What is Competition Law?
Competition Law is created to sustain and promote fair and healthy competition between enterprises in the market. It strives to protect the interests of the consumers and ensure freedom of occupation carried on by other players in the market by regulating the conduct of these enterprises and by refraining them from practicing any anti-competitive behavior. While speaking about competition regulatory systems the two most influential systems in the world are the competition law of the European Union and the anti-trust laws of the US.
Status of Competition Law in India?
From the year 1969 to 2003, India had the Monopolistic and Restrictive Trade Practices Act (MRTP) which was established for the same purpose. Nonetheless, it did not apply to government corporations, undertakings owned or controlled by the government and undertakings owned by corporations established under a central or state Act, it also rejected its application in respect of matters for which specific provisions were created in the sectoral legislation relating to banks, the State Bank of India and insurance companies making the scope of the Act very limited and ineffective, as a result, the Competition Act, 2002 was passed by the Parliament in 2003. This Act includes the major provisions dealing with anti-competitive agreements, abuse of a dominant position and a combination or an acquisition dropping under Section 3, 4, 5 and 6 of the Act.
How does the Competition Act, 2002 work?
The Competition Commission of India (CCI) is a quasi-judicial body which has been instituted under the Competition Act (Section 7) to control competition in the market and to implement the Act. It comprises of a Chairperson and not less than 2 and not more than 6 other members to be appointed by the Central Government. The Commission probes into the alleged violation of the provisions of the Act either on its own or on the receipt of the information by any person or a reference made to it by the Central Government, State Government or statutory authority.
When the Commission is of the conclusion that a prima facie case exists, it directs the Director-General to study into the matter and submit its report. On the grounds of the DG’s report, the Commission invites objections/replies from the parties, deliberates over the same and decides the case. In case of a compound, any party joining into such a combination will have to notify the Commission disclosing the details of the proposed sequence. The Commission’s approval to the succession will depend on its opinion whether it will have an appreciable adverse effect on competition or not.
The orders of the CCI passed under the designated sections mentioned under Section 53A of the Act can be contested in the Competition Appellate Tribunal (COMPAT) and the orders of the COMPAT can be appealed in the Supreme Court.
What orders can be issued by the CCI while deciding a case?
After the probe when the Commission finds any contravention of the Act in respect to the anti-competitive agreement or the abuse of a dominant power or a combination it may pass the following orders-
- It may impose a penalty (not more than 10% of the average turnover for the last 3 preceding financial years).
- Direct the party to stop and not to re-enter any such anti-competitive agreement or to discontinue the abuse of its powerful position.
- It may suggest changes to the agreement in question.
- Propose modification to combinations deemed to have an appreciable adverse effect on competition.
- Pass any order or direction as it may consider fit.