CHAPTER 1

INTRODUCTION
 CHAPTER 1

INTRODUCTION

1.1 Introduction

1.1.1 Competition Law-An Emerging Perspective

India has gained huge financial ground since its independence. Through the
many decades, by adopting progressive policy and financial reforms, India has
emerged as one of the fastest developing business economies in the world. The
Government has initiated the much-needed legislative reforms in the sphere of
financial and business laws because of the emerging economic environment involving
rapid innovation changes, globalization of the economy, advancement in trade and
industry, emphasis on international competitiveness and by bringing existing laws in
tune with the future market needs.

India earlier had a command and control economy wherein the economy was
mainly controlled by the state. A market system developed wherein there were no
contestable competitors as the state controlled almost all areas of economic activities
and intervened every step of the business process and financial actions of the private
sector. This restricted the growth of private enterprises and favoured public sector
companies.As the economy started opening up, there was immense business growth
and development as new companies flourished. The natural corollary was that the
market in India would require to be geared up to face competition from within and
outside the country. On the other side, simple malpractices like hoarding, monopolies
and unfair trade practices were replaced by more complicated anti competitive
practices like cartels, abuse of dominance, bid rigging, collusion etc.

Innovation and research were important areas in the new emerging business
order. However, innovation and research cannot be continued, if competition does not
flourish. If monopolies and anti competitive behaviours are not prevented and
punished then new companies, distribution systems, efficient and sustainable markets

2
 would not be able to succeed. Competition law therefore paves the way for a level
playing field for old and new entrants alike.

The Competition law is meant to preserve and promote competition, as a

means to ensure efficient allocation of resources in an economy, resulting in the best
possible choice of quality, the lowest prices and adequate supplies to consumers. The
Competition policy, which goes hand-in-hand with the Competition Laws .

Competition in today’s world needs to be encouraged with renewed vigour and

sincerity, especially in emerging global economies. The term ‘competition’, from an
economic perspective, can be defined as a healthy exercise among different producers
and sellers for attracting the consumers and ultimately leading towards profit
maximization, higher sales, rising turnover and getting a strong hold over the market.
Such a scenario works as a motivating factor, provided it is followed in a legitimate
manner. The objective of competition law is to protect the competition in the market.
It consists of rules and regulation to ensure existence of fair competition, thereby
leading to maximum welfare of the consumers. 1

The evolution of competition law relates back to the medieval era when
Roman legislators started making efforts to control price fluctuations and unfair trade
practices. Later in Europe, Kings and Queens prohibited monopolies even statutory
monopolies were also prohibited. The doctrine of ‘restraint of trade’ of Common law
laid foundation stones for modern competition law. First codified version of antitrust
legislation came in US in the name of Sherman Act in 1890 which influenced other
countries especially European Union to enact similar competition laws after Second
World War. In India, Competition law regime came into existence in a codified form
under “Monopolies and Restrictive Trade Practices Act, 1969” that was superseded by
the “Competition Act of 2002”. Now this law is applied to numerous activities that
were considered as monopolies or sovereign function of any state. Some of such
examples can be telecommunication, services, energy sector, transport, broadcasting
and postal services etc. are now covered under the ambit of competition law scrutiny.
Generally, the regime governing competition law in any country consists of an
Act to regulate anti-competitive behaviour and a policy commonly called as
‘competition policy’, which depicts the ideology of the government regarding the
1
G.R. Bhatia,Abdullah Hussain & Ravishankar Nair, “Law in Focous: Competition Law in India”.(The
Indian Journal of International Economic Law, Vol.1,2008 p. 182

3
issues of anticompetitive activities. The main issue in regard to a policy of
competition law is that the organisations.These issues cannot be mentioned in the
codified rules but can be implemented in general practice, for example, “laws on
taxation or the relationship of a landlord and tenant.”2

The study of issues related to competition law involves market power

assessment, which cannot be conducted without the knowledge of various concepts:

(i) Anti-competitive Agreements: These are the agreements, which have their
object to restrict or to adversely affect the competition. Such agreements are
considered to as unlawful unless some immunity is provided by way of any
exception. These include horizontal agreements regarding fixing of prices,
sharing of markets or restricting output etc. Vertical agreements like tying
agreements, exclusive supply agreements etc. are also considered to be as anti-
competitive in nature.

(ii) Abuse of Dominance: Abuse of dominance by a monopoly holder or by a firm

having dominant control over the market is also prohibited by the competition
law. Imposing restrictions while licensing the patents, predatory pricing are some
of the examples of abuse of dominance.

(iii) Mergers and Regulations: Mergers per se are not illegal, but any combination
or merger, which directly or indirectly culminates to eliminate the competitors
and results in the entity getting a hold over the market, can be considered as
anticompetitive in nature and hence are prohibited and regulated by competition
law.

Apart from handling the above stated activities the competition law regime of
any country also focuses on the promoting awareness and welfare of customers by
way of ‘competition advocacy’. ‘Competition Advocacy’ is generally referred to as
“the initiative taken by the competition authority to promote common welfare of the
society by creating awareness about competition law and also includes the advisory
function of the authority to the government on matters relating to competition law.”

2
Richard Whish, David Bailey, ‘Competition Law’, (Oxford Press, 2012, p. 2)

4
1.1.2 Issues and Challenges related with Competition Law

Competition law as discussed above works with the objective of prevention of

anti-competitive practices and promotion of consumer welfare and while working
towards such objectives the law is faced with several issues and challenges which are
to be dealt by the respective authority in order for the smooth functioning of the
regime. An effort has been made to explain and illustrate such issues in brief in this
chapter and in detail in furthers chapters of this dissertation.

One of the major concerns of any competition law is related to combating of

anticompetitive practices. Every law relating to competition enshrines preventing and
prohibiting anti-competitive activities as its main prime objectives. Such practices are
of different types namely “anti-competitive agreements which would consist of
cartels, abuse of dominant position, mergers and regulations etc”.

Another major challenge for any competition law regime is the

extraterritoriality of application and enforcement of competition law beyond the
boundaries of India.

Another issue relating to the efficient working of agencies of Competition Law

is related with the organizational challenges, which may cause hindrance in the
working of the authorities. For example under the Indian Competition Act, 2002
earlier both regulatory as well as adjudicatory functions were handled by the
Competition Commission of India (CCI), on which an objection was raised before the
supreme court that same authority cannot perform these two functions simultaneously.
Later, in 2007 Competition Appellate Tribunal (COMPAT) was established by way of
an Amendment Act to look after the adjudicatory functions and now CCI only does
the regulatory functions. Experts have also raised their concerns about the shortage of
manpower with such authorities, which are adversely affecting the working of such
agencies.3 Now infact, the Competition Appellate Tribunal has given way to the
National Company Law Appellate Tribunal.

Another major area of concern regarding the scope of application of

competition law is its conflict with other laws in force for example laws relating to
3
Deepak Patel, ‘For a Robust of Competition Law’, Article published in Business Standards on 21 st
February, (2016)

5
Intellectual Property Rights or Consumer protection laws. The conflict of competition
law in context of IPR laws is that on one hand laws relating to IPR like Copyright
laws, Patents law, Trademark laws provide for exclusive rights to the owner of such
intellectual property which sometimes leads to dominance of such owner in the
market, whereas Competition law works for the protection of market from monopolies
or abuse of dominance. Such conflict remained in debate for a long period of time,
which is now on the track of a settled position that both the laws work for the ultimate
objective of safeguarding consumer’s interest and IP holder’s interest. Competition
Law interferes in the functioning of IPR laws only when the protection provided to
the intellectual property is adversely affecting the competition in the market or when
the IP owner in arbitrarily exercising his rights which is deterrent for the market.

Similarly, conflict between competition law and consumer protection law,

though not much controversial, arises when the question is raised as regard to the
appropriate authority for grievance in case of unfair trade practice by the businesses
or any manufacturer, seller or trader. However in such a case also consumer laws
remain applicable irrespective of the number of persons, But the scope of operation of
competition law is wider than that of Consumer laws .

1.2 Evolution and Development of Competition Law in India

1.2.1 Origin in the World

The global economy is witnessing an explosion of economic activities since

the last few years. The thrust of the new emerging global economy is to move away
from centrally controlled resources to a market economy where competition and
innovation is encouraged. Competition law is an area of law that has emerged
significantly and is law which aims at the promotion and maintenance of competition
in the market by regulating the activities of organizations which are anti-competitive
in nature.

Competition law has developed immensely over the years especially since the
early 90’s. “The growth has been both in terms of geographical regions that have
accepted competition law, as well as in the array of economic activities now subject to
competition law. As an increasing number of countries have undertaken economic

6
 reforms and embraced the market economy, many of them have also introduced
competition law to maintain competition in their markets. Also, many economic
activities that were earlier state monopolies or natural monopolies and were shielded
from competition are now subject to competition law. Similarly, professions such as
medicine or law that have been more or less self-regulated are also now feeling the
reach of competition law”.4

India was one of the primaries creating nations to have a challenge law as the
Monopolies and Restrictive Trade Practices (MRTP) Act, 1969. However, with the
“advent of economic reforms in 1991, the law was found inadequate for encouraging
competition in markets. Hence, the Competition Act, 2002 was enacted by the
Parliament of India to establish the new competition regime in India and MRTP was
repealed. The Act was later amended in 2007 and a new amendment bill, 2022 has in
progress. Competition Commission of India (CCI) has been set up as a statutory
authority to enforce the provisions of the Act in India. It is a quasi-judicial body,
formed under the provisions of the Act, with the main objective to ensure that nation’s
markets are vigorous, vibrant, efficient, and free from restrictions that harm trade and
industry and also the end consumers. This has, indeed, become a task of prime
importance in the context of present day global markets, high technology innovations
and the fast changing economic landscape.”
The transition to competition law regime ensures the foreign investors that the
market they are investing is a transparent economy, which is regulated by laws in the
market place. An adequate competition policy, guided by appropriate competitions
laws encourages competence in the market and increases customer welfare and free
trade. This also enables the government to meet issues and challenges of globalization
by increasing the competition in the markets, nationally and internationally.5

The history of competition law, in today’s day and age, can be traced to the
Sherman Act of United States, which was enacted in the year 1890 6 owing to the
concern in regard to trusts of American Companies wherein the stock owners of
competition companies transferred those stocks in trusts controlling the actions of the
4
Available at http://en.wikipedia.org/wiki/Competition_law.
5
Available at http://www.slideshare.net/NehaKumar09/the-competition-act-india .
6
Canada enacted its first law in 1889 and some states of United States too had earlier laws, but, on
account of their limited effectiveness, they had not acquired comparable significance in anti-trust
history. See also Para 4.4.4. (2000). ‘Report of the High Level Committee on Competition Policy and
Law in India’, (Raghavan Committee)

7
competitors in order to coordinate the acts of pricing, output, etc. to dominate the
market. The Sherman Act prohibits those acts, which may be contractual or
agreements, which restrain trade7 and those attempts or actions of monopolization. 8
This Act was basic and a small law, and was interpreted by precedents of the court.
Some of the deficiencies of the law was sought to be made up through the Clayton
Act, 1914, which include provisions which control merger and identify prices and
exclusive dealings. The Act of Federal trade Commission, enacted in 1914 was to
constitute an enforcement agency. With increase in anti-competitive mergers in
1940s, the Clayton Act was then amended to ensure control over such mergers,
through the Celler-Kefauver Act, 1950.

The years of World War II, “witnessed the operation of huge cartels, both at
the national and international levels. After the war, therefore, antitrust was looked
upon also as a check against private corporate power. Antitrust legislation was
introduced in Germany in 1957, attributed to the influence of both the ordo-liberal
philosophy of the Freiburg school and the Marshall Plan. 9 Similarly, antitrust law
introduced in Japan in 1947; however, it is generally felt that in Japan, the law did not
take root for many years due to the tacit acceptance of cooperative business practices
and Government-business collaboration prevailing in the country.” In the United
Kingdom, the Monopolies and Restrictive Practices (Inquiry and Control) Act was
enacted in 1948.10 In 1957, the Treaty of Rome was signed by six European nations
bringing into existence the European Economic Community (EEC). Competition law
was incorporated into this treaty in the form of Articles 85 and 86 (later renumbered
Articles 81 and 82). These articles forbid anti-trust agreements and dominant position
abuse, respectively, Later, in 1989, the European Commission adopted the Merger
Regulation to control anti-competitive mergers. The enforcement of the EU
competition law was to be done through “modernization” of the EU law, and a greater
role has been given to the national competition agencies in the enforcement of
Articles 81 and 82.

7
Section 1, Sherman Act, 1890
8
Section 2, Sherman Act, 1890
9
Richard Whish & David Bailey, Competition Law, (Oxford University Press, New York, 2012, p. 2.)
10
Richard Whish & David Bailey, Competition Law, (Oxford University Press, New York, 2012, p. 2.)

8
 The economies of the East European countries, in 1990s, were overhauled to
give way to market-based economies; hence, the concerned countries formulated their
national competition laws. Many developing countries also adopted competition
legislation, including countries in Latin America, Africa and Asia. Amongst the
countries that have most recently adopted the competition legislation are Singapore,
Vietnam and India. China is also in the process of adopting a competition law. So, the
number has risen to over 100 from only about 40 in the early 1990s.

1.2.2 Development of Competition Law in India

Post independence, impetus was given to industrialization with engendered

increased governmental regulation on most economic activities. However, influential
conglomerate tended towards monopolization and subsequent unbridled mushrooming
of such businesses in the late 50’s and early 60’s The Monopolies and Restrictive
Trade Practices Act, 1969 (MRTP) was a legislation enacted with the specific intent
to address this socialist concern of increase in concentration of economic power and
end license raj.

Considering the situation at that point of time, 3 studies were undertaken namely -

a.Committee Chaired by Mr. Hazari, 1965

This committee was formed to study licensing procedure required by the

Industrial sector under the Industries (Development and Regulation) Act, 1951 which
reported that “there was a disproportionate growth in regard to various industrial
houses. The Committee report emphasized that the policy in regards to industries had
been taken over by large industry houses for their benefit. The only growth had been
in regional and sector wise development”.11

b.Committee setup in 1960 under Professor Mahalonobis

It went into the details of industrial licensing and concluded that this had
actually led in disproportionate growth of big business houses in India.

11
Vijay Kumar Singh, Competition Law and Policy in India: The Journey in a Decade, available at
http://nujslawreview.org/wp-content/uploads/2016/12/vijay-kumar-singh.pdf.
”

9
 A number of reforms were initiated by way of various studies by certain
committees and commissions to deal with the issue of License raj. The first committee
was the Mahalanobis Committee. This committee was known as the “Distribution of
Income and Levels of Living” which was set up in the year 1960 to ensure “the
building of the first and second five year plans due to no increase in per capita income
of the people in the society”.

c.Monopolies Inquiry Commission (MIC), April 1964

Chairman Mr. Gupta set out the report that “there was a set of few persons and
business houses which held the economic power and there was a product wise
concentration and country wise concentration of this economic power. Few
individuals and businesses were in possession of a large number of companies wealth
and there existed restrictive and monopolistic trade practices in these concerns.”

The bill then put together by the Monopolies Inquiry Commission (MIC)
became the MRTP 1969 and it was sought to be enforced from June 01, 1970. There
was still criticism of the MRTP Act that it prohibited growth and this lead to the
passing of The Consumer Protection Act 1986, the main object of which was to look
into the complaints of the customer.

1.2.3 Constitutional Basis for Development of Competition Law in India

According to the Indian Constitution, the “State shall aim to promote the
welfare of the people by securing and protecting as effectively, as it may, a social
order in which justice – social, economic and political – shall inform all the
institutions of the national life, and the State shall, in particular, direct its policy
towards securing that the ownership and control of material resources of the
community are so distributed as best to sub serve the common good; and that the
operation of the economic system does not result in the concentration of wealth and
means of production to the common detriment.”12 These were the fundamental
guidelines of MRTP Act of 1969.

A competition law enacted with a view to maintain economic status quo and
encourage protectionism becomes toothless in a liberalized economy. The 1991

12
Article 38 & 39, The Constitution of India, 1950

10
 Industrial Policy introduced by the then Finance Minister Dr. Manmohan Singh is
often credited with the liberalization, privatization and globalization of Indian
economy. In conformity with the then existing industrial policy, the MRTP Act also
underwent significant amendments in 1991.13

However, an important question raised in relation to Indian markets is the

ability to take on competition in all sectors. Fair competition benefits the consumer
and their welfare. But as a country, the interests of Indian sellers or manufacturers
cannot be infringed. Or certain sectors should be excluded from the jurisdiction of
CCI unless they undertake competition for the global market?

Protection in pre-liberalization era in India has led to non-competitive

companies. In order to enable consumer welfare, Competition Act should be
implemented for better approach to the economy. “Mr. Arvind Panagariya, (Professor
at Columbia University and Non-resident Senior Fellow at Brookings Institution)
called CCI a ‘game changer’. Citing the matter of pre-payment fine imposed by
banks, which is currently under investigation by CCI, Mr. Panagariya argues that CCI
is probably the most important reform under the UPA government. Support for this
argument can be drawn from a catena of cases presently under investigation by CCI;
the sectors under investigation vary from films to Stock Exchanges to Shipping to
DTH manufacturers.”

However, another opinion with regard to this is that CCI is a regulator, which
increases the issues with regard to business regulations in the country. This is stated
by the CCI in regard to combinations, which are mergers, acquisition, etc. In view of
the concept from preventing monopolies to promoting competition, there was a need
to look into the Monopolies and Restrictive Trade Practices Act. Therefore, the main
objective of Competition law is rejecting the structure of MRTP Act and focuses on
its rules which are flexible in nature.14

After the introduction of this Act on the internet and in the domain of the
public, the question of old law in substance and not in form is often asked. It is

13
Report of the Working Group on Competition Policy, Planning Commission Government of India,
February 2007 available at http://planningcommission.nic.in/reports/rpwpbody.html.
14
S. Chakravarthy, “Competition Act, 2002: The Approach”, Pradeep S. Mehta (ed.), Towards a
Functional Competition Policy for India: An Overview, (Academic Foundation, New Delhi, 2005, p.53.)

11
 thereby answered by the title of this section. Reasons which necessitated the
enactment of Competition Act are enumerated in a tabular form below15:-

S No. MRTP Act 1969 Competition Act 2002

The main factor in the Competition Act

The MRTP. Commission should be able to is “Appreciable adverse effect on
pass a ‘cease & desist’ order if the competition” for which the parameters
restrictive trade practice is being indulged have been prescribed.
into and the Commission is convinced,
1.
which has been subject to enquiry and is
“prejudicial to public interest”. The
concept “prejudicial to public interest” is
unclear and ambiguous.

Under the MRTP Act, it is essential for a The requirement to file registered anti-
party to file a trade agreement within 60 competitive agreement with the office
2. days with the office of the DGI&R if such of the DG has been omitted.
trade agreement contains restrictive
clauses.

Under this, only “restrictive clause” of the Under this, the whole agreement is void
trade agreement can be affirmed void and in case it is found to have anti-
3. not the whole agreement. competitive clause which are against the
nature of competition.

Under the Competition Act, the DG as

Under the MRTP Act, the powers of the the same powers as that of the Civil
4. DG have been found to be deficient and Court.
limited in carrying out investigation.

The MRTP Act has provisions both The Competition Act focuses only on
relating to practices which are “competition issues” and does not
5.
anticompetitive in nature and consumer contain provisions totally relating to
protection. consumer protection.

Other differences between MRTP Act, 1969 and Competition Act 2002 can be
explained by the table below16:-

S No. MRTP Act 1969 Competition Act 2002

1. The basis of this Act was the The basis of this Act was the
preliberalization era. postliberalization era.

15
Available at http://www.caclubindia.com/forum/mrtp-act-and-competition-act-difference-174369.asp.
16
Available at http://www.slideshare.net/sharathalva84/competition-act2002.

12
2. The main aim of the Act is to prevent The main aim of the Act would be to
massing of economic power in the forestall activities having an
hands of a few. unfavourable impact on competition; to
advance and support competition in
business sectors; to secure the benefits to
consumers and to guarantee freedom of
trade carried on by different
entrepreneurs in business markets in
India

3. MRTP Commission was The Competition Act is empowered to

empowered to pass only “Cease” and pass an order which prevents and
“Desist” orders. punishes such of those activities, which
are anti-competitive.

4. It recognizes only 4 offences, which are

It suggested 14 offences, which were
deemed to be against the principle of
against the principle of natural justice.
natural justice.

5. The size of the firm, is the factor for It focuses on the firm's structure not on
determining dominance etc. the size factor.

6. Competition offences are included or Competition offences are not included

not defined. and defined.

7. Complex in understanding and Simple in understanding and language

language. and easily understandable.

8. Frowns upon dominance. Entity Frowns upon abuse of dominance. Any

having status of dominant position is organisation which is at a position of
itself considered as bad. dominance is not bad; but the
organisation abusing that dominant
position, thereby affecting

the consumer welfare is

not acceptable.

9. Registration of agreements No requirement of registration of

is compulsory. agreements.

1 No regulation on combination after Combinations regulated beyond a high

10. 1991. threshold.

11. MRTPC appointed by the CCI selected by Collegiums.

Government.

13
 12. MRTPC bound by less administrative Relatively more autonomy for CCI. The
power and finance. The MRTP Act Competition Act provides competition
did not provide for the formation of fund for promotion of advocacy and
fund for its activities. awareness creation in competitive issues
or training as may be prescribed in its
rules.

13. No competition advocacy role for CCI has competition advocacy role.
MRTPC.

14. Penalties are not there for offences. There are penalties for offences.

15. Reactive cum rigid. Proactive cum flexible.

16. Unfair trade practices covered. An unfair trade practice is not covered.
The cases relating to unfair trade
practices are transferred to consumer
courts.

17. No time framework. Time is the essence.

18. MRTP Commission role was only

advisory. Competition Commission can initiate the
suo motu proceedings and levy penalties.

19. Focuses on public at large.

Focused on consumer interest at large.

The Competition Act regulates the following types of practices:

i. Agreements, which are anti-competitive.

ii. Dominant position abuse.
iii. Mergers, acquisitions and amalgamations combinations.17

While competition laws are different for all countries, there are certain important
provisions in almost all competition law matters.18 These provisions may be classified
into three categories. “The first category comprises of agreements or practices or
17
Retrieved from http://uk.practicallaw.com/2-532-3777
18
American Bar Association Sections of Antitrust Law and International Law and Practice, Report on
the Internationalization of Competition Law Rules: Coordination and Convergence 4 (1999)

14
 arrangements between certain competitors who are independent that reduces the
competition between them. The second category of practices which are anti-
competitive in nature exists due to acquiring of a dominant position in a market by a
single entity. The third group of regulated anti-competitive practice relates to mergers
and acquisitions”.19“

1.3 Jurisprudential Basis for Competition Law

Competition law jurisprudence in India (like several other common law

jurisdictions), the preamble of the Act serves as an important interpretation aid which
may be resorted to in case of ambiguity. The Preamble to the Competition Act
entrusts the commission with a responsibility to function with a view to enhance the
economic development of the country.20

Further, the following new Section 19(4) (l) was inserted into the list of
criteria for determining whether a firm enjoys a dominant position: “relative
advantage, by way of the contribution to the economic development, by the enterprise
enjoying a dominant position having or likely to have an AAE ton competition.” A
similar Section 20(4) (m)was inserted into the list of criteria for determining whether
a combination would have an adverse effect on competition.21

When the definition of development itself remains debatable, the preamble

and the aforementioned clauses “are meaningless and potentially dangerous. Unlike
the other listed criteria, they in no way help to determine dominance or the effect of a
combination on competition; instead, they invite the competition authority to condone

19
Dr. H.K. Saharay, Text Book on Competition Law,(Universal Law Publishing Co. Pvt. Ltd., New
Delhi, 2012, p.53.)
20
The Preamble of the Act reads, “An Act to provide, keeping in view of the economic development of
the country, for the establishment of a Commission to prevent practices having adverse effect on
competition, to promote and sustain competition in markets, to protect the interests of consumers and to
ensure freedom of trade carried on by other participants in markets, in India, and for matters connected
therewith or incidental thereto.”

21
Srinivasan Parthasarthy, Competition Law in India, (Kluwer Law International, London, 2012, p. 118.)

15
 blatantly anticompetitive activities by large corporations that purport to promote
development.”22

1.4 Need for Development of Competition Law in India

The main object of the Act is to promote free competition in India and to
protect the interests of consumers. The Raghavan Committee on Competition Policy
defines ‘free competition’ to mean total freedom to develop optimum size without any
restriction. The limitation, if at all necessary, is not limitation of size but of
competition power by prohibiting trade practices which cause AAE on competition in
markets within India. The consumer interest is the ultimate raison d’etreof
competition, low prices and higher quality. For the entrepreneurs, the objective is to
ensure fairness. ”23

The Competition Act, therefore, seeks to:-

➢ to forest all activities having an unfavourable impact on competition

➢ to advance and support competition in business sectors
➢ to secure the benefits to consumers and
➢ to guarantee freedom of trade carried on by different entrepreneurs in business
markets in India.24

The objective of the Act is “to protect the interests of the consumers. In
order to do so, it seeks to promote and sustain competition and ensure fair
competition and freedom of trade. The use of the word ‘protect’ in the Preamble
furnishes the key to the mind of the makers of the Act. Efforts to liberalize the
Indian economy to bring it at par with the best of the economies in this era of
globalization would be jeopardized if time bound schedule and, in any case,
expeditious disposal by the Commission is not adhered to.” The Act provides
for the “establishment of a quasi-judicial body called Competition Commission
of India with the following two basic functions, to achieve the said objectives: -

22
Aditya Bhattacharjee, “India's New Competition Law: A Comparative Assessment”, Journal of
Competition Law and Economics, Vol. 4, Issue 3, 609, September 2008.
23
Raghavan’s Committee Report, para. 1.2-0.
24
D.P. Mittal, Taxmann’s Competition Law and Practice: A comprehensive section wise commentary on
Law relating to Competition Act, (Taxmann Publications (P.) Ltd., New Delhi, 2011, p. 36.)

16
 (i) Administration and enforcement of competition law and competition
policy to foster economic efficiency and consumer welfare.

(ii) Involvement proactively in Government policy formulation to ensure

that markets remain fair, free, open, flexible and adaptable.”

It shall also undertake competition advocacy and imparting training on

competition issues. The Act also seeks to repeal the Monopolies and Restrictive
Trade Practices Act. 1969. The act aims at curbing negative aspects of
competition through the medium of CCI.

Various regulators are present to ensure its implementation:

Authority Sector

SEBI NSE, BSE

Director General of Civil Aviation(DGCA) Aviation

Telecom Regulatory of India Telecom Commission

IRDA Insurance sector

Forward Market Commission Forward and future sector

Reserve Bank of India(RBI) Monetary policy

Following are within the ambit of the Act: -

➢ Anti-competitive agreements regulations;

➢ Abuse of dominant position regulations;
➢ Combinations regulations;
➢ MRTP, 1969 repeal;
➢ Extra-territorial reach;
➢ Both goods and provision of services covered.

Non-applicability of Competition Act

➢ Public Financial Institutions;

17
 ➢ Foreign Institutional Investors;
➢ Banks;
➢ Venture Capital Funds;
➢ IPRs such as trademarks, patents, copyrights, etc. agreements;
➢ The central government may exempt any class of enterprises from the
provisions of this Act in the interest of national security or in public interest.25

1.4.1 Competition Policy

Competition policy is a set of rules that guide and govern competition. “It is
defined as those measures that directly affect the behaviour of enterprises and the
structure of industry”. The objective of competition policy is to promote efficiency
and maximize welfare, i.e., to ensure to consumers low prices and high quality, and to
assure fairness – a level playing field for the entrepreneurs who provide competition.

