Evolution and Development of Competition Law in India

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.
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 certain amendments from which the amendments of 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 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 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. 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.

Aims, objectives and salient features

Salient Features of Competition Act, 2002
The Competition Act provides for establishment of a Competition Commission of India which will be
a quasi judicial body bound by principles of rule of law (i.e. predictability in reasoning and uniform
and consistent application of law) in giving decisions and the doctrine of precedents. The CCI has all
the powers of a civil court for gathering evidence.
There are three major elements in the Competition Act
Anti-competitive Agreements (Section 3)
Abuse of Dominant Position (Section 4)
Combinations (Section 5 and 6)

Anti-competitive Agreements (can be asked as SN)

Anti-competitive Agreements are prohibited under the Competition Act. The following agreements
entered into by enterprise, association or persons are considered as anti-competitive:
Agreement having appreciable adverse effect on competition(AAEC) – no one 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 appreciable adverse effect on competition
within India. Following factors are to be considered by the Commission to determine whether an
agreement has appreciable adverse effect on competition in India:
Creation of barriers to new entrants in the market
Driving existing competitors out of the market
Foreclosure of competition by hindering entry into the market
Accrual of benefits to the consumers
Improvements in production or distribution of goods or provision of services.
Any agreement entered into, including cartels engaged in identical or similar trade of goods or
provision of services, which:
Determines purchase or sale prices
Limits or controls production, supply, markets, technical development, investment or provision of
services
Shares the market of source of production or the provision of services by way of allocation of
geographical area of the market, or type of goods or services, or number of customers in the market
or any other similar way
Results in bid rigging or collusive bidding having AAEC in India.
Agreement 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:
Tie-in arrangement
Exclusive supply agreement
Exclusive distribution agreement
Refusal to deal
Resale price maintenance

Abuse of Dominant Position (SN & LONG ANS)

The Act defines dominant position (dominance) in terms of a position of strength enjoyed by an
enterprise, in the relevant market in India, which enables it to: a operate independently of the
competitive forces prevailing in the relevant market; or an affect its competitors or consumers or the
relevant market in its favor.

The relevant market (Section 2(r)) means

“the market that may be determined by the Commission with reference to the relevant product
market or the relevant geographic market or with reference to both the markets”.
SECTION 4 (2) OF THE ACT SPECIFIES THE FOLLOWING PRACTICES BY A DOMINANT ENTERPRISES OR
GROUP OF ENTERPRISES AS ABUSES

directly or indirectly imposing unfair or discriminatory condition in purchase or sale of goods or

service;
directly or indirectly imposing unfair or discriminatory price in purchase or sale (including predatory
price) of goods or service;
limiting or restricting production of goods or provision of services or market;
limiting or restricting technical or scientific development relating to goods or services to the
prejudice of consumers;
denying market access in any manner;
making conclusion of contracts subject to acceptance by other parties of supplementary obligations
which, by their nature or according to commercial usage, have no connection with the subject of
such contracts;
using its dominant position in one relevant market to enter into, or protect, other relevant markets.
Abuses as specified in the Act fall into two broad categories:
Exploitative (excessive or discriminatory pricing)
Exploitative activities are those where the prevailing body abuses its strength by forcing biased or
potentially low conditions on different firms or shoppers. In the case of, Pankaj Agarwal v. DLF, Case
No. 13 & 21 of 2010 and Case No. 55 of 2012, where, for a situation relating to the distribution of
apartment, the agreements drafted singularly by Delhi Land and Finance (DLF), empowered them to
be discretionary about the designation of super-area, secretive about data pertinent to the buyer,
like the number of the apartment on the floor, and to drop portions and relinquish booking sums.
The Commission held the agreements to be exploitative against purchasers, and consequently, it was
one-sided and abusive.

Exclusionary (for example, denial of market access).

Exclusionary activities are those in which the dominant body utilizes its strength to confine entry of
competition into the relevant market. For instance, in the case of Re Shri Shamsher Kataria v Seil
Honda, Case No. 03/2011, where there already existed agreement between the dominant entities
and the Overseas Suppliers of unique vehicle parts which kept the Overseas Suppliers from providing
parts to free repairers, such understandings were held to be anti-competitive as they limited passage
of new firms.

Procedure followed by the Commission

Inquiry into the abuse of dominance
In exercise of powers vested under Section 19 of the Act, the commission may ask into any supposed
negation of Section 4(1) of the Act that states about the abuse of dominant position. Section 19(4)
gives a detailed list of elements that the Commission will consider while asking into any claim of
abuse of dominance. A portion of these components is the market share of the endeavor, size, and
assets of the venture, size, and significance of the contenders, reliance of buyers, passage
obstructions, and social commitments and expenses in the pertinent geographic and item showcase.

The Commission, on being fulfilled that there exists an at first sight instance of abuse of dominant
position, will guide the Director-General to cause an examination and outfit a report. The
Commission has the forces vested in a Civil Court under the Code of Civil Procedure in regard to
issues like summoning or authorizing the participation of any individual and examining him on the
pledge, requiring revelation and creation of records and accepting proof on an affidavit. The
Director-General, to complete an examination, is vested with forces of the civil court other than
forces to lead ‘search and seizure’.

Powers of the Commission

After request, the Commission may pass inter-alia any or the entirety of the following orders under
Section 27 of the Act:

1) direct the parties to suspend and not to reappear into such an understanding;

2) direct the endeavor or enterprise concerned to alter or change the agreement.

3) direct the enterprise concerned to submit to such different requests as the Commission may pass
and conform to the bearings, including payment of expenses, assuming any; and

4) pass such different orders or issues such directions as it might esteem fit.
5) can force such punishment as it might consider fit. The punishment can be up to 10% of the
normal turnover for the last three preceding financial years of endless supply of such people or
ventures which are parties to bid-rigging or collusive bidding.

6) Section 28 enables the Commission to coordinate the division of a venture or enterprise

appreciating the prevailing situation to guarantee that such an undertaking doesn’t showcase an
abuse of dominant position.
Thus the available remedies are, when the abuse of dominant position has been built up, the
competition specialists can take certain measures for the same:

A restraining order.
The penalty which might be 10% of yearly turnover.
Direct the enterprise to make a move which the authority regards fit.
Give any other request which it might think fit.
Divide the prevailing endeavor.
In the instance of allure to the Competition Appellate Tribunal, the Tribunal may arrange for
payment to the party bearing misfortune.
Interim Order
Under Section 33 of the Act, during the pendency of an investigation into abuse of dominant
position, the Commission may incidentally control any party from duration with the alleged
offending act until the completion of the order or until further order, without giving out to such
gathering, where it esteems fundamental or necessary.

Appeals
The Competition Appellate Tribunal (COMPAT) is set up under Section 53A of the Act, to hear and
discard claims against any course given or a choice made or order passed by the Commission
underdetermined or specific sections of the Act. An appeal must be documented inside 60 days of
receipt of the order/direction/choice of the Commission.

Penalties and Sanctions

To an undertaking held to the abuse of dominant position, the Commission can do several things on
its parts-

Direct the undertaking to suspend such acts that add up to misuse. Occasions of such uses by the
Commission can be found in cases like in Re Shri Shamsher Kataria v. Honda Siel Cars India Ltd, Case
No. 03/201, and, also, Atos Worldline v. Verifoneindia, Case No. 56 of 2012, where the overarching
parties were mentioned to stop it from getting a charge out of activities that had been viewed as in
invalidation of Section 4.
Impose disciplines of up to 10% of the ordinary of the turnover for the last three preceding financial
year.
Combinations (SN)
As per the Competition Act, Combinations include Mergers, Acquisitions, and Amalgamations. The
term combination according to the Act means:

Section 5(a): Acquisition of control, voting rights or assets;

Section 5(b): Acquisition of control by a person over an enterprise where such person has control
over another enterprise in similar or identical business;
Section 5(c): Mergers and Acquisitions.

