Competition Act ICSI Module

Lesson 12 The Competition Act, 2002
Key Concepts One Learning Objectives Regulatory Framework

Should Know
To understand: • Competition Act, 2002
• Competition • Competition Policy • Competition Commission of
• Cartel • Anti-Competitive India (Procedure in regard to
• Consumer Agreements the transaction of business
relating to combinations)
• Bidriging • Abuse of Dominant Position Regulations, 2011
• Enterprise • Overview of Combination • Competition Commission of
• Anti-Competitive • Regulation of Combinations India (Lesser Penalty)
Agreement Regulations, 2009
• Competition Advocacy
• Dominant Position • Competition Commission of
• Competition Commission of
India (Determination of Cost
• Combination India
of Production) Regulations,
• Right to Legal 2009
Representation
Lesson Outline
• Competition and Economic efficiency
• Competition Law and Policy
• Competition Regime in India
• Anti-Competitive Agreement
• Abuse of Dominant Position
• Combination
• Director General
• Enquiry into Certain Agreements
• Enquiry into Dominant Position of Enterprise
• Enquiry into Combination by Commission
• Competition Commission of India
• Competition Advocacy
• Offences and penalties
• Appeal to Supreme Court
• LESSON ROUND-UP
• TEST YOURSELF
268 Lesson 12 • EP-EB&CL
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.
INTRODUCTION
There is a growing recognition that a flexible, dynamic and competitive private sector is essential to fostering
sustained economic development. Promoting effective competition spurs firms to focus on efficiency and improves
consumer welfare by offering greater choice of higher-quality products and services at lower prices. It also promotes
greater accountability and transparency in government-business relations and decision making, helps reduce
corruption, lobbying, and rent seeking. In addition, it provides opportunities for broadly based participation in the
economy and for sharing in the benefits of economic growth.
The idea of competition has had, for two centuries or more, a powerful influence on the way we think about our
society, the way we organise things and the way we conduct our own economic and personal lives. The competition
being an essential element in the efficient working of markets encourages enterprise and efficiency and widens
choice. By encouraging efficiency in industry, competition in the domestic market whether between domestic
companies alone or between those and overseas companies also contribute to international competitiveness. The
full benefits of competition are, however, felt in markets that are open to trade and investment.
Economic theory suggests that prices and quantities in a competitive market equilibrate to levels that generate
efficient outcomes at a given point of time. Competition is therefore, beneficial as it provides to consumers wider
choice and provides sellers with stronger incentives to minimize costs, so eliminating waste. Competition increases
the likelihood that cost savings resulting from efficiency gains will be passed on to a firm’s customers, who may be
either final consumers or intermediary customers (in which case costs of those firms are also lowered). Ample
empirical evidence supports these arguments. The importance of competition for achieving a higher rate of
innovation and adoption of new technologies over time is critical for sustaining rapid growth. Yet it is not automatic
and is not the same as laissez faire.
In fact, there are reasons to believe that less mature markets tend to be more, rather than less, vulnerable to anti-
competitive practices than the markets of developed countries. Reasons include: (a) high “natural” entry barriers
due to inadequate business infrastructure, including distribution channels, and (sometimes) intrusive regulatory
regimes; (b) asymmetries of information in both product and credit markets; and (c) a greater proportion of local
(non-tradable) markets. Competition also serves to diffuse socio-economic power, broadening participation in
economic, social, and political advances while ensuring opportunities for new entrepreneurs. Moreover, it can
facilitate realization of the benefits for the domestic economy of integrating into international trade and investment
patterns.
Several studies have demonstrated the stimulating effects of competitive markets in terms of growth and prosperity.
William Lewis in his book, The Power of Productivity underlines this point forcefully with his observations on the
growth of productivity in the late 1990s in the United States. The author has argued that more than technology and
other factors, what matters above all is competition. Similarly, economist Paul London in his book, The Competition
Solution concludes that heightened competition in the US over-shadowed tax cuts or new technologies in explaining
the prosperity of the 1990s. Competitive pressures helped suppress inflation and raise living standards through
improved productivity. The author noted that competition from imports forced the steel and auto industry, among
other manufacturers, to streamline, thereby pushing manufacturing productivity up by 4% a year. Competition has
brought down real air fares, telephone rates and several other costs. Where jobs have been lost in one industry,
these have been more than compensated by jobs created elsewhere; thus employment has not suffered but has
shifted from losers to winners. This argument underlines across the board, the benefits of competition to a wide
sections of society, including consumers, workers and many others.
Lesson 12 • The Competition Act, 2002 269
Definition of Competition
Competition is a complex and technical subject which does not lend itself to easy summary or concise clarification.
Of late, with globalisation and opening of the markets worldwide, it has become a subject of great practical
importance. It involves the establishment and development of concepts, legal principles and policies for the benefit
of consumer interest. The principles and policies are applied to a wide range of private agreements and arrangements,
which commercial undertakings enter into for themselves or with each other. In addition, they also apply to the
policies and directions of the Government.
In the absence of a generally accepted definition of the phenomenon of competition, it has to be regarded as the
object fostered and protected by competition policy and law. The World Bank and OECD in its Report A Framework
for the Design and Implementation of Competition Law and Policy, broadly defines the competition is “a situation in
a market in which firms or sellers independently strive for the buyers’ patronage in order 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 their pursuit to outdo rival enterprises, market players either adopt fair means (producing quality
goods, being cost efficient, adopting appropriate technologies, etc.) or indulge in unfair measures (carrying out
restrictive business practices – such as predatory pricing, exclusive dealing, tied selling, collusion, cartelisation,
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 facilitates fair competitive outcomes in the market, curb anti-competitive behaviour
and discourage market players from adopting unfair measures.
What is competition in the market?

In common parlance, competition in the market means sellers striving independently
for buyers’ patronage to maximize profit (or other business objectives).A buyer
prefers to buy a product at a price that maximizes his benefits whereas the seller prefers
to sell the product at a price that maximizes his profit.
Competition and Economic Efficiency

A number of empirical studies found a positive relationship between competition and innovation, productivity and
economic growth. P. Aghion and P. Howitt in Endogenous Growth Theory offered several theoretical situations where
competition is conducive to innovation – Intensified product market competition could force managers to speed up
the adoption of new technologies; Intensive product market competition with incumbent firms engaged in step by
step innovative activities could enhance each firms incentive to acquire or increase its technological lead over its
rivals and, if labour markets are flexible, competition will induce skilled workers to move to opportunities employing
best practices and technologies. Competition also reduces slack by providing more incentives for managers and
workers to increase efforts and improve efficiency. Therefore, the product market competition disciplines firms into
efficient operation.
Nickel et. al. in his article Competition and Corporate Performance suggested three different channels of incentives
– competition creates greater opportunities for comparing performance; a more competitive environment where
price elasticity of demand tends to be higher, induces greater efforts among workers and managers for cost reducing
improvements in productivity since improvements could generate larger increase in revenue and profits; and a
more competitive environment forces managers to improve efficiency, because more intense the competition,
greater the chances for inefficient to be extinguished.
UK White Paper on World Class Competition Regime clearly brings out the importance of competition in an
increasingly innovative and globalised economy. Vigorous competition between firms is the lifeblood of strong and
effective markets. Competition helps consumers get a good deal. It encourages firms to innovate by reducing slack,
putting downward pressure on costs and providing incentives for the efficient organisation of production.
Empirical evidences show that strong competition is closely linked to dynamic and efficient markets. The benefits
of competitive forces for economic growth and consumer welfare are widely recognized and evidenced by several
studies. Recently, an empirical study in the U.K. by the Centre for Competition Policy, University of East Anglia
showed that prices were more than halved through competition in international telephony and airfares, and were
significantly reduced in other areas. The survey also brought home the point that competition is not just about
prices but is typically multi-faceted, bringing new ways of doing business and leading to technological and other
advances.
Michel Porter in his recent work Can Japan Compete? shows that in Japan only those sectors characterized by strong
domestic competition remain internationally competitive following the country’s recent economic downturn,
examples include cameras, automobiles and audio equipment. Many leading competition experts believe in the
premise that, in the presence of competition, the market will achieve the objective of maximising welfare.
Competition Law and Policy

The World Bank and OECD in its Report A Framework for the Design and Implementation of Competition Law and
Policy pointed out that a dynamic and competitive environment, underpinned by sound competition law and policy,
is an essential characteristic of a successful market economy. Effective enforcement of competition law and active
competition advocacy can also be powerful catalysts for successful economic restructuring. This in turn fosters
flexibility and mobility of resources, which in the current global business environment are critical elements for the
competitiveness of firms and industries across nations. Although the field of competition law and policy is evolving
rapidly and includes many different viewpoints on specific issues, recognition is growing that effective competition
law is important in shaping business culture and that its proper implementation needs to allow for the education of
business people, government officials, the judiciary, and the interested public.
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: one is a set of policies that enhance competition
in local and national markets. The 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.
Asian Development Bank in “During economic transition or reforms”, observed that “the benefits of an open market
economy cannot be fully realized unless restrictions on competition are removed. Opening markets is not enough
by itself for countries to begin reaping the benefits of competition; firms will still find incentives to engage in anti-
competitive practices. Thus, the intended benefits of trade reforms may not be realized without active enforcement
of competition law. This highlights the importance of having faith in the benefits of competition from an early stage
of economic growth and of incorporating competition policy into the broader economic policy framework.”
Prof. Paul Geroski, former Chairman, Competition Commission of the United Kingdom observed that “Competition
policy is about ensuring that markets are, and remain, competitive. This brings benefits to consumers eventually in
all the ways. However, eliminating anti-competitive practices and dismantling monopoly positions that lead to
abuses also benefit firms whose business suffers from these practices and abuses. It is worth emphasizing that
many of the benefits that emanate from proper application of competition policy are felt in the first instance by
firms. This is important for those who seem to think of competition policy as an added and unnecessary burden on
business. Competition policy is sometimes a burden on business, but only on those businesses that try to unfairly
disadvantage their rivals in ways that reduce their competitive abilities or incentives to compete vigorously”.
Hence, competition policy and competition law need to be distinguished. The former can be regarded as a genus, of
which, the latter is specie.
COMPETITION REGIME IN INDIA
Historical Perspective
The Indian economy remained subject to controls and regulations for several decades, such as industrial licensing,
foreign exchange restrictions, small scale industry protection, control on foreign investment and technologies,
quantitative restrictions on imports, administered prices, and control on capital issues. The domestic industry was
thus insulated from competition.
The economic consequences of this policy regime, though initially beneficial, were reflected in a poor rate of
economic growth, low levels of productivity and efficiency, absence of international competitiveness, sub- optimal
size of businesses, and outdated and inefficient technologies in various sectors.
India has therefore witnessed two phases of development process with different policy regimes and institutional
frameworks. In the first phase, since independence, the transformation and development of the Indian economy
took place within a planned, rigidly regulated and relatively closed economic framework. In the second phase, since
1991, when the country embarked upon reform process and embraced market oriented policies.
In the late 1980s and early 1990s, need for liberalization policies was recognized and a range of policy and regulatory
reforms were initiated, such as delicensing of industry, shrinking the monopoly of the public sector industries
(other than those where strategic and security concerns dominated), removal of quantitative restrictions on
imports, market determined exchange rate, liberalization of foreign direct investment, capital market reforms,
liberalizing the financial markets, reduction in small scale industry reservations, and a much greater role for the
private sector in infrastructure industries such as power, port, transport and communications.
Economic Reforms and Competition

The world economy has been experiencing a progressive international economic integration for the last half a
century. There has been a marked acceleration in this process of globalisation and also liberalisation during the last
three decades.
Since 1991, the Government of India has introduced a series of economic reforms, including policies of liberalisation,
deregulation, disinvestment and privatisation. The seriousness of macroeconomic imbalances and unanimity
towards reform rendered this possible. The broad thrust of the new policies was a move away from the centralised
allocation of resources in some key sectors by the government to allocation by market forces. Private participation
in economic development has emerged as an alternative to the state-oriented development strategy in the reform
period.
After a decade of reforms, restraints to competition such as state monopolies and protective measures and controls
have been replaced by relatively more competitive and de-regulated open market policies. In the post reform period,
the private sector participation in production and supply of utility services has increased substantially. Independent
regulators have been established for many sectors such as road, power, telecommunications and insurance. These
sectoral regulators have been empowered to determine sector specific entry conditions and eventually the level of
competition. In nutshell, post reforms period witnessed an open market orientation in industrial policy, foreign
trade policy, foreign investment policy and financial sector policy, infrastructure policy, etc.
Competition Law-Evolution and Development

The first Indian competition law was enacted in 1969 and was christened as the Monopolies and Restrictive Trade
Practices Act, 1969 (MRTP Act). The genesis of the MRTP Act, 1969 is traceable to Articles 38 and 39 of the
Constitution of India. The Directive Principle of State Policy in those Articles lays down, inter-alia that the State shall
strive to promote the welfare of the people by securing and protecting as effectively, as it may, a social order in
which justice - social, economic and political- shall inform all the institutions of the national life, and the State shall,
in particular, direct its policy towards securing:
1. that the ownership and control of material resources of the community are so distributed as best to subserve
the common good; and
2. that the operation of the economic system does not result in the concentration of wealth and means of
production to the common detriment.
Legal framework dealing with competition in India spread over other legislations, besides the Monopolies and
Restrictive Trade Practices Act, 1969, other legislations dealing with competition include Consumer Protection Act,
1986, the Patents Act 1970 etc.
Background to the MRTP Act, 1969

India, when it became free from the colonial power was industrially very backward. In fact, it inherited an economy
in a ravaged condition. Under development of the economy in many respects led the successor Government to adopt
a system of planning. In the interest of transformation of the backward industrial economy into an advanced
industrial economy, the planners thought it fit to allow the then established industries to develop and grow further.
Alongside, mixed economy was also developed as a concept of economic planning. No doubt, there was perceptible
growth in industrialisation. However, this also brought on its trails, concentration of wealth and economic power.
This led to widening of the difference between the haves and have nots in the society. The Government of India
therefore set up the Monopolies Inquiry Commission in 1964 with a view to finding out the causes, the nature and
the extent of concentration of economic power in the country and to suggest remedial measures therefor.
The Monopolies Inquiry Commission submitted a detailed report in October 1965 which was well documented and
revelatory of many facets of concentration of economic power. Many of the trade practices which were designed to
stifle competition in the market and to promote monopolistic tendency were also noticed by the Commission in the
course of its inquiry. The Commission observed that there was no need to strike at the concentration of economic
power as such but to do so only when it became a menace to the best production in quality and quantity or to fair
distribution. Monopolistic conditions in any industrial sphere should be discouraged without injury to the interests
of the general public and monopolistic and restrictive trade practices should be curbed except when they were
conducive to the common good. The Commission pointed out that on the one hand over the years certain business
houses had built vast industrial empires and on the other hand they were trying to accentuate and enlarge the
empires by adopting certain trade practices which were intended to distort competition in the market and promote
a set of near monopoly conditions. The Commission felt that such tendencies seemed to destroy the basic concept
of socio-economic justice enshrined in the Constitution. The Commission also framed a draft Bill as a part of its
recommendations.
The Monopolies and Restrictive Trade Practices Bill was introduced in Parliament in 1967 which after being referred
to the Joint Select Committee became an Act and finally came into force w.e.f. 1st June, 1970.
The enactment was based on the socio-economic philosophy enshrined in the Directive Principles of State Policy
contained in the Constitution which provides that the State shall direct its policy towards securing that the
ownership and control of material resources of the community are distributed as best to subserve the common
good and that the operation of the economic system does not result in the concentration of wealth and means of
production to the common detriment.
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.
The MRTP Act, 1969 underwent amendments in 1974, 1980, 1982, 1984, 1986, 1988 and 1991. Major changes
introduced in the 1982 and 1984 Amendment Acts were based on the recommendations of the Sachar Committee.
The 1984 amendment introduced the concept of unfair trade practice under the Act. Far-reaching changes have
been brought about by the 1991 amendment and these were made in the wake of new industrial policy of July, 1991
which is wedded to liberalisation, globalisation and de-regulation.
Scheme of the MRTP Act

