COMPETITION LAW

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 Plan of Presentation
 What is Competition Law
 Benefits of Competition
 Applicability of Competition Law
 Competition Act, 2002
 Enforcement of Competition Law: Powers of the Commission
 How to file Information
 How to not fall foul of Competition Law: Dos and Don’ts

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 What is Competition Law?
 The law which governs the conduct of enterprises in the market.

 The law that penalises cartels and prohibits abuse of dominance.

 The law that governs big mergers.

Objective: To protect and promote fair competition in markets in India.

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 BENEFITS OF COMPETITION
Mobile Segment
– From Rs.32 per
minute to 1 paisa
for 2 seconds Two Wheelers –
O/g from 30 kmpl
to 100 kmpl

…and choices
lead to consumer
achieving better
India big market, quality at lower
leaders in growth prices eg.
airtravel

Witnessed across
goods, be it
electronics,
mobiles,
automobiles….
Encourag
es
Innovatio
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 Applicability
 All enterprises including public sector enterprises and
Department of

Government engaged in commercial activities.

 Both goods and services

LIMITATION: Law is not applicable to sovereign functions and functions relating

to:

Atomic Energy-Currency-Defence-Space

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Competition Act,
2002

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Salient Features of the Act

Competition
Act

Enforcement Advocacy

Anti-
Abuse of Combinations
competitive
Dominance Regulations
Agreements 7

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 Anti-competitive Agreements
Anti-
Competitive

Agreements

Horizontal

Vertical

Horizontal: The producers competing for the similar good or service

i.e. at the same level of value chain may agree to:
Fix prices to avoid price competition; limit production and supply
to create artificial scarcity in the market and to charge excessive
prices.
Allocate markets, and
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 Price Fixing Agreements
 Price fixing: For Example; if there are only 3-4 Chocolate producers in
Delhi and they agree to charge same price from the consumers;
consequently, consumers will not have any choice and they have to
buy Chocolate at higher prices.

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 Allocation of Markets
Sharing of market: For Ex. If there are only 5 cable operators in Delhi and they
divide the whole city in 5 parts and they agree not to enter into one another’s
areas. Consumers will not have any choice.

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 Limiting Production
Limiting production & Supply: For Ex. If the producers or suppliers of milk &
dairy products in Delhi agree to reduce production or supply; that will results
into higher prices of the milk & dairy products in Delhi. Consumers have to pay
more.

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 Bid Rigging
 Advance agreements about who is going to win a particular bid
 Bid rigging is harmful because it
Lets decide
Eliminates or reduces competition who will win
Artificially raises prices
Generally found to increase prices
between 20%-40%

CCI has imposed penalties in various cases related to Bid Rigging.

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 Vertical Agreements
The Agreements entered between players operating at
different levels of value chain.
Example: Tie In and Bundling
 Suppose a consumer wants to have a cooking gas connection but he is
given connection on the condition that he has to purchase cooking gas
stove also, it becomes an instance of bundling.
Forcing consumers to buy another product alongwith the required

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 Abuse of Dominance
 What is Dominance?
 Ability of an enterprise to behave independently of the market forces. Or
Strength of an enterprise to affect its competitors or consumers in its
favor.
 What is abuse of dominance?
 When an enterprise uses its dominant position in the market in an
exploitative manner.
 Not dominance, but its abuse is prohibited

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Is it fair competition?

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….The result is
clear.
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 Contd…
If the weak player is another producer, dominant producer
would throw him out of the market---Decrease in no. of
producers and degree of competition---Decrease in Production--
--Increase in prices …..consumer welfare decreases.
If the weak player is a consumer---Producer dictates the
decision making--- Consumer given no say----Prices may not be
proportionate to quality---consumer welfare decreases.

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 Instances of Abuse of
Dominance
Imposes unfair or discriminatory conditions in purchase or sale
Imposes unfair or discriminatory price
Limits/ restricts production or supply of goods or service
Limits / restricts technical development
Denies market access

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 Combinations Regulation
 Examine potential effect of a Merger/Amalgamation/Acquisition on
Competition in market.

 The major considerations are the change in ability of the combined

enterprise to increase prices of goods, post merger and the impact
on consumer choice.

 All combinations meeting thresholds as prescribed, need pre

approval of CCI

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POWERS OF THE
COMMISSION

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 What Orders the Commission
Can Pass? Cartel
 The penalty on cartel is up to 3 times of the profit earned OR
up to 10% of the turnover of each member for each year of
continuance of such agreement, whichever is higher.

 After the inquiry, the commission may direct the members of

the cartel to discontinue and not to re-enter in anti-
competitive agreement.

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 What Orders the Commission
Can Pass? Agreements & AoD
 The Penalty can be up to 10% of the average turnover for the
last 3 preceding financial years upon each of such persons or
enterprises which are parties to such agreement or abuse.

 The Commission may direct division of enterprise in case it is

found to abuse its dominant position in the market to ensure
that such enterprise does not abuse its dominant position.

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 APPEAL PROVISIONS
National Company Law Appellate Tribunal (NCLAT)

 To hear and dispose of appeals against the specific order of the

Commission.

 An appeal has to be filed within 60 days of receipt of the

order /
direction / decision of the Commission.

 A person aggrieved with the direction, decision or order of the

NCLAT can appeal to the Supreme Court of India within 60 days
from the date of communication of the direction, decision or
order.
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 HOW TO FILE
INFORMATION
?
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 Who can Provide Information?
 Any person, consumer, consumer association or trade association
can provide information.

 Central govt. State Govt. or salutatory authority can

make a reference.

 or the Commission can take Suo-Moto action.

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 What Information can be Filed?
The information can be filed on;

 Anti-competitive activities

 Abuse of dominant position

 Or a Combination

Which causes or likely to cause an appreciable

adverse effect
on competition in the markets in India.

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 INQUIRY-
Receipt of PROCESS
Information or Suo-moto or
Reference

Preliminary Analysis; if commission is of the opinion that there is

Prima Facie case

Direction to the DG for detailed

investigation

DG submits investigation reports to the commission within a

specific time period ; if Commission feels so it may ask DG for
further investigation

Commission sends DG report to both the parties for inviting their

comments and objections

After further analysis and hearing

2 the concerned parties the
commission pass appropriate
7 orders
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 How to not fall foul of
competition law: Don’ts

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 How to not fall foul of
competition law: Don’ts
 Price fixing: Do not enter into an agreement, however informal it may
seem, that fixes the price. This is a classic cartel behavior.

 Market sharing: Do not divide territories or customers between you

and your competitors.

 Information regarding future pricing: Do not exchange

commercially sensitive information with your competitors such as your
price and cost etc.

 Agreeing to limit sales or output: Do not agree to production quotas or

anything that could lead to a limitation of sales or output.

Leniency Provisions

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 Conclusion
 Competition Act is People’s Act that aims at maximizing social
welfare by protecting consumers interest.

 Contributes to the sustainable and inclusive development of our

country.

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