Section 6 provides for regulation of combinations so that they do not have an adverse effect on
competition. As per this section, No enterprise should enter into any combination that is likely to
cause an AAEC. When any enterprise enters into a combinations and if the value of assets or
turnover increases beyond a threshold declared by the government such enterprise shall give notice
to the Commission in the prescribed form by disclosing the details of the proposed combination and
any such combination shall not come into effect until 210 days have passed from the date on which
the notice has been given to the Commission.

Objectives
To promote healthy competition in the market.
To prevent those practices which are having adverse effect on competition.
To protect the interests of concerns in a suitable manner.
To ensure freedom of trade in Indian markets.
To prevent abuses of dominant position in the market actively.
Regulating the operation and activities of combinations (acquisitions, mergers and amalgamation).
Creating awareness and imparting training about the competition Act.
Types Of Combinations
Horizontal Combinations
Horizontal Combinations involve the merging of enterprises or firms with identical level of
production process, with substitute goods and are competitors. The horizontal combination is
primarily a friendly merger between companies, although it can be a takeout of one by the other. Of
course the synergy formed by this combination enhances the business performance, financial gains
and shareholder value in the long run. The cost efficiency with the staff cut-offs leads to the
increased margins of the company. However this tends to pave way for reduced competition as a
monopolist agenda emerges from the combinations of powerful enterprises, along with the
unemployment that follows which has a very drastic and adverse effect on the economy of the
country. It is also bad for the consumers as the reduced competition gives the companies a “higher
pricing power.” Therefore these merges are the chief focus and are often scrutinised by the
Competition Law Authority for the above given reasons.

Non-Horizontal Combinations
The non-horizontal combinations are of two types: Vertical and Conglomerate combinations.

Vertical Combinations
Vertical merging is “combining of business firms engaged in different phases of the manufacture and
distribution of a product into an interacting whole”. This leads to increased competitiveness, a
greater process control, wider market share, a better supply chain co-ordination and decline in cost
as this sort of integration is the structuring of supply chain of companies under a particular company.

Conglomerate Combinations
Conglomerate combinations involve firms or enterprises in unrelated business fields. Such
combination happens when two companies that provide different services and goods or are
integrated into varying sectors of business merge together. This sort of merger happens when the
companies achieve a stronger stand in the market both in products and services and profit
management unlike when they are individual enterprises.
Conglomerate merges can lead to an ascend in “market share, synergy and cross selling”. Here
diversification takes a major roll and thereby reduces the “risk exposure” factor. The cons of this
particular combination can be the monopolization of a company over a certain market and the over
expansion of the conglomerate can seriously affect the quality of functioning of the company and
result in the collapse of the system. Such coalescence can be detrimental as it restricts business
options for newly formed enterprises in the market. However it is to be note that Non Horizontal
Conglomerations do not promote loss of direct competition and are therefore not anti-competitive
within an overall framework.

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 covers the definition and regulation of
combinations.

Powers of CCI to control combinations

In case of combinations: (Section 31)
Approve Combination
Approve with modifications
Direct that combinations shall not take effect
To order demerger
The CCI is primarily responsible for regulating combinations to ensure that “competition” is not
adversely affected (“appreciable adverse effect on competition or AAEC”) and uses the following
criteria to determine the same:
THESE ARE DESCRIBED IN SECTION 20(4), OF THE COMPETITION ACT:
(a) actual and potential level of competition through imports in the market;
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination, individually
and as a combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective competitor
or competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination, if any.
Procedure.
Step 1: To Notify
Once the threshold is met the next step is to non optionally notify the Competition Commission of
India (CCI) on the merger or combination as prescribed in section 6 (2) of the Competition Act. This is
for the purposes of determining whether a combination would have the effect of or is likely to have
an appreciable adverse effect on competition in the relevant market while regarding factors like the
actual and potential level of competition through imports in the market; extent of barriers to entry
into the market; level of combination in the market; degree of countervailing power in the market
etc.

The CCI has been amended on the 8th of January 2016 bringing in key changes closing in to complete
ease of doing business in India and also in the regulation of combinations through the Competition
Commission of India (Procedure in regard to the transaction of business relating to combinations)
Amendment Regulation, 2016. Any new enterprise to be considered by the CCI will have to abide by
the section 6(2) of the Competition Act read with Regulation 5 and Regulation 8 of the Combination
Regulation (2016).

Step 2
Inspection of the Notice: The CCI is to scrutinise the notice for defects or incompleteness on the
premises of Regulation 14 of the CCI Amendment Regulation , 2016. After the process the parties to
the merger are asked to remove the defects if any.

Step 3: Prima Facie Opinion

The Commission has to form a prima facie opinion under sub-section 1 of section 29 of the Act
within thirty days of the receipt of said notice. The procedure related to forming a prima facie view is
contained in Regulation 19. As per sub regulation 2 of Regulation 19, the Commission may, if
considered necessary, require the parties to the combination to file additional information.

Further the parties are asked to publish the details of the combination as per section 29 (2) which
creates an open invitation to the public to come forth with objections within fifteen working days
from the publishing under section 29(3) , which are to be pacified by the CCI accordingly. The CCI
may call upon the parties for additional information pertaining to the merger under section 29(4)
read with section 29(5).

Step 4
Proceeding to the Final Order: After receiving the additional information the Commission decides as
to whether or not the merger or combination will have unfavourable effects on the current
competition market as per under section 31. If the commission has concluded after careful scrutiny
that the combination at hand will not have harmful effects on the competition market then the
Commission shall approve of the transaction under section 31(1) of the Act. On the other hand if the
Commission has concluded negative on the transaction due to its adverse effect on the market , it
shall hold the transaction null under Section 31(2) of the Act. In a third scenario the Commission can
provide the parties with modifications to be made in the transaction to rinse out the provisions likely
to be inharmonious to the competition market [Section 31(3)].

Difference Between MRTP Act and Competition Act

BASIS OF
MRTP ACT COMPETITION ACT
COMPARISON
MRTP Act, is the first competition law
Competition Act, is implemented to
made in India, which covers rules and
Meaning promote and keep up competition in the
regulations relating to unfair trade
economy and ensure freedom of business.
practices.
Nature Reformatory Punitive
Dominance Determined by firm's size. Determined by firm's structure.
Focuses on Consumer interest at large Public at large
Offenses against
principle of natural 14 offenses 4 offenses
justice
Penalty No penalty for offense Offenses are penalized
Objective To control monopolies To promote competition
It does not specify any provision relating
Agreement Required to be registered.
to registration of agreement.
 BASIS OF
MRTP ACT COMPETITION ACT
COMPARISON
Appointment of
By the Central Government By the Committee consisting of retired
Chairman

Horizontal Agreements
Horizontal agreements are done between businesses that are on the same level of the production
chain. These agreements are usually done among the large scale businesses in the market that
would, under normal circumstances, compete with each other. However, they come to an
agreement as to fixing a minimum price for the products, or to limit production to artificially drive up
prices, or share the relevant market among themselves, etc. 
Horizontal agreements are provided for under Section 3(3) of the Competition Act, 2002, and the
description specifically includes cartels.
The horizontal agreements between enterprises can be described as cartels. As per the definition of
cartel, as provided under Section 2(c) of the Act, cartel includes
“an association of producers,
sellers,
distributors,
traders or service providers who,
by agreement amongst themselves,
limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or
provision of services”.
The various types of horizontal agreements are:

Price Fixing: The horizontal agreements that are formulated to directly or indirectly determine the
purchase or sale prices, would be this type of agreements. As the intention of competition is to
provide the customers with the lowest possible price, this is a harmful anti – competitive practice.
Controlling: Another type of horizontal agreement may seek to control the business in various ways,
by controlling production, supply, markets, technology, investment, or provisions.
Sharing: Some horizontal agreements that are formed to share the market, or source of production,
or provision of services by sharing amongst themselves the geographical area of market, or by the
type of goods and services that each would sell, or by fixing a maximum number of customers that
each would have, it would come under this category.
Bid Rigging: This kind of agreement only comes into play for cases where the process of business
involves bidding. By forming anti – competitive agreements, the bidders may reduce competition in
the process, or manipulate the bidding process.