1.4.2 Competition Advocacy

The basic function of the Commission is to enforce competition law. The aim
of competition advocacy is to foster conditions that will lead to more competitive
market structure and business behaviour without the direct intervention of the
Competition Law Authority, namely, the CCI.”26

Section 4927 contains provisions for competition advocacy by the Commission.

It specifically states that “the Central Government may, apart from review of laws
relating to competition in formulating a policy on competition as the case may be,
make a reference to the Commission for its opinion on effects of such policies on
competition and on the receipt of such a reference, the Commission shall, within sixty
days of making such reference, tender its opinion to the Central Government, or the
State Government, as the case may be, which then may take further action as it deems
fit. The opinion tendered by the Commission shall not be binding upon the Central
Government or the State Government, as the case may be in formulating such policy.
25
T.R. Jain, Mukesh Trehan, Manju Trehan, Business Environment, (V.K. India Enterprises, New Delhi,
2009, p. 150.)
26
S.M. Duggar, Guide to Competition Law: Containing Commentary on the Competition Act, MRTP Act
& Consumer Protection Act (Vol. 1, LexisNexis Butterworths Wadhwa Nagpur, New Delhi, 2010, p.
1076.)
27
Competition Act 2002

18
 The Commission shall take adequate measures for the promotion of competition
advocacy. It is through this medium that it seeks to create awareness and impart
training about competition issues.”28

1.4.3 Need to therefore Research on Competition Laws in India

Open competitive markets are the engine of economic growth. Competition

Law is, therefore, an important institutional pillar for a thriving market economy as
competitive pressures hone production efficiency and stimulate product and process
innovation fundamental to competitiveness and economic growth.

The Competition Act has been structured as an omnibus code to manage

matters identifying with the presence and guideline of rivalry and imposing business
models. Its articles are grand, and incorporate the advancement and sustenance of
rivalry in business sectors, security of buyer premiums and guaranteeing opportunity
of exchange of different members in the market, all against the background of the
financial improvement of the nation. Be that as it may, the Competition Act is
shockingly smaller, made out of just 66 segments. The legislation is “procedure-
intensive, and is structured in an uncomplicated manner. In the changed scenario,
India desires a brand new law for competition and a new regulatory authority, which
under this policy is the ‘Competition Commission of India’. The law will serve the
purpose only if it is made independently, runs independently and is less expensive.
The message is strident yet clear that a well-planned exhaustive competition
compliance programme can be of great benefit to all enterprises irrespective of their
size, area of operation, jurisdiction involved, nature of products supplied or services
rendered and the same is essential for companies, its directors and the delegates, key
corporate executives to avoid insuperable hardships of monetary fines, civil
imprisonment, beside loss of hard-earned reputation when the Competition
Authorities, the media and others reveal the misdeeds in public. In order to increase
the clarity and workability of the new regime, it is highly desirable that the CCI
publish detailed procedural and substantive guidelines as soon as its application of the
Act has bedded down.”

28
Adi P. Talati and Nahar S. Mahala, Commercial’s Competition Act, 2002: Law, Practice and
Procedure, (Commercial’s Law Publishers (India) Pvt. Ltd., Delhi, 2006, p. 232.)

19
 A good competition policy, along with a sound competition law, should help
in fostering “competition, economic efficiency, consumer welfare and freedom of
trade, which should equip the Governments in meeting the challenges of globalization
by increasing competition in local and national markets.” Perhaps one of the most
crucial components of the Act is contained in Section 49 providing for competition
advocacy. The CCI has a positive advocacy role in shaping policies.

1.5RELEVENCY OF THE STUDY

My study is all about “Is the government policy helps small scale Industries,
Retailers and other small businesses to fight to big giant in market for accumulate and
merger among them’ ’Is they got protected, friendly competitive environment and
checking abuse of dominance under competition law’ ’And last but not the least ; “Is
dominant firm imposes abuse of dominance or influence by their pricing techniques’’.
Section 4 of competition act29, disallow abuse of dominant position in market but does
not prohibit dominance per se.This means that an enterprise is permitted to engage in
any anti -competitive act until the point it becomes dominant. It has been stated by the
CCI that when none of the parties hold a dominant position, it is not required to go in
to the allegation of abuse of dominance under section 4 of the competition act30.

In second instance, Reliancejio, a new entrant in the telecom sector made its
hold in the market by providing free services for 3 months which Bharti Airtel
challenged as predatory pricing under section 4 of the competition act 2002.

The CCI held that offering service free of charges is not anti-competitive, it is
done by a none dominant enterprise 31, and in the presence of other big incumbents in
the market like Airtel, Vodafone etc.Jio, a new entrant holding 6.4% market share can
not be hold dominant.
The above ruling caused great havoc in the telecom market forcing the other
operators to cut down their charges substantially. Meanwhile, Jio become the second
largest telecom operator in the market using its pricing techniques.32

29
Competition Act,2002,s.4, (12 of 2003) , Acts of Parliament,2002(India).
30
Mohit Manglani v. Flipcart India (p) Ltd.,2015 sccOnLine CCI 61:[2015] CCI 97
31
Bharti Airtel Ltd. V. Relience Industries Ltd..,2017 SCC OnLine CCI 25: (2019) 1 Comp L J 1
32
Demsetz, Harold, The cost of transaction , 9,The Quarterly Journal of Economics 22,33-53 (1968)

20
So, the ruling did not meet the goal and intention as decided by the competition law
object. I am going to try to find what are the actual loophole &lacking under the laws
and how fill those shortcomings.

1.6OBJECTIVE OF STUDY
The objectivity of the study is very clear and I am searching answer of two major
question which I have mentioned in relevancy of the study;
the first question is how we achieve economic equality, is fair competition
could be a way?and the second major question how competition law disallow abuses of
dominant position in the market; because I mentioned above how a giant industries
overtake the business and gutted monopolies.

1.6.1 OTHER OBJECTIVES

1.To study the condition of small-scale industries and retail businesses in relation to big
incumbents in the market.
2.To study to attempt to know impact of competition law and government policy on
market or business periphery.
3.To study and understand what are the provisions of competition act and regarding
policies with CCI rulings.
4.To study what are the legal remedies available for aggrieved party.
5.To study how securing protection and managing fair trade practice and maintain the
competitive environment.
The principle object of my study is to protect the interest of the consumers. In
order to do so, it seeks to promote and sustain competition and ensure fair competition
and freedom of trade.

1.7STATEMENT OF PROBLEM
The Competition Law is meant to preserve and promote competition as a means
to ensure efficient allocation of resources in an economy, resulting in best possible
choice of quality, the lowest price and adequate supplies to consumers.

21
 The Competition policies , which goes hand-in-hand with the Competition
Law , would consist of laws to achieve the objective which would be “to forestall
activities having an unfavourable impact on competition’’ to advance and support
competition in business sector, to secure the benefits to consumers and to guarantee
freedom of trade carried on by different entrepreneurs in business market in India. Its
core aim would be economic development of the nation and provide to achieve
economic equality through checking abuse of dominance under the law. Competition
law in not solely about relating the supply side market but also focusing on the demand
side also.

1.8REVIEW OF LITERATURE
After formulation of my statement of problem, it is necessary the review of
literature. I am going to use library of p.g department of law, some reference books on
competition law, some journal; likewise the Practical lawyer ,reports of law
commission, International report & journal access through the library and internet,
PRS website etc.I am going to mentioning some important literature works.
In a competition commission order probe against Flipcart , Amazon. In this
order cci said that “an investigation is required to the examine the provisions of the
vertical agreement , their operation and impact on the competition and leads to the
exclusion of other sellers.33
Second is a article wrote by Allan asher. He mentioned in his article how
merger is anti-competitive. In his words “in some respect mergers can be seen the
ultimate expression of competetion ; In others they are the ultimate anti-competitive
act.34
The third is a case law 35decided by CCI. “Pertinently, in the case, the
informant alleged that a pricing mechanism adopted by OLA and UBER reeks of anti-
competitive practices. It was alleged that the algorithmic price fixing does not allow the
drivers to dictate their own terms and provide a competitive market”.
The fourth is report and case of EUROPEAN COURT CASE “A legal person
whose activities consist not only in taking part in administration decisions authorising
the organization of motorcycling events, but also in organising such events itself and in
entering, in that connection, into sponsorships, advertising and insurance contracts,
falls within the scope of Art.82 EC and Art. 86 EC”.36
The last but not least, it is competition commission report on market study.
“Asper cci market study on telecom, it has been stated that data privacy can take a form
33
Rohit Jain, Competition Commission orders probe against Flipcart ,Amazon,Bloomberg Quint (Feb
2,2020), https://www.bloombergquint.com/lawandpolicy/competition-commission-orders-probe-
against-flipcart-amazon .
34
Allan asher in Liberalized Trade and Faire Competition (CUTS 1995).
35
Samir Agarwal v.Ani Technologies Case no 37of 2018.
36
Motoe v. Elliniko dimosio,European Court Reports 008 I-04863,Motosykletistiki Om Ospondia
Elladosnpid (MOTOE) v. Elliniko dimosio.

22
onon-price competition and abuse of dominance can lower privacy protection…..and
that an aspect of data in the context of competition in digital communication market is
the conflict between allowing access and protecting consumer privacy”.37

1.9 HYPOTHESIS
Keeping in view the objectivity of the study following hypothesis are
formulated.
I am searching the problems which under competition law and competition policies
that monopolies are still present in market after new competition act,2002.
1. There is glaring examples of jurisdictional conflicts and legal lacuna under
competition act.
2. Private enforcement mechanism in India is inadequate.
3. CCI failed to take notice of while determining the issues of relevant market
product and the resulting anti-competitive impact from exclusive arrangement
between e-retailers and the sellers of product.
4. There is absence of mutual negotiation process and no guidelines stating that
the use of personal information of the user without their consent, constitute an
abuse of dominance of a superior bargaining position.
5. The overlap of intellectual property and competition law has always been
tricky.
6. understanding the function of e-commerce in India and its subsequent effect on
the markets and competition.
7. There is no adequate law for protection against DEEP DISCOUNTING and
EXCLUSIVE AGREEMENT.
8. Indian laws are not well equipped to adopt to requirements of a new e-
commerce market to ensure effectiveness in the light of a current digital market
place.
9. Big enterprises playing the dual role of both a retailer as well as that of a market
place. This has lead to an anti-competitive practice in market.
10. Giant enterprises acquiring data from sellers who use their market place to sell
their goods is creating unfairness and abuse of dominance.
11. CCI yet does not have any modus operandi how to tackle advance technology
adaption by the tech giants. Cci has been less active on this front t tackle the
anti competitive practice by big tech giants.
12. CCI not well equipped to tackle PRICE ALGORITHIM.

37
Competition Commission Report, Market Study on the Telecom Sector in India, competition
Commission of India, January 22,201

23
 13. The competition act,2002 does not deals with Joint dominance or collective
dominance of enterprises.
14. No rule yet to prevent use of Dominance of power by big giant companies
through indirectly the way of certain techniques; such as , PREDATORY
PRICING, DEEP DISCOUNTING etc.

1.10 RESEARCH METHODOLOGY

Research methodology is a systematized investigation to gain new knowledge
about the phenomenon after finalization of subject matter or study the next step.
In this order I am following Doctrinal Research process. I rely on mainly
secondary source of data and a small part of primary source, where, there it very
necessary.

1.11 RESEARCH DESIGN

To design is a plan of making decision before the situation arises in which has
to be carried out. This research is going to comparative examine the competition law
and competition policies in relation with preserve and promote competition, as a means
to ensure sufficient allocation of resources in an economy.

24
CHAPTER-2

COMPETITION ACT, 2002: ISSUES AND HIGHLIGHTS

25
CHAPTER-2

COMPETITION ACT, 2002: ISSUES AND HIGHLIGHTS

2.1Highlights of the Competition Act

Competition in any field is considered to be a healthy practice for providing

wider and better opportunities to consumers and working as a motivating factor for
the seller, provided it is followed in a legitimate manner. perfect competition can be
defined as a market outcome in which all firms sell a homogeneous and perfectly
divisible product,the industry is categorized by freedom of entry and exit and there
are no externalities.38It is the basis on which market system works and economy
grows.

However, this urge of profit maximization and getting hold over the market
sometimes leads to the adoption of unfair trade practices and extract maximum
profits. In the absence of effective and adequate safeguards such producers or sellers
may indulge in anti-competitive practices which not only leads to consumer
exploitation but also adversely affects the market economy of a country. Adoption of
Competitive regulatory regimes in the form of enactments and regulations became
popular in post globalization scenarios when the business entities started expanding
their spheres of operation. However, countries like US, UK Canadaetc. had their
Competition enacted in the 19th Century only but for majority of Countries of the
world such adoption of the Competition Act as prevalent today took place in the later
part of 20th century.

38
G.R. Bhatia, Abdullah Hussain & Ravi Shekhar Nair, ‘Law in Focus: Competition Law in
India’,(The Indian Journal of International Economic Law, Vol. 1, 2008 p. 182)

26
 The Competition laws of most of the countries seek to increase “consumer
welfare, ensure fair-trading, increase economic efficiency and prevent abuse of
market power (Dominant Position). The three areas of enforcement that are provided
for in most competition laws are: -

➢ Anti-competitive agreements including Cartels

➢ Abuse of dominance, and

➢ Mergers, which have potential for anti-competitive effect.”

There may be different reasons for countries to be enacting the competition

law. However, the most common explanations for a country enacting a competition
law is that the country is undergoing economic reform, political liberalization or has
reached a sufficient level of development to be concerned with monopolistic
practices.39

The objectives of the act have been set forth in its preamble which states that
the act would provide for establishment of a Commission (i.e., Competition
Commission of India) to prevent anti-competitive practices, to promote and sustain
competition in the market, to protect the consumers and to ensure freedom of trade
carried on by the other participants of the market. The Act is mainly divided into 9
Chapters that cover various aspects of competition law starting from definitions and
explanation of anti-competitive practices and also covers regulation and adjudication
of such practices by Competition Commission of India and the National Company
Law Appellate Tribunal.

2.1.1Economies of Competition Law

Competition Law follows broadly the decided principles of economics. Under

the economic principle, a perfect competitive market is when there are many sellers
and buyers selling a homogenous product and no one seller or buyer is able to

39
Mark R.A. Palim, ‘The worldwide growth of competition law: an empirical analysis’, The Antitrust
Bulletin 1998 p. 10

27
influence the market. This leads to a healthy competition where sellers vie to sell their
products and buyers buy the best quality products at the most competitive price.

2.1.2 Applicability of the Act

The Competition Act applies to “all goods including the goods imported into
India and services as defined in the Act. The Act is applicable to all the enterprises,
which include private sector undertakings, public sector undertakings, Government
Departments carrying out non-sovereign functions.” Those Government departments
carrying out sovereign functions do not come under this Act.

2.1.3 Jurisdiction

The Act extends to the whole of India except the State of Jammu and
Kashmir. The expression ‘whole of India’ has not been defined, as such.
However, according to clause (3) of Article 1 of the Constitution of India, the
‘territory of India’ comprises –

➢ the territories of the States;

➢ the Union territories specified in the First Schedule; and
➢ such other territories as may be acquired

This is different from the extra-territorial jurisdiction of the Act which is dealt
with in section 32 of the Competition Act.

2.1.4 Consumer disputes and Competition law

The Consumer laws deal with the premise that the consumer is the weaker
party and covers under it the unfair trade practices. On the other hand the Competition
Act covers the Restrictive Trade Practices which have the impact of avoiding,
twisting or limiting challenge

2.1.5Transfer of cases from MRTP to Consumer Act 2002

Section 66 of the Competition Act provides for the transfer of cases from the
MRTP to the Competition Commission of India. The MRTP used to deal with
basically “three types of practices – the Monopolistic Trade Practices, the Restrictive
Trade Practice ,and the Unfair Trade Practices.”

28
2.1.6 Main Regulations

The Act regulates 3 Anti-competitive practices namely Anti competitive

agreements, Abuse of Dominant Position and Mergers & Acquisitions
(Combinations). It states, that all the anti competitive agreements, which can have an
AAE on competition in India, shall be void subject to certain exceptions as provided
under section 3(5). Section 4 deals with issues of abuse of dominant position, it gives
a list of acts which may amount to abuse of dominant position. Further section 5 and
6 explains aspects of combinations and also prescribe certain norms to regulate
combinations.

Chapter III of the Act deals with the establishment and composition of
Competition commission of India. It also prescribes the norms for the appointment of
members of the commission including the chairperson. Prior to 2007 CCI had the
power to the regulate as well as adjudicate the matters related to Anti-competitive
practices but after the Amendment Act of 2007 the adjudicatory functions in anti
competitive cases were assigned to a newly established body named Competition
Appellate Tribunal (COMPAT). The provisions relating to formation and functioning
of the tribunal have been enshrined under Chapter VIIIA of the Act.

As per a recent amendment, the Competition Appellate Tribunal (COMPAT)

has ceased to exist with effect from 26 May 2017. The appellate function under the
Competition Act, 2002 (Competition Act) would now confer to the National
Company Law Appellate Tribunal (NCLAT). These amendments were brought about
under the provisions of Part XIV of Chapter VI of the Finance Act, 2017.

Accordingly, Sections 2(ba) and 53A of the Competition Act and Section 410 of
the Companies Act, 2013 (CA 2013) have been appropriately amended and various
other provisions of the Competition Act dealing with the COMPAT have been
omitted.

Chapter IV of the Act deals with the Duties, Powers and functions of the
Commission. Section 18 explains that the main duty of the commission shall be to
fulfil the objectives of the act as prescribed in the preamble. Further Section 19
provides for detailed norms that are to be followed while conducting an inquiry in
cases of anti competitive agreements as well as in case of abuse of dominant position.

29
 However the procedure for conducting inquiry under section 19 is given in section 26
of the Act. Similarly section 20 of the Act explains the norms for inquiry in the cases
of combinations and section 29 prescribes for such procedure. Section 32 of the Act
gives Extraterritorial authority to CCI to conduct the inquiry in cases of anti
competitive activities taking place outside India but have an AAE on competition in
India. It is important here to note that the Director General of the Commission
conducts the investigative functions under the act. This provision is provided in
chapter V under section 41 of the Act.

Further, Chapter VI of the Act from Sections 42 to 48 provides a list of

penalties that can be imposed by the commission in various contraventions by the
parties either to the orders of the commission and the director or for causing
hindrance in course of investigation by non disclosure of any information or by
providing false information to the commission. There has been a separate chapter in
the act (Chapter VII) that deals with Competition Advocacy. Section 49 explains that
it shall be the duty of the commission to provide opinion to the government whenever
asked for and the commission shall also work to promote competition advocacy and
to create consciousness about competition issues.

2.1.7 Important Definitions under the Act

For the detailed comparative analysis of the Act, it is important to get an

insight of several important concepts and features of the Act. Firstly, there are several
key definitions, which are necessary to be understood in order to understand the
functioning of the Act. These are:

➢ Cartel40: The Act defines Cartel as “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”. Cartel has been put
in the category of those anti-competitive agreements through which the
manufacturers, sellers, producers of homogenous commodities agree to
control the production, supply prices etc. of goods so as to get desired profits
and control over the market.

40
Cartel has been defined under section 2(c) of the Act.

30
 ➢ Enterprise41: “Enterprise means and includes a person or a department of
Government, who or which is or has been engaged in following activities:
• Production, storage, supply, distribution, acquisition or control of
articles or goods;
• Provisions of services of any kind;
• Investing or acquiring of business, holding or dealing in shares or other
securities of any other body corporate either directly or through a
subsidiary.”

➢ Person42: Section 2(l) of the Act provides an inclusive definition of ‘person’.

It states that a ‘person’ includes following:
• “An individual, Hindu undivided family, company or a firm;
• An association of persons whether incorporated or not in India or
outside India;
• Any corporation established by Central or State government or a
Government Company as defined under Companies Act.

• Anybody corporate incorporated by or under the laws of a country

outside India
• Any Cooperative Society, local authority or an artificial juridical
person.”
Relevant Market: The definition of the term ‘relevant market’ is dependent
on two terms namely ‘relevant geographic market’ and ‘relevant product market’ as
section 2(r) of the Act lays down that for determination of relevant market.
Commission has to refer either ‘relevant geographic market’ or ‘relevant product
market’ or both.

i. Relevant geographic market implies a market in an area where

homogeneous conditions prevails for various aspects of trade and
commerce. Such conditions are distinct from markets in neighbouring
areas43.

41
Enterprise has been defined under section 2 (h) of the Act.
42
Person has been defined under section 2 (i) of the Act.
43
Section 2 (s), of Competition Act,2002

31
 ii. Relevant Product Market refers to a market where the products and
services are of such a nature that those can be interchanged or substituted
by other products and services available in that market44.

2.1.8 Main Concepts under the Act

One of the objects of the Act as stated in the Preamble is “to prevent practices
having adverse effect on competition.

The market share of an enterprise does not, as under the MRTP Act,
determine the dominant position of an enterprise, though it is one of the factors to be
considered, along with other factors, including the market shares of its competitors, in
determining whether it enjoys a dominant position or not. The Act sets out the factors
that are to be considered by the competition authorities in determining whether an
enterprise enjoys a dominant position, as well as the method for determining the
relevant product and geographic market in which the dominant position is to be
found45.

According to section 19(4) of the Act, “the Commission shall, while inquiring
whether an enterprise enjoys a dominant position or not under section 4, have due
regard to all or any of the following factors, namely:—

(a) market share of the enterprise;

(b) size and resources of the enterprise;

(c) size and importance of the competitors;

(d) economic power of the enterprise including commercial advantages over

competitors;

(e) vertical integration of the enterprises or sale or service network of such enterprises;

(f) dependence of consumers on the enterprise;

44
Section 2 (t), of Competition Act,2002
45
Section 19 (4-7), of Competition Act,2002

32
(g) monopoly or dominant position whether acquired as a result of any statute or by
virtue of being a Government company or a public sector undertaking or otherwise;

(h) entry barriers including barriers such as regulatory barriers, financial risk, high
capital cost of entry, marketing entry barriers, technical entry barriers, economies
of scale, high cost of substitutable goods or service for consumers;

(i) countervailing buying power;

(j) market structure and size of market;

(k) social obligations and social costs;

(l) relative advantage, by way of the contribution to the economic development, by the
enterprise enjoying a dominant position having or likely to have an AAE on
competition;

(m) any other factor which the Commission may consider relevant for the inquiry.”

Finally, the analysis should reveal if the result of the conduct indicted as
abusive is the restriction or elimination of competition in the relevant market, for the
goods or services in question. The regulatory provisions of the Act would be set in
motion if the abuse were a breach of Section 4 of the Act.

2.2 Anti-Competitive Agreements

Agreements causing an adverse effect on competition are known as

anticompetitive agreements. Section 3 of the Competition Act, 2002 defines
“anticompetitive agreements as any agreements in respect to production / supply /
distribution / storage / acquisition / control of goods or provision of services that
causes an AAE on competition in India.”46

Anti-Competitive agreements are those agreements among the persons

involved in a business transaction, which have the tendency to harm the Competition
in a particular market or which results in undue benefit to one person or group over
the loss of others. Such anti-competitive agreements are prohibited under the
Competition Act, 2002.

46
Section 3, of Competition Act,2002.

33
 The term ‘agreement’ as defined under section 2(b) of the Act provides that
the agreement does not necessarily have to be in the form of a formal document
executed by the parties. It may or may not be in writing. Clearly, the definition so
provided is inclusive in nature and not exhaustive and is a wide one.

The main reason for adopting a wide connotation for the term ‘agreement’ in
Competition law is because the persons so involved in anti-competitive activities may
not enter into formal written agreements so as to keep it a secret affair. For example
Cartels are usually shrouded in secrecy. “Section 3 of the Act prohibits any agreement
with respect to production, supply, distribution storage, acquisition or control of
goods or provision of services which causes or is likely to cause AAE on competition
within India.”47 Thus the term ‘agreement’ has been given a wide meaning.
The‘agreement’ is the factum rather than form in which such arrangement or
understanding is reached or sought to be operated. In order to ascertain the existence
of such ‘arrangement’ or ‘understanding’, the whole context must be looked into. In
case of oral or informal agreements, it is necessary to prove the existence of an
agreement. Proof will generally be based on circumstantial evidence and parallelism
of action between enterprises indicates this.

Further section 3(2) provides that any agreement in contravention of this

provision shall be void. On the basis of the provisions of Section 3 of the Act,
anticompetitive agreements are classified into two categories namely horizontal and
vertical agreements.

Horizontal agreements “are agreements between two or more competitors that

occupy the same stage of production chain and are in the same market. Vertical
agreements involve a purchasing or selling relationship between firms, and may be
pernicious if they are between firms in a position of dominance. Most competitive
laws view vertical agreements more leniently than horizontal agreements because,
prima facie, the latter are more likely to reduce competition than are agreements
between firs in a purchase – seller relationship.” The effect of the horizontal or
vertical agreements on competition is judged on the basis of two separate criteria - per
se rule and the rule of reason.

Anti-competitive agreements.-
47
Section 3(1), Competition Act, 2002

34
1. “No enterprise or association of enterprises or person or association of persons shall
enter into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is likely to
cause an AAE on competition within India.”48
2. “Any agreement entered into in contravention of the provisions contained in sub-
section (1) shall be void.”49

3. Any agreement entered into between enterprises or associations of enterprises or

persons or associations of persons or between any person and enterprise or practice
carried on, or decision taken by, any association of enterprises or association of
persons, including cartels, engaged in identical or similar trade of goods or
provision of services, which-

i. “directly or indirectly determines purchase or sale prices;

ii. limits or controls production, supply, markets, technical development,
investment or provision of services;
iii. shares the market or source of production or provision of services by way
of allocation of geographical area of market, or type of goods or services,
or number of customers in the market or any other similar way;
iv. directly or indirectly results in bid rigging or collusive bidding, shall be
presumed to have an AAE on competition: provided that nothing
contained in this sub-section shall apply to any agreement entered into by
way of joint ventures if such agreement increases efficiency in
production, supply, distribution, storage, acquisition or control of goods
or provision of services.”50

4. “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-

a. tie-in arrangement;
b. exclusive supply agreement;

48
THE GAZETTE OF INDIA available at https://unctad.org/Sections/ ditc_ccpb/ docs/ ditc_ ccpb_
ncl_ India_en.pdf
49
THE GAZETTE OF INDIA available at https://unctad.org/Sections/ ditc_ ccpb/ docs/ ditc_ ccpb_
ncl_ India_en.pdf
50
re: Cartelization in Tender Nos. 21 and 28 of 2013 of Pune Municipal Corporation for Solid Waste
Processing, Competition commission of India Suo Motu Case No. 03 of 2016

35
 c. exclusive distribution agreement;
d. refusal to deal;
e. resale price maintenance shall be an agreement in contravention of
subsection (1) if such agreement causes or is likely to cause an AAE on
competition in India.”51

Section 3 of the Act provides three types of the agreements as anticompetitive

agreement

1) Which directly or indirectly determines purchase or sale prices –

“Agreements that are entered into with the sole purpose of defeating competition
through fixing prices are prohibited as it is not in the best interests of the
consumer. The prohibition under this head relates to price fixing and pricing
methods.” Thus, any agreement entered into for the purpose and with the effect of
raising, depressing, fixing, pegging or stabilizing the price of a commodity is per
se illegal and this also includes agreements relating to specific forms of price
computation and also price discrimination.

2) Limits or controls production, supply, markets, technical development, investment

or provision of services –

Any agreement that stipulates the amount of production or restricts the market
where the goods or services are to be offered is prohibited.

3) Shares the market or source of production or provision of services by way of

allocation of geographical area of market, or type of goods or services, or
number of customers in the market or any other similar way –

“If the retailers/distributors mutually enter into an agreement dividing the market
by geographical areas amongst themselves and supplying only to those
customers, or if they mutually agree to offer only particular goods or services to
the deterrence of the consumers, such an agreement is prohibited.”

