Combination

Concept of Combination

A "Combination" in competition law refers to mergers, acquisitions, or amalgamations that

can potentially impact market competition. The idea is to ensure that business transactions do
not lead to market monopolization or harm consumer interests by reducing competition.

1. Mergers – When two or more companies merge to form a single entity.

o Example: If Company A (a mobile phone manufacturer) and Company B
(another mobile phone manufacturer) merge, the combined company may
dominate the mobile phone market, potentially reducing competition.
2. Acquisitions – When one company acquires control or a significant shareholding in
another company.
o Example: Company A (a large tech company) acquires Company B (a popular
software developer). The acquisition may increase Company A's market
power, limiting competition from smaller software companies.
3. Amalgamations – The unification of two or more companies into a new entity for
synergies and economies of scale.
o Example: Two banks, Bank X and Bank Y, amalgamate to form a new bank,
Z. This allows them to pool resources and provide better services, but the
combination needs to be checked to ensure it doesn’t reduce competition in the
banking sector.

Combination Provisions and Regulations under the Competition Act, 2002

Under the Competition Act, 2002 in India, Sections 5 and 6 primarily deal with
combinations and their regulation.

Section 5: Definition of Combination

Section 5 of the Competition Act, 2002 defines Combinations as mergers, acquisitions, or

amalgamations that meet certain thresholds based on assets or turnover. These thresholds
are designed to identify transactions that may have significant market impact and could
potentially affect competition adversely.

Key Elements of Section 5

1. Acquisitions:
o Definition: Acquisition of shares, voting rights, or control by one enterprise in
another.
o Thresholds:
 Global Assets: Exceed INR 2,000 crore.
 Domestic Assets: Exceed INR 1,000 crore.
 Global Turnover: Exceed INR 6,000 crore.
  Domestic Turnover: Exceed INR 3,000 crore.

Example:
Company A acquires a 51% stake in Company B. If their combined assets exceed
INR 2,000 crore globally or INR 1,000 crore domestically, the transaction is
considered a combination.

2. Mergers or Amalgamations:
o Definition: Unification of two or more enterprises into a new entity.
o Thresholds: Similar to those for acquisitions.

Example:
A merger between two banks, Bank X and Bank Y, to form Bank Z, will be
considered a combination if their combined assets exceed the prescribed thresholds.

3. Control:
o Definition: Acquisition of direct or indirect control over management, voting,
or assets of an enterprise.
o Key Factor: Control may not involve ownership but still influence strategic
decisions.

Example:
If Company A secures the right to appoint a majority of directors in Company B, it is
deemed a combination if thresholds are exceeded.

Section 6: Regulation of Combinations

Section 6 of the Competition Act prohibits combinations that may cause an Appreciable
Adverse Effect on Competition (AAEC) in the relevant market in India. It outlines the
process and criteria for regulating these transactions.

Key Provisions of Section 6

1. Prohibition of Anti-Competitive Combinations (Section 6(1)):

o Combinations that cause or are likely to cause AAEC in the market are
prohibited.
o AAEC factors include market share, entry barriers, availability of substitutes,
and impact on consumers.

Example:
A merger between two telecom companies, resulting in a market share of 90%, would
likely cause AAEC and may be prohibited.
 2. Mandatory Notification (Section 6(2)):
o Parties involved in a combination must notify the Competition Commission
of India (CCI) within 30 days of entering into an agreement.
o Failure to notify may result in penalties.

Example:
If Company A and Company B sign a merger agreement on January 1, they must
notify the CCI by January 31.

3. Waiting Period (Section 6(2A)):

o Parties cannot proceed with a combination until the CCI grants approval or the
waiting period (typically 210 days) expires.

Example:
Company A and B must wait for CCI approval before merging their operations, even
if the transaction aligns with legal thresholds.

4. CCI Investigation and Approval (Section 6(3)):

o The CCI evaluates whether the combination will lead to AAEC.
o Investigations consider factors such as market structure, consumer impact, and
potential anti-competitive behaviour.

Example:
A merger in the cement sector may be approved with conditions like divestiture of
specific plants to avoid market dominance.

5. Factors for Assessing AAEC (Section 6(4)):

o Market structure and concentration.
o Entry barriers for new competitors.
o Impact on consumers, suppliers, and other stakeholders.
o Nature and extent of vertical integration.
6. Exemptions (Section 6(5)):
o Combinations involving small enterprises or falling below prescribed
thresholds are exempt from CCI review.

Example:
An acquisition of a start-up valued below INR 50 crore by a larger enterprise may not
require CCI approval.