Prevention of undesirable concentration of economic power was sought to be achieved essentially through the
regulation of growth of undertakings of particular size, viz. undertakings having assets of the value of `100 crores.
These business houses were officially designated as large business houses. Undertakings having a sizable share of
the market, or licensed production capacity of more than 1/4th of the total production or installed capacity in India
were described as dominant undertakings. These companies were declared large business houses if their assets
were of the value of `1 crore or more.
These undertakings were referred to as MRTP undertakings. Such undertakings had to obtain approval of the
Central Government to undertake substantial expansion of production, establishment of new undertakings,
amalgamate with or takeover any other undertaking. Appointment of persons who were directors in such
undertakings as director in any other undertaking needed the approval of the Central Government. The Central
Government also had the power to order for division of such undertakings or for severance of interconnection
under certain circumstances. Restrictions were placed on the acquisition and transfer of shares of, or by, bodies
corporate owning such undertakings.
However, the MRTP (Amendment) Act, 1991 sought to liberalise these restrictions by removing the concept of
MRTP undertakings and provisions relating to their substantial expansion, amalgamation etc., and acquisition of
shares of, or by, such undertakings etc. The provisions relating to Central Governments power to direct division of
undertakings or severance of interconnection have been modified such that they apply to all undertakings (hitherto,
they applied only to MRTP undertakings).
Chapter IV deals with monopolistic trade practices indulged in by any undertaking. The Act defines the concept of
monopolistic trade practices in terms of unreasonableness of the prices charged, unreasonableness in preventing
or lessening competition in the market, unreasonably increasing prices, profits and limiting technical development
to the common detriment etc. The remedy for dealing with monopolistic trade practice is an inquiry at the instance
of the Central Government by the M.R.T.P. Commission or suo motu by the Commission and suitable orders being
passed by the Central Government thereafter to prevent the mischief resulting from such practices.
The Act also deals with matters relating to restrictive trade practices. Briefly stated, a restrictive trade practice is
one which prevents, distorts or restricts competition for goods and services in any manner. While unreasonableness
is the test for monopolistic trade practices, even a small distortion in competition is sufficient to bring a case under
restrictive trade practices. The provisions relating to restrictive trade practices are therefore intended to promote
fair and free competition in the market. The Act provides for a scheme of registration of certain agreements relating
to restrictive trade practices. The MRTP (Amendment) Act, 1984 introduced new provisions relating to unfair trade
practices with a view to promoting the interest of consumers. It is essential to note that the M.R.T.P. Commission has
been given full powers to regulate restrictive and unfair trade practices by means of an inquiry and pass final orders
thereon. The MRTP Commission may inquire into restrictive and unfair trade practices at the instance of the Central
Government, State Government, Director General of Investigation and Registration, registered consumer
associations, individual consumer and on its own. The Commission has also powers to grant temporary injunctions
and award compensation and punish for contempt under Sections 12A, 12B and 13B of the Act respectively.
The Commission is an independent quasi-judicial body and has powers similar to a Civil Court under the Code of
Civil Procedure, 1908 on some matters. The Director General of Investigation and Registration and the Secretary of
the Commission assist in the inquiry in respect of monopolistic, restrictive and unfair trade practices. The
Commission conducts enquiries and other businesses in accordance with MRTPC Regulations, 1991.
The Central Government has framed the Monopolies and Restrictive Trade Practices Rules, 1970, the Monopolies
and Restrictive Trade Practices (Classification of Goods) Rules, 1971, and the M.R.T.P. (Information) Rules, 1971 in
exercise of the powers conferred under the Act. However these Rules have lost much of their significance in view of
deletion of Sections 21 to 26 of the Act w.e.f. 27.9.91.
MRTP (Amendment) Act, 1991
The new industrial policy announced by the Government in Parliament on July 24, 1991 sought to amend the MRTP
Act, 1969 by removing all pre-entry restrictions and placing more emphasis on controlling and regulating
monopolistic, restrictive and unfair trade practices.
The ‘Statement of Objects and Reasons to the MRTP (Amendment) Act, 1991 reiterates that the basic philosophy
behind the MRTP Act, 1969 was not to inhibit industrial growth but to ensure that industrial growth was channelised
for public good and growth did not perpetuate concentration of economic power to the common detriment. To quote,
1. With the growing complexity of industrial structure and the need for achieving economies of scale for
ensuring higher productivity and competitive advantage in the international market, the thrust of the
industrial policy has shifted to controlling and regulating the monopolistic, restrictive and unfair trade
practices rather than making it necessary for certain undertakings to obtain prior approval of the Central
Government for expansion, establishment of new undertakings, merger, amalgamation, take over and
appointment of directors. It has been the experience of the Government that pre-entry restrictions under the
MRTP Act on the investment decision of the corporate sector has outlived its utility and has become a
hindrance to the speedy implementation of industrial projects. By eliminating the requirement of time-
consuming procedures and prior approval of the Government, it would be possible for all productive sections
of the society to participate in efforts for maximisation of production. It is, therefore, proposed to re-structure
the MRTP Act by omitting the provisions of Sections 20 to 26 and transfer the provisions contained in Chapter
III-A regarding restrictions on acquisition and transfer of shares to the Companies Act, 1956. The Schedule to
the MRTP Act is also consequently to be transferred with modification to the Companies Act, 1956.
2. It is also proposed to enlarge the scope of inquiry by the MRTP Commission with a view to taking effective
steps to curb and regulate monopolistic, restrictive and unfair trade practices which are prejudicial to public
interest. It is also proposed to provide for deterrent punishment for contravention of the orders passed by
the MRTP Commission and the Central Government and empower the Commission to punish for its contempt.
Certain other consequential changes are also found necessary in the MRTP Act.
Scope and Applicability of the MRTP Act
Section 3 of the MRTP Act, 1969 provides that unless the Central Government, by notification in the Official Gazette
otherwise directs, the Act shall not apply to:
(a) undertakings owned or controlled by the Government, a government company, a corporation, a registered
cooperative society and undertakings, the management of which has been taken over by the Central
Government;
(b) trade unions and other associations of workmen;
(c) financial institutions.
However, vide notification dated 27.9.1991, the Government has directed that the provisions of the MRTP Act shall
apply to all undertakings and financial institutions specified in Section 3 which were hitherto outside the purview
of the Act, except undertakings owned or controlled by a Government company, or the Government and engaged in
the production of arms and ammunition and allied items of defence equipment, defence aircraft and warships,
atomic energy, minerals specified in the schedule to the Atomic Energy (Control of Production and Use) Order, 1953
and industrial units under the Currency and Coinage Division, Ministry of Finance, Department of Economic Affairs.
Thus, the hitherto anomaly which used to exist prior to 27.9.91 about applicability of provisions of Act between
private sector enterprises and public sector undertakings and those stated in sub- clause (a) to (g) of Section 3, has
been removed.
But trade unions and other associations of workmen or employees formed for their own reasonable protection as
such workmen or employees continue to be exempt from the applicability of the MRTP Act. However, Truck owners
or operators Unions/Associations being not of workmen have been held to be subject to the jurisdiction of MRTP
Commission by Supreme Court in the case of Bharatpur Truck Operators Union.
In effect, all public sector companies, except those engaged in the production of arms and ammunition etc. and
industries under the Currency and Coinage Division, have been brought within the scope of the MRTP Act in respect
of monopolistic, restrictive and unfair trade practices.
Monopolistic Trade Practices

Prohibition of monopolistic trade practices is one of the objects of the MRTP Act, 1969. The word ‘monopoly’ has
not been defined in the MRTP Act. But it is common knowledge that a pure monopoly as well as ‘monopolistic’
position leads to distortion of competition in the market, besides endangering in the normal circumstances
concerted action to fix prices, supplies of commodities, etc. The result of such action is no doubt detrimental to the
consuming public.
The Monopolies Inquiry Commission made copious analysis of this aspect in its report. It is worth quoting the following
passages from Chapter V of the report:
Our study of product-wise concentration brings out prominently the fact that in a large number of industries, a
single undertaking is the only supplier or at least has to its credit a very large portion of the market as compared
with its competitors. Such an undertaking has the power to dictate the price of the commodity or services it supplies
and to regulate its volume of production in such a manner as to maximize its profits. This power is what is generally
understood by the words “monopoly power” Though in the strict etymological sense of the word, and in strict
economic theory, monopoly exists when there is only one single supplier, there is no reason why an enterprise
enjoying the power to dictate the price and thus to control the market even though it is not the single supplier
should not be considered a monopoly. What happens in such cases is that the price decided upon by the dominant
producer (or distributor) is followed by others who are in a position to compete. This price leadership phenomenon
is in essence a manifestation of the price leaders power to dictate the price in the market. We think it proper
therefore to include within the word monopoly not only the single supplier in a market but also the one dominant
supplier who has the power to dictate the price in the market.”
“The question that next arises is : When such a power is shared by a few enterprises being the dominant sellers,
should they be considered to be holding a monopolistic position? We see no reason to exclude such dominant
sellers from our understanding of monopoly. For, the essence of monopoly is the ability to dictate the price and
control the market without being materially influenced by other competing concerns.”
One important difference between the situation when a single seller dominates the market and a few independent
sellers together enjoy a dominating position cannot be overlooked. In the former case, monopoly power is inevitably
present, in the latter it may or not be present. The effect on the market of a few dominant sellers has been widely
discussed by economists, specially in recent years; but their opinions are by no means the same. We do not propose
to try to resolve this controversy. It is sufficient for our purpose to notice that it is generally agreed that when a few
big sellers dominate the market there will ordinarily be a high probability of their coming to some kind of agreement
or understanding whether formal or not, about the price and output, by which a monopolistic power is shared
between themselves. Even in the absence of such agreement or understanding it frequently happens that each has
a healthy fear of the other big producers or distributors and ultimately a policy of live and let live comes into
operation. Some economists point out that when a few large sellers dominate the market, each of them is able to
calculate fairly and accurately the probable effect on the market of his action in increasing or decreasing his output.
So, it is said that each will try to regulate the output in such a way that the marginal costs remain well below the
price. Each such seller will also be well aware that any attempt of his to reduce the price is likely to be met
immediately by similar action by his competitors. The matter is succinctly put by Stocking in Monopoly and Free
Enterprise at p. 90 thus:
“In markets where sellers are few, each in trying to determine his most profitable volume of output must, as would
a monopolist, consider the probable effects of various possible rates of production not only on costs but also on
prices. Indeed each seller will ordinarily decide on the price at which he will sell and adjust his output accordingly,
just as a monopolist does. Each oligopolist however in determining his price must consider not merely his own cost-
price relationships but also how his rivals will react to his prices. Anyone of a few sellers, if fully informed and
perfectly rational, when selling a completely standardised product will realise that if he reduces his prices his rivals
will meet the lower price promptly.
For all these reasons, we are convinced that when the market is dominated by a few sellers, monopolistic conditions
will sometimes prevail. At the same time, we are conscious that even in a market of a few sellers, there will sometimes
be keen competition. This is likely to happen apart from the effect of the mutual jealousies which sometimes
characterise the relations between big business houses when one or more of the few sellers feel confident that due
to superior managerial ability and technical skill and financial resources they will be able to capture a larger share
of the market at the expense of their rivals. Even so, there is no gainsaying the fact that in a market of a few
dominating sellers, there is real risk of the emergence of monopolistic power and consequently of monopolistic
practices. To ascertain the extent to which monopolistic practices prevail, we must examine not only the cases
where a single enterprise is the sole or dominant producer of the goods or services but also the cases where a few
enterprises between themselves share such dominating position.”
Restrictive Trade Practices

The Monopolies and Restrictive Trade Practices Act, 1969, has as one of its objects the prohibition of restrictive
trade practices. In order to ensure that the benefits of free and fair competition in a market reach the ultimate
consumer, it is essential that the process of competition should not be distorted by any trade practice, either by a
single manufacturer or a group of manufacturers or dealers. For instance, if a manufacturer stipulates a condition
that the wholesale purchaser shall sell only his products and not of others or shall resell the goods only at the prices
stipulated by him or forces the wholesale purchaser to procure the entire line of manufacture from him, the result
may be a distortion of competition in the market. The MRTP Act is concerned with promoting fair and free
competition in the market, the securing of consumer interest being the ultimate goal.
The Monopolies Inquiry Commission in its report observed that a restrictive trade practice means a practice which
obstructs the free play of competitive forces or impedes the free flow of capital or resources into the stream of
production or of the finished goods in the stream of distribution at any point before they reach the hands of the
ultimate consumer. The Commission list out the following types of restrictive trade practices pursued not only in
India but also in many other countries. These include (i) horizontal fixation of price; (ii) vertical fixation of price and
re-sale price maintenance; (iii) allocation of markets between purchasers; (iv) discrimination between purchasers;
(v) boycott; (vi) exclusive dealing contracts; and (vii) tie-up arrangements.
The Monopolies Inquiry Commission made a wee-bit of distinction between a monopolistic trade practice and a
restrictive trade practice. It observed every monopolistic trade practice is on the face of it a restrictive trade practice.
Indeed, sometimes the two words are used indiscriminately. Thus the report of Macquarrie Committee which was
set up to study Canadian Combines Legislation treats all combines or common policy among several firms designed
to strengthen the market position of a group of firms as monopolistic practices. In our opinion, every practice
whether it is by action or understanding or agreement, formal or informal, to which persons enjoying monopoly
power resort in exercise of the same to reap the benefits of that power and every action, understanding or agreement
tended to or calculated to preserve, increase or consolidate such power should properly be designated as
monopolistic trade practice.
Unfair Trade Practices

Unfair trade practices in trade and commerce were prevalent even in older days. Priests in Sumaria and Babylon are
on record to have lent money to the needy at high rates of interest. During the period of Tudors, practices of
forestalling (meaning pushing up prices by buying up supplies before they reached market), regrating (buying up
supplies in the market), and engrossing (buying up supplies wherever available) were prevalent. Thus exploitation
at market place is not a new phenomena of modern civilisation. At present various types of unfair trade practices
are prevalent at National as well as at International markets. The legislative history of countries the world over
bears redeeming testimony to the endeavours of the National Governments to enact suitable legislations to curb
such unfair trade practices.
The underlying objective of such legislative endeavours has been to make the behaviour at market place conducive
to righteous dealings so that the ultimate consumer gets a fair deal. Senator Murphy, the then Australian Attorney
General, introducing the Restrictive Trade Practices Bill of the Commonwealth of Australia in the Senate said: In
consumer transactions, unfair practices are widespread. The existing law is still founded on the principle known as
‘Caveat Emptor meaning ‘let the buyer beware. That principle may have been appropriate for transactions conducted
in village markets, it has ceased to be appropriate as a general rule. Now the marketing of goods and services is
conducted on organised basis and by the trained business executives. The untrained consumer is no match for the
businessman who attempts to persuade the consumer to buy goods or services on terms and conditions suitable to
the vendor. The consumer needs protection by the law and this Bill will provide such protection.
It is often said that consumers need no special protection; all can be safely left to the market. But the concept of
perfect market is an economists dream and consumers sovereignty a myth. In real life products are complex and of
great variety and consumers and retailers have imperfect knowledge. Suppliers may often have a dominant buying
position. As a consequence bargaining power in the market is generally weighed against the consumer. Thus
consumers have felt the need to create organisations to identify their interests and to supply information and
advice.
The Federal Trade Commission of US is stated to have labelled under the Federal Trade Commission Act, 1914
numerous practices not known before. It was because a need was felt to ensure that the public was prevented from
being made victims of false claims of products blatantly advertised even though it may not have an adverse effect on
the competition. The effort was to shift the emphasis on detention and eradication of fraud against the consumers,
particularly those belonging to the weaker sections of the society.
Consumer Protection Law in India
The Government enacted various laws to safeguard the interest of the consumers. The Essential Commodities Act,
The Trade Marks Act, The Specific Relief Act, The Drugs Control Act, The Drugs and Cosmetics Act, The Drugs and
Magic Remedies (Objectionable Advertisements) Act, The Emblems and Names (Prevention of Improper Use) Act,
The Indian Standard Institution (Certification Marks) Act, The Agricultural Produce (Grading and Marketing) Act,
The Standards of Weights and Measures Act, etc. are a few of the many laws intended to protect the interest of the
consumer. Some of these laws alongwith the delegated legislation framed thereunder protect both the pecuniary
interest as well as other interests of the consumer. Even the Indian Contract Act 1872 and the Sale of Goods Act,
1930 contain provisions for breach of contracts and remedies therefor. The Indian Penal Code provides for stringent
punishment for certain offences.
In the year 1986, the Government enacted the Consumer Protection Act, 1986 and framed necessary rules
thereunder, for facilitating the formation of Consumer Protection Councils in all states and setting up of Consumer
Forums at district level, State Commission at state level and National Commission at national level for redressing
the grievances of consumers. The Government also framed the MRTP (Recognition of Consumer Association) Rules
and amended a number of economic legislations like the Essential Commodities Act, 1955; Standards of Weights
and Measures Act, 1976; Prevention of Food Adulteration Act, 1954; Drugs and Cosmetics Act, 1940 etc. to provide
better protection to consumers.
However, the passing of the MRTP Act, 1969, could be said to be the beginning of the Governments concern for
consumer interest. Till the amendment of the Act in the year 1984, even the MRTP Act did not contain provisions
directly aimed at protecting the interests of consumer, but they were intended to regulate competition in the hope
that it would generate fair conduct, the effect of which would percolate to the ultimate consumer, the terminal point
in the distributive line.
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 half truths,
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
heaven for the suppliers and a position of frustration and uncertainty for the consumers.
It should be the function of any consumers 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.
COMPETITION ACT, 2002
Short title, extent and commencement

Section 1 of the Act provides that it shall come into force on such date as the Central Government may notify in the
Official Gazette. However, an enabling provision empowering the Government to appoint different dates for different
provisions of the Act have been incorporated.
Scheme of the Act

