bid Rigging: If two or more supplier exchange sensitive information of bid, then it
will also be restricted practice and against competition

• Re-Sale price fixation: If the producer sells the goods to the distributors on the
condition that he will not sell on any other price which is not fixed by the producer.

• Exclusive Dealing: This is also restricted practice. If the distributor purchases the
goods on a condition that supplier will not supply the goods to any other distributo
COMPONENTS

• Prohibition of Anti-Competitive practices(Sec 3).

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.

• Prohibition of the Abuse of Dominance (Sec 4).

Abuse of Dominance “Dominant position” is defined as a position of strength which enables

the enterprise to operate independently of competitive forces in the market, or to affect its
competitors or consumers in its favour.

• Regulation on Mergers and Aquisitions (Sec 5 and 6).

The Act is designed to regulate the operation and activities of "combinations", a term, which
contemplates acquisition, mergers or amalgamations. Combination that exceeds the threshold
limits specified in the Act in terms of assets or turnover, which causes or is likely to cause an
appreciable adverse impact on competition within the relevant market in India, can be
scrutinized by the Commission.

• Regulation on Competition Advocacy (Sec 49).

Perhaps one of the most crucial components of the Act is competition advocacy. Intention
is to help evolve competition law through review of policy, promotion of competition
advocacy, creating awareness and imparting training about competition issues

COMPETITION AUTHORITY

• Two Tier agencies were created as per the provisions of the Competition Act, 2002 -

• A) The Competition Commission of India (CCI).

CCI, entrusted with eliminating prohibited practices, is a body corporate and independent
entity possessing a common seal with the power to enter into contracts and to sue in its name.
It is to consist of a chairperson, who is to be assisted by a minimum of two, and a maximum
of ten, other members.

• B) The Competition Appellate Tribunal (COMPAT).

The COMPAT is made to hear appeals from a person, enterprise, local authority which are
aggrieved by any direction, decision or order which regards to competition. And they can also
provide compensation.

COMPETITION POLICIES

Competition policy is defined as those govt. measures that affect the behavior of enterprises
& structures of the industry . It is to promote efficiency & maximize welfare(sum of
consumers ,surplus and producers , surplus &taxes collected by the govt. ) .

• Industrial Policy: Which assert that Competition, both domestic and external, will be
deepened across industry

• Trade Policy: Measures for liberalisation of trade promote greater competition e.g.
reducing tariffs, removal of quotas/physical controls, investment controls

• Privatization. privatization of state owned enterprises is important element of

competition policy since a state- owned enterprises generally tend to be less efficient
than private owned firms

• Economic Policy: New legislation and regulations to promote competition and to

bring about restructuring of major industrial sectors is essential in order to create a
competitive environment

NON-APPLICABILITY

Despite its range, competition act has certain limitation since it is not applicable to the
following area:

• Banks.

• Public Financial Institutions.

• Foreign Investors.

• Trademarks.
 • Patents.

• Copyrights etc..

CONCLUSION

It can now be concluded that the competition Act, 2002 is landmark legislation.

Its main aim is to promote competition and curb all anti-competitive agreements. Indeed, it
not only restricts the abuses of dominant enterprises but also regulate any kind of
combinations beyond a particular size.

But bear in mind that this Act does not curb monopolies rather it curbs abuses of monopolies.

Thus, the competition Act is expected to protect the interest of the small and medium
industries in the country besides giving consumers more powers to redress their grievances.

http://www.mondaq.com/india/x/33971/Antitrust+Competition/Indian+Competition+Act+An
+Overview

Conclusion
The message is loud yet clear that a well planned exhaustive competition compliance
programme can be of great benefit to all enterprises irrespective of their size, area of
operation, jurisdiction involved, nature of products supplied or services rendered and the
same is essential for companies, its directors and the delegatee key corporate executives to
avoid insurmountable hardships of monetary fines, civil imprisonment, beside loss of hard-
earned reputation when the Competition Authorities, the media and others reveal the
misdeeds in public.

In the changed scenario, India do needs a fresh law for competition and a new regulatory
authority, which under this policy is the `Competition Commission of India’. The law will
serve the purpose only if it is made independently, runs independently and is less expensive.