Comparison of Sections 5 and 6

Aspect Section 5 Section 6
 Aspect Section 5 Section 6

Defines combinations based on Regulates combinations for potential

Scope
thresholds. AAEC.

Mandatory notification to CCI within 30

Notification Not applicable.
days.

Prohibition Not explicitly covered. Prohibits combinations causing AAEC.

Specifies asset and turnover

Thresholds Does not define new thresholds.
thresholds.

Involves CCI investigation and

Investigation Not applicable.
approval.

Significance of Sections 5 and 6

 Safeguards Market Competition: Prevents monopolies and ensures fair market

practices.
 Protects Consumer Interests: Maintains competitive pricing and product
availability.
 Encourages Economic Efficiency: Balances business growth with market health.
 Aligns India with Global Standards: Consistent with EU and US approaches to
competition.

FLOWCHART

Section 5: Combinations

Defines what constitutes a "Combination" under the Act. A combination refers to mergers,
acquisitions, or amalgamations that meet specified thresholds.

Flowchart:

1. Combination Trigger
↓
1. Acquisition: Acquiring control, shares, voting rights, or assets of an enterprise
OR
2. Merger/Amalgamation: Between two or more enterprises
↓
Threshold Check (Based on turnover or assets, either in India or globally)
o Enterprise-Level
 Assets: ₹2,000 Cr (India) or $500 Mn (Global)
 Turnover: ₹6,000 Cr (India) or $1,500 Mn (Global)
o Group-Level
 Assets: ₹4,000 Cr (India) or $2 Bn (Global)
 Turnover: ₹12,000 Cr (India) or $6 Bn (Global)
↓
Outcome: Combination identified if thresholds are met

Section 6: Regulation of Combinations

Regulates combinations to prevent any appreciable adverse effect on competition (AAEC) in

the relevant market.

Flowchart:

1. Combination Identified (As per Section 5)

↓
Mandatory Notice to CCI
o Within 30 days of Board approval/Execution of agreement
o Forms: Form I (short form) or Form II (long form)
↓
CCI Review
o Check for AAEC: Appreciable Adverse Effect on Competition
 Factors considered:
 Market share
 Barriers to entry
 Consumer interest
 Innovation impact
↓
CCI Decision
o Approved: If no AAEC is found
o Modified: Conditional approval with remedies
o Rejected: If AAEC is significant

Important Cases:

1. Holcim Ltd. and Lafarge S.A.

 Facts:
Holcim Ltd., a Swiss cement giant, proposed a global merger with Lafarge S.A., a
French cement company. Both companies had significant operations in India, creating
one of the largest cement players in the country post-merger.
  Issue:
The key concern was whether the merger would lead to a dominant market position in
the cement industry, potentially stifling competition and leading to higher prices for
consumers in India.
 CCI Observation:
The Competition Commission of India (CCI) approved the merger but imposed
conditions. It required the merged entity to divest some assets in certain geographic
markets to prevent monopolistic dominance and ensure competitive market
conditions.
 Importance:
This case highlighted the CCI's role in safeguarding competition through conditional
approvals, setting a precedent for future large-scale mergers in sectors with limited
players.

2. Walmart-Flipkart Acquisition

 Facts:
In 2018, Walmart, a global retail giant, acquired a 77% stake in Flipkart, one of
India’s leading e-commerce platforms. The acquisition was valued at approximately
$16 billion.
 Issue:
The acquisition raised concerns regarding competition in India’s e-commerce market,
potential impacts on small retailers, and Walmart’s influence on pricing and market
access in India.
 CCI Observation:
CCI approved the deal but acknowledged potential concerns raised by small traders
and retailers. The CCI noted the need for Walmart-Flipkart to maintain fair practices
to prevent anti-competitive conduct but did not impose restrictions.
 Importance:
This case was pivotal for India’s digital economy, marking one of the largest foreign
investments in an Indian e-commerce platform. It underscored the CCI's balanced
approach, recognizing foreign investment benefits while considering domestic
competition impacts.

3. CCI v. Jet-Etihad Airways

 Facts:
Etihad Airways, a national airline of the UAE, acquired a 24% stake in Jet Airways, a
major Indian airline. The deal was part of a strategic alliance intended to increase
Etihad’s footprint in India.
  Issue:
Concerns were raised about the impact on competition within India’s aviation sector,
specifically the potential for collusion on fares and flight schedules.
 CCI Observation:
The CCI cleared the acquisition after a detailed review, stating that the deal did not
create a monopoly or restrict competition, but it closely monitored their future market
behaviour.
 Importance:
This case established the CCI's approach in assessing combinations involving foreign
investments in critical sectors, balancing competitive practices with industry growth.