The Scheme of the Act has been split into nine chapters indicated hereunder: Chapter I contains preliminary
provisions viz. Short title, extent and Definition clauses; Chapter II provides for substantive laws i.e. Anti Competitive
Agreements, Abuse of Dominance and Regulation of Combinations; Chapter III contains provisions relating to
Establishment of Commission, Composition of Commission, Selection of Committee for Chairperson and other
Members, Term of Office of Chairperson etc. Chapter IV elaborately provides the Duties, Powers and Functions of
the Commission; Chapter V provides for the Duties of Director General; Chapter VI stipulates Penalties for
Contravention of Orders of Commission, Failure to Comply with Directions of Commission and Director-General,
Making False Statement or Omission to Furnish Material Information etc; Chapter VII deals with Competition
Advocacy; Chapter VIII contains provisions relating to Finance, Accounts and Audit, Chapter VIII A contains
provisions relating to “Appellate Tribunal” and Chapter IX contains Miscellaneous provisions.
In the case of Competition Commission of India Vs Steel Authority of India Ltd. & Anr in Civil Appeal No. of 2010
judgement dated September 9, 2010 Hon’ble Supreme Court observed that the decision of the Government of India
to liberalize its economy with the intention of removing controls persuaded the Indian Parliament to enact laws
providing for checks and balances in the free economy. The laws were required to be enacted, primarily, for the
objective of taking measures to avoid anti-competitive agreements and abuse of dominance as well as to regulate
mergers and takeovers which result in distortion of the market. The earlier Monopolies and Restrictive Trade
Practices Act, 1969 was not only found to be inadequate but also obsolete in certain respects, particularly, in the
light of international economic developments relating to competition law. Most countries in the world have enacted
competition laws to protect their free market economies- an economic system in which the allocation of resources
is determined solely by supply and demand. The rationale of free market economy is that the competitive offers of
different suppliers allow the buyers to make the best purchase. The motivation of each participant in a free market
economy is to maximize self-interest but the result is favourable to society. As Adam Smith observed: “there is an
invisible hand at work to take care of this”. As far as American law is concerned, it is said that the Sherman Act, 1890,
is the first codification of recognized common law principles of competition law. With the progress of time, even
there the competition law has attained new dimensions with the enactment of subsequent laws, like the Clayton
Act, 1914, the Federal Trade Commission Act, 1914 and the Robinson-Patman Act, 1936. The United Kingdom, on
the other hand, introduced the considerably less stringent Restrictive Practices Act, 1956, but later on more
elaborate legislations like the Competition Act, 1998 and the Enterprise Act, 2002 were introduced. Australia
introduced its current Trade Practices Act in 1974. The overall intention of competition law policy has not changed
markedly over the past century. Its intent is to limit the role of market power that might result from substantial
concentration in a particular industry. The major concern with monopoly and similar kinds of concentration is not
that being big is necessarily undesirable. However, because of the control exerted by a monopoly over price, there
are economic efficiency losses to society and product quality and diversity may also be affected. Thus, there is a
need to protect competition. The primary purpose of competition law is to remedy some of those situations where
the activities of one firm or two lead to the breakdown of the free market system, or, to prevent such a breakdown
by laying down rules by which rival businesses can compete with each other. The model of perfect competition is
the `economic model’ that usually comes to an economist’s mind when thinking about the competitive markets. As
far as the objectives of competition laws are concerned, they vary from country to country and even within a country
they seem to change and evolve over the time. However, it will be useful to refer to some of the common objectives
of competition law. The main objective of competition law is to promote economic efficiency using competition as
one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect
competition are three- fold: allocative efficiency, which ensures the effective allocation of resources, productive
efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes
innovative practices. These factors by and large have been accepted all over the world as the guiding principles for
effective implementation of competition law.
Further, in Excel Crop Care India v Competition Commission of India ( Civil Appeal No. 2480 of 2014 judgement dated
May 08, 2017,{ 2017) (8) SCC 47} the Supreme Court Observed that in the instant case, we are concerned with the
first type of practices, namely, anti-competitive agreements. The Act, which prohibits anti-competitive agreements,
has a laudable purpose behind it. It is to ensure that there is a healthy competition in the market, as it brings about
various benefits for the public at large as well as economy of the nation. In fact, the ultimate goal of competition
policy (or for that matter, even the consumer policies) is to enhance consumer well-being. These policies are
directed at ensuring that markets function effectively. Competition policy towards the supply side of the market
aims to ensure that consumers have adequate and affordable choices. Another purpose in curbing anti-competitive
agreements is to ensure level playing field for all market players that helps markets to be competitive. It sets rules
of the game that protect the competition process itself, rather than competitors in the market. In this way, the
pursuit of fair and effective competition can contribute to improvements in economic efficiency, economic growth
and development of consumer welfare. It is well settled that the Competition Act, 2002 is a regulatory legislation
enacted to maintain free market so that the Adam Smith’s concept of invincible hands operate unhindered in the
background. Further it is clear from the Statement of objects and reason that this law was foreseen as a tool against
concentration of unjust monopolistic powers at the hands of private individuals which might be detrimental for
freedom of trade. Competition law in India aims to achieve highest sustainable levels of economic growth,
entrepreneurship, employment, higher standards of living for citizens, protect economic rights for just, equitable,
inclusive and sustainable economic and social development, promote economic democracy, and support good
governance by restricting rent seeking practices. Therefore an interpretation should be provided which is in
consonance with the aforesaid objectives.
DEFINITIONS
The term “Competition” is not defined in the Act. However, in the corporate world, the term is generally understood
as a process whereby the economic enterprises compete with each other to secure customers for their product. In
the process, the enterprises compete to outsmart their competitors, sometimes to eliminate their rivals. Competition
in the sense of economic rivalry is unstable and has a natural tendency to give way to a monopoly. Thus, competition
kills competition.
The important concepts incorporated in the Competition Act, 2002 have been defined under Section 2 of the Act.
These have been discussed herein below:
Acquisition
This term has been specifically defined. It means – directly or indirectly, acquiring or agreeing to acquire: (i) shares,
voting rights or assets of any enterprise; (ii) control over management or control over assets of any enterprise.
[(Section 2(a)]
The terms ‘acquiring’ or ‘acquisition’ are relevant for “Regulation of Combinations”.
Agreement
The term includes any arrangement or understanding or action in concert –
(i) whether or not, such arrangement, understanding or concert is in formal or in writing; or
(ii) whether or not such arrangement, understanding or concert is intended to be enforceable by legal proceedings.
It implies that an arrangement need not necessarily be in writing. The term is relevant in the context of Section 3,
which envisages that anti-competitive agreements shall be void and thereby prohibited by the law. [Section 2(b)]
The term “Competition” is not defined in the Act. However, in the corporate world, the term is generally understood
as a process whereby the economic enterprises compete with each other to secure customers for their product. In
the process, the enterprises compete to outsmart their competitors, sometimes to eliminate their rivals. Competition
in the sense of economic rivalry is unstable and has a natural tendency to give way to a monopoly. Thus, competition
kills competition.
Cartel
“Cartel” includes an association of producers, sellers or 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
Chairperson
Chairperson means the Chairperson of Competition Commission of India appointed under Sub-section (1) of
Section 8. [Section 2(d)]
Commission
Commission means Competition Commission of India established under Section 7(1). [Section 2(e)]
Consumer
Under that Act, the Consumer includes only such purchasers or buyers who make purchases for their own
consumption or to earn their livelihood. This deficiency has now been made good – by defining “Consumer” under
the Act. 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 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 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)]
It may be noted that under the Competition Act even if a person purchases goods or avails of services for commercial
purpose, he will be a Consumer, whereas for purposes of Consumer Protection Act, a person purchasing goods/
availing services for commercial purposes is not a “Consumer” and can not seek relief under that Act.
Director General
Director General means the Director General appointed under Section 16(1) and includes Additional, Joint or
Deputy or Assistant Director Generals. [Section 2(g)]
Enterprise
Enterprise means a person or a department of the Government, who or which is, engaged in any activity, relating to
production, control of goods or articles or 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 whether such unit or
division or subsidiary is located at the same place where the enterprise is located or at different place(s).
However, it does not include any activity of the Central Government relating to sovereign functions of Government
including all activities carried on by the Government Departments dealing with atomic energy, currency, defence
and space.
‘Activity’ includes profession or occupation. ‘A unit or division’ includes a plant or factory established for production,
supply, distribution, acquisition or control of any goods or any branch or office established for provision of any
service. [Section 2(h)]
It may thus be noted that sovereign function of Government are excluded from definition of enterprise but Government
Departments performing non-sovereign functions for consideration are subject to jurisdiction of Commission.
Goods
Goods means goods as defined in Sale of Goods Act, 1930 and –
(a) products manufactured, processed or mined;
(b) debentures, shares and stocks after allotment;
(c) in relation to ‘goods supplied’, goods imported into India. [Section 2(i)]
Member
Member means a Member of the Commission appointed under Section 8(1) of the Act and includes a Chairperson.
[Section 2(j)]
Notification
Notification means notification published in the Official Gazette. [Section 2(k)]
Person
Person includes (i) an individual; (ii) a Hindu undivided family; (iii) a company; (iv) a firm; (v) an association of
persons; (vi) a corporation established under Central, State Act or a Government Company (vii) a body corporate
incorporated by or under a law of a foreign country; (viii) a co-operative society registered under any Law (ix) local
authority (x) every artificial juridical person.
‘Government Company’ for this Section will be same as defined under Section 617 of Companies Act, 1956.
[Section 2(p)]
Practice
Practice includes any practice relating to carrying on of any trade by a person or enterprise. [Section 2(p)]
Prescribed
Prescribed means prescribed by rules made under the Act by Central Government. [Section 2(n)]
Price
Price, in relation to sale of goods or supply of services, includes every valuable consideration, whether direct or
indirect, or deferred, and includes any consideration, which relates to sale of any goods or to performance of any
services although ostensibly relating to any other matter or thing. [Section 2(o)]
Public Financial Institution

Public Financial Institution means a Public Financial Institution as defined in Section 4A of Companies Act, 1956
and includes a State Financial, Industrial or Investment corporation. [Section 2(p)]
Regulations
Regulations means the regulations made by the Competition Commission of India. [Section 2(q)]
Relevant Market
Relevant market means the market, which may be determined by the Commission with reference to ‘relevant
product market’ or ‘relevant geographic market’ or with reference to both the markets. [Section 2(r)]
Relevant Geographic Market

Relevant Geographic Market means a market comprising the area in which the conditions of competition for supply
of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished
from conditions prevailing in neighbouring areas. [Section 2(s)]
Relevant Product Market

Relevant Product Market means a market comprising of all those products or services which are regarded as
interchangeable or substitutable by the consumer, by reasons of characteristics of products or services, their prices
and intended use. [Section 2(t)]
The terms ‘relevant market’, ‘relevant geographical market’ and ‘relevant product market’ have relevance in
determination of the agreements being anti competitive, in evaluating combinations and dominance of an enterprise
or group. An agreement in the nature of cartel which limits or controls production, supply, market, technical
development, investments etc. need to be looked as being anti competitive with reference to relevant market.
Similarly agreement to share the market or sources of production by way of allocation of geographical area of
market, types of goods or services or number of customers in the market or by any similar way and these need to
be interpreted in the context of the definition of relevant geographical market under Section 2(s).
Service
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)]
It may be noted that under the Competition Act, the services of industrial or commercial nature also fall within the
scope of the Act whereas under the Consumer Protection Act, the services of commercial nature or for business or
industrial purposes are excluded for interpreting deficiency in the supply thereof and for determining compensation,
if any, payable to them. To this extent, the relief claimable under the Consumer Protection
Act, 1986 is limited in scope. It may also be noted that “education” has been specifically included in ambit of “Service”
to set at rest the dispute, if any, about the jurisdiction of Commission in such matters.
Shares
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)]
This definition of shares is much wider than what is provided under the Companies Act. It implies that not only
shares in the share capital of a company e.g. equity or preference shares are included in the definition of shares but
‘debentures convertible into shares with voting rights’ are also included.
Statutory Authority
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)]
It implies that this definition widens the scope of type of bodies, which are empowered to make a reference for
enquiring into anti-competitive agreement or abuse of dominant position or make a reference for opinion on a
competition issue.
Trade
Trade means any ‘trade’, business, industry, profession or occupation relating to production, supplies,
distribution, storage or control of goods and includes the provision of any services.
The definition of the term ‘trade’ is relevant, inter-alia, to the interpretation of any of the type of agreement listed
in Section 4 (a), (b), (c), (d) and (e) in relation to the trading goods and provisions of services. [Section 2(x)]
Turnover
Turnover includes value of sale of goods or services. [Section 2(y)]
The definition of the term ’turnover’, inter-alia, is relevant and significant in determining whether the combination
of merging entities exceeds the threshold limit of the turnover specified in Section 5 of the Act. It is also relevant for
the purpose of imposition of fines by the Commission.
Section 2 further provides that the words and expression used but not defined in the Competition Act, 2002 and
defined in the Companies Act, 1956 [(1) of 1956] shall have the same meaning respectively assigned to them in the
Companies Act, 1956 (1 of 1956).
Chapter II of the Competition Act, 2002 stipulates provisions relating to Prohibition of Certain Agreements, Abuse
of Dominant Position and Regulations of Combinations.
Anti Competitive Agreements

It is provided under Section 3(1) of the Competition Act 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. Section 3(2) further declares that any anti competitive agreement within the meaning of sub-
section 3(1) shall be void. Under the law, the whole agreement is construed as ‘void’ if it contains anti- competitive
clauses having appreciable adverse effect on competition. Section 3(3) provides that following kinds of agreements
entered into between enterprises or association of enterprises or persons or associations of persons or person or
enterprise or practice carried on, or decision taken by any association of enterprises or association of persons,
including “cartels”, engaged in identical or similar goods or 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; and
(d) directly or indirectly results in bid rigging or collusive bidding;
shall be presumed to have an appreciable adverse effect on the competition and onus to prove otherwise lies on the
defendant.
Such agreements are known as horizontal agreements because they are entered into between enterprises engaged
in identical or similar goods or services. The above stated four categories include agreements, practice or decision
by enterprises for- price fixation, output control, market allocation and bid rigging.
The explanation appended to the Section 3 defines the term ‘bid rigging’ as any agreement between enterprises or
persons which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating
the process for bidding. Efficiency enhancing joint ventures entered into by parties engaged in identical or similar
goods or services, shall not be presumed to have appreciable adverse effect on competition but judged by rule of
reason. The term “cartel” used in the Section is the most severe form of entering into ‘anti competitive agreements’
and has been defined in Section 2(c).
Bid rigging takes place when bidders collude and keep the bid amount at a pre-determined level. Such pre-
determination is by way of intentional manipulation by the members of the bidding group. Bidders could be actual
or potential ones, but they collude and act in concert.
Bid rigging is anti-competitive

Bidding, as a practice, is intended to enable the procurement of goods or services on the most favourable terms and
conditions. Invitation of bids is resorted to both by Government (and Government entities) and private bodies
(companies, corporations, etc.). But the objective of securing the most favourable prices and conditions may be
negated if the prospective bidders collude or act in concert. Such collusive bidding or bid rigging contravenes the
very purpose of inviting tenders and is inherently anti-competitive.
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 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 –
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.
Such agreements are known as vertical agreements as they are entered into enterprises at different stages in the
production or supply chain. Rule of reason is applicable to such agreements in order to find appreciable adverse
effect on competition. Agreements that are likely to cause appreciable adverse effect on competition also fall under
sub-section (4).
The term “tie-in agreement” includes any agreement requiring a purchaser of goods, as a condition of such
purchase, to purchase some other goods. A good example of tie-in agreement is where a gas distributor requires a
consumer to buy a gas stove as a pre condition to obtain connection of domestic cooking gas. [Chanakaya and
Siddharth Gas company, In-re RTP 11/1985 decided by (MRTP Commission on 27.1.1985)]
“Exclusive supply agreement” includes any agreement restricting in any manner from acquiring or otherwise
dealing in any goods other than those of the seller or any other person. Thus, where a manufacturer asks a dealer
not to deal in similar products of its competitor directly or indirectly and discontinues the supply on the ground that
dealer also deals in product of suppliers’ competitor’s goods is an illustration of exclusive dealing agreement.
[Bhartia Curtec Hammer Ltd. In-re (1997) 24 CLA 104 (MRTPC)]
“Exclusive distribution agreement” includes any agreement to limit, restrict or withhold the output or supply of
any goods or allocate any area or market for the disposal or sale of the goods.
Requiring a distributor not to sell the goods of the manufacturer beyond the prescribed territory is a good example
of exclusive distribution agreement. Vadilal Enterprise Ltd. In-re (1998 (91) COMP CAS 824 is a good example of
exclusive distribution agreement.
“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 are sold or from whom goods are bought. For eg. an agreement which provides
that the franchisees will not deal in products or goods of similar nature for a period of three years from the date of
determination of agreement within a radius of five kms from showroom amounts to exclusive dealing agreement.
DGIR v. Titan industries (2001) 43 CLA 293 MRTPC.
“Resale price maintenance” includes any agreement to sell goods on condition that the prices to be charged on
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.
Any stipulation that the cement dealer should not sell below the stipulated price is a ‘resale price maintenance’
practice and is an anti competitive practice. (In re-India Cement Ltd. RTP Inquiry 48 /1985).
The agreements falling in Section 3(3) shall be presumed to have appreciable adverse effect on competition and
thereby they are construed as deemed restrictive agreements. The agreements falling in Section 3(4) shall be judged
by rule of reason and the onus lies on the prosecutor to prove its appreciable adverse effect on competition. The
definition of all restrictive concepts covered under Section 3(4) is inclusive one.
Moreover, Section 3 does not restrict 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.
That apart, the Act does not restrict any person’s right to export from India goods under an agreement which
requires him to exclusively supply, distribute or control goods or provision of services for fulfilling export contracts.
The exclusion of ‘export business’ is in view of ‘effect theory’, and doctrine of ‘relevant market’.
WHAT IS AN ANTI-COMPETITIVE AGREEMENT?