4) Directly or indirectly results in bid rigging or collusive bidding –

51
Available at Indian Kanoon.org

36
 As per explanation of Section s.3 (3), bid rigging means “any agreement that
has the effect of eliminating or reducing competition for bids or adversely affecting or
manipulating the process for bidding.”

Section 3 of the Act prohibits both the horizontal and vertical agreements.
Section 3(3) prohibits four categories of horizontal agreements between enterprises in
the same industry.”

2.2.1 Competition: Meaning

Competition has been stated as “a situation in a market in which firms and

sellers independently strive for buyer’s patronage in order to achieve a particular
business objective for example, profits, sales or market share.”The characteristics,
which give rise to pure competition, are:

a. Large number of sellers each acting independently;

b. A homogenous or perfectly uniform product; and
c. Freedom of entry of new firms.

2.2.2 Agreement: Meaning

As their object is unlawful, anti-competitive agreements are not made through

formal documents and are rarely reduced into writing. The term ‘agreement’ has been
52
defined widely. An agreement requires that there should be two parties which
should be independent of each other. It is to be noted that even what are called
‘gentlemen’s agreements’ would fall under Section 2(b) as an ‘understanding’ and if
the effect of such an agreement were to cause or was likely to cause an AAE on
competition within India, there would be breach of Section 3. Such an agreement
need not be in writing and also would not need to be legally enforceable.

2.2.3Horizontal and Vertical Agreements

On the basis of the provisions of Section 3 of the Act, anti-competitive

agreements are divided into two categories namely horizontal agreements and vertical
agreements.

52
Any agreement entered into in contravention of the provisions contained in sub-section (1) shall be
void.

37
 ➢Horizontal Agreement: These are the agreements which generally occur
between two or more entities or enterprises that stand at par with each
other in terms of production, supply distribution etc. in the same market.
For example, an agreement between manufactures of a particular
commodity of not selling a particular product below agreed price or for
not to supply a products to a particular market would be deemed as
horizontal anti-competitive agreement.

Competition Act, 2002 prohibits following types of horizontal agreements

namely:

1. Agreements regarding fixing of purchase or selling prices of a product either

directly or indirectly.53

2. Agreements with regard to limit, control production, supply, investment,

provision of services of particular products and for a particular quantity.54

3. 3.Agreement regarding sharing of market

4. Bid Rigging Agreements.

Explanation to Section 3(3) (d) defines bid rigging, “as an agreement between
parties engaged in identical business, which has the effect of eliminating or reducing
the competition for bids or adversely affecting or manipulating the process for
bidding.”

5. Agreements in the form of Cartels

“Cartels are created by anti-competitive horizontal agreements among

business enterprises. They pose a great threat to competition and ultimately tend to
destroy the free trade. In fact cartels are secret agreements between business firms
with the sole objective of fixing prices or sharing markets between them”.55

53
Section 3 (3) (a), of Competition Act,2002
54
Section 3 (3) (b), of Competition Act,2002
55
Rajkumar S. Adukia, ‘An overview of provisions relating to Competition laws & Consumer
Protection Laws in India’ Retrieved from http://www.caaa.in on 29/10/2022

38
 ➢ Vertical Agreements: According to Section 3(4) of the Act ‘vertical
agreements’ are those agreements, which take place among enterprises or
persons at different stages or levels of production in respect of
production, supply, distribution, storage, sale or price of goods etc. For
example any agreement between manufacturer and wholesaler, which can
adversely affect competition in the market, will be termed as a vertical
anti-competitive agreement. Competition Act, 2002 envisages various
types of Vertical agreements. These are:

1. Tie-in-Arrangement: This arrangement includes any agreement that requires

the purchaser of the goods to purchase some other goods along with the
required goods as a condition mandate.56 Such kind of agreements, usually are
entered into by the sellers so as to increase their sales and earn more profit.

2. Exclusive Supply Agreement57: Such agreements impose restrictions on

purchaser of the goods of not to acquire or deal in goods other than those of the
seller or any other person. Such agreements are usually entered into by
organisations using their dominant position in the market

58
3. Exclusive Distribution Agreement: Such agreement usually imposes
conditions that limit, restrict or withhold the output or supply of any goods.

4. Refusal to Deal:59Agreements which, by any method, restrict, or are likely to

restrict the persons or class of persons to whom goods are sold or from whom
goods are bought are prohibited under the Act as such agreements have
anticompetitive tendencies.

60
5. Resale Price Maintenance: Resale price maintenance “includes any
agreement to sell goods on condition that the prices to be charged on the resale

56
Section 3(4)(a), Competition Act, 2002
57
Section 3(4)(b), Competition Act, 2002
58
Section 3(4)(c), Competition Act, 2002
59
Section 3(4)(d)), Competition Act, 2002
60
Section 3(4)(e), Competition Act, 2002

39
 by the purchaser shall be the prices stipulated by the seller unless it is clearly
stated that prices lower than those prices may be charged.61

6. Permitted Agreements: Competition Act, 2002 provides for certain exceptions

which meant for the protection of Intellectual Property Rights (IPRs). As per
section 3(5) prohibition for anti-competitive agreements will not affect the right
on any person to restrain any infringement of, or to impose reasonable
conditions as may be necessary for protecting, any rights under the following
legislations: -

➢ The Copyright Act, 1957,

➢ The Patents Act, 1970
➢ The Trade and Merchandise Marks Act, 1958
➢ The Geographical Indications of Goods (Registration and Protection) Act,
1999
➢ The Designs Act, 2000
➢ The Semi-conductor Integrated Circuits Layout-Design Act, 2000”

Similarly, exemption against anti-competitive agreements is also provided in

cases of export. Section 3(5) (ii) lays down that prohibitions of anti-competitive
agreements shall not apply to the right of any person to export goods from India to the
extent to which the agreement relates export of goods or services.

61
Available at https://www.oecd.org/daf/competition/43835526.pdf

40
 Horizontal anti-competitive agreements Vertical anti-competitive agreements

In Vertical Agreements the parties to the

In Horizontal Agreements the parties to the
agreements are non-competing enterprises
agreement are enterprises at the same stage of
at different stages of the production chain
the production chain “engaged in similar trade
of goods or provision of services competing in
the same market”

Horizontal Anti-Competitive Agreements are

Vertical Anti-Competitive Agreements are
entered into between rivals or competitors.
entered into between parties having actual
or potential relationship of purchasing or
selling to each other.

Horizontal Anti-Competitive Agreements are per Vertical Anti-Competitive Agreements are

se void. not per se void.

The ‘rule of presumption’ is applied to horizontal The ‘rule of reason’ is applied to vertical
anti-competitive agreements. anti-competitive agreements.

Examples of Horizontal Anti-Competitive

Agreements are cartels, bid-rigging, collusive Examples of Vertical Anti-Competitive
tendering etc. Agreements are resale price maintenance,
tie-in agreements, exclusive supply and
distribution agreements etc.

2.3 Abuse of Dominance

A person or an enterprise is deemed to be in dominant position when such

entity is in a position of strength and such position enables that entity to operate
independently of competitive forces prevailing in the relevant market or affects its
competitors or consumers or the relevant market in its favour. The European
Commission’s Glossary states that ‘a firm is in a dominant position if it has the ability
to behave independently of its competitors, customers, suppliers, and ultimately, the
final consumer.’ For the purpose of Competition Act, 2002 the definition of
‘dominant position’ depends upon the definitions of relevant market, which are
explained above. Thus, for an abuse of dominance finding, it is necessary to first find

41
the enterprise in question occupied a position of dominance in terms of a particular
product market and the demarcation of the geographic market for that product.

Section 4 of the Act provides for control of such abuse. It states that no
enterprise or group abuse its dominant position. It also provides for instances as to
what acts amounts to abuse of Dominant position. The acts, which amount to ‘abuse
of dominant position’, are enshrined below:

➢ Direct or Indirect imposition of unfair or discriminatory condition in

purchase or sale of goods or services or prices in purchase or sale
(including predatory price) of goods and services. ‘Predatory price’ means
selling of goods at a price which is below the cost of production of goods
or provisions of service in order to eliminate competitors or to reduce
competition. The Competition Commission of India (Determination of
Cost of Production) Regulations, 2009 have been enacted for the
determination of predatory pricing cost. According to Regulation 3(1),
average variable cost will generally be taken as a proxy for marginal cost.
➢ Limiting or restricting the production of goods or services or putting
restrictions on technical or scientific development relating to goods or
services to the prejudice of consumers.
➢ Indulging in practices which result in denial of market access in any
manner
➢ Using Dominant position in one relevant market to protect or to enter into
another relevant market.

2.3.1 Meaning of Abuse

The philosophy of the Act is reflected by this provision, where it is clarified

that a situation of monopoly per se is not against public policy but, rather, the use of
the monopoly status such that it operates to the detriment of potential and actual
competitors. The Act, therefore, targets the abuse of dominance and not dominance
per se.62

62
Manoj Kumar, “Competition Act 2002: An Overview”, Dr.MadhavMehra (ed.), Competition Law:
An Instrument for Inclusive Growth, (International Academy of Law, New Delhi, 2009, p.153)

42
 The word ‘abuse’ means, “to put to bad or wrong use”. Exploitation of that
position is prohibited by Section 4 of the Act, for example, imposition of unfair prices
and conditions, limiting or restricting production, indulging in practices leading to
denial of market access, etc.63 The Act does not prohibit dominance by an enterprise
or group, but strictly prohibits the abuse of dominance. Section 4(1) of the Act
expressly states that no enterprise or group shall abuse its dominant position.”

2.3.2 Meaning of Dominant Position

“The concept of abuse of dominance metamorphosed from the erstwhile MRTP

Act to section 4of the Competition Act ,2002 which clearly enumerates the abuse of
dominant position. The definition of dominant position “a position of strength
enjoyed by an undertaking which enables it to prevent effective competition being
maintained on the relevant market by affording it the power to behave to an
appreciable extent independently of its competitor, customers, and ultimately of its
consumers”.64

2.3.3 Definition of Relevant Market

Dominant position is usually cited in reference to a relevant market. Therefore

it becomes important to understand what a relevant market is. “The concept of
relevant market has two dimensions namely, the relevant product market and the
relevant geographical market. The Competition Act, 2002 states that for determining
the relevant market, the relevant product market or the relevant geographic market, or
both are to be taken into account.” Section 2(r) of the Act 65 defines relevant market
as:

“the market which may be determined by the Commission with reference to the
relevant product market or the relevant geographic market or with reference to both
the markets”;

Section 2(s)66 defines the “relevant product market” as:

63
Continental Can Co., Inc. v. Commission (1973) ECR 215, on Article 82 of the EC Treaty cited from
D.P. Mittal, Tannan’s Competition Law and Practice: A comprehensive sectionwise commentary on
Law relating to Competition Act, (Taxmann Publications (P.) Ltd., New Delhi, 2011, p. 284)
64
United Brand v. Commission of the European Communities[1978] ECR 207
65
Competition Act, 2002
66
Competition Act, 2002

43
 “….a market comprising all those products or services which are regarded as
interchangeable or substitutable by the consumer, by reason of characteristics of the
products or services, their prices and intended use”;

Section 2(t)67 defines “relevant geographical market” as:

“…..a market comprising the area in which the conditions of competition for
supply of goods or provision of services or demand of goods or services are distinctly
homogenous and can be distinguished from the conditions prevailing in the
neighbouring areas”

The definition of the relevant market in, both its product and geographic
dimensions often has a decisive influence on the assessment of a competition case.
“The purpose of ascertaining market is to be able to examine whether an enterprise is
dominant in a specific market, made up of the product or service, the competing
suppliers and the buyers of the product or service, all operating in a geographical
68
area”. The Competition Act requires that the relevant geographic and product
market are determined on consideration of certain factors which are given in Section
19(5) to (7).

Position of dominance of enterprise has to be determined in accordance with

the behaviour of enterprise in relevant market vis-à-vis its competitor and
consumers.69

2.3.4 Artificial Intelligence and Relevant Market

The concept of relevant market is a very important developing concept and

has to be streamlined jurisprudentially so that the same factors are taken in each
circumstance. In the case of relevant market, data pertaining to that particular
situation becomes very important for the Court to understand dominance vis-à-vis the
relevant market. Therefore, in this case, the data collected through the mechanism of
artificial intelligence would be very beneficial to correctly determine the extent of
relevant market.

67
Competition Act, 2002
68
T.Ramappa, Competition Law in India- Policy, Issues and Developments; (Oxford University Press
2006 pg.147)
69
All Odisha Steel Federation v. Odisha Mining Corporation Limited, 2013 Comp LR 746(CCI)

44
 The new buzzword nowadays is Artificial Intelligence (AI), which is
emerging as a game changer in today’s economy. AI uses sophisticated machines to
reduce human effort and give faster and more accurate results. AI technologies can be
used in all important sectors like media, medical sciences, air transport, heavy
industries etc. While the advantages of AI are many fold, the major critique
surrounding AI is for relying just, on a lot of sophisticatedly computed aspects of
behaviorism, maybe often independent of scientific insight and human intervention.

AI as a method of colluding, with restricted or no human involvement, will

most likely proliferate. As queries multiply, in-depth scrutiny into competition-related
risks to businesses would be the need of the hour.
Artificial intelligence (AI) systems are growing at an exponential rate
nowadays, with a lot of subtle varieties of features being incorporated into them. AI
enabled systems have transcended from being used in straightforward calculations to
collecting data, analysing market trends and algorithms which can alter competition

Why AI Matters

The developments of ‘machine-learning’, advanced algorithms and systems

capable of processing large quantities of knowledge have provided the platform to
enable innovative industrial applications for AI. One such application that has
received attention from competition authorities is ‘algorithmic pricing’. That is, the
machine-controlled re-calibration of costs supporting internal or external factors in
business, like offer and demand variables, competitors’ costs and pricing of products.
Competition law prevents anti competitive agreements, abuse of dominance and
practices which unfairly reduce competition in the market. However, ‘algorithmic
pricing’ under AI may enable traders to form cartels and affect pricing of goods
adversely after obtaining relevant data knowledge.

The European Commission’s E-commerce Sector Inquiry (2017) found that,

after the UN agency had actively monitored competition costs of the net retailers
surveyed, sixty seven per cent of the retailers had used automatic algorithmic code
programs to trace and report on competitors’ costs. Most of these businesses later on
adjusted their costs manually. However, many of the retailers had additionally relied
on the algorithmic code to implement automatic changes.

45
Cartelisation Using AI

The use of artificial intelligence and algorithms has been commonplace in

markets in the bid to attract more customers and have profitable businesses. However,
these practices have drawn the attention of competition authorities in India and
abroad. Under ordinary circumstances, humans form cartels among themselves and
then implement them through price-cutting or price fixing among their cartel
members.

As now AI has replaced human knowledge, AI can do the data

implementation through its automatic recalibration. It is seen that where businesses
merely implement or conceal their ‘offline’ anticompetitive agreement by the misuse
of AI, the United Kingdom and EU competition authorities have clearly noted that
this may be treated as a component of an anti competitive agreement.

Collusion

Collusion through AI may gain ground if there is a misuse of AI technologies.

Business industries are shifting from an evaluation setting of fixing prices for
products wherein store clerks once sealed costs/prices on products, to a dynamic,
differential evaluation wherein refined computer algorithms quickly calculate and
update costs.

Discrimination

AI technologies can also be used for segregation of customers. However, this

segregated data of customers can be used discriminately to further products of certain
businesses and attain a dominant position to the detriment of others. The strategy
involves corporations gathering the personal information of customers shopping for a
particular product, the place where he/she tends to buy the product and the highest
amount the customer is willing to pay for the product. After analysing this data,
businesses will tailor their advertising and selling to focus on the customers at the
right moments with the proper price and emotional pitch.

46
Apps

Another risk of the misuse of AI arises wherever there is a relationship of

competition and cooperation existing between super-platforms and independent apps.

Measures to Combat Misuse of AI

In view of the above risks that AI poses, it is important to analyse the legal
regime’s readiness. The two important aspects that the competition authorities need to
deal with is the readiness to investigate such matters and the readiness to impose
sanctions for the misuse of AI.

Readiness to investigate

AI practices leading to anti competitive behaviour would be very difficult to

detect. AI often works with minimum or no human intervention. Therefore the issue
is whether or not competition authorities are able to investigate business mistreatment
of AI technologies. AI technology and mechanisms need to comply with the legal
tenants of transparency, fairness and legality. In this scenario, investigatory tools and
methodologies need to be broadened. It is important to engage technology specialists
who have specialised AI technology knowledge and knowledge of Competition laws.

Readiness to impose sanctions for misuse of AI

Accountability in Competition law for misuse of AI to indulge in anti

competitive practices is also important. When attributing liability in the case of
misuse of AI, there are two eventualities to contemplate. The primary one is wherever
AI is simply being used to implement the parties’ real-world agreement. The second
is wherever the anti competitive practices have been carried out by the use of AI
itself, with the consent or knowledge of a business’ human staff. In the former case
AI use is legal, while in the latter, there would sanctions imposed under Competition
Law.

Advantages of AI in Competition Law

There are many advantages that artificial intelligence has on competition,

which cannot be ignored and it is important to accept that the future of virtual
competition isn't essentially bleak. The innovations from machine learning and large
47
 information will be transformative—lowering search prices to find a product or
parking spot, lowering entry barriers, making new channels for growth and entry, and
ultimately stimulating competition.

Data-driven on-line markets won't essentially correct themselves. As power

shifts to the hands of the few, the risks this may seemingly have for competition, our
democratic ideals, and our economic and overall well being can increase
consequently.

Accordingly ,competition authorities should have understanding how tackle computer

algorithms and their effects on the market.

The Legal Challenges Posed By AI

The legal challenges posed by AI hinge on the interface between man and
machine. A lot will depend on the flexibility of humans to regulate the ‘deep-
learning’ algorithms in the areas of business. AI is led by knowledge and it will test
the liability of humans for taking responsibility for machine activities.According to
legal principles, therefore it is the “intent” and the “agreement” between operators,
which become important to establish anti competitive behaviour when AI is involved.
These two legal principles may become even more important as in most cases; there is
no human intervention at all. Another legal principle that needs to be explored is the
concept of “agency”. Are AI methodologies adopted by businesses “agents” of those
who have conceptualised them?

Analysing the legal provisions, general data regulations adopted in countries

may not be enough to deal with the adverse circumstances in which AI technologies
may be used.

AI would also challenge the traditional methods of Intellectual Property

Rights. It would be difficult to analyse who is an “author” or who is an
“inventor”.

Premise in India

Last year, the Competition Commission of India (CCI) imposed a hefty

penalty on Google, for abusing its dominant position, within the on-line search media

48
market. The corporate was suspected of promoting its own verticals at the expense of
its oppositions. This is one of the most important cases in AI technologies and
competition law.

Essentially, the regulatory challenges posed by AI could fall in three broad

categories: market exclusionary practices; new methods of collusion; and new ways
to implement worth discrimination. Concepts of “technological sovereignty” and
“wealth differences” created by the use of AI would also arise. In matters relating to
public policy these concepts would need to be fair and transparent.

2.3.5 Relevant Product Market and Geographical Market

According to the Act, “relevant market means the market which may be
determined by the Commission with reference to the relevant product market or the
relevant geographic market or with reference to both the markets.”70

There are two dimensions to this – the product market and the geographical
market. “Relevant geographic market means a market comprising the area in which
the conditions of competition for supply of goods or provision of services or demand
of goods or services, are distinctly homogenous and can be distinguished from the
conditions prevailing in the neighbouring areas.” 71 “Relevant product market means a
market comprising all those products or services which are regarded as
interchangeable or substitutable by the consumer, by reason of characteristics of the
products or services, their prices and intended use.”72

The Act posits the factors that would have to be considered by the
adjudicating Authority in determining the “Relevant Product Market” and the
“Relevant Geographic Market”, reproduced herein below:

➢Relevant Product Market

Following are the major factors in determining the relevant market:

• physical characteristics or end-use of goods;

• price of goods or service;
70
Section 2(r), Competition Act, 2002
71
Section 2(s), Competition Act, 2002
72
Section 2(t), Competition Act, 2002

49
 • consumer preferences;
• exclusion of in-house production;
• existence of specialized producers;
• Classification of industrial products.

➢Relevant Geographic Market

The Commission shall, while determining the “relevant product market”, have
due regard to all or any of the following factors, namely:-

(a) physical characteristics or end-use of goods;

(b) price of goods or service;

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial product

The Indian Competition Act, 2002, provides that the Competition Commission
shall have due regard to the relevant product market and the relevant geographical
market in determining whether a market constitutes a relevant market for the purposes
of the Act.73The relevant market means the market that may be determined by the
Commission with reference to the relevant product market or the relevant
74
geographical market or with reference to both. “Relevant product market” and
“relevant geographic market” have been specifically defined in the Indian
Competition Act.

2.3.6 Predatory Pricing

Another aspect, which is emerging and has to be understood as an abuse of

Dominant position is the concept of predatory pricing. It is defined as “the situation
wherein the firm with the market power prices below cost so as to drive the

73
Section 19 (5), Competition Act, 2002
74
Section 2(r), Competition Act, 2002

50
competitors out of the market and acquire or maintain a position of dominance. 75 The
theory of predatory pricing is such that it states that monopolist or a future monopolist
may sell its products at below cost process in an effort to drive the competitors out of
the market. On the event that the strategy works out, the monopolist can then, in the
absence of competition charge higher prices and more than recouping losses.”76

One of the most destructive forms of abuse of dominance is “the practice of

predatory pricing. Predatory pricing occurs, where a dominant enterprise charges low
prices over a long enough period of time so as to drive a competitor from the market
or deter others from entering the market and then raises prices to recoup its losses.
The bigger the diversification of the activities of the enterprise in terms of products
and markets and the greater its financial resources, the greater is its ability to engage
in predatory behaviour.”

‘Predatory price’ is defined in the Explanation to section 4 of the Act to “mean

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’ [according to section
2(q), the expression ‘regulations’ means the regulations made by the Commission
under the Act]. Predatory pricing, therefore is a situation where a firm with market
power prices below cost so as to drive competitors out of the market .

2.3.7 Process of Dealing with Abuse of a Dominant Position

Section 19(4) of the Act lays down the various factors that the Commission
shall consider while deciding whether an enterprise enjoys a dominant position. The
test of AAE on competition is conspicuous by absence in determining abuse of
dominant position under the Indian law. On the contrary, violation of the thirteen
criteria laid down in Section 19(4) is enough to establish abuse of dominance. Ten of
these criteria are economic indicators but the most dangerous are the economic
development and social obligations indicators which virtually give the commission
carte blanche to set free any company of its choice. Sections 27 and Section 28 of the

75
Explanation (b), Section 4, Competition Act 2002
76
Cargill Inc. v. Montfort of Colorado 479 US 104 (1986) cited from Abir Roy and Jayant Kumar,
Competition Law in India, (Eastern Law House Pvt. Ltd., New Delhi, 2008, p. 113)

51
Act provide the various orders that can be passed by the Commission after inquiry
into an instance of abuse of dominance by an enterprise or group.

Section 27 - Orders by Commission after inquiry into agreements or abuse of

dominant position -

“Where after inquiry the Commission finds that any agreement

referred to in section 3 or action of an enterprise in a dominant
position, is in contravention of section 3 or section 4, as the case may
be, it may pass all or any of the following orders, namely:—

(a) direct any enterprise or association of enterprises or person or

association of persons, as the case may be, involved in such agreement,
or abuse of dominant position, to discontinue and not to re-enter such
agreement or discontinue such abuse of dominant position, as the case
may be;

(b) impose such penalty, as it may deem fit which shall be not more than
ten per cent. of the average of the turnover for the last three preceding
financial years, upon each of such person or enterprises which are
parties to such agreements or abuse:

Provided that in case any agreement referred to in section 3 has

been entered into by any cartel, the Commission shall impose upon
each producer, seller, distributor, trader or service provider included in
that cartel, a penalty equivalent to three times of the amount of profits
made out of such agreement by the cartel or ten per cent of the average
of the turnover of the cartel for the last preceding three financial years,
whichever is higher;

(c) award compensation to parties in accordance with the provisions

contained in section 34;

(d) direct that the agreements shall stand modified to the extent and in the
manner as may be specified in the order by the Commission;

52
 (e) direct the enterprises concerned to abide by such other orders as the
Commission may pass and comply with the directions, including
payment of costs, if any:

(f) recommend to the Central Government for the division of an enterprise

enjoying dominant position;

(g) pass such oilier order as it may deem fit.”77

Section 28 - Division of enterprise enjoying dominant position -

“(1) The Central Government, on recommendation under

clause (f) of section 27, may, notwithstanding anything contained in
any other law for the time being in force, by order in writing, direct
division of an enterprise enjoying dominant position to ensure that
such enterprise does not abuse its dominant position.

(2) In particular, and without prejudice to the generality of the

foregoing powers, the order referred to in sub-section (1) may provide
for all or any of the following matters, namely:—

(a) the transfer or vesting of property, rights, liabilities or obligations;

(b) the adjustment of contracts either by discharge or reduction of any
liability or obligation or otherwise;
(c) the creation, allotment, surrender or cancellation of any shares, stocks or
securities;
(d) the payment of compensation to any person who suffered any loss due
to dominant position of such enterprise;
(e) the formation or winding up of an enterprise or the amendment of the
memorandum of association or articles of association or any other
instruments regulating the business of any enterprise;
(f) the extent to which, and the circumstances in which, provisions of the
order affecting an enterprise may be altered by the enterprise and the
registration thereof;

77
Competition Act, 2002

53
 (g) any other matter which may be necessary to give effect to the division of
the enterprise.
(3) Notwithstanding anything contained in any other law for
the time being in force or in any contract or in any memorandum or
articles of association, an officer of a company who ceases to hold
office as such in consequence of the division of an enterprise shall not
be entitled to claim any compensation for such cesser.”78

Competition Commission is empowered, under Section 34, to award, after an

inquiry, compensation to any person, for loss or damage suffered by him as a result of
any contravention of the provisions of Chapter II by any enterprise. This includes
breach of Section 4, i.e., abuse of dominance. However, compensation is claimable
only for loss or damage suffered as a result of abuse of dominant position by the firm.
The advantage of compensation is deterrence – firms in similar circumstances in other
markets will be deterred from engaging in the same conduct, lest they also be forced
to pay compensation.

2.3.8 Procedural aspects under the Competition Act for abuse of dominant
position

Competition act has established the competition commission of India to

prevent practices having adverse effect on competition to promote and sustain the
competition in the market and to protect the interest of the consumers. To provide an
independent investigation for abuse of dominance, CCI is having an investigating
wing under the Director General.79 Upon receiving the information and on prima facie
finding under section 26(1) of the Act directs the Director General to initiate the
investigation in to the allegation made. After completion of the investigation the
Director General sends the report to the commission for adjudication.

Information alleging abuse of dominant position is to be filed under Section

19(1) (a), wherein, any person, consumer or their association or trade union can file
information alleging abuse of Dominant Position by any enterprise or group.

For filing of information the Information must contain:

78
Competition Act, 2002
79
Section 16, Competition Act 2002

54
 ➢ Particulars of the Informant
➢ Name of the Person against whom the Information is filed
➢ Details of fee paid in accordance with Regulation 49 of CCI (General)
Regulation, 2009
➢ Introduction / brief of the facts giving rise of the Information
➢ Jurisdiction of CCI
➢ Details of alleged contravention of the Competition Act
➢ Detailed facts of the case
➢ Interim relief sought

If Commission is of the opinion that there is no prima facie case in the

information, then, the Commission will call Informant for hearing. If they are
satisfied then may take a view otherwise, else, will pass order under Section 26(2) and
close the issue and send a copy of the order to the parties concerned. If the report of
the Director General clearly specifies that there is an abuse of the Dominant Position
by Once the Commission is of the opinion that there is prima facie case of abuse of
Dominant Position then Commission passes order under Section 26(1) directing the
Director General to cause investigation to be made into the allegation.

