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Competition Act, 2002

What is competition in the market?
Competition can be defined as a situation in the market in which manufacturers or sellers
independently fight for selling their goods or services to the buyers, to achieve a particular business
objective (for example - profits, sales or market share).

Competition can also be defined as a process of economic rivalry between market players to attract
customers. These market players can be multinational or domestic companies, wholesalers, retailers
or even the neighborhood shopkeeper.

In order to gain lead ahead of rival enterprises, market players either –

a) adopt fair means (producing quality goods, being cost efficient, adopting appropriate
technologies, etc.), or

b) indulge in unfair measures (carrying out restrictive business practices- such as predatory pricing
exclusive dealing, collusion, cartelization, abuse of dominant position etc.)

However, in the interest of consumers and the economy as a whole, it is necessary to promote an
environment that facilities fair competitive outcomes in the market, curb anti-competitive behavior
and discourage market players from adopting unfair measures.

The Competition Act, 2002 has been enacted 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 the markets, to protect the
interest of consumers and to ensure freedom of trade carried on by other participant in the markets
in India and for matters connected therewith or incidental thereto.

Competition Law & Policy

The objective of competition policy is to preserve and promote competition as a means of ensuring
efficient allocation of resources.

Competition policy has two components. The first component is a set of policies that enhance
competition in local and national markets. The second component is a set of legislations designed to
prevent anti-competitive business practices with minimal government intervention.

A competition law by itself cannot produce or ensure competition in the market unless this is
facilitated by appropriate government policies.

On the other hand, government policies would also be incomplete without a law to enforce such
policies and prevent competition malpractices.

Competition policy is about ensuring that markets are, and remain, competitive. This brings benefits
to consumers eventually in all ways. However, eliminating anti-competitive practices and dismantling
monopoly positions that lead to abuses also benefits those firms whose business suffers from these
practices and abuses.

Competition polices cover a much broader set of instruments than competition law, and typically
include all polices aimed at increasing the intensity of competition or rivalry in local and national
markets by lowering entry barriers to ensure that markets work effectively and serve interests of
all citizens. Competition law is only a sub-set of a nation's competition policies.

The basic purpose of Competition Policy and law is to preserve and promote competition as a means
of ensuring efficient allocation of resources in an economy. Competition policy typically has two
elements:

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- one is a set of policies that enhance competition in local and national markets.
- second element is legislation designed to prevent anti-competitive business practices with
minimal Government intervention, i.e., a competition law.

Competition law by itself cannot produce or ensure competition in the market unless this is
facilitated by appropriate Government policies. On the other hand, Government policies without a
law to enforce such policies and prevent competition malpractices would also be incomplete.

Competition policies cover a much broader set of instruments than competition law, and typically
include all policies aimed at increasing the intensity of competition or rivalry in local and national
markets by lowering entry barriers and opportunities for harmful coordination, to ensure that
markets work effectively and serve the interests of all citizens. Competition law is only a subset of
a nation's competition policies. Competition policies typically include pro-competition approaches to
trade, investment, sectoral regulation, and consumer protection. The barriers to international or
interregional trade, restrictions on Foreign Direct Investment (FDI) and technology transfers,
restrictions on entry in regulated network utility industries, regulations affecting the registration
of new enterprises and the taxation and corporate governance of existing enterprises, and rules on
marketing practices all influence the extent of competitive pressures in markets and so are
appropriate concerns of competition policies. In many countries, competition authorities have
become the focal point for consultations and putting forward pro-competition viewpoints across a
broad range of policy areas.

The principal objectives of the Act, as spelt out in the preamble were:

i prevention of concentration of economic power to the common detriment;

ii control of monopolies;

iii prohibition of monopolistic trade practice;

iv prohibition of restrictive trade practices.

Why do we need competition in the market?

Competition is now universally acknowledged as the best means of ensuring that consumers have
access to the broadest range of services at the most competitive prices. Producers will have
maximum incentive to innovate, reduce their costs and meet consumer demand. Competition thus
promotes allocative and productive efficiency. But all this requires healthy market conditions and
governments across the globe are increasingly trying to remove market imperfections through
appropriate regulations to promote competition.

Salient Features of the Act

With the enforcement of the Competition Act, 2002 the MRTP Act, 1969 shall stand repealed and
the MRTP Commission shall be dissolved.

1. The Competition Act, 2002 has been enacted to:

- Prevent practices having an appreciable adverse effect on competition,
- To promote and sustain competition in the market and
- To protect the interests of consumers and to ensure freedom of trade.
2. The competition Act, 2002 seeks to achieve its objectives by:
- Prohibiting anti-competitive policy on competition,
- Creating awareness by imparting training on competition issues.
3. The Competition Act, 2002 provides for the establishment of Competition Commission of India.

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ASEAN REGIONAL GUIDELINES ON COMPETITION POLICY

In the case of Excel Crop Care Limited v. Competition Commission of India and Another the
Hon'ble Supreme Court of India observed that the Act, which prohibits anti-competitive
agreements, has a laudable purpose behind it. The benefits of which are explained in ASEAN Regional
Guidelines on Competition Policy and are as follows:

“Main Objectives and Benefits of Competition Policy”

• Economic efficiency: Economic efficiency refers to the effective use and allocation of the
economy's resources. Competition tends to bring about enhanced efficiency, in both a static
and a dynamic sense, by disciplining firms to produce at the lowest possible cost and pass these
cost savings on to consumers, and motivating firms to undertake research and development to
meet customer needs.
• Economic growth and development: Economic growth–the increase in the value of goods and
services produced by an economy – is a key indicator of economic development. Economic
development refers to a broader definition of an economy's well-being, including employment
growth, literacy and mortality rates and other measures of quality of life. Competition may
bring about greater economic growth and development through improvements in economic
efficiency and the reduction of wastage in the production of goods and services. The market
is therefore able to more rapidly reallocate resources, improve productivity and attain a higher
level of economic growth. Over time, sustained economic growth tends to lead to an enhanced
quality of life and greater economic development.
• Consumer Welfare: Competition policy contributes to economic growth to the ultimate benefit
of consumers, in terms of better choice (new products), better quality and lower prices.
Consumer welfare protection may be required in order to redress a perceived imbalance
between the market power of consumers and producers. The imbalance between consumers and
producers may stem from market failures such as information asymmetries, the lack of
bargaining position towards producers and high transaction costs. Competition policy may serve
as a complement to consumer protection policies to address such market failures.”

The aforesaid guidelines also spell out few more benefits of such laws incorporating
competition policies by highlighting the following advantages:
1. In addition, competition policy is also beneficial to developing countries. Due to worldwide
deregulation, privatisation and liberalisation of markets, developing countries need a
competition policy, in order to monitor and control the growing role of the private sector in
the economy so as to ensure that public monopolies are not simply replaced by private
monopolies.
2. Besides contributing to trade and investment policies, competition policy can accommodate
other policy objectives (both economic and social) such as the integration of national markets
and promotion of regional integration, the promotion or protection of small businesses, the
promotion of technological advancement, the promotion of product and process innovation, the
promotion of industrial diversification, environment protection, fighting inflation, job creation,
equal treatment of workers according to race and gender or the promotion of welfare of
particular consumer groups.

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In particular, competition policy may have a positive impact on employment policies, reducing
redundant employment (which often results from inefficiencies generated by large incumbents
and from the fact that more dynamic enterprises are prevented from entering the market)
and favoring jobs creation by new efficient competitors.

3. Competition policy complements trade policy, industrial policy and regulatory reform.
Competition policy targets business conduct that limits market access and which reduces actual
and potential competition, while trade and industrial policies encourage adjustment to the
trade and industrial structures in order to promote productivity-based growth and regulatory
reform eliminates domestic regulation that restricts entry and exit in the markets. Effective
competition policy can also increase investor confidence and prevent the benefits of trade
from being lost through anticompetitive practices. In this way, competition policy can be an
important factor in enhancing the attractiveness of an economy to foreign direct investment,
and in maximizing the benefits of foreign investment.”

Further, the Apex Court inter alia observed that in fact, there is broad empirical evidence
supporting the proposition that competition is beneficial for the economy. Economists agree that it
has an important role to play in improving productivity and, therefore, the growth prospects of an
economy. It is achieved in the following manner:

“International Competition Network - Economic Growth and Productivity:

Competition contributes to increased productivity through:

Pressure on firms to control costs: In a competitive environment, firms must constantly strive to
lower their production costs so that they can charge competitive prices, and they must also improve
their goods and services so that they correspond to consumer demands.

Easy market entry and exit: Entry and exit of firms reallocates resources from less to more
efficient firms. Overall productivity increases when an entrant is more efficient than the average
incumbent and when an existing firm is less efficient than the average incumbent. Entry – and the
threat of entry –incentivizes firms to continuously improve in order not to lose market share to or
be forced out of the market by new entrants.

Encouraging innovation: Innovation acts as a strong driver of economic growth through the
introduction of new or substantially improved products or services and the development of new and
improved processes that lower the cost and increase the efficiency of production. Incentives to
innovate are affected by the degree and type of competition in a market.

Pressure to Improve Infrastructure: Competition puts pressure on communities to keep local

producers competitive by improving roads, bridges, docks, airports, and communications, as well as
improving educational opportunities.

Benchmarking: Competition also can contribute to increased productivity by creating the possibility
of benchmarking. The productivity of a monopolist cannot be measured against rivals in the same
geographic market, but a dose of competition quickly will expose inferior performance. A monopolist
may be content with mediocre productivity but a firm battling in a competitive market cannot afford
to fall behind, especially if the investment community is benchmarking it against its rivals.”

