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RayatBahra Group Of Institutes
Submitted To Submitted ByMs Anshu Goyal Rohit Nayyar
Inderpreet Singh
Harpreet Singh
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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 (World Bank, 1999)Competition is an age-old
phenomenon
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Competition is an age-old phenomenon
Benefits of Competition:
Companies : Efficiency, cost-saving operations, betterutilization of resources, etc.
The Consumer : Wider choice of goods at competitive
prices
The Government : Generates revenue
BUT
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all these benefits are lost if Competition is
UNFAIR or NON-EXISTANT
Choice of CARS in the olden days
MTNL Monopoly : The position today
Airlines : INDIAN AIRLINES : JET : SAHARA
Indian Railways : The monopoly continues.
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It is a tool to implement and enforce competition policyand to prevent and punish anti-competitive businesspractices by firms and unnecessary Governmentinterference in the market.
Competition Law generally covers 3 areas:
Anti - Competitive Agreements, e.g., cartels,
Abuse of Dominant Position by enterprises, e.g.,
predatory pricing, barriers to entry and
Regulation of Mergers and Acquisitions (M&As).
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The need for Competition Law arises because marketcan suffer from failures and distortions, and variousplayers can resort to anti-competitive activities such ascartels, abuse of dominance etc. which adverselyimpact economic efficiency and consumer welfare.
Thus there is need for Competition Law, and aCompetition Watchdog with the authority for enforcing
Competition Law.
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Competition:
Increases efficiency Encourages innovation Enhances consumer welfare wider
choice, lower prices, better quality Conducive to economic and political
democracy
Apprehension of market failure hasprompted 100 countries to enactmodern competition laws
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Main features of Competition Act
Prohibits Anti-Competitive Agreements
Prohibits Abuse of Dominant PositionProvides for Regulation of Combinations
Mandates Competition Advocacy
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Horizontal Agreements including cartels, e.g., price
fixing, limiting production, sharing markets, bid-rigging
Vertical Agreements e.g., tie-in, exclusive supply/
distribution, refusal to deal
Cartel regarded most pernicious violation - heavypenalties - criminal offence (lysine, vitamins, graphiteelectrodes)
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Not dominance, but abuse is illegal
Dominance based, not on arithmetical
formula, but on economic factors listedin Acts
Abuse includes : discriminatory pricing,
limiting production, denying access
Examples : Microsoft (penalized Euro497m)
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Ex-post action
Notification either compulsory or optional
Strict time frame for decision
Threshold limits
Less than 5% merger applications are
prohibited worldwide
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Commission is expected to regulate
Combinations, i.e., large mergers, acquisitions,
etc. likely to have appreciable adverse effect on
competition.
Threshold:
For single enterprise
Assets > Rs.1000 crores
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Threshold:
For group of enterprises
Assets > Rs.4000 crores
Turnover > Rs.12000 crores
Similarly, threshold is provided for overseas groups.
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Notification of Combination to Commission is
voluntary
If notified, Commission to take a decision within
90 days on the combination. Decision may allow,
disallow, modify, etc. the combination.
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Cease and desist order
Impose penalty up to 10% of turnover.
In case of cartel, penalty can be 10% ofturnover or 3 times of profit illegally gained
from cartel activity, whichever is higher.
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Recommend to Government the division ofdominant Enterprise
Various penalties ranging from Rs.1 lac uptoRs.1 crore are also provided for failure to
comply with direction/order of Commission.
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Creates an environment conducive to competition.
The operation of the act is not confined to transactions strictlywithin the boundaries of India but also such transactions involving
entities existing or established overseas.
Explicit definitions and criteria have been specified in order toaccess whether a practice has an appreciable adverse effect oncompetition.
It is the intention of our legislators that provisions of the act in itsextant form should not be considered to be immutable andunchangeable. The intention is promotion of competition advocacy,creating awareness and imparting training about competition issues.