An anti-competitive agreement is an agreement having appreciable adverse effect
on competition. Anti-competitive 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.
Prohibition of Abuse of Dominant Position

Section 4 of the Competition Act, 2002 expressly prohibits any enterprise or group from abusing its dominant
position, meaning thereby a position of strength, enjoyed by an enterprise or group, 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”.
In line with the latest global trend, the dominance shall not be determined with reference to “assets”, “turnover” or
“market share”.
As per Section 2(r) ‘relevant market’ means the market, which may be determined by the Commission with reference
to the relevant ‘product market’ or ‘relevant geographic market’ or with reference to both the markets. Thus, for
determining dominance, these are relevant concepts.
The term “enterprise” means a person or a department of the Government, who or which is, or has been, engaged
in any 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, whether such unit or division or subsidiary is located at the same place
where the enterprise is located or at a different place or at different places, 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.
For the purposes of this clause, “activity” includes profession or occupation; “article” includes a new article and
“service” includes a new service; “unit” or “division”, in relation to an enterprise, includes—
(i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any
article or goods;
(ii) any branch or office established for the provision of any service.
Section 4(2) states that there shall be abuse of dominant position, if an enterprise or group –
(i) directly or indirectly imposes unfair or discriminatory;
(ii) condition in purchase or sale of goods or services; or
(iii) price in purchase or sale (including predatory price) of goods or service.
Explanation appended to Section 4 (2) clarifies that the unfair or discriminatory condition in purchase or sale of goods
or services shall not include any discriminatory condition or price which may be adopted to meet the competition.
Section 4(2)(b) includes in abuse of dominant position an enterprise or group limiting or restricting
(i) production of goods or provision of services or market therefore; or
(ii) technical or scientific development relating to goods or services to the prejudice of consumers.
Similarly Section 4 (2) (c), (d) and (e) specify three other forms of abuses namely, if any person indulges in practice
or practices resulting in denial of market access in any manner; or 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 and also, if any person uses dominant position in one relevant
market to enter into, or protect, other relevant market.
The term “predatory price” has been defined as 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 goods or provision of services, with a view to reduce
competition or eliminate the competitors. Thus, the two conditions precedent to bring a case with the ambit of
predatory pricing are:
(i) selling goods or provision of service at a price which is below its cost of production and
(ii) that practice is resorted to eliminate the competitors or to reduce competition.
The Competition Commission of India has been empowered under Section 19(4) of the Act to determine whether
any enterprise or group enjoys a dominant position or not, in the ‘relevant market’ and also to decide whether or
not there has been an abuse of dominant position. It may be noted that mere existence of dominance is not to be
frowned upon unless the dominance is abused.
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:
• imposing unfair conditions or price,
• predatory pricing,
• limiting production/market or technical development ,
• creating barriers to entry,
• applying dissimilar conditions to similar transactions,
• denying market access, and
• using dominant position in one market to gain advantages in another
market.
Combinations
Combination has broad coverage and includes acquisition of control, shares, voting rights, assets, merger or
amalgamation. Unless exempted, Commission’s approval is mandatory under the Act, if jurisdictional thresholds in
terms of assets or turnover either in India or in India and outside India, as the case may be (as set out in the table
below), of the combining parties are met.
Control: As per explanation (a) to Section 5 of the Act “control” includes controlling the affairs or management by—
(i) one or more enterprises, either jointly or singly, over another enterprise or group; (ii) one or more groups, either
jointly or singly, over another group or enterprise. Accordingly, control defined under the Act refers to sole as well
as joint control.
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.
THRESHOLDS FOR COMBINATION

On March 4, 2016, the Central Government issued notifications pertaining to the statutory thresholds for the
purposes of “combinations” under Section 5 of the Competition Act, 2002 (“Act”).
However, pursuant to Notification No. S.O. 675(E) dated March 4, 2016, the value of assets and the value of turnover
has been enhanced by 100% for the purposes of Section 5 of the Act. Accordingly, the revised thresholds for
notification to the Competition Commission of India (“CCI/ or Commission”) are:
THRESHOLDS FOR FILING NOTICE

Assets Turnover
Enterprise Level India >2000 INR crore >6000 INR crore
Worldwide >USD 1 bn with at >USD 3 bn with at least
with India Leg least > 1000 INR crore
in India OR > 3000 INR crore in India
OR
Group Level India >8000 INR crore >24000 INR crore
Worldwide >USD 4 bn with at >USD 12 bn with at least
with India leg least >1000 INR crore
in India OR > 3000 INR crore in India
De Minimis Exemption/ Target Exemption: Pursuant to Notification No. S.O. 988(E) dated March 27, 2017, the Central
Government, in public interest, has exempted the enterprises being parties to –– (a) any acquisition referred to in
clause (a) of section 5 of the Competition Act; (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, referred
to in clause (b) of section 5 of the Competition Act; and (c) any merger or amalgamation, referred to in clause (c) of
section 5 of the Competition Act, where the value of assets being acquired, taken control of, merged or amalgamated
is not more than rupees three hundred and fifty (350) crores in India or turnover of not more than rupees one
thousand (1000) crores in India, from the provisions of section 5 of the said Act for a period of five years from the
date of publication of this notification in the official gazette. Aforesaid Notification was published on March 29,
2017 in official gazette. De Minimis/Target Exemption was first notified by Central Government in 2011 and was
initially applicable to acquisitions only. Thereafter, De Minimis/Target Exemption was revised in 2016 by the Central
Government. De Minimis/Target Exemption was further revised vide aforesaid Notification dated March 27, 2017
by increasing the scope of Target Exemption to include acquisitions, mergers and amalgamations.
Aforesaid revised De Minimis/Target Exemption issued by the Central Government vide Notification dated March
27, 2017 also clarifies that where a portion of an enterprise or division or business is being acquired, taken control
of, merged or amalgamated with another enterprise, the value of assets of the said portion or division or business
and or attributable to it, shall be the relevant assets and turnover to be taken into account for the purpose of
calculating the thresholds under section 5 of the Act. Revised De Minimis/Target Exemption further provides that
the value of the said portion or division or business shall be determined by taking the book value of the assets as
shown, in the audited books of accounts of the enterprise or as per statutory auditor’s report where the financial
statement have not yet become due to be filed, in the financial year immediately preceding the financial year in
which the date of the proposed combination falls, as reduced by any depreciation, and the value of assets shall
include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered
proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications,
design or layout design or similar other commercial rights, if any, referred to in sub-section (5) of section 3. The said
revised De Minimis/Target Exemption also provides that the turnover of the said portion or division or business
shall be as certified by the statutory auditor on the basis of the last available audited accounts of the company.
Accordingly, the revised threshold for availing of the De Minimis/Target exemption for acquisitions, mergers and
amalgamations are:
THRESHOLDS FOR AVAILING OF DE MINIMISE EXEMPTION FOR

ACQUISITIONS, MERGERS AND AMALGAMATIONS
Assets Turnover
Target In India < 350 INR crore OR < 1000 INR crore
Enterprise
Regulation of Combinations
Section 6 of the Competition Act prohibits any person or enterprise from entering into a combination which causes
or is likely to cause an appreciable adverse effect on competition within the relevant market in India and if such a
combination is formed, it shall be void. Combinations can be both horizontal and vertical. Horizontal combinations
are considered to have more adverse effect on competition in relevant market due to consolidation. Section 6(2)
envisages that any person or enterprise, who or which proposes to enter into any combination, shall give a notice
to the Commission disclosing details of the proposed combination, in the form, prescribed and submit the form
together with the fee prescribed by regulations. Such intimation should be submitted within 30 days of –
(a) approval of the proposal relating to merger or amalgamation, referred to in Section 5(c), by the board of
directors of the enterprise concerned with such merger or amalgamation, as the case may be;
(b) execution of any agreement or other document for acquisition referred to in Section 5(a) or acquiring of
control referred to in Section 5(b).
EXEMPTION NOTIFICATIONS
Exemption from filing notice to the Commission: Pursuant to Notification No. S.O. 2039(E) dated June 29, 2017,
Central Government, in public interest, has exempted every person or enterprise who is a party to a combination as
referred to in section 5 of the Act from giving notice within thirty days mentioned in sub-section (2) of section 6 of
the Act, subject to the provisions of sub-section (2A) of section 6 and section 43A of the said Act, for a period of five
years from the date of publication of notification in Official Gazette. Accordingly, the benefit of aforesaid exemption
will be available for 5 (five) years from June 29, 2017 till June 29, 2022. Above exemption does not mean absolute
exemption from filing the notice. Above exemption notification from filing notice is subject to provisions contained
under Section 6(2A) of the Act which envisages that no combination shall come into effect until 210 days have
passed from the day of notice or the Commission has passed orders, whichever is earlier. Further, in terms of section
43A of the Act, if any person or enterprise who fails to give notice to the Commission under sub-section (2) of
section 6, the Commission shall impose on such person or enterprise a penalty which may extend to one percent, of
the total turnover or the assets, whichever is higher, of such a combination. Accordingly, requirement to file notice
with the Commission is still mandatory.
Notification regarding exemption of Regional Rural Banks from Section 5 and 6 of the Competition Act, 2002:
Pursuant to Notification No. S.O. 2561 (E) dated August 10, 2017 the Central Government, in public interest, has
exempted the Regional Rural Banks in respect of which the Central Government has issued a notification under sub-
section (1) of section 23A of the Regional Rural Banks Act, 1976 (21 of 1976), from the application of provisions of
sections 5 and 6 of the Competition Act, 2002 for a period of five years from the date of publication of this notification
in the Official Gazette. Accordingly, the benefit of aforesaid exemption will be available for 5 (five) years from August
10, 2017 till August 10, 2022.
Exemption of nationalized banks from Section 5 and 6 of the Competition Act, 2002: Pursuant to Notification No.
S.O. 2828 (E) dated August 30, 2017, the Central Government in the public interest has exempted, all cases of
reconstitution, transfer of the whole or any part thereof and amalgamation of nationalized banks, under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), from the application of provisions of Sections 5
and 6 of the Competition Act, 2002 for a period of ten years from the date of publication of this notification in the
Official Gazette. Accordingly, the benefit of aforesaid exemption will be available for 10 (ten) years from August 30,
2017 till August 30, 2027.
Exemption of Combination under Section 5 of the Act involving Central Public Sector Enterprises (CPSEs)
operating in the Oil and Gas Sectors: Pursuant to Notification No. S.O. 3714(E) dated November 22, 2017, the
Central Government in the public interest has exempted all cases of combinations under section 5 of the Act
involving the Central Public Sector Enterprises (CPSEs) operating in the Oil and Gas Sectors under the Petroleum
Act, 1934 (30 of 1934) and the rules made thereunder or under the Oilfields (Regulation and Development) Act,
1948 (53 of 1948) and the rules made thereunder, along with their wholly or partly owned subsidiaries operating
in the Oil and Gas Sectors, from the application of the provisions of sections 5 and 6 of the Act, for a period of five
years from the date of publication of notification in the Official Gazette. Accordingly, the benefit of aforesaid
exemption will be available for 5 (five) years from November 22, 2017 till November 22, 2022.
Categories of transactions not likely to have appreciable adverse effect on competition & Notice need not
normally be filed: Regulation 4 of the Competition Commission of India (Procedure in regard to the transaction of
Business relating to Combinations) Regulations, 2011 (“Combination Regulations”) relating to categories of
transactions not likely to have appreciable adverse effect on competition in India clarifies that certain categories of
combinations mentioned in Schedule I to the Combination Regulations are ordinarily not likely to cause an
appreciable adverse effect on competition in India. Accordingly, notice under sub-section (2) of section 6 of the Act
need not normally be filed. Following are categories of transactions listed under Schedule I.
1. An acquisition of shares or voting rights, referred to in sub-clause (i) or sub-clause (ii) of clause (a) of section
5 of the Act, solely as an investment or in the ordinary course of business in so far as the total shares or voting
rights held by the acquirer directly or indirectly, does not entitle the acquirer to hold twenty five per cent
(25%) or more of the total shares or voting rights of the company, of which shares or voting rights are being
acquired, directly or indirectly or in accordance with the execution of any document including a share
holders‟ agreement or articles of association, not leading to acquisition of control of the enterprise whose
shares or voting rights are being acquired. By way of guidance, Explanation to Item 1 provides that the
acquisition of less than ten per cent of the total shares or voting rights of an enterprise shall be treated as
solely as an investment. However, following conditions must be satisfied for the purposes of claiming
exemption under Item 1 of Schedule I viz. (A) the Acquirer has ability to exercise only such rights that are
exercisable by the ordinary shareholders of the enterprise whose shares or voting rights are being acquired
to the extent of their respective shareholding; and (B) the Acquirer is not a member of the board of directors
of the enterprise whose shares or voting rights are being acquired and does not have a right or intention to
nominate a director on the board of directors of the enterprise whose shares or voting rights are being
acquired and does not intend to participate in the affairs or management of the enterprise whose shares or
voting rights are being acquired.
1A. An acquisition of additional shares or voting rights of an enterprise by the acquirer or its group, where the
acquirer or its group, prior to acquisition, already holds twenty five per cent (25%) or more shares or voting
rights of the enterprise, but does not hold fifty per cent (50%) or more of the shares or voting rights of the
enterprise, either prior to or after such acquisition. However, for claiming this exemption, it is pertinent to
note that such acquisition does not result in acquisition of sole or joint control of such enterprise by the
acquirer or its group.
2. An acquisition of shares or voting rights, referred to in sub-clause (i) or sub-clause (ii) of clause (a) of section
5 of the Act, where the acquirer, prior to acquisition, has fifty percent (50%) or more shares or voting rights
in the enterprise whose shares or voting rights are being acquired, except in the cases where the transaction
results in transfer from joint control to sole control.
3. An acquisition of assets, referred to in sub- clause (i) or sub-clause (ii) of clause (a) of section 5 of the Act, not
directly related to the business activity of the party acquiring the asset or made solely as an investment or in
the ordinary course of business, not leading to control of the enterprise whose assets are being acquired
except where the assets being acquired represent substantial business operations in a particular location or
for a particular product or service of the enterprise, of which assets are being acquired, irrespective of
whether such assets are organized as a separate legal entity or not.
4. An amended or renewed tender offer where a notice to the Commission has been filed by the party making
the offer, prior to such amendment or renewal of the offer. However, for claiming this exemption, it is pertinent
to note that compliance with regulation 16 relating to intimation of any change is duly made.
5. An acquisition of stock-in-trade, raw materials, stores and spares, trade receivables and other similar current
assets in the ordinary course of business.
6. An acquisition of shares or voting rights pursuant to a bonus issue or stock splits or consolidation of face
value of shares or buy back of shares or subscription to rights issue of shares, not leading to acquisition of
control.
7. Any acquisition of shares or voting rights by a person acting as a securities underwriter or a registered stock
broker of a stock exchange on behalf of its clients, in the ordinary course of its business and in the process of
underwriting or stock broking, as the case may be.
8. An acquisition of shares or voting rights or assets, by one person or enterprise, of another person or enterprise
within the same group, except in cases where the acquired enterprise is jointly controlled by enterprises that
are not part of the same group.
9. A merger or amalgamation of two enterprises where one of the enterprises has more than fifty per cent
(50%) shares or voting rights of the other enterprise, and/or merger or amalgamation of enterprises in
which more than fifty per cent (50%) shares or voting rights in each of such enterprises are held by
enterprise(s) within the same group. However, for claiming this exemption, it is pertinent to note that
transaction does not result in transfer from joint control to sole control.
10. Acquisition of shares, control, voting rights or assets by a purchaser approved by the Commission pursuant
to and in accordance with its order under section 31 of the Act.
Form of notice: Regulation 5 of the Combination Regulations relating to form of notice for the proposed combination
provides that the notice under sub-section (2) of section 6 of the Act, shall ordinarily be filed in Form I as specified
in schedule II to the Combination Regulations. Regulation 5 further provides that the parties to the combination
may, at their option, give notice in Form II, as specified in schedule II to Combination regulations, preferably in the
instances where- (a) the parties to the combination are engaged in production, supply, distribution, storage, sale or
trade of similar or identical or substitutable goods or provision of similar or identical or substitutable services and
the combined market share of the parties to the combination after such combination is more than fifteen percent
(15%) in the relevant market; (b) the parties to the combination are engaged at different stages or levels of the
production chain in different markets, in respect of production, supply, distribution, storage, sale or trade in goods
or provision of services, and their individual or combined market share is more than twenty five percent (25%) in
the relevant market. However, in terms of Regulation 5 (5), it is pertinent to note that in cases where the parties to
the combination have filed notice in Form I and the Commission requires information in Form II to form its prima
facie opinion whether the combination is likely to cause or has caused appreciable adverse effect on competition
within the relevant market, it shall direct the parties to the combination to file notice in Form II as specified in
schedule II to combination regulations.
Obligation to file the notice: Regulation 9 of the Combination Regulations relating to obligation to file the notice
provides that in case of an acquisition or acquiring of control of enterprise(s), the acquirer shall file the notice in
Form I or Form II, as the case may be. Regulation 9 further provides that in case of a merger or an amalgamation,
parties to the combination shall jointly file the notice in Form I or Form II, as the case may be.
Suspensory regime: Section 6(2A) of the Act envisages that no combination shall come into effect until 210 days
have passed from the day of notice or the Commission has passed orders, whichever is earlier. In other words, there
is requirement to receive approval of the Commission prior to closing of the transaction.
Review of combination by Commission: The Competition Commission of India (CCI) has been empowered to deal
with such notice in accordance with provisions of Sections 29, 30 and 31 of the Act. Section 29 prescribes procedure
for investigation of combinations. Section 30 empowers the Commission to determine whether the disclosure made
to it under Section 6(2) is correct and whether the combination has, or is likely to have, an appreciable adverse
effect on the competition. Section 31 provides that the Commission may allow the combination if it will not have any
appreciable adverse effect on competition or pass an order that the combination shall not take effect, if in its opinion,
such a combination has or is likely to have an appreciable adverse effect on competition.
Non applicability of section 6: The provisions of Section 6 do not apply to share subscription or financing facility
or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund,
pursuant to any covenant of a loan agreement or investment agreement. This exemption appears to have been
provided in the Act to facilitate raising of funds by an enterprise in the course of its normal business. Under Section
6(5), the public financial institution, foreign institutional investor, bank or venture capital fund, are required to file
in prescribed form, details of the control, the circumstances for exercise of such control and the consequences of
default arising out of loan agreement or investment agreement, within seven days from the date of such acquisition
or entering into such agreement, as the case may be.
As per the explanation appended to Section 6(5)
(a) “foreign institutional investor” has the same meaning as assigned to it in clause (a) of the Explanation to
Section 115AD of the Income-tax Act, 1961;
(b) “venture capital fund” has the same meaning as assigned to it in clause (b) of the Explanation to clause (23
FB) of Section 10 of the Income-tax Act, 1961.
It may be noted that under the law, the combinations are only regulated whereas anti-competitive agreements and
abuse of dominance are prohibited. Further, under the MRTP Act prior to 27.9.91, undertakings of certain size were
required to be registered and such undertakings were required to seek prior approval of the Central Government
before embarking upon expansion plans. In the present Act, there is no requirement of registration of an undertaking
and further, there is no need to have prior approval of the Central Government but CCI will only examine as to
whether or not combination is or is likely to have an appreciable adverse effect on competition.
The Competition Act with many innovative concepts coupled with power to impose fine is likely to let in harsh glare
of sunlight to disinfect pernicious anti-competitive practices.
Competition Commission of India

