Competition Commission of India "The aim of the Commission is to make markets work well for consumers through effective

competition. The advantages to various sectors arising out of competition should percolate to consumers and businesses for level playing field, redressal against anti-competitive practices, competitively priced inputs and optimal realization from sale of assets." Ex chairman CCI

Competition Commission of India (CCI) is the competition regulator of India. It was established in 14 October 2003 , under the Competition Act, 2002. The CCI consist of a chairperson and 6 members. The main objective of competition law is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency, which ensures the effective allocation of resources, productive efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes innovative practices. The aim of the Commission is to make markets work well for consumers through effective competition. The advantages to various sectors arising out of competition should percolate to consumers and businesses for level playing field, redressal against anti-competitive practices, competitively priced inputs and optimal realization from sale of assets. Role To achieve its objectives, the Competition Commission of India endeavors to do the following: Make the markets work for the benefit and welfare of consumers. Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of economy. Implement competition policies with an aim to effectuate the most efficient utilization of economic resources. Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law. Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in Indian economy. Components of Competition Act Competition Act, 2002 (Act, for brief) has essentially four compartments: # Anti - Competition Agreements

# Abuse of Dominance # Combinations Regulation # Competition Advocacy

Anti Competition Agreements Firms enter into agreements, which may have the potential of restricting competition. A scan of the competition laws in the world will show that they make a distinction between horizontal and vertical agreements between firms. The former, namely the horizontal agreements are those among competitors and the latter, namely the vertical agreements are those relating to an actual or potential relationship of purchasing or selling to each other. A particularly pernicious type of horizontal agreements is the cartel. Vertical agreements are pernicious, if they are between firms in a position of dominance. Most competition laws view vertical agreements generally more leniently than horizontal agreements, as, prima facie, horizontal agreements are more likely to reduce competition than agreements between firms in a purchaser - seller relationship. An obvious example that comes to mind is an agreement between enterprises dealing in the same product or products. Such horizontal agreements, which include membership of cartels, are presumed to lead to unreasonable restrictions of competition and are therefore presumed to have an appreciable adverse effect on competition. In other words, they are per se illegal. The underlying principle in such presumption of illegality is that the agreements in question have an appreciable anti-competitive effect. Abuse of Dominance Dominant Position has been appropriately defined in the Act in terms of 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; or (ii) affect its competitors or consumers or the relevant market, in its favour. Section 4 enjoins, No enterprise shall abuse its dominant position. Dominant position is the position of strength enjoyed by an enterprise in the relevant market which enables it to operate independently of competitive forces prevailing in the market or affects its competitors or consumers or the relevant market in its favour. Dominant position is abused when an enterprise imposes unfair or discriminatory conditions in purchase or sale of goods or services or in the price in purchase or sale of goods or services. Again, the philosophy of the Competition Act is reflected in this provision, where it is clarified that a situation of monopoly per se is not against public policy but, rather, the use of the monopoly status such that it operates to the detriment of potential and actual competitors.

At this point it is worth mentioning that the Act does not prohibit or restrict enterprises from coming into dominance. There is no control whatsoever to prevent enterprises from coming into or acquiring position of dominance. All that the Act prohibits is the abuse of that dominant position. The Act therefore targets the abuse of dominance and not dominance per se. This is indeed a welcome step, a step towards a truly global and liberal economy.

The Act on Combinations Regulation The Competition Act also is designed to regulate the operation and activities of combinations, a term, which contemplates acquisitions, mergers or amalgamations. Thus, the operation of the Competition Act is not confined to transactions strictly within the boundaries of India but also such transactions involving entities existing and/or established overseas. Herein again lies the key to understanding the Competition Act. The intent of the legislation is not to prevent the existence of a monopoly across the board. There is a realisation in policy-making circles that in certain industries, the nature of their operations and economies of scale indeed dictate the creation of a monopoly in order to be able to operate and remain viable and profitable. This is in significant contrast to the philosophy, which propelled the operation and application of the MRTP Act, the trigger for which was the existence or impending creation of a monopoly situation in a sector of industry. The Act has made the pre-notification of combinations voluntary for the parties concerned. However, if the parties to the combination choose not to notify the CCI, as it is not mandatory to notify, they run the risk of a post-combination action by the CCI, if it is discovered subsequently, that the combination has an appreciable adverse effect on competition. There is a rider that the CCI shall not initiate an inquiry into a combination after the expiry of one year from the date on which the combination has taken effect. Competition Advocacy In line with the High Level Committee's recommendation, the Act extends the mandate of the Competition Commission of India beyond merely enforcing the law (High Level Committee, 2000). Competition advocacy creates a culture of competition. There are many possible valuable roles for competition advocacy, depending on a country's legal and economic circumstances. The Regulatory Authority under the Act, namely, Competition Commission of India (CCI), in terms of the advocacy provisions in the Act, is enabled to participate in the formulation of the country's economic policies and to participate in the reviewing of