4. Zomato-Uber Eats Acquisition

 Facts:
Zomato, an Indian food delivery company, acquired the Indian operations of Uber
Eats in a strategic move to consolidate its position in the food delivery market.
 Issue:
The primary concern was whether this acquisition would reduce competition in the
food delivery market, particularly as Zomato’s main competitor, Swiggy, remained
the only other major player.
 CCI Observation:
CCI approved the acquisition, stating that it would not have an appreciable adverse
effect on competition in the relevant market. The CCI recognized the benefits of
consolidation in a rapidly growing market and allowed the acquisition to proceed
without restrictions.
 Importance:
This case demonstrated the CCI’s willingness to permit market consolidation in new-
age, technology-driven industries while monitoring for anti-competitive risks.

5. Sun Pharmaceuticals and Ranbaxy Laboratories

 Facts:
Sun Pharmaceuticals, a major Indian pharmaceutical company, acquired Ranbaxy
Laboratories, a key competitor. The merger created one of India’s largest
pharmaceutical companies.
 Issue:
Concerns arose over potential monopoly in various drug segments where both
companies held significant shares, which could lead to higher prices for essential
drugs.
  CCI Observation:
CCI approved the merger with conditions, requiring Sun Pharma to divest certain
overlapping products to mitigate monopoly concerns in specific drug markets.
 Importance:
This case emphasized the CCI's approach of imposing structural remedies (e.g.,
divestiture of assets) to protect competition in essential sectors like pharmaceuticals,
ensuring market diversity and affordability for consumers.

Comparison of Combination Regulations: India, European Union (EU), and the United
States (USA)

1. India
o Governed by the Competition Act, 2002.
o Pre-merger notification to the CCI is mandatory when thresholds are met.
o The focus is on preventing AAEC in the Indian market.
o Example: Two leading FMCG companies in India plan to merge. The CCI
evaluates whether the combination will reduce competition and harm
consumers by raising prices or limiting product variety.
2. European Union (EU)
o Governed by the EU Merger Regulation.
o The European Commission assesses mergers with a "community dimension."
o A two-phase investigation process is followed:
 Phase I: A quick assessment to identify any competition concerns.
 Phase II: A more detailed investigation if competition concerns
arise.
o Example: If two large car manufacturers in France and Germany decide to
merge, the European Commission assesses the potential impact on the car
market across all EU member states.
3. United States (USA)
o Governed by The Clayton Act (Section 7), The Sherman Act, and The
Federal Trade Commission Act.
o The Federal Trade Commission (FTC) and the Department of Justice
(DOJ) are responsible for assessing mergers.
o Example: If a major retailer in the USA plans to acquire a competitor, the
FTC and DOJ assess whether the combination would lead to higher prices or
reduced consumer choice in the retail sector.
o The USA also focuses on the potential impact on innovation and future
competition.

Key Differences
  Thresholds: The combination thresholds for asset value and turnover are significantly
higher in the EU and USA compared to India.
 Evaluation Standards: India uses the AAEC standard, while the EU uses the
Significant Impediment to Effective Competition (SIEC) standard, and the USA
evaluates whether there is a Substantial Lessening of Competition (SLC).
 Procedures: In the EU and USA, mergers often undergo more extensive
investigations, especially for cross-border combinations. India focuses more on
domestic market competition.

Comparison of Combination Regulations: India, European Union (EU), and the

United States (USA)

United States (Clayton

India (Competition European Union (EU
Aspect Act, Sherman Act, FTC
Act, 2002) Merger Regulation)
Act)
Federal Trade
Competition
Regulatory Commission (FTC),
Commission of India European Commission
Authorities Department of Justice
(CCI)
(DOJ)
EU Merger Regulation
Key Clayton Act, Sherman
Competition Act, 2002 (Council Regulation
Legislation Act, FTC Act
(EC)
Appreciable Adverse Significant Impediment
Standard for Substantial Lessening of
Effect on Competition to Effective
Evaluation Competition (SLC)
(AAEC) Competition (SIEC)
Mandatory for mergers Mandatory under the
Pre-Merger Mandatory if thresholds
with a "community Hart-Scott-Rodino Act
Notification are met
dimension" (HSR Act)
Single-phase Single-phase and detailed
Investigation Two-phase investigation
investigation, clear investigation depending
Process (Phase I & Phase II)
timelines on concerns
Domestic market, Cross-border impacts Market-specific analysis,
Focus Areas AAEC in Indian within EU member impact on innovation and
competition states, consumer choice consumer welfare
Asset value: INR 2,000 Turnover threshold $94 million transaction
Thresholds crore or Turnover: INR exceeding EUR 250 size, with additional
6,000 crore million turnover thresholds
Merger of two major
Merger of two telecom Acquisition of a software
Examples airlines across EU
giants in India company by a tech giant
member states
Example:

1. India: If two large telecom companies in India plan to merge, the CCI examines
whether the combination would limit consumer choices or increase prices in the
telecom sector.
2. EU: If two major airlines in the EU propose a merger, the European Commission
assesses the impact on air travel prices and competition across multiple EU countries.
3. USA: If two tech giants in the USA plan to merge, the DOJ evaluates whether the
merger will harm innovation and reduce competition in the tech market, potentially
affecting consumers worldwide.

1. India: AAEC (Appreciable Adverse Effect on Competition)

 What it checks: Whether an agreement, merger, or business conduct is harmful

enough to significantly affect competition in the market.
 Focus: Does it hurt competition? For example, does it:
o Create barriers for new players to enter the market?
o Force existing competitors out of the market?
o Harm consumers by increasing prices or reducing choices?
 Example: Suppose two large telecom companies in India merge. If this merger makes
it impossible for smaller telecom companies to compete (e.g., by reducing prices
temporarily to drive out competitors), it could lead to an AAEC.

2. EU: SIEC (Significant Impediment to Effective Competition)

 What it checks: Whether a merger or acquisition significantly reduces the level of

competition that currently exists in the market.
 Focus: Does it block competition significantly? For example, does it:
o Create or strengthen a dominant company (monopoly)?
o Lead to collusion between companies (e.g., price-fixing)?
 Example: In the EU, if two car manufacturers merge and gain a very strong market
position, it might reduce competition because they could dictate prices or slow down
innovation. The EU would check whether this merger creates a SIEC, where no one
else can compete effectively.
 Difference from AAEC: While AAEC focuses broadly on "adverse effects" (like
entry barriers or price effects), SIEC goes a step further and looks for dominance or
other actions that make effective competition nearly impossible.
3. USA: SLC (Substantial Lessening of Competition)

 What it checks: Whether a merger or practice reduces competition to a substantial

degree or risks creating a monopoly.
 Focus: Does it cause big harm to competition? For example, does it:
o Directly lead to price increases?
o Create a monopoly or restrict consumer choices in the market?
 Example: If two large tech companies in the USA merge and this merger allows them
to increase prices for consumers (because no one else can challenge them), it could
lead to SLC. The USA looks at whether this lessens competition enough to make the
market unhealthy.

Key Differences:

Aspect AAEC (India) SIEC (EU) SLC (USA)

Broad impact on Significant harm to Large reduction or risk
Focus
competition. competition. of monopoly.
Dominance Often related to Looks for monopoly-
Not always required.
Requirement dominance. like situations.
More flexible and Broader focus on Focuses on direct
Approach
specific to India. market health. economic harm.

Example Across Jurisdictions:

Scenario: Two large e-commerce companies (A and B) merge.

 India (AAEC): The Competition Commission of India would see if the merger
creates barriers for new e-commerce companies or reduces consumer choice in India.
Even if they don’t dominate yet, the merger can still be stopped.
 EU (SIEC): The EU would look at whether this merger gives A+B a dominant
position, so smaller businesses cannot compete effectively (e.g., due to higher costs or
collusion). A dominance threshold is often a big concern.
 USA (SLC): The U.S. would focus on whether the merger directly leads to higher
prices for consumers or creates a monopoly where no one else can compete.

Summary:

 AAEC (India): Focused on adverse effects specific to India's competition landscape.

Flexible approach.
  SIEC (EU): Stricter focus on ensuring competition remains effective, with concerns
about dominance.
 SLC (USA): Direct focus on harm to competition, price increases, or monopolistic
behavior.