Vertical Agreements
Vertical agreements, as the name suggests, are done among the players that are at different levels of
the production chain.
The Competition Act, 2002, provides for vertical agreements and its different types under Section
3(4). It provides a comprehensive definition of the same, and
“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” falls under its purview.
for example, there could be an agreement between a seller and a distributor that the distributor
would supply the necessary goods in a timely manner, as per the seller’s requirements. This is why
vertical agreements are not considered to be prima facie illegal, and whether they are distorting
competition, is decided via the rule of reason
As per the Act, the different types of vertical agreements are:

Tie in arrangement: Tie-in arrangements is an agreement wherein a seller sells one desirable product
on a precondition that buyers shall purchase a second less desirable product or service. The former
product shall be known as a tying product and the latter shall be known as a tied product. It is not
required that the tying product and the tied product must be identical to each other in
characteristics. Not all tie-in arrangements are illegal and not all illegal tie-in arrangements are per
se illegal.
Exclusive supply agreement: This kind of agreement happens when the purchaser is restricted from
acquiring goods that are not of the seller – as in, the seller becomes the sole supplier of the product
for the concerned customer.
Exclusive distribution agreement: This is slightly different from the previous scenario, as under this,
an agreement is made to sell or not to sell a product in a specific pre-determined area.
Refusal to deal: This kind of agreement includes those which restrict certain people or classes of
people, from selling or buying the concerned products.
Resale price maintenance: This agreement mandates the purchaser that if, he or she wishes to resale
the product in a future time, a minimum price must be maintained as a resale value.

Appreciable Adverse Effect on Competition (AAEC)

The effect of anti – competitive agreements is measured by their appreciable adverse effect on
competition or AAEC. For horizontal agreements, it is presumed that AAEC would be there, because
there can be no logical reason for two competitors in the market to enter into an agreement. For
that reason, in cases of horizontal agreements, it is enough to prove that the agreement was there –
the existence of AAEC is presumed. However, there can be certain agreements within the chain of
supply which are not anti- competitive in nature. Thus, such agreements are not considered to be
primarily illegal or causing AAEC, rather, the existence of AAEC needs to be proved separately. Now,
we will discuss what are the important factors, based on which AAEC is assessed.

The Competition Act, 2002, provides under Section 19(3), as to which factors should be considered
when deciding whether there is an appreciable adverse effect on competition or not. It provides that
the CCI should take into account “any or all of these factors, namely:

Creation of barriers to new entrants in the market;

Driving existing competitors out of the market;
Foreclosure of competition by hindering entry into the market;
Accrual of benefits to consumers;
Improvements in production or distribution of goods or provision of services;
Promotion of technical, scientific and economic development by means of;
production or distribution of goods or provision of services.”

Case Law
Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors.
In this case, the various car companies including Honda, did not make their cars’ spare parts
available in the open market.
In fact, the companies had clauses in their agreements with the authorized dealers, that they must
source these spare parts only from the companies directly, or from their authorized vendors.
The CCI firstly found that there were a number of vertical agreements between the car companies
and the authorized dealers of the spare parts, for example, exclusive supply, exclusive distribution,
and refusal to deal.
However, as you already know, vertical agreements are not considered prima facie illegal and
causing AAEC.
Thus, an analysis was now required as to whether there was an AAEC in the concerned market.
The CCI had found that there were virtually two relevant markets in this case – one market for the
cars themselves, or primary products, and one aftermarket for the spare parts and other relevant
materials and documents.
The Commission found that due to such kind of agreements, once a customer bought a car from a
company, it allowed the car companies to be monopolistic players in the aftermarket for their space
products.
This created entry barriers for new companies in the market for spare parts, and prevented
independent service providers from entering the market. Thus, the car companies could now charge
even the most exorbitant amount of prices for their spare parts, and due to the lack of competition
and the lack of option for the customers, they would have to comply with the same.
In this way, the CCI found that such vertical agreements had major distorting effects on competition
in India, and they were found to be illegal.

Predatory pricing
The Competition Act, 2002 outlaws predatory pricing, treating it as an abuse of dominant position,
prohibited under Section 4 "predatory price" means the sale of goods or provision of services, at a
price which is below the cost, as may be determined by regulations, of production of the goods or
provision of services, with a view to reduce competition or eliminate the competitors. The act
declares predatory pricing as a means of abuse of dominance.
It is a strategy that entails a temporary price below the cost of production in order to injure
competition and thereby reap higher profits in the long run. Predatory pricing is a strategy adopted
to enhance market power. The company engaging in predatory pricing must take a loss during the
predatory phase, but later raises prices when the competition is thinned. With enough capital to
sustain predatory pricing, a company can end up with a monopoly on the market for a lengthy
period of time.
Fast Track Call Cab Pvt. Ltd. and Ors. (Informant). vs. ANI Technologies Pvt. Ltd. (Respondent) dated
July 19,2017
Facts of the case
The aforesaid case adjudged by Competition Commission of India (“Commission”) dated July 19,
2017. The Informant alleged that the Respondent has abused the dominant position and offered the
relevant market by offering heavy discounts to the passengers and incentives to the cab drivers
associated with them which amounts to predatory pricing. The Commission directed the Director
General (“DG”) to conduct detailed investigation into the matter.

Observation and Findings

The issue before the DG under this case were:- (i) whether, Respondent held a dominant position in
the relevant market or not; and (ii) if it held a dominant position, whether its conduct would amount
to abusive practice (predatory pricing) within the meaning of Section 4(2)(a)(ii) of the Indian
Competition Act(“Act”).
The DG has opined that for a player to have a dominant position in the relevant market, it should be
able to hold its market share for a reasonable period of time whereas the market share of the
Respondent declined due to entry of another participant i.e. Uber.
The DG noted that in the absence of dominance of an entity, the question of abuse would not arise.
However, the DG analyzed the pricing strategy of Respondent vis-à-vis its competitors and rather
found Uber to be a more aggressive player, in terms of below-cost pricing, in the relevant market
than the Respondent. Thus, DG opined that both Respondent and Uber have adopted 'below-cost
pricing strategy'. However, since the scheme of the Act only attracts the provisions of Section 4
when an incumbent is found to be dominant, the DG stated that OP (opposing party) can be said to
have indulged in abuse by way of predatory pricing, only if it is found to be dominant in the relevant
market. Since OP was not found to be dominant, the DG concluded that Respondent did not
contravene the provisions of Section 4 of the Act.
The Informant contended placing reliance on General Court’s decision in Astra Zeneca v. Commission
(Case T-321/05) and British Airways plc v. Commission (Case T-219/99) case, wherein it was noted
that decline in the market share cannot be taken as an evidence that the entity is not dominant. The
Informant further contented that dominant position cannot be judged based on the fact that
enterprises ability to increase price but also on the ability of the enterprise to suppress it for a longer
period of time which adversely affects the competition. In the alternative, the Informants have
stated that it is not necessary that only one entity can be dominant in a particular relevant market.
There is a possibility of two entities exercising dominance at the same time.
Comment
A new entrant armed with new idea, superior technology or a superior product or technological
solution that challenges the status quo in a market and shifts a large consumer base in its favour
would cannot always be as held dominant.
If we analyze the provision of the Act i.e. Section 4 it is restricted to the dominant position held by
only one enterprise or one group. In the present case presence of more than one dominant entity
(i.e. OLA and UBER) none of those entities would be able to act independent of one another.