Where the Commission, during an inquiry, has, by an order, temporarily

restrained any party from carrying on any act in contravention of sub-section (1) of
Section 3 or sub-section (1) of Section 4 of the Act, until the conclusion of such inquiry
or until further orders, under Section 33 of the Act, such order, if any, shall be signed
and dated by the Members, including a dissenting note by the dissenting Member, if
that be the case, and shall be made at the earliest.80

2.3.9 Regulation of Combinations

With the merger regulations attracting so much controversy and comments, it is

fitting that the substantive analysis of the Act begins with merger review.
Interestingly, the Act does not specifically define ‘merger’ or ‘amalgamation’
and hence these are to be understood in the general sense. However, the Act sets out
thresholds in respect of combinations (which include mergers). These thresholds are
criteria for identifying mergers which are relevant for and open to scrutiny under the

80
Regulation 31 of the CCI (General) Regulation

55
Act. 81Section 5, which deals with the regulation of combinations, inter alia specifies
that the “merger or amalgamation of enterprises shall be a combination of such
enterprises and persons, if

1)The enterprise remaining after merger or the enterprise created as a

result of the amalgamation , as the case may be, have,-

a) either in India, the assets of the value of more than Rupees Ten Billion or
turnover of more than Rupees Thirty Billion; or

b) In India or outside India, in aggregate, the assets of the value of more than
fivehundred million US dollars, including, at least Rupees Five Billion in
India, or turnover more than Fifteen Hundred Million US dollars, including
at least Rupees Fifteen Billion in India; or

2)The group to which the enterprise remaining after the merger or the
enterprise created as a result of the amalgamation would belong after the
merger or the amalgamation, as the case may be, have or would have,-

a) either in India, the assets of the value of more than Rupees Forty Billion
or turnover of more than Rupees One Hundred and Twenty Billion; or

b) In India or outside India, in aggregate, the assets of the value of more

than Two billion US dollars, including, at least Rupees Five Billion in India, or
turnover more than Six Billion US dollars, including at least Rupees Fifteen
Billion in India.”82

The applicable test which triggers action by the Commission under the Act is
the AAE test, as is specified in Section 6 of the Act. Any combination (which inter alia
includes a merger) which causes or is likely to cause an AAE on competition within the
relevant market in India is prohibited, and such a combination shall be void. 83 To
determine as to whether a combination would have the effect of or is likely to have an
AAE on competition in the relevant market, the following factors have been outlined
under section 20(4) of the Act for the consideration of the Commission:

81
Section 5, of the Competition Act,2002
82
Competition Act,2002
83
Section 6,of the Competition Act,2002

56
 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 AAE on competition;
n. whether the benefits of the combination outweigh the adverse impact of the
combination, if any.”84

2.3.10 Meaning of Combination

Broadly, combination under the Act means “acquisition of control, shares,

voting rights or assets, acquisition of control by a person over an enterprise where such
person has direct or indirect control over another enterprise engaged in competing
businesses, and mergers and amalgamations between or amongst enterprises” when the
combining parties exceed the thresholds set in the Act. The thresholds are stated in the
Act in reference “to assets or turnover in India and outside

India -

i. Horizontal combinations are those that are between rivals and are most likely
to cause AAE on competition.

84
Section 6, of the Competition Act,2002.

57
 ii. Vertical combinations are those that are between enterprises that are at
different stages of the production chain and are less likely to cause AAE on
competition.
iii. Conglomerate combinations are those that are between enterprises not in the
same line of business or in the same relevant market and are least likely to
cause AAE on competition.”85

“The combination under the Act is usually expected to take place before it
comes into effect with an idea of preventing a possible anti-competitive behaviour
which may adversely affect the consumers. Combinations likely to have an
anticompetitive effect can be permitted after such effects are removed by
modifications.”

2.3.11 Thresholds for Combinations under the Act

The current thresholds for the combined assets/turnover of the combining parties
are as follows:

i. Individual: “Either combined assets of the enterprises are more than 1,500 crores
in India or the combined turnover of the enterprise is more than 4,500 crores in
India. In case either or both of the enterprises have assets/ turnover outside India
also, then the combined assets of the enterprises are more than US$ 750 million,
including at least 750 crores in India, or turnover is more than US$ 2250 million,
including at least 2,250 crores in India.”86

ii. Group: “The group to which the enterprise whose control, shares, assets or
voting rights are being acquired would belong after the acquisition or the group to
which the enterprise remaining the merger or amalgamation wouldbelong has
either asset of more than 6000 crores in India or turnover more than 18000 crores
in India. Where the group has presence in India as well as outside India then the
group has assets more than US$ 3 billion including at least 750 crores in India or
turnover more than US$ 9 billion including at least 2250 crores in India –

85
Introduction to Competition Law, Competition Commission of India available at
https://www.cci.gov.in
86
Section 5, The Competition Act, 2002, also available at www.cci.gov.in

58
 a. The term Group has been explained in the Act. Two enterprises belong to a
Group if one is in position to exercises at least 26 per cent voting rights or
appoint at least 50 per cent of the directors or controls the management or
affairs in the others. The government has exempted Group exercising less
than fifty per cent of voting rights in other enterprise from the provisions of
section 5 of the Act for a period of five years.

b. In exercise of the powers conferred by the Competition Act, 2002, the

Central Government, in public interest, exempts an enterprise, whose
control, shares, voting rights or assets are being acquired has either assets
of the value of not more than 250 crores in India or turnover of not more
than 750 crores in India from the provisions of section 5 of the said Act for
a period of five years.”87

2.3.12 Directions of the CCI

Considering, “the facts on record and the details provided in the notice, the
Commission is of the opinion that the proposed combination is not likely to have AAE
on competition in India and therefore, the Commission hereby approves the same.” It is
however to be noted, that the Commission is granting the present approval, under
Section 31(1) of the Act, and that “such approval is being granted, pursuant to the
underlying competition assessment, based upon the information / details provided by
the parties. This approval should not be construed as immunity in any manner from
subsequent proceedings before the Commission for violations of other provisions of the
Act. This order shall stand revoked if, at any time, the information provided by the
parties is found to be incorrect, e.g. Combination Tata Steel & Corus Group.”88

2.3.13 Procedural Details

Prior to the 2007 amendments, the merger regime relied on voluntary

notification. However, the combinations which meet the aforementioned thresholds
have to now mandatorily notify the Commission. This change in policy may well avoid
dissolution of completed mergers as in Whole Foods89.
87
Section 5, Competition Act, 2002, also available at www.cci.gov.in
88
Available at - https://www.slideshare.net/Narayan92/competition-act-2002-54368706
89
FTC v. Whole Foods Market, Inc., 533 F.3d 869 (D.C. Cir. 2008)

59
 In the present dispensation under the Act, any person or enterprise who or
which proposes to enter into a combination (which includes a merger) is required to
give notice to the Commission, disclosing details of the proposed combination within
thirty days of :-

i. the approval of the proposal relating to merger or amalgamation by the board

of directors of the enterprises concerned with such merger or amalgamation,
as the case may be; or
ii. the execution of any agreement or other document for acquisition, or the
acquiring of control.90

Once the notice has been given, the Commission examines the notice and forms
its prima facie opinion whether the combination has caused or is likely to cause an
AAE on competition in the relevant market in India, and on that basis takes further
action. If the Commission is prima facie of the opinion that the combination has caused
or is likely to cause an AAE on competition within the relevant market in India, it
issues a show cause notice to such combination to respond as to why the combination
should not be investigated. The Commission may also call for a report from the
Director General and then may direct the parties to the said combination to publish the
details of the combination for the knowledge and information of the public and persons
affected or likely to be affected by the combination. The Commission may invite
members of the public to file written objections to the combination and may also call
for additional information from the parties to the combination.

2.3.14 Certain Areas of Concern

Definition of Acquisition-Since the Act aims to regulate combinations; it even

covers in its ambit any acquisition by companies meeting the threshold requirements.
The definition of the “acquisition” under Section 2(a) of the Act is too wide covering
all acquisitions of shares, voting rights, assets or control irrespective of the ‘size’ of
such acquisitions. According to section 2(a), “acquisition means, directly or indirectly,
acquiring or agreeing to acquire— (i) shares, voting rights or assets of any enterprise;
or

90
Section 6(2), Competition Act, 2002

60
 (ii) control over management or control over assets of any enterprise.”91

2.3.15 Post Enquiry Measures

If the Commission decides that the combination does not or is not likely to
cause an AAE on competition, it shall, by order, approve the combination. However, if
the Commission is of the opinion that the combination has or is likely to have an AAE
on competition, it shall under Section 31 of the Act direct that the combination shall not
take place. The Commission may also propose suitable modification to the combination
to eliminate its adverse effects. The parties to the combination may submit amendment
to the modification proposed by the Commission and the Commission may or may not
agree with such amendment. If any person or enterprise fails to give notice of a
proposed combination to the Commission, then under Section 43A of the Act the
Commission shall impose on such person or enterprise a penalty which may extend to
one per cent of the total turnover or the assets, whichever is higher, of such a
combination. Section 42(2) provides that any person who commits breach of. or fails to
comply with, any obligation imposed on him under such direction, may be ordered by
the Commission to be detained in civil prison for a term not exceeding one year unless
in the meantime the Commission directs his release and he shall also be liable to a
penalty not exceeding rupees ten lakhs.

2.3.16 Penalties under the Act

An analysis for the effectiveness of the Act is also necessary and this can be
seen only from the penalties which are allotted to the various contraventions under the
Competition Act, 2002. The Act penalizes for various contraventions. Following table
shows various penalties that can be imposed for various contraventions:
Contravention Penalty Section

Non - Compliance of order of Fine up to Rs. 1 lakh for each day Section 42(2)
Commission of non-compliance subject to
maximum Rs. 10 crore.

Non-Compliance of orders of Imprisonment up to 3 year Section 42(3)

Commission under Section 42(2)

91
Competition Act, 2002

61
 Failure to comply with the Fine up to Rs. 10 lakh for each day Section 42
directions of Commission under of non-compliance subject to
Section 36 or with direction of maximum Rs. 10 crore
Director General under section
41

Non-furnishing information on Penalty up to 1 percent of the Section 43A

Combination turnover or the assets whichever
is higher

Making false statement Minimum fine of Rs. 50 lakhs Section 44

which may extend to Rs. 1 crore

Furnishing wrong information Fine up to Rs. 1 crore Section 45

or omitting to disclose material
information

2.3.17 Proposed Amendments in Competition Act

A Competition (Amendment) Bill, 2022 was introduced in Lok Sabha on

August 5,2022. Key features of the Bill include :-92

Regulation of combination based on transaction value:- the act prohibits any

person or enterprise from entering into a combination. the prohibition applies to
transactions where parties involved have:(1) cumulative assets of more than Rs 1,000
crore ,or (2) cumulative turnover of more than Rs 3,000 crore, subject to certain
conditions.The bill expands the definition of combinations to include transactions
with the value of above Rs.2,000 crore.

Definition of control for classification of combination:- The Bill modifies the

definition of control as the ability to exercise material influence over the management
,affairs or strategic commercial decision.

Time limit for approval of combination:- the Bill reduces the time limit in the
latter case to 150 days, presently this is 210 days.

Anti-competitive agreement:- The Bill adds that enterprises or persons not

engaged in identical or similar businesses shall be presumed to be part of such
agreements, if they actively participates in the furtherance of such agreements.
92
www.prsindia.org

62
 Settlement and Commitment in anti-competitive proceedings:- The Bill
permits CCI to close inquiry proceedings if the enterprises offers:- (i) settlement (may
involved payment) or, (ii) commitments (may be structural or behavioural in nature).
The manner and implementation of settlement and commitment may be specified by
CCI through regulations.

Relevant product market:-The Act defines relevant product market as product

and services which are considered substitutable by the consumer. The Bill widens the
power to production or supply of products an d services considered substitutable by
the suppliers.

Appointment of Director General:- The Acts empowers the central

government to appoint a Director General to CCI. The Director General assists in
conducting inquiries in to contraventions of any provisions of the Act. The Bill
amends this to empower the CCI to appoint the Director General, with prior approval
of the government.

Qualifications of members of CCI:- The act provides ,the Chairperson and

members of CCI should have professional experience of at least 15years in field such
as (i) economics (ii)competition matters (iii) law (iv)managements or (v)business. The
Bill expands this to include experience in the field of technology.

Decriminalisation of certain offences:- The Bill change the nature of

punishment for certain offences from imposition of fine to penalty. These offences
includes failure to comply with order of CCI and directions of Director General with
regard to anti-competitive agreement and abuse of dominant position.

2.3.18 Regulations under Competition Act

The Government from time to time has enacted various rules and regulations on
different aspects Competition Act. These regulations generally provide for authoritative
rules that are meant to be followed by the bodies so constituted under the Act (i.e.
Competition Commission of India and Competition Appellate Tribunal) and by the
members of such bodies.

Some of the important rules and regulations so enacted by the Government are
enlisted hereunder:

63
 ➢ “Competition Commission of India (Oath of Office and of Secrecy for
Chairperson and other Members) Rules, 2003”:

These rules provide the manner in which oath of office of Chairperson and
Members of commission is to be obtained and it also provides for procedure for
maintaining secrecy of office by such persons.

➢ “Competition Commission of India (Return on Measures for the promotion of

Competition Advocacy, awareness and training on Competition Issues) Rules,
2008”:

These rules have been enacted for making it compulsory for theCommission to
file a return of all the measures and actions taken by the Commission during a year to
promote Competition advocacy, awareness and capacity building in competition
matters. Such return has to be submitted to the Central government.

➢ “The Competition Commission of India (Manner of Recovery of Monetary

Penalty) Regulations, 2011”:

The regulation deals with the manner in which the penalty soimposed by
Commission can be recovered from the parties.

➢ “Competition Commission of India (Procedure in regard to the transaction of

business relating to combination) Regulation 2011”:

The procedure with regard to transaction of business of combinations, form of

notice of proposed combination, mode of making fee payment, procedure of filing
notice of merger etc. are dealt in this regulation.

➢ “The Competition Commission of India (General) Regulations, 2009”:

The general powers of Commission, contents and form of reference to the

commission. Procedure for investigation by Director General. Detailed provisions with
regard to taking of evidence and imposition of penalty are enumerated under this
Regulation.

➢ “The Competition Commission of India (Procedure for Engagement of Experts

and Professionals) Regulations, 2009”:

64
 Commission has the authority to engage experts and professionals in different
fields related to competition. This regulation provides for the functions, qualification,
experience as well as the procedure for selecting such expert and professionals.

2.3.19 World Trade Organisation Competition Policies and Indian Compliance

The Competition Act, 2002 is already compliant with the World Trade
Organisation competition policies, which focus mainly on three types of anti
competitive behaviour. The first being anti competitive agreements, next the abuse of
dominance and third being the regulation of combinations. The Indian competition
regime and the Competition Commission of India have dealt extensively in this area
and have imposed orders and penalties as the provisions of the Act.

2.4 Competition Law and Intellectual Property Rights

2.4.1 Objectives of Competition Laws and Intellectual Property Laws

The domain of operation of Competition law and Intellectual Property Rights

(IPRs) is different from each other, having different scope of application. On one hand
intellectual property laws provide exclusive controlling rights to the owner,
competition/ anti-trust laws on the other hand make provisions for promoting
competition and equal access to market for all.However, there exists certain kind of
relation between the two laws. Such relationship between Competition Law and
Intellectual property rights (IPRs) is often construed as conflicting in nature. IPRs
mainly include patents, designs, copyright, trademarks and other similar kind of.

As the main objective of both the laws is to improve efficiency and promote
consumer welfare in long run, both anti-trust and IP law can operate in parallel regimes.
It is commonly a widespread misconception that Competition law has conflicting goals
with IPR laws. Such fallacy has emerged from traditional impression behind the subject
matter of two arenas without deep investigation of their background.

IPRs are generally granted for different purposes in different areas. One of such
reason is that they may encourage various kinds on investment. Patents may be justified
on the ground that without the prospect of an exclusive right, few firms would invest
large resources in research and development (R&D). There would be no incentive to

65
perform the original R&D if others could take free ride on it. 93 Secondly, IPs like
Trademarks encourage the holder to invest in the reputation of the product as
consumers will be able to identify it by reference to the trademark. Thirdly, IPs in form
of Copyright gives effect to the right to exploit fruits on one’s own artistic endeavour
and to restrain conduct that might harm artists’ reputation.

Analyzing the domain of IPR in sense of reward theory i.e. reward to the
inventor, crystallize the endless conflict between IP law and Competition law. 94Such
focus on protection of individual rights leads to conflict between protections of
personal interest with interest of public at large.

2.4.2 Competition and IPR Relationship

The relationship between competition law and IPRs policy used to be

mistakenly described as a pure apposition or sheer contradiction in the past. Basically,
IPRs assign “boundaries within which competitors may exercise legal exclusivity
(monopolies) over their innovation therefore, in principle, create market power by
restricting static competition in order to promote investments in dynamic competition.
IPRs are, therefore, at first sight, seen not in accordance with the principles of stable
market access and level playing fields sought by competition rules, in particular the
restrictions on horizontal and vertical covenants, or on the abuse of dominant
positions.”95 This is, however, not necessarily the case. Empirically, it has been
observed that IPRs, while ascertaining the exclusion of rival firms from the exploitation
of protected technologies and derived products and processes, do not necessarily give
their holders with market power. In fact, there often exist various technologies, which
can be considered potential substitutes to confer effective constraints to the potential
monopoly-type conduct of IPRs holders.
The present competitive market is a transition from manufacture of and trade in
homogeneous natural goods to a highly diversified and artificially tangible or intangible
goods. Similarly, competition has changed from rivalry by production and natural
imitation to a scientific process of systematic creation and innovation.
93
Valentine Korah, ‘Competition Law and Intellectual Property Rights’, in VinodDhall,
‘Competition Law Today: Concepts, issues and Challenges’, (Oxford University Press, New Delhi 2007,
p.130)
94
VK Ahuja, Intellectual Property Laws in India, (Vol. I, 2012, p. 67)
95
Alice Pharm, ‘Competition Law and Intellectual Property Rights: Controlling Abuse or Abusing
Control,’ (CUTS International, Jaipur, (2008), p. 16)

66
2.4.3 Laws on Competition and IPR interface in Different Jurisdictions

2.4.3.1 US Antitrust and IPR Regime

Antitrust law in general and the Sherman Act in particular are considered as the
‘Magna Carta’ of free enterprise in US. They are as important for the preservation of
economic liberty and free enterprise system as the ‘Bill of Rights’ is for the protection
of fundamental personal freedoms in US.’96

The conflict of IPR and competition law is not specifically dealt under the
antitrust legislation of United States. There also the traditional view relating to IPRwas
that IP laws were the key to monopolies, which were adverse to the Anti-trust practices.
However, with progress of both competition law and Intellectual property law, a long
time debate has been started regarding granting immunity to IPR under the domain of
antitrust laws. “With emergence of jurisprudence in the field of IPR, there has been a
tilt towards the view that IPRs permit consumers to exercise their freedom to replace
products and technologies with other products and technologies available in the market.
The Department of Justice (DoJ) and other authorities have analyzed the disputative
issue very closely and have inferred that presence of IPR does not necessarily amounts
to abuse of dominant position or creation of monopolies.”97
2.4.3.2 State of Affairs in EU

The Rome Treaty that established European Economic Community (EEC) and
presently European Union (EU) was meant for promoting competition in the market. 98
Article 81 and 82 of the treaty deals with the competition provisions, which governs the
potential use and abuse of intellectual property rights. Article 81 bars agreement that
adversely affects trade between member states through restriction of competition.
Article on the other hand makes prohibition of abuse of dominant position in the
market. 99The Council Regulation 17, enforced in 1962, which implemented Article 81
and 82 was replaced by Council Regulation 1/2003.100These new Council Regulations
introduced two important Articles, namely Articles 101 and 102 respectively.
96
KD Raju, ‘Interface between Competition law and Intellectual Property Rights: A Comparative Study
of the US, EU and India’, Intel Prop Rights 2 115, doi:10.4172/ipr.1000115
97
Illinois Tool Works Inc. v. Independent Ink, Inc. 547 U.S. 28 (2006)
98
Treaty on Functioning of European Union, 1957
99
KD Raju, ‘Interface between Competition law and Intellectual Property Rights: A Comparative Study
of the US, EU and India’, Intel Prop Rights 2 115, doi:10.4172/ipr.1000115
100
EC Council Regulation No. 1/2003 of 16th December 2002

67
 Articles 101 and 102 recognize the fact that competition plays the role of setting
basic mechanism of market economy and works as an encouragement for the
companies to produce goods as per consumer needs.

2.4.3.3 IPR in Indian Competition Law

In India, the Competition regime namely, the Competition Act, 2002 deals with
the provision relating to IPR and Competition law issues under Section 3 and Section 4
of the Act. As discussed in previous chapters Section 3 of the Act deals with the anti-
competitive agreements to IPRs. Sub section (5) to Section 3 provides for reasonable
exceptions to anti-competitive agreements, which relates to laws relating to IPRs. It
states that: constitute abuse of a dominant position, but that the exercise of an exclusive
right by the proprietor may, in exceptional circumstances, involve an abuse”

2.4.3.4 Provisions of IPR in Indian Competition Law

In India, the Competition regime namely, the Competition Act, 2002 deals with
the provision relating to IPR and Competition law issues under Section 3 and Section 4
of the Act. As discussed in previous chapters Section 3 of the Act deals with the anti-
competitive agreements to IPRs. Sub section (5) to Section 3 provides for reasonable
exceptions to anti-competitive agreements, which relates to laws relating to IPRs. It
states that: “Nothing Contained in this section shall restrict-

A.The right of any person to restrain any infringement of or to impose reasonable

conditions, as may be necessary for protecting any of his rights which have
been or may be conferred upon him under:

(a)The Copyright Act, 1957 (14 of 1957)

(b)The Patents Act, 1970 (39 of 1970)

(c)The Trade and Merchandise Marks Act, 1958 (43 of 1958) or the
Trade Marks Act, 1999 (47 of 1999)
(d)The Geographical Indications of Goods (Registration and Protection)
Act, 1999 (48 of 1999)
(e)The Designs Act, 2000 (16 of 200)

68
 (f) The Semi-conductor Integrated Circuits Layout-Designs Act, 2000 (37
of 2000).”

Section 3(5) of the Act talks about ‘reasonable conditions’ which are allowed for
the protection of IPR’s. This expression has not been defined or explained in the Act.
By implication, it means that unreasonable conditions relating to IPR will attract
application of Section 3.101 Similarly Section 4 of the Act does not expressly provide
for IPR-antitrust interface however, it provides a list of acts, which will amount to
abuse of dominant position which can also be acquired through IPRs. This section is
similar to that of Article 102 of TFEU and it prohibits abuses in the form of:102

(i) Directly or indirectly imposition of unfair or discriminatory conditions

related to prices.

(ii) Limits or restricts the production of goods and services or technical and
scientific development or access to market.

(iii) Concluding contracts by way of tying agreements.

Protection of one relevant market by using dominant position in other relevant

market. In VallalPeruman and Others v. Godfrey Phillips India Limited 103, the court
observed that –

“Trademark owner has the right to use the trademark reasonably. This right is
subject to terms and conditions imposed at the time of grant of trademark. But it does
not allow using the mark in any unreasonable way. In case, trademark owner abuses the
trademark by manipulation, distortion, contrivances etc., it will attract the action of
unfair trade practices.”
2.4.4 TRIPS on IPR-Competition Interface

TRIPS Agreement provides scope for the enforcement of competition law visà-
vis anticompetitive licensing practices and conditions. It provides various
“guidelines for the prevention of conflicts between the two regimes. The gist of
the same can be pinned down to three essential principles which are: It is up to the
101
‘Intellectual Property Rights under Competition Act, 2002’ Available at http://www.competition -
commission-india.nic.in/advocacy/Intellectual_property_rights.PDF
102
Section 4, Competition Act, 2002
103
(1995) 16 CLA 201

69
determination of each nation to reserve its own IPR-related competition policy. It is
required to have consistency between the TRIPs Agreement’s principles of IP
protection and national IPR-related competition policy.The focus is majorly
centeredtowards targeting those practices that are restricting the dissemination of
protected technologies.”104

The TRIPS agreement in its text comprehensively identifies the role of IPRs
and supporting character of competition laws and policies to avoid the conflict between
the two regimes. However, the non binding character of TRIPS agreement makes it a
mere facilitator rather than a regulator. Still, the objectives and principles of this
agreement provide a path for attaining the competitive balance among the two laws
which is required for facilitating innovation along with economic growth.

Article 6 of the TRIPS deals with an important aspect of exhaustion, “which

plays, a vital role under competition law. It deals with exhaustion of rights. It facilitates
the balancing of rights, duties and liabilities under the two domains.”105

Article 8.2 deals with other aspects of objectives and principles enumerated
under the TRIPS Agreement. It specifies that:

“Appropriate measures, provided that they are consistent with the provisions of
this Agreement, may be needed to prevent the abuse of intellectual property rights by
right holders.”

This article is of much importance from the perspective of developing nations as

it alleviates developing nations in justifying their provisions and stand in competition
law on matters for which no specific mention has been made under the agreement for
example abuse of dominant position in the relevant market and IPR.

Article 40 of TRIPS is the foundation of the competition-IPR interface and it

helps in providing flexibilities to the developing nations. It has provisions like “code of
conduct for transfer of technology for the developing nations and equitable principles
for regulating anti-competitive and restrictive practices that were adopted by the UN
General Assembly in 1980”. Further, Article 7 acts as “a guiding principle for

104
RuchiVerma, Shanya, ‘Clash between Intellectual Property Law and Competition Law: Critical
Analysis’, RGNUL Sttudent Law Review, Vol. 1 Issue 1, 2013, p. 155
105
Article 6, TRIPS

70
interpreting the provisions pertaining to IPR and competition law under TRIPS.”
Article 31(k) also acts as a strong provision to counterbalance the adverse effect of IPR
on competition law.

2.4.5 Conclusion

It is indisputable fact that innovation is important for the survival of business in

the era of cut throat competition. Such innovation is protected by providing exclusive
rights to the inventor or to the creator of such IP.
From the above stated observations, it can be evidently concluded that both
intellectual property law and competition law are playing complementary role for each
other. Both these laws are thriving towards the achievement of an ultimate goal of
promotion and protection of consumer welfare. Intellectual properties promote
competitions in markets which ultimately promotes more innovations. Competition law
interferes in the domain of IP laws only when the holder of IP uses his dominant
position in such a way that affects competition adversely. While developed countries
like US and UK have established this IPR-Competition law interface through various
regulations, treaties and judicial pronouncements, Indian law is still in the stage of
infancy in regards to these controversial matters.

Both IPR and Competition law is in a dynamic state of progression. New

scenarios in both domains would lead to new measures of control. Continuous research
and active observations of respective authorities is inevitable to maintain harmony and
efficacy of both laws.