Monopolistic
Aspect Monopoly Oligopoly
Competition
A market structure A market structure A market structure where
where a single firm where a small number of many firms sell similar but
dominates the entire firms dominate the not identical products,
Definition
market, with no close market, often with allowing for competition
substitutes for its limited competition based on product
product or service. between them. differentiation.
Few large firms Many firms operate in the
Number of Single firm controls
(typically 2 to 10) market, offering
Firms the market.
dominate the market. differentiated products.
The monopoly firm Firms have significant Firms have limited market
has significant market market power but are power due to competition,
Market Power power and can set interdependent; actions but differentiation allows
prices without direct by one firm can them to influence prices
competition. influence the others. within a narrow range.
No need for Products can be
High degree of product
differentiation, as homogeneous (e.g., oil)
Product differentiation, with firms
there is only one or differentiated (e.g.,
Differentiation competing on quality,
product or service cars), depending on the
brand, or features.
available. industry.
Very high, often due High barriers to entry Low to moderate barriers
Barriers to to legal restrictions, due to economies of to entry, allowing new
Entry patents, or significant scale, brand loyalty, or firms to enter the market
capital requirements. legal restrictions. and compete.
The monopoly firm Firms have some control Firms have limited control
has complete control over pricing, but they over pricing, as consumers
Price Control over pricing, often are aware of the can switch to close
setting higher prices reactions of competing substitutes if prices are too
than in competitive firms, leading to price high.
 Monopolistic
Aspect Monopoly Oligopoly
Competition
markets. rigidity.
Monopolistic
Monopoly: A local Oligopoly: The
Competition: The fast
utility company with automobile industry,
food industry, where many
Examples exclusive rights to where a few firms (e.g.,
firms (e.g., McDonald's,
provide electricity in a Toyota, Ford, and
Burger King) offer
region. Volkswagen) dominate.
differentiated products.
Limited choice, as only
Very limited, as there a few firms dominate High level of consumer
Consumer is only one firm the market. Choices may choice, as firms compete
Choice offering the product or vary depending on the on product features,
service. level of product quality, and branding.
differentiation.
Limited competition due
to the small number of High competition, as firms
No competition, as firms, but firms compete must differentiate their
Competition
there is only one firm. on factors like pricing, products and compete for
advertising, and consumer preference.
innovation.
More Efficient: Due to
Moderately Efficient:
Inefficient: competition, firms in
Oligopolies may exhibit
Monopolies often monopolistic competition
some inefficiencies, but
result in higher prices tend to be more responsive
Efficiency competition between
and lower output than to consumer demands,
firms can lead to
in competitive though inefficiencies exist
innovation and lower
markets. due to product
prices.
differentiation.

Summary:

 Monopoly: A single firm controls the entire market, resulting in significant market
power, little to no competition, and high barriers to entry.
 Oligopoly: A small number of firms dominate the market. These firms have some
market power, but they must consider the actions of their rivals.
 Monopolistic Competition: Many firms compete in the market by offering
differentiated products. Firms have some market power but face competition due to
the availability of close substitutes.
 Unit 5: Competition Commission of India

1. Constitution and Composition of the CCI (Section 7 and Section 8 of the Competition
Act, 2002)

 Section 7 of the Act establishes the Competition Commission of India (CCI) as a

statutory body.
 The CCI consists of a Chairperson and a minimum of two members, up to a
maximum of six members, all appointed by the Central Government.
 The members must have professional experience in fields such as economics, law,
commerce, finance, or competition law.
 Section 8 states that the Chairperson and members hold office for a term of 5 years
and are eligible for reappointment, but the total tenure cannot exceed 10 years.

2. Powers and Functions of CCI (Section 18, Section 19, Section 26, Section 31)

The CCI has various powers and responsibilities as per the Competition Act, 2002 to
regulate competition and prevent anti-competitive practices in India:
  Section 18: It mandates the CCI to eliminate practices having an adverse effect on
competition, promote and sustain competition, protect the interests of consumers, and
ensure freedom of trade in markets.
 Section 19: The CCI has the power to inquire into any alleged contraventions of the
provisions relating to anti-competitive agreements (Section 3) and abuse of dominant
position (Section 4) based on information received or on its own motion (suo moto).
 Section 26: After receiving information, the CCI can form a prima facie opinion on
whether an investigation is required. If it finds that an inquiry is needed, it directs the
Director General (DG) to investigate the matter.
 Section 31: In the case of combinations (mergers or acquisitions), the CCI reviews
proposed combinations to ensure they do not lead to an Appreciable Adverse Effect
on Competition (AAEC) in the relevant market. If the CCI finds that a combination
is likely to have AAEC, it can approve it conditionally or block the combination
entirely.

Key Functions:

 Inquiring into Anti-Competitive Agreements (Section 3): CCI investigates and

penalizes businesses that engage in agreements that restrict competition.
 Investigating Abuse of Dominance (Section 4): CCI examines companies that
misuse their dominant position in the market to harm competitors or consumers.
 Regulating Combinations: CCI reviews mergers, acquisitions, and amalgamations to
ensure they do not harm competition.
 Advisory Role: The CCI advises the Central and State governments on competition
law and policy matters to foster a competitive environment.
 Imposing Penalties: If a company violates competition law, the CCI can impose
financial penalties or order corrective actions.
 Promoting Competition Advocacy: The CCI plays an active role in spreading
awareness about competition laws and the benefits of fair competition.