Productivity is increased through competition by putting pressure on firms to control costs as the
producers strive to lower their production costs so that they can charge competitive prices. It also
improves the quality of their goods and services so that they correspond to consumers’ demands.

Competition law enforcement deals with anti-competitive practices arising from the acquisition or
exercise of undue market power by firms that result in consumer harm in the forms of higher prices,
lower quality, limited choices and lack of innovation. Enforcement provides remedies to avoid

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situations that will lead to decreased competition in markets. Effective enforcement is important
not only to sanction anti-competitive conduct but also to deter future anti-competitive practices.

Keeping in view the aforesaid objectives that need to be achieved, Indian Parliament enacted
Competition Act, 2002. Need to have such a law became all the more important in the wake of
liberalisation and privatisation as it was found that the law prevailing at that time, namely,
Monopolistic Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle
the competition aspects of the Indian economy. The law enforcement agencies, which include CCI
and COMPAT, have to ensure that these objectives are fulfilled by curbing anti-competitive
agreements.

COMPETITION REGIME IN INDIA

Recommendations of Sachar Committee

The Government of India appointed a Committee in August, 1977 under the Chairmanship of Justice
Rajinder Sachar to look into the simplification of the working of the companies and the MRTP Act.
The Committee submitted its report in the year 1978 and as far as recommendations pertaining to
the MRTP Act are concerned, far reaching changes were suggested by the Committee. For the first
time, the Committee highlighted the need for introduction of suitable provisions to curb unfair trade
practices.

In its view, the assumption that curbing monopolistic and restrictive trade practices and thereby
preventing distortion of competition automatically results in the consumers getting a fair deal was
only partly true. It was felt necessary to protect the consumers from practices adopted by trade
and industry to mislead or dupe them.

The Committee pointed out that advertisements and sales promotion having become well established
modes of modern business techniques, representations through such advertisements to the
consumer should not become deceptive. If a consumer was falsely induced to enter into buying goods
which do not possess the quality and did not have the cure for the ailment advertised, it was apparent
that the consumer was being made to pay for quality of things on false representation. Such a
situation could not be accepted.

Therefore, an obligation is to be cast on the seller to speak the truth when he advertises and also
to avoid halftruths, the purpose being preventing false or misleading advertisements. The Committee
also noted that fictitious bargain was another common form of deception and many devices were
used to lure buyers into believing that they were getting something for nothing or at a nominal value
for their money. The Committee observed: Prices may be advertised as greatly reduced and cut
when in reality the goods may be sold at sellers regular prices. Advertised statements that could
have two meanings, one of which is false, are also considered misleading. In America, it was held that
statement that a tooth paste fights decay could be interpreted as a promise of complete protection
and was thus deceptive. Mock-ups on television put up by companies including Colgate Palmolive had
also received the attention of the Enforcement Agencies in America and have been held to be
deceptive.

We cannot say that the type of misleading and deceptive practices which are to be found in other
countries are not being practised in our country. Unfortunately our Act is totally silent on this
aspect. The result is that the consumer has no protection against false or deceptive advertisements.
Any misrepresentation about the quality of a commodity or the potency of a drug or medicine can
be projected without much risk. This has created a situation of a very safe haven for the suppliers
and a position of frustration and uncertainty for the consumers.

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It should be the function of any consumer’s legislation to meet this challenge specifically. Consumer
protection must have a positive and active role.

Accordingly, the Committee specified certain unfair trade practices which were notorious and
suggested prohibition of such practices. The main category of unfair trade practices recommended
for prohibition by the Sachar Committee were: (a) misleading advertisements and false
representations (b) bargain sale, bait and switch selling; (c) offering gifts or prizes with the
intention of not providing them and conducting promotional contests; (d) supplying goods not
conforming to safety standards; and (e) hoarding and destruction of goods.

In India, by an amendment to the MRTP Act in the year 1984 Part B Unfair Trade Practices was
added to Chapter V. It may be recalled that Part A of Chapter V deals with registration of
agreements relating to restrictive trade practices. Section 36A, 36B, 36C, 36D and 36E are relevant
for the purposes of understanding the main provisions relating to unfair trade practices.

Recommendations of Raghavan Committee

As India moved steadily on the path of reforms comprising of Liberalisation, Privatisation and
Globalisation, it did away with the MRTP Act, 1969 as it was realised that the Act had outlived its
utility and control of monopoly was not appropriate to support the growth aspirations of more than
1 billion Indians. Indeed, need was felt to promote and sustain competition in the market place. The
then Finance Minister (Shri.Yashwant Sinha) in the budget speech in 1999 had announced:

“The Monopolies and Restrictive Trade Practices Act has become obsolete in certain areas in the
light of international economic developments relating to competition laws. We need to shift our focus
from curbing monopolies to promoting competition. Government has decided to appoint a Committee
to examine this range of issues and propose a modern Competition Law suitable for our conditions.”

Accordingly, a High Level Committee on Competition Policy and Law was constituted under
Chairmanship of Mr. S.V.S Raghavan. The Committee submitted its report on 22nd May 2000
recommending replacement of the MRTP Act with a modern competition law for fostering
competition and for eliminating anticompetitive practices in the economy. After consulting the
stakeholders, Competition Bill, 2001 was introduced in the Parliament which eventually became the
Competition Act, 2002.

The purpose of the Competition Act, as stated in its preamble is: “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.”

Why do we need competition in the market?

Competition is now universally acknowledged as the best means of ensuring that consumers have
access to the broadest range of services at the most competitive prices. Producers will have
maximum incentive to innovate, reduce their costs and meet consumer demand. Competition thus
promotes allocative and productive efficiency. But all this requires healthy market conditions and
governments across the globe are increasingly trying to remove market imperfections through
appropriate regulations to promote competition.

IMPORTANT DEFINITIONS
“Acquisition” means, directly or indirectly, acquiring or agreeing to acquire—

i. shares, voting rights or assets of any enterprise; or

ii. control over management or control over assets of any enterprise. [Section 2(a)]

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“Agreement” includes any arrangement or understanding or action in concert, —

i. whether or not, such arrangement, understanding or action is formal or in writing; or

ii. whether or not such arrangement, understanding or action is intended to be enforceable by
legal proceedings. [Section 2(b)]

“Appellate Tribunal” means the National Company Law Appellate Tribunal.

“Cartel” includes an association of producers, sellers, distributors, traders or service providers who,
by agreement amongst themselves, limit, control or attempt to control the production, distribution,
sale or price of, or, trade in goods or provision of services. [Section 2(c)]

The nature of a cartel is to raise price above competitive levels, resulting in injury to consumers and
to the economy. For the consumers, cartelisation results in higher prices, poor quality and less or no
choice for goods or/and services.

An international cartel is said to exist, when not all of the enterprises in a cartel are based in the
same country or when the cartel affects markets of more than one country.

An import cartel comprises enterprises (including an association of enterprises) that get together
for the purpose of imports into the country.

An export cartel is made up of enterprises based in one country with an agreement to cartelize
markets in other countries. In the Competition Act, cartels meant exclusively for exports have been
excluded from the provisions relating to anti-competitive agreements. This is because such cartels
do not adversely affect markets in India and are hence outside the purview of the Competition Act.
If there is effective competition in the market, cartels would find it difficult to be formed and
sustained.

Some of the conditions that are conducive to cartelization are:

- high concentration - few competitors
- high entry and exit barriers
- homogeneity of the products (similar products)
- similar production costs
- excess capacity
- high dependence of the consumers on the product
- history of collusion

“Consumer” means any person who—

i. buys any goods for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such goods other
than the person who buys such goods for consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment when such use is made with the approval
of such person, whether such purchase of goods is for resale or for any commercial purpose
or for personal use;
ii. hires or avails of any services for a consideration which has been paid or promised or partly
paid and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who hires or avails of the services for
consideration paid or promised, or partly paid and partly promised, or under any system of
deferred payment, when such services are availed of with the approval of the first-mentioned
person whether such hiring or availing of services is for any commercial purpose or for personal
use. [Section 2(f)]

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“Director General” means the Director General appointed under sub-section (1) of section 16 and
includes any Additional, Joint, Deputy or Assistant Directors General appointed under that section.
[Section 2(g)]

“Enterprise” means a person or a department of the Government, including units, divisions,

subsidiaries, who or which is, or has been, engaged in any economic activity, relating to the
production, storage, supply, distribution, acquisition or control of articles or goods, or the provision
of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or
dealing with shares, debentures or other securities of any other body corporate, either directly or
through one or more of its units or divisions or subsidiaries, but does not include any activity of the
Government relatable to the sovereign functions of the Government including all activities carried
on by the departments of the Central Government dealing with atomic energy, currency, defence
and space.