Protection of consumers
The Relationship Between Competition Law And Consumer Protection
In the recent times, there has been major changes and emergence of various competitive practices
in economies across the world.
Due to the increasing competition, adverse consequences are produced.
These repercussions do not remain limited to the market stakeholders but are extended to the
consumers as well.
The major problem arises when the effects of such competition become non-quantifiable and non-
obvious.
In the recent consumer friendly environment, it is acknowledged that the true indicator of a
country’s development and its progressiveness is a level of consumer awareness and protection.
The factors that have led to an increase in need of consumer protection are multifold.
These include increasing the complexity of production and distribution system, greater levels of
sophistication in selling and marketing, advertising and promotional practices, increased mobility of
consumers and lack of or reduction in the interaction between the consumers and sellers.
In order to tackle this problem, enactment of Competition laws is the best suitable recourse.
Taking into consideration the consumer needs and imbalances faced by them in economic terms,
education levels and bargaining power, there are various guidelines that have been made in
furtherance of consumer protection.
Such guidelines have been formulated or expanded to include ‘sustainable consumption’ as an
important subject matter.
These guidelines have been helpful in setting up international accepted set of objectives particularly
for the developing countries in order to help them identify priorities and hence structure their
consumer protection policies and legislations.

Enforcement of Consumer protection through Competition laws

It is an acknowledged fact there exist an unequal relationship between the producers and
consumers. Competition Law, therefore, restricts the producers from abusing the dominant position
of theirs in the market. The Supreme Court of India has observed that the main objective of
Competition law is to use competition as a tool to promote economic efficiencies and assist in
creating the market as responsive to consumer preferences.

Using Competition as a tool bears following benefits for the consumers:

It is a means of lowering prices and improving quality. Consumer prices get lowered because with a
better degree of competition, productivity of the industries increases. Not only consumer prices get
lowered but also employment increases.
It leads to consumer empowerment because of promotion of factors like higher degree of consumer
protection, freedom of individual choice and abhorrence of concentration of power and
decentralised economic efficiency
It also aims for open market so that situations of shortages can be avoided, and therefore allocative
efficiency may be increased;
By achieving all these objectives growth and development get accelerated, and political and
economic democracy gets preserved.
It also produces better and wider choices.
An effective and efficient competition policy if implemented in a proper manner can reduce the
amount of trade barriers on entry and exit. Such reduction in barriers can help in making the market
environment more conducive for not only promoting entrepreneurship but also for small and
medium scale enterprises and their respective growth and provide scope for consequent expansion.
Competition law and Policy aims at maintaining the ambit and process of competition between
various enterprises and also provide for remedies to behavioural and structural problems so that
competition can be re-established in the market.
If all the above mentioned objectives are met then benefits like greater economic efficiency, higher
innovation, and enhancement of consumer welfare can be achieved.
Consumer welfare would be achieved because now the consumers shall have greater choices and
more availability of goods at reasonable and affordable prices.
On the other hand, consumer policy deals with the nature of consumer transactions, steps, and
strategies that can help in improving market conditions so that the consumers can effectively make
an informed choice.
The ultimate objective of competition policy is to formulate such legal framework which shall
empower other policies to facilitate competitive outcomes in the country.
It benefits the consumers in the way that it creates a business environment where efficient resource
allocation is ultimately curbing or preventing abuse of market power.

Provisions in the Competition Act that enforce consumer protection

The Competition Act, 2002 gives protection to the consumers by way of Section 4, where it is
recognised that an enterprise or group shall be termed as abusing its dominant position if it limits or
restricts technical or scientific development relating to goods or services to the prejudice of
consumers.
Section 18 of the Act, the Competition Commission of India has the power to take suo moto action in
order to eliminate practices having adverse effect on competition, promote and sustain competition,
protect the interests of consumers and ensure freedom of trade carried on by other participants in
market.
Section 19(4), among other factors, dominant position is also determined by the dependence of
consumers on the enterprise and entry barriers including barriers such as regulatory barriers,
financial risk, high capital cost of entry, marketing entry barriers, technical barriers, economies of
scale, high cost of substitutable goods or service for consumers.

Protection from the Unfair Trade Practices and Restrictive Trade Practices to consumers
The Competition Act, 2002 does not recognise unfair trade practices. Such practices have been
recognised in the Consumer Protection Act, 1986, and any person found in contravention of such
provisions is penalised. However, the Competition Act, 2002 recognises the Restrictive Trade
Practices. A Restrictive Trade Practices is defined as the one which has the potential of bearing
effects such as preventing, distorting or restricting competition. In particular, any trade practice that
obstructs the flow of capital or resources into the stream of production can be termed as Restrictive
Trade Practice. Examples of such practice include price manipulation, the imposition of such
conditions on the delivery or supply of goods that have an effect of imposing unjustified costs and
restrictions etc.

Module 3

Structure and functions of CCI

The main purpose behind enacting the Competition Commission of India was to ease trade practices
within India as well as overseas, as one of the major ways to grow an economy is by enhancing the
trade and commerce of that country.
The companies should be allowed to enter the market freely and promote their goods and services
without any unnecessary hurdles given by the government.
But at the same time, it is also essential to protect the market from unfair trade practices or else it
can lead to the collapse of the entire market.
The Competition Commission of India ensures that there are no unfair practices moving along the
market and even imposes penalties, if found any.
The Commission was formed with the backing of the Competition Act 2002 at the time when
Vajpayee government was in rule.
As India had adopted economic liberalisation and globalization, it was equally important to ensure
healthy competition in the market without any prejudices and biases, through legislation.
Functions
1- To ensure fair and healthy competition in the economic activities for faster and inclusive
development in the nation.
2- To keep a check on the unfair practices having an adverse impact on the competition.
3- To protect the interests of the consumers and ensure freedom of trade to all the participants in a
market.
4- To encourage a competitive culture in the economy by spreading awareness amongst all the
stakeholders regarding the benefits of fair competition.
5- To effectively undertake competition advocacy. The Commission has to provide its opinion on
competition issues on a reference received from any statutory authority established under law.
However, the opinion rendered is not binding on the authority.
6- To frame and implement competition policies for efficient utilization of the economic resources.
7- To evolve and nurture relations with the sectoral regulators for efficient alignment of the sectoral
regulatory laws with the competition laws.
8- To protect the small organizations from the torment of the large corporations by playing the role
of antitrust watchdog.
9- To impart training to stakeholders on competition issues.

Composition of CCI –
The members of the CCI are appointed by the Central Government. The Competition Commission of
India is currently functional with a Chairperson and two members.
The Commission used to consist of one chairperson and a minimum of two members and a
maximum of six members.
This has further been reduced to three members and one chairperson by the Cabinet. This move was
taken to produce a faster turnaround in hearings and speedier approval, thereby stimulating the
business processes of corporates and resulting in greater employment opportunities in the country.
The chairperson and the members are usually full-time members.
The eligibility for the Commission: The Chairperson and every other Member shall be a person of
ability, integrity, and who, has been, or is qualified to be a judge of a High Court, or, has special
knowledge of, and professional experience of not less than fifteen years in international trade,
economics, business, commerce, law, finance, accountancy, management, industry, public affairs,
administration or in any other matter which, in the opinion of the Central Government, may be
useful to the Commission.