Establishment of Commission
The Central Government under Section 7 has been empowered to establish a Commission to be called “Competition
Commission of India” by issue of a Notification. The Commission is a body corporate having perpetual succession
and a common seal. The Commission has power to acquire, hold movable or immovable property and to enter into
contract in its name and by the said name, sue or be sued. In the premises, the set up of Commission corresponds to
that of Securities & Exchange Board of India constituted under the SEBI Act, 1992.
The Head Office of the Commission shall be at such place as the Central Government may decide from time to time.
Vide Notification: SO 1198(E) dated 14th Oct., 2003, the Central Government established the Competition
Commission of India having its Head Office at New Delhi.
The Commission has also been authorized to establish its office at other places in India. Thus, the law provides for
setting up of CCI’s offices at places other than that of its Headquarter.
Composition of Commission
The composition of the Commission as spelled out under Section 8 of the Act consists of a Chairperson and not less
than two and not more than six other Members. The Chairperson and the Members are to be appointed by the
Central Government. Regarding the qualifications of the Chairman and other Members, Section 8(2) provides that
they shall be person of ability, integrity and standing and who has special knowledge of and such professional
experience of not less than fifteen years in international trade, economics, business, commerce, law, finance,
accountancy, management, industry, 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 are to be appointed on whole time basis.
Selection of Chairperson and Members of Commission
Section 9(1) envisages 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 the Chief Justice
of India or his nominee, as Chairperson; and the Secretary in the Ministry of Corporate Affairs, Member; the
Secretary in the Ministry of Law and Justice, Member; and two experts of repute who have special knowledge of, and
professional experience in international trade, economics, business, commerce, law, finance, accountancy,
management, industry, public affairs or competition matters including competition law and policy, as member.
Term of office of Chairperson and other Members
The Act stipulates that the Chairperson and every other Member shall hold offi as such for a term of fi years from
the date on which he enters upon his offi and shall be eligible for re-appointment. However, the Chairperson or
other Members shall not hold offi as such after he has attained the age of sixty-fi 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 of Chairperson etc.
It has been provided under section 11 that the Chairperson or any other Member may resign his office by notice in
writing under his hand addressed to the Central Government. However, until the Chairperson or a Member is
permitted by the Central Government to relinquish his office, he will continue to hold his office until the expiry of
three months from the date of receipt of such notice or until a person duly appointed as a successor enters into his
office or until the expiry of his term, which ever is the earliest. Under Section 11(2), it is provided that in the
following circumstances the Central Government may, by order, remove the Chairperson or any Member from his
office if such Chairman 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 it likely to affect prejudicially his functions as a Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the public interest; or
(f) has become physically or mentally incapable of acting as a Member.
However, no Member shall be removed from his office on the ground that he has acquired such financial or other
interest as is likely to affect prejudicially his function as a Member or has so abused his position as to render his
continuance in public office prejudicial to the public interest unless the Supreme Court, on a reference being made
to it in this behalf by the Central Government, has on an inquiry as prescribed reported that the Member ought on
such ground or grounds to be removed.
Section 12 provides that for a period of two years from the date on which the Chairperson and other Member cease
to hold office shall not accept any appointment in or connected with the management or administration of, any
enterprise which has been a party to the proceeding before the Commission. This restriction, however, shall not
apply to any employment under the Central Government or a State Government or local authority or any corporation
established by or under any Central, State or Provincial Act or a Government company as defined under the
Companies Act.
Appointment of Director General
Director General is an important functionary under the Act. He is to assist the Commission in conducting inquiry
into contravention of any of the provisions of the Act and for performing such other functions as are, or may be,
provided by or under the Act.
Section 16 (1) empowers the Central Government to appoint a Director General and such number of additional,
joint, deputy or assistant Director Generals or other advisers, consultants or officers for the purposes of assisting
the Commission in conducting inquiry into the contravention of any provision of the Act.
Additional, joint, deputy and assistant Director Generals, other advisors, consultants and officers shall however,
exercise powers and discharge functions subject to the general control, supervision and directions of the Director
General.
The salary, allowances and other terms and conditions and service of Director General, consultants, advisors or other
officers assisting him shall be such as may be prescribed by the Central Government. The Director General, advisers,
consultants and officers assisting him are to be appointed from amongst the 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.
The Commission may appoint a Secretary and such officers and other employees, as it considers necessary for the
efficient performance of his functions under the Act. 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 the Act.
Duties, Powers and Functions of Commission
As per Section 18 of the Act, duties of the CCI are:–
Section 18 empowers the Commission to enter into any memorandum or arrangement, with the prior approval of
the Central Government, for the purpose of discharging the duties and functions under this Act with any agency of
any foreign country. This will enable the CCI to have extra territorial reach and shall facilitate exchange of information
and enforcement of its order.
Inquiry into certain agreements and dominant position of enterprise
The Commission may inquire into any alleged contravention of Section 3(1) or 4(1) on its own motion or on
(a) receipt of any information in such manner and accompanied by such fee, from any person, consumer or
consumer association or trade association; or
(b) a reference made to it by the Central Government or State Government or a statutory authority.
The Director General is not vested with a right to move an application for institution of an enquiry relating to anti-
competitive agreements or abuse of dominance.
The terms ‘person’ and ‘statutory authority’ have been defined under Sections 2(l) and 2(w) respectively. The term
‘person’ has been given wide connotation and it includes an individual, a HUF, a company, a firm, an association of
persons, any corporation established under any Central, State or Provincial Act or a Government company, a co-
operative society, a local authority and every artificial juridical person.
Section 19(3) provides that while determining whether an agreement has appreciable adverse effect on
competition, the Commission shall give due regard to all or any of the following factors, namely–
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or provision of services;
(f) promotion of technical, scientific and economic development by means of production or distribution of
goods or provision of services.
The first three factors are anti-competitive, while the latter three factors deal with benign effects.
“Adverse appreciable affect on competition” is a key factor while enquiring into anti-competitive agreement. The
touch stone of appreciable adverse effect on competition need not be proved while enquiring into abuse of
dominance.
For the purpose of determining whether an enterprise enjoys dominant position or not under Section 4,
the Commission shall have due regard to all or any of the following factors, namely–
(a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
(d) economic power of the enterprise including commercial advantages over competitors;
(e) vertical integration of the enterprises or sale or service network of such enterprises;
(f) dependence of consumers on the enterprise;
(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a
Government company or a public sector undertaking or otherwise;
(h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry,
marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or
service for consumers;
(i) countervailing buying power;
(j) market structure and size of market;
(k) social obligations and social costs;
(l) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying
a dominant position having or likely to have an appreciable adverse effect on competition;
(m) any other factor which the Commission may consider relevant for the inquiry.
The present law makes explicit the issues and the parameters which will be considered while deciding “abuse of
dominance”. The Commission shall have due regard to the, “relevant geographic market” and “relevant product
market” for determining as to what constitutes a “relevant market”.
The terms ‘relevant market’ and “relevant geographic market” have been defined in Sections 2 (r) and 2(s) of the
Act. For determining the “relevant geographic market”, the Commission shall 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, regular supplies or rapid after-sales service.
Similarly, while determining ‘relevant product market’ the Commission shall have due regard to all or any of the
following factors namely;
(a) physical characteristics or end-use of goods;
(b) price of goods or service;
(c) consumer preferences;
(d) exclusion of in-house production;
(e) existence of specialized producers;
(f) classification of industrial products.
The prescription of parameters for determining “appreciable adverse effect” on competition of agreement,
“dominant position”, within “relevant market”, are intended to bring consistency and certainty in the working of the
Commission which has to consider all or any of the applicable factors, as the case may be. It is quite apparent that
any inquiry by the CCI will be a detailed exercise, which will not only involve gathering of information in regard to
technological or marketing factors but also the government policy which relate to the trade or business in which the
enterprise is involved beside global scenario especially with regard to regulatory trade barriers including import-
export policy, tariff and subsidy issues will also be taken into account by the Commission.
Inquiry into Combination by Commission
The Commission under Section 20 of the Competition Act may inquire into the appreciable adverse effect caused or
likely to be caused on competition in India as a result of combination either upon its own knowledge or information
(suo motu) or upon receipt of notice under Section 6(2) relating to acquisition referred to in Section 5(a) or
acquiring of control referred to in Section 5(b) or merger or amalgamation referred to in Section 5(c) of the Act. It
has also been provided that an enquiry shall be initiated by the Commission within one year from the date on which
such combination has taken effect. Thus, the law has provided a time limit within which suo moto inquiry into
combinations can be initiated. This provision dispels the fear of enquiry into combination between merging entities
after the expiry of stipulated period.
On receipt of the notice under Section 6(2) from the person or an enterprise which proposes to enter into a
combination, it is mandatory for the Commission to inquire whether the combination referred to in that notice, has
caused or is likely to cause an appreciable adverse effect on competition in India.
The Commission shall have due regard to all or any of the factors for the purposes of determining whether
the combination would have the effect of or is likely to have an appreciable adverse effect on competition
in the relevant market, namely –
(a) actual and potential level of competition through imports in the market;
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able to significantly
and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination, individually and as a
combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective competitor or
competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to the economic development, by any combination having
or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination, if any.
The above yardsticks are to be taken into account irrespective of fact whether an inquiry is instituted, on receipt of
notice under Section 6(2) upon its own knowledge. The scope of assessment of adverse effect on competition will
be confined to the “relevant market”. Most of the facts enumerated in Section 20 (4) are external to an enterprise. It
is noteworthy that sub clause (n) of Section 20 (4) requires to invoke principles of a “balancing”. It requires the
Commission to evaluate whether the benefits of the combination outweigh the adverse impact of the combination,
if any. In other words if the benefits of the combination outweigh the adverse effect of the combination, the
Commission will approve the combination. Conversely, the Commission may declare such a combination as void. In
this regard, following must also be noted. Section 31 (1) provides that 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 including the combination in respect of which a notice has been given under sub-section
(2) of section 6. Section 31 (2) provides that 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.
However, Section 31 (3) provides that where the Commission is of the opinion that the combination has, or is likely
to have, an appreciable adverse effect on competition but such adverse effect can be eliminated by suitable
modification to such combination, it may propose appropriate modification to the combination, to the parties to
such combination.
Reference by statutory authority

The term “statutory authority” has been defined in Section 2(w). If in the course of a proceeding before any statutory
authority, an issue is raised by any party that any decision which such authority has taken or proposes to take, is or
would be, contrary to the provisions of the Competition Act 2002, it may make a reference in respect of such issue
to the Commission and seek its opinion. The Commission shall, on receipt of the reference, after hearing the parties
to the proceedings, give its opinion within 60 days of receipt of such reference to such authority on the issues
referred to it. The statutory authority shall thereafter pass such order on the issues referred to the Commission as
it deems fit. The statutory authority may, suo motu make such reference in respect of such issue to the Commission.
Likewise, the Commission either in the course of proceedings before it or suo motu may make a reference for opinion
to a statutory authority and the latter has to render its opinion within 60 days of making a reference.
Meetings of Commission
Section 22 provides that the Commission shall meet at such times and places, and shall observe such rules and
procedure in regard to the transaction of business at its meetings as may be provided by regulations. The Chairperson,
if for any reason, is unable to attend a meeting of the Commission, the senior-most Member present at the meeting,
shall preside at the meeting. All questions which come up before any meeting of the Commission shall be decided
by a majority of the Members present and voting, and in the event of an equality of votes, the Chairperson or in his
absence, the Member presiding, shall have a second or/casting vote. However, the quorum for such meeting shall be
three Members.
Procedure for inquiry on complaints under Section 19

If the Commission is of the opinion that there exists a prima facie case, on receipt of an information from any person,
consumer, their association or trade association or on a reference from Central Government or State Government or
of a statutory authority or on its knowledge or information under Section 19, it shall direct the Director General to
cause an investigation to be made into the matter. The Director General shall investigate into the matter and submit
a report of its findings within the period as may be specified by the Commission. It is, however, not binding on the
Commission to accept the report of the Director General.
Where upon receipt of a reference or information, the Commission is of the opinion that there is no prima-facie
case, it shall pass an order dismissing the reference/information, as it deems fit and necessary.
Upon receipt of a report from the Director General, the Commission shall forward a copy thereof to (a) the parties
concerned or (b) Central Government or (c) State Government or (d) statutory authority as the case may be. If the
Director General, in relation to a matter referred to it, recommends that there is no contravention of any of the
provisions of the Act, the Commission shall give an opportunity of hearing to the informant and after hearing, if the
Commission agrees with the recommendation of the Director General, it shall dismiss the information. According to
Section 26(7) if, after hearing information provider, the Commission is of the opinion that further inquiry is called
for, it shall direct the enquiry to proceed further.
Where the report of the Director General relates to matter referred to Commission by the Central Government or a
State Government or a statutory authority and the report contains recommendation that there is no contravention
of the provisions of the Act, the Commission shall invite the comments of the Central Government or the State
Government or statutory authority, as the case may be, on such report. On receipt of the comments, if there is no
prima-facie case, in the opinion of the Commission the Commission shall return the reference. However, if the
Commission feels that there is a prima-facie case it shall proceed with a reference.
Section 26(9) provides that the Commission on receipt of recommendation of Director General that there is
contravention of any of the provisions of the Act, and a further inquiry is called for, shall inquire into such
contravention in accordance with the provisions of the Act.
The provisions of the Section indicate that it is mandatory that information or reference received or a matter which
comes to the knowledge of the Commission regarding alleged violation of the provisions of the Act, must be referred
to the Director General for an investigation in the matter. A copy of the report of the Director General is required to
be sent to the information provider or to the Central Government or State Government or a statutory authority, as
the case may be, for their comments and an opportunity of hearing is required to be given to the parties as this is
warranted by the principles of natural justice. Where the Director General recommends that there is contravention
of any of the provisions of the Act, and that the Commission is of opinion that further inquiry is called for, it shall
institute an inquiry into the matter and pass a reasoned order. The Commission may or may not subscribe to the
recommendations of the Director General.
Orders by Commission after inquiry into agreements or abuse of dominant position
Section 27 envisages that the Commission after any inquiry into agreement entered into by any enterprise or
association of enterprises or person or association of persons, or an inquiry into abuse of dominant position may
pass all or any of the following orders, namely, –
(i) direct that such agreement, or abuse of dominant position shall be discontinued and such agreement, which
is in contravention of Section 3 shall not be re-entered or the abuse of dominant position in contravention of
Section 4 shall be discontinued, as the case may be. The direction to discontinue and not to recur is commonly
known as “Cease & desist” order.
(ii) the Commission may impose penalty not exceeding ten percent of the average turnover of last three preceding
financial years, upon each of person or enterprises which are parties to such agreement in contravention of
Section 3 or are abusing dominant position within meaning of Section 4.
In case any agreement which is prohibited by Section 3 has been entered into by any cartel, the Commission
may impose upon each producer, seller, distributor, trader or service provider participating in that cartel, a
penalty up to three times of its profits for each year of the continuance of such agreement whichever is higher.
(iii) The Commission may direct that the agreements shall stand modified to the extent and in the manner as
specified in the order.
(iv) The Commission may direct the enterprises concerned to comply with such other orders and directions,
including payment of cost, if any, as it deems fit.
(v) to pass such order or issue such directions as it may deem fit.
Relevant turnover for determining penalty under section 27 of the Act

In Excel Crop Care Limited Vs Competition Commission of India & Another (Civil Appeal No. 2480 of 2014, judgment
dated May 08, 2017), Hon’ble Supreme Court of India observed that a plain reading of Section 27 (b) elucidates that
the commission is empowered to impose penalty and to the extent as it deems fit but not exceeding ten percent of
the turnover. Section 27 (b) emphasize that penalty is to be levied on ‘person or enterprise’ who have contravened
Section 3 or Section 4 of the Act. Supreme Court emphasized on the usage of the phrase ‘as it may deem fit’ as
occurring under Section 27 of the Act. At the outset this phrase is indicative of the discretionary power provided for
the fining authority under the Act. As the law abhors absolute power and arbitrary discretion, this discretion
provided under Section 27 needs to be regulated and guided so that there is uniformity and stability with respect
to imposition of penalty. This discretion should be governed by rule of law and not by arbitrary, vague or fanciful
considerations. Supreme Court noted that any penal law imposing punishment is made for general good of the
society. As a part of equitable consideration, we should strive to only punish those who deserve it and to the extent
of their guilt. Further it is well established by this Court that the principle of proportionality requires the fine
imposed must not exceed what is appropriate and necessary for attaining the object pursued.
In the aforesaid context, Hon’ble Supreme Court observed that in consonance of established jurisprudence, the
principle of proportionality needs to be imbibed into any penalty imposed under Section 27 of the Act. Otherwise
excessively high fines may over-deter, by discouraging potential investors, which is not the intention of the Act.
Therefore the fine under Section 27(b) of the Act should be determined on the basis of the relevant turnover.
Supreme Court laid out a two step calculation that has to be followed while imposing the penalty under Section 27
of the Act. Under Step 1 relating to determination of relevant turnover, Hon’ble Supreme Court observed that at this
point of time it needs to be clarified that relevant turnover is the entity’s turnover pertaining to products and
services that have been affected by such contravention. The aforesaid definition is not exhaustive. The authority
should have regard to the entity’s audited financial statements. Where audited financial statements are not available,
the Commission may consider any other reliable records reflecting the entity’s relevant turnover or estimate the
relevant turnover based on available information. However the Tribunal is free to consider facts and circumstances
of a particular case to calculate relevant turnover as and when it is seized with such matter. Under Step 2 relating to
determination of appropriate percentage of penalty based on aggravating and mitigating circumstances, Hon’ble
Supreme Court observed that after such initial determination of relevant turnover, commission may consider
appropriate percentage, as the case may be, by taking into consideration nature, gravity, extent of the contravention,
role played by the infringer, the duration of participation, the intensity of participation, loss or damage suffered as
a result of such contravention, market circumstances in which the contravention took place, nature of the product,
market share of the entity, barriers to entry in the market, nature of involvement of the company, bona fides of the
company, profit derived from the contravention etc. These factors are only illustrative for the tribunal to take into
consideration while imposing appropriate percentage of penalty. Accordingly, Supreme Court observed that at the
cost of repetition it should be noted that starting point of determination of appropriate penalty should be to
determine relevant turnover and thereafter the tribunal should calculate appropriate percentage of penalty based
on facts and circumstances of the case taking into consideration various factors while determining the quantum.
But such penalty should not be more than the overall cap of 10% of the entity’s relevant turnover. Such interpretation
of Section 27 (b) of the Act, wherein the discretion of the commission is guided by principles established by law
would sub-serve the intention of the enactment.
Division of enterprise enjoying dominant position