“Goods” means goods as defined in the Sale of Goods Act, 1930 and includes—

a) products manufactured, processed or mined;

b) debentures, stocks and shares after allotment;
c) in relation to goods supplied, distributed or controlled in India, goods imported into India.
Section 2(i)]

“Party” includes:

- a consumer or
- an enterprise or
- a person or
- an information provider, or
- a consumer association or
- a trade association, or
- the Central Government or
- any State Government or
- any statutory authority, as the case may be,
- and shall include an enterprise or a person against whom any inquiry or proceeding is instituted;
- and any enterprise or person impleaded by the Commission to join the proceedings. [Section
2(ka)]

“Person” includes—

i. an individual;
ii. a Hindu undivided family;
iii. a company;
iv. a firm;
v. an association of persons or a body of individuals, whether incorporated or not, in India or
outside India;
vi. any corporation established by or under any Central, State or Provincial Act or a Government
company as defined in clause (45) of section 2 of the Companies Act, 2013;
vii. any body corporate incorporated by or under the laws of a country outside India;
viii. a co-operative society registered under any law relating to co-operative societies;
ix. a local authority;
x. every artificial juridical person, not falling within any of the preceding sub-clauses. [Section
2(l)]

“Price”, in relation to the sale of any goods or to the performance of any services, includes every
valuable consideration, whether direct or indirect, or deferred, and includes any consideration which
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in effect relates to the sale of any goods or to the performance of any services although ostensibly
relating to any other matter or thing. [Section 2(o)]

“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. [Section 2(r)]

“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.
[Section 2(s)]

“Relevant Product Market” means a market comprising of all those products or services—

i. which are regarded as inter-changeable or substitutable by the consumer, by reason of

characteristics of the products or services, their prices and intended use; or
ii. the production or supply of, which are regarded as interchangeable or substitutable by the
supplier, by reason of the ease of switching production between such products and services
and marketing them in the short term without incurring significant additional costs or risks in
response to small and permanent changes in relative prices. [Section 2(t)]

“Service” means service of any description which is made available to potential users and includes
the provision of services in connection with business of any industrial or commercial matters such
as banking, communication, education, financing, insurance, chit funds, real estate, transport,
storage, material treatment, processing, supply of electrical or other energy, boarding, lodging,
entertainment, amusement, construction, repair, conveying of news or information and
advertising.[Section 2(u)]

“Shares” means shares in the share capital of a company carrying voting rights and includes—

i. any security which entitles the holder to receive shares with voting rights;
ii. stock except where a distinction between stock and share is expressed or implied.[Section
2(v)]

“Statutory Authority” means any authority, board, corporation, council, institute, university or any
other body corporate, established by or under any Central, State or Provincial Act for the purposes
of regulating production or supply of goods or provision of any services or markets therefor or any
matter connected therewith or incidental thereto. [Section 2(w)]

“Trade” means any trade, business, industry, profession or occupation relating to the production,
supply, distribution, storage or control of goods and includes the provision of any services. [Section
2(x)]

PROHIBITION OF CERTAIN AGREEMENTS

Section 3 deals with anti-competitive agreements.

Section 3(1) provides that 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
appreciable adverse effect on competition within India.

As per Section 3(2) any agreement entered into in contravention of the provisions contained in sub-
section (1) shall be void.

Section 3(3) states that any agreement entered into between enterprises or associations of
enterprises or persons or associations of persons or between any person and enterprise or practice

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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—

a) directly or indirectly determines purchase or sale prices;

b) limits or controls production, supply, markets, technical development, investment or provision
of services;
c) 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;
d) directly or indirectly results in bid rigging or collusive bidding,

shall be presumed to have an appreciable adverse effect 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.

Explanation. —For the purposes of this sub-section, “bid rigging” means any agreement, between
enterprises or persons referred to in sub-section (3) engaged in identical or similar production or
trading of goods or provision of services, which has the effect of eliminating or reducing competition
for bids or adversely affecting or manipulating the process for bidding.

Some of the most commonly adopted ways in which collusive bidding or bid rigging may occur are:

- agreements to submit identical bids

- agreements as to who shall submit the lowest bid, agreements for the
- submission of cover bids (voluntarily inflated bids)
- agreements not to bid against each other,
- agreements on common norms to calculate prices or terms of bids
- agreements to squeeze out outside bidders
- agreements designating bid winners in advance on a rotational basis, or on a geographical or
customer allocation basis.

If bid rigging takes place in Government tenders, it is likely to have severe adverse effects on its
purchases and on public spending. Bid rigging or collusive bidding is treated with severity in the law.
The presumptive approach reflects the severe treatment.

Section 3(4) provides that any other agreement amongst enterprises or persons including but not
restricted to 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 dealing agreement;
c) exclusive distribution agreement;
d) refusal to deal;
e) resale price maintenance,

shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to

cause an appreciable adverse effect on competition in India.

Provided that nothing contained in this sub-section shall apply to an agreement entered into between
an enterprise and an end consumer.

Explanation. —For the purposes of this sub-section, —

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a) “Tie-In Arrangement” includes any agreement requiring a purchaser of goods or services, as

a condition of such purchase, to purchase some other distinct goods or services;
b) “Exclusive Dealing Agreement” includes any agreement restricting in any manner the
purchaser or the seller, as the case may be, in the course of his trade from acquiring or selling
or otherwise dealing in any goods or services other than those of the seller or the purchaser
or any other person, as the case may be;
c) “Exclusive Distribution Agreement” includes any agreement to limit, restrict or withhold the
output or supply of any goods or services or allocate any area or market for the disposal or
sale of the goods or services;
d) “Refusal to Deal” includes any agreement which restricts, or is likely to restrict, by any
method the persons or classes of persons to whom goods or services; are sold or from whom
goods or services are bought;
e) “Resale Price Maintenance” includes, in case of any agreement to sell goods or provide
services, any direct or indirect restriction that the prices to be charged on the resale 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.

It may be noted that Section 3 shall not restrict —

i. 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;
b) the Patents Act, 1970;
c) the Trade and Merchandise Marks Act, 1958 or the Trade Marks Act, 1999;
d) the Geographical Indications of Goods (Registration and Protection) Act, 1999;
e) the Designs Act, 2000;
f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000;
g) any other law for the time being in force relating to the protection of other intellectual
property rights.
ii. the right of any person to export goods from India to the extent to which the agreement
relates exclusively to the production, supply, distribution or control of goods or provision of
services for such export.

What Is an Anti-Competitive Agreement?

An anti-competitive agreement is an agreement having appreciable adverse effect on competition.
Anticompetitive agreements include, but are not limited to: -

- agreement to limit production and/or supply;

- agreement to allocate markets;
- agreement to fix price;
- bid rigging or collusive bidding;
- conditional purchase/ sale (tie-in arrangement);
- exclusive supply / distribution arrangement;
- resale price maintenance; and
- refusal to deal.

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PROHIBITION OF ABUSE OF DOMINANT POSITION

According to Section 4(1) of the Act, no enterprise or group shall abuse its dominant position.

Section 4(2) states that there shall be an abuse of dominant position under sub-section (1), if an
enterprise or a group:

a) directly or indirectly, imposes unfair or discriminatory—

i. condition in purchase or sale of goods or service; or
ii. price in purchase or sale (including predatory price) of goods or service.
b) limits or restricts—
i. production of goods or provision of services or market therefor; or
ii. technical or scientific development relating to goods or services to the prejudice of
consumers; or
c) indulges in practice or practices resulting in denial of market access in any manner; or
d) makes conclusion of contracts subject to acceptance by other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with
the subject of such contracts; or
e) uses its dominant position in one relevant market to enter into, or protect, other relevant
market.

Explanation. — For the purposes of this section, the expression:

“Dominant Position” means a position of strength, enjoyed by an enterprise, in the relevant market,
in India, which enables it to:

i. operate independently of competitive forces prevailing in the relevant market; or

ii. affect its competitors or consumers or the relevant market in its favour.

“Predatory Price” means the sale of goods or provision of services, at a price which is below the
cost, as may be determined by regulations, of production of the goods or provision of services, with
a view to reduce competition or eliminate the competitors.

“Group” means two or more enterprises where one enterprise is directly or indirectly, in a position
to:

i. exercise 26% or such other higher percentage as may be prescribed, of the voting rights in
the other enterprise; or
ii. appoint more than 50% of the members of the board of directors in the other enterprise; or
iii. control the management or affairs of the other enterprise.

What Constitutes Abuse of Dominance?

Dominance refers to a position of strength which enables an enterprise to operate independently of
competitive forces or to affect its competitors or consumers or the market in its favour. Abuse of
dominant position impedes fair competition between firms, exploits consumers and makes it difficult
for the other players to compete with the dominant undertaking on merit. Abuse of dominant position
includes:

i. imposing unfair conditions or price,

ii. predatory pricing,
iii. limiting production/market or technical development,
iv. creating barriers to entry,
v. applying dissimilar conditions to similar transactions,
vi. denying market access, and
vii. using dominant position in one market to gain advantages in another market.

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COMBINATION
The acquisition of one or more enterprises by one or more persons or merger or amalgamation of
enterprises shall be a combination of such enterprises and persons or enterprises, if –

a) any acquisition where –

i. the parties to the acquisition, being the acquirer and the enterprise, whose control,
shares, voting rights or assets have been acquired or are being acquired jointly have, –
A. either, in India, the assets of the value of more than Rs. 2,500 crores or turnover
more than Rs. 7,500 crores; or
B. in India or outside India, in aggregate, the assets of the value of more than 1.25
billion US dollars, including at least Rs. 1,250 crores in India, or turnover more than
3.75 billion US dollars, including at least Rs. 3,750 crores in India; or
ii. the group, to which the enterprise whose control, shares, assets or voting rights have
been acquired or are being acquired, would belong after the acquisition, jointly have or
would jointly have, –
A. either in India, the assets of the value of more than Rs. 10,000 crores or turnover
more than Rs. 30,000 crores; or
B. in India or outside India, in aggregate, the assets of the value of more than 5 Billion
US dollars, including at least Rs. 1,250 crores in India, or turnover more than 15
Billion US dollars, including at least Rs. 3,750 crores in India; or
b) acquiring of control by a person over an enterprise when such person has already direct or
indirect control over another enterprise engaged in production, distribution or trading of a
similar or identical or substitutable goods or provision of a similar or identical or substitutable
service, if—
i. the enterprise over which control has been acquired along with the enterprise over which
the acquirer already has direct or indirect control jointly have, —
A. either in India, the assets of the value of more than Rs. 2,500 crores or turnover
more than Rs. 7,500 crores; or
B. India or outside India, in aggregate, the assets of the value of more than 1.25 billion
US dollars, including at least Rs. 1,250 crores in India, or turnover more than 3.75
billion US dollars, including at least Rs. 3,750 crores in India; or
ii. the group, to which enterprise whose control has been acquired, or is being acquired,
would belong after the acquisition, jointly have or would jointly have, —
A. either in India, the assets of the value of more than Rs. 10,000 crores or turnover
more than Rs. 30,000 crores; or
B. in India or outside India, in aggregate, the assets of the value of more than 5 Billion
US dollars, including at least Rs. 1,250 crores in India, or turnover more than 15
Billion US dollars, including at least Rs. 3,750 crores in India; or
c) any merger or amalgamation in which—
i. 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 Rs. 2,500 crores or turnover
more than Rs. 7,500 crores; or
B. India or outside India, in aggregate, the assets of the value of more than 1.25 billion
US dollars, including at least Rs. 1,250 crores in India, or turnover more than 3.75
billion US dollars, including at least Rs. 3,750 crores in India; or

