COMPETITION ACT,2002: BRIEF REVIEW

COMPETITION ACT , 2002

OBJECTIVE

Competition Act, 2002 is passed keeping in view of the economic development of the country with following objective:

(1) To prevent practices having adverse effect on competition,

(2) To promote and sustain competition in markets,

(3) To protect the interests of consumers and to ensure freedom of trade carried    on by other participants in markets,

GUIDING PRINCIPLES

The Competition Commission of India is being guided by the following principles in its approach to its work:

1. To be in sync with markets; have good understanding of market forces.

2. To minimize cost of compliance by enterprises, and cost of enforcement by Commission.

3. To maintain confidentiality of business information; to maintain transparency in Commission's own operations.

4. To be a professional body, equipped with requisite skills.

5. To maintain a consultative approach.

FUNCTIONS

1.         CCI shall prohibit anti-competitive agreements and abuse of dominance, and regulate combinations (merger or amalgamation or acquisition) through a process of enquiry.

2.         It shall give opinion on competition issues on a reference received from an authority established under any law (statutory authority)/Central Government.

3.       CCI is also mandated to undertake competition advocacy, create public awareness and impart training on competition issues.

ENFORCEMENT

The enforcement provisions in the Competition Act relate to prohibition of anti-competitive agreements and abuse of dominant position, and also prevention of anti-competitive combinations.

Section (3): Anti competitive agreements

Section (4) Abuse of dominant power

Section (5): Combination

Section (6): Regulation of combinations

Section (3): Anti competitive agreements

Agreements which cause or are likely to cause appreciable adverse effect on competition in markets in India are anti-competitive and are void. While some anti-competitive agreements are presumed to cause appreciable adverse effect on competition, others are to be proved so by rule of reason.

Section (4) Abuse of dominant power

The provisions relating to abuse of dominant position require determination of dominance in the relevant market. The relevant market consists of the relevant product market and the relevant geographic market. The factors for determination of the relevant market as well as dominance are provided in the Act itself. Once dominance has been established, the conduct of an enterprise, which falls within any one of the five abuses, is prohibited.

Sections (5 & 6 ): Combination & Regulation of combinations

Combination includes merger, amalgamation and acquisition above the thresholds stated in the Act in terms of assets or turnover. Regulation of combinations is usually done ex ante, although the Commission has the power to investigate a combination even after it has taken effect. Combinations which cause or are likely to cause appreciable adverse effect on competition have to be prevented. The provisions relating to regulation of combinations are given in sections 5 and 6 of the Act.

NOTIFICATIONS

Though the act was passed in India in 2003, it could not be enforced. Competition Act is being notified in phases. The commission came into being on 28 February 2009 with appointment of the Chairman and Members of the Competition Commission of India vide notification dated 27-march-2009. Vide Notification dated 28th August 2009, Monopolies and Restrictive Trade Practices Act, 1969 (“the MRTP Act”) stands repealed and is replaced by the Competition Act, 2002, with effect from September 1, 2009. Anti competitive agreements (section 3) and Abuse of dominant power (Section 4) has already came into force on 20-5-09 vide notification dated 15-5-09. However Regulations with respect to combinations are still awaited to be notified.

REPEAL OF MRTP ACT, 1969

1. GOI vide Notification dated 28th August 2009, repealed the Monopolies and Restrictive Trade Practices Act, 1969 and the MRTP Act is replaced by the Competition Act, 2002, with effect from September 1, 2009. However as per amendment act, 2007 MRTP was to act as per provisions of repealed act. For 2 years from effective date of repeal  with the condition that it will not hear any new case. On 14-October 2009 The President of India promulgated the competition (Amendment) Ordinance, 2009 and enforced the same with immediate effect. With this amendment MRTP Commission became defunct.

TRANSFER OF CASES FROM MRTP

The following transitional provisions would apply as provided in Section 66 of the Competition Act, 2002:-

1.       Transfer of pending cases

a) Monopolistic or restrictive trade practice cases: All pending cases pertaining to monopolistic or restrictive trade practices, including cases having an element of unfair trade practice, shall stand transferred to the Competition Appellate Tribunal, which shall adjudicate such cases in accordance with the provisions of the repealed MRTP Act.

b)  Unfair trade practice cases: All pending cases relating solely to unfair tradepractices shall stand transferred to the National Commission as constituted under the Consumer Protection Act, 1986, which may in turn transfer such cases to a StateCommission constituted under the said Act under circumstances it deems appropriate. These cases will be dealt with by them in accordance with the provisions of the Consumer Protection Act.

c)  Cases relating to giving false or misleading facts disparaging the goods, services or trade of another person under the MRTP Act: All such pending cases shall be transferred to the Competition Appellate Tribunal which will be dealt in accordance with the provisions of repealed MRTP Act.

2.       Investigations/proceedings undertaken by the Director General under the MRTP Act

a)  Monopolistic/ restrictive trade practices will be transferred to the Competition Commission of India (CCI), who may conduct such investigations/ proceedings in any manner it deems appropriate.

b) Unfair trade practices will be transferred to the National Commission under the