INTRODUCTION

• In India 1st competition law was enacted in 1969, i.e. Monopolies and restrictive trade
practices act, 1969 ['MRTP act, 1969’].
• The main goals of the MRTP act was to encourage fair play and fair deal in the market
besides promoting healthy competition.
• They seek to afford protection and support consuming public by reducing monopolistic,
restrictive and unfair trade practices from the market
• The Central Government appointed high level committee under the chairmanship of Mr.
Raghavan
• The committee presented its report on may 2000, after certain amendments the parliament
passed the new law, called Competition Act 2002. The act came into force on January
2003.
• The act was amended by the Competition Amendment Act, 2007 and became fully
operational from 1 June 2011,
•The provisions relating to competition advocacy was notified in 2003;
•The provisions regulating anti-competitive agreements and abuse of dominance were
notified with effect from 20 May 2009;
•The provisions regulating mergers and acquisitions were notified on June 2011.
• Competition Act comprises of 66 sec.
• The framework of Competition Act 2002 has essentially four compartments:
1.Anti- competitive agreements [ section 3]
2.Abuse of dominance [ section 4]
3.Combination regulation [ section 5 & 6]
4.Competition advocacy [ section 49]
 OBJECTIVES OF ACT

Facilitate & promote competition

Establish a commission to prevent practices having adverse effect on
competition
Promote and sustain competition in markets
Protect the interests of consumers
Ensure freedom of trade in the Indian markets
 WHAT IS COMPETITION

• It is a situation in a market in which firms or sellers independently

strive for the buyers patronage in order to achieve a particular
business objectives.
• Buyers prefers to buy product at a price that maximizes his benefits
whereas the seller prefers to sell the product at a price that
maximizes his profit.
• Self interest but outcome mostly beneficial for the society.
• The process of rivalry between firms striving to gain sales and
make profits.
Types:
1. Price competition: Winning customers by lowering prices.
2. Non-price competition: Winning customers by advertising, using
sales promotion tools etc.

Ways of Competition:
3. Fair Competition: Producing good quality goods, becoming cost
efficient, optimising the use of resources etc.
4. Unfair Competition: Fixing price with the rivals, predatory pricing,
misleading advertisements etc.
 DEFINITIONS UNDER COMPETITION ACT, 2002
• “Acquisition” sec 2(a): means, directly or indirectly, acquiring or agreeing to acquire
(i) shares, voting rights or assets of any enterprise; or
(ii) control over management or control over assets of any enterprise.
• “Cartel” sec 2(c) : includes an association of producers, sellers, 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;
• Predatory Pricing- It means the sale of goods or provision of services, at a price below
cost of production to reduce competition or eliminate the competitors. The main
objective of such price is to reduce competition or to eliminate the competitors.
• Penetration pricing : penetration pricing is a marketing strategy used by businesses to
attract customers to a new product or service by offering a lower price during its initial
offering.
Advantages of penetration pricing :
1. Adoption of products,
2. Not much competition in the initial phase
3. Good will among early customers
4. Cost efficiency
5. Competitors are kept at bay
6. Channel benefit
 Definitions under MRTP act, 1969

Monopolistic Trade Practices – the activities undertaken by big business houses by