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For achieving the foresaid duties, the Commission has jurisdiction to:
Enquire into Anti-Competitive Agreements (e.g. Cartels, bid-rigging, etc.) [Section
3]
Enquire into abuse of dominant position (e.g. Predatory Pricing, etc.) [Section 4]
Regulate combinations (Mergers, Amalgamation, Acquisition of shares or control),
[Sections 5 & 6]
Undertake Competition Advocacy (including advice on competition policy issues),
create public awareness, impart training on competition issues, [Section 49]
Jurisdiction
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Commission has regulatory and quasi-judicial powers.
It is to function through Benches [Section 22(1)].
Bench Composition [Section 22(3)].
Constituted by Chairperson At least 2 Members
At least one Judicial member ( Qualified Judge of High Court)
* Judicial Member means a Member who is, or has been, or is qualified to be, a Judge of a High Court.
The Bench over which the Chairperson presides shall be the Principal Bench and the other Benches
shall be known as the Additional Benches.
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Competition Act 2002 MRTP Act
Aims at promoting competition Aims at curbing monopolies
Focus on effects on competition in the market Focus on size (uptil 1991) and on behaviour from 1991
onwards.
Seeks to prohibit anti-competitive agreements, abuse of
dominant position and to regulate combinations
Prohibit monopolistic, restrictive and unfair trade practices
Statutory Authorities can seek CCIs opinion No provision to seek opinion
Appreciable adverse effect is a key factor Factors prescribed
to determine AAEC
Prejudicial to public interest is a key factor parameters not
mentioned in the law
Primary duty to achieve the objectives of the Act devolves on
CCI
Act implemented partly by Central Government and partly by
the MRTP Commission
Leans heavily on Rule of Reason Obsessed with deemed concept
14 per se offences negating the principles of natural justice 4 per se offences and all the rest subjected to rule of reason.
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Competition Act 2002 MRTP Act
Concept of Market is rationalized Relevant
Market=Relevant product market + Relevant Geographical
market
Market has not been defined nor factors to determine
market have been prescribed
Commission to exercise jurisdiction in case of unreasonablerestraints exercised in respect of IPRs.
No explicit power with the MRTP in respect of IPRs
Exclusion of jurisdiction in respect of export business Implicit exclusion of jurisdiction in respect of export
Frowns upon dominance Frowns upon abuse of dominance
No combinations regulation Combinations regulated beyond a high threshold limit.
Penalties for offences No penalties for offences
Reactive and rigid Proactive and flexible
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Chairperson
Member between 2 & 10 appointed by GOI
Chairperson & its Members shall be whole-time Members & maximum term of 5 years
Maximum age for;
Chairperson: 65 years
Member: 65 years
In Chairperson's absence, Senior most Member , is the acting Chairperson
Suspended By Central Government
Insolvent
Engaged in alternate Paid Employment
Convicted of an office involves Moral Turpitude
Abused his position
Physically or mentally incapable to discharge duties
Composition
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Make the markets work for the benefit and welfare of consumers
Ensure fair and healthy competition in economic activities in the country for development of
economy.
Implement competition policies for the most efficient utilization of economic resources
Participate in formulation of country's economic policies.
Alignment of sectoral regulatory laws in tandem with the competition law.
Effectively carry out competition advocacy.
Spread the information on benefits of competition among all stakeholders to establish and
nurture competition culture in Indian economy.
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Overview
Under the competition advocacy initiative, the Commission organizes interactive meetings, seminars, etc with
different trade organizations, consumer associations, stakeholders and the public at large to spread
awareness about the Competition Law and the Commission.
Objectives of Competition Advocacy
Spread awareness about Competition Act
Familiarize business enterprises, central government ministries, state government ministries, central/state
PSUs about the importance and benefits of fair competition and ensure compliance of the provisions
of Competition Act by all
Sensitize departments / ministries of central / state governments, and PSUs about nuances of competition
law, to facilitate competition audit of their respective laws on different subjects
Take confidence building measures among business enterprises and other stakeholders associated with
competition
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Formed in 19th Oct 2009
Besides, the Chairperson, the Appellate Tribunal shall consist of not more than two Members to be appointed by the Central
Government.