2.5 Extraterritoriality

2.5.1 Extraterritoriality and Indian Perspective

With the advent of globalization in the commercial sector, activities of business

and trade became a borderless affair. Expansion of domestic companies at multinational
level, investment of foreign investors in the markets of other countries etc. became a
reality by the end of 1980s. But just like the other side of the coin the boon of access to
international market came with the bane of rise in anticompetitive practices by
multinational corporations in the greed of making more profits by creating a virtual
monopoly. Cases of International cartels involving world renowned entities like the

71
Vitamins case106 of 1999 in which eight vitamins manufacturing companies of the
world entered into agreements for charging high prices for vitamins powders affecting
direct and indirect purchasers of many countries or the Air Cargo Case 107 of 2010 where
11 air cargo carrier companies were charged with a fine of Euros 799 million for fixing
fuel and security charges had an impact on several nations including US and European
countries. Another such example of international cartel involving several oil producing
nations joining hands together for controlling and regulating the prices of crude oil in
international market is the OPEC Oil Cartel.108
Every country has some sovereign powers which cannot be undermined or
interfered by any other nation. Enactment and enforcement of laws in one’s own
territory is one of such sovereign power. So one of the major constraints in the
application of competition law or rules, extraterritorially on an undertaking in the
territory of some other nation is the sovereign immunity of such another country. Apart
from sovereign immunity, political and legal constraints also stand as barriers in
successful implementation of domestic competition laws at international level.
Every state has virtual supremacy over its own territory. This supremacy
includes the power of state to make laws affecting its subject in a defined framework of
operation which in other words is known as its jurisdiction. From international
perspective jurisdiction can be defined as a measure of the limits within which one state
may prescribe and enforce rules of law without violating or infringing the sovereignty
of another state.109 Jurisdiction extraterritorially under public international law provided
there is sufficient nexus between the state (regulating) and the object sought to be
regulated.110

The legitimacy of extraterritorial jurisdiction based on the offence having

occurred within the territory of a state has been recognized as a valid action by the
international court of justice in the Lotus Case111 where it was observed that:

106
Vitamins cartels OJ [2003] L 6/1, [2003] 4 CMLR 1030
107
[2010] EWCA Civ 1284
108
Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of
13 petroleum-exporting nations, founded in 1960

109
Boaz Barrack, The Application of the Competition Rules (antitrust law) of the European Economic
Community, Springer Science + Business Media, LLC, 1981
110
Van Gerven, ‘EC Jurisdiction in antitrust matters: The Woodpulp Judgment’, Annual Fordham
Corporate Law Quarterly 1989, p. 376
111
The Lotus P.C.I.J. Ser. A No. 9 (1927) on 23

72
 “…...it is certain that the courts of many countries, even of countries
which have given their criminal legislation a strictly territorial
character, interpret criminal law in the sense that the offences, the
authors of which at the moment of commission are in the territory of
another state, are nevertheless regarded as having been committed in
the international territory if one of the constituent elements of the
offence, and more specifically, its effects, have taken place there.”

Although the Lotus case was related to a criminal offence but this case opened
the field for debate on legality and limits of extraterritoriality in international law.

A state jurisdictional competence is categorized in two categories namely:

(i) Law making jurisdiction: This is also known as state’s subject matter
jurisdiction i.e. power of state to regulate the subject matter.

(ii) Law enforcing jurisdiction: This refers to the power of a state to enforce
or to give effect to general rules framed by adopting substantive implementing
measures which sometimes include coercion by the authorities.

2.5.2 Subject Matter Jurisdiction

The general principles that govern the subject matter jurisdiction of a state
emphasize on two things namely the state has the jurisdiction to make laws affecting
the conduct within its territory commonly known as the territoriality principle and
secondly, state can regulate the conduct of its citizens abroad which also includes
corporations incorporated under its laws. This principle is known as the nationality
principle. These principles are further explained in detail below.

➢Nationality Principle

As discussed above the nationality principle refers to the state to regulate the
conduct of it nationals irrespective of their territorial location. While for individuals,
nationality principle is applicable for almost every field of law, it is not the case in the

73
matter of companies. In other words nationality principle in case of companies is
applicable only for the cases of competition law.112

➢Territoriality Principle

This principle lays down that state has the sovereign power to govern the
conduct of persons, control of resources and regulate other acts within its territorial
limits without any external interference. However, with the emergence of globalization
and adoption of welfare character by the state, the territorial principle has not remained
much restrictive in its application. As a result the principle has been modified in further
two categories namely subjective territoriality which deals with the act originating in
the territorial limits of a nation and second version of this principle is known as
objective territoriality which relates to the act originating abroad but having impact on
the concerned nation. The objective territoriality forms the basis of ‘effects doctrine’
which was used by US courts in several decisions concerning extraterritorial
application of competition laws.113

➢Enforcement Jurisdiction

Exercise of the enforcement jurisdiction extraterritorially is the most conflicting

aspect of a sovereign power of a nation. As a general rule, even if the subject matter
jurisdiction is in existence in relation to the conduct of any subject in another state, the
enforcement of such power in another state’s territory without its consent is an act
against the sovereignty of such state.

Efforts in the past have been made to make arrangements for cooperation
among the authorities there are several provisions in various legal systems that provide
for assistance among states in different matters. One such example is the “Hague
Convention on the Taking of Evidence Abroad in Civil or Commercial Matters which
provides for one State to assist another in the gathering of evidence: this Convention is
given effect in UK law by the Evidence (Proceedings in Other Jurisdictions) Act 1975.”

2.5.3 Approaches of Different Nations over Extraterritorial Application of

112
Colin Warbrick, ‘Brownlie’s Principles of Public International Law: An Assessment’, European
Journal of International Law Vol. 11 (2000) p. 32
113
United States v Aluminium Co of America, 148 F 2d 416 (2nd Cir 1945)

74
Competition Law

During the 19th Century several nations adopted the ‘effects doctrine’
formulated by the US courts by way of enacting new laws or by modifying existing
laws for providing extraterritorial application to their respective domestic competition
laws. The various approaches adopted by the agencies of US, UK and EU are explained
here below.

➢Application of US Competition Law

Antitrust enforcement in United States began in 1890 with one of the most
significant act in Competition regime i.e. the Sherman Act. The most relevant
provisions of the Act are Section 1 and section 2. Section 1 deals with prohibition of
contracts, combinations and conspiracies which restrain trade, and prescribes for
imprisonment and fines for any such violation. Further Section 2 of the act provide for
actions against monopolization activities of trade or commerce among several states, or
with foreign nations. Later in 1914, Clayton Act came into force which extended the
antitrust jurisdiction of the competition authorities to cover mergers capable of
reducing competition. In the same year the Federal Trade Commission Act came into
existence that created an independent agency namely the federal trade commission for
regulating unfair trade practices and which shared joint responsibility with the
Department of Justice to enforce antitrust law in the United States. This act was
subsequently amended in the year 1982 which now provides for the extraterritorial
enforcement of Sherman Act on the basis of effects test.

At one time, the question of federal jurisdiction was terribly important to US

Competition law, with many leading cases turning whether a restraint sufficiently
affected international commerce. US courts initially looked up to the crux of the act to
decide legality, but the famous 1945 Alcoa opinion adopted the ‘effects doctrine test’,
which Stated that Agreements made abroad can violate the Sherman Act, if they were
114
intended to affect imports and did affect them. However, there was some
disagreement between US courts as to whether the effects on US commerce had to be
substantial.115

114
Stephen Calkins, ‘Competition Law in USA’, Taken from Vinod Dhall, Competition Law Today:
Issues, Concepts and Law in Practice, Oxford University Press, 2007, p. 410
115
Todhunter- Mitchell & Co Ltd v. Anheuser- Busch 383 F Supp 586 (ED Pa 1974)

75
 This concern was resolved by the Foreign Trade Antitrust Amendment Act
1982, which provides that the Sherman Act, 1890 does not apply to conduct involving
trade or commerce with foreign nations unless such conduct has a ‘direct, substantial
and foreseeable effect’ on trade or commerce in the US. 116 Although the test was
controversial at the time, in 1993 the Supreme Court in Hardford Fire Insurance Co.
v.California117observed that ‘it is well established by now that the Sherman Act
applies to foreign conduct that was meant to produce and did in fact produce some
substantial effect in the United States.’ The department of Justice/ Federal Trade
Commission Antitrust Enforcement Guidelines for International Operations of 1995
explained the principle on how the enforcement agencies interpret the jurisdictional
scope of US antitrust law in the light of various judgments.

Some US courts have the principle of comity in judicial matters and have
applied the effects doctrine in a restrictive manner. In many such cases the courts
required that the observance should not only be given to direct and substantial effects in
US, but also to the interest of other states which might get offended in the
extraterritorial assertion of US antitrust authorities in one way or another. 118In the year
1994 the US congress passed the International Antitrust Enforcement Assistance Act
which in intended to improve the ability of the US enforcement agencies to obtain
evidence located abroad by providing reciprocal agreements to be entered between the
US and other countries to facilitate the exchange of information, including confidential
information.

➢Application of EU Competition Law

European Competition Law today derives authority mostly from Articles

101109 of the Treaty on the Functioning of the European Union (TFEU). In the past,
many non- EU undertakings have been held to have infringed the EU competition rules.
On the question of applicability of ‘effects doctrine’ in EU laws, the Court of Justice of
EU has neither clearly accepted nor have ruled out its application. Article 101 and 102
of TFEU, jurisdiction of EU courts can be based on several grounds namely economic
entity doctrine or the fact that an agreement entered into outside the EU was
116
Section 7 of the Foreign Trade Antitrust (Amendment) Act 1982
117
(1993) 509 U.S. 764

118
Timberlane Lumber Co v Bank of America 549 F 2d 597 (9th Cir 1976) and Mannington Mills v
Congoleum Corp. 595 F 2d 1287 (3rd Cir 1979)

76
implemented within it.In several landmark cases, the question of applicability of effects
doctrine was came to be discussed but the pronouncement in such cases was made of
several other basis of jurisdiction119.

➢Economic Entity Theory

The definition of economic entity theory was proposed by the OECD committee
of Experts on Restrictive Business Practices. This theory was also known as the theory
of enterprise unity120.

“The theory of enterprise unity involves considering as a single

economic entity, and even though they have separate legal personalities,
enterprises belonging to the same group and thus subject to same
control…. The theory of enterprise unity is thus to be understood as an
example of the application of the behaviour principle, but should not
lead automatically imputing the subsidiary’s behaviour to the parent
nor to the denial of any independence of action on the part of the
subsidiaries, which have been established in the countries in which they
operate.”

The single economic entity theory was used by the Court of Justice in Dyestuffs
case121. This case is related to price fixing agreements by 10 dyestuffs manufacturers
including 4 German, 1 French, 3 Swiss, and 1 English company. The court came to the
conclusion that non-EU undertakings had participated in the price fixing agreements
within EU through their subsidiary companies located in EU. The court refused to
recognize independent legal personality of the subsidiary companies and held that the
subsidiaries were working under the control of the parent companies. This decision
attracted criticism by several countries but in EU it was accepted as a part of the
competition law. The consequence of the economic entity doctrine is that a claimant
may be able to bring actions in the English courts against a UK subsidiary of a foreign
parent that participated in a agreement contrary to Article 101 of TFEU. 122 The same
approach was adopted by the ECJ in Woodpulp case123where the court avoided
119
Dyestuffs and Wood Pulp case
120
OECD, Committee of Experts on Restrictive Business Practices of Multinational Enterprises, (1977)
121
Imperial Chemical Industries Ltd v Commission of European Community 48/69 [1972] E.C.R. 619
122
Provimi Ltd. v Aventis Animal Nutrition SA [2003] EWHC 961
123
OJ [1985]L85/1, [1985] 3 CMLR 474

77
explaining the application of effects doctrine and concluded that as the agreement was
implemented within EU so the Commission had the jurisdiction to impose penalty on
the basis of TFEU.
➢EU Merger Regulation (EUMR)

The EU Merger Regulations as adopted in 1989 provides for a mechanism for

the control of mergers and acquisitions. These regulations were revised in 2004 after a
wide range of consultation initiated in 2001. The current version came into force on
1stMay, 2004.

The EU Merger Regulation requires that any concentration with a community

dimension must be promptly notified to the commission and it is suspended effectively
for 3 weeks from the notification even if there is no adverse affect of such
concentration.124“The EU Merger Regulation has often been applied to mergers outside
the EU. The General Court has given an important judgment on the territorial
application of EUMR in Gencor v Commission.125” In this case the commission using
EUMR “prohibited a merger between South African undertakings on the grounds that
such merger would create a dominant duopoly in the platinum and rhodium markets, as
a result of which effective competition would be significantly hindered in the market.
Gencor filed an appeal in the General Court against the order of the commission and
raised objections against the jurisdiction of EUMR. General court upheld the decision
of the commission and ruled that the decision is qualified according to the Article 1(2)
of EUMR. Moreover, the court also adopted the decision of Woodpulp case and
observed that the commission had the jurisdiction for assertion outside the territory of
EU.”126
➢Application of UK Competition Law

As discussed, earlier UK being the biggest protester of the US ‘effects doctrine’

and the efforts made by the UK government in form of ‘blocking statutes’ makes it
clear that the jurisdiction for antitrust matters in UK cannot be based on the effects
doctrine. UK follows the traditional territoriality and Nationality principle for the
assessment of legitimate jurisdiction. There have been cases in the past where the UK
124
Article 1(2) of EU Merger Regulation.
125
T-102/96[1999] ECR II-753
126
Fox E., ‘The Merger Regulation and its Territorial Reach’, European Competition Law Review 334
(1999), p. 33

78
Government made submissions to the Court of Justice that it applies the above
mentioned two principles instead of effects doctrine for jurisdictional matters. This was
also illustrated in the Protection of Trading Interests Act, 1980.

The main acts dealing with competition regime in UK are here below:

•Competition Act, 1998 •Enterprise Act, 2002

2.5.4 Co-operation and Internationalization of Competition Law

From the aforesaid discussions it is clear that with the globalization of the world
economy the business related activities are no longer restricted to the boundaries of a
nation and as a consequence anti-competitive activities at international level have been
affecting the economies of the several nations at a time.

The concept of Cooperation among competition agencies of different nations

has a multi facet approach, which includes aspects like cooperating in law enforcement
issues or competition advocacy, design of competition laws and sometimes exchange of
experiences. As a matter of fact international cooperation among such agencies has
now become an inevitable need for any nations. Increasingly, competition cases involve
more than one competition law jurisdiction such as global cartels, cross border mergers
and abuse of dominance by multinational corporations. In such cases competition
authority may find itself unable to tackle the problem at domestic level. 127 Among
several other factors, the main reasons that have contributed for the need of cooperation
among competition agencies at international level can be inferred as follow:

(a)Globalization of the world economy has not only eroded the boundary barriers
among the nations for trade but also has given a breeding ground to anti-
competitive activities at multinational level which has a wider impact on several
countries at a time.

128
(b) Although after the emergence of ‘effects doctrine’ in US the
competition regimes of several nations have inserted provisions relating to
extraterritorial enforcement of competition laws but in reality, a legitimate

127
Vinod Dhall, ‘Overview: Key Concepts in competition law’, Competition Law Today: Issues,
Concepts and Law in Practice, (Oxford University Press, 2007, p. 30)
128
United States v. Aluminium Co. of America, 148 F.2d 416 (2d Cir. 1945)

79
 enforcement of such laws require a prior consent of the competition agency across
border in whose jurisdiction such act takes place.

(c) Laws governing the anti-competitive activities in different nations vary

according to social, political and economic culture of such nation. Hence, there
may be chances of conflict among competitive authorities of different countries on
several issues involving enforcement or investigation of cases. Such conflict can
be avoided either by way of a uniform policy for regulating competition law
international level or by a formal arrangement among countries drawn for the
purpose of facilitating International cooperation.

(d) Apart from above mentioned points, factors like lack of experience
among the authorities, rapid changes in technological and institutional structures of
businesses globally and criticism of competition authorities at the national level
also advocate for having an international cooperation among agencies for efficient
enforcement of competition laws.

2.5.5 Steps towards International Cooperation

The desired framework of international cooperation can be achieved by

different means. It can be done through bilateral or multilateral agreements among
nations. Although the preferred mode can be said to be the multilateral approach at
global and if not possible at regional level, however, several nations sometimes enter in
bilateral agreements for the purpose of inter-state cooperation in competition matters.

At Multilateral level several bodies have taken several initiatives to promote

competition and to facilitate International cooperation. Such initiatives are elaborated
here below: -

(I) UNCTAD

UNCTAD, which is governed by its 195 member States, is the United Nations
body responsible for dealing with development issues, particularly international trade –
the main driver of development. It offers direct technical assistance to developing
countries and countries with economies in transition, helping them to build the

80
capacities they need to become equitably integrated into the global economy and
improve the well-being of their populations.129

The UN set of Multilaterally Agreed Equitable Control of Restrictive Business

Practices adopted by general assembly in 1980 and accorded by UNCTAD is the only
multilateral agreement on competition policy to date which contains rules on
anticompetitive practices and structures and provides a cooperation framework within
developing and developed countries. However it is a non binding agreement which only
recommends certain general principles to member countries.130

Apart from the agreement UNCTAD has also provided for UN Model Law on
Competition which is based on the above-mentioned UN Set also provides for the
provisions related to relationship between competition authorities and regulatory bodies
including sector regulators in Chapter VII of the law. The commentary on Chapter VII
on the UN Model Law concludes that the relationship between competition authorities
and regulators is particularly relevant in industries such as public utilities or public
services, which require government intervention to secure universal services.131

(II) OECD

OECD is an organization whose mission is to promote policies that will

improve the economic and social well-being of people around the world. It provides a
forum in which governments can seek solutions to common problems and work
together to share experiences. In the field of competition law OECD has provided many
recommendations on many different aspects. With regard to International cooperation
in competition law the OECD Council on 16 September 2014 adopted a
Recommendation that calls for governments to foster their competition laws and
practices so as to promote further international co-operation among competition
authorities and to reduce the harm arising from anticompetitive practices and from
132
mergers with anticompetitive effects. The 2014 Recommendation concerning
129
http://unctad.org/en/Pages/AboutUs.aspx. Last accessed on 01/03/2016 at 8:30pm
130
http://unctad.org/en/Pages/DITC/CompetitionLaw/The-United-Nations-Set-of-Principles-on-
Competition.aspx Last Accessed on 01/10/2022 at 8:30 pm
131
Philip Lowe, Geraldine Emberger, ‘Competition Advocacy and Interface with Government’, In
VinodDhall, CompetitionLaw Today: Issues, Concepts and Law in Practice, (Oxford University Press,
2007 p. 238)
132
Available at http:/ /www.oecd.org/daf /competition /international–coop–competition– 2014–
recommendation.htm Last Accessed on 02/10/2022 at 9:00pm

81
International Co-operation on Competition Investigations and Proceedings replaces the
former 1995 OECD Council Recommendation and is a step forward in the fight against
anticompetitive practices.

The new recommendation of 2014 contains two sections that offer new and
particularly innovative solutions to the enforcing agencies:

(i) A section calling for the adoption of national provisions that allow
competition agencies to exchange confidential information without the need of
seeking prior consent from the source of the information (so called “information
gateways”).
(ii) Another section deals with enhanced co-operation in the form of
investigative assistance, including the possibility to execute dawn-raids
(inspections of premises), requests of information, witness testimonies, etc. on
behalf of another agency.

(III) ICN

A significant contribution to the argument on the next international competition

policy was the “Final Report of the International Competition Policy Advisory
Committee to the US Attorney General and Assistant Attorney General for
Antitrust” (the so-called ‘ICPAC Report’), published in February 2000. The
ICPAC Report led in October 2001, to the establishment of the International
Competition Network (ICN) as an international forum for competition law and policy.
The ICN is “an informal, virtual network that seeks to assist cooperation between
competition authorities and to encourage procedural and substantive convergence of
competition laws; a Steering Group oversees the conduct of its business. The ICN’s
work is complementary to that of other international organisations such as UNCTAD
and the OECD. Membership is open to national and multinational organisations
responsible for the enforcement of competition law. The ICN seeks advice and
contributions from the private sector and from non-governmental organisations
involved in the application of competition law.”

In 2010 the ICN published a “Statement of Achievements recording (inter alia) a

remarkable degree of voluntary convergence in the handling of international mergers

82
and the ‘fight against cartels’, in particular through the refinement of practical
enforcement techniques. A further achievement has been the number of ICN
recommendations that have led to ‘soft harmonisation’ in the form of legislative
changes in numerous jurisdictions.”

The principle of extraterritorial application competition regimes has become a

controversial though necessary aspect of today’s economy. With anticompetitive
activities taking place at global level, the measures to control such activities have also
to be seen from global perspective. The ‘effects doctrine’ as laid down by the US courts
can be termed as the first step toward such approach. Although being face with
criticism in the initial years this doctrine is now being accepted as a universal principle
(either directly or indirectly) for the assertion of jurisdiction in the territory of another
nation Apart from this, efforts at national, regional and global level to achieve a
cooperative environment for investigation of anti competitive affairs have given a new
dimension to the regulatory mechanism in controlling cross border anticompetitive
activities. Much has been done and much more has to be done to attain an efficient
international antitrust control system that would work in harmony with the interest of
both developing as well as developed nations. Such an issue can be resolved by
establishing a global level organization which will not only provide uniform code of
procedure for handling cross border competition law cases but can also help in
restricting international anti-competitive activities at a significant level.

83
Chapter 3

Competition Commission of India (CCI): Role and

Functions

CHAPTER 3

COMPETITION COMMISSION OF INDIA (CCI):

ROLE AND FUNCTIONS

84
 3.1 Role and Effectiveness of CCI

Administration and the enforcement of the competition law require an

administrative set up. The Competition Act, 2002 provides for the establishment of
Competition Commission of India133; its composition134; selection of its Chairperson
and other members135, the term of their office136, their resignation, removal and
suspension137, restriction on their employment after they cease to hold office 138
, their
salary and allowances and other terms and conditions 139. Section 13 empowers the
chairperson to have general superintendence, direction and control in respect of
administrative matters.
Section 15 provides that “no act or proceeding of the Commission shall be
invalid for the reason of any vacancy or defect in the appointment of a personas
chairperson or other member or irregularity in the procedure of the Commission”.
Section 16 deals with the appointment of Director General, etc.; and Section 17, with
secretary, and other staff.

The Competition Appellate Tribunal is a statutory organisation 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 under sub-sections (2) and (6) of Section 26, Section 27, Section
28, Section 31, Section 32, Section 33, Section 38, Section 39, Section 43, Section
43A, Section 44,
Section 45 or Section 46 of the Competition Act, 2002. The Appellate
Tribunal shall also
adjudicate on claim for compensation that may arise from the findings of the
Competition Commission of India or the orders of the Appellate Tribunal in an appeal
against any findings of the Competition Commission of India or under Section 42A or
under subsection (2) of Section 53Q of the Act and pass orders for the recovery of
compensation under Section 53N of the Act.”

133
Section 7, Competition Act, 2002
134
Section 8, Competition Act, 2002
135
Section 9, Competition Act, 2002
136
Section 10, Competition Act, 2002
137
Section 11, Competition Act, 2002
138
Section 12, Competition Act, 2002
139
Section 14, Competition Act, 2002

85
 The Appellate Tribunal was set up by the Central Government on 15 th May,
2009 with its Headquarter at New Delhi. The First Chairperson of the Appellate
Tribunal was Hon’ble Dr. Justice Arijit Pasayat, former Judge of Supreme Court.

The new competition law provided for a competition law authority to be nown
as CCI who shall deal with the administration and enforcement of competition law in
the country. Although CCI was a new body, but it’s preliminary structure could not
depart from that of its predecessor, the MRTP Commission. The major difference was
that unlike the MRTP Commission, which was a unitary tribunal, the CCI would
exercise its powers through its benches. CCI is not a toothless body as it can enforce
its directions and if the parties do not comply with its directions and of Director
General, then it has the power to impose penalty by virtue of Section 27and Section
28 of the Act.140

Section 27 – Orders by Commission after inquiry into agreements or abuse of

dominant position:

“Where after inquiry the Commission finds that any agreement referred to in section 3
or action of an enterprise in a dominant position, is in contravention of section 3 or
section 4, as the case may be, it may pass all or any of the following orders, namely:
—

a. direct any enterprise or association of enterprises or person or association of

persons, as the case may be, involved in such agreement, or abuse of dominant
position, to discontinue and not to re-enter such agreement or discontinue such
abuse of dominant position, as the case may be;

b. impose such penalty, as it may deem fit which shall be not more than ten per
cent. of the average of the turnover for the last three preceding financial years,
upon each of such person or enterprises which are parties to such agreements
or abuse:

140
Shikha Chauhan, Role of Competition Commission of India: A Critical Study of the Competition
Commission of India under Competition Act 2002, (LAP Lambert Academic Publishing, London,
2012.)

86
 Provided that in case any agreement referred to in section 3 has been entered
into by a cartel, the Commission may impose upon each producer, seller, distributor,
trader or service provider included in that cartel, a penalty of up to three times of its
profit for each year of the continuance of such agreement or ten per cent of its
turnover for each year of the continuance of such agreement, whichever is higher.

(a) Omitted by Competition (Amendment) Act, 2007.

(b) direct that the agreements shall stand modified to the extent and in the manner
as may be specified in the order by the Commission;

(c) direct the enterprises concerned to abide by such other orders as the
Commission may pass and comply with the directions, including payment of
costs, if any:;

(d) Omitted by Competition (Amendment) Act, 2007.

(e) pass such other order or issue such directions as it may deem fit.

Provided that while passing orders under this section, if the Commission
comes to a finding, that an enterprise in contravention to section 3 or section 4 of the
Act is a member of a group as defined in clause(b) of the Explanation to section 5 of
the Act, and other members of such a group are also responsible for, or have
contributed to, such a contravention, then it may pass orders, under this section,
against such members of the group.”141

3.1.1 Competition Commission of India (CCI)

An administrative set up is required for the administration and enforcement of

the competition law. Such an administrative set up should take a proactive stand and
be favourable for the administration of competitive policy, enabling free and fair
competition.

The CCI has been entrusted with the following essential objectives:

➢ “Administration and enforcement of competition law and competition

policy to enable economic efficiency and consumer welfare.

141
Competition Act, 2002

87
 ➢ Involvement proactively in government policy formulation to ensure that
markets remain fair, free open flexible and adaptable.”

3.1.2 Principles of CCI

“CCI is being guided by the following principles in its approach to its

work-

➢ To be in line with markets; have good understanding of market forces.

➢ To minimize costs of compliance by enterprises and cost of enforcement by
commission.
➢ To maintain confidentiality of business information; to maintain transparency
in
Commission’s own operation.
➢ To maintain a consultative approach.
➢ To be a professional body, equipped with requisite skills.”142

3.1.3 General Provisions Regarding CCI

Section 7 to Section 17 under Chapter III deals with the general provisions
regarding the Competition Commission of India.

Establishment of CCI

The CCI should be a body corporate having perpetual succession and a

common seal with power to acquire, hold and dispose of movable and immovable
property. However, the place of head office of the Commission should be decided by
the Central Government from time to time. Notably, the Commission can establish
offices at other place in India.

142
Competition Act, 2002

88
 Composition of CCI

According to Section 8(1), the CCI shall consist of a Chairperson and not less
than two, but not more than six other Members to preside the proceedings. It is to be
noted that the Chairperson and the members shall be appointed by the Central
Government.

In terms of Section 8(2), the Chairperson and every Member shall “be a person
of aability, integrity, having special knowledge and 15 years of professional
experience in international trade, economics, business, commerce, law, finance,
accountancy, management industry, public affairs or competition matters including
the competition law and policy which is in opinion of the Central Government is
useful for the purpose of a fair competition in the relevant market.”143

Whole time employment

Section 8(3) makes it clear that the Chairperson and the Members of CCI will
be full time members.

Selection Committee for Chairperson and members of CCI144

As provided under Section 9 that the appointment of Chairperson and

Members of the CCI shall be made by the Central Government on the basis of names
in a panel and the recommendations made by the duly constituted selection
committee.

Composition of Selection Committee

In terms of Section 9, “the composition of selection committee shall be the

following:-

a. Chairperson: The Chief Justice of India or his nominee.

b. Members: Total four members-
➢ Member – Secretary, Ministry of Corporate Affairs,
➢ Member – Secretary, Ministry of Law and Justice,
143
Competition Act 2002
144
Subs. by Competition (Amendment) Act, 2007 for “Selection of Chairperson and other Members”

89
 ➢ Members – two experts of repute who have special knowledge of,
and professional experience in international trade, and as other
qualification prescribed in Section 8(2).”