abusing their market position that hamper or eliminate healthy competition in the market.
Such practices are anti-consumer-welfare.
Restrictive Trade Practices– activities that block the flow of capital or profits in the
market. Some firms tend to control the supply of goods or products in the market either
by restricting production or controlling the delivery. MRTPA discourages and prevents
the firms from indulging in rtps.
Unfair Trade Practices – sec (36A) any trade practice which, for the purpose of
promoting the sale, use or supply of goods or for the provision of any services, adopts
one or more of the practices thereby causing loss or injury to the consumer of such goods
or services.
• The following will constitute unfair trade practices:
1. Misleading advertisement and false representation
2. Bargain sale, bait and switch selling: Include advertisements to supply commodities at a
bargain price. But the intention is not to offer adequately reasonable quantities to cater the
market.
3. Offering gifts or prizes: Gifts or price offer is creating an impression that it is being given
free of charge. But the cost of the gift is covered by the price paid by the consumers.
4. Safety sub-standard products: Sub-standard products mean those commodities which do
not conform to the standards prescribed by competent authority. Generally, standards are
prescribed in relation to performance, composition, contents, construction etc. Safety sub-
standard products may injure the person using it.
5. Hoarding or destruction of goods: Unfair trade practices include hoarding or destruction of
goods or refusal to sell the goods to raise the price of those related goods.
 ANTI-COMPETITIVE AGREEMENTS SEC (3)
• Sec 3 provides for prohibition of entering into anti-competitive agreements.
• Sec 3(1) : 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 within India.
• Sec 3(2): any agreement entered into in contravention of the provisions contained in
subsection (1) shall be void.
• Essential Ingredients:
1 There should be an agreement;
2. The agreement should cause an appreciable adverse effect on competition in the
market in India.
• How to determine AAEC?
• The act provides that any agreement including cartels, which-
• Directly or indirectly determines purchase or sale prices;
• Limits production, supply, technical development or provision of
services in market;
• Results in bid rigging or collusive bidding
• Shall be presumed to have an appreciable adverse effect on
competition in India
• Anti-competitive agreements are further classified into horizontal agreements and vertical
agreements.
• Horizontal agreements Sec 3(3): agreement for the co-operation between two or more
competing businesses operating at same stage of production chain in the same market.
These agreements have a direct negative impact on effective competition and prices of
commodities in the market. Thus, they are void per se.
 The horizontal agreements are further divided into four kinds:
1. Price fixation
2. Output/production control
3. Market sharing
4. Bid rigging
• VERTICAL AGREEMENTS SEC 3(4) - vertical agreements are those agreements which
are entered into between two or more enterprises operating at different levels of production.
• The ‘per se’ rule as applicable for horizontal the agreements does not apply for vertical
agreements. Hence, a vertical agreement is not per se anti-competitive or does not have
an appreciable adverse effect on competition.
• The following are the vertical agreements which, if found to have an AAEC on the market
are considered to be an anti-competitive-
1. Tie-in arrangement: If you want the duster you need to take the chalk from me
2. Exclusive supply agreement
3. Exclusive distribution agreement
4. Refusal to deal
5. Resale price maintenance
• Tie-in arrangement” includes any agreement requiring a purchaser of goods, as a condition
of such purchase, to purchase some other goods
• “Exclusive supply agreement” includes any agreement restricting in any manner the
purchaser in the course of his trade from acquiring or otherwise dealing in any goods other
than those of the seller or any other person;
• “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
• “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
• “Resale price maintenance” includes any agreement to sell goods on condition that the
prices to be charged on the 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.
Anti-competitive agreements and exemption :
Sec 3(5): 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.
Any agreement protecting rights conferred under:
1. Copyright Act, 1957
2. Patent Act, 1970
3. Trademarks Act, 1999
4. Designs Act, 2000
5. Geographical Indication Act, 1999
6. Semi-conductor Integrated Circuits Layout-design Act, 2000
 ABUSE OF DOMINANT POSITION SEC(4)
• Sec 4 prohibits abuse of dominant position by any enterprises.
• Under the Competition Act, 2002 dominant position is defined as the position of
strength, enjoyed by an enterprise, in the relevant market in India, which enables
it to :
i) operate independently of competitive forces prevailing in the relevant
market;
ii) affect its competitors or consumers or the relevant market in its
favour.
• A dominant firm is a firm having market power substantial enough to act
independent of the competitive forces that prevail in the relevant market.
• Identification of abusive use of dominant position [section 4(2)]
• There are five kinds of abusive use of dominant position-
1. Unfair or discriminatory trade practices
2. Limiting production or technical or scientific development
3. Denial of access to market, barriers to entry and expansion
4. Predatory pricing
5. Protection of other markets– when an enterprise uses its position in a
relevant market to enter into another market, then there is an abuse of
dominant position.
 Stages To Determine Abuse Of Dominant Position
• There are primarily three stages in determining whether an enterprise has
abused its dominant position :-
i) the first stage is defining the relevant market;
ii) second stage is determining whether the concerned under-taking
/enterprise/firm is in a dominant position has substantial degree of market
power in the relevant market;
iii) third stage is the determination of whether the undertaking in a dominant
position having substantial market power has engaged in conduct
amounting to abuse of dominant position.
• Relevant market is a tool to identify and define the boundaries of
competition between firms.
• Relevant market is defined in sec 2 (r) exhaustively to mean market
which may be determined by the competition commission of India with
reference to either or both of-
The relevant product market ; sec 2 (t)
The relevant geographic market. Sec 2 (s)
• The relevant market is area of effective competition where supply and
demand interact.
• Relevant Product Market Sec 2(t): all products or services which are
regarded as interchangeable or substitutable by the consumer by reason of
the products characteristics, their prices and their intended use.
E.g. Coca cola may be a substitute of Pepsi but a fruit pulp juice may not be.