The Appellate Tribunal shall have, for the purposes of discharging its functions under the Act, the same powers as are vested
in a civil court under the Code of Civil Procedure,1908.
Formed for
- Hearing grievances against the decisions and remedies given by the CCI
- Outstanding cases before Monopolies and Restrictive Trade Practices Commission (MRTPC)
- Cases on Unfair Trade Practices (UTP), Restrictive Trade Practices (RTP) & Monopolistic Trade Practices (MTP)
Cases on Disparaging Advertisements transferred to National Consumer Disputes Redressal Commission.
If any person contravenes, without any reasonable ground, any order of the Appellate Tribunal, he shall be liable for a penalty
of not exceeding Rupees one crore or imprisonment for a term up to three years or with both as the Chief MetropolitanMagistrate, Delhi may deem fit.
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Commission has suo moto power to inquire whether an anti-competitive
agreement or abuse of dominant position causes or is likely to cause an
appreciable adverse effect on competition [Section 19(1)]
Commission has suo moto power to enquire whether a combination causes or
is likely to cause an appreciable adverse effect on competition [Section 20(1)] .
This power must be exercised within one year from the date combination has
taken effect [Proviso to section 20(1)]
Suo Moto Inquiry
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Complaint OR State/Central/Statutory
Authorities
Director General (DG) Submits
inquiry Finding to CCI
Complaint Rebut Findings of DG
Dismiss ComplaintPrima
facie Further Inquiry
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In case of abuse by dominant
enterprise, may recommenddivision of the enterprise to the
Central Government
Compensation to the parties
Penalty < 10 % of Annual T/o
of last 3 preceding years
Orders of Commission
Modify Agreements
Inquiry into Anti Competitive Agreements & Abuse of Dominant Position
Cartel: Penalty of 3 x Total
profits OR 10 % of Annual T/o
of last 3 preceding years - Transfer OR Vesting of rights, Liabilities, Property or Obligations- Adjustment of Contracts By Discharge/Reduction of Liabilities/Obligation
- Creation/Allotment/Cancellation of Shares/Stocks/Securities
- Compensation to the affected enterprise/person
- Winding up of enterprise
- Amendments to MoA or AoA
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Dissolve CombinationApprove Combination
If not accepted, parties to submit modifications
with 30 days
OR
90 Days extension period
Adverseeffect
No
Modifications
Yes
Inquiry into Combinations
If modifications accepted, combination will be
allowed
Orders of Commission
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Order equivalent to decree/order by High Court OR Principal Civil Court.
Self rectification of Order.
Appeal against decision of the Commission can be filed to the Appellate
Tribunal within 60 days from the date of communication of the direction, decisionor order to him.
A further Appeal can be made against the order of the Appellate Tribunal, before
the Supreme Courtwithin 60 days from the date of communication of the
direction.
Commissions order
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Penalties for non-compliance with Commissions orders:-
Penalty not less than Rs. 10 lacs [Section 42(1)]
For failure to comply with a direction of Commission or DG Rs 1 lac per day of failure
[Section 43]
If party to a combination makes a false statement or omits a material particular not
less than Rs. 50 lacs up to Rs. 1 crore [Section 44]
Forwillfully omitting to furnish information penalty up to Rs. 10 lacs [Section 45]
Penalities
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Benefits to Centre & State Governments bodies
Savings for exchequers, accrue to central and state governments by virtue of adhering to fair competition
norms
Fair competition among suppliers
Small enterprises, self-employed and micro-retailers are protected against abuse of dominance bybigger enterprises
Helping to sensitize their procurement officers to the harmful effects of anti competitive practices by
suppliers, contractors or manufacturers
Helping identifying areas where bid-rigging, cartelization or abuse of dominance
Familiarizing with the legal remedies available in competition law
Helping them develop competition compliance programs
Providing competition advise.
Helping Nodal Officers at state level in overseeing the task of ensuring fair competition
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