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ii. 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 Rs. 10,000 crores or turnover
more than Rs. 30,000 crores; or
B. in India or outside India, in aggregate, the assets of the value of more than 5 Billion
US dollars, including at least Rs. 1,250 crores in India, or turnover more than 15
Billion US dollars, including at least Rs. 3,750 crores in India.
d) value of any transaction, in connection with acquisition of any control, shares, voting rights or
assets of an enterprise, merger or amalgamation exceeds Rs. 2,000 crores:

Provided that the enterprise which is being acquired, taken control of, merged or amalgamated
has such substantial business operations in India as may be specified by regulations.

e) notwithstanding anything contained in clause (a) or clause (b) or clause (c), where either the
value of assets or turnover of the enterprise being acquired, taken control of, merged or
amalgamated in India is not more than such value as may be prescribed, such acquisition,
control, merger or amalgamation, shall not constitute a combination under section 5.

Explanation. —For the purposes of section 5 —

a) “Control” means the ability to exercise material influence, in any manner whatsoever, over
the management or affairs or strategic commercial decisions by—
i. one or more enterprises, either jointly or singly, over another enterprise or group;
or
ii. one or more groups, either jointly or singly, over another group or enterprise;
b) “Group” means two or more enterprises where one enterprise is directly or indirectly, in a
position to –
i. exercise 26% or such other higher percentage as may be prescribed, of the voting
rights in the other enterprise; or
ii. appoint more than 50% of the members of the board of directors in the other
enterprise; or
iii. control the management or affairs of the other enterprise;

What is 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 specified in the Act in terms of assets or turnover in India and outside India.
Entering into a combination which causes or is likely to cause an appreciable adverse effect on
competition within the relevant market in India is prohibited and such combination shall be void.

REGULATION OF COMBINATIONS
Section 6(1) provides that no person or enterprise shall enter into a combination which causes or is
likely to cause an appreciable adverse effect on competition within the relevant market in India and
such a combination shall be void.

Section 6(2) states that subject to the provisions contained in sub-section (1), any person or
enterprise, who or which proposes to enter into a combination, shall give notice to the Commission,
in the form as may be specified, and the fee which may be determined, by regulations, disclosing

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the details of the proposed combination, after any of the following, but before consummation of the
combination of—

a) approval of the proposal relating to merger or amalgamation, referred to in clause (c) and
clause (d) of section 5, by the board of directors of the enterprises concerned with such
merger or amalgamation, as the case may be;
b) execution of any agreement or other document for acquisition referred to in clause (a) and
clause (d) of section 5 or acquiring of control referred to in clause (b) of that section.

According to Section 6(2A), no combination shall come into effect until 150 days have passed from
the day on which the notice has been given to the Commission under sub-section (2) or the
Commission has passed orders under section 31, whichever is earlier.

Section 6(3) provides that the Commission shall, after receipt of notice under sub-section (2), deal
with such notice in accordance with the provisions contained in sections 29, 29A, 30 and 31.

Section 6(4) states that notwithstanding anything contained in sub-sections (2A) and (3) and section
43A, if a combination fulfils such criteria as may be prescribed and is not otherwise exempted under
this Act from the requirement to give notice to the Commission under sub-section (2), then notice
for such combination may be given to the Commission in such form and on payment of such fee as
may be specified by regulations, disclosing the details of the proposed combination and thereupon a
separate notice under sub-section (2) shall not be required to be given for such combination.

As per Section 6(5) upon filing of a notice under sub-section (4) and acknowledgement thereof by
the Commission, the proposed combination shall be deemed to have been approved by the Commission
under sub-section (1) of section 31 and no other approval shall be required under sub-section (2) or
sub-section (2A).

Section 6(6) provides that if within the period referred to in sub-section (1) of section 20, the
Commission finds that the combination notified under sub-section (4) does not fulfil the
requirements specified under that subsection or the information or declarations provided are
materially incorrect or incomplete, the approval under sub-section (5) shall be void ab initio and the
Commission may pass such order as it may deem fit:

Provided that no such order shall be passed unless the parties to the combination have been given
an opportunity of being heard.

Section 6(7) states that notwithstanding anything contained in this section and section 43A, upon
fulfilment of such criteria as may be prescribed, certain categories of combinations shall be
exempted from the requirement to comply with sub-sections (2), (2A) and (4).

Section 6(8) provides that notwithstanding anything contained in sub-sections (4), (5), (6) and (7)—

i. the rules and regulations made under this Act on the matters referred to in these sub-sections
as they stood immediately before the commencement of the Competition (Amendment) Act,
2023 and in force at such commencement, shall continue to be in force, till such time as the
rules or regulations, as the case may be, made under this Act; and
ii. any order passed or any fee imposed or combination consummated or resolution passed or
direction given or instrument executed or issued or thing done under or in pursuance of any
rules and regulations made under this Act shall, if in force at the commencement of the
Competition (Amendment) Act, 2023, continue to be in force, and shall have effect as if such
order passed or such fee imposed or such combination consummated or such resolution passed
or such direction given or such instrument executed or issued or done under or in pursuance
of this Act.

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According to Section 6(9) the provisions of this section shall not apply to share subscription or
financing facility or any acquisition, by a public financial institution, foreign portfolio investor, bank
or Category I alternative investment fund, pursuant to any covenant of a loan agreement or
investment agreement.

Open Offers, etc.

Section 6A of the Act provides that nothing contained in section 6(2A) and section 43A shall prevent
the implementation of an open offer or an acquisition of shares or securities convertible into other
securities from various sellers, through a series of transactions on a regulated stock exchange from
coming into effect, if—

a) the notice of the acquisition is filed with the Commission within such time and in such manner
as may be specified by regulations; and
b) the acquirer does not exercise any ownership or beneficial rights or interest in such shares or
convertible securities including voting rights and receipt of dividends or any other
distributions, except as may be specified by regulations, till the Commission approves such
acquisition in accordance with the provisions of sub-section (2A) of section 6 of the Act.

COMPETITION COMMISSION OF INDIA

Establishment of Commission
Section 7 of the Act empowers the Central Government may, by notification, appoint, there shall be
established, for the purposes of this Act, a Commission to be called the “Competition Commission of
India”.

The Commission shall be a body corporate by the name aforesaid having perpetual succession and a
common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of
property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

The head office of the Commission shall be at such place as the Central Government may decide
from time to time. The Commission may establish offices at other places in India.

Composition of Commission
According to Section 8 the Commission shall consist of a Chairperson and not less than 2 and not
more than 6 other Members to be appointed by the Central Government.

The Chairperson and every other Member shall be a person of ability, integrity and standing and who
has special knowledge of, and such professional experience of not less than 15 years in, international
trade, economics, business, commerce, law, finance, accountancy, management, industry, technology,
public affairs or competition matters, including competition law and policy, which in the opinion of
the Central Government, may be useful to the Commission.

The Chairperson and other Members shall be whole-time Members.

Selection Committee for Chairperson and Members of Commission

Section 9 provides that the Chairperson and other Members of the Commission shall be appointed
by the Central Government from a panel of names recommended by a Selection Committee consisting
of:

i. the Chief Justice of India or his nominee – Chairperson

ii. the Secretary in MCA – Member
iii. the Secretary in Ministry of Law & Justice – Member
iv. 2 experts of repute who have special knowledge of, and such professional experience in
international trade, economics, business, commerce, law, finance, accountancy, management,

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industry, technology, public affairs or competition matters, including competition law and
policy, which in the opinion of the Central Government, may be useful to the Commission –
Members.

The term of the Selection Committee and the manner of selection of panel of names shall be such
as may be prescribed.

Term of office of Chairperson and other Members

Section 9 of the Act states that the Chairperson and every other Member shall hold office as such
for a term of 5 years from the date on which he enters upon his office and shall be eligible for re-
appointment:

Provided that the Chairperson or other Members shall not hold office as such after he has attained
the age of 65 years.

A vacancy caused by the resignation or removal of the Chairperson or any other Member under
section 11 or by death or otherwise shall be filled by fresh appointment in accordance with the
provisions of sections 8 and 9.

The Chairperson and every other Member shall, before entering upon his office, make and subscribe
to an oath of office and of secrecy in such form, manner and before such authority, as may be
prescribed.

In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his death,
resignation or otherwise, the senior-most Member shall act as the Chairperson, until the date on
which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy,
enters upon his office.

When the Chairperson is unable to discharge his functions owing to absence, illness or any other
cause, the senior-most Member shall discharge the functions of the Chairperson until the date on
which the Chairperson resumes the charge of his functions.

