Competition Act

2002
 Need for the Act
• The Act seeks to provide the legal framework and
tools to ensure competition policies are met and
to prevent anti-competition practices and provide
for the penalisation of such acts.
• The Act protects the free and fair competition
which protects the freedom of trade, which in turn
protects the interest of the consumer.
• The Act seeks to prevent monopolies and also to
prevent unnecessary intervention by the
government
 Amendments
• To replace the Monopolies and Restrictive
Trade Practices Act, 1969.
• It is in effect to govern Indian competition law.
• After its enactment The Competition Act, 2002
has been amended twice, The Competition
(Amendment) Act, 2007 and The Competition
(Amendment) Act, 2009.
• Latest Amendment Bill, initiated in 2018, draft
Bill tabled in Feb. 2020
 Objectives of the Competition Act, 2002
• To prevent practices having adverse effect on
competition
• To promote and sustain competition in the market
• to provide the framework for the establishment of the
Competition Commission of India - CCI
• to prevent monopolies
• to ensure freedom of trade carried on by other
participants in markets in India
• to protect the interest of the consumer
• to regulate the operation and activities of
combinations (acquisitions, mergers & amalgamation).
 Features of Competition Act 2002
• Prohibition of certain agreements, which are
considered to be anti-competitive in nature
• Prohibition of abuse of dominant position
• Regulation of combinations
• Entrust Competition Commission of India - CCI
the responsibility of undertaking competition
advocacy, awareness and training about
competition issues
 Anti-Competitive agreements – Sec 3
“No enterprise or association of enterprises or
individuals or association of individuals may
enter into an agreement regarding
production, supply, distribution, storage,
acquisition or control of goods or provision of
services which may adversely affect the
competition in the Indian market”.
Any such agreement is void.
 AAEC agreements - Meaning

Agreements that are made by two or more

companies competing in the same market, to
fix prices or reduce stocks etc, so as to
manipulate the market favourably for them
are anti competitive agreements.
This has the effect of the companies reducing
the competition in the market which
adversely affects the end consumer.
• AAEC agreements - Appreciable Adverse Effect
on Competition agreements are void
 AAEC agreements
Any agreement between competitors that
1. Directly/indirectly determines purchase/sale price
2. Limits/controls production, supply, technical
development, investment or provision of services
3. Shares market on the basis of geographical area, type
of goods/services, no of customers etc
4. Directly/indirectly result in bid rigging or collusive
bidding.
5. If such agreement increases efficiency in production,
supply, distribution, storage, acquisition or control of
goods or provision of services, shall not be considered
to be an anti-competitive agreement.
 AAEC agreements
• Tie-in arrangements
• Exclusive Supply agreement
• Exclusive Distribution Agreement
• Refusal to deal
• Resale price maintenance
 Abuse of dominant position (Section 4)
Dominant position means a position of strength,
enjoyed by an enterprise, in the relevant market,
in India
The Act prohibits abuse of dominant position by
any enterprise or group:
a) imposes unfair or discriminatory— (i) condition
in purchase or sale of goods or services; or (ii)
price in purchase or sale (including predatory
price) of goods or service
b) Limits or restricts production of
 Abuse of dominant position – contd…

c) Practices resulting in denial of market access

d)makes conclusion of contracts subject to

acceptance by other parties of supplementary
obligations that has no connection with the subject
of such contracts;

(e) uses its dominant position in one relevant market

to enter into, or protect, other relevant market.
 Combinations - Sec 5
• Combination within the Competition Law is
the merger between two or more enterprises
or firms or the business sector acquisitions
(such as companies or firms) by other business
enterprises.
• The Government controls combinations or
mergers and acquisitions within the country to
promote competition and thereby seeing to
that the small scale establishments are not
overshadowed and swallowed by more
reputed industries.
 Types of Combinations
• Horizontal – merging of enterprises or firms with identical
level of production process
• Non- Horizontal - Vertical – combining of business firms
engaged in different phases of the manufacture and
distribution of a product into an interacting whole.

Conglomerate – combining of business firms that provide

different services and goods.

A combination can be held valid under the purview of the

Competition Act 2002 only if the newly acquired or merged
enterprise passes the threshold pertaining to the assets and the
 Section 6: Regulation of Combinations
No person or enterprise shall enter into a combination
which cause or is likely to cause an appreciable adverse
effect on the competition within the relevant market in
India and such a combination is shall be void.

Prior Notice to Competition Commission of India

• A notice disclosing the details of the proposed
combination, within 7 days of-
• approval of proposal relating to merger or amalgamation,
as referred in section 5 of the Act.
• execution of any agreement or documents for acquisition
referred to in section 5 of the Act.