Competition Act, 2002

Competition Law
It is a tool to implement and enforce competition policy and to prevent and punish anti-competitive business practices by firms and unnecessary Government interference in the market.

OBJECTIVES OF COMPETITION LAW

Promoting economic efficiency Protecting consumers from the undue exercise of market power Facilitating economic liberalization, including privatization,reduction of external trade barriers

OBJECTIVES OF COMPETITION LAW

Ensuring fairness and equity in market place transactions Protecting the public interest relating to industrial competitiveness and employment Protecting opportunities for small and medium business

FEATURES
Competition Law generally covers 3 areas: Anti - Competitive Agreements, e.g. cartels,

Abuse of Dominant Position by enterprises, e.g barriers to entry Regulation of Mergers and Acquisitions (M&As).

Anti-competitive Agreements
These are agreements which cause or are likely to cause an adverse effect on competition within India: Horizontal Agreements: These are between and among competitors who are at the same stage of production, supply, distribution, etc. These are presumed to be illegal

Examples: cartels, sharing of markets, etc.

Anti-Competitive Agreements
Vertical Agreements: Vertical Agreements are between parties at different stages of production, supply, distribution, etc. These are not presumed illegal.

Abuse of Dominant Position

Includes practices like:

Unfair or discriminatory conditions or prices,

Limiting or restricting production development, Denial of market access

Power of the Competition Commission

After inquiry into abuse of dominant position, the Competition Commission can order:
discontinuance of abuse of dominant position

impose a penalty upto 10% of the average turnover of the enterprise

Mergers and Acquisitions

Commission is expected to regulate Combinations, i.e.,

large mergers, acquisitions, etc. likely to have appreciable

adverse effect on competition.

Therefore:
For single enterprise

Assets > Rs.1000 crores

Turnover > Rs.3000 crores

Mergers and Acquisitions

Therefore:

For group of enterprises

Assets > Rs.4000 crores

Turnover > Rs.12000 crores

Similarly,it is provided for overseas groups.

Competition Commission
It is a body corporate It has Regulatory judicial functions through Benches Each Bench shall consist of at least two Members and one of such Members must be a judicial Member

Powers of Commission
Cease and desist order

Impose penalty up to 10% of turnover.

In case of cartel, penalty can be 10% of turnover or 3 times of profit illegally gained from cartel activity, whichever is higher.

Powers of Commission
Recommend to Government the division of dominant Enterprise Various penalties ranging from Rs.1 lac upto Rs.1 crore are also provided for failure to comply with direction/order of Commission.