Resignation, Removal and Suspension of Chairperson and other Members

Section 10(1) provides that the Chairperson or any other Member may, by notice in writing under his
hand addressed to the Central Government, resign his office:

It may be noted 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.

As per Section 10(2) 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 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 has become physically or mentally incapable of acting as a Member.

No Member shall be removed from his office on the ground specified in clause (d) or clause (e) of
that sub-section unless the Supreme Court, on a reference being made to it in this behalf by the

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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.

Restriction on Employment of Chairperson and other Members

According to Section 12(1) of the Act, Chairperson and other Members shall, for a period of two
years from the date on which they cease to hold office, not accept any employment in or advise as
a consultant, retainer or in any other capacity whatsoever, or be connected with the management or
administration of–

a) any enterprise which is or has been a party to a proceeding before the Commission under this
Act; or
b) any person who appears or has appeared before the Commission under section 35.

Section 12(2) provides that notwithstanding anything contained in section 35, the Chairperson or
any other Member after retirement or otherwise ceasing to be in service for any reason shall not
represent for any person or enterprise before the Commission:

Provided that nothing contained in this section shall apply to any employment under the Central
Government or a State Government or local authority or in any statutory authority or any corporation
established by or under any Central, State or Provincial Act or a Government company as defined in
clause (45) of section 2 of the Companies Act, 2013.

Appointment of Director General

Section 16 empowers the Commission with the prior approval of the Central Government appoint a
Director General for the purposes of assisting the Commission in conducting inquiry into
contravention of any of the provisions of this Act and for performing such other functions as are,
or may be, provided by or under this Act.

The number of other Additional, Joint, Deputy or Assistant Directors General or such officers or
other employees in the office of Director General and the manner of appointment of such Additional,
Joint, Deputy or Assistant Directors General or such officers or other employees shall be such as
may be prescribed.

Every Additional, Joint, Deputy and Assistant Directors General or such officers or other
employees, shall exercise his powers, and discharge his functions, subject to the general control,
supervision and direction of the Director General.

The salary, allowances and other terms and conditions of service of the Director General and
Additional, Joint, Deputy and Assistant Directors General or, such officers or other employees,
shall be such as may be prescribed.

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

Appointment of Secretary, Experts, Professionals and Officers and other Employees of

Commission
Section 17 empower the Commission to appoint a Secretary and such officers and other employees
as it considers necessary for the efficient performance of its functions under this Act.

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The salaries and allowances payable to, and other terms and conditions of service of, the Secretary
and officers and other employees of the Commission and the number of such officers and other
employees shall be such as may be prescribed.

The Commission may engage, in accordance with the procedure specified by regulations, such number
of experts and professionals of integrity and outstanding ability, who have special knowledge of, and
experience in, economics, law, business or such other disciplines related to competition, as it deems
necessary to assist the Commission in the discharge of its functions under this Act.

DUTIES, POWERS AND FUNCTIONS OF COMMISSION

Duties and functions of Commission

Section 18 of the Act deals with duties and functions of the Commission. It states that subject to
the provisions of this Act, it shall be 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 carried on by other participants, in markets in India:

Provided that the Commission may, for the purpose of discharging its duties or performing its
functions under this Act, enter into any memorandum or arrangement with the prior approval of the
Central Government, with any agency of any foreign country:

Provided further that, the Commission may, for the purpose of discharging its duties or performing
its functions under this Act, enter into any memorandum or arrangement with any statutory
authority or department of Government.

Inquiry into Certain Agreements and Dominant Position of Enterprise

Section 19(1) provides that the Commission may inquire into any alleged contravention of the
provisions contained in section 391) or section 4(1) 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.

It may be noted that the Commission shall not entertain an information or a reference unless it is
filed within 3 years from the date on which the cause of action has arisen.

Provided further that an information or a reference may be entertained after the period specified
in the first proviso if the Commission is satisfied that there had been sufficient cause for not filing
the information or the reference within such period after recording its reasons for condoning such
delay.

As per Section 19(2), without prejudice to the provisions contained in sub-section (1), the powers
and functions of the Commission shall include the powers and functions specified in sub-sections (3)
to (7).

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;
d) benefits or harm to consumers;
e) improvements in production or distribution of goods or provision of services;

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f) promotion of technical, scientific and economic development by means of production or

distribution of goods or provision of services.

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) dependence of consumers on the enterprise;
e) 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;

For determining whether a market constitutes a “relevant market” for the purposes of this
Act, the Commission shall have due regard to the “relevant geographic market’’ and “relevant
product market”.

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

a) regulatory trade barriers;

b) local specification requirements;
c) national procurement policies;
d) adequate distribution facilities;
e) transport costs;
f) language;
g) consumer preferences;
h) need for secure or regular supplies or rapid after-sales services;
i) characteristics of goods or nature of services;
j) costs associated with switching supply or demand to other areas.

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 1[or the nature of services];

b) price of goods or service;
c) consumer preferences;
d) exclusion of in-house production;
e) existence of specialised producers;
f) classification of industrial products;
g) costs associated with switching demand or supply to other goods or services;
h) categories of customers.

Inquiry into Combination by Commission

Section 20(1) states that the Commission may, upon its own knowledge or information relating to
acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of
section 5 or merger or amalgamation referred to in clause (c) of that section 5 or acquisition of any
control, shares, voting right or assets of an enterprise, merger or amalgamation referred to in clause
(d) of that section, inquire into whether such a combination has caused or is likely to cause an
appreciable adverse effect on competition in India:

Provided that the Commission shall not initiate any inquiry under this sub-section after the expiry
of one year from the date on which such combination has taken effect.

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Section 20(2) provides that the Commission shall, on receipt of a notice under section 6(2) inquire
whether a combination referred to in that notice or reference has caused or is likely to cause an
appreciable adverse effect on competition in India.

According to Section 20(3) of the Act, notwithstanding anything contained in section 5, the Central
Government shall, on the expiry of a period of two years from the date of commencement of this
Act and thereafter every two years, in consultation with the Commission, enhance or reduce by
notification, or keep at the same level, on the basis of the wholesale price index or fluctuations in
exchange rate of rupee or foreign currencies, or such factors that in its opinion are relevant in this
matter, the value of assets or the value of turnover or value of transaction, for the purposes of
that section.

As per Section 20(4), for the purposes of determining whether a combination would have the effect
of or is likely to have an appreciable adverse effect on competition in the relevant market, the
Commission shall have due regard to all or any of the following factors, namely: —

a) extent of barriers to entry into the market;

b) level of concentration in the market;
c) likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase prices or profit margins;
d) extent of effective competition likely to sustain in a market;
e) market share, in the relevant market, of the persons or enterprise in a combination, individually
and as a combination;
f) likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
g) possibility of a failing business;
h) nature and extent of innovation.

Reference by Statutory Authority

Section 21 provides that where in the course of a proceeding before any statutory authority an
issue is raised by any party that any decision which such statutory authority has taken or proposes
to take, is or would be, contrary to any of the provisions of this Act, then such statutory authority
may make a reference in respect of such issue to the Commission:

It may be noted that any statutory authority, may, suo motu, make a reference to the Commission
on any issue that involves any provision of this Act or is related to promoting the objectives of this
Act, as the case may be. On receipt of a reference, the Commission shall give its opinion, within 60
days of receipt of such reference, to such statutory authority which shall consider the opinion of
the Commission and thereafter, give its findings recording reasons therefor on the issues referred
to in the said opinion.

Reference by Commission
Section 21A states that where in the course of a proceeding before the Commission an issue is
raised by any party that any decision which, the Commission has taken during such proceeding or
proposes to take, is or would be contrary to any provision of an Act whose implementation is
entrusted to a statutory authority, then the Commission may make a reference in respect of such
issue to the statutory authority:

It may be noted that the Commission, may, suo motu, make a reference to a statutory authority on
any issue that involves provisions of an Act whose implementation is entrusted to that statutory
authority.

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On receipt of a reference, the statutory authority shall give its opinion, within 60 days of receipt
of such reference, to the Commission which shall consider the opinion of the statutory authority,
and thereafter give its findings recording reasons therefor on the issues referred to in the said
opinion.

Procedure for Inquiry into Certain Agreements and Dominant Position of Enterprise
Section 26 deals with procedure for Inquiry into Certain Agreements and Dominant Position of
Enterprise. It states that:

1. On receipt of a reference from the Central Government or a State Government or a statutory

authority or on its own knowledge or information received under section 19, if the Commission
is of the opinion that there exists a prima facie case, it shall direct the Director General to
cause an investigation to be made into the matter:

It may be noted that if the subject matter of an information received is, in the opinion of the
Commission, substantially the same as or has been covered by any previous information
received, then the new information may be clubbed with the previous information.

2. Where on receipt of a reference from the Central Government or a State Government or a

statutory authority or information received under section 19, the Commission is of the opinion
that there exists no prima facie case, it shall close the matter forthwith and pass such orders
as it deems fit and send a copy of its order to the Central Government or the State Government
or the statutory authority or the parties concerned, as the case may be.

2A. The Commission may not inquire into agreement referred to in section 3 or conduct of an
enterprise or group under section 4, if the same or substantially the same facts and issues
raised in the information received under section 19 or reference from the Central Government
or a State Government or a statutory authority has already been decided by the Commission
in its previous order.

3. The Director General shall, on receipt of direction under sub-section (1), submit a report on
his findings within such period as may be specified by the Commission.

3A. If, after consideration of the report of the Director General referred to in sub-section (3),
the Commission is of the opinion that further investigation is required, it may direct the
Director General to investigate further into the matter.

