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LAW PROJECT

Need for Competition Act in an era of globalization


where the world at large is a single platform for
carrying out trade and commerce
Under the Guidance of

Prof.

INDEX

Competition is an evasive term.


Level of competition does not depend upon number
of players in an industry but degree of contestability.
Benefits:
Companies: Efficiency, cost-saving operations, better
utilization of resources, etc.
Consumer: Wider choice of goods at competitive
prices.
Government: Generates revenue

MRTP (Monopolistic and Restrictive Trade Practice)


Act 1969 came into force from 01st June 1970.

The MRTP Act was extended to the whole of India


except Jammu and Kashmir.

MRTPACT,
ACT,1969
1969
MRTP

OBJECTIVES OF THE MRTP ACT


Prevention of concentration of economic power
Control of monopolies
Prohibition of Monopolistic Trade Practices (MTP)
Prohibition of Restrictive Trade Practices (RTP)
Prohibition of Unfair Trade Practices (UTP)

MRTPACT,
ACT,1969
1969
MRTP
Monopolistic Trade Practices
Limiting or controlling production, supply or
distribution of goods or services.
Maintaining price of goods or charge or service at an
unreasonable price.
Unreasonably preventing or lessening competition.
Unreasonably increasing prices and cost of goods or
services.

MRTPACT,
ACT,1969
1969
MRTP
Restrictive Trade Practices

Refusal deal (Newspaper)


Tie-up sale (Toothbrush & Toothpaste)
Exclusive dealings (Coke & Mc.D)
Price discriminations (Lawyer)
Resale price maintenance
Area restriction

MRTPACT,
ACT,1969
1969
MRTP
Unfair Trade Practices

False representation
False offer of bargain price
Free gifts offer and price schemes
Non-compliance of prescribed standards
Hoardings
Case: Chevrolet Forester

COMPETITIONACT,
ACT,2002
2002
COMPETITION
Components of COMPETITION ACT, 2002

Anti-Competitive agreements (Sec 3)


Abuse of Dominance (Sec 4)
Regulation of Combinations (Sec 5,6)
Competition Advocacy (Sec 49)

COMPETITIONACT,
ACT,2002
2002
COMPETITION
Anti-Competitive agreements (Sec
3)
Horizontal agreements
Vertical agreements

COMPETITIONACT,
ACT,2002
2002
COMPETITION

Horizontal agreements

Same stage of production chain


Substitute products
Directly or indirectly determines prices
Most pernicious form-cartelization
Eg: price fixing, bid rigging

COMPETITIONACT,
ACT,2002
2002
COMPETITION

Vertical agreements

Different stages of the production chain


Rule of reason
Refusal to deal
Tie in agreements
Eg: printer along with paper
Case : Govt. of India vs Ms. Puja Enterprises

COMPETITIONACT,
ACT,2002
2002
COMPETITION
Abuse of Dominance (Sec 4)
Dominance
product market : substitute products or
services
Geographic market : products can be supplied
at little above the current prices
Predatory pricing
Unfair pricing
Entrance to other markets
Case : Belaires Owners Association vs DLF

COMPETITIONACT,
ACT,2002
2002
COMPETITION

Regulation of Combinations (Sec 5,6)


Combinations include mergers, amalgamations and acquisition
of control, shares, voting rights or assets.
Entering into a combination which causes adverse effect on
competition within the relevant market in India is prohibited
Types Of Combination.
Horizontal Combination
Vertical Combination
Conglomerate Combination

Case : Jet Airways Vs. Etihad

COMPETITIONACT,
ACT,2002
2002
COMPETITION
Thresholds for Combinations under the Act
In India

In India
&
Outside

Applicable
To
Individual

Assets

Turnover

Rs.1,500 cr.

Rs.4,500 cr.

Group

Rs.6,000 cr.

Rs.18,000 cr.

Assets

Turnover
Minimum
Indian
Total
Component out
of Total

Individual
Parties

Minimum
Total
Indian
Component
$750 m

Group

$3 bn

Rs.750 cr. $2,250 m

Rs.2,250 cr.

Rs.750 cr.

Rs.2,250 cr.

$ 9 bn

COMPETITIONACT,
ACT,2002
2002
COMPETITION

Competition Advocacy (Sec 49)


Foster conditions leading to competitive market
Develop relationship with the Ministries and Departments
of the Government
Encourage debate on competition and promote a better
and more informed economic decision making
Prevent practices having adverse effect on competition
Enhanced by establishing good media relations

MRTP Act
1.

Based

on

the

Competition Act

pre-reforms Based

on

the

post-reforms

scenario

scenario

2.

Frowns upon dominance

Frowns upon abuse of dominance

3.

No regulation of combinations

Provides

for

regulation

of

combination
4.

Has no advocacy role

Provides for advocacy

5.

No power to impose penalty

Power

to

impose

deterrence factor

penalty

Establishment

14TH October 2003

perpetual succession and a common seal

Head office decided by Central Government


Composition

Chairperson & Minimum 2 and maximum 6 other


Members appointed by the Central Government.

Eligibility

Role of CCI

COMPETITONCOMMISSION
COMMISSIONOF
OFINDIA
INDIA(CCI)
(CCI)
COMPETITON

Consequences of Contravention of Competition Act, 2002


Infringement

Fine/Penalty

Who is liable?

Anti -competitive
agreements

Penalties of up to 10% of
turnover (or 3x cartelized
profits)

Enterprises who enter into


an anti -competitive
agreement
Directors/officials also
liable

Abuse of
dominance

Penalties of up to 10% of
turnover
Division of dominant enterprise

Enterprises abusing
dominant position
Directors/officials also
liable

Failure to notify
a reportable
combination

Fine of up to 1% of combined
turnover/assets

Person or enterprise
Directors/officials also
liable

Failure to
comply with
directions of CCI

Fines and/or imprisonment as


prescribed
Compensation can also be
awarded by Appellate Tribunal
for loss/damage suffered by
any person

Person failing to comply


Directors/officials also
liable

JURISDICTION

INDIA

CHINA

AUSTRALIA

REGULATOR

Competition
Commission of India

Anti-Monopoly
Commission

The Australian
Competition and
Consumer
Commission

Key Legislation

The Competition Act,


2002.

The Anti-Monopoly
Law.

The Competition
and Consumer
Act, 2010.

Key Prohibitions

1. Anti-Competitive
Agreements
2. Abuse of
Dominance
3. Regulation of
Combinations

1. Anticompetitiv
e agreements
2. Abuse of
dominance
3. Anticompetitiv
e mergers and
acquisitions

1. Anticompetitiv
e mergers and
acquisitions
2. Anticompetitiv
e contracts,
arrangements
or
understanding
s
3. Prohibited
forms of
exclusive
dealing

COMPARISONWITH
WITHOTHERS
OTHERS
COMPARISON
JURISDICTION

INDIA

CHINA

AUSTRALIA

Civil/Criminal
sanctions for
cartel

Yes for civil


sanctions
No for criminal
sanctions.

Yes for civil


sanctions
No for criminal
sanctions.

Yes for both.

Leniency
Programme

Yes

Yes

Yes

Merger control
regime and
whether
voluntary or
suspensory

Yes, mandatory
and suspensory.

Yes, mandatory
provided
threshold in
turnover is met.

Yes, voluntary and


not suspensory
unless you file a
formal merger
clearance
notification or
application for
authorisation..

Survey

CONCLUSION

THANK YOU!