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 or group does
not abuse its dominant position.
The order of the Commission referred to above 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 or group.
Procedure for investigation of combination
The procedure for investigation by the Commission has been stipulated under Section 29 of the Act. It involves
following stages -
(i) The Commission first has to form a 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. Further, when the Commission
has come to such a conclusion then it shall proceed to issue a notice to the parties to the combination, calling
upon them to show cause why an investigation in respect of such combination should not be conducted;
(ii) After receipt of the response of the parties to the combination Commission may call for the report of the
Director General.
(iii) When pursuant to response of parties or on receipt of report of the Director General whichever is later, the
Commission prima-facie is of the opinion that the Combination is likely to cause an appreciable adverse eff
on competition in relevant market, it shall, within seven days direct the parties to the combination to publish
within ten working days, the details of the combination, in such manner as it thinks appropriate so as, to
bring to the information of public and persons likely to be aff by such combination.
(iv) The Commission may invite any person affected or likely to be affected by the said combination, to file his
written objections within fifteen working days of the publishing of the public notice, with the Commission for
its consideration.
(v) The Commission may, within fifteen working days of the filing of written objections, call for such additional
or other information as it deem fit from the parties to the said combination and the information shall be
furnished by the parties above referred within fifteen days from the expiry of the period notified by the
Commission.
(vi) After receipt of all the information and within forty-five days from expiry of period for filing further
information, the Commission shall proceed to deal with the case, in accordance with provisions contained in
Section 31 of the Act.
Thus, the provisions of Section 29 provide for a specified timetable within which the parties to the combination or
parties likely to be affected by the combination are required to submit the information or further information to the
Commission to ensure prompt and timely conduct of the investigation. It further imposes on Commission a time
limit of forty-five working days from the receipt of additional or other information called for by it under sub-Section
(4) of Section 29 for dealing with the case of investigation into a combination, which may have an adverse effect of
the competition.
Inquiry into disclosures under Section 6(2)

Section 6(2) casts an obligation on any person or enterprise, who or which proposes to enter into combination,
shall give notice to the Commission, in the form as may be specified, and the fee which may be determined, by
regulations, disclosing the details of the proposed combination within thirty days of—
(i) approval of the proposal relating to merger or amalgamation by the board of directors of the enterprises
concerned with such merger or amalgamation;
(ii) execution of any agreement or other document for acquisition referred to in Section 5(a) or acquiring of
control referred to in Section 5(b).
Non-filing of notice attracts penalty in terms of Section 43A of the Act.
Section 6(2A) envisages that no combination shall come into effect until two hundred and ten days have passed
from the day on which notice has been given to Commission or the Commission has passed orders, whichever is earlier.
Upon receipt of such notice, the Commission shall examine such notice and form its prima facie opinion as to
whether the combination has, or is likely to have, an appreciable adverse effect on the competition in the relevant
market in India.
Orders of Commission on Certain Combinations

The Commission, after consideration of the relevant facts and circumstances of the case under investigation, by it
under Sections 28 or 30 and assessing the effect of any combination on the relevant market in India, may pass any
of the written orders indicated herein below. Where the Commission comes to a conclusion that any combination
does not, or is not likely to, have an appreciable adverse effect on the Competition in relevant market in India, it may,
approve that Combination.
(i) In the case where the Commission is of the opinion that the combination has, or is likely to have an adverse
effect on competition, it shall direct that the combination shall not take effect.
(ii) Where the Commission is of the opinion that adverse effect which has been caused or is likely to be caused on
competition can be eliminated by modifying such Combination then it shall direct the parties to such
combination to carry out necessary modifications to the Combination.
(iii) The parties accepting the proposed modification shall carry out such modification within the period specified
by the Commission.
(iv) Where the parties who have accepted the modification, fail to carry out such modification within the period
specified by the Commission, such combination shall be deemed to have an appreciable adverse effect on
competition and shall be dealt with by the Commission in accordance with the provisions of the Act.
(v) If the parties to the Combination do not accept the proposed modification such parties may within thirty days
of modification proposed by the Commission, submit amendment to the modification proposed by the
Commission.
(vi) If the Commission agrees with the agreement submitted by the parties it shall, by an order approve the
combination.
(vii) If the Commission does not accept the amendment then, parties shall be allowed a further period of thirty
days for accepting the amendment proposed by the Commission.
(viii) Where the parties to the combination fail to accept the modification within thirty days, then it shall be deemed
that the combination has an appreciable adverse effect on Competition and will be dealt with in accordance
with the provisions of the Act.
(ix) Where the Commission directs under Section 31 (2) that the combination shall not take effect or it has, or is
likely to have an appreciable adverse effect, it may order that,
(a) the acquisition referred to in Section 5 (a); or

(b) the acquiring of control referred to in Section 5(b); or
(c) the merger or the amalgamation referred to in Section 5(c) shall not be given effect to by the parties.
As per proviso the Commission may, if it considers appropriate, frame a scheme to implement its order in
regard to the above matters under Section 31(10).
(x) A deeming provision has been introduced by Section 31(11). It provides that, if the Commission does not, on
expiry of a period of two hundred ten days from the date of filing of notice under Section 6(2) pass an order
or issue any direction in accordance with the provisions of Section 29(1) or Section 29(2) or Section 29(7),
the combination shall be deemed to have been approved by the Commission. In reckoning the period of two
hundred ten days, the period of thirty days specified in Section 29(6) and further period of thirty working
days specified in Section 29(8) granted by Commission shall be excluded.
(xi) Further more where extension of time is granted on the request of parties the period of two hundred ten days
shall be reckoned after deducting extended time granted at the request of the parties.
(xii) Where the Commission has ordered that a combination is void, as it has an appreciable adverse effect on
competition, the acquisition or acquiring of control or merger or amalgamation referred to in Section 5, shall
be dealt with by other concerned authorities under any other law for the time being in force as if such
acquisition or acquiring of control or merger or amalgamation had not taken place and the parties to the
combination shall be dealt with accordingly.
(xiii) Section 29(14) makes it clear that nothing contained in Chapter IV of the Act shall affect any proceeding
initiated or may be initiated under any other law for the time being in force. It implies that provisions of this
Act are in addition to and not in derogation of provisions of other Acts.
Thus, approval under one law does not make out a case for approval under another law.
Acts taking place outside India but having an effect on Competition in India
Section 32 extends the jurisdiction of Competition Commission of India to inquire and pass orders in accordance
with the provisions of the Act into an agreement or dominant position or combination, which is likely to have, an
appreciable adverse effect on competition in relevant market in India, notwithstanding that,
(a) an agreement referred to in Section 3 has been entered into outside India; or
(b) any party to such agreement is outside India; or
(c) any enterprise abusing the dominant position is outside India; or
(d) a combination has taken place outside India; or
(e) any party to combination is outside India; or
(f) any other matter or practice or action arising out of such agreement or dominant position or combination is
outside India.
The above clearly demonstrates that acts taking place outside India but having an effect on competition in India will
be subject to the jurisdiction of Commission. The Competition Commission of India will have jurisdiction even if
both the parties to an agreement are outside India but only if the agreement, dominant position or combination
entered into by them has an appreciable adverse effect on competition in the relevant market of India.
Appearance before Commission

As per Section 35 of the Act, following persons are entitled to appear before the Commission–
(i) a complainant; or
(ii) a defendant; or
(iii) the Director General
They may either appear in person or authorise any of the following:

(a) a chartered accountant as defined in Section 2(1)(b) of Chartered Accountants Act, 1949 (38 of 1949) who
has obtained a certificate of practice; or
(b) a company secretary as defined in Section 2(1)(c) of the Company Secretaries Act, 1980 (56 of 1980) and
who has obtained a certificate of practice;
(c) a cost accountant as defined in Section 2(1)(b) of the Cost and Works Accountants Act, 1959 (23 of 1959) and
who has obtained a certificate of practice;
(d) a legal practitioner that is an advocate, vakil or an attorney of any High Court including a pleader in
practice.
The above provisions unambiguously state that a ‘Company Secretary in Practice’ is entitled to
represent an informant or a defendant or Director General. A Company Secretary in Practice can
also get himself empanelled with the Director General to prosecute his cases before the Commission.
Power of Commission to regulate its own procedure

The Competition Commission of India has been empowered to lay down its own procedure and regulations. It is not
bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall have to observe the principles of
natural justice and subject to the provisions of the Act. The Competition Commission of India shall also be subject
to the rules made by the Central Government. Section 36(2) makes it clear that the Commission shall have the same
powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying the suit, in respect of the
following matters, namely:
In terms of Section 36(3), the Commission may call upon such experts, from the field of economics, commerce,
accountancy, international trade or from any discipline as it deems necessary to assist the Commission in the
conduct of any enquiry by it.
In terms of Section 36(4), the Commission may direct any person –
(a) to produce before the Director General or the Secretary or an officer authorized 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 the Act;
(b) to furnish to the Director General or the Secretary or any other officer authorized 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 the Act.
The Competition Commission in thus empowered to appoint experts, from the fields of economics, commerce,
accountancy, international trade or from any other discipline as it deems necessary, to assist in the conduct of any
inquiry or proceeding before it.
As stated earlier, Director General is an important functionary assisting the Commission and the Commission may
ask the Director General to investigate into any trade practice and for the purpose of examination of books, or
account and other document of the parties concerned. The Director General is also vested with all the powers as are
conferred upon the Commission under Section 36(2) of Act.
Ratification of orders
The Commission may amend any order passed by it under the provisions of this Act with a view to rectifying any
mistake apparent from the record. Section 38(2) provides that subject to other provisions of this Act, the Commission
may make –
(a) an amendment of an order of its own motion;
(b) an amendment for rectifying any mistake apparent from record, which has been brought to its notice by any
party to the order.
An explanation below the Section clarifies that while rectifying any mistake apparent from the record, the
Commission shall not amend substantive part of the order passed by it under the provisions of this Act.
Execution of Orders of the Commission Imposing Monetary penalty
Section 39 provides that 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. In a case where the
Commission is of the opinion that it would be expedient to recover the penalty imposed under the 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.
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 sections 221 to 227, 228A, 229, 231 and 232 of the said Act and the Second
Schedule to 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.
Explanation 1 – Any reference to sub-section (2) or sub-section (6) of section 220 of the income-tax Act, 1961 (43
of 1961), in the said provisions of that Act or the rules made thereunder shall be construed as references to sections
43 to 45 of this Act.
Explanation 2 – The Tax Recovery Commissioner and the Tax Recovery Officer referred to in the Income- tax Act,
1961 shall be deemed to be the Tax Recovery Commissioner and the Tax Recovery Officer for the purposes of
recovery of sums imposed by way of penalty under this Act and reference made by the Commission under sub-
section (2) would amount to drawing of a certificate by the Tax Recovery Officer as far as demand relating to penalty
under this Act.
Explanation 3– Any reference to appeal in Chapter XVIID and the Second Schedule to the Income-tax Act, 1961 shall
be construed as a reference to appeal before the Competition Appellate Tribunal under section 53B of this Act.
It would be noted that Commission may by its Regulations has been empowered to evolve procedure of recovering
monetary penalty. It may also make reference to Income Tax Authority for recovering of penalty as tax due under
the said Act.
Duties of Director General
The Act provides that the Director General when so directed by the Commission, is to assist the Commission in
investigation into any contravention of the provisions of this Act. The Director General is bound to comply with such
a direction to render requisite assistance to the Commission.
The Director General, in order to effectively discharge his functions, has been given the same powers as are conferred
upon the Commission under section 36(2). Under section 36(2) the Commission is having same powers as are vested
in Civil Court under the Code of Civil Procedure (1908) while trying a suit, in respect of the following matters, namely;
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
(e) subject to the provisions of Sections 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public
record or document or copy of such record or document from any office;
Without prejudice to the above powers, the provisions of Sections 240 and 240A of the Companies Act, 1956, so far
as may be, shall apply to an investigation made by the Director General or by a person authorised by him, as they
apply to an inspector under the Companies Act 1956. This power includes search and seizure of the record of any
person in respect of which an investigation has been directed by the Commission. It has been provided that wherever
the approval of the Central Government is required, the same shall be given by the Commission and the word
‘magistrate’ appearing in Section 240A shall be construed as the Chief Metropolitan Magistrate.
Penalties
The Competition Act prescribes penalties for contravention of orders of the Commission. As per Section 42 (1) 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.
Section 42(2) provides that if any person, without reasonable clause, fails to comply with the orders or
directions of the Commission issued under sections 27, 28, 31, 32, 33, 42A and 43A of the Act, he shall be punishable
with fine which may extend to rupees one lakh for each day during which such non-compliance occurs, subject to a
maximum of rupees ten crore, as the Commission may determine.
Further, Section 42(3) states that if any person does not comply with the orders or directions issued, or fails to pay
the fine imposed under sub-section (2), he shall, without prejudice to any proceeding under section 39, be punishable
with imprisonment for a term which may extend to three years, or with fine which may extend to rupees twenty-five
crore, or with both, as the Chief Metropolitan Magistrate, Delhi may deem fit:
Provided that the Chief Metropolitan Magistrate, Delhi shall not take cognizance of any offence under this section
save on a complaint filed by the Commission or any of its officers 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 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
Section 43 of the Act provides that if any person fails to comply, without reasonable cause, with a direction given by
the Commission under Sub-sections (2) and (4) of section 36; or the Director General while exercising powers
referred to in sub-section (2) of section 41, such person shall be punishable with fine which may extend to rupees
one lakh for each day during which such failure continues subject to a maximum of rupees one crore, as may be
determined by the Commission
Power to impose penalty for non-furnishing of information on combination

Section 43A provides that if any person or enterprise who fails to give notice to the Commission under sub-
section(2) of section 6, the Commission shall impose on such person or enterprise a penalty which may extend to
one per cent of the total turnover or the assets, whichever is higher, of such a combination.
Thus, failure to file notice of combination falling under Section 5 attract deterrent penalty.
Penalty for making false statement

Section 44 provides that If any person, being a party to a combination, makes a statement which is false in any
material particular, or knowing it to be false; or omits to state any material particular knowing it to be material, such
person shall be liable to a penalty which shall not be less than rupees fifty lakhs but which may extend to rupees one
crore, as may be determined by the Commission.
Power to impose lesser penalty

If 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 alleged violations and such a disclosure is vital, the
Commission may impose upon him a lesser penalty than as prescribed under the Act or rules or regulations.
However, the lesser penalty shall not be imposed where before making such disclosure, the report of Director
General under Section 26 has been received in the Commission. Further, the lesser penalty shall be imposed only in
respect of the producer, seller, distributor, trader or service provider included in the cartel, who has made a full, true
and vital disclosures under this Section. Any producer, seller, trader or service provider included in the cartel shall
also be liable to imposition of penalty, if in the course of proceedings, had, –
(a) not complied with the condition on which the lesser penalty was imposed by the Commission; or
(b) given false evidence; or
(c) the disclosure made is not vital.
The lesser penalty is for a member of a ring who breaks the rank. There is no provision to provide any protection or
incentive to a whistle blower, which is conferred upon Authorities in contemporary legislations abroad.
Contravention by Companies
A company means a body corporate and includes a firm or other association of individuals; director, in relation to a
firm, means a partner in the firm for the purposes of penalties in connection with contravention of the provisions
of the Act by companies.
Where any rule, regulation, order made by the Commission or any direction issued thereunder is contravened by a
company, every person who, at the time the contravention was committed, was in charge, and was responsible to
the company for conducting business of the company, as well as the company, shall be deemed to be guilty of the
contravention and shall be liable to be proceeded against and punished. However it will be a good defence by a
person liable to any punishment if he proves that the contravention was committed without his knowledge or that
he has exercised all due diligence to prevent the commission of an offence.
Where a contravention of any of the provisions of this Act or any rule, regulation, order made or direction issued
thereunder has been committed by a company and it is proved that contravention has taken place with the consent
or connivance of, or it is attributable to any neglect on the part of, any director, manager, secretary or other officer
of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the
contravention and shall be liable to be proceeded against and punished accordingly.
The word company in this Section, has been used in a wider sense and also includes a ‘firm’ or an ‘association of
persons’. Though the word ‘director’ is normally used in a company, in the light of the wider definition, the term
director is interpreted to include a partner of the firm. The company being a legal person, its affairs are conducted
by a board of directors, manager, secretary or other officer, therefore, according to Section 48 (2) such director,
manager, secretary or other officer, in addition to the company itself shall be deemed to be liable to be proceeded
against for contravention of any provisions of this Act or any rule, regulation, order made or direction issued
thereunder by the Commission or the Director General of Investigation.
Competition Advocacy
Under Section 49 the Central Government/State Government may seek the opinion of the CCI on the possible effects
of the policy on competition or any other matter. In this context, Section 49 envisages that while formulating a
policy on the competition, the Government may make a reference to the Commission for its opinion on possible
effect of such a policy on the competition, or any other matter.
On receipt of such a reference, the Commission shall, give its opinion on it to the Central Government/State
Government, within sixty days of making such a reference and the latter may formulate the policy as it deems fit.
The role of the Commission is advisory and the opinion given by the Commission shall not be binding upon the
Central Government/State Government in formulating such a policy. The Commission is also empowered to take
suitable measures for the
(a) promotion of competition advocacy;
(b) creating awareness about the competition; and
(c) imparting training about competition issues.
The creating awareness about benefits of competition and imparting training in competition issues is expected to
generate conducive environment to promote and foster competition, which is sine-qua non for accelerating
economic growth.
FINANCE, ACCOUNTS AND AUDIT

