Blog Details

Author - Associate Aliza Abdin

India is venturing into a free-market and free economy regime and in order to eliminate previous “command and control” policies that was encouraged by the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), the parliament of India enacted the Competition Act, 2002. The Monopolies and Restrictive Trade Practices Act, 1969 limited the growth of competition and kept the Indian market below par to other countries and so the country needed a better and more progressive law that helped the Indian market soar to great heights. This law also helped establish many Indian firms as equals to others in the world.

The Competition Act, 2002 is an instrument that governs all competition policies in India and oversees the economy of the nation. The bill was first introduced in the Lok Sabha by the then Finance Minister, Arun Jaitley in 2001. Since its implementation there has been tremendous growth of fair competition in the market, it has also launched the Competition Commission of India (CCI/the Commission) that enforces certain rules and regulations of the Competition Act, such as preventing any anti-competitive business practices carried out by various firms in the market. The Commission also has the right to punish any person found guilty of unfair practices. The Competition Act extends to the whole of India except the state of Jammu and Kashmir.

“Competition laws are equally applicable on written as well as oral agreement, arrangements between the enterprises or persons.”

OBJECTIVES OF THE COMPETITION

Just like any other Act enacted by the Parliament, this Act also had a specific purpose and that was to encourage healthy competition in the market and eliminate monopolies in order to help the Indian economy grow. Some of its objectives are mentioned below.

1. It ensures that no firm enters into a contract that affects their competition in the market. (horizontal and vertical agreements / conduct)
2. It strictly prohibits any monopoly or the misuse of dominance in the Indian market.
3. It also forbids any such practices that are harmful to fair competition in the market.
4. It protects and promotes competition in the market by safeguarding the interests of the businessmen
5. It supports freedom of trade and ensures that all firms enjoy this right
6. It not only safeguards the interests of businessmen but also protects and promotes the interests of consumers
7. It also forbids certain collaborations between enterprises which may affect the competition in the market

The main duties of the competition commission

The competition commission is a statutory body that was launched to keep a check on the competition market and to enforce rules and regulations. It was established in 2003 but became functional in 2009; it consists of two to six members and a chairperson. It oversees all activities of the market by exercising certain powers, they are as follows:

1. It controls all practices of the firms that may cause any harm to competition in the market.
2. It introduces new policies in order to help small firms enter the competition market to promote competition in India.
3. It promotes laws that are created to generate awareness about competition and promote competitive measures to public.
4. It is liable to enquire into matters that may be of concern

ELEMENTS OF COMPETITION ACT

Competition Act comprises of four major elements, and they are as follows:

1. Anti-competitive elements: Any agreement or contract that restricts competition in the market is prohibited by this Act. As per Section 3 of the Competition Act, 2002 such an agreement is immediately considered void because of the presence of Anti-competitive element.
   For example, “the Act prohibits any agreement connected with production, supply, distribution, storage, and acquisition or control of goods or services as it may cause an appreciable adverse effect on the competitive affairs of India.”
2. Abuse of Dominance: According to the Act, a Dominant position is a position of power and strength which is enjoyed by a firm in the Indian market, however as per section 4(2) of the Act no firm is allowed to abuse this position by imposition of unfair prices or involvement in any such activity that affects the competition in the market, in short it is not allowed to become a monopoly. The CCI has the power to determine whether a dominant enterprise is abusing its power or not.
3. Mergers, amalgamations and acquisitions control: A firm or a group of them are prohibited from entering into collaborations or mergers that may make them a monopoly and harm the competition in the market as per Section 6 of the Act. If in any case the firms wish to join to carry out a deal, a prior notice has to be submitted to the CCI and only after their approval can they carry out the deal.
4. Competition Advocacy: This is one of the most important elements of the Act and it provides that the government when taking any decision or forming laws related to the competition market must take the opinion/advice of the CCI. The CCI then has to give its opinion within 60 days. The CCI is allowed to implement certain measures for the promotion and creation of competition in the market.

AMENDMENTS IN THE COMPETITION ACT

The Act was amended in 2007 and 2009 to cope up with the changing market and help boost the economy of the nation. It brought the following changes which allowed the Indian economy to foster both domestic and international competition.

1. “CCI to function as a regulator for preventing and regulating anti-competitive practices in the country in accordance with the Act;
2. Notice to be given to the CCI in case of any merger or combination within 30 days and imposition of penalty in case of failure to give notice to CCI;
3. Establishment of Competition Appellate Tribunal, to be headed by a three-member quasi-judicial body headed by a Chairman who is Judge of Supreme Court or Chief Justice of a High Court;
4. The cases pending with Monopolies and Restrictive Trade Practices Commission were transferred to the Competition Appellate Tribunal and National Consumer Commission.”