3. Jurisdiction of the CCI (Section 32)

 Section 32 grants the CCI extra-territorial jurisdiction, which means that the CCI can
investigate and take action against anti-competitive practices, agreements, or
combinations that are entered into outside India but affect competition within the
Indian market.
 This provision ensures that global mergers or practices that have a direct or indirect
impact on Indian markets fall under the scope of CCI.

4. Role of the Director General (Section 41)

 The Director General (DG), as per Section 16 of the Act, is appointed by the Central
Government and assists the CCI in conducting investigations.
  Section 41: The DG has the power to gather evidence, conduct searches, and carry out
inspections during investigations. The DG can compel companies to provide
documents and other evidence and submit a report to the CCI after completing an
investigation.
 The DG plays a key role in providing factual and evidentiary support to the CCI’s
decision-making process.

5. Role of the National Company Law Appellate Tribunal (NCLAT) (Section 53A to
53T)

 Section 53A establishes the NCLAT as an appellate body to hear appeals against the
orders of the CCI.
 If a company, individual, or organization is dissatisfied with a decision or penalty
imposed by the CCI, they can appeal to the NCLAT under Section 53B.
 The NCLAT has the authority to:
o Overturn the decision of the CCI
o Modify the decision or penalty imposed
o Uphold the decision
 Appeals from the NCLAT can further be made to the Supreme Court of India under
Section 53T.

6. Extra-Territorial Jurisdiction of the CCI (Section 32)

 Section 32 empowers the CCI to inquire into and take action against anti-competitive
agreements, abuse of dominance, or combinations that occur outside India but have an
impact on competition within India.
 This ensures that Indian markets are not adversely affected by global cartels or
mergers that may limit competition, raise prices, or harm consumers in India.

Notable Case Laws Involving CCI

1. Brahm Dutt v. Union of India (AIR 2005 SC 730):

o This case laid the foundation for the CCI’s separation into two bodies: one for
advisory and one for adjudicatory functions. It ensured the CCI’s operational
independence and role in promoting fair competition.
2. CCI v. Steel Authority of India Ltd. & Anr (2010):
o This case involved the CCI’s powers to investigate the abuse of dominant
position. The Supreme Court upheld the CCI’s right to conduct suo moto
inquiries and clarified procedural requirements in competition cases.
3. Rajasthan Cylinders and Containers Ltd v Union of India & Anr (2018):
o This case dealt with cartelization and price-fixing agreements, where the CCI
imposed fines on businesses found guilty of violating competition laws.

Key Concepts
  Appreciable Adverse Effect on Competition (AAEC): Under Section 20(4), the
CCI examines factors like market share, entry barriers, and consumer impact to
determine whether a merger, acquisition, or agreement has an adverse effect on
competition.
 Dominance: The CCI assesses whether a company holds a dominant position under
Section 19(4). Dominance refers to a company’s ability to act independently of
competitive forces and control market outcomes.
 Combination Control: Sections 5 and 6 regulate large combinations (mergers,
acquisitions, or amalgamations). The CCI reviews combinations to ensure they do not
lead to monopoly power or reduce consumer welfare.

Conclusion

The CCI plays a pivotal role in maintaining competitive markets in India by regulating anti-
competitive agreements, investigating abuse of dominance, reviewing large mergers, and
advocating for fair competition. Its powers extend beyond national borders, ensuring that the
Indian market remains competitive even in a globalized economy. The CCI's decisions can be
appealed at the NCLAT and further reviewed by the Supreme Court of India, ensuring
judicial oversight of its operations.

Unit 6: Role of Advocates in Competition Law and Emerging Trends

1. Competition Advocacy

 Definition:
o Competition advocacy involves promoting awareness and understanding of
competition principles among various stakeholders (businesses, consumers,
policymakers).
o Aims to encourage pro-competitive behaviours and compliance with
competition law.
 Importance:
o Helps prevent anti-competitive practices.
o Ensures stakeholders are informed about the benefits of competition in market
dynamics.
 Comparison:
o European Union (EU):
 Advocacy includes public consultations, issuing guidelines, and
involving stakeholders in competition law enforcement.
 Example: The Digital Markets Act (DMA) to regulate gatekeeper
platforms like Google.
 o United States (US):
 Federal Trade Commission (FTC) and Department of Justice (DOJ)
run workshops and issue advisory opinions.
 Focus is on educating industries and ensuring compliance with
antitrust laws.
 Example: FTC's workshop on the impact of big tech on competition.
o India:
 The Competition Commission of India (CCI) conducts seminars,
workshops, and training programs.
 Advocacy initiatives target government bodies, industries, and the
public.
 Example: CCI's awareness drive for e-commerce platforms to comply
with the Competition Act.

