Competition

The Competition Act, 2002

Section 3 Prohibits Anti-Competitive Agreements i.e. Cartels, Bid-Rigging etc.

Section 4 Prohibits Abuse of Dominant Position including Predatory Pricing etc.

Sections 5 & 6 Regulates Combinations i.e. Mergers, Amalgamation, Acquisitions etc

Section 49 Undertake Competition Advocacy i.e. advice on policy issues, create public
awareness, training on competition issues etc.

Anti- Competitive (Horizontal) Agreements

Section 3 (3) provides that agreements including cartels, where any enterprise or person or
association of persons are, engaged in identical or similar trade of goods or provision of
services, shall be presumed to have appreciable adverse effect on competition and therefore
void.

Vertical Agreements are not seen as presumed violative of the Act. Instead they are judged on
the ‘rule of reason’.

Anti-Competitive (Vertical) Agreements

Section 3(4) provides that any agreement amongst enterprises or persons at different stages or
levels of the production chain in different markets, in respect of production, supply,
distribution, storage, sale or price of, or trade in goods or provision of services, including: -

1. Tie-in agreement

2. Exclusive supply agreement

3. Exclusive distribution agreement

4. Refusal to deal

5. Resale price maintenance

shall be anti-competitive if such agreement causes or is likely to cause an appreciable adverse
effect on competition in India.

Abuse of Dominance (Section 4 of the Act)

‘Dominance’ - ▪ Ability of an enterprise to behave independently of the market forces OR ▪

Strength of an enterprise to affect its competitors or consumers in its favour.

What is “abuse of dominance”?

When an enterprise uses its dominant position in the market in an exploitative or exclusionary
manner.

Section 4 provides a list of ‘abuses’ that are prohibited to be conducted by ‘dominant’

enterprises:

 Directly or indirectly, imposing ‘unfair’ or ‘discriminatory’ conditions/price in purchase

or sale of goods/services
 Limiting/restricting production of goods or technical development to the prejudice of
consumers
 Denial of market access
 Makes conclusion of contracts subject to acceptance of obligations which have no
connection with such contracts
 Leveraging

It is important to note that not dominance, but its abuse is prohibited

Exploitative Abuses

Conduct which results in exploitation of others in the value chain

 Imposition of unfair or discriminatory conditions

 Imposition of unfair or discriminatory prices e.g., predatory pricing

Exclusionary Abuses

Conduct which interferes with the competitive process

Making conclusion of contract subject to acceptance of supplementary obligations

 Denial of market access

 Limiting production of goods, provision of services; scientific development
 Using dominance in one relevant market to enter into or protect other relevant market
 Regulation of Combinations (Sections 5 & 6)

Merger review is necessary to prevent:

•Enterprises from acquiring dominant position which can be abused

•Concentration of market power that can reduce competition and diminish product
quality and/or availability

1. Any Person/ Enterprise, who/ which proposes to enter into a combination, shall give
notice to the Commission within 30 days
2. All combinations meeting the threshold limits as prescribed, need pre approval of CCI.
(few exemptions notified from time to time)
3. The major concerns are increase in prices of goods, innovation and the impact on
consumer choice.
4. Act provides 210 days for the Commission to decide
5. Deeming provision - on expiry of the prescribed period if no order is passed, the
combination is deemed to be approved

Competition Commission of India

The Competition Commission of India (CCI) is a statutory body established under the
Competition Act, 2002. Its primary objective is to prevent anti-competitive practices in the
Indian market, promote and sustain competition, and protect the interests of consumers.

The CCI investigates and takes appropriate action against practices such as price-fixing, bid-
rigging, abuse of dominant market positions, and anti-competitive mergers and acquisitions. It
also conducts market studies and advocacy to promote competition in various sectors of the
economy.

The CCI has wide-ranging powers, including the authority to impose fines, order the divestment
of assets, and prohibit anti-competitive conduct. Its decisions can be challenged before the
Competition Appellate Tribunal and the courts.

The CCI has been instrumental in promoting a competitive and fair market in India and has
been involved in several high-profile cases involving major corporations. It continues to play a
crucial role in maintaining a level playing field and protecting consumer interests in the Indian
economy.

Some of the major powers of CCI are:

1. Investigation: CCI has the power to investigate any alleged anti-competitive practices,
including cartels, abuse of dominance, and anti-competitive mergers and acquisitions.

2. Inquiries and Market Studies: CCI can conduct inquiries and market studies to
determine the state of competition in various sectors and identify anti-competitive
practices.

3. Penalty: CCI has the power to impose penalties on the companies found guilty of anti-
competitive practices. The maximum penalty can be up to 10% of the average turnover
of the preceding three financial years.

4. Combination Regulation: CCI regulates mergers, acquisitions, and amalgamations

between companies to ensure that they do not cause any adverse effects on
competition in the market.

5. Directions: CCI can issue directions to stop or modify any anti-competitive practice.

6. Advocacy: CCI has the power to promote competition advocacy and create awareness
about the benefits of competition in the market.

7. Appeal: Parties aggrieved by CCI's decisions can appeal to the Competition Appellate
Tribunal and, subsequently, to the Supreme Court of India.

1. Google: In 2018, the CCI imposed a fine of INR 136 crores on Google for abusing its
dominant position in the market for online search advertising.

2. Reliance Jio and Bharti Airtel: In 2020, the CCI dismissed allegations of anti-competitive
practices against Reliance Jio and Bharti Airtel, stating that they did not violate any
competition laws.

3. Flipkart and Amazon: In 2020, the CCI initiated an investigation into alleged anti-
competitive practices by Flipkart and Amazon, including preferential treatment to
certain sellers and deep discounting.

4. Maruti Suzuki: In 2014, the CCI imposed a fine of INR 471 crores on Maruti Suzuki for
imposing unfair conditions on its dealers and restricting their ability to sell cars to
customers outside their designated territories.

5. Cement Cartel: In 2012, the CCI imposed a penalty of INR 6,307 crores on 11 cement
companies for forming a cartel and engaging in price-fixing.

6. Ola and Uber: In 2018, the CCI approved the merger of Ola and Uber's food delivery
businesses, stating that it would not have any adverse impact on competition in the
market.