• Relevant Geographical Market Sec 2(s): The geographic dimension within

which competition can take place in the relevant market can be local ,National,
International or global depending upon the product , Here pattern of
consumption , Transportation are important factors.
 REGULATION OF COMBINATION (SECTION 5
TO 6)
• The acquisition of one or more enterprise by way of merger or
amalgamation or control over enterprise is regarded as combination.
• Combinations above the defined monetary thresholds require filing and
prior approval of the cci before they can be made effective. CCI has powers
to investigate combinations and modify/reject them.
• Exemption of notification to CCI
Under the combination regulations, decision taken for the amalgamation,
mergers, acquisition prior to June 1, 2011 have been exempted from
notifying to CCI.
• Regulation of combination (section 6): any combination which has an
adverse effect on competition can be declared void by the CCI.
• Procedure to be followed for the combination :
Any person or enterprise proposes to enter into combination shall give notice
to competition commission in prescribed form within 30 days to
•Approval of the board of directors of proposal relating to merger or
amalgamation
•Execution of any agreement relating to acquisition or acquiring control
No combination shall come into effect until 210 days from the day on which
notice has been given to commission or order has been passed
Procedure for investigation into combination by CCI
Step 1
• The CCI will issue a notice to the parties to the combination to reply within 30days of
such combination for not declaring it as void the CCI will direct the director general to
submit a report on combination, on receipt of such report, if the CCI is satisfied that the
combination has an adverse effect on competition, it can pass the following order
Step 2
•It can direct the combination shall not be in effect
•If the adverse effect can be rectified by suitable modification the CCI will order such
modification should be performed by the parties. ( In this case the parties shall submit the
modified combination within 30 working days if the CCI agrees with the modification, it
can accept the combination)
Step 3
• If the CCI is not satisfied by the modification effected by the parties, it can
grant 30 days further to the party to accept that modification proposed by
the commission
Step 4
• If the party still fails to accept the modification, the commission can
declare the combination as void as well as it can impose such penalties
mentioned in the act ( 1 % of turnover)
 COMPETITION ADVOCACY SEC 49
• The commission shall make suitable measures for:
1. The promotion of competition advocacy,
2. Creating awareness and
3. Imparting training about competition issues
Central government may obtain opinion of CCI on the possible effect of the policy on
competition while formulating competition policy
•On receipt of deference, commission is required to give its opinion to central
Government within 60days
•Opinion given by commission is not binding upon the central Government
COMPETITION AUTHORITIES IN INDIA
• POWERS OF CCI:
1. The commission shall have the powers to regulate its own procedure. [Section 36 (1)
2. Commission has a power of civil court [ section 36 (2)
3. Commission may call the experts on respective field i.e. Economics’, commerce, accountancy
which may be necessary [ section 36 (3)]
4. Direct any person [ section 36 (4)] : Produce book , accounts or other documents or Furnish
information about trade in procession of such persons
5. Issue cease and desist orders
6. Impose fines and penalties (section 27)
7. Declare agreement having appreciable adverse effect on competition (AAEC) void
8. Direct that combinations shall not take effect
9. To order demerger
• Competition Appellate Tribunal
1. Central government shall by notification establish competition appellant
tribunal
2. Any person aggrieved by the order of the commission may appeal to COMPAT
within 60days.
3. COMPAT may accept the petition after 60days if it is satisfied that there was
sufficient cause for not filling appeal with in specified time
4. COMPAT may confirm/modify/setting side decision of commission after
giving opportunity to both parties
5. COMPAT shall send copy of order to parties to appeal
6. COMPAT shall dispose the appeal within six months
 RKG HOSPITALITIES PVT. LTD V. ORAVEL STAYS PVT. LTD., I.E. OYO
ROOMS

RKG hospitalities Pvt. Ltd (informant) alleged that OYO is in dominant position in the
RM of service providing budget hotels to customers through online booking, and it
imposes unfair and one sided terms on its partners through the said position.
The competition commission of India in its order dated July 31, 2019 held that Oravel
stays Pvt. Ltd., I.E. OYO rooms, is not acting in violation of the competition act 2002.
Terms of the agreement signed between the parties, too are fair and justified in the
business circumstances it is signed.
 AJAY DEVGAN FILMS V. YASH RAJ FILMS LTD.
The informant approached the CCI that the opposite party had made an offer to numerous single screen theaters
for its films ‘EK THA TIGER’[ETT] (scheduled to be released in august) and ‘JAB TAK HAI JAAN’[JTHJ]
(scheduled to be released for Diwali). The informant’s movie ‘son of sardar’ was also scheduled to be released
during Diwali. The informant urged that ETT was a big budget film and thus was bound to succeed at the box
office. The informant alleged  violation of section 3(4)(a), 3(4)(b) and 3(4)(d) [anti-competitive agreement] and
also section 4(2)(a) of the act [abuse of dominant position].
After due consideration, the Commission stated the following reasons for concluding that there was no AAEC
appreciable adverse effect on competition (AAEC):
• The single screen theatres took a competitive decision in their own interest while entering into the agreement.
• The informant is free to exhibit its film on multiplexes and on those single screen theatres which did not enter
into agreement with opposite parties.
• The release of film can be preponed or postponed as per the availability of screens by a distributor.

COMPAT was of the view that there was no appreciable adverse effect on competition in India.
 GOOGLE INC. V. CCI
• A complaint was filed before the CCI that Google Inc. Has abused its dominant position in
the internet advertising space by promoting its vertical search services like YouTube, google
news, google maps, etc. In other words, these services would appear predominantly during a
search result on google, irrespective of their popularity or relevance. The main issue was
whether an administrative body like CCI had inherent powers to review or recall its order
passed under section 26(1) in the absence of any specific provisions in the competition act,
2002?
• The competition commission of India has found search giant google guilty of abusing its
dominant position in India and imposed a penalty of Rs 135.86 crore, according to the order
posted on its website. The penalty amounts to 5 percent of Google's average total revenue
from India operations in the last three years.