Grants by Central Government
The Central Government may make to the Commission grants of such sums of money as it may think fit for
beingutilised for the purposes of the Act. Such grant is to be made after due appropriation made by the Parliament.
Constitution of Fund
The Act provides for the constitution of a fund called the “Competition Fund” for meeting the establishment and
other expenses of the Competition Commission in connection with the discharge of its functions and for the
purposes of this Act. The following shall be credited to the “Competition Fund”, -
(a) all government grants received by the commission;
(b) Omitted
(c) the fees received under the Act;
(d) the interest on the amounts accrued on the monies referred under clauses (a) to (c). Fee realized alongwith
notice disclosing combination shall form part of ‘Competition Fund’.
The Fund shall be administered by a Committee of such Members of the Commission, as may be determined by the
Chairperson and the Committee so appointed, shall spend monies out of the Fund only for the objects for which the
Fund has been constituted.
Accounts and Audit
Proper accounts and other relevant records shall be maintained by the Commission and an annual statement of
accounts shall be prepared by it in prescribed form in consultation with the Comptroller and Auditor General of
India (CAG).The CAG shall specify the intervals within which the accounts of the Commission shall be audited by
him.
Explanation to Section 52(2) clarifies that the orders passed by the Commission, being matters appealable to the
Supreme Court, shall not be subject to audit by the CAG. The expenses, if any, incurred in connection with such audit
shall be payable by the Commission to the CAG.
The CAG or any person appointed by him in connection with the audit of the accounts of the Commission shall have
same rights, privileges and authority in connection with such audit as CAG has in connection with the audit of
Government accounts and, shall have the right to demand the production of books, accounts, connected vouchers
and other documents and papers and to inspect any of the offices of the Commission.
Only accounts as certified by the CAG and any other person authorised by him in this behalf together with the audit
report thereon shall be forwarded to the Central Government and the Government shall cause it to be laid before
each House of Parliament.
Furnishing of Returns, etc., to Central Government
The Commission shall furnish to the Central Government such returns and statements and such particulars in
regard to any proposed or existing measures for promotion of competition advocacy, creating awareness and
imparting training about competition issues, in such form and such manner as the Central Government may
prescribe. An annual report giving a true and full account of activities of the Commission during the previous year
shall be prepared once in every year by the Commission and submitted to the Central Government.
A copy of the annual report of the Commission received by the Government shall cause to be laid by the Central
Government before each House of Parliament.
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—
(a) hear and dispose of appeals against any direction issued or decision made or order passed bythe Commission
under sub-sections (2) and (6) of section 26, section 27, section 28, section 31, section 32, section 33,
section 38, section 39, section 43, section 43A, section 44, section 45 or section 46 of this Act; and
(b) 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 or under section 42A or under sub-
section (2) of section 53Q of this Act, and pass orders for the recovery of compensation under section 53N of
this Act.
In Competition Commission of India v. Steel Authority of India (Civil Appeal No. 7779 of 2010, judgment dated
September 09,2010), Supreme Court of India held that in terms of Section 53A(1)(a) of the Act appeal shall lie only
against such directions, decisions or orders passed by the Commission before the Tribunal which have been
specifically stated under the provisions of Section 53A(1)(a). The orders, which have not been specifically made
appealable, cannot be treated appealable by implication. For example taking a prima facie view and issuing a
direction to the Director General for investigation would not be an order appealable under Section 53A. Supreme
Court noted that the principle of ‘appeal being a statutory right and no party having a right to file appeal except in
accordance with the prescribed procedure’ is now well settled. Supreme Court observed that the expression ‘any’,
in fact, qualifies each of the three expressions ‘direction issued or decision made or order passed’. It cannot be said
that it signifies any one of them and, particularly, only ‘direction issued’. All these words have been used by the
legislature consciously and with a purpose. It has provided for complete mechanism ensuring their implementation
under the provisions of the Act, for example, under Section 26(1) the Commission is expected to make a decision by
formation of a prima facie opinion and issue a direction to cause an investigation to be made by the Director General
and after receiving the report has to take a final view in terms of Section 26(6) and even otherwise, it has the
discretion to form an opinion and even close a case under Section 26(2). Having enacted these provisions, the
legislature in its wisdom, made only the order under Section 26(2) and 26(6) appealable under Section 53A of the
Act. Thus, it specifically excludes the opinion/decision of the authority under Section 26(1) and even an order
passed under Section 26(7) directing further inquiry, from being appealable before the Tribunal. Therefore, it would
neither be permissible nor advisable to make these provisions appealable against the legislative mandate.
Accordingly, Supreme Court held that no appeal will lie from any decision, order or direction of the Commission
which is not made specifically appealable under Section 53A(1)(a) of the Act.
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 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.
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.
(5) 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

A person preferring an appeal to the Appellate Tribunal may either appear in person or authorize 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 authorize 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 authorized may present
the case with respect to any appeal before the Appellate Tribunal.
The Commission may authorize 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 authorized may present the
case with respect to any appeal before the Appellate Tribunal.
Explanation – The expressions “chartered accountant” or “company secretary” or “cost accountant” or “legal
practitioner” shall have the meanings respectively assigned to them in the Explanation to section 35.
Appeal to Supreme Court

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. 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.
Power to Punish for contempt
The Appellate Tribunal shall have, and exercise, the same jurisdiction, powers and authority in respect of contempt
of itself as a High Court has and may exercise and, for this purpose, the provisions of the Contempt of Courts Act,
1971 shall have effect subject to modifications that,—
(a) the reference therein to a High Court shall be construed as including a reference to the Appellate Tribunal;
(b) the references to the Advocate-General in section 15 of the said Act shall be construed as a reference to such
Law Officer as the Central Government may, by notification, specify in this behalf.
MISCELLANEOUS
Power to exempt
(a) The Central Government may, by notification exempt from the application of the Act, or any provision thereof—
(b) any class of enterprises if such exemption is necessary in the interest of security of the State or public interest;
(c) any practice or agreement arising out of and in accordance with any obligation assumed by India under any
treaty, agreement or convention with any other country or countries;
(d) any enterprise, which performs a sovereign function on behalf of the Central Government or a State
Government.
Thus, the power to grant exemption can be invoked by the Central Government in specified circumstances and
conditions.
Where any enterprise is engaged in activities, which includes any activity relatable to the sovereign functions of the
Government, exemption may be granted by the Central Government only in respect of the activity relatable to the
sovereign functions.
Power of Central Government to issue directions
The Central Government may give in writing to the Commission such directions on questions of policy, other than
those relating to technical and administrative matters and the Commission shall be bound by such directions. The
Commission shall be given an opportunity to express its views to the Central Government before any direction is
given by the Government to the Commission. The decision of the Central Government as to whether the question is
of one of policy or not, shall be final.
Power of Central Government to supersede Commission

It is stipulated under section 56 of the Act that if at any time the Central Government is of the opinion, -
(a) that the Commission, on account of circumstances beyond its control is unable to discharge the functions or
perform the duties imposed on it by or under the provisions of the Act; or
(b) that the commission has persistently made default in complying with any direction given by the Central
Government under this Act or in discharge of functions or performance of duties imposed on it by or under
the provisions of the Act and as a result of such default the financial position or the administration of the
Commission has suffered; or
(c) that the circumstances exist which render it necessary in the public interest to do so, the Central Government
may, by notification and for the reasons stated therein, supersede the Commission for such period, not
exceeding six months, as may be specified in the notification.
Thus, power to supersede CCI vests in the Central Government. However before issuing any such notifi the Central
Government shall give to the Commission a reasonable opportunity to make representations against the proposed
supersession for its consideration. Upon publication of a notifi superseding the Commission –
(a) the Chairperson and other members shall vacate the office from the date of supersession;
(b) until Commission is reconstituted, all powers functions and duties of the Commission shall be discharged by
the Central Government or by an authority specified by the Central Government in this behalf;
(c) until the Commission is reconstituted all of its properties shall vest in the Central Government.
The Central Government shall reconstitute the Commission by a fresh appointment of its Chairman and other
Members on or before the expiration of six months from the date of order of the Central Government superseding
the Commission. Any Chairperson or Member who vacates the office because the Commission is unable to discharge
its functions or perform duties imposed on it by or under the provisions of this Act on account of circumstance
beyond its control shall not be deemed to be disqualified for re-appointment upon re-constitution of the Commission
by the Government.
The Central Government shall cause a notification superseding the Commission and a full report of any action taken
under this Section and circumstances leading to such action, be laid before each House of the Parliament at the
earliest.
Restriction on disclosure of information
The Commission from time to time may require any enterprise to submit information for the purposes of the Act.
The information may relate to sensitive business secrets and patents of such an enterprise. In order to ensure
complete secrecy of such information, Section 57 provides that no information relating to any enterprise, being an
information which has been obtained by or on behalf of the Commission or the Appellate Tribunal for the purposes
of this Act, shall, without the previous permission in writing of the enterprise, be disclosed otherwise than in
compliance with or for the purposes of this Act or any other law for the time being in force.
Exclusion of jurisdiction of Civil Courts

A civil court is precluded to exercise jurisdiction in respect of any matter, which the Commission is empowered by
or under the Act to determine and no injunction shall be granted by any court or other authority in respect of any
action taken or to be taken in pursuance of any power conferred by or under the Act.
Application of other laws not barred
The provisions of the Act are in addition to, and not in derogation of, the provisions of any other law for the time
being in force.
POWER TO MAKE RULES
The Central Government may, by notification, make rules to carry out provisions of this Act. In particular, the Central
Government may make rules to provide for all or any of the following matters; namely-
(a) the term of the Selection Committee and the manner of selection of panel of names under sub-section (2) of
Section 9;
(b) the form and manner in which and the authority before whom the oath of office and of secrecy shall be made
and subscribed to under Sub-section (3) of Section 10;
(c) Omitted by the Competition (Amendment) Act, 2007;
(d) the salary and the other terms and conditions of service including travelling expenses, house rent allowance
and conveyance facilities, sumptuary allowance and medical facilities to be provided to the Chairperson and
other Members under Sub-section (1) of Section 14;
(da) the number of Additional, Joint, Deputy or Assistant Director General or such officers or other employees in
the office of DG and the manner in which such Additional, Joint, Deputy or Assistant Director Generals or such
officers or other employees may be appointed under sub-section (1A) of Section 16.
(e) the salary, allowances and other terms and conditions of service of the Director General, Additional, Joint,
Deputy or Assistant Directors General or such officers or other employees under Sub-section (3) of Section
16;
(f) the qualifications for appointment of the Director General, Additional, Joint, Deputy or Assistant Directors
General or such officers or other employees under Sub-section (4) of Section 16;
(g) the salaries and allowances and other terms and conditions of service of the Secretary and officers and other
employees payable, and the number of such officers and employees under Sub-section (2) of Section 17;
(h) for securing any case or matter which requires to be decided by a Bench composed of more than two Members
under Sub-section (4) of Section 23; (Omitted by the Competition (Amendment) Act, 2007)
(i) any other matter in respect o which the Commission shall have power under clause (g) of Sub-section (2) of
Section 36; (Omitted by the Competition (Amendment) Act, 2007)
(j) the promotion of competition advocacy, creating awareness and imparting training about competition issues
under Sub-section (3) of Section 49; (Omitted by the Competition (Amendment) Act, 2007)
(k) the form in which the annual statement of accounts shall be prepared under Sub-section (1) of Section 52;
(l) the time within which and the form and manner in which the Commission may furnish returns, statements &
such particulars as the Central Government may require under Sub-section (1) of Section 53;
(m) the form in which and the time within which the annual report shall be prepared under Sub-section (2) of
Section 53;
(ma) the form in which an appeal may be filed before the Appellate Tribunal under sub-section (2) of section 53B
and the fees payable in respect of such appeal;
(mb) the term of the Selection Committee and the manner of selection of panel of names under sub-section(2) of
section 53E;
(mc) the salaries and allowances and other terms and conditions of service of the Chairperson and other Members
of the Appellate Tribunal under sub-section (1) of section 53G;
(md) the salaries and allowances and other conditions of service of the officers and other employees of the
Appellate Tribunal under sub-section (3) of section 53M;
(me) the fee which shall be accompanied with every application made under sub-section (2) of section 53N;
(mf) the other matters under clause (i) of sub-section(2) of section 53O in respect of which the Appellate Tribunal
shall have powers under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit;
(n) the manner in which the monies transferred to the Central Government shall be dealt with by that Government
under the fourth proviso to Sub-section (2) of Section 66;
(o) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be, or may be,
made by rules.
Every notification for making such rules shall be laid before each House of Parliament, while it is in session, for a
total period of thirty days which may be comprised in one session, or in two or more successive sessions. If both
Houses agree that notification is not be issued or rule should not be made, then rule shall not be made or if the
House decides that notification or rules should have effect in such modified form then the rule or notification shall
be enforced in modified form. However, any such modification or annulment shall be without prejudice to the
validity of anything previously done under the notification or rule, as the case may be.
POWER TO MAKE REGULATIONS

The Commission may, by notification, make regulations, which are consistent with the Act. Without prejudice to the
generality of the foregoing provision, such regulations may provide for all or any of the following matters, namely,-
(a) the cost of production to be determined under clause (b) of the Explanation to Section 4;
(b) the form of notice as may be specified and the fee which may be determined under Sub-section (2) of Section 6;
(c) the form in which details of acquisition shall be filed under Sub-section (5) of Section 6;
(d) the procedure to be followed for engaging the experts and the professionals under sub-section (3) of Section 17;
(e) the fee which may be determined under clause (a) of Sub-section (1) of Section 19;
(f) the rules of procedure in regard to transaction of business at the meetings of the Commission under sub-
section (1) of Section 22;
(g) the manner in which penalty shall be recovered under sub-section (1) of Section 39;
(h) any other matter in respect of which provision is to be, or may be made by regulations.
Every regulation shall be laid before both the Houses of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if before the expiry of the
session immediately following the session or the successive sessions aforesaid, both Houses agree in making any
modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall
thereafter have effect only in such modified form or be of no effect, as the case may be. However, any such modification
or annulment shall be without prejudice to the validity of anything previously done under that regulation.
Power to remove difficulties

The Central government may, by order published in the Official Gazette, make such provisions, not inconsistent with
the provisions of the Act as may appear to be necessary to remove difficulties which may arise in giving effect to the
provisions of the Act. However, no such order shall be made after expiry of a period of two years from the
commencement of the Act. Every order made under this Section shall be laid before both the Houses of Parliament
as soon as may be, after it is made.
Important Case Laws