Regulatory Role of CCI –

The Competition Commission of India plays a vital role in sustaining healthy competition in the
Indian Markets. They have certain role to play which are similar to the duties of the Commission.
They are-
The Commission has the role to eliminate the practices which are having negative impact on the
competition and ensure freedom of trade within the markets
They can also give their views on competition issues while receiving the reference from statutory
authority established under the law.
The Commission also focuses on fulfilling their objectives such as keeping the markets fair for the
consumers in such a way that it is beneficial for both producers and consumer. This also helps in the
overall economic development of the country.
The competition policies should be enforced and executed properly for optimum utilization of
resources
The Commission also works on effective and smooth alignment of the sectoral regulatory laws
working in acquiescence with the competition law
The Competition Commission acts as the watchdog of the smaller organizations who are working
hard to sustain in the market among with the bigger stakeholders and companies
The Commission also has the authority to notify and warn the organizations who are selling in the
Indian markets, if they feel it is negatively affecting the competition of the Indian markets.
As per the Competition Act, it has been guaranteed that no enterprise or firm shall be permitted to
abuse their dominant position in the market by manipulating their purchase prices and controlling
their supply which might directly affect the market.
In case there is foreign company which is interested in participating in Indian markets via acquisition
or mergers, shall have to abide by the country’s competition laws and even the assets and turnover
of a particular company or enterprise when cross a particular monetary value, they are brought
under the purview of the Commission.

Module 4

Competition appellate tribunal (LONG ANS)

Functions-
The Competition Appellate Tribunal is a statutory organization established under the provisions of
the Competition Act, 2002 to hear and dispose of appeals against any direction issued or decision
made or order passed by the Competition Commission of India.
The Appellate Tribunal shall also adjudicate on claim for compensation that may arise from the
findings of the Competition Commission of India
Prior to 2007, if a party was not satisfied with the decision of the Competition Commission of India
(CCI), It had to file an appeal in the Supreme Court of India, thereby increasing the pendency of cases
in the Court. However, after the Competition (Amendment) Act, 2007, the Competition Appellate
Tribunal (COMPAT) was established. It provided the parties with a proper channel for appeal and
changed the hierarchy of appeal. After the establishment of the Competition Appellate Tribunal
(COMPAT), the appeal from Competition Commission of India lies in front of the Appellate Tribunal
and a further appeal goes to the Supreme Court.
Composition-
The tribunal shall consist of a chairperson and not more than two other members to be appointed by
the central government.
Qualification-
The chairperson of the tribunal shall be a person, who is or has been a judge of the supreme court or
the chief justice of a high court. A member of the tribunal shall be a person of ability, integrity and
standing having special knowledge of and professional experience of not less than twenty five years
in competition matters including competition law and policy international trade, economies,
business, commerce, law, finance, accountancy, management, industry, public affairs, administration
or in any other matter which in the opinion of the central government, may be useful to the tribunal.
The chairperson and members of the tribunal shall be appointed by the central government from a
panel of names recommended by the selection committee.
Tenure-
The chairperson or a member of the tribunal shall hold office as such for a term of five years from
the date on which he enters upon his office and shall be eligible for reappointment. No chairperson
or other member of the tribunal shall hold office as such after he has attained-
In the case of the chairperson, the age of sixty-eight years;
In the case of any other member the age of sixty-five years.

Powers-
The Tribunal shall, for the purposes of discharging its functions under this Act, the same powers as
are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the
following matters, namely-
Summoning and enforcing the attendance of any person and examining him on oath;
• Requiring the discovery and production of documents;
• Receiving evidence on affidavits;
Subject to the provisions of Sections 123 and 124 of the Indian Evidence Act, 1872 requisitioning any
public record or document or copy of such record or document from any office;
• Issuing commissions for the examination of witnesses or documents;
• Reviewing its decisions;
• Dismissing a representation for default or deciding it ex-parte;
• Setting aside any order of dismissal of any representation for default or any order passed by
it ex-parte;
• Any other matter which may be prescribed;

Procedure:
• The Central Government or the State Government or a local authority or enterprise or any
person, aggrieved by any direction, decision or order may prefer an appeal to the Tribunal;
Every appeal shall be filed within a period of sixty days from the date on which a copy of the
direction or decision or order made by the Commission is received by the Central Government or the
State Government or a local authority or enterprise or any person;
The Tribunal may entertain an appeal after the expiry of the said period of sixty days if it is satisfied
that there was sufficient cause for not filing it within that that period;
• A memorandum of appeal shall be presented in the Registry or shall be sent by Registered
post addressed to the Registrar of Appellate Tribunal in the Form appended to the Competition
Appellate Tribunal (Form and fee for filing an appeal and fee for filing compensation applications)
Rules, 2009;
• A memorandum of appeal sent by post shall be deemed to have been presented on the day
it was received by the Registry;
• Every memorandum of appeal shall be in five copies and shall be accompanied with the
certified copy of the direction or decision or order against which the appeal is filed;
Where a party is represented by an authorized representative, a copy of the authorization to act as
the authorized representative and the written consent thereto by such authorized representative,
shall be appended to memorandum of the appeal;
Every memorandum of appeal presented to the Appellate Tribunal shall be in English and in case it is
on some other Indian language, it shall be accompanied by a copy translated in English and shall be
fairly written.
• Every memorandum of appeal shall be accompanied with a fee as detailed below

AMOUNT OF PENALTY IMPOSED AMOUNT OF FEES PAYABLE

Less than Rs.20,000/- Rs.1,000/-
Twenty thousand or more rupees but less than one lakh Rs.2,500/-
One lakh or more rupees Rs.2,500/- plus Rs.1,000
• Amount of fee payable in respect of any other appeal against a direction or decision or order
of the Commission under the Act shall be Rs.10,000/-
The Tribunal may, to advance the cause of justice and in suitable cases, waive payment of fee or
portion thereof, taking into consideration the economic condition or indigent circumstances of the
petitioner or the appellant or applicant or such other reason, as the case may be, by an order for
reasons to be recorded.;
• On receipt of an appeal the Tribunal may, after giving the parties to the appeal, an
opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting
aside the directions, decisions or order appealed against;
The Tribunal shall, for the purposes of discharging its functions under this Act, the same powers as
are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the
following matters, namely-
Summoning and enforcing the attendance of any person and examining him on oath;
• Requiring the discovery and production of documents;
• Receiving evidence on affidavits;
Subject to the provisions of Sections 123 and 124 of the Indian Evidence Act, 1872 requisitioning any
public record or document or copy of such record or document from any office;
• Issuing commissions for the examination of witnesses or documents;
• Reviewing its decisions;
• Dismissing a representation for default or deciding it ex-parte;
• Setting aside any order of dismissal of any representation for default or any order passed by
it ex-parte;
• Any other matter which may be prescribed;
• Every proceeding before the Tribunal shall be deemed to be judicial proceedings within the
meaning of Section 193 and 228 and for the purposes of Section 196 of the Indian Penal Code.
• If for any reason other than temporary absence, any vacancy occurs in the office of the
Chairperson or a Member of the Tribunal the Central Government shall appoint another person in
accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued
before the Tribunal from the stage at which the vacancy is filled;
In the event of the occurrence of any vacancy in the office of the Chairperson of the Tribunal by
reason of his death or resignation, the senior most member of the Tribunal shall act as the
Chairperson of the Tribunal until the date on which a new Chairperson appointed in accordance with
the provisions of this Act to fill such vacancy enters upon his office;
• No act or proceeding of the Tribunal shall be questioned or shall be invalid merely on the
ground of existence of any vacancy or defect in the constitution of the Tribunal;
The Tribunal shall send a copy of every order made by it to the Commission and the parties to the
appeal;
• The appeal filed before the Tribunal shall be dealt with by it as expeditiously as possible and
endeavor shall be made by it to dispose of the appeal within six months from the date of receipt of
the appeal.