In this regard, only the Chief Justice of India is empowered to nominate a

Chairperson if he/she is not in position to preside one, the proceeding of the Selection
Committee.

The manner in which the names and the term of the Selection Committee are
to be selected shall be laid down by the Central Government. Although, under Section
9(2) who shall lay down the said term and procedure/criteria of selecting names in a
panel is probably the Central Government, but it has not been expressly stated by the
Parliament.

Term of Office of Chairperson and Other Members

The Chairperson and other Members shall hold office for a term of five years.
However, no Chairperson or any other member shall head after he/she attains the age
of 65 years. In case, the Chairperson is not able to discharge his/her functions, the
senior most member shall perform the functions of the Chairman.

Resignation, Removal and Suspension of Chairperson and Other Members

According to section 11 of the Act, “The Chairperson or any other Member

may, by notice in writing under his hand addressed to the Central Government, resign
his office: provided that the Chairperson or a Member shall, unless he is permitted by
the
Central Government to relinquish his office sooner, continue to hold office
until the expiry of three months from the date of receipt of such notice or until a
person duly appointed as his successor enters upon his office or until the expiry of his
term of office, whichever is the earliest.”145

“Notwithstanding anything contained in sub-section (1) -the Central

Government may, by order, remove the Chairperson or any other Member from his
office if such Chairperson or Member, as the case may be,— (a) is, or at any time has

145
Section11(1), Competition Act, 2002

90
 been, adjudged as an insolvent; or (b) has engaged at any time, during his term of
office, in any paid employment; or (c) has been convicted of an offence which, in the
opinion of the Central Government, involves moral turpitude; or (d) has acquired such
financial or other interest as is likely to affect prejudicially his functions as a Member;
or (e) has so abused his position as to render his continuance in office prejudicial to
the public interest; or (f) has become physically or mentally incapable of acting as a
Member.”146

“Notwithstanding anything contained in sub-section (2) - no Member shall be

removed from his office on the ground specified in clause (d) or clause (e) of that
subsection unless the Supreme Court, on a reference being made to it in this behalf by
the Central Government, has, on an inquiry, held by it in accordance with such
procedure as may be prescribed in this behalf by the Supreme Court, reported that the
Member, ought on such ground or grounds to be removed.”147

Restriction on Employment of Chairperson and other Members in Certain Cases

“The Chairperson and other Members shall not, for a period of 2 years from
the date on which they cease to hold office, accept any employment in, or connected
with the management or administration of, any enterprise which has been a party to a
proceeding before the Commission under this Act.”148

Administrative Powers of Chairperson

“The Chairperson shall have the powers of general superintendence, direction

and control in respect of all administrative matters of the Commission.”149

Salary and Allowances and other Terms and Conditions of Service of

Chairperson and other Members

This section declares that under terms and conditions of service of Chairperson
and other Members they shall be entitled to receive travelling costs, HRA and
conveyance, sumptuary allowance and medical expenses.
146
Section11(2), Competition Act, 2002
147
Section11(3), Competition Act, 2002
148
Section12, Competition Act, 2002
149
Section13, Competition Act, 2002

91
 Vacancy, not to invalidate proceedings of Commission

According to section 15, “no act or proceeding of the Commission shall be

invalid merely by reason of— (a) any vacancy in, or any defect in the constitution of,
the Commission; or (b) any defect in the appointment of a person acting as a
Chairperson or as a Member; or (c) any irregularity in the procedure of the
Commission not affecting the merits of the case.”150

Appointment of Director General, etc

The Central Government shall appoint a Director General with the object to
render assistance to the Commission in conducting inquiry into the matter violating
the provisions of this Act and for performing such other functions as are, or may be,
provided by or under this Act.

Appointment of Secretary, Experts, Professionals and Officers and other

Employees of Commission

While keeping the object regarding functioning of the CCI smoothly and
efficiently, Section 17 says that a Secretary, experts, professionals and officers may be
appointed to discharge functions pertaining to different fields.

3.2. Inquiry and Orders by CCI

Under chapter IV, duties, powers and functions of the CCI have been given in
detail.

Duties of the Commission

The Commission has a number of duties like to discourage anti-competitive

agreements, to check the abuse of dominant position, to help common man by
providing goods and services at convenient prices, to promote fair competition in
economy, to create equivalent chances for all producers, to create awareness among
people and to enforce the freedom of trade in the Indian markets.151

150
Competition Act, 2002
151
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ofIndia-CCI-and-its-duties.aspx> last visited on 12.05.2022 at 12:30 IST.

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 Powers and Functions of the Commission

The powers and functions of the Commission are as follows-

➢ “The Commission may inquire into any alleged contravention of the

provisions contained in subsection (1) of section 3 or sub-section (1) of
section 4 either on its own motion or on— (a) receipt of any information, in
such manner and accompanied by such fee as may be determined by
regulations, from any person, consumer or their association or trade
association; or (b) a reference made to it by the Central Government or a State
Government or a statutory authority under section 19(1), of competition
Act.”The jurisdiction, powers and authority of the Commission may be
exercised by the Benches thereof and every Bench shall consist of at least one
judicial member. “The Commission is separately seized of work relating to
formulation of its Regulations which shall inter alia, govern the procedure
relating to conduct of inquiries.”
➢ “The Commission shall, while determining whether an agreement has an
appreciable adverse effect on competition under section 3, have due regard to
all or any of the following factors, namely:— (a) creation of barriers to new
entrants in the market; (b) driving existing competitors out of the market; (c)
foreclosure

of competition by hindering entry into the market; (d) accrual of benefits to

consumers; (e) improvements in production or distribution of goods or
provision of services; or (f) promotion of technical, scientific and economic
development by means of production or distribution of goods or provision of
services.”152
➢ “After an inquiry, in case the Commission finds that any agreement referred to
in Section 3 or action of an enterprise in a dominant position is in
contravention of Section 3 or 4, it may pass all or any of the following
orders, namely:-
i. direction to discontinue and not to re-enter such agreement or
discontinue abuse of dominance;
ii. to impose penalty;
152
Section 19(3), Competition Act 2002

93
 iii. to award compensation to an aggrieved person in accordance
withSection34;
iv. to direct modification of agreement;
v. direction to abide by such other order including payment of costs;
vi. to recommend to the Central Government the division of enterprise
enjoying dominant position;
vii. to pass such other order as it may deem fit.”153

Likewise, the Commission is empowered to “inquire into certain combinations

involving enterprises, the turnover or assets of which exceeds the threshold limits
prescribed in the Act. The Commission after due procedure may approve,
modification or reject the proposed combination and declare the combination
agreement as void.”154

The key factor in case of anti-competitive agreements and combinations is

“adverse appreciable effect on competition, in market, in India”. The parameters to
determine relevant market, relevant product market, relevant geographical market and
factors to assess the AAE on competition in markets, in India have been prescribed in
the

Act itself and are to be determined by the Commission. “A condition precedent to

taking action in respect of abuse of dominant position is that the alleged delinquent
enterprise must have dominance in the relevant market. The factors which shall be
taken into account to determine “dominance” and the situations when such dominance
is to be construed as “abuse” thereof are also prescribed in the Act”. The Commission
is also empowered to grant temporary injunctions during the course of inquiry. 155 “It
has been explicitly provided that acts taking place outside India but having effect on
competition in India also fall within the ambit of the Commission. The Commission,
with the prior approval of the central government is also empowered to enter into any
Memorandum or Arrangement with any foreign agency of any foreign country for the
purposes of the Act. Violation of an order passed by Commission attracts deterrent
penalty provisions.”156

The Commission is “assisted by a Director General who is under obligation,

on the direction of the Commission to carry out and furnish investigation reports into
the contraventions of the provisions of the Act or any Rules or Regulations made

153
Section 27, Competition Act 2002
154
Section 31, Competition Act 2002
155
Section 33, Competition Act 2002
156
Section 32, Competition Act 2002

94
 there under. He is to assist the Commission also in carriage of proceedings of
inquiries which are initiated by the Commission upon its own knowledge or
information (suo moto) beside such other duties as are entrusted to it by the
Commission.”157
The Commission is also assisted by the “Registrar” who besides being the
custodian of the records of the Commission is required to perform such other
functions as are prescribed under the Act, Rules, and Regulations beside such other
duties as are entrusted to him by the Commission.158

3.2.1 Commission has Powers of Civil Court

“The Commission shall not be bound by the procedure laid down by the Code
of Civil Procedure, 1908, but shall be guided by the principles of natural justice and,
subject to the other provisions of this Act and of any rules made by the Central
Government, the Commission shall have powers to regulate its own procedure
including the places at

which they shall have their sittings, duration of oral hearings when granted,
and times of its inquiry.”159

“The Commission shall have, 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:-

(a) power to issue summon for appearance of any person;

(b) compel production of documents;
(c) require discovery of documents;

157
Section 41, Competition Act 2002
158
Available at - http://www.competition-commission-india.nic.in/aboutus.htm last visited on
22.09.2022at 13:55 IST.
159
Section 36(1), Competition Act 2002

95
 (d) issuance of omission for examination of witnesses/documents;
(e) receiving evidence on affidavit;
(f) requisitioning, subject to the provisions of Sections 123 and 124
of the Indian Evidence Act, 1872, any public record or document or copy of
such of record or document from any office.”160

The Commission may call upon such experts, from the field of economics,
commerce, accountancy, international trade or from any other discipline as it deems
necessary to assist the Commission in the conduct of any inquiry by it.161

3.2.2Private Enforcement

The Act provides that an application can be made to “the Appellate Tribunal by
any person for granting of an order for recovery of compensation from any enterprise
for any loss or damage shown to have been suffered by such person as a result of the
said enterprise violating directions issued by the Commission or contravening,
without any reasonable ground, any decision or order of the Commission or any
condition or restriction subject to which any approval, sanction, direction or
exemption in relation to any matter has been given under the Act or delaying in
carrying out such orders or directions of the Commission”. 162 The Competition
(Amendment) Act, 2007 has insertednew provisions in the Act relating to award of
compensation. In terms of Section 53N, the Appellate Tribunal is, inter alia,
empowered to grant compensation on an application for compensation arising from
the findings of the Commission or the orders of the Appellate Tribunal. The
compensation that may be awarded under this section is for losses arising out of a
practice or act that is anti-competitive, and that has been determined to be anti-
competitive by the authorities set up under the Act.

Under Section 53N of the Act, a claim for enforcement of damages would
only lie to the Appellate Tribunal, and would only arise in case of a violation of the
Act, if the same has been determined in a proceeding before the CCI or Appellate
Tribunal. The Claimant would then have to establish that he/she has suffered a loss

160
Section 36(2), Competition Act 2002
161
Section 36(3), Competition Act 2002
162
Section 53N, Competition (Amendment) Act, 2007

96
 due to this proved contravention, and must substantiate the quantification of loss
suffered to support the claim.

Moreover, Section 42A of the Act also “provides that any person may make an
application to the Competition Appellate Tribunal for an order for recovery of
compensation from any enterprise for any loss or damage shown to have been
suffered by such person as a result of the said enterprise violating directions issued by
the Commission or contravening, without any reasonable ground, certain decisions or
order of the Commission or any condition or restriction subject to which any
approval, sanction, direction or exemption in relation to any matter has been given
under the Act or delaying in carrying out such orders or directions of the
163
Commission.” Thus, the compensation that may be awarded under this section is
for losses arising out of violation of certain directions, decisions or orders issued by
the Commission.

A claim under Section 42A would require the claimant to prove that a
direction, decision or order of the Commission has been contravened and that the
Claimant has suffered a loss due to such contravention. A claim may be made by any
aggrieved party, and where the aggrieved party includes several persons interested in
it, then any one or more of such persons can make the claim, with the permission of
the Appellate Tribunal.

Section 42A - Compensation in case of contravention of orders of Commission

“Without prejudice to the provisions of this Act, any person may make an
application to the Appellate Tribunal for an order for the recovery of compensation
from any enterprise for any loss or damage shown to have been suffered, by such
person as a result of the said enterprise violating directions issued by the
Commission or contravening, without any reasonable ground, any decision or order
of the Commission issued under Sections 27, 28, 31, 32 and 33 or any condition or
restriction subject to which any approval, sanction, direction or exemption in
relation to any matter has been accorded, given, made or granted under this Act or
delaying in carrying out such orders or directions of the Commission.”

163
Section 42A, Competition Act 2002

97
 In a claim for compensation, the claimant is not required to prove any
contravention of the Act (since that would already have been established by the
Commission or the Appellate Tribunal), and must only establish the quantum of loss
suffered as a consequence of the said contravention. The standard of proof, as in any
civil proceedings, is a preponderance of probabilities. The claimant in a claim for
compensation must establish that the loss resulted as a direct and proximate
consequence of the contravention of the provisions. No compensation can be claimed
for remote and indirect losses. There are no specific timeframes specified for the
disposal of an application for compensation. Both under proposed Section 53N as
well as Section 42A, the Appellate Tribunal is only empowered to grant compensatory
damages.

3.2.3 Post-Decisional Options

The aggrieved person may apply to CCI for review of the order under Section
37164 within 30 days from the date of the order, provided that the Act allows an appeal
and the same has not been preferred.

Provision has been made for an appeal against any order or decision of CCI by any
aggrieved person under Section 40165 of the Act. An application for this purpose has to
be made to the Supreme Court within 60 days from the date of communication of the
decision or order.

3.2.4 Competition Appellate Tribunal (COMPAT) and National Company Law

Tribunal (NCLAT)

The Competition Appellate Tribunal (COMPAT) “is a quasi-judicial body

constituted under the provisions of the Competition Act. After the dissolution of the
former Monopolies and Restrictive Trade Practices Act (MRTP) Commission, the
Government of India entrusted the COMPAT with powers to hear and dispose of
pending cases, dealt with by the then MRTP Commission. About 1,825 pending cases
were transferred to COMPAT, out of which 1,583 cases have been disposed of by the
end of
December, 2012.”

164
Section 37, Competition Act 2002
165
Section 40, Competition Act 2002

98
 Formation of COMPAT

“The Appellate Tribunal will consist of Chairperson and not more than two
other members appointed by Central Government.166 Chairperson of COMPAT will be
a person who is or has been judge of Supreme Court or Chief Justice of High Court.
Member of Appellate Tribunal shall be a person of ability, integrity and standing and
who has special knowledge of, and professional experience of not less than twenty-
five years in international trade, economics, business, commerce, law, finance,
accounting, management, industry, public affairs, administration or in any other
matter which, in the opinion of the Central Government, may be useful to the
Appellate Tribunal.167 The Chairperson or a Member of the Appellate Tribunal shall
hold office for a term of five years and shall be eligible for re-appointment. Provided
that no Chairperson or other Member of the Appellate Tribunal shall hold office after
he has attained the age of sixtyeight years or sixty-five years respectively.”168

Functioning of COMPAT and NCLAT

COMPAT will be guided by the principles of natural justice and it can regulate
its own procedure.169 COMPAT can dismiss a petition for default or decide it ex parte
and such order of dismissal or ex parte order can be set aside. 170 The proceedings
before COMPAT are deemed to be judicial proceedings. 171 If Appellate Tribunal
cannot execute its order, it will be sent to Court within whose jurisdiction the
registered office of the company or place of residence of the person is situated. 172
Orders of COMPAT will be executed as a decree of Court. 173 COMPAT can directly
send the order to a civil court for execution. The order will be executed by that Court
as if a decree of that Court.

Appeal against the order of CCI can be filed with COMPAT. Provisions in
respect of COMPAT are contained in Sections 53A to 53U. It will – (a) hear and
dispose of appeals against the orders of CCI; and (b) adjudicate claims for

166
Section 53C, Competition Act 2002
167
Section 53D, Competition Act 2002
168
Available at http://compat.nic.in/Introduction.html, last visited on 20.06.2022 at 23:55 IST.
169
Section 53O(1), Competition Act 2002
170
Section 53O(2)(n), Competition Act 2002
171
Section 53O(3), Competition Act 2002
172
Section 53P(1), Competition Act 2002
173
Section 53P(2), Competition Act 2002

99
 compensation and pass orders for recovery of compensation. 174 The compensation
cane be claimed under Section 42A or 53Q(2) of the Competition Act. Appeal can be
filed with COMPAT by the Central Government, State Government or enterprise or
any person who is aggrieved by the decision, direction or order of CCI. 175 Appeal
should be filed within 60 days in prescribed form. 176 Delay in filing appeal can be
condoned by the COMPAT if sufficient cause is shown. The Tribunal shall “give
opportunity of hearing to parties and pass such orders thereon as it thinks fit,
confirming, modifying, or setting aside the direction, decision, or order appealed
against.177 Copy of the order shall be sent to parties to appeal and also to CCI. 178
COMPAT will endeavour to dispose of the appeal within six months from receipt of
appeal. Thus, the time limit of six months is not mandatory.”179

Powers of COMPAT

COMPAT can “summon witnesses, enforce their attendance, require recovery

180
and production of documents, receive evidence. Every proceedings before
Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of
Sections 193 and 228, and for the purposes of Section 196, IPC and the Appellate
Tribunal shall be deemed to be a civil court for the purposes of Section 195 and
Chapter XXVI of the Code of Criminal Procedure, 1973. The Appellate Tribunal can
also review its own
decisions.”

In the event that the orders of COMPAT are contravened without any reasonable
ground, punishable of imprisonment up to three years and penalty up to rupee one
crore can be imposed by Chief Metropolitan Magistrate, Delhi. Complaint will be
filed by officer authorized by the Appellate Tribunal. Appeal against the order of

174
Section 53A, Competition Act 2002
175
Section 53B(1), Competition Act 2002
176
Section 53B(2) Competition Act 2002
177
Section 53B(3), Competition Act 2002
178
Section 53B(4), Competition Act 2002
179
Section 53B(5), Competition Act 2002
180
Section 53O(2), Competition Act 2002

100
 COMPAT can be made be made to the Supreme Court which should be filed within
60 days, but Supreme Court can condone the delay.181

Awarding Compensation by COMPAT

The Appellate Tribunal can “award compensation for any loss or damage
shown to have been suffered by a person as a result of contravention of provisions of
Chapter II of the Act. Appellate Tribunal will make inquiry and order for
compensation. It may obtain recommendations of Competition Commission before
passing order.”182

First Case – Jindal Steel & Power Ltd. v. Steel Authority of India Ltd183

“Appellate tribunal passes first order against Competition Commission in the

first appeal filed under the Competition Act the Competition Appellate Tribunal
decided in favour of the appellant. The Steel Authority of India Limited had appealed
against a Competition Commission order dated December 8 ,2009 in Case 11/2009,
through which the commission, after forming an opinion on the existence of a prima
facie case, had referred the information filed by Jindal Steel & Power Limited against
the Steel Authority (under Sections 3 and 4 of the Competition Act) for investigation
to the director general, rejecting the Steel Authority's request for a time extension for
filing reply to the commission’s notice. The appellate tribunal, through a detailed
order dated February 15 2010, directed the commission to take a fresh decision after
considering the reply and additional reply, if any, to be filed by the Steel Authority.
However, the appellate tribunal expressed no opinion on the merits of the case. The
commission order dated December 8, 2009 was quashed, mainly on the grounds of an
absence of reasons for the rejection of the Steel Authority’s request. The
commission’s request to be impleaded as a necessary party during the hearing of the
appeal was also rejected by the appellate tribunal on the grounds that:

(i) the commission cannot become a respondent to support its own order as
it no adversarial role;

(ii) it could not have justified its own order by an affidavit in

support;
181
Section 53T, Competition Act 2002
182
Section 53N(3), Competition Act 2002
183
Case No. 11 /2009, Dated: 20.12.2011

101
 (iii) the order of an authority must stand on its own feet.”184

Now as per an amendment, the National Company Law Appellate Tribunal

(NCLAT) has been set up to hear and dispose off appeals against the orders given by
the Competition Commission of India, adjudicate compensation and pass orders
regardingrecovery.

3.2.5 Penal Provisions

In case of infringement of Section 3 & 4 of the Competition Act, section 27 of

the Act lays down the penalty, provided the Competition Commission is satisfied that
there is a flouting of Section 3 or 4 of the Competition Act, after a proper enquiry and
investigation.

Orders by Commission after Inquiry into Agreements or Abuse of Dominant

Position

“Upon completion of inquiry by Director General (DG) under Section 26(7) or

by the commission itself under Section 26(8) of the Act in case of abuse of dominant
position and under Section 29 to 31 of the Act in case of combination, commission
can pass various orders as provided under Section 27. It is a settled position of the law
that the Commission is vested with the power of the Civil Court under Section 36(2)
of the Act (though for limited purpose) or can evolve its own procedure under Section
36(1) of the Act. Similar powers of commission are vested with DG under Section
41(2) of the Act.”

Section 27- “Where after inquiry the Commission finds that any agreement
referred to in section 3 or action of an enterprise in a dominant position, is in
contravention of section 3 or section 4, as the case may be, it may pass all or any of
the following orders, namely:—

(a) direct any enterprise or association of enterprises or person or association

of persons, as the case may be, involved in such agreement, or abuse of
dominant position, to discontinue and not to re-enter such agreement or
discontinue such abuse of dominant position, as the case may be;
184
The full text of the Competition Appellate Tribunal's order dated February 15 2010 is available on
its website http://compat.nic.in.

102
 (b) impose such penalty, as it may deem fit which shall be not more than ten
percent of the average of the turnover for the last three preceding financial
years, upon each of such person or enterprises which are parties to such
agreements or abuse: [provided that in case any agreement referred to in
section 3 has been entered into by a cartel, the Commission may impose
upon each producer, seller, distributor, trader or service provider included
in that cartel, a penalty of up to three times of its profit for each year of the
continuance of such agreement or ten percent. of its turnover for each year
of the continuance of such agreement, whichever is higher.

(c) Omitted by Competition (Amendment) Act, 2007

(d) direct that the agreements shall stand modified to the extent and in the
manner as may be specified in the order by the Commission; (e) direct the
enterprises concerned to abide by such other orders as the Commission
may pass and comply with the directions, including payment of costs, if
any;

(f) Omitted by Competition (Amendment) Act, 200

(g) pass such other 45[order or issue such directions] as it may deem fit.

provided that while passing orders under this section, if the Commission
comes to a finding, that an enterprise in contravention to section 3 or section 4 of the
Act is a member of a group as defined in clause (b) of the Explanation to section 5 of
the Act, and other members of such a group are also responsible for, or have
contributed to, such a contravention, then it may pass orders, under this section,
against such members of the group.”185

Provisions of Section 27 of the Act are Remedial or Penal?

The provisions of section 27 are remedial in nature although the word penalty
has been used in the Act. The Act provides a remedy under section 27, in case the
provisions of the Act are infringed.

185
Section 27, Competition Act 2002

103
Power of Commission to Impose Penalty for Contravention

Sub-section (b) of Section 27 of the Act provides that “the Commission is

empowered to impose penalty-

▪ Subject to maximum of 10% of the average of turnover of last three

preceding financial year(s) on such person or enterprise which are the parties to
such agreement or abuse.
▪ In case if the penalty is to levied in case any agreement referred to in Section 3
has been entered into by a cartel, the Commission may impose upon a penalty on each
producer, seller, distributor, trader or Service provider included in that cartel:
▪
(a) A penalty up to three times of its profits for each year of the continuance
of such agreement; or
(b)10% of its turnover for each year of the continuance of such agreement,
whichever is higher.”

If we look at the above penalty provisions, there are “three important terminologies
have been used in the Act, i.e.

(i) There should be a ‘person’ or ‘enterprise’ or ‘cartel’ and the member of

such cartel.
(ii) The term ‘turnover’ is a paramount consideration while the penalties are
determined in relation to a person or enterprise not forming the part of a cartel
and even in case of a cartel where the profits are compared with the % of
turnover.
(iii) The term ‘profit’ is an important term in case if penalty is levied on a
cartel and each of its members, as the provision says penalty equivalent to three
times of Penalties generally range from 5 to 10 percent of the average turnover
for the last three preceding financial years of the enterprise. Though it is still not
clear as to how the CCI arrives at these fines. The accompanying language
generally alludes to the “facts and circumstances of the case, which does not shed
any light on the actual manner of computation. Since there are no formal
guidelines to this effect, the CCI is effectively adopting a closed-door approach
to fines, which begs the question whether this is a fair and reasonable exercise of
discretionary powers. Without objective and transparent parameters for the

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 calculation of fines, it is also possible that higher penalties will be struck down
by either the COMPAT or the Supreme Court of India for arbitrariness,
undermining the CCI’s legitimacy.”

In addition, the CCI (General) Regulations 2009 allow “parties to present

submissions on the quantum of penalty even before a determination of guilt. So, while
the CCI takes a strong stand on contraventions of the Competition Act in terms of
both decisions and the level of fines, industries and other stakeholders are awaiting
greater transparency concerning the calculation of fines.”

Cases and Interpretation of term ‘Turnover’

In the short span of about 3 year, the Commission has investigated the
complaints and have passed order in number of cases, but the following are the
remarkable orders / judgments wherein the Commission has pass orders under Section
27(a) restraining the orders for restraining any enterprise or association of person /
enterprise, levied penalty under Section 27(b) as percentage of the turnover and
percentage of the profits, and some of the most highlighted cases are as under:

Under Section 27 (b) of the Act:

“Penalty in relation to turnover on an enterprise:

(i) Belaire Owners Association v. DLF Limited186

(ii) Kapoor Glass Private Limited v. Schott Glass Private Limited187
(iii) GKB Hitech Lenses Private Limited v. Transition Optical India Private
Limited188
(iv) Kasan News P. Limited v. Fastway Transmission Private Limited
&Ors189
(v) Print India v. Springer (India) Private Limited”190

Under Section 27 (b) of the Act:

186
Case No.19/2010
187
Case No. 22 of 2010
188
Case No. 1 of 2010
189
Case No. 36 of 2011
190
Case No. 16 of 2010

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 “Penalty in relation to profit on an enterprise, being member of a cartel:

Consequences for Non-Compliance of Order Passed by the Commission

Sections 42 to 48 of the Act deal with the contravention of orders passed by

the Commission. These penal provisions are:

Penalty for Contravention of Orders of Commission

If any person, without reasonable clause, fails to comply with the orders or
directions of the Commission issued under sections 27, 28, 31, 32, 33, 42A and 43A
of the Act, he shall be punishable with fine which may extend to rupees one lakh for
each day during which such non-compliance occurs, subject to a maximum of rupees
ten crore, as the Commission may determine. If any person does not comply with the
orders or directions issued, or fails to pay the fine imposed under sub-section (2), he
shall, without prejudice to any proceeding under section 39, be punishable with
imprisonment for a term which may extend to three years, or with fine which may
extend to rupees twentyfive crore, or with both, as the Chief Metropolitan Magistrate,
Delhi may deem fit: Provided that the Chief Metropolitan Magistrate, Delhi shall not
take cognizance of any offence under this section save on a complaint filed by the
Commission or any of its officers authorized by it.191

Compensation in case of contravention of orders of Commission

Any person may make an application to the Appellate Tribunal for an order for
the recovery of compensation from any enterprise for any loss or damage shown to
have been suffered, by such person as a result of the said enterprise violating
directions issued by the Commission or contravening, without any reasonable ground,
any decision or order of the Commission issued under sections 27, 28, 31, 32 and 33
or any condition or restriction subject to which any approval, sanction, direction or
exemption in relation to any matter has been accorded, given, made or granted under
this Act or delaying in carrying out such orders or directions of the Commission.192

191
Section 42, Competition Act 2002
192
Section 42A, Competition Act 2002

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 Penalty for Failure to Comply with Directions of Commission and
Director General

The Act provides that, “if any person fails to comply, without reasonable
cause, with a direction given by— (a) the Commission under sub-sections (2) and (4)
of section 36; or (b) the Director General while exercising powers referred to in sub-
section (2) of section 41, such person shall be punishable with fine which may extend
to rupees one lakh for each day during which such failure continues subject to a
maximum of rupees one crore, as may be determined by the Commission.”193

Power to Impose Penalty for Non-Furnishing of Information on

Combinations

“If any person or enterprise who fails to give notice to the Commission under
sub- section(2) of section 6, the Commission shall impose on such person or
enterprise a penalty which may extend to one percent, of the total turnover or the
assets, whichever is higher, of such a combination.194

Penalty for Making False Statement or Omission to Furnish Material

Information

“If any person, being a party to a combination, — (a) makes a statement which
is false in any material particular, or knowing it to be false; or (b) omits to state any
material particular knowing it to be material, such person shall be liable to a penalty
which shall not be less than rupees 50 lakhs but which may extend to rupees 1crore, as
may be determined by the Commission.”195

This section contemplates that in case if a person, being a party to the

combination, fails to make a particular statement or makes the false statement to his
knowledge, then he is liable to pay Rs. 50 lakh, as penalty which may be extend to Rs.
100 lakh.

