Economic, Business & Commercial Laws

What is competition in the In common parlance, competition in the market means sellers striving
market? 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. World Bank 1999.

Competition and Economic A number of empirical studies found a positive relationship between
Efficiency 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.

Competition law and Policy 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 Law-Evolution The first Indian competition law was enacted in 1969 and was christened
and Development 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 sub serve 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.
Acquisition means- acquiring- (a) shares or voting rights of any enterprise; or (b) control
over management of any enterprise; or (c) control over assets of any
enterprise.
Agreement includes any agreement or understanding or action in contract whether or not such
agreement or understanding or action is formal; or in writing; or intended to
be enforceable by legal proceedings.
“Cartel” includes an association of producers, sellers, distributors, traders or service providers
who, by agreement amongst themselves limit, control or attempt to control
production, distribution, sale or price of goods or services.

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“Consumers” means- any person who-
i. (a) Buys any goods for a consideration, (b) which has been paid
or promised or partly paid and partly promised, or (c) under
any system of deferred payment, or (d) and includes any
user of such goods, (e) other than the person who buys such
goods for consideration paid or promised or partly paid and
partly promised, or under any system of deferred payment, (f)
when such use is made with the approval of such person, (g)
whether such purchase of goods is for resale or for any other
commercial purpose or for personal use.
ii. (a) Hires or avails of any services for a consideration, (b) which
has been paid or promised or partly paid and partly promised,
or under any system of deferred payment, (c) and includes
any beneficiary of such services, (d) other than the person
who hires or avails of the services for consideration paid or
promised or partly paid and partly promised, or under any
system of deferred payment, (e) when such services are
availed of with the approval of the first mentioned person,
(g) whether such hiring or availing of services is for any other
commercial purpose or for personal use.

“Enterprise”- a) Enterprise means a person or a department of the government

engaged in any activity relating to- the production, storage, supply,
distribution, acquisition or control of articles or goods of any
kind; or the provision of services of any kind business if acquiring,
holding, underwriting or dealing with shares, debentures or any other
securities of any body corporate either directly or through one or more
of its wits and 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.
b) Enterprise does not include any activity of the Government relatable
to sovereign functions of the Government including all activities
carried on by the departments of CG dealing with atomic energy,
currency, space.

“Goods” means - Goods as defined in SOGA, 1930 includes- (a) Products manufactured,
processed or mined, (b) debentures, stocks and shares after allotment, (c)
goods imported into India.

COMPETITION i. Establishment of CC: - By issuing notification in the Official Gazette.

COMMISSION OF INDIA The Commission shall come into existence on such date as may be
specified in such notification.
(Sec. 7 and 15)
ii. “Offices of the Commission: - (a) Head Office- such place may be
decided by CG from time to time, (b) Other offices in India may be
established by the Commission.
iii. Characteristics of the Commission: - (a) Body Corporate having
perpetual succession and a common seal, (b) Power to contract, (c)
Power to sue in its own name, (d) Power to acquire, hold and dispose
of property.

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iv. Vacancy etc. not to invalidate the proceeding of the Commission.

(Sec 15)
No act or proceeding of the Commission shall be invalid merely by reason
of- any vacancy in the Commission; or any defect in the Constitution of
the Commission; or any defect in the appointment of the Chairperson or a
member or any irregularity in the procedure of the Commission not affecting
the merits of the case.

COMPOSITION OF THE Chairperson & members:

COMMISSION a) One chairperson, min 2 members & maximum 6 members.
b) Vacancy- The senior-most member should act as the Chairperson
until the new Chairperson assumes his office (Sec. 10).
c) Inability to functions: - the senior-most member shall discharge
the functions of the Chairperson until the Chairperson resumes the
change in his functions (Sec. 10).

COMMON PROVISIONS 1. Manner of appointment:

APPLICABLE TO Appointment by CG from a panel of names recommended by
CHAIRPERSONS AND Selection Committee. The Selection Committee shall consist of: -
MEMBERS a) The Chief Justice of India or his nominee as the Chairperson
for the Selection Committee
b) The Secretary in the Ministry of Corporate Affairs - as a
member of the Selection Committee
c) The Secretary in the Ministry of Law and Justice - as a member
of the Selection Committee
d) Two experts of repute who have special knowledge of and
professional experience in international trade, economics,
business commerce, laws, finance, accountancy, management,
industry, public affairs, or competition matters including
Competition Law and policy - as members of the Selection
Committee
The term of the Selection Committee and the manner of selection of panel
of names shall be such as may be prescribed.
2. Nature of office - whole time members
3. Tenure: 5 years
4. Reappointment - Possible
5. Maximum Age - Not to hold office after him as attained the age of 65
years.
6. Filling of Vacancies - Fresh appointments shall me made in the
prescribed manner.
7. Oath - oath of secrecy shall be maintained in the prescribed manner.
8. Salary and Terms and Conditions - determined by Rules
9. Variation in Salary and Terms and Conditions- no variation prejudicial
to chairperson or member

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 10. Qualification and Experience- the Chairperson and every other
member shall be a person of ability, integrity and standing and
who has special knowledge of and such professional experience of
not less than 15 years in international trade, economics, business,
commerce, law, finance, accountancy, management, industry, public
affairs or competition matters including competition law and policy,
which in opinions of the CG may be useful to the Commission.

RESIGNATION, REMOVAL i. Right to Resign - the Chairperson or any other member may by notice
AND SUSPENSION OF in writing under his hand addressed to CG, resign his office.
CHAIRPERSON OR OTHER ii. Effect of Resignation - the Chairperson or member shall, unless he is
permitted by the CG to relinquish his office sooner, continue to hold
MEMBERS:
office until the expiry of 3 months from the date of receipt of such
notice or until a person duly appointed his success or enter upon his
office or until the expiry of his term of office, whichever is the earliest.
ii. Removal - CG may, by order remove the Chairperson or any other
member in the following cases - (a) If he is or at any time has been
adjudged insolvent, (b) if he has engaged at any time during his term
of office in any paid employment, (c) If he has been convicted of
an offence, which in the opinion of the CG involves moral turpitude,
(d) if he has acquired such financial or other interest as is likely to
affect prejudicially his functions as member, (e) if he has so abused
his position as to render his continuation in office prejudicial to the
public interest, (f) if he has become physically or mentally incapable
of acting as member.
However, no member shall be removed from his office on the ground
specified in clause (d) or clause (e) unless the Supreme Court, on a relevance
being made to it in this behalf by CG on an inquiry, held by it in accordance
with such procedure as may be prescribed in this behalf by the Supreme
Court, reported that the members ought on such ground or grounds to be
removed.

Restriction on Emp. Restriction on Emp.: On Whom? - Chairperson and every member.

Of Chairman and other Nature of Restriction: No Emp. In any enterprise which has been a party to
members in certain cases any proceeding before the Commission.
(Sec. 12): Time period of Restriction - 2 years from date of cessation of office.
Exempted Enterprises: - (a) CG, (b) SG, (c) Local Authority, (d) Statutory
Authority, (e) A corp. established by a central, state or provincial Act, (f) A
Govt. Company.

[MEETINGS OF THE 1. Number of meetings and procedures for meetings - the commission
COMMISSION (Sec. 22) shall meet at such times and such places, and shall observe such
rules of the procedure in regard to the transaction of business at its
meetings as may be provided by the Regulations.
2. Effects of absence of Chairperson - If the Chairperson is unable to
attend any meeting of the Commission (because of any person, the
senior-most Member present at the meeting, shall preside at the
meeting.

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