Award Compensation
Section 53N of the Competition Act, as it stands today, provides that the claim may be filed after the
decision of the CCI or the NCLAT and there is no specific provision requiring applications to be filed
after the conclusion of Supreme Court proceedings. Owing to this, in many cases, compensation
applications are filed just after the decision of NCLAT, even while the main appeal is pending before
the Supreme Court.
Cases such as MCX Stock Exchange Ltd. v. National Stock Exchange of India Ltd., where the
compensation application was filed after the order of the NCLAT but before the final decision of the
Supreme Court, remain pending and are not actively heard by the NCLAT.
The Competition Act does not prescribe any limitation period within which a claim for compensation
can be filed. Having a limitation period has its own advantages, and indiscriminate use of the
absence of a limitation clause could lead to filing of stale claims where there is little chance of
producing evidence of dated damages.

The law clarifies that a claim for compensation can only be made to the appellate tribunal once the
CCI finds a contravention. Further, there is no burden to prove afresh that the contravention has
taken place. However, the burden of proof will be on the claimant to show that loss or damages
were suffered.
In practice, it has been observed that while the appellate tribunal may admit such cases, it may not
hear such applications where the parties have filed appeals (i) challenging the order of the CCI
before the appellate tribunal itself or (ii) against the order of the appellate tribunal before the
Supreme Court, until a final decision has been rendered.
Section 57 of the Competition Act grants confidentiality against disclosure of information obtained
by the CCI or the appellate tribunal, except where the information is required to be disclosed in
compliance with the Competition Act or any other law in force. In practice, the CCI does not disclose
confidential information, unless it is necessary for the case.

POWER TO PUNISH FOR CONTEMPT:

The Tribunal shall have, and exercise, the same jurisdiction, powers and authority in respect of
contempt of itself as a High Court has and may exercise and for this purpose the provisions of
Contempt of Courts Act, 1971 shall have effect subject to modification that-
• the reference therein to a High Court shall be considered as including a reference to the
Tribunal;
• the references to Advocate General in Section 15 of the said Act shall be construed as a
reference to such Law Officer as the Central Government may, by notification, specify in this behalf.

EXECUTION OF ORDERS OF TRIBUNAL:

Every order may be Tribunal shall be enforced by it in the same manner as if it were a decree made
by a court in a suit pending therein, and it shall be lawful for the Tribunal to send in case of the
inability to execute such order, to the court within the local limits of whose jurisdiction-
in the case of an order against a company, the registered office of the company is situated; or
• in the case of an order against any other person, place where the person concerned
voluntarily resides or carries on business personally works for gain, is situated.
The Tribunal may transmit order made by it to a civil court having local jurisdiction and such civil
court shall execute the order as if it were a decree made by that court.
Types of market:
A market can be characterised as where a couple of parties can meet, which will expedite the trading
of products and services. The parties involved in the market activities are the sellers and the buyers.
A market is an actual structure like a retail outlet, where the dealers and purchasers can meet eye to
eye, or in a virtual structure like an internet-based market, where there is the truancy of direct,
actual contact between the purchasers and vendors.
Monopoly:
A monopolistic market is a market formation with the qualities of a pure market. A pure monopoly
can only exist when one provider gives a specific service or a product to numerous customers. In a
monopolistic market, the imposing business organisation, or the controlling organisation, has the
overall control of the entire market, so it sets the supply and price of its goods and services. For
example, the Indian Railway, Google, Microsoft, and Facebook.

Oligopoly:
An oligopoly is a market form with a few firms, none of which can hold the others back from having a
critical impact. The fixation or concentration proportion estimates the piece of the market share of
the biggest firms. For example, commercial air travel, auto industries, cable television, etc.

Perfect competition:
Perfect competition is an absolute sort of market form wherein all end consumers and producers
have complete and balanced data and no exchange costs. There is an enormous number of makers
and customers rivalling each other in this sort of environment. For example, agricultural products
like carrots, potatoes, and various grain products, the securities market, foreign exchange markets,
and even online shopping websites, etc.

Monopolistic competition:
Monopolistic competition portrays an industry where many firms offer their services and products
that are comparative (however somewhat flawed) substitutes. Obstructions or barriers to exit and
entry in monopolistic competitive industries are low, and the choices made of any firm don’t
explicitly influence those of its rivals. The monopolistic competition is firmly identified with the
business technique of brand separation and differentiation. For example, hairdressers, restaurant
businesses, hotels, and pubs.

Cartelization
The Competition Act, 2002 (hereinafter referred to as the ‘Act’), is the primary statute in the country
that acts as the protector of free and fair competition. Healthy competition is always considered
beneficial for the economy, and the Act prohibits any behavior that unfairly benefits someone or
causes unfair losses to the other. It also keeps an eye on the abuse of dominant position in the
market, and such mergers or acquisitions that have the effect of jeopardizing the consumer’s
interests. As defined under section 2(c) of the Act, cartels are an association of producers, sellers,
distributors, traders or service providers who, by agreement amongst themselves, limit, control or
attempt to control the production, distribution, sale or price of, or, trade in goods or provision of
services.
To put this simply, cartels are formed when competing enterprises in a market, instead of indulging
in fair and healthy competition, come together to fix the prices or production of goods. However,
cartels are not only limited to this, and they sometimes also involve allocation of specific markets or
consumer bases among the members. Needless to say, these associations are considered to be
illegal by the Competition Commission of India (hereinafter referred to as the ‘CCI’). Section 3 of the
Act prohibits any such agreements that are anti-competitive in nature and violate the interests of
comparatively vulnerable stakeholders such as consumers, and other small businesses.
According to the CCI’s reasoning in the case of All India Tyre Dealers’ Federation v. Tyre
Manufacturers, no explicit agreement is required in order to prove cartelisation, it may be proved
even through the intention or conduct of parties.
According to Section 27 of the Act, the CCI has the power to impose upon every cartel participant a
penalty of up to three times its profit for each year of continuance of the cartel, or up to 10 percent
of the turnover for every year of the continuance of the cartel, whichever is higher. However, the CCI
may not always impose penalties on cartel members. It can issue other directions as well. Under
Section 48 of the Act, the Commission may order the cartel members to discontinue the cartel and
not to engage in such activities again. It may also direct the modification of agreements as it deems
suitable, and might even impose criminal or additional monetary penalties if the concerned parties
act in contravention to the commission’s orders.

Module 1:
Basic economic and legal principles
Refer notes

Restraint of trade under Indian contract act.