193
Section 43, Competition Act 2002
194
Section 43A, Competition Act 2002
195
Section 44, Competition Act 2002

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 Penalty for offences in relation to furnishing of information

Section 45 lays down that, “without prejudice to the provisions of section 44,
if a person, who furnishes or is required to furnish under this Act any particulars,
documents or any information,— (a) makes any statement or furnishes any document
which he knows or has reason to believe to be false in any material particular; or (b)
omits to state any material fact knowing it to be material; or (c) wilfully alters,
suppresses or destroys any document which is required to be furnished as aforesaid,
such person shall be punishable with fine which may extend to rupees one crore as
may be determined by the
Commission.”
Crediting sums realized by way of penalties to Consolidated Fund of
India

All sums realized by way of penalties under this Act shall be credited to the
Consolidated Fund of India.196

Contravention by Companies

This section provides with special provisions relating to offences committed

by firms and companies or any of its Director / Partner / Officer / Manager or
Secretary has committed the contravention of any of the provisions of this Act and
who was in charge and was responsible for conduct of business of a company or firm,
then each such person of that firm or company and company / firm shall be liable to
proceed against them and punish them accordingly. However, this section provides an
exception that if any proves that he was not in charge of the affairs of firm / company
a firm or such contravention has not taken place with his consent or connivance, then
the penalty provision of this Act shall not be applicable on that person.

Leniency

Section 46197 provides for leniency provisions. Under the Competition Act, the
CCI can impose lower penalties on any member of a cartel, on a “first-come-
first-serve” basis.

196
Retrieved from <http://cci.gov.in/images/media/ResearchReports/Penalties%20for%20infringement%
20of%20Competition%20Laws.pdf> last visited on 24.09.2022 at 12:30 IST.
197
Section 46, Competition Act 2002

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 Section 46 -Power to impose lesser penalty

“The Commission may, if it is satisfied that any producer, seller,

distributor, trader or service provider included in any cartel, which is alleged to
have violated section 3, has made a full and true disclosure in respect of the
alleged violations and such disclosure is vital, impose upon such producer, seller,
distributor, trader or service provider a lesser penalty as it may deem fit, than
leviable under this Act or the rules or the regulations:

Provided that lesser penalty shall not be imposed by the Commission in

cases where proceedings for the violation of any of the provisions of this Act or
the rules or the regulations have been instituted or any investigation has been
directed to be made under section 26 before making of such disclosure:

Provided further that lesser penalty shall be imposed by the Commission

only in respect of a producer, seller, distributor, trader or service provider
included in the cartel, who first made the full, true and vital disclosures under this
section:
Provided also that the Commission may, if it is satisfied that such
producer, seller, distributor, trader or service provider included in the cartel had
in the course of proceedings,—
(a) not complied with the condition on which the lesser penalty was imposed by
the
Commission; or
(b) had given false evidence; or
(c) the disclosure made is not vital,

and thereupon such producer, seller, distributor, trader or service provider may
be tried for the offence with respect to which the lesser penalty was imposed and shall
also be liable to the imposition of penalty to which such person has been liable, had
lesser penalty not been imposed.”

The first member of a cartel to approach the CCI who fulfills the requirement
receives a 100% waiver in penalty. Subsequent members who approach the CCI
receive reductions of up to 50% and 30%, but only if they provide additional valuable

109
information previously unknown to the regulator. Under the three bands for reduction
(100%, 50% and 30%), only a single participant is entitled to each band. Once the
first three participants have been granted leniency, no others will receive favourable
treatment. The standard for disclosure is that it must be full, true and vital in respect
of the alleged violations. Full details of the form and procedure are set out in the
Competition Commission of India (Lesser Penalty) Regulations 2009 (Lesser Penalty
Regulations). Despite the provisions of the Competition Act and the Lesser Penalty
Regulations, there are some shortcomings:

(i) There is very little clarity on what is meant by ‘vital’. Therefore,

applicants may find it near impossible to determine their “priority status” in the
race for immunity.

(ii) The Competition Act does not clarify whether the grant of immunity
also means the whistleblower will not be held guilty of participating in a cartel.
In fact, the grant of leniency may not actually bar claims of compensation by
third parties before the CAT.

These uncertainties may explain why there have been no leniency applications
to date.

3.3 Conclusion

The objectives of the Act are sought to be achieved through the Competition
Commission of India (CCI), which has been established by the Central Government
with effect from 14 October 2003. CCI consists of a Chairperson and 6 Members
appointed by the Central Government. It is the duty of the Commission to eliminate
practices having adverse effect on competition, promote and sustain competition,
protect the interests of consumers and ensure freedom of trade in the markets of India.
The Commission is also required to give opinion on competition issues on a reference
received from a statutory authority established under any law and to undertake
competition advocacy, create public awareness and impart training on competition
issues.

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CHAPTER-4

GLOBAL PERESPECTIVE- COMPARATIVE ANALYSIS

111
 CHAPTER-4

GLOBAL PERESPECTIVE- COMPARATIVE ANALYSIS

4.1. Sherman Act and Clayton’s Act

These statutes were federal laws that were enactedin the late1800s and 1900s
respectively when the U.S government struggled with the anti-competitive practices
among businesses. The Sherman Antitrust Act was passed in 1890 to prohibit
business activities that federal government regulators deemed to be anti-competitive,
and required them to investigate and pursue as cartels. Thee Sherman Act aimed at
prevention of artificial increase in price by restrictive trade practices followed by
business entities. The Sherman Act prohibits anti-competitive agreements (cartels)
and unilateral conduct that monopolies or attempt to monopolize the relevant market.
The Sherman Act is divided into 3 sections wherein in the first section
prohibitsspecific means of anti-competitive conduct, the second section deals with
end results of business activity that are anti-competitive in nature and the 3rd section is
about jurisdiction and extent/applicability of the Act.

It provides that no person shall monopolize, attempt to monopolize or conspire

with another to monopolize interstate or foreign trade or commerce, regardless of the
type of business entity. Monopoly achieved solely by merit is perfectly legal, but acts
by monopolist to artificially to preserve his status, or collusion amongst competitors o
create a monopoly, are not198. The U.S. court, is one of the cases, has defined the
objectives of the Sherman Act as follows199:-

“The purpose of the Sherman act is not to protect businesses from the
working of the market; it ids to protect the public from the failure of market, The law
directs itself not against the conduct which is competitive, even severely so, but
against conduct which unfairly tends to destroy competition itself”.

The Sherman Act intended too prohibit trusts and the courts in the United
States had interpreted the la of cartels as applying against trade unions. It is also
pertinent to mention that the word “trust” as we use today had a different
198
Hovenkamp, Herbert. Federal Antitrust Policy: The Law of Competition and Its Practice,2nd edition. St.
Paul, MN: West Group,1999.
199
Spectrum Sports, Inc. v. Mc. Quillan 506 U.S. 447,458(1993).

112
 interpretation to refer to any sort of collusive, covert or conspiratorial behaviour. This
enactment also precipitated the largest wave of merger in U.S. history as business
realized that instead of creating a cartel they could simply fuse into a single
corporation and still have the benefits of market power that a cartel could bring. This
shortcoming of the Sherman Actresulted in the passing of the Clayton’s Act,1914,
which made considerable procedural changes to American competition law. The
clayton’s Act,1914 aimed at capturing anti-competitive practice in their incipiency by
prohibiting conducts not deemed in the best interest of competitive market.

Political parties then felt that the Supreme Court was very lenient towards big
corporation and anti-trust laws needed to strengthened. The ambiguity in the language
of the Sherman Act created hassles and developed loopholes for big corporations and
thus the Clayton’s Act was passed in 1914. This Act was an amendment passed by the
U.S. Congress to clarifies, substantiate and widen the scope of the application of
Sherman Anti-trust Act of 1890. The clayton’s Act was mainly passed to regulate the
general principles that were detrimental to fair competition and provided for
regulating anti-trust issues, more fully areas like price discrimination, tying
agreements or required contracts, mergers and acquisitions and so on.

The Federal Trade Commission (FTC) and the Department of Justice (DOJ)
were the key enforcement machineries of this Act200. The Act also provided specific
provisions on how the FTC and DOJ should handle the violation.

4.2 Competition law in the EU

To establish a “single market” has been the paramount aim of the 27 member-
countries within the E.U., which has assumed the role of central enforcement
authority. The union has enveloped and internal single market system which aims to
guarantee free transit of goods, capital, service and labour within the geographic
territories of the member nations and is intended to promote a favourable trade
environment, increased competition and better innovation and specialisation of goods
and services. It also aims at bringing in larger economies of scale allowing free
movements of factors of production which can be better valued in a geographic region

200
http://www.encyclopedia.com/topic/New_York.aspx

113
 that has demand for it and thereby improving the efficiency of the allocation of
resources.

The E.U. Competition law has its origin in the Treaty of the functioning of the
European Union (TFEU). Articles 101 to 109 of the Treaty contains a series of
regulations and directives regarding cartels, or control of collusion, market
dominance, merger laws and state aid or subsidies given by the government to
companies that distort competition.

Article101 of the Treaty prohibits agreements between two or more

independent market operators which restricts competition. It covers both vertical and
horizontal agreements201. Article 101 restricts any agreement or conspiratorial
conducts between business entities that afflict competition within European Union 202.
Therefore, agreements that restrict two or more companies’commercial option are
likely to violate Article 101.

Article 102 restricts undertakings or business entities that have a dominant

position in the market from abusing that position to the detriment of consumers. The
main policy underlaying the European Union Competition Law is maximizing the
efficiency, protecting consumers from collusion and other kind of restraints on free
competition, protecting small and medium sized entities, and integrating the European
Economy.Further, the Article covers within its ambit mergers between undertakings
or business entities that may distort competition by regulating such mergers through
its enforcementauthority, the European Commission.

The task of investigating and giving legal sanction by way of punitive action is
entrusted to the European Commission, which is the primary enforcer of the EU
Competition law. This commission is an independent council with 20 members
nominated by the members of the state, and around 15,000 staff to execute the
European Union Competition Law and render decisionsin the connection.

201
Vertical agreements are between firms operating at different llevels, Horizontal agreements are
between firms at the same level
202
Stephen harrris. H. Jr. EU Competition Law Overview, ABA Anti-trust Section, SpringMeeting , April
4,2003.

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 The commission is empowered by the Treaty to apply these rules and has wide
ranging investigative powers203. The commissionmay also impose fines on
undertaking who violate the anti-trust rules and has also developed and implanted a
policy on the application of EU CompetitionLaw to action for damage before national
courts204..

The commission decides case, issues directions and guidelines, proposes

regulation, and aid in amending and shaping the competition law legislation among
member states.

Initial appeals from the European Commission are heard by theCourt ofFirst
Instancewhich consists of 15 jdges, one from each member state. The European
Court of Justice consisting of one judge from each member state and 8 advocates
generals consider issues of law and not of facts (unlike the Court of First Instance)
and hears appeals from the Court of First Instance.

4.3 Anti-monopoly Law of China

The first initiative to formulate an anti-monopoly la in China was made in

1987 when an AML (Anti-monopoly Law) drafting team was officially set up and
National People’s Congress passed the legislation in August 2007 and the law was
implemented with the effect from 1st August 2008. The draft committee’s final
legislation indicates that provisions of law have bee influenced by anti-competitive
laws in the European Union, U.S. and japan.

Much like in India, international pressure and the evolving global trade
dynamics played a pivotal role in persuading China to legislate an Anti-monopoly
Law. Several workshops were conducted in other Countries to air their views,
particularly between E.U and U.S officials and their Chinese counterparts, support
and pressure from foreign governments and overseas regulators also played an
important role in persuading China to come with an Anti-trust law. Thus, at the 29th
meeting of the Standing Committee of the 10th National People’s Republic of China
the Anti-Monopoly Law was adopted on August 30, 2007. This was enacted to
prevent and restraint monopolistic conduct, and protect fair competition in the market,

203
E.g. inspection at business and non-business premises, written requests for information, etc.
204
http://ec.europa.eu/competition/antitrust/overview_en.htm

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 in turn enhancing economic efficiency, safeguarding the interests of consumers and
public, promoting healthy development of the socialist market economy205.

Like other nations, the Chinese anti-monopoly law is founded on the doctrine
of “illegal per se rule” and the “rule of reason”. The doctrine of I”illegal per se” refers
to any act which is inherently illegal without any proof of scienter or mensrea. In the
ambit of competition law, “illegal per se “often refers to categories of anti-
competitive conduct which are conclusively presumed to be monopolistic or
“unreasonable restraint on trade”.

The “Rule of reason” is a doctrine which was first developed in a ruling on

Addyson Pipe and Steel Co. Case206, wherein it was held that the actions such as
“possession of monopoly” must be interpreted and deemed to be illegal considering
their effect is to unreasonably restrain trade, unlike “Price fixation” which is regarded
“Illegal per se”. in this context of Indian’s competition law, the rule of reason is
termed “Adverse appreciable effect on competition”. These doctrines from the
bedrock of the Chinese Anti-Monopoly Law as well.

The Chinese anti-monopoly law primarily deals with the merger control,
prohibition of monopoly agreements or cartels and prohibition of abuse of dominent
market position.

Under the Anti-Monopoly Law, the state council created two regulatory
bodies;207

(i). The Anti-Monopoly Committee (AMC) -which is bestowed with the

responsibility of amending and progressively making policies, print, publish and
disseminate guidelines and other allied administrative work.

(ii). The Anti-Monopoly Enforcement Agency (AEA)- AEA s vested with

powers o enforce the Anti-Monopoly Law with the aid of the following three
agencies: -

205
Article 1 of the Antii-Monopoly Law of the People’s Republic of China
206
Addyston Pipe and Steel Co. v. United States, 175 U.S. 211 (1899)
207
http://english.mofcom.gov.cn/aarticle/policyrelease/announcement

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 (a). The National Development and Reform Commission (NDRC), which
adjudicates price related offences;

(b). The State Administration for Industry and Commerce (SAIC), which deals
with the enforcement of cartels, abuse of dominance; and

(c). The Ministry of Commerce (MOFCOM) which deals with merger control.

4.4. Competitionand Consumer Protection Act of Australia

The trade practices act, 1974 was the statute that dealt with anti-trust matters
in Australia and was amended and renamed as the Competition and Consumer
Protection Act in 2010. The objective of this Act is to promote competition, fair
trading practices and to safeguard to legal rights of consumers. Though there is no
object clause in the original Act, in the second reading speech the then Attorney
General208 stated that “its purpose was to control restrictive trade practices and
monopolies and to protect consumers from unfair commercial practices”.

The Australian Competition andConsumer Commission (ACCC) is the

sole enforcer of the Competition and Consumer Act with the powers to initiate Suo
motoaction against any undertaking that it believes to have violated or contravened
any provisions of the Act. The Commission has power to obtain evidence, search and
seizure in order for the purpose of investigation. The Commission has also been
vested with the function of disseminating information about the CCA, provide
guidelines and it actively performs a research and reporting role.

The Australian Federal Court adjudicates complaints made in regardto

contraventions of the Act and possesses exclusively jurisdictions under the state and
territory Competition Codes.

The National Competition Council is an advisory body which wasestablished

as aresult of the Hilmerr Reforms209 in 1995 which led to formulation of the

208
Senator Lionel Murphy, https://en.m.wikipedia.org/wiki/Lionel_Murphy .
209
https://parlinfo.aphh.gov.au/parllnfo/search/display/display.w3p;

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 Competition and Consumer Protection Act 2010. The council actively advises and
provides recommendations to state bodies in matters pertaining to competition law.

The Commonwealth Director of Public Prosecution is an independent

prosecution service and government agency in Australia which assists in prosecuting
offence in violation of the statute.

The Australian Competition Tribunal has an appellate jurisdiction over

appeals arising from the decisions of the ACCC and also performs a review function.
The appellate tribunal hears applications regarding merger authorizations directly and
appeals and merger clearance decisions arising from the decision of ACCC.210

4.5. Competition Law and Policy in Latin America

U.S. anti-trust laws and European competition laws have largely influenced
competition legislation in developing nation in Latin America. Argentina, brazil,
Chile, Mexico and Peru have enacted competition law within their national territories
to curb anti-competitive practices. The statutes of these nationals deal with cartels,
abuse of dominance in general. However, merger control is part of Argentina, Mexico
and Chile but not part of the Peruvian Competition Law.

The objective of competition laws in Latin America is to promote economic

efficiency, consumer welfare, the freedom of initiative, the opening of markets, and
the fair and equal participation of small and medium enterprises. They alsoendeavour
to diminish concentration of economic power, prevent monopolies abusing their
dominant positions adversely affecting economic growth211.

4.6. OECD Countries and Anti-Monopoly Law

The Organisation for Economic Co-operation and Development (OECD) was

established in 1961 with 34 member countries aiming to promote better inter- country
trade. The inter-governmental economic organisation provides a forum for member
governments to seek a solution for their common problems and co-ordinate domestic

210
https://www.competitiontribunal.gov.au/about/about-the-tribunal
211
OECD, Latin American Competition Forum (2003), available at
http://www.oecd.org/competition/latinamerica/2003%20Latin%American%20Competition
%20Forum.pdf.

118
and international policies of its members. The OECD is an official United Nations
Observer and collects socio-economic data to analyse and recommend policies to its
member nations.

OECD actively encourages member governments to tackle anti-competitive

practices and foster market-oriented reforms.

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 Chapter 5

Jurisprudential Analysis

120
CHAPTER 5

JURISPRUDENTIAL ANALYSIS

5.1 Pursuance for a better economy

“Competition is the precursor to success. When markets work hard there is

sustainability, profits, efficiency, innovation and long-lasting benefits to the economy.
The Competition Act is one such legislation, which aims to weed out anti- competitive
practices through mainly preventing anti-competitive agreements and abuse of
dominance situations in the market. If markets are not competitive then this gives rise
to monopolies and oligopolies, which have harmful effects in the long run.

Economic theory suggests that in a competitive market, prices and quantities

equilibrate to levels that generate efficient outcomes. Less mature markets tend to be
vulnerable to anti-competitive practices. Competition Law and policy does not kill
competition but encourages competition by penalizing anti-competitive behaviour like
anti-competitive agreements and abuse of dominance situations.

The Competition laws of most of the countries seek to increase consumer

welfare, ensure fair trading, increase economic efficiency and prevent abuse of market
power (Dominant Position). The three areas of enforcement that are provided for in
nearly all competition laws are:

(i) Anti-competitive agreements which includes Cartels

(ii) Abuse of dominance position

(iii) Mergers which are anti-competitive

The Competition Act was enacted in the year 2002 and it came into force on
th
13 January 2003. The objectives of the act have been set forth in its preamble which
states that the act would provide for establishment of a Commission (i.e. Competition
Commission of India) to prevent anti-competitive practices, to promote and sustain

121
competition in the market, to protect the consumers and to ensure freedom of trade
carried on by the other participants of the market.

The main criteria used for the regulation of anti-competitive practices are that
such practices should not cause an AAE on competition within India. Section 3 of the
Act explains as to what agreements are anti-competitive in nature and it classifies such
agreements into two categories namely Horizontal agreements and vertical agreements.
It states that all the anti- competitive agreements, which can cause an AAE on
competition in India shall be void subject to certain exceptions as provided under
section 3(5). Section 4 deals with issues of abuse of dominant position, it gives a list of
acts which may amount to abuse of dominant position. Further section 5 and 6 explains
aspects of combinations and also prescribe certain norms to regulate combinations.

Jurisprudentially for markets to grow it is important to encourage entrepreneurs

to have a free hand and allow markets to grow.

Competition Act has dealt with the transfer of cases from the MRTP to the
Competition Commission of India. The MRTP used to deal with basically 3 types of
practices-the Monopolistic, Restrictive and Unfair Trade Practices.

Monopolistic practices deals with a situation where there is an abuse of an

entities’ power and the aim is to monopolies the market. In Unfair Trade Practise there
are false and misleading statements made by the party to gain an advantage in the
market. In the case of Restrictive Trade practise, the entity tries to obstruct the supply
and production of the goods in the market and gain an advantage. To effectively deal
with the matters above, the Unfair Trade Practices cases were transferred to the
National Commission under the Consumer Protection Act, 1986. Cases under the other
two practices namely the Monopolistic Trade practices and the Restrictive Trade
practices were transferred to the Competition Commission of India.

Conflict between competition law and consumer protection law, though not
much controversial, may also arise when the question is raised as regard to the
appropriate authority for grievance in case of unfair trade practice by the businesses or
any manufacturer, seller or trader. Consumer protection laws basically deals with the
grievance redressal in case the unfair trade practice is affecting quite a less number of

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person whereas competition law comes into picture when the trade practice is affecting
a significant part of the society or of the market.

Competition law has developed a lot in recent years, especially after 1990. The
growth has been both in terms of geographical regions that have adopted competition
law, as well as in the range of economic activities now subject to competition law. As
an increasing number of countries have undertaken economic reforms and embraced
the market economy, many of them have also introduced competition law to maintain
competition in their markets.

India has responded proactively and positively by opening up its economy to

global players, in the wake of globalisation, by removing controls and ensuring
liberalised market conditions. Thus, “with the harmonisation of the Indian economy
and markets with the international economy, by enacting the Competition Act, the
Government of India has acquired an edge on regulation of market from merely
curbing monopoly to promoting competition.” The significant development under the
Act has been the establishment of the Competition Commission of India (CCI) as “a
statutory authority to enforce the provisions of the Act in India. It is a quasi-judicial
body, formed under the relevant provisions of the Act, with the objective to ensure that
nation’s markets are vibrant, efficient, and free from restrictions that harm trade and
industry and consumers. This has, indeed, become a task of importance in the context
of today’s global markets, high technology innovations and the changing economic
landscape. An effective law to regularize competition is a means of building
international confidence in an economy. Foreign investors would also be willing to
commit capital in a country where there is a safety in the system.”

The promulgation of competition law “ensures the foreign investors that the
market is a transparent economy, which participates in genuine transactions and would
be guided by the rules applicable to all in the market place. India is becoming a more
complex and competitive market and therefore competition in any field is considered
to be a healthy practice. It is the duty of the state to provide for a level playing field for
nourishing the opportunities to organisations and working as a motivating factor for
organisations to grow in a legitimate manner.

The Competition law seeks to increase consumer welfare, ensure fair-trading,

increase economic efficiency and prevent abuse of market power (Dominant Position).
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Use of technology and data to further strengthen the competition law in India is a very
important emerging step in today’s business economy. Competition Law leads to a
healthy competition where sellers compete to sell their products and buyers buy the
best quality products at the most competitive price. The situations of market monopoly
and oligopoly have to be curtailed.

Neither the Competition Act defines AAE and nor there is any thumb rule to
determine when an agreement causes or is likely to cause AAE, Section 19 (3) of the
Act specifies certain factors for determining AAE. The intent of the legislature
reflected vide the mandatory language of Section 19 (1) of the Act is that the
Competition Commission of India is required to carry a balanced assessment of anti-
competitive effect as well procompetitive justification of the agreement. 212

The Competition Act does not categorize agreements into horizontal or vertical.
However, the language of Sections 3(3) and 3(4) makes it abundantly clear that the
former is aimed at horizontal agreement and later at vertical agreement. Horizontal
agreements relating to activities referred to under Section 3(3) of the Competition Act
are presumed to have an AAE within India.

Section 3(3) of the Competition Act provides that, “agreements or a ‘practice

carried’ on by enterprises or persons (including cartels) engaged in trade of identical or
similar products are presumed to have AAE in India if they:

(a) Directly or indirectly fix purchase or sale prices;

(b) Limit or control production, supply, markets, technical development, investments

or provision of services;

(c) Result in sharing markets or sources of production or provision of services;

(d) Indulge in bid-rigging or collusive bidding.”213

212
Nishith Desai, Competition Law in India, A report on Jurisprudential Trends available at
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/
Competition_Law_in_India.
pdf
213
Section 3(3), Competition Act 2002

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 Section 3(4) of the Competition Act provides that “any agreement among
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 (a) tie-in arrangement; (b) exclusive
supply agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale
price maintenance, shall be an agreement in contravention of Section 3(1) if such
agreement causes or is likely to cause an AAE on competition in India. As can be
reason, these agreements are not deemed anti-competitive. Only if they cause or are
likely to cause an AAE in India will these agreements be in violation of Section 3(1) of
the Competition Act. The rule of reason must be applied in this determination.214

The Competition Act recognises the rights of Copyright, Patent, Trademark,

Geographical Indications of Goods, Design and Semi-conductor Integreted Circuits
Lauout-Design and states that Competition Law does not restrict such rights.
Consequently, the Competition Act specifically states that the contours of
anticompetitive restraints will not apply with respect to those horizontal and vertical
agreements which impose reasonable conditions to protect or restrain infringement of,
the rights granted under intellectual property laws.

There are many modern anti competitive practices which are difficult to detect
and are practiced by organisations and individuals having muscle and money. Anti
competitive behaviour like cartels, bid rigging etc cause a great harm to the economy
by influencing production, distribution, manufacturing and storage facilities by causing
AAEs.

A law was therefore required, to prevent practices having adverse effect on

competition; to promote and sustain competition in markets; to protect the interests of
consumers who are susceptible to the ill effects of unfair competition and to ensure

Abuse of dominance is another important aspect in Competition law. Dominant

position means “a position of strength, enjoyed by an enterprise, in the relevant
market, in India, which enables it to operate independently of competitive forces
prevailing in the relevant market (product or geographical Market); or affects its
competitors or consumers or the relevant market in its favour.” There is no

214
Section 3(4), Competition Act 2002

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mathematical formula to determine dominance and it has to be seen in a case-to-case
basis relating to the relevant product market and geographical market.

The concept of the abuse of dominance has been seen in the relevant context of
the relevant product market and the relevant geographic market. The use of artificial
intelligence should be undertaken to correctly and accurately determine the relevant
product and geographic market.

The revolutionary concept of predatory pricing where initially the consumer

feels privileged while being offered lower prices only to be actually duped in the long
run is also important. Predatory pricing has the effect of big monopolies to completely
drive out competition in the market in the long run by selling below cost production
and finally wiping out competition. This price-cutting however, has to be coupled with
mens rea to wipe out the competitor out of business for the pricing to be an offence
under this Act.

Combinations Regulations under the Act inter alia provides that no person or
enterprise shall enter into a Combination, which causes or is likely to cause an AAE on
competition within the relevant market in India and such a combination shall be void.
Regulation of the Combinations is the third area of focus of Competition Law.

The Competition Act regulates mainly three types of combinations namely:

i. Acquisition of shares, voting rights or assets of another entity by a

person or an enterprise.
ii. Acquiring control by a person over enterprise.
iii. Merger or amalgamation between or amongst enterprise.

Section 5 of the Act defines combination by providing certain threshold limits

below which combinations would not be covered under the scanner of Competition
Act. The main justification behind prescribing such limits can be the reason that
combination between small enterprises or entities may not have AAE on competition
in Indian markets.