Scope of filing of Information before Competition Commission of India [Section 19] and filing of Appeal before
National Company Law Appellate Tribunal [Section 53B], Supreme Court of India [Section53T] etc.
In Samir Agrawal Vs Competition Commission of India (Civil Appeal No. 3100 of 2020, judgment dated December 15,
2020), Hon’ble Supreme Court of India setting aside judgment of National Company Law Appellate Tribunal [NCLAT]
looked into following issues viz. whether “information” may be received by the Competition Commission of India
[CCI] from any person, whether such person is or is not personally affected; and whether a person like the Informant
can be said to be a “person aggrieved” for the purpose of sections 53B and 53T of the Competition Act, 2002 [“the
Act”]. Accordingly, while deciding the said issues, Hon’ble Supreme Court of India laid down law relating to issue of
“locus standi” with reference to section 19 of the Act; and “person aggrieved” for the purposes of filing appeal before
NCLAT and Supreme Court respectively.
“any person” may provide information to the CCI
Hon’ble Supreme Court after looking into the scheme of the Act and Competition Commission of India (General)
Regulations, 2009 [“2009 Regulations”] observed that reading of the provisions of the Act and the 2009 Regulations
would show that “any person” may provide information to the CCI, which may then act upon it in accordance with
the provisions of the Act. In this regard, the definition of “person” in section 2(l) of the Act, set out hereinabove, is
an inclusive one and is extremely wide, including individuals of all kinds and every artificial juridical person. This
may be contrasted with the definition of “consumer” in section 2(f) of the Act, which makes it clear that only persons
who buy goods for consideration, or hire or avail of services for a consideration, are recognised as consumers.
Supreme Court observed that look at section 19(1) of the Act would show that the Act originally provided for the
“receipt of a complaint” from any person, consumer or their association, or trade association. This expression was
then substituted with the expression “receipt of any information in such manner and” by the 2007 Amendment.
This substitution is not without significance. Whereas, a complaint could be filed only from a person who was
aggrieved by a particular action, information may be received from any person, obviously whether such person is or
is not personally affected. This is for the reason that the proceedings under the Act are proceedings in rem which
affect the public interest. Hon’ble Supreme Court of India further observed that the CCI may inquire into any alleged
contravention of the provisions of the Act on its own motion, is also laid down in section 19(1) of the Act. Further,
even while exercising suo motu powers, the CCI may receive information from any person and not merely from a
person who is aggrieved by the conduct that is alleged to have occurred. This also follows from a reading of section
35 of the Act, in which the earlier expression “complainant or defendant” has been substituted by the expression,
“person or an enterprise,” setting out that the informant may appear either in person, or through one or more
agents, before the CCI to present the information that he has gathered. Supreme Court of India noted that Section
45 of the Act is a deterrent against persons who provide information to the CCI, mala fide or recklessly, inasmuch as
false statements and omissions of material facts are punishable with a penalty which may extend to the hefty
amount of rupees one crore, with the CCI being empowered to pass other such orders as it deems fit. This, and the
judicious use of heavy costs being imposed when the information supplied is either frivolous or mala fide, can keep
in check what is described as the growing tendency of persons being “set up” by rivals in the trade. Supreme Court
of India noted that the 2009 Regulations also point in the same direction inasmuch as regulation 10, does not
require the informant to state how he is personally aggrieved by the contravention of the Act, but only requires a
statement of facts and details of the alleged contravention to be set out in the information filed. Also, regulation 25
shows that public interest must be foremost in the consideration of the CCI when an application is made to it in
writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may
therefore be allowed to take part in the proceedings. What is also extremely important is regulation 35, by which
the CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such
informant be free from harassment by persons involved in contravening the Act.
“person aggrieved” for the purpose of sections 53B and 53T of the Act
As regards whether a person like the Informant can be said to be a “person aggrieved” for the purpose of sections
53B and 53T of the Act, Hon’ble Supreme Court observed that given the context of the Act in which the CCI and the
NCLAT deal with practices which have an adverse effect on vests powers in the CCI and enables it to act in rem, in
public interest. This would make it clear that a “person aggrieved” must, in the context of the Act, be understood
widely. Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any
person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the
provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the
information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation
for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the
Act, having been committed by an enterprise. By this sub-section, clearly, therefore, “any person” who makes an
application for compensation, under sub-section (1) of section 53N of the Act, would refer only to persons who have
suffered loss or damage, thereby, qualifying the expression “any person” as being a person who has suffered loss or
damage. Obviously, when the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of
approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to
subserve the high public purpose of the Act.
Ambit and scope of power vested with the Commission under Section 26(1) of the Competition Act, 2002
September 09,2010), looked into the ambit and scope of power vested with the Commission under Section 26(1) of
the Act and whether the parties, including the informant or the affected party, are entitled to notice or hearing, as a
matter of right, at the preliminary stage of formulating an opinion as to the existence of the prima facie case. With
regard to notice and/or hearing at the stage of forming prima facie decision by the Commission under Section 26
(1) of the Act, Supreme Court of India held that neither any statutory duty is cast on the Commission to issue notice
or grant hearing, nor any party can claim, as a matter of right, notice and/or hearing at the stage of formation of
opinion by the Commission, in terms of Section 26(1) of the Act that a prima facie case exists for issuance of a
direction to the Director General to cause an investigation to be made into the matter. However, the Commission,
being a statutory body exercising, inter alia, regulatory jurisdiction, even at that stage, in its discretion and in
appropriate cases may call upon the concerned party(s) to render required assistance or produce requisite
information, as per its directive. Supreme Court also observed that the Commission is expected to form such prima
facie view without entering upon any adjudicatory or determinative process. The Commission is entitled to form its
opinion without any assistance from any quarter or even with assistance of experts or others. The Commission has
the power in terms of Regulation 17 (2) of the Regulations to invite not only the information provider but even ‘such
other person’ which would include all persons, even the affected parties, as it may deem necessary. In that event it
shall be ‘preliminary conference’, for whose conduct of business the Commission is entitled to evolve its own
procedure.
In the aforesaid context, Supreme Court noted kind of function the Commission is called upon to discharge while
forming an opinion under Section 26(1) of the Act. Supreme court observed that at the face of it, this is an inquisitorial
and regulatory power. The jurisdiction of the Commission, to act under this provision, does not contemplate any
adjudicatory function. The Commission is not expected to give notice to the parties, i.e. the informant or the affected
parties and hear them at length, before forming its opinion. The function is of a very preliminary nature and in fact,
in common parlance, it is a departmental function. At that stage, it does not condemn any person and therefore,
application of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (Director
General, being appointed by the Central Government to assist the Commission, is one of the wings of the Commission
itself) does not amount to an adjudicatory function but is merely of administrative nature. At best, it can direct the
investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of
Section 26(2) of the Act, which order itself is appealable before the Tribunal and only after this stage, there is a
specific right of notice and hearing available to the aggrieved/affected party. Accordingly, keeping in mind the
nature of the functions required to be performed by the Commission in terms of Section 26(1), Supreme Court
observed that the right of notice of hearing is not contemplated under the provisions of Section 26(1) of the Act.
Supreme Court also looked into the issue whether it is obligatory for the Commission to record reasons for formation
of a prima facie opinion in terms of Section 26(1) of the Act. Supreme Court held that in consonance with the settled
principles of administrative jurisprudence, the Commission is expected to record at least some reason even while
forming a prima facie view. However, while passing directions and orders dealing with the rights of the parties in its
adjudicatory and determinative capacity, it is required of the Commission to pass speaking orders, upon due
application of mind, responding to all the contentions raised before it by the rival parties.
In the aforesaid context, Supreme Court of India noted that the proposition of law whether an administrative or
quasi judicial body, particularly judicial courts, should record reasons in support of their decisions or orders is no
more res integra and has been settled by a recent judgment of this Court in the case of Assistant Commissioner,
C.T.D.W.C. v. M/s Shukla & Brothers [JT 2010 (4) SC 35]. Reasons are the links between the materials on which
certain conclusions are based and the actual conclusions. By practice adopted in all courts and by virtue of judge
made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and in fact, is a
mandatory requirement of the procedural law. Supreme Court noted that recording reasons in support of decisions
or orders is consistent with the settled canons of law and would apply to Section 26, under its different sub-sections,
which requires the Commission to issue various directions, take decisions and pass orders, some of which are even
appealable before the Tribunal. Supreme Court also noted that even if it is a direction under any of the provisions
and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be
supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act,
the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of
the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such
view should be recorded with reference to the information furnished to the Commission. Such opinion should be
formed on the basis of the records, including the information furnished and reference made to the Commission
under the various provisions of the Act, as afore-referred. However, other decisions and orders, which are not
directions simpliciter and determining the rights of the parties, should be well reasoned analyzing and deciding the
rival contentions raised before the Commission by the parties. In other words, the Commission is expected to
express prima facie view in terms of Section 26(1) of the Act, without entering into any adjudicatory or determinative
process and by recording minimum reasons substantiating the formation of such opinion, while all its other orders
and decisions should be well reasoned.
Competition Commission of India: Necessary or Proper Party before Appellate Tribunal
September 09,2010), Supreme Court noted that the concept of necessary and proper parties is an accepted norm of
civil law and its principles can safely be applied to the proceedings before the Tribunal to a limited extent. Supreme
Court observed that the Commission, in cases where the inquiry has been initiated by the Commission suo moto,
shall be a necessary party and in all other cases the Commission shall be a proper party in the proceedings before
the Competition Tribunal. The presence of the Commission before the Tribunal would help in complete adjudication
and effective and expeditious disposal of matters. Being an expert body, its views would be of appropriate assistance
to the Tribunal. Thus, the Commission in the proceedings before the Tribunal would be a necessary or a proper
party, as the case may be.
Ambit and scope of the powers vested in the Competition Commission of India under section 33 of the
Competition Act, 2002
September 09,2010), Supreme Court observed that during an inquiry and where the Commission is satisfied that
the act is in contravention of the provisions stated in Section 33 of the Act, it may issue an order temporarily
restraining the 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. This power has to be exercised by the Commission sparingly
and under compelling and exceptional circumstances. The Commission, while recording a reasoned order inter alia
should : (a) record its satisfaction (which has to be of much higher degree than formation of a prima facie view
under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has been
committed and continues to be committed or is about to be committed; (b) It is necessary to issue order of restraint
and (c) from the record before the Commission, it is apparent that there is every likelihood of the party to the lis,
suffering irreparable and irretrievable damage or there is definite apprehension that it would have adverse effect
on competition in the market. Supreme Court concluded that the Commission can pass ex parte ad interim restraint
orders in terms of Section 33, only after having applied its mind as to the existence of a prima facie case and issue
direction to the Director General for conducting an investigation in terms of Section 26(1) of the Act. It has the
power to pass ad interim ex parte injunction orders, but only upon recording its due satisfaction as well as its view
that the Commission deemed it necessary not to give a notice to the other side. In all cases where ad interim ex parte
injunction is issued, the Commission must ensure that it makes the notice returnable within a very short duration
so that there is no abuse of the process of law and the very purpose of the Act is not defeated.
Scheme relating to section 3 relating to anti-competitive agreements read with section 19 (3) of the Competition
Act, 2002
In Rajasthan Cylinders and Containers Ltd v Union of India (Civil Appeal No. 3546 of 2014, judgment dated October 01,
2018), Supreme Court of India laid down the scheme relating to section 3 relating to anti-competitive agreements
read with section 19 (3) relating to factors to be taken into account by the CCI while determining whether an
agreement has an appreciable adverse effect on competition under section 3. Supreme Court observed that that
Section 19(3) of the Act mentions the factors which are to be examined by the CCI while determining whether an
agreement has an appreciable adverse effect on competition under Section 3. However, this inquiry would be
needed in those cases which are not covered by clauses (a) to (d) of sub-section (3) of Section 3. Supreme Court
observed that the agreements of nature mentioned in sub-section (3) are presumed to have an appreciable effect
and, therefore, no further exercise is needed by the CCI once a finding is arrived at that a particular agreement fell
in any of the aforesaid four categories. However, agreements mentioned in Section 3(3) raise a presumption that
such agreements shall have an appreciable adverse effect on competition. It follows, as a fortiorari, that the
presumption is rebuttable as these agreements are not treated as conclusive proof of the fact that it would result in
appreciable adverse effect on competition. What follows is that once the CCI finds that case is covered by one or
more of the clauses mentioned in sub-section (3) of Section 3, it need not undertake any further enquiry and burden
would shift upon such enterprises or persons etc. to rebut the said presumption by leading adequate evidence. In
case such an evidence is led, which dispels the presumption, then the CCI shall take into consideration the factors
mentioned in Section 19 of the Act and to see as to whether all or any of these factors are established. If the evidence
collected by the CCI leads to one or more or all factors mentioned in Section 19(3), it would again be treated as an
agreement which may cause or is likely to cause an appreciable adverse effect of competition, thereby compelling
the CCI to take further remedial action in this behalf as provided under the Act.
Standard of Proof in Cartels/ Collusive Bid Rigging cases
2018), Supreme Court of India observed that there may not be a direct evidence on the basis of which cartelisation
or such agreement between the parties can be proved. As these agreements are normally entered into in closed
doors. The standard of proof which is required is one of probability. Supreme Court also noted that even in the
absence of proof of concluded formal agreement, when there are indicators that there was practical cooperation
between the parties which knowingly substitute the risk of competition, that would amount to anti-competitive
practices.
Collusive bidding and Bid Rigging
2018), Supreme Court of India observed that though the expression ‘collusive bidding’ is not defined in the Act, it
appears that both ‘bid rigging’ and ‘collusive bidding’ are overlapping concepts. This position stands accepted in
Excel Crop Care Ltd v Competition Commission of India case wherein Supreme Court noted that no doubt, clause (d)
of sub-section (3) of Section 3 uses both the expressions “bid rigging” and “collusive bidding”, but the Explanation
thereto refers to “bid rigging” only. However, it cannot be said that the intention was to exclude “collusive bidding”.
Even if the Explanation does contain the expression “collusive bidding” specifically, while interpreting clause (d), it
can be inferred that “collusive bidding” relates to the process of bidding as well. Accordingly, Supreme Court in Excel
Corp Care Limited Case observed that ‘two expressions are to be interpreted using the principle of noscitur a sociis
i.e. when two or more words which are susceptible to analogous meanings are coupled together, the words can take
colour from each other.’
Test for parallel behaviour in bid rigging/ collusive bidding or tendering cases
2018), Supreme Court of India observed that the parameters on the basis of which collusive tendering are to be
judged are stated in Excel Crop Care Ltd v Competition Commission of India case.
In the Excel Crop Care Ltd case, Supreme Court observed that existence of a concerted practice could be appraised
correctly by keeping in mind the following test ‘If the evidence upon which the contested decision is based is
considered, not in isolation, but as a whole, account being taken of the specific features of the products in question.’
In the said Excel Crop Care Ltd case, Supreme Court also noticed that in an oligopoly situation, parallel behaviour
may not, by itself, amount to a concerted practice by relying on observations made by European Court of Justice in
Dyestuffs case [Imperial Chemical Industries Ltd. v. Commission of European Communities, 1972 ECR 619 (ECJ)]
wherein it was observed that ‘By its very nature, then, the concerted practice does not have all the elements of a
contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants.
Although parallel behaviour may not itself be identified with a concerted practice, it may however amount to strong
evidence of such a practice if it leads to conditions of competition which do not respond to the normal conditions of
the market, having regard to the nature of the products, the size and number of the undertakings, and the volume
of the said market. Such is the case especially where the parallel behaviour is such as to permit the parties to seek
price equilibrium at a different level from that which would have resulted from competition, and to crystallise the
status quo to the detriment of effective freedom of movement of the products in the [internal] market and free
choice by consumers of their suppliers.’
Taking into account aforesaid principles, Supreme Court also dealt with the argument on oligopsony raised by the
appellants that the market conditions lead to the situation of oligopsony that prevailed because of limited buyers
and influence of buyers in the fixation of prices was all prevalent. In this regard, Supreme Court described the
concept of monopsony by stating that monopsony consists of a market with a single buyer. Supreme Court stated
that when there are only few buyers the market is described as an oligopsony. In this regard, Supreme Court
emphasised that in such a situation a manufacturer with no buyers will have to exit from the trade. Supreme Court
noted that the situation of oligopsony can be both ways. There may be a situation where the sellers are few and they
may control the market and by their concerted action indulge into cartelization. It may also be, as in the present
case, a situation where buyers are few and that results in the situation of oligopsony with the control of buyers.
Supreme Court noted that as per CCI there was a collusive tendering, which is inferred from the parallel behaviour
of the appellants, namely, quoting almost the same rates in their bids. On a hollistic view of the matter, Supreme
Court observed that the appellants have been able to discharge the onus by referring to various indicators which go
on to show that parallel behaviour was not the result of any concerted practice. In Dyestuffs, the European Court
held that parallel behaviour does not, by itself, amount to a concerted practice, though it may provide a strong
evidence of such a practice. Nevertheless, it is a strong evidence of such a practice. However, before such an inference
is drawn it has to be seen that this parallel behaviour has led to conditions of competition which do not correspond
to the normal conditions of the market, having regard to the nature of the products, size and volume of the
undertaking of the said market.
Accordingly, examining the matter from the stand point of market economy where question of oligopsony assumes
relevance, Supreme Court observed that whenever there is a situation of oligopsony, parallel pricing simplicitor
would not lead to the conclusion that there was a concerted practice. There has to be other credible and corroborative
evidence to show that in an oligopoly a reduction in price would swiftly attract the customers of the other two or
three rivals, the effect upon whom would be so devastating that they would have to react by matching the cut.
On facts, Supreme Court of India after taking note of the test that needs to be applied in such cases, which was laid
down in Dyestuffs and accepted in Excel Crop Care Limited case concluded that the inferences drawn by the CCI on
the basis of evidence collected by it are duly rebutted by the appellants and the appellants have been able to
discharge the onus that shifted upon them on the basis of factors pointed out by the CCI.
LESSON ROUND-UP
• Competition Act, 2002 seeks to provide, keeping in view the economic development of the country, for the
establishment of Competition 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 besides repeal of MRTP Act and the dissolution of the MRTP Commission.
• 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.
• Competition Act expressly prohibits any enterprise or group from abusing its dominant position.
Dominant Position meaning thereby a position of strength, enjoyed by an enterprise or group, in the
relevant market, in India, which enables it to operate independently of competitive forces prevailing in
the relevant market; or affect its competitors or consumers or the relevant market in its favour.
• Competition Act prohibits any person or enterprise from entering into a combination which causes or is
likely to cause an appreciable adverse effect on competition within the relevant market in India and if
such a combination is formed it shall be void.
• While formulating a policy on the competition the Central/State Government may make a reference to the
Commission for its opinion on possible effect of such a policy on the competition.
• Competition Appellate Tribunal to hear and dispose of appeals against the direction issued or decision
made or orders passed by the Commission under the Act, and to adjudicate on claim of compensation.
• 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.
TEST YOURSELF
(These are meant for recapitulation only. Answer to these questions are not to be submitted for evaluation)
1. (These are meant for re-capitulation only. Answers to these questions are not to be submitted for
evaluation)
1. Define and discuss the Relevant Market, Relevant Geographic Market, and Relevant Product Market.
2. What are anti-competitive agreements? Discuss the procedure for enquiry into anti-competitive
agreements.
3. The Competition Act does not prohibit dominance, but the abuse of dominant position. Explain.
4. Discuss the composition and functions of Competition Commission of India.
5. Write short notes on:
(i) Combinations.
(ii) Competition Advocacy.

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Lesson 12 The Competition Act, 2002

Key Concepts One Learning Objectives Regulatory Framework

What is competition in the market?

Competition and Economic Efficiency

Competition Law and Policy

Economic Reforms and Competition

Competition Law-Evolution and Development

Background to the MRTP Act, 1969

(iii) prohibition of monopolistic trade practice;

Scheme of the MRTP Act

Monopolistic Trade Practices

Restrictive Trade Practices

Unfair Trade Practices

Recommendations of Sachar Committee

Why do we need competition in the market?

COMPETITION ACT, 2002

Short title, extent and commencement

Scheme of the Act

Some of the conditions that are conducive to cartelization are:

Public Financial Institution

Relevant Geographic Market

Relevant Product Market

Anti Competitive Agreements

Bid rigging is anti-competitive

WHAT IS AN ANTI-COMPETITIVE AGREEMENT?

Prohibition of Abuse of Dominant Position

WHAT CONSTITUTES ABUSE OF DOMINANCE?

THRESHOLDS FOR COMBINATION

THRESHOLDS FOR FILING NOTICE

THRESHOLDS FOR AVAILING OF DE MINIMISE EXEMPTION FOR

Competition Commission of India

Reference by statutory authority

Procedure for inquiry on complaints under Section 19

Relevant turnover for determining penalty under section 27 of the Act

Division of enterprise enjoying dominant position

Inquiry into disclosures under Section 6(2)

Orders of Commission on Certain Combinations

(a) the acquisition referred to in Section 5 (a); or

Appearance before Commission

They may either appear in person or authorise any of the following:

Power of Commission to regulate its own procedure

COMPENSATION IN CASE OF CONTRAVENTION OF ORDERS OF COMMISSION

Power to impose penalty for non-furnishing of information on combination

Penalty for making false statement

Power to impose lesser penalty

FINANCE, ACCOUNTS AND AUDIT

Appeal to Appellate Tribunal

Right to legal representation

Appeal to Supreme Court

Power of Central Government to supersede Commission

Exclusion of jurisdiction of Civil Courts

POWER TO MAKE REGULATIONS

Power to remove difficulties

Important Case Laws

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