Section 27 of the Indian Contract Act, 1872 states that an agreement, which restrains anyone from
carrying on a lawful profession, trade or business, is void to that extent. The main reason behind this
section is that agreements of restraint are unfair, injustice as they impose an undue restriction on
the personal freedom of a contracting party. However, as an exception, if a party sells his goodwill to
another he can agree with the buyer that he will not carry on a similar business within the specified
local limits.
Statutory Exceptions
Sale of Goodwill:
The only exception mentioned in Section 27 of the Contract Act is related to sale of goodwill. One
who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar
business, within specified local limits, so long as the buyer, or any person deriving title to the
goodwill from him, carries on a like business therein, provided that such limits appear to the court
reasonable, regard being had to the nature of the business.
Meaning of Goodwill:- There should be real goodwill to be sold. The Goodwill which has been the
subject of sale is nothing more than the probability that the old customer will resort to old place.
Partnership Act:
According to Section 11 the Partnership Act,1932 partners during the continuance of the firm to
restrict none of them shall carry on any other business than that of the firm. Section 36 the
Partnership Act,1932 is related to restrain an outgoing partner from carrying on a similar business
within the specified period and specified local limits, The agreement should specify the local limits or
the period of restraint, and The restriction imposed must be reasonable.
Firm Daulat Ram vs. Firm Dharm Chand, AIR 1934 Lah 110, where two ice factory owners
constituting a partnership agreed that only one factory will be worked at a time and its profits
distributed among them. The restraint was held to be justified.
Restraint upon employees
Restraint during Employment:
Agreement of service contain negative covenants is for preventing the employee from working
anywhere during period covered by the agreement. Nowadays trade secrets is main contention for
negative covenants. Employer's wants to protect his trade secrets because of that employment
agreement with negative covenants are generally used.
Agreements for protection of confidentiality and trade secrets are not one sided or unfair or
unreasonable. Any breach of such clauses on the part of employee can be treated as a misconduct.
Restraint during the employment and post-employment this issue was first time discussed by
Supreme Court in Niranjan Shankar Golikar vs. Century Spg & Mfg Co. Ltd. a company
manufacturing tyre cord yarn was offered collaboration by a foreign producer on the condition that
the company shall maintain secrecy of all the technical information from its employees.
The Defendant was appointed for a period of five years, the condition being that during this period
he shall not serve anywhere else even if he left the service earlier. Shelat J held the agreement to be
valid. The defendant was accordingly restrained from serving anywhere else during the currency of
the agreement.
Post-Employment Covenant:
According to Indian laws any agreement which is related to restraint of trade and profession shall
not be binding on the parties and the same shall be null and void.
By using the term void ab initio, for such type of agreements it has shown that it has kept such non-
compete clause in the agreements beyond consideration.
Indian courts have also consistently refused to enforce post termination non-compete clauses in
employment contracts as 'restraint of trade' is impermissible under Section 27 of the Indian Contract
Act 1872, and have held them as void and against the public policy because of their potential to
deprive an individual of his or her fundamental right to earn a living.
Covenants that prohibit employees from engaging in a business similar to or competitive with that of
the employer beyond the term of employment or post-employment are invalid.
A non-compete clause is well known under the Contractual Laws as the clause being made out into
any agreement between two parties where one party is the employer and the other party is the
employee.
According to this non-compete clause:
the employee undertakes and gives his acceptance as per the condition of the employer
that during the course of the employment or
even after post-employment,
he will not be the competitor of the employer
in the form and nature of the employment of the employer.
The Non-compete clause finds place under the agreements and contracts throughout the world.
According to Indian Contract Act, 1872 the non-compete clause, it is prohibited.
Article 21 of the Constitution of India guarantees the right to livelihood and this is the fundamental
right.
Nobody can take away fundamental right because of this to enforce non-compete clauses in India
even more difficult.

Monopolistic trade practices:

Section 2(i) of the Act defines (in a nutshell) a monopolistic trade practice as a trade practice which
has or is likely to have the effect of :-
i) maintaining the prices of goods or charges of services at unreasonable levels by limiting, reducing
or other wise controlling the production, supply or distribution of such goods or services;
ii) unreasonably preventing or lessening competition in the production, supply or distribution of
goods or services;
iii)causing deterioration in the quality of goods or provision of services or limiting technical
development or capital investment in goods or services to the common detriment;
iv)preventing or lessening competition by adoption of unfair or deceptive methods in the
production, supply or distribution of goods or services.
Section 10 of the MRTP Act empowers the MRTP Commission (MRTPC) to inquire into such trade
practices upon reference made to it by the Central Govt or on an application by the Director General
or upon its own knowledge and information.

Relief available for the aggrieved victims of a Monopolistic Trade Practice:-

If the Commission’s investigation indicates that the trade practice under investigation operates or is
likely to operate against the public interest, the Central Government may issue any orders it deems
necessary to correct or mitigate any harm caused by the trade practice.
The Central Government may-based on the Commission’s probe report-
Prohibit the affected undertaking’s owner(s) from continuing to engage in monopolistic business
practises; or
Prohibit the continuation of any monopolistic trading activity in regard to the products or services by
the owner of any class of enterprises or undertakings in general.
Unless specifically approved by the legislation or the Central Government, monopolistic trading
practices are considered to be harmful to the public interest. Any monopolistic trading conduct may
be investigated by the Commission on the basis of a referral from the Central Government, an
application from the Director General, or upon its own knowledge or information.

THE COMPETITION COMMISSION OF INDIA (PROCEDURE FOR ENGAGEMENT OF EXPERTS AND

PROFESSIONALS) REGULATIONS, 2009
The Commission may engage such number of experts and professionals in the fields of economics,
law, business or such other disciplines related to competition, as it may deem fit. The procedure of
selection of experts and professionals are dealt with by Regulation 8 as detailed below:

The experts and professionals shall ordinarily be engaged by the Commission on contractual basis
for not less than three months and not more than three years;
The Commission may decide, from time to time, the number of the experts and professionals to be
engaged;
The Secretary of the Commission shall publish the number of the experts and professionals to be
engaged with details of qualifications, experience needed and remuneration payable on the official
website of the Commission and invite applications for each category and level of expert and
professional giving a stipulated last date for the receipt of the applications for each category and
level. The Secretary may also invite the applications by suitable public notice, for each category and
level of expert and professional;
The Commission shall constitute a selection board for each category of expert and professional. The
Commission may invite the eminent experts having special knowledge and experience in the
relevant field to join the selection boards;
The Secretary shall scrutinize the applications in accordance with these regulations and prepare lists
of eligible candidates for each category to be called for interview and submit a report to the
Commission;
The selection boards shall be convened with the approval of the Chairperson for each category and
the Secretary shall notify the date and the venue of the interview to the short listed eligible
candidates sufficiently in advance;
The recommendations of each selection board regarding engagement for each category shall be
placed by the Secretary before the Commission for decision;
On approval of the engagements by the Commission, the Secretary shall inform each candidate in
writing by an offer letter of engagement giving not less than ten days time to accept the offer of
engagement;
After receipt of acceptance from the selected candidates the Secretary shall issue letter of
engagement to each candidate giving not less than thirty five days time to join. The jointing time
may be extended by the Secretary on being satisfied that extension is sought on circumstances
beyond the control of the individual candidate;
The Secretary shall inform the number of selected candidates who have joined in the next meeting
of the Commission and obtain approval of the Commission to restart the process of selection to fill
up the shortfalls, if any, in the total number of experts and professionals decided to be engaged.
Role of director general in commission
Appointment:
Section 16(1) of the Competition Act, 2002, relates to the appointment of the Director General for
assisting the Commission to conduct any sort of enquiry pertaining to the contravention of any of
the provisions of this Act and to perform any other such functions as provided under the
Competition Act, 2002.

Section 16 of the Competition Act, 2002 is pertaining to the appointment of the Director General.
This can be done by a notification by Central Government for the appointment of a Director General
for assisting the Commission to conduct any inquiry for the contravention of any of the provisions as
provided in the Competition Act, 2002.

The number of other Additional, Joint, Deputy, and/or Assistant Director General in this manner shall
be appointed as prescribed in the Competition Act, 2002. Every Additional, Joint, Deputy, Assistant
Directors General shall exercise his power and discharge his functions under the supervisions and
control of the Director General and shall work under his direction.

The salary, allowances and other terms and conditions of the services of the Director General and
other officers under him shall be as prescribed by the Central Government under the provisions of
the Competition Act, 2002.

The Director General and Additional, Joint, Deputy, Assistant Directors shall be appointed from
amongst the person of integrity and outstanding ability and who have experience in
investigation,knowledge of accountancy, management, business, public administration, international
trade, law or economics and such other qualifications as prescribed.

Duties of the Director General

The Director General shall assist the Commission, when so directed by the Commission, in
investigation of any contravention of provisions as set by the Competition Act, 2002 or any of its
rules and regulations.
The Director General have all the powers as are conferred upon the Commission under sub section
(2) of section 36 of the Act.
Without any prejudice towards the provisions of sub section (2), sections 240 and 240A of the
Companies Act, 1956, shall apply to an investigation made by the Director General or any other
person investigating under his authority in same manner as they apply to an inspector appointed
under the Companies Act 1956.