2. Role of Lawyers During Search and Seizure

 Overview:
o Searches (dawn raids) are conducted by the CCI when anti-competitive
behaviour, such as cartel formation, is suspected.
o Lawyers ensure the legality of these operations and protect their client’s rights.
 Key Responsibilities:
1. Ensuring Compliance:
 Verify the search warrant’s validity and scope.
 Confirm that the search follows the prescribed legal procedure under
Section 41 of the Competition Act.
2. Advising Clients:
 Counsel clients during the raid to cooperate without self-incrimination.
3. Protecting Privileged Documents:
 Ensure that legally privileged communications (e.g., between client
and lawyer) are not seized.
4. Post-Raid Action:
 Challenge illegal searches in court, if necessary.
Case Example:
o Builders Association of India v. Cement Manufacturers:
 Highlighted the role of legal counsel during raids conducted to
investigate cartelization.
o Rajasthan Cylinders Case:
 Search operations on companies suspected of price-fixing in LPG
cylinder tenders were monitored for procedural compliance.
3. International Trade Law and Competition

International trade law and competition law often overlap as they both aim to promote fair
and efficient markets, though their focus areas differ. Trade law regulates the exchange of
goods and services across borders, while competition law ensures fair practices within
markets.

Intersection:

Competition law complements international trade law by addressing anti-competitive trade

practices and fostering a level playing field in international markets. Key issues include
restrictive agreements, monopolistic behaviors, and practices like dumping.

 Example: A foreign pharmaceutical company entering India must avoid exclusive

agreements with local distributors that prevent competitors from accessing the market.

Key Aspects:

1. Market Access:
o Competition law ensures that foreign players can compete fairly in domestic
markets without facing artificial barriers created by dominant local players or
anti-competitive agreements.
o Example: A South Korean electronics company facing unfair exclusion in the
US market due to local competitors colluding to set high import tariffs could
seek redress through competition law mechanisms.
2. Anti-Dumping Measures:
o International trade law uses anti-dumping measures to counter the practice of
dumping, where companies sell goods below their production cost to eliminate
competition in the importing country.
o Example: If a Chinese textile manufacturer exports clothing to Europe at
unrealistically low prices to outcompete local producers, anti-dumping duties
might be imposed to restore fair competition.
3. Cross-Border Enforcement:
o Cooperation between nations is essential to tackle global anti-competitive
practices, such as cartels operating across jurisdictions.
o Example: If global airline companies coordinate pricing strategies to inflate
ticket prices, competition authorities from multiple countries might collaborate
to investigate and penalize such behavior.
Challenges:

1. Jurisdictional Conflicts:
o Different jurisdictions may have varying definitions of anti-competitive
behavior and inconsistent enforcement mechanisms.
o Example: A merger between two global tech giants may be approved in one
country but blocked in another due to differing regulatory standards.
2. Differing Competition Policies Across Nations:
o Lack of uniformity in competition laws creates challenges in addressing cross-
border issues.
o Example: Practices considered anti-competitive in the European Union, such
as exclusive agreements, may be legally permissible in countries like the
United States.

Global Efforts:

1. International Competition Network (ICN):

o A global forum fostering cooperation among competition regulators to address
cross-border anti-competitive practices.
o Example: ICN assists countries in aligning their competition policies to better
handle multinational cartels.
2. WTO Involvement:
o The World Trade Organization incorporates competition-related provisions
into its trade agreements to reduce anti-competitive practices in global trade.

Example:

 The Boeing-Airbus Subsidy Dispute:

o A long-standing conflict where both the US and the EU alleged that
government subsidies to Boeing and Airbus gave them unfair advantages in
the global aerospace market. This dispute highlighted the intersection of state
subsidies (regulated under trade law) and anti-competitive behavior in the
global market.

4. Intellectual Property Rights (IPR) and Competition Law

Relationship:
  IPR grants creators exclusive rights to protect and commercialize their inventions, but
it can lead to anti-competitive practices if abused.
 Competition law ensures that IPR is not misused to harm competition, thereby
maintaining market fairness.

