The Competition Act 2002 and the Competition Commission of India

The Competition Act 2002 and the Competition Commission of India

Subject: Economy

Section: Msc

Context:

India’s antitrust agency the Competition Commission of India raided offices of tyre companies, including Germany’s Continental AG and India’s Apollo Tyres and CEAT in a case of suspected competition law violations.

Concept:

The Competition Act, 2002

It was passed by the Parliament in the year 2002, to which the President accorded assent in January, 2003.

It was subsequently amended by the Competition (Amendment) Act, 2007. In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established.

Government replaced the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.

It replaced the erstwhile Monopolies and Restrictive Trade Practices Act, 1969. This was done based on the recommendations of the Raghavan Committee.

The following are the definitions cited under the Competition Act

• Acquisition: Acquisition is defined as the direct or indirect agreement to acquire shares, voting rights or control of assets over any enterprise.
• Cartel: A cartel is defined as an association of producers, sellers who limit control distribution, sale or promotions on goods through an arrangement previously made.
• Position: A dominant position means a position of power held by an enterprise in the related market. It enables the enterprise to function freely and influence the market to its directions.
• Predatory pricing: Predatory pricing is where the price of goods and services is reduced to well below the cost of production in order to eliminate competition.
• Rule of reason: The interpretation of activity on the basis of business justification, market impact on competition and on the consumer.

The following are the features of the Competition Act:

• Prohibits anti-competitive agreements: Any individual or enterprises shall not deal in production supply or distribution that may cause a negative impact regarding competition in India. Any existence of such agreements is considered illegal.
• Prohibits abuse of dominant position by enterprises: In the event, an enterprise or an associated individual, it is found to indulge in practices that are unfair or discriminatory in nature shall be considered an abuse of dominant position. If a party is found to be in abuse of its position, then they will be subjected to an investigation from the concerned authorities.

• Regulates combinations (acquisition, acquiring of control, and M&A), which can cause or is likely to cause an appreciable adverse effect on the competition within India. As per the act a combination is defined as terms which lead to acquisitions or mergers. But should such combinations cross the limits as put forth by the Act, and then the parties involved would be under the scrutiny of the Competition Commission of India.

Competition Commission of India:

The Commission used to consist of one chairperson and a minimum of two members and a maximum of six members. This has further been reduced to three members and one chairperson by the Cabinet.

The commission is a quasi-judicial body which gives opinions to statutory authorities and also deals with other cases. The Chairperson and other Members shall be whole-time Members.

Eligibility of members: The Chairperson and every other Member shall be a person of ability, integrity and standing and who, has been, or is qualified to be a judge of a High Court, or, has special knowledge of, and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter Functions

• Ensuring that the benefit and welfare of the customers are maintained in the Indian Market.
• An accelerated and inclusive economic growth through ensuring fair and healthy competition in the economic activities of the nation.
• Ensuring the efficient utilization of the nation’s resources through the execution of competition policies.
• The Commission also undertakes competition advocacy.
• It is also the antitrust ombudsman for small organizations.
• The CCI will also scrutinize any foreign company that enters the Indian market through a merger or acquisition to ensure that it abides by India’s competition laws – the Competition Act, 2002.
• CCI also ensures interaction and cooperation with the other regulating authorities in the economy. This will ensure that the sectoral regulatory laws are agreeable with the competition laws.
• It also acts as a business facilitator, by ensuring that a few firms do not establish dominance in the market and that there is a peaceful co-existence between the small and the large enterprises.

The Competition Commission of India takes the following measures to achieve its objectives:

• Consumer welfare: To make the markets work for the benefit and welfare of consumers.
• Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
• Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
• Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
• Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in the Indian economy.