The Madras High Court recently in Hyundai Motor India Limited ("Hyundai") v. Competition
Commission of India ("CCI") has clarified that under the Competition Act, 2002 ("the Act"):
The Director General ("DG") cannot initiate an investigation sou motu;
The process to be followed should be: DG to submit information to CCI, and then CCI to cause an
inquiry under Section 19 of the Act and order for an investigation – thereafter DG can initiate
investigation.
The CCI is not required to form a prima facie opinion before initiating an investigation upon receipt
of information pertaining to the same subject matter.

Define agreements and essentials for valid agreement

The Indian Contract Act 1872 states the term contract is like an agreement that creates an obligation
between parties. According to the act, the contract is "an agreement enforceable by law."
The act also lists the essentials of a valid contract directly or through various judgments of the Indian
judiciary.
Essentials Elements of a Valid Contract

All contracts are agreements but all the agreements are not contract, an agreement becomes a
contract only when it fulfills the essential conditions which are laid down in the Indian contract
Act,1872. Those are as follows :

1. Offer and Acceptance:

The first essential for creating a contract is a valid offer or proposal. The Contract Act defines
proposal as ‘when one person signifies to another his willingness to do or abstain from doing
anything to obtain the assent of that other to such act or abstinence, he is said to make proposal’.

The person who proposes is the promisor/offeror and the person accepting the proposal is called the
promisee/ offeree. An offer to be valid must fulfill certain conditions such as, it must intend to create
a legal obligation, its terms must be certain and unambiguous and it must be communicated to the
person to whom it is made.

Secondly, the offer must be accepted and accepted by the person to whom it was intended. It is only
after the acceptance of the proposal that a contract between the parties can arise. When this
proposal is accepted it results in an agreement. To be a valid acceptance it must have certain
conditions such as :

It must be absolute and unqualified

It must be in a prescribed manner
It must be communicated by an authorized person before the offer lapses.
Apart from these, there must be consensus ad idem which means a meeting of minds. i.e the parties
on the contract should accept the terms of the contract in the same sense.

2. Intention to create legal obligation :

The parties which are forming an agreement must have an intention to create a contract. There
must be involvement of legal obligation and both parties must be aware of the legal consequence.
Those contracts where there are no legal obligations involved such contracts are not enforceable by
law such as the social or domestic agreement with family, relatives, and friends. etc

3. Consideration :
It constitutes the very foundation of the contract, an agreement that is not supported by
consideration is void. Consideration is the cause of the promise and its absence would make the
promise a gratuitous or bare promise(nudum pactum). To be a valid consideration it must fulfill
certain conditions they are :

It must be an act of abstinence or promise

It must be lawful
It must be real and not vague, indefinite, or illusory, etc.
The general rule is that an agreement without consideration is void, but there are certain exceptions
to this rule which are being provided under Section 25 of the Act.

4. Capacity of parties:
The parties to an agreement must be competent to contract i.e they must be capable of entering
into a contract. Section 11 of the Act provides that a person who has not attained the age of
majority, who is of unsound mind, and a person who is disqualified from entering into a contract by
any law are considered as not competent to enter into any contract.
In Mohari Bibee v. Damodar Ghosh, the court held that an agreement entered by a minor is void ab
initio.

5. Free consent:
To be a valid contract it is essential for the contract that parties must consent to the contract and
they must give the consent freely, it is said to be free when it is not caused by coercion, undue
influence, fraud, misrepresentation, or mistake.

6. Legality of object:
The object of an agreement must be lawful, if the object of an agreement is unlawful or if the object
of an agreement is prohibited by law then such agreement will not be valid and are unenforceable.

7. Certainty:
The terms of the agreements must be clear, certain, and not vague. Any uncertain agreements are
considered to be void. In Guthing v. Lynn, a horse was brought for a certain price with a promise to
give 5 pounds more if the horse proved lucky. The agreement was held to be void for uncertainty.
Thus to be a valid contract its terms must be clear and not vague or uncertain.

8. Agreements have not expressly declared void :

Certain agreements are declared void under the Indian contract Act 1872 which are mentioned in
sections 24-30, they are agreements in restraint of marriage, agreements in restraint of legal
proceedings, agreements in restraint of trade, and wagering agreements. If an agreement possesses
all other essential elements of a valid contract but it belongs to the category of such agreements
that have been expressly declared void by the contract Act then it is not a valid contract.

RESTRAINT OF TRADE AND IT’S EXEMPTIONS

The Competition Act, 2002 (Competition Act) is the primary Indian law specifically
regulating restrictive agreements and practices. There are no state-level or criminal law
statutes dealing with competition laws in India (including restraints of trade).
Section 3(3) of the Competition Act lists inter-competitor (horizontal) agreements that are
presumed to cause an appreciable adverse effect on competition within the relevant market in
India (AAEC). These are agreements which:
•       Directly or indirectly determine purchase or sale prices.
•       Limit or control production, supply, markets, technical development, investment or
provision of services.
•       Share the market or source of production or provision of services by 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 result in bid-rigging or collusive bidding.

Section 3(4) of the Competition Act also prohibits and penalises vertical restraints that cause,
or are likely to cause an AAEC. Vertical restraints, unlike the aforementioned horizontal
agreements, do not carry a presumption of AAEC and are governed by a rule of reason
approach. The Indian antitrust regulator, the CCI, can prohibit vertical restraints if it can
establish, after investigation, that such restraints cause, or are likely to cause an AAEC. The
inclusive list of vertical restraints contains:
•       Tie-in arrangements. A purchaser of goods must purchase any other goods as a
condition of purchase.
•       Exclusive supply agreements. Which restrict, in any manner, the purchaser from
acquiring or otherwise dealing with the goods of the seller or any person.
•       Exclusive distribution agreements. Which limit, restrict or withhold the supply of
goods or allocate any area or market for the disposal or sale of goods.
•       Refusal to deal. Which restricts, or is likely to restrict, by any method, the person or
persons from or to whom goods are bought and sold.
•       Resale price maintenance. Any agreement wherein goods are sold on the condition
that the resale price will be the price stipulated by the seller, unless clearly stated that prices
lower than those prices can be charged.

The Competition Act does not provide for specific exemptions for any kind of agreement or
for any specific sector. However, the Central Government can exempt the application of the
Competition Act (or any of its provisions) to agreements/practices for a given period for any
of the following:
•      Any class of enterprise, if it is in the interests of national security or public interest.
•      Any practice or agreement relating to India’s international obligations.
•    Any enterprise that performs a sovereign function such as functions relating to atomic
energy, currency, defence and space.

RULE OF REASON
The contradictory judgments of the Commission point towards the need to employ an
objective analysis to judge whether exchange of information in a particular case can be
considered anti-competitive or not. This is where the ‘Rule of Reason’ analysis can be of
immense utility, which can reduce legal uncertainty and lead to uniformity in CCI’s
decisions.
Section 3 of the Competition Act, 2002, covers two types of agreements. There are
agreements, which are per se illegal. Apart from these agreements, there are agreements
which are illegal under the act only if they cause or are likely to cause AAEC.
Therefore, to determine the legality of an agreement, it has to be examined through the lens
of “Rule of Reason”.
Rule of Reason is a method of analysis which takes into consideration the positive and
negative effects of a particular agreement on the competition, to evaluate the legality of that
agreement. Even though the phrase “Rule of Reason” has not been mentioned in the
Competition Act, 2002, section 19(3) of the act has the same function as its provisions allow
the Commission to compare pro-competitive and anti-competitive features of an agreement.
The information exchange is a common feature of competitive markets and it certainly has
some pro-competitive effects. However, the difference between anti-competitive and pro-
competitive information exchange lies in the nature and type of information exchanged. If the
information exchanged leads to enhanced economic efficiency and leads to more intense
competition among competitors, then it might not be considered anti-competitive.
Effective sharing of information can aid businesses in developing unique and innovative
goods. It might also help them interpret market trends in a better way and promote out-of-the-
box thinking among companies. Further, in sectors prone to fluctuations, sharing of
information can help coordinate supply and demand.