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OUTLINE:ObjectiveBackground of competition actThe competition Act.Competition Commission of IndiaDuties, Powers , Functions and PenaltiesDistinction between MRTP and Competition act
Competition
Is “a situation in a market in which
firms or sellers independently strive for
the buyers’ patronage in order to
achieve a particular business objective
for example, profits, sales or market
share”
Benefits of Competition
Companies : Efficiency, cost-saving operations, better utilization of resources, etc.
The Consumer : Wider choice of goods at competitive prices The Government : Generates revenue
BACKGROUND of Competition Law
MRTP Act came into force (1970), limited provisions existed under :–The Indian Contract Act–Directive Principles of State Policy (Non-
enforceable)
The MRTP Act brought in a four-pronged thrust :–Concentration of economic power –Restrictive Trade Practices–Monopolistic Trade Practices –Unfair Trade Practices
Post 1991 policy of Liberalization, Privatization and Globalization introduced.
MRTP Act was found inadequate to meet the challenges of a modern globalize economy.
Government of India in October 1999 appointed a high level Committee on Competition Policy and Law (the Raghavan Committee) to advise on the competition law in consonance with international developments.
Competition Law was Introduced in the year 2002.
Competition law It extends to the whole of India except the
State of Jammu and Kashmir.An Act to provide, keeping in view of the
economic development of the country, for the establishment of a Commission
to prevent practices having adverse effect on competition,
to promote and sustain competition in markets, to protect the interests of consumers and to
ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
Competition Law
Competition Law generally covers 3 areas:
1. – Anti - Competitive Agreements, e.g., cartels,
2. – Abuse of Dominant Position by enterprises, e.g., predatory pricing, barriers to entry and
3. – Regulation of Mergers and Acquisitions (M&As).
OBJECTIVES OF COMPETITION LAW
Promoting economic efficiency in both static and dynamic sense
Protecting consumers from the undue exercise of market power
Facilitating economic liberalization, including privatization. Deregulation and reduction of external trade barriers
Preserving and promoting the sound development of a market economy
Cont…
Ensuring fairness and equity in market place transactions
Protecting the ‘public interest’ including in some cases considerations relating to industrial competitiveness and employment
Protecting opportunities for small and medium business
Anti-competitive agreements• No enterprise or association of
enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.
Abuse of dominant position
• "dominant position" means a 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.
combinations
Regulation of combinations
No person or enterprise shall
enter into a combination which
causes or is likely to cause an
appreciable adverse effect on
competition
EXEMPTIONSEXEMPTIONS GOVT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW
ANY CLASS OF ENTERPRISES IN THE INTEREST OF
NATIONAL SECURITY/PUBLIC INTEREST.
ANY PRACTICE/AGREEMENT ARISING OUT OF
INTERNATIONAL TREATY/AGREEMENT
ANY ENTERPRISE PERFORMING A SOVEREIGN
FUNCTION ON BEHALF OF GOVERNMENT
DIFFERENT PROVISIONS FROM DIFFERENT DATES IF,
NEED BE.
Competition Commission Of IndiaCentral Government has appointed CCI as a
governing Body. The commission shall be a body corporate by the
name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable.
The head office of the Commission shall be at such place as the Central Government may decide from time to time (New Delhi)
CCI (Competition commission of India) may also assign office in other places in India.
Composition of CommissionThe Commission has a Chairperson and six
members.
The Chairperson and other Members of the Commission shall be appointed by the Central Government.
Selection Committee includes Chief Justice of India or his nominee, Secretary in the Ministry of Corporate Affairs
PENALITIESIf any person, without reasonable clause, fails to
comply with the orders or directions of the act, he shall be punishable with fine which may extend to rupees 1 Lac for each day during which such non-compliance occurs, subject to a maximum of rupees 10 Cr, as the Commission may determine.
If any person does not comply with the orders or directions issued, or fails to pay the fine imposed be punishable with imprisonment for a term which may extend to 3 years, or with fine which may extend to rupees 25 CR.
18
OLD WINE OR NEW WINE ?OLD WINE OR NEW WINE ?
MRTP ACT
BASED ON PRE-1991 LPG
PREMISED ON SIZE
PROCEDURE ORIENTED
COVERS UNFAIR TRADE PRACTICES (INDIVIDUAL CONSUMER INTEREST)
POLITICAL APPOINTMENTS OF CHAIRPERSON/MEMBERS
NEW LAW
BASED ON POST-1991 LPG
PREMISED ON BEHAVIOUR/ CONDUCT
RESULT ORIENTED.
UNFAIR TRADE PRACTICES EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT)
APPOINTMENTS BY A COLLEGIUM