laws related to competition at the instance of the Central Government. The Central Government can make a reference to the CCI for its opinion on the possible effect of a policy under formulation or of an existing law related to competition. The Commission will therefore be assuming the role of competition advocate, acting proactively to bring about Government policies that lower barriers to entry, that promote deregulation and trade liberalisation and that promote competition in the market place. Perhaps one of the most crucial components of the Competition Act is contained in a single section under the chapter entitled competition advocacy.

CCI: DLF and NSE abuse of dominance

The Director General (DG) in charge of investigations at the Competition Commission of India (CCI) has found that that real estate company DLF Limited abused its dominant position, building two Gurgaon based projects, without acquiring required approvals or seeking clearance from the Haryana Government for changes that were made to the original plans. On the other hand, DG has also found that the National Stock Exchange (NSE) had unfairly stifled competition in the trading of equity derivatives to the detriment of its older, but smaller rival Bombay Stock Exchange (BSE). DLF on allegations of anti-consumer and anti-competitive practice DG has the report on its finding on the two development plans in Gurgaon comprising of DLF Belaire and DLF Park Place. Complaint was filed by an apartment buyer claiming delays and frequent change in plans. Senior Advocate Ashok Desai is appearing for DLF and is briefed by Advocate Ravinder Narain of Rajinder Narain and Co. Advocate M.L. Lahoty is representing the apartment owners association. Speaking to Bar & Bench, M.L. Lahoty said, This is the first time a developer has been hauled up by the CCI. DLF was building 2,230 apartments in buildings known as Belaire and Park Place in Gurgaon and the project is worth Rs. 4,500 crore. DLF has charged exorbitant late fees and interest, for delayed payments made by the buyers and the agreement between the apartment owners and DLF was also, extremely one sided. DLF has not built the project in time and in turn has further delayed the construction time. DLF has announced the project and entered into Agreements without even having its building plans / lay-out plans been approved /

sanctioned by the competent authorities. In fact, hundreds of crores of rupees were illegally collected by DLF as well. It has violated building restriction norms and although it was sanctioned 19 floors, it went ahead and built 29 floors thereby reducing the super area, common areas and facilities". The DG has issued strict orders and has said in its investigation report about the abusive practices of the developers. The CCI will issue an order on the 6th of January. The CCI also has passed serious observations against the town planner, who was made a party to the petition. NSE stifling the BSE The NSE has been accused of dominant position for the second time, based on a recent report by the DG which concludes that the NSE had tried to stifle competition in the currency segment by waiving transaction fees. NSE vs. BSE: The NSE and BSE are both at each others neck this time. According to media reports, the DGs report states that It can, therefore, be safely concluded that the waiver of transaction charges has nothing to do with the genesis of NSE and the reasoning of NSE, that it has been done to promote and develop a healthy market cannot be accepted. The DG report also alleges, that the NSE has used tactics to harm competition by using its dominant position in stock exchange services and has also protected its leadership in the currency derivatives segment by using monopoly revenues from other segments, in violation of the provisions of Section 4 of the Competition Act, concludes the report, asking CCI to consider taking requisite remedial measures, reports the Mint. Based on the report, the commission is holding a hearing today, i.e. 15th December. NSE is represented by Amarchand Mangaldas in both instances (i.e. against the BSE and MCX), with a team led by Senior Partner Pallavi Shroff. History of NSE with MCX: In the first instance of abuse of dominance, the CCI in March, 2010 had directed the DGs office to investigate pricing practices at NSE, and submitted a report based on a complaint by MCX Stock Exchange Ltd. (MCX), which alleged predatory pricing by NSE in the currency derivatives segment. MCX had been stubbed previously in September by the Securities and Exchange Board of India (SEBI) in its offer to trade in segments like equities and equity derivatives. Later in October, the NSE moved the Delhi High Court and asked for extension of time to file a reply to the CCI on the DGs report, which the Court granted to NSE to reply by November 1, reports theET. According to the Press Trust of India, the CCI is believed to have recommended action against the NSE for abusing its dominant position in currency derivatives trade segment. The DG has asked the Commission to take action against the NSE under Sections 27 and 28 of the Competition Act which is granting orders and division of enterprise enjoying dominant position.