3B. The Director General shall, on receipt of direction under sub-section (3A), investigate the
matter and submit a supplementary report on his findings within such period as may be
specified by the Commission.

4. The Commission may forward a copy of the report referred to in sub-section (3) and (3B) to
the parties concerned.

Provided that in case the investigation is caused to be made based on reference received from
the Central Government or the State Government or the statutory authority, the Commission
shall forward a copy of the report referred to in sub-section (3) and (3B) to the Central
Government or the State Government or the statutory authority, as the case may be.

5. If the report of the Director General referred to in sub-section (3) and (3B) recommends that
there is no contravention of the provisions of this Act, the Commission shall invite objections
or suggestions from the Central Government or the State Government or the statutory
authority or the parties concerned, as the case may be, on such report of the Director General.
6. If, after consideration of the objections or suggestions referred to in sub-section (5), if any,
the Commission agrees with the recommendation of the Director General, it shall close the

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matter forthwith and pass such orders as it deems fit and communicate its order to the Central
Government or the State Government or the statutory authority or the parties concerned, as
the case may be.
7. If, after consideration of the objections or suggestions referred to in sub-section (5), if any,
the Commission is of the opinion that further investigation is called for, it may direct further
investigation in the matter by the Director General or cause further inquiry to be made in the
matter or itself proceed with further inquiry in the matter in accordance with the provisions
of this Act.
8. If the report of the Director General referred to in sub-section (3) and (3B) recommends that
there is contravention of any of the provisions of this Act, and the Commission is of the opinion
that further inquiry is called for, it shall inquire into such contravention in accordance with
the provisions of this Act.
9. Upon completion of the investigation or inquiry under sub-section (7) or sub-section (8), as the
case may be, the Commission may pass an order closing the matter or pass an order under
section 27, and send a copy of its order to the Central Government or the State Government
or the statutory authority or the parties concerned, as the case may be.

Provided that before passing such order, the Commission shall issue a show-cause notice
indicating the contraventions alleged to have been committed and such other details as may be
specified by regulations and give a reasonable opportunity of being heard to the parties
concerned.

Orders by Commission after Inquiry into Agreements or Abuse of Dominant Position

Section 27 of the Act provides that 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 10% of the average of
the turnover or income, as the case may be, for the last 3 preceding financial years, upon each
of such person or enterprise which is a party to such agreement or has abused its dominant
position.

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 3 times of its profit for each year of the continuance
of such agreement or 10% of its turnover or income, as the case may be, for each year of the
continuance of such agreement, whichever is higher.

c) direct that the agreements shall stand modified to the extent and in the manner as may be
specified in the order by the Commission;
d) 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;
e) pass such other order or issue such directions as it may deem fit:

It may be noted 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

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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.

Division of Enterprise Enjoying Dominant Position

Section 28(1) of the Act provides that the Commission 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.

Section 28(2) states that 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 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;
e) 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;
f) any other matter which may be necessary to give effect to the division of the enterprise.

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.

Procedure for Investigation of Combinations

Section 29 of the Act deals with procedure of investigation of Combinations. It provides that:

1. Where the Commission is of the prima facie opinion that a combination is likely to cause, or
has caused an appreciable adverse effect on competition within the relevant market in India,
it shall issue a notice to show cause to the parties to combination calling upon them to respond
within 15 days of the receipt of the notice, as to why investigation in respect of such
combination should not be conducted.

1A. After receipt of the response of the parties to the combination under sub-section (1), the
Commission may call for a report from the Director General and such report shall be submitted
by the Director General within such time as the Commission may direct.

1B. The Commission shall, within 30 days of receipt of notice under sub-section (2) of section
6, form its prima facie opinion referred to in sub-section (1).

2. The Commission, if it is prima facie of the opinion that the combination has, or is likely to have,
an appreciable adverse effect on competition, it shall, within 7 days from the date of receipt
of the response of the parties to the combination, or the receipt of the report from Director
General called under sub section (1A), whichever is later, direct the parties to the said
combination to publish details of the combination within 7 days of such direction, in such
manner, as it thinks appropriate, for bringing the combination to the knowledge or information
of the public and persons affected or likely to be affected by such combination.
3. The Commission may invite any person or member of the public, affected or likely to be
affected by the said combination, to file his written objections, if any, before the Commission

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within 10 days from the date on which the details of the combination were published under
sub-section (2).
4. The Commission may, within 7 days from the expiry of the period specified in sub-section (3),
call for such additional or other information as it may deem fit from the parties to the said
combination.
5. The additional or other information called for by the Commission shall be furnished by the
parties referred to in sub-section (4) within 10 days from the expiry of the period specified
in sub- section (4).
6. After receipt of all information, the Commission shall proceed to deal with the case in
accordance with the provisions contained in section 29A or section 31, as the case may be.

Notwithstanding anything contained in this section, the Commission may accept appropriate
modifications offered by the parties to the combination or suo motu propose modifications, as the
case may be, before forming a prima facie opinion under sub-section (1).

Issue of Statement of Objections by Commission and Proposal of Modifications

Section 29A (1) of the Act provides that upon completion of the process under section 29, where
the Commission is of the opinion that the combination has, or is likely to have, an appreciable adverse
effect on competition, it shall issue a statement of objections to the parties identifying such
appreciable adverse effect on competition and direct the parties to explain within 25 days of receipt
of the statement of objections, why such combination should be allowed to take effect.

As per Section 29A (2) where the parties to the combination consider that such appreciable adverse
effect on competition can be eliminated by suitable modification to such combination, they may
submit an offer of appropriate modification to the combination along with their explanation to the
statement of objections issued under sub-section (1) in such manner as may be specified by
regulations.

Section 29A(3) states that if the Commission does not accept the modification submitted by the
parties under sub-section (2) it shall, within 7 days from the date of receipt of the proposed
modifications under that sub-section, communicate to the parties as to why the modification is not
sufficient to eliminate the appreciable adverse effect on competition and call upon the parties to
furnish, within 12 days of the receipt of the said communication, revised modification, if any, to
eliminate the appreciable adverse effects on competition.

Provided that the Commission shall evaluate such proposal for modification within 12 days from
receipt of such proposal:

Provided further that the Commission may suo motu propose appropriate modifications to the
combination which may be considered by the parties to the combination.

Procedure in case of Notice under Section 6(2)

Section 30 provides that where any person or enterprise has given a notice under section 6(2) the
Commission shall examine such notice and form its prima facie opinion as provided in section 29(1)
and proceed as per provisions contained in that section.

Orders of Commission on Combinations

Section 31 deals with order of the commission on combination. It states that:

1. Where the Commission is of the opinion that any combination does not, or is not likely to, have
an appreciable adverse effect on competition, it shall, by order, approve that combination in
respect of which a notice has been given under section 6(2).

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It may be noted that if the Commission does not form a prima facie opinion as provided under
section 29(1B), the combination shall be deemed to have been approved and no separate order
shall be required to be passed.

2. Where the Commission is of the opinion that the combination has, or is likely to have, an
appreciable adverse effect on competition, it shall direct that the combination shall not take
effect.
3. Where the Commission is of the opinion that any appreciable adverse effect on competition
that the combination has, or is likely to have, can be eliminated by modification proposed by
the parties or the Commission, as the case may be, under section 29(7) or section 29A(2)(3),
it may approve the combination subject to such modifications as it thinks fit.
4. Where a combination is approved by the Commission under sub-section (3), the parties to the
combination shall carry out such modification within such period as may be specified by the
Commission.
5. Where –
i. the Commission has directed under sub-section (2) that the combination shall not take
effect; or
ii. the parties to the combination, fail to carry out the modification within such period as
may be specified by the Commission under sub-section (4); or
iii. the Commission is of the opinion that the combination has, or is likely to have, an
appreciable adverse effect on competition which cannot be eliminated by suitable
modification to such combination, then, without prejudice to any penalty which may be
imposed or any prosecution which may be initiated under this Act, the Commission may
order that such combination shall not be given effect to, or be declared void, or frame a
scheme to be implemented by the parties to address the appreciable adverse effect on
competition, as the case may be.
6. If no order is passed or direction issued by the Commission in accordance with the provisions
of subsection (1) or sub-section (2) or sub-section (3) or sub-section (5), as the case may be,
within a period of one hundred and fifty days from the date of notice given to the Commission
under section 6(2), the combination shall be deemed to have been approved by the Commission.

Acts Taking Place outside India but Having an Effect on Competition in India
According to Section 32 of the Act, the Commission shall, notwithstanding that, —

- an agreement referred to in Section 3 has been entered into outside India; or

- any party to such agreement is outside India; or
- any enterprise abusing the dominant position is outside India; or
- a combination has taken place outside India; or
- any party to combination is outside India; or
- any other matter or practice or action out of such agreement or dominant position or
combination is outside India,

have power to inquire in accordance with the provisions contained in sections 19, 20, 26, 29, 29A and
30 of the Act into such agreement or abuse of dominant position or combination if such agreement
or dominant position or combination has, or is likely to have, an appreciable adverse effect on
competition in the relevant market in India and pass such orders as it may deem fit in accordance
with the provisions of this Act.

Power to Issue Interim Orders

Section 33 provides that where during an inquiry, the Commission is satisfied that an act in
contravention of section 3(1) or section 4(1) or section 6 has been committed and continues to be

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committed or that such act is about to be committed, the Commission may, by order, temporarily
restrain any party from carrying on such act until the conclusion of such inquiry or until further
orders, without giving notice to such party, where it deems it necessary.