Indian Context:

 Section 3(5) of the Competition Act, 2002:

o Provides an exemption for agreements that protect IPRs, such as patents,
copyrights, and trademarks.
o However, it prohibits the abuse of IPR that results in anti-competitive effects
in the market.

Example: A pharmaceutical company holding a patent for a life-saving drug cannot impose
excessive licensing fees to block generic competitors.

Key Issues:

1. Refusal to License:
o Denying competitors access to essential IP, especially when such IP is critical
for business operations in the market.
o Example: A software company refusing to license a key coding tool to rivals,
thereby restricting market entry.
2. Patent Pooling:
o Agreements between multiple patent holders to license their patents
collectively. While it can promote efficiency, it may also lead to monopolistic
behavior if used to block competitors.
o Example: A consortium of tech companies forming a patent pool to dominate
the market for 5G technologies and exclude smaller players.
3. Standard-Essential Patents (SEPs):
o Patents essential for industry standards (e.g., Wi-Fi or 4G) must be licensed on
FRAND terms (Fair, Reasonable, and Non-Discriminatory).
o Example: A company owning an SEP for 4G connectivity cannot charge
exorbitant royalties or discriminate between licensees.

Important Cases:

1. Telefonaktiebolaget LM Ericsson v. CCI:

 o Issue: Ericsson was accused of charging excessive royalties for its SEPs
related to mobile communication standards.
o Outcome: The case highlighted the need for FRAND licensing of SEPs.
o Example: Ericsson demanded royalties based on the price of the end product
(mobile phones) rather than the component cost, which was considered unfair.
2. Google India Case:
o Issue: Explored self-preferencing practices and misuse of dominance in online
advertising tied to intellectual property.
o Outcome: Google was scrutinized for leveraging its dominant position in the
search engine market to benefit its own advertising services.
o Example: Google used algorithms that unfairly prioritized its advertising tools
over competitors'.

5. Emerging Trends in Competition Law

The field of competition law is evolving in response to new economic dynamics,

technological advancements, and global challenges. Below are key emerging trends that are
shaping the future of competition law.

Digital Markets:

 The rapid growth of digital platforms has led to increased regulation of major tech
giants, such as Google, Amazon, and Facebook.
 Key Concerns:
o Data Privacy and Competition: How companies use and exploit user data
can impact market fairness and competition.
o Algorithmic Collusion: Algorithms, especially in e-commerce or digital
services, may unintentionally (or intentionally) collude to fix prices or limit
competition.
o Platform Neutrality and Self-Preferencing: Large platforms might favor
their own services or products over competitors, creating an unlevel playing
field.
 Example:
o The CCI's fine on Google for anti-competitive practices in the Android
ecosystem. Google was found to be promoting its own apps and services at the
expense of competitors, restricting competition in the mobile ecosystem.

Sustainability and Competition:

  There is an increasing need to balance environmental, social, and governance
(ESG) goals with competition laws.
 Challenges:
o Collaboration between firms on sustainability issues (e.g., reducing carbon
emissions, transitioning to green technologies) can raise concerns about
collusion and anti-competitive behavior.
 Example:
o Discussions on green collaborations in the automobile industry in Europe,
where car manufacturers have explored joint ventures to produce electric
vehicles but face scrutiny to ensure such collaborations do not breach
competition rules.

Global Collaboration:

 Multi-jurisdictional mergers and anti-competitive cartels have led to stronger

cooperation between competition authorities worldwide.
 Example:
o EU and US regulators working together on the Facebook-WhatsApp
merger, ensuring that the merger would not result in anti-competitive effects
in either jurisdiction. This represents a significant shift towards increased
global cooperation in the enforcement of competition laws.

Role of Artificial Intelligence (AI):

 AI-driven markets, powered by algorithms, present new challenges in competition

law, particularly in the areas of pricing and market coordination.
 Challenges:
o AI systems could potentially engage in tacit collusion by indirectly
coordinating prices or other competitive actions without direct communication
between firms, making it more difficult to detect anti-competitive behavior.
 Example:
o Investigations into algorithm-driven price-fixing in e-commerce platforms,
where AI systems used by competing retailers set similar prices without any
explicit agreement, leading to inflated costs for consumers.

Conclusion

Advocates in competition law are crucial in maintaining fair market practices, especially as
new trends emerge in digital markets, sustainability, AI, and global cooperation. As
businesses continue to navigate these complexities, legal professionals must remain agile,
continuously learning and adapting to new challenges to ensure market fairness and foster
competition.