Competetion Law

Competitio
n Law
Flow of the session
❖ What is Competition Law
❖ Benefits of Competition
❖ Applicability of Competition Law
❖ Competition Act, 2002
❖ Enforcement of Competition Law: Powers of the Commission
❖ How to file Information
❖ How to not fall foul of Competition Law: Dos and Don’ts
What is Competition Law?
The law which governs the conduct of enterprises in the market.
The law that penalizes cartels and prohibits abuse of dominance.
The law that governs big mergers.
Objective: To protect and promote fair competition in markets in India.

BENEFITS OF COMPETITION
Applicability
❖All enterprises including public sector
enterprises and Department of Government
engaged in commercial activities.
❖Both goods and services
LIMITATION: Law is not applicable to sovereign

functions and functions relating to: Atomic Energy-
Currency-Defence-Space
Competition
Act, 2002
Salient Features of the Act
Competition
Act
Enforcement Advocacy
Anti
Abuse of Combination
competitive
Dominance Regulation
agreement
Anti-competitive
Agreements
❖Horizontal: The producers
competing for the similar good
or service i.e. at the same level
of value chain may agree to:
❖ Fix prices to avoid price
competition; limit production and
supply to create artificial scarcity in
the market and to charge excessive
prices.
❖ Allocate markets, and
❖ Bid Rigging
Price Fixing
Agreements
➢Price fixing: For Example; if
there are only 3-4 Chocolate
producers in Delhi and they
agree to charge same price from
the consumers; consequently,
consumers will not have any
choice and they have to buy
Chocolate at higher prices.
Allocation of
Markets
➢Sharing of market: For Ex. If
there are only 5 cable operators
in Delhi and they divide the
whole city in 5 parts and they
agree not to enter into one
another’s areas. Consumers will
not have any choice.
Limiting
Production
Limiting production & Supply: For
Ex. If the producers or suppliers
of milk & dairy products in Delhi
agree to reduce production or
supply; that will results into
higher prices of the milk & dairy
products in Delhi. Consumers
have to pay more.
Bid Rigging
Advance agreements about who is going to win a particular bid
Eliminates or reduces competition

Bid rigging is harmful because it Artificially raises prices
Generally found to increase prices between 20%-40%
CCI has imposed penalties in various cases related to Bid Rigging.

Vertical Agreements
❖The Agreements entered between players operating at different levels of value
chain.
❖Example: Tie In and Bundling
❖ Suppose a consumer wants to have a cooking gas connection but he is given connection on the
condition that he has to purchase cooking gas stove also, it becomes an instance of bundling.
❖ Forcing consumers to buy another product alongwith the required
Abuse of Dominance
What is Dominance?
❖ Ability of an enterprise to behave
independently of the market forces. Or Strength
of an enterprise to affect its competitors or
consumers in its favor.
What is abuse of dominance?
❖ When an enterprise uses its dominant position
in the market in an exploitative manner.
Not dominance, but its abuse is prohibited
Is it fair competition?
Contd…
❖If the weak player is another producer, dominant producer would throw him out of
the market---Decrease in no. of producers and degree of competition---Decrease in
Production-- --Increase in prices …..consumer welfare decreases.
❖If the weak player is a consumer---Producer dictates the decision making---
Consumer given no say----Prices may not be proportionate to quality---consumer
welfare decreases
Instances of Abuse of
Dominance
Imposes unfair or discriminatory conditions in
purchase or sale
❖Imposes unfair or discriminatory price
❖Limits/ restricts production or supply of goods
or service
❖Limits / restricts technical development
❖Denies market access
Combinations
Regulation
❖Examine potential effect of a
Merger/Amalgamation/Acquisition on
Competition in market.
❖ The major considerations are the change in
ability of the combined enterprise to increase
prices of goods, post merger and the impact on
consumer choice.
❖ All combinations meeting thresholds as
prescribed, need pre approval of CCI
POWERS OF
THE
COMMISSION
What Orders the Commission Can Pass?
Cartel
❖ The penalty on cartel is up to 3 times of the profit earned OR
up to 10% of the turnover of each member for each year of
continuance of such agreement, whichever is higher.
❖ After the inquiry, the commission may direct the members of

the cartel to discontinue and not to re-enter in anti-competitive agreement
What Orders the Commission Can Pass?
Agreements & AoD
❖ The Penalty can be up to 10% of the average turnover for the ❖ The Commission may direct division of enterprise in case it is
last 3 preceding financial years upon each of such persons or found to abuse its dominant position in the market to ensure
enterprises which are parties to such agreement or abuse. that such enterprise does not abuse its dominant position.
APPEAL PROVISIONS
National Company Law Appellate Tribunal (NCLAT)
❖ To hear and dispose of appeals against the
specific order of the Commission.
❖ An appeal has to be filed within 60 days of
receipt of the order / direction / decision of the
Commission.
❖ A person aggrieved with the direction,
decision or order of the NCLAT can appeal to
the Supreme Court of India within 60 days from
the date of communication of the direction,
decision or order
HOW TO FILE
INFORMATION?
❖ Any person, consumer, consumer
association or trade association can
provide information.
Who can ❖ Central govt. State Govt. or

Provide salutatory authority can make a
reference.
Information?
❖ or the Commission can take Suo-
Moto action
The information can be filed on;
❖ Anti- ❖ Abuse of
❖ Or a
competitive dominant
What activities position
Combination
Information
can be Filed? Which causes or likely to cause an
appreciable adverse effect on
competition in the markets in India
❖ Price fixing: Do not enter into an agreement,
however informal it may seem, that fixes the price.
This is a classic cartel behavior.
❖ Market sharing: Do not divide territories or
How to not customers between you and your competitors.
fall foul of ❖ Information regarding future pricing: Do not
exchange commercially sensitive information with
competition your competitors such as your price and cost etc.
law: Don’ts ❖ Agreeing to limit sales or output: Do not agree to
production quotas or anything that could lead to a
limitation of sales or output.
Leniency Provisions
Conclusion
❖ Competition Act is People’s Act
that aims at maximizing social
welfare by protecting consumers
interest.
❖ Contributes to the sustainable
and inclusive development of our
country.

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Competitio

The law that penalizes cartels and prohibits abuse of dominance.

The law that governs big mergers.

Objective: To protect and promote fair competition in markets in India.

LIMITATION: Law is not applicable to sovereign

Eliminates or reduces competition

CCI has imposed penalties in various cases related to Bid Rigging.

❖ After the inquiry, the commission may direct the members of

Who can ❖ Central govt. State Govt. or

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