Appearance before Commission

Section 35(1) states that a party or the Director General may either appear in person or authorise
one or more chartered accountants or Company Secretaries or cost accountants or legal
practitioners or any of his or its officers to present his or its case before the Commission.

Explanation. —For the purposes of this section, —

a) “Chartered Accountant” means a chartered accountant as defined in Chartered Accountants

Act, 1949 and who has obtained a certificate of practice;
b) “Company Secretary” means a company secretary as defined in Company Secretaries Act, 1980
and who has obtained a certificate of practice;
c) “Cost Accountant” means a cost accountant as defined in section 2 of the Cost and Works
Accountants Act, 1959 and who has obtained a certificate of practice;
d) “Legal Practitioner” means an advocate, vakil or an attorney of any High Court, and includes a
pleader in practice.

As per Section 35(2) without prejudice to sub-section (1), a party may call upon experts from the
fields of economics, commerce, international trade or from any other discipline to provide an expert
opinion in connection with any matter related to a case.

Power of Commission to Regulate its Own Procedure

Section 36 provides that in the discharge of its functions, the Commission 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 the powers to regulate its own procedure.

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: —

i. summoning and enforcing the attendance of any person and examining him on oath;
ii. requiring the discovery and production of documents;
iii. receiving evidence on affidavits;
iv. issuing commissions for the examination of witnesses or documents;
v. requestioning any public record or document or copy of such record or document from any
office.

The Commission may call upon such experts, from the fields 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.

The Commission may direct any person: -

- to produce before DG or the Secretary or an officer authorised by it, such books or other
documents in the custody or under the control of such person so directed as may be specified
or described in the direction, being documents relating to any trade, the examination of which
may be required for the purposes of this Act;
- to furnish to the DG or the Secretary or an officer authorised by it, as respects the trade or
such other information as may be in his possession in relation to the trade carried on by such
person as may be required for the purposes of this Act;

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Execution of orders of Commission Imposing Monetary Penalty

1. If a person fails to pay any monetary penalty imposed on him under the Act, the Commission
shall proceed to recover such penalty in such manner as may be specified by the regulations.
2. In a case where the Commission is of the opinion that it would be expedient to recover the
penalty imposed under this Act in accordance with the provisions of the Income-tax Act, 1961
, it may make a reference to this effect to the concerned income-tax authority under that Act
for recovery of the penalty as tax due under the said Act.
3. Where a reference has been made by the Commission under sub-section (2) for recovery of
penalty, the person upon whom the penalty has been imposed shall be deemed to be the
assessee in default under the Income-tax Act, 1961 and the provisions contained in that Act
and any rules made there under shall, in so far as may be, apply as if the said provisions were
the provisions of this Act and referred to sums by way of penalty imposed under this Act
instead of to income- tax and sums imposed by way of penalty, fine and interest under the
Income–tax Act, 1961 and to the Commission instead of the Assessing Officer.

DUTIES OF DIRECTOR GENERAL

Section 41 of the Act empowers the Director General to investigate contraventions. It provides
that:

1. The Director General shall, when so directed by the Commission, assist the Commission in
investigating into any contravention of the provisions of this Act or any rules or regulations
made thereunder.
2. The Director General shall have all the powers as are conferred upon the Commission under
subsection (2) of section 36.
3. Without prejudice to sub-section (2), it shall be the duty of all officers, other employees and
agents of a party which are under investigation—
a) to preserve and to produce all information, books, papers, other documents and records
of, or relating to, the party which are in their custody or power to the Director General
or any person authorised by it in this behalf; and
b) to give all assistance in connection with the investigation to the Director General.
4. The Director General may require any person other than a party referred to in sub-section (3)
to furnish such information or produce such books, papers, other documents or records before
it or any person authorised by it in this behalf if furnishing of such information or the
production of such books, papers, other documents or records is relevant or necessary for the
purposes of its investigation.
5. The Director General may keep in his custody any information, books, papers, other documents
or records produced under sub-section (3) or sub-section (4) for a period of 180 days and
thereafter shall return the same to the person by whom or on whose behalf the information,
books, papers, other documents or records were produced:

Provided that the information, books, papers, other documents or records may be called for
by the Director General if they are needed again for a further period of 180 days by an order
in writing:

Provided further that the certified copies of the information, books, papers, other documents
or records, as may be applicable, produced before the Director General may be provided to
the party or person on whose behalf the information, books, papers, other documents or
records are produced at their own cost.

6. The Director General may examine on oath—

a) any of the officers and other employees and agents of the party being investigated; and

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b) with the previous approval of the Commission, any other person, in relation to the affairs
of the party being investigated and may administer an oath accordingly and for that
purpose may require any of those persons to appear before it personally.
7. The examination under sub-section (6) shall be recorded in writing and shall be read over to or
by, and signed by, the person examined and may thereafter be used in evidence against it.
8. Where in the course of investigation, the Director General has reasonable grounds to believe
that information, books, papers, other documents or records of, or relating to, any party or
person, may be destroyed, mutilated, altered, falsified or secreted, the Director General may
make an application to the Chief Metropolitan Magistrate, Delhi for an order for seizure of
such information, books, papers, other documents or records.
9. The Director General may make requisition of the services of any police officer or any officer
of the Central Government to assist him for all or any of the purposes specified in sub-section
(10) and it shall be the duty of every such officer to comply with such requisition.
10. The Chief Metropolitan Magistrate, Delhi may, after considering the application and hearing
from the Director General, by order, authorise the Director General—
a) to enter, with such assistance, as may be required, the place or places where such
information, books, papers, other documents or records are kept;
b) to search that place or places in the manner specified in the order; and
c) to seize information, books, papers, other documents or records as it considers necessary
for the purpose of the investigation:

Provided that certified copies of the seized information, books, papers, other documents or
records, as the case may be, may be provided to the party or person from whose place or places
such documents have been seized at its cost.

11. The Director General shall keep in his custody such information, books, papers, other
documents or records seized under this section for such period not later than the conclusion
of the investigation as it considers necessary and thereafter shall return the same to the
party or person from whose custody or power they were seized and inform the Chief
Metropolitan Magistrate, of such return:

Provided that the Director General may, before returning such information, books, papers,
other documents or records take copies of, or extracts thereof or place identification marks
on them or any part thereof.

12. Save as otherwise provided in this section, every search or seizure made under this section
shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973,
relating to search or seizure made under that Code.

Explanation. —For the purposes of this section, —

a) “Agent”, in relation to any person, means any one acting or purporting to act for or on
behalf of such person, and includes the bankers, and persons employed as auditors and
legal advisors, by such person;
b) “Officers”, in relation to any company or body corporate, includes any trustee for the
debenture holders of such company or body corporate;
c) any reference to officers and other employees or agents shall be construed as a reference
to past as well as present officers and other employees or agents, as the case may be.

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PENALTIES

Contravention of Orders of Commission

According to Section 42 of the Act, the Commission may cause an inquiry to be made into compliance
of its orders or directions made in exercise of its powers under the Act.

If any person, without reasonable clause, fails to comply with the orders or directions of the
Commission issued under sections 6, 27, 28, 31, 32, 33, 42A, 43, 43A, 44 and 45 of the Act, he shall
be liable to a penalty 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 penalty
imposed, 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
twenty-five crore, or with both, as the Chief Metropolitan Magistrate, Delhi may deem fit.

It may be noted 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
authorised by it.

Compensation in case of Contravention of Orders of Commission

Section 42A provides that 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 6, 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.

Penalty for Failure to comply with directions of Commission and Director General
As per Section 43 of the Act, 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 liable to a penalty 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.

Power to Impose Penalty for Non-Furnishing of Information on Combination

According to Section 43A if any person or enterprise fails to give notice to the Commission under
sub-section (2) or sub-section (4) of section 6 or contravenes sub-section (2A) of section 6 or submit
information pursuant to an inquiry under sub-section (1) of section 20, the Commission may impose
on such person or enterprise, a penalty which may extend to one per cent., of the total turnover or
assets or the value of transaction referred to in clause (d) of section 5, whichever is higher, of such
a combination:

It may be noted that in case any person or enterprise has given a notice under sub-section (4) of
section 6 and such notice is found to be void ab initio under sub-section (6) of section 6, then a
notice under sub-section (2) of section 6 may be given by the acquirer or parties to the combination,
as may be applicable, within a period of thirty days of the order of the Commission under sub-section

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(6) of that section and no action under this section shall be taken by the Commission till the expiry
of such period of thirty days.

Power to Impose Lesser Penalty (Section 46)

1. 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 may be
specified by regulations, than leviable under this Act or the rules or the regulations made
under the Act.

Provided that lesser penalty shall not be imposed by the Commission in cases where the report
of investigation directed under section 26 has been received 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 has made
the full, true and vital disclosures under this section.

Provided also that lesser penalty shall not be imposed by the Commission if the person making
the disclosure does not continue to co-operate with the Commission till the completion of the
proceedings before the Commission.

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 contravention 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.
2. The Commission may allow a producer, seller, distributor, trader or service provider included
in the cartel, to withdraw its application for lesser penalty under this section, in such manner
and within such time as may be specified by regulations.
3. The Director General and the Commission shall be entitled to use for the purposes of this Act,
any evidence submitted by a producer, seller, distributor, trader or service provider in its
application for lesser penalty, except its admission.
4. Where during the course of the investigation, a producer, seller, distributor, trader or service
provider who has disclosed a cartel under sub-section (1), makes a full, true and vital disclosure
under sub-section (1) with respect to another cartel in which it is alleged to have violated
section 3, which enables the Commission to form a prima facie opinion under sub-section (1) of
section 26 that there exists another cartel, then the Commission may impose upon such
producer, seller, distributor, trader or service provider a lesser penalty as may be specified
by regulations, in respect of the cartel already being investigated, without prejudice to the
producer, seller, distributor, trader or service provider obtaining lesser penalty under sub-
section (1) regarding the newly disclosed cartel.