The Competition Act, 2002 is already compliant with the World Trade
Organisation competition policies, which focus mainly on three types of anti

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competitive behaviour. The first being anti-competitive agreements, next the abuse of
dominance and third being the regulation of combinations. The Indian competition
regime and the Competition Commission of India have dealt extensively in this area
and have imposed orders and penalties as the provisions of the Act.

The enforcement and administrative set up of Competition Law in India is also

in tune with what is required jurisprudentially to look into anti-competitive practices.
The Competition Commission of India is a body of the Government of India
responsible for enforcing The Competition Act, 2002 throughout India and to prevent
activities that have an adverse effect on competition in India. It was established on 14
October 2003 and became fully functional in May 2009.

The objective of the Act is to be achieved through the Competition

Commission of India (CCI), which has been established by the Central Government
with effect from 14 October 2003. CCI consists of a Chairperson and 6 Members
appointed by the Central Government.

It is the “duty of the Commission to eliminate practices having adverse effect

on competition, promote and sustain competition, protect the interests of consumers
and ensure freedom of trade in the markets of India. The Commission is also required
to give opinion on competition issues on a reference received from a statutory
authority established under any law and to undertake competition advocacy, create
public awareness and impart training on competition issues.” The above aspects along
with the suomoto inquiry, which can be undertaken by CCI has been discussed in the
project.”

The domain of operation of Competition law and Intellectual Property Rights

(IPRs) is different from each other, having different scope of application. On one hand
intellectual property laws provide exclusive controlling rights to the owner,
competition/ anti-trust laws on the other hand make provisions for promoting
competition and equal access to market for all.

With the advent of globalization in the commercial sector, activities of business

and trade became a borderless affair. Expansion of domestic companies at
multinational level, investment of foreign investors in the markets of other countries
etc. became a reality. Therefore jurisprudentially, Competition law of India is in a

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developing stage and as the area of operation of this law is so dynamic, constant
research and development is required by the authorities to remain equipped with the
latest developments in the field. It has been realized, that an efficient and
comprehensive competition law regime has become an inevitable part of economic
harmony and with continuous progression of time many new challenges will come
which will require a newly innovative approach to tackle such issues. Therefore the
dynamism of competition law makes it a unique field of operation with lots of
explorations to be completed to keep its objective alive.

The enactment of Competition Act, 2002 is a step taken by the Government to

stand at par with the changed and changing economic scenarios and is in line with the
changed economic thinking of liberalisation, privatization and globalization. It
indicates the willingness of country to move forward from control economy to free
market economy but with adequate checks and control measures.

Legal Developments

The last year witnessed some important legal issues being settled by the
judicial bodies in competition law jurisprudence. The Hon’ble Supreme Court, vide its
judgement dated December 15, 2020 in Samir Agrawal vs CCI & Anr., settled the
issue of locus before the Commission and its appellate authority. The Court agreed
with the submission of the Commission and held that “any person” may provide
information to the Commission, which may then act upon it in accordance with the
provisions of the Competition Act. Further, the Court elaborated that information may
be received from any person, irrespective of whether or not such a person is personally
affected. The Court specified the reason behind such a scheme, viz., that the
proceedings under the Competition Act are proceedings in rem, which affect public
interest. Further, the Court held that, under the scheme of the Competition Act, 2002,
the doors of the Commission must be kept wide open in the public interest so as to
serve the high public purpose of the Competition Act. The Hon’ble Delhi High Court
vide its judgement dated May 20, 2020 in Monsanto HoldingPvt. Ltd. & Ors. vs. CCI
& Ors., concluded that there was no irreconcilable repugnancy or conflict between the
Competition Act and the Patents Act, and therefore, the jurisdiction of the Commission

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to entertain complaints regarding abuse of dominance with respect to patent rights
could not be excluded. The Court also ruled that any anti-competitive agreement that
imposes unreasonable conditions would not enjoy the safe harbour of Section 3(5) of
the Competition Act. Further, it does not mean that a patentee would be free to include
onerous conditions under the guise of protecting its rights. Currently, this judgement is
impugned before a Division Bench of the Hon’ble Delhi High Court. In several other
cases, Orders of the Commission were upheld by the appellate body, i.e., the Hon’ble
National Company Law Appellate Tribunal (NCLAT). Vide its judgement dated May
29, 2020 in Major Pankaj Rai vs. CCI, it considered the issue as to whether the delay
of 730 days, including 693 days spent by the appellant before the Hon’ble High Court
for the state of Telangana at Hyderabad, in filing a statutory appeal under Section 53B
of the Competition Act, 2002, could be condoned. Deciding the issue, the Hon’ble
NCLAT held that the appellant’s conduct in pursuing a remedy before the
Constitutional Courts and not filing an appeal before the Appellate Tribunal cannot
constitute a “sufficient cause” for not exercising the statutory right of appeal, and in
view of the same, the appellant cannot claim that he was prevented by a “sufficient
cause” from filing an appeal within the statutory period of limitation. This judgement
of the Hon’ble NCLAT was later endorsed by the Hon’ble Supreme Court.

5.2 Landmark Decisions of Competition Commission

Following are some of the crucial observations made by the Commission and
directions given by it during the year 2020-2021. These observations have been taken
from the Annual report of the Commission for the year 2020-2021.

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5.2.1 . Cartelisation in Industrial and Automotive Bearings 215

On the basis of an application filed by Schaeffler India Ltd. (‘Schaeffler’) under the
Lesser Penalty Regulations, the CCI initiated a suo motu inquiry with respect to
cartelisation in the domestic Industrial and Automotive bearings market. It was alleged
that five companies, namely, (a) ABC Bearings Limited (now amalgamated with
Timken India Limited) (Timken); (b) National Engineering Industries Ltd. (NEI); (c)
Schaeffler India Ltd. (previously known as FAG Bearings India Ltd.); (d) SKF India
Ltd. (SKF); and (e) Tata Steel Ltd., Bearing Division (Tata Bearings) co-ordinated their
prices, thus adversely affecting buyers in the market. After inquiry, the CCI, vide an
Order dated June 5, 2020, found NEI, Schaeffler, SKF and Tata Bearings to have
cartelized in the aforesaid market from November 03, 2009 to March 31, 2011, thus
contravening provisions of Section 3(3)(a) read with Section 3(1) of the Act.
Furthermore, CCI also found eleven persons of these companies liable in terms of
Section 48 of the Act for the anti-competitive conduct of their respective companies.
Resultantly, CCI passed a cease and desist Order and also cautioned the parties to
ensure that their future conduct is strictly in accord with the provisions of the Act.

5.2.2.Bid rigging in a tender floated by the Railways 216

The CCI initiated this case on the basis of a reference received from the Chief
Materials Manager, South Eastern Railway (Informant), against certain RDSO–
approved composite brake block (CBB) vendors (OPs), alleging submission of
identical bids in the CBB tenders floated by the Informant. Subsequently, similar
Information(s) were received from other railway zones/departments. On the basis of
inquiry into the matter, the CCI concluded that the OPs and their respective individuals
had indulged in cartelisation from 2009 till 2017 by directly or indirectly determining
prices, allocating markets, co-ordinating bids and manipulating the bidding process.
Therefore, OPs were held to be in contravention of the provisions of Section 3(3) read
with Section 3(1) of the Act. Taking into account the prevailing economic situation
due to the outbreak of the pandemic (COVID-19), co-operation extended by the OPs
during investigation and the fact that some of these were Micro, Small and Medium
Enterprises, the CCI did not impose any monetary penalty and directed the parties and

215
https://www.cci.gov.in/sites/default/files/05-of-2017.pdf
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https://www.cci.gov.in/sites/default/files/03-of-2016.pdf

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their respective individuals to cease from such cartel behaviour and desist from
indulging in similar behaviour in the future.

5.2.3. Abuse of dominant position in alcoholic beverages market 217

International Spirits and Wines Association of India filed an Information

against: (a) Uttarakhand Agricultural Produce Marketing Board (UAPMB); (b)
Garhwal Mandal Vikas Nigam Ltd. (GMVNL); and (c) Kumaun Mandal Vikas Nigam
Ltd. (KMVNL), alleging: (i) unfair and discriminatory conduct/practice of Opposite
Parties in relation to procurement of alcoholic beverages which resulted in certain
alcoholic manufacturers being denied market access for a large number of their brands;
and (ii) imposition of unfair terms and conditions in the agreements entered into
between alcoholic beverage manufacturers and the Board, which adversely affected
not only manufacturers but also retailers and consumers. After a detailed inquiry, the
Commission noted that the arbitrary and capricious procurement of Indian Made
Foreign Liquor (IMFL) in the implementation of the Liquor Wholesale Order by
UAPMB led to some brands/players gaining an undue advantage over others, thus
distorting inter-brand competition of IMFL sold in the State of Uttarakhand. The
arbitrary action of UAPMB also led to a situation where the preferences/demand of the
retailers and end-consumers were not taken into account by UAPMB. Further, the
Commission observed that UAPMB had inserted certain one-sided clauses in
agreements it entered into with some members of the Informant. The Commission,
therefore, held the unilateral conduct of UAPMB in limiting and restricting the
wholesale procurement and distribution of IMFL in the State of Uttarakhand and
denial of market access to producers of certain brands of IMFL in the State of
Uttarakhand to be in violation of Section 4(1) read with Section 4(2)(b)(i) and Section
4(2)(c) of the Act and imposed a monetary penalty upon it. However, the conduct of
GMVNL and KMVNL was not found to be anticompetitive

Some of the important rules and regulations so enacted by the

Government are enlisted hereunder:

(i) Competition Commission of India (Oath of Office and of Secrecy for

Chairperson and other Members) Rules, 2003: These rules provide the manner in
which oath of office of Chairperson and Members of commission is to be obtained
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 and it also provides for procedure for maintaining secrecy of office by such
persons.

(ii) Competition Commission of India (Return on Measures for the promotion of

Competition Advocacy, awareness and training on Competition Issues) Rules,
2008: These rules have been enacted for making it compulsory for the
Commission to file a return of all the measures and actions taken by the
Commission during a year to promote Competition advocacy, awareness and
capacity building in competition matters.

(iii) The Competition Commission of India (Manner of Recovery of

Monetary Penalty) Regulations, 2011: the regulation deals with the manner in
which the penalty so imposed by Commission can be recovered from the parties.

(iv) Competition Commission of India (Procedure in regard to the transaction of

business relating to combination) Regulation 2011: the procedure with regard to
transaction of business of combinations, form of notice of proposed combination,
mode of making fee payment, procedure of filing notice of merger etc are dealt in
this regulation.

(v) The Competition Commission of India (General) Regulations, 2009: The general
powers of Commission, contents and form of reference to the commission.
Procedure for investigation by Director General. Detailed provisions with regard
to taking of evidence and imposition of penalty are enumerated under this
Regulation.

(vi) The Competition Commission of India (Procedure for Engagement of Experts

and Professionals) Regulations, 2009: Commission has the authority to engage
experts and professionals in different fields related to competition. This regulation
provides for the functions, qualification, experience as well as the procedure for
selecting such expert and professionals.

Competition law is in its nature an evolving law. The competition

(Amendment) Bill,2022 was introduced in Lok Sabha on August 5,2022. It
seeks to amend the Competition Act,2022

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 As more and more complex jurisprudence and cases involving anti-competitive
practices evolve, it is important for Competition law to follow suit and engage in those
practices and legal issues that weed out such practices and encourage free and better
market economies.

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 Chapter 6

Conclusion and Suggestions

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 CHAPTER 6

CONCLUSION AND SUGGESTIONS

This chapter brings together the results and conclusions from previous chapters.
It shall discuss the strength and weakness of this research. Besides, some directions for
future research and recommendations are also presented in this chapter. In essence, this
research has answered all its research questions and has achieved all its initial
objectives.

6.1 Journey Revisited

“ The past few years have been challenging for the economy and for businesses
world over, making the task of policy makers even more daunting. India, in the quest
for globalization reacted by opening up its economy by doing away with controls and
taking the route to liberalization. In the light of this, the obvious need of the hour was
that the Indian market be geared to face competition from within the country and
outside. The financial crisis which gripped world strengthened the need and
highlighted the importance of a strong and effective competition policy, a policy which
would encourage markets to work well for the benefit of business and consumers,
thereby increasing the country’s economic fitness: markets characterized by effective
competition makes firms innovate more, keep prices down for consumers and improved
total factor productivity drives economic growth. These factors are all the more
relevant given the financial challenges faced by the country. It is clear that ultimately,
the way out of this crisis – for the financial sector and the wider economy – lies with
competitive markets, backed up by a robust competition policy.”

Competition policy is defined as those government measures that affect the

behaviour of enterprises and structure of the industry with a view to promoting
efficiency and maximizing consumer / social welfare. There are two components of a
comprehensive competition policy. The first involves putting in place a set of policies
that enhance competition or competitive outcomes in the markets, such as relaxed
industrial policy, liberalized trade policy, convenient entry and exit conditions, reduced
controls and greater reliance on market forces. The other component of competition
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policy is a law and its effective implementation to prohibit anti competitive behaviour
by businesses, to prohibit abusive conduct by dominant enterprise, to regulate
potentially anti competitive mergers and to minimize unwarranted government /
regulatory controls.

In the wake of economic liberalization and wide spread economic reforms

introduced by India since 1991 and in conformity with the commitments made at the
WTO, in October 1999, the Government of India appointed a High Level Committee
(Raghavan Committee) on Competition Policy and Competition Law to advise a
modern competition law for the country in line with international developments and to
suggest a legislative framework, which may entail a new law or appropriate
amendments to the MRTP Act. The Committee submitted its report to the Central
government. The Central Government consulted all concerned including the trade and
industry associations and the general public. The Central Government after considering
the suggestions of the trade and industry and the general public decided to enact a law
on Competition to replace the then existing competition law namely, the Monopolies
and Restrictive Practices Act (1969) which was primarily designed to restrict growth of
monopolies in the market with a modern competition law in sync with the established
competition law principles. As the first step towards this transformation, a new
Competition Act, 2002 was enacted which received Presidential assent on January 13,
2003.

“ The Competition Act, 2002 in its preamble, seeks to achieve the objectives
which include to forestall activities having an unfavourable impact on competition; to
advance and support competition in business sectors; to secure the benefits to
consumers; to guarantee freedom of trade carried on by different entrepreneurs in
business markets in India. The Act regulates the broad areas of competition law in India
like anti-competitive agreements: these could be both horizontal and vertical
agreements; abuse of dominant position by an enterprise or a group and the
Competition Commission of India is empowered into such matters; and combinations.”

Competition advocacy is defined as “the ability of the competition office to

provide advice, influence and participate in government economic and regulatory
policies in order to promote more competitive industry structure, firm behavior and
market performance.”

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 The Competition (Amendment) Act, 2007 brought significant changes in the
existing regulatory infrastructure established under the Competition Act such as – “the
Commission to be an expert body which will function as a market regulator for
preventing anti competitive practices in the country and would also has advisory role
and advocacy functions; the Commission to function as collegiums and its decisions
would be based on simple majority and also suggested to omit power of the
Commission to award compensation to parties against proven anti competitive practices
indulged in by enterprises; allows continuation of the MRTP Commission till two years
after the constitution of the Commission for trying pending cases under the MRTP Act
and to dissolve the same thereafter; notification of all “combinations” i.e. Mergers,
Acquisitions and Amalgamations to the Commission made compulsory; and
establishment of a Competition Appellate Tribunal with a three member Quasi judicial
body to be headed by a retired or serving judge of the Supreme Court or Chief Justice
of High Court to hear and dispose appeals against any direction issued or decision made
or order passed by the Commission.”

Thus, it can be concluded that the Competition Act ushers in a new Competition
Regime in India. The new regime will herald a paradigm shift to the business
environment in India. A significant section of Indian industry is, perhaps rightly so,
apprehensive about this new enactment and its possible impact on them. Industry is also
anxious that the advantages to various sectors arising out of competition should
percolate to consumers and businesses for a level playing field, redressal against anti
competitive practices, competitively priced inputs and optimal realization from sale of
assets.

6.2 Impact of Competition Law in Indian Liberalized Economy

The emergence of Competition law was a response to the growing unfair trade
practices in the economy which were not only affecting the interest of consumers but
were also causing deterrent effects in the markets. The urge and greed of holding
dominant position in market and of profit maximization lead to the violations of ethics
of business by different players in market who adopted different means to eliminate
competition from the market unfairly and ultimately enjoying non deserving
dominance. Activities like anticompetitive agreements restricting or imposing
limitations upon the other competitors, abuse of dominant position, mergers and

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regulations with the main object of eliminating competition, are commonly prohibited
in the competition law legislation of any country.

Similar to the legislations of other countries Competition law of India i.e.

Competition Act, 2002 is based on the pillars of prevention of anti-competitive
elements, promotion of competition, protection and promotion of consumer welfare. It
provides for the establishment of a commission which works as regulator of
competition in the market. However, being in the nascent stage of its operation the
Competition law in India deals with many issues and challenges some of them are
already experienced by other nations of old established regimes while some issues and
challenges are exclusively faced by the Indian legislation.

As discussed in this thesis the various issues faced by the competition regimes
have been settled to quite an appreciable extent but the work not yet said to be
completed. With regard to issue of extraterritoriality, efforts taken by agencies at
national, regional and global level to achieve a cooperative environment for working of
competition enforcement agencies have expanded the scope of operation of the
regulatory mechanism in controlling cross border anti-competitive activities. But still
absence of a global level organization for governing international competition law
leaves the issue in a disputed state. Such an efficient international antitrust control
system is inevitable for promoting harmony in the interest of both developing as well as
developed nations. The Competition Act, 2002 was enacted with a view to curb anti-
competitive practices in light of new emerging situations in post globalization era. So
far, the Commission has worked in quite a satisfactory manner as a regulator of
competition and has imposed highly punitive penalties on the entities engaged in anti-
competitive practices. Such actions of commission have ultimately resulted in a
disciplined environment of monopolistic competition which is proving beneficial for
the consumers. However, the ideal scenario which has been set as an objective of the
Act is yet to be achieved. There are still some concerns on which introspection is
required both by the government as well as of the Commission. Being a new comer in
the field, the Competition Act has adopted many provisions from legislations of
different countries but it has also missed many significant provisions also. One such
provision is related to settlement and plea agreements as available in other countries
which makes the regulatory and adjudicatory process quick and more effective.
Absence of such provision in Indian legislation leads to delay in final enforcement of
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decisions which can be quickly resolved through settlement. From adjudicatory point of
view the controversial aspect of the Act relates to the ambiguity in the powers of
commission. A number of cases gone before Competition appellate Tribunal are being
set aside because of the reason that Commission had not followed the principles of
natural justice or had made some other procedural errors. Absence of specific and clear
provisions regarding the powers and duties of commission while forming a prima facie
opinion regarding any case has lead to maximum number of cases being filed against
the orders of the Commission. Furthermore, the acceptance of Writs by the High Court
ignoring the alternate remedy by way of appeal to the Competition Appellate Tribunal
leads to conflict of decisions and confusion in the mind of aggrieved party to choose
the right authority for effective remedy.
Increasing backlog of cases due to staff crunch is another concern that is needed
to be dealt by the Government. Another area where the Commission needs to re-think is
the role of the competition laws in the overlap between Intellectual property laws and
competition laws. Such matters have to be taken up for serious consideration by the
concerned authorities to achieve the desired objectives with which the Competition Act
was enacted.

The Act enables the Commission to regulate the market for goods and services
as diverse as power, telecom, and insurance services, etc. At the same time sector
specific legislations have already established sector specific regulators like Telecom
Regulatory
Authority of India (“TRAI”) for telecom, Insurance Regulatory Development Authority
(“IRDA”) for insurance, and Electricity Regulators for power sector, etc. The absence
of clearly carved out legal space for statutory and sector regulators under various
legislations and the Act creates an overlap between the domain of sector regulators and
the Commission.

Another conflicting issue, which is emerging as a challenge for the competition

law regime is the IPR-Competition law interface. Just like any other legislation laws
relating to the protection of IPRs provides for remedy in case of any grievance but such
remedies are provided mostly in favor of IP holder. In situations relating to the arbitrary
use of IPR which affects the competition adversely, competition law comes into
picture. But the real situation is not as easy as it seems. The main objectives of both the
laws make them stand in clash with each other. In many cases relating to competition-
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IPR interface, objections have also been raised with regard to the presence of remedy
under IPR law with the object of putting a bar on the jurisdiction of competition law. In
Indian context, the Amir Khan Productions case and the recent Ericsson case have
settled the position by concluding that existence of remedy under competition law does
not puts a bar on the jurisdiction of competition law if the activity of IPR holder is
violative of provisions of Competition Act.

The issues and challenges faced by competition law regime of any country can
set an example of caution for other countries whose legislation on this subject is in a
course of progression. However, the implication of such issues may vary according to
the economic scenario of the country but the gist of the problem remains mostly the
same. So lessons should be learned from experiences of other regimes so as to make
competition law efficient in all aspects. Moreover, cooperation through mutual
exchange programs can be proved as a panacea for universal problems relating to
administration and regulation of competition law.

6.3 Conclusion and Suggestions

The researcher made following recommendation while assessing future
prospects of Competition law of India to deal with the current controversies regarding
the Liberalisation, Privatisation and Globalisation model of Indian economy:

(a) Global Level organization for International Competition Law: Establishment of a

global level organization to regulate and govern matters relating to international
issues of competition law is required. Such organization would not only help in
formulating universal guidelines for extraterritorial matters of competition law
enforcement but would also provide harmony in working of competition agencies
in different countries.

(b) Clear Provisions regarding powers of Commission: Provisions of Competition

Act, 2002 should be amended to provide for clear provisions of powers to be
exercised by the Commission during an investigation. As majority of the orders
passed by the commission are being set aside by the appellate tribunal for the
reasons of procedural defects. Such lacunas makes the efforts put up by the
commission useless and also orders for reinvestigations leads to increase in
burden of cases.

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(c) Demarcation of Scope of operation of Commission: The law should provide for
sufficient demarcation of jurisdiction of commission so as to prevent conflict
between different regulators working in their respective fields with CCI.

(d) Capacity building of CCI: It is required that the Government should make
necessary appointments in staff crunched CCI for making it work in an efficient
manner which will also reduce the pendency of cases before the commission.

(e) Regulations for IPR-Competition Law interface: Specific regulations are required
for the governance of IPR which also falls under the ambit of competition law.
This would not only reduce the conflict of IPR law with competition law but
would also provide for clarity on the matters relating to licensing of IPRs.

(f) Introduction of scientific data collection and use of artificial intelligence in

assimilating data to be used for understanding and establishing relevant market
concepts.

(g) Greater emphasis on international co operations as cartels and dominant

enterprises always operate internationally to take advantage of the loopholes in
the laws and the atmosphere of international politics and mistrust.

Competition law of India is in a developing stage and as the area of operation of

this law is so dynamic, constant research and development is required by the authorities
to remain equipped with the latest developments in the field. By now it has been
realized that an efficient and comprehensive competition law regime has become an
inevitable part of economic harmony and with continuous progression of time many
new challenges will come which will require a newly innovative approach to tackle
such issues. So the dynamism of competition law makes it a unique field of operation
with lots of explorations required to be done to keep its objective alive

While the objective of the Competition Act as declared in its preamble, is

undoubtedly commendable and pointless to say that this dynamic statute can and will
touch and change the way Corporate India functions on a day to day basis. What is
important is that the investigations and inquiries under the provisions of the Act should
be concluded as expeditiously as possible and timing issues need to be addressed.

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 The New Indian Competition Law seeks to build upon the global best practices
and has been inspired by both the US and EC experience in its formative stages. The
Competition Act, 2002 having underwent a painful gestation period, phase wise
implementation checked with amendments introduced as a result of various economic,
judicial and administrative concerns is finally in execution mode. In a relatively short
time, the Commission has undertaken enquiries into fields as diverse as entertainment,
realty, power sector, stock exchanges, aviation etc. Needless to say that many of the
inquiries would be path breaking in nature and would pave the way for Competition
Law Jurisprudence and more importantly Competition Law Culture in the country.

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

The gains sought through a competition law can only be realised with effective
enforcement. Weak enforcement of competition law can be as significant an
impediment to consumer interest as the altogether absence of such a law. Competition
law and policy in India is in a developmental stage. This is quite evident from the
recent policy decisions of the Government in this regard, especially in view of the
ongoing work on the National Competition Policy and the consequential changes it
would bring to the Act.

May 2009 has great relevance in the history of Competition law as it laid the
foundation of the modern competition regime in India. Although the Act was passed in
2002, it was delayed due to judicial intervention at the highest level because of the
earlier proposed constitution of the Competition Commission, which included a judicial
function, but did not have a judge as its chairperson. The 2007 amendment to the
Competition Act removed this anomaly and created an appellate tribunal headed by a
sitting or retired Supreme Court judge or a chief justice of a high court, while leaving
the regulatory space for the Competition Commission as an expert body.
Notwithstanding litigation in the Supreme Court relating to the constitution of the

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Competition Commission, for its part the commission continued primarily with
competition advocacy during the interim period from 2003 to 2007, together with
drafting most of its implementing regulations under the Competition Act. It conducted
a number of seminars and workshops to create awareness about the new law among
various stakeholders, including the leading business chambers in India. It also created a
small pool of talent through its internship programmes and commissioned a number of
research studies and projects under its advocacy mandate, including some under the
World Bank aid projects. After the reconstitution of the full Competition Commission
under the amended act and the enforcement of the key sections pertaining to anti-
competitive agreements and abuse of dominant positions, the rate of disposal of
complaints received by the commission has been rather slow. This could be due to the
lack of a proper organizational setup.

During 2020–21, the Commission also took an important initiative in its

outreach efforts. On February 26, 2021, the Commission operationalised its first
regional office at Chennai, which will cater to Andhra Pradesh, Karnataka, Kerala,
Tamil Nadu, Telangana, Puducherry, and Lakshadweep. Along with strengthening
advocacy outreach activities, the regional office is expected to facilitate enforcement by
acting as a centre for filing and receiving cases as well as facilitating investigation,
follow-up court cases, and online depositions in coordination with the Delhi office. The
Commission used the twin instruments of enforcement and advocacy to correct market-
distorting practices. Enforcement was applied judiciously, with interventions made only
in cases where business conduct was found to seriously undermine market processes
and mute competition. For instance, the Commission pursued an assertive enforcement
agenda to free Indian markets from cartels and promote deterrence of this economic
offence. At the same time, it incentivised self-reporting by offering businesses the
opportunity to approach the Commission for lesser penalty by making vital disclosures
on cartels. The aim is to engage the industry not only in the prompt detection and
rectification of competition problems, but also to make businesses realise that everyone
stands to gain from fair and competitive markets

To sum up -

The Competition Act ushers in a new Competition Regime in India. The

new regime will herald a paradigm shift to the business environment in

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India. A significant section of Indian industry is, perhaps rightly so,
apprehensive about this new enactment and its possible impact on them.
Industry is also anxious that the advantages to various sectors arising out
of competition should percolate to consumers and businesses for a level
playing field, redressal against anti competitive practices, competitively
priced inputs and optimal realization from sale of assets. While the
objective of the Competition Act, 2002, as stated in its preamble, is
undoubtedly laudable and needless to say that this dynamic statute can
and will touch and change the way Corporate India functions on a day to
day basis, what is important is that the investigations and inquiries under
the provisions of the Act should be concluded as expeditiously as
possible and timing issues need to be addressed. In addition, it is very
important to have detailed guidelines and a framework within which the
approval would be given by the Competition Commission. This could
help mitigate the likely element of uncertainty by an upfront evaluation
of the parameters contained in the guidelines. The main utility of the Act
should not be to pose as an impediment to business; rather it should
promote business and provide a level playing field. One hopes the
government will take such issues seriously and take steps to address
them.

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