CONTRAVENTION BY COMPANIES
Section 48(1) states that where a person committing contravention of any of the provisions of this
Act or of any rule, regulation, order made or direction issued thereunder is a company, every person
who, at the time the contravention was committed, was in charge of, and was responsible to the

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company for the conduct of the business of the company, as well as the company, shall be deemed
to be in contravention of this Act and unless otherwise provided in this Act, the Commission may
impose such penalty on such persons, as it may deem fit which shall not be more than ten per cent.
of the average of the income for the last three preceding financial years.

Provided that in case any agreement referred to in section 3(3) has been entered into by a cartel,
the Commission may unless otherwise provided in this Act, impose upon such persons referred to in
sub-section (1), a penalty of up to ten per cent. of the income for each year of the continuance of
such agreement.

Section 48(2) provides that nothing contained in sub-section (1) shall render any such person liable
to any penalty if he proves that the contravention was committed without his knowledge or that he
had exercised all due diligence to prevent the commission of such contravention.

As per Section 48(3) notwithstanding anything contained in sub-section (1), where a contravention
of any of the provisions of this Act or of any rule, regulation, order made or direction issued
thereunder has been committed by a company and it is proved that the contravention has taken place
with the consent or connivance of, or is attributable to any neglect on the part of, any director,
manager, secretary or other officers of the company, such director, manager, secretary or other
officers shall also be deemed to be in contravention of the provisions of this Act and unless
otherwise provided in this Act, the Commission may impose such penalty on such persons, as it may
deem fit which shall not be more than ten per cent. of the average of the income for the last three
preceding financial years:

Provided that in case any agreement referred to in section 3(3) has been entered into by a cartel,
the Commission may, unless otherwise provided under this Act, impose upon such person a penalty as
it may deem fit which shall not exceed ten per cent. of the income for each year of the continuance
of such agreement.

Explanation. —For the purposes of this section, —

a) “company” means a body corporate and includes a firm or other association of individuals;
b) “director”, in relation to a firm, means a partner in the firm;
c) “income”, in relation to a person, shall be determined in such manner as may be specified by
regulations.

Settlement
According to Section 48A of the Act, any enterprise, against whom any inquiry has been initiated
under section 26(1) for contravention of section 3(4) or section 4, may, for settlement of the
proceeding initiated for the alleged contraventions, submit an application in writing to the
Commission in such form and upon payment of such fee as may be specified by regulations.

An application may be submitted at any time after the receipt of the report of the Director General
under section 26(4) but prior to such time before the passing of an order under section 27 or section
28 as may be specified by regulations.

The Commission may, after taking into consideration the nature, gravity and impact of the
contraventions, agree to the proposal for settlement, on payment of such amount by the applicant
or on such other terms and manner of implementation of settlement and monitoring as may be
specified by regulations.

While considering the proposal for settlement, the Commission shall provide an opportunity to the
party concerned, the Director General, or any other party to submit their objections and
suggestions, if any. If the Commission is of the opinion that the settlement offered above is not
appropriate in the circumstances or if the Commission and the party concerned do not reach an

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agreement on the terms of the settlement within such time as may be specified by regulations, it
shall, by order, reject the settlement application and proceed with its inquiry under section 26.

The procedure for conducting the settlement proceedings under this section shall be such as may
be specified by regulations.

No appeal shall lie under section 53B against any order passed by the Commission under this section.

All settlement amounts, realised under this Act shall be credited to the Consolidated Fund of India.

Commitment
As per Section 48B of the Act, any enterprise, against whom any inquiry has been initiated under
section 26(1) for contravention of section 3(4) or section 4, as the case may be, may submit an
application in writing to the Commission, in such form and on payment of such fee as may be specified
by regulations, offering commitments in respect of the alleged contraventions stated in the
Commission’s order under section 26(1).

An offer for commitments may be submitted at any time after an order under section 26(1) has
been passed by the Commission but within such time prior to the receipt by the party of the report
of the Director General under section 26(4) as may be specified by regulations.

The Commission may, after taking into consideration the nature, gravity and impact of the alleged
contraventions and effectiveness of the proposed commitments, accept the commitments offered
on such terms and the manner of implementation and monitoring as may be specified by regulations.

While considering the proposal for commitment, the Commission shall provide an opportunity to the
party concerned, the Director General, or any other party to submit their objections and
suggestions, if any.

If the Commission is of the opinion that the commitment offered above is not appropriate in the
circumstances or if the Commission and the party concerned do not reach an agreement on the terms
of the commitment, it shall pass an order rejecting the commitment application and proceed with its
inquiry under section 26 of the Act.

The procedure for commitments offered under this section shall be such as may be specified by
regulations.

No appeal shall lie under section 53B against any order passed by the Commission under this section.

Revocation of the Settlement or Commitment Order and Penalty

Section 48C provides that if an applicant fails to comply with the order passed under section 48A
or section 48B or it comes to the notice of the Commission that the applicant has not made full and
true disclosure or there has been a material change in the facts, the order passed under section
48A or section 48B, as the case may be, shall stand revoked and withdrawn and such enterprise shall
be liable to pay legal costs incurred by the

Commission which may extend to rupees one crore and the Commission may restore or initiate the
inquiry in respect of which the order under section 48A or section 48B was passed.

COMPETITION ADVOCACY
Section 49 deals with Competition Advocacy. It provides that the Central Government may, in
formulating a policy on competition (including review of laws related to competition) or on any other
matter, and a State Government may, in formulating a policy on competition or on any other matter,
as the case may be, make a reference to the Commission for its opinion on possible effect of such
policy on competition and on the receipt of such a reference, the Commission shall, within sixty days

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of making such reference, give its opinion to the Central Government, or the State Government, as
the case may be, which may thereafter take further action as it deems fit.

The opinion given by the Commission shall not be binding upon the Central Government or the State
Government, as the case may be, in formulating such policy.

The Commission shall take suitable measures for the promotion of competition or culture advocacy,
creating awareness and imparting training about competition issues.

APPELLATE TRIBUNAL
According to Section 53A of the Act, the National Company Law Appellate Tribunal constituted
under section 410 of the Companies Act, 2013 shall, on and from the commencement of Part XIV of
Chapter VI of the Finance Act, 2017, be the Appellate Tribunal for the purposes of this Act and
the said Appellate Tribunal shall—

- hear and dispose of appeals against any direction issued or decision made or order passed by
commission, and
- adjudicate on claim for compensation that may arise from the findings of the Commission or
the orders of the Appellate Tribunal in an appeal against any finding of the Commission.

Appeal to Appellate Tribunal

Section 53B provides that the Central Government or the State Government or a local authority or
enterprise or any person, aggrieved by any direction, decision or order referred to in clause (a) of
section 53A may prefer an appeal to the Appellate Tribunal.

Every appeal shall be filed within a period of sixty days from the date on which a copy of the
direction or decision or order made by the Commission is received by the Central Government or the
State Government or a local authority or enterprise or any person referred to in that sub-section
and it shall be in such form and be accompanied by such fee as may be prescribed.

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of
sixty days if it is satisfied that there was sufficient cause for not filing it within that period.

Provided further that no appeal by a person, who is required to pay any amount in terms of an order
of the Commission, shall be entertained by the Appellate Tribunal unless the appellant has deposited
twenty-five per cent. of that amount in the manner as directed by the Appellate Tribunal.

On receipt of an appeal, the Appellate Tribunal may, after giving the parties to the appeal, an
opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or
setting aside the direction, decision or order appealed against.

The Appellate Tribunal shall send a copy of every order made by it to the Commission and the parties
to the appeal.

The appeal filed before the Appellate Tribunal shall be dealt with by it as expeditiously as possible
and endeavour shall be made by it to dispose of the appeal within six months from the date of receipt
of the appeal.

Right to Legal Representation

According to Section 53-S of the Act, a person preferring an appeal to the Appellate Tribunal may
either appear in person or authorise one or more chartered accountants or company secretaries or
cost accountants or legal practitioners or any of its officers to present his or its case before the
Appellate Tribunal.

The Central Government or a State Government or a local authority or any enterprise preferring an
appeal to the Appellate Tribunal may authorise one or more chartered accountants or company

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secretaries or cost accountants or legal practitioners or any of its officers to act as presenting
officers and every person so authorised may present the case with respect to any appeal before the
Appellate Tribunal.

The Commission may authorise one or more chartered accountants or company secretaries or cost
accountants or legal practitioners or any of its officers to act as presenting officers and every
person so authorised may present the case with respect to any appeal before the Appellate Tribunal.

APPEAL TO SUPREME COURT

Section 53T provides that the Central Government or any State Government or the Commission or
any statutory authority or any local authority or any enterprise or any person aggrieved by any
decision or order of the Appellate Tribunal may file an appeal to the Supreme Court within sixty
days from the date of communication of the decision or order of the Appellate Tribunal to them:

It may be noted that the Supreme court may, if it is satisfied that the applicant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed after the expiry
of the said period of sixty days.

COMPOUNDING OF CERTAIN OFFENCES

Section 59A states that notwithstanding anything contained in the Code of Criminal Procedure,
1973, any offence punishable under this Act, not being an offence punishable with imprisonment only
or imprisonment and also with fine, may either before or after the institution of any proceeding, be
compounded by the Appellate Tribunal or a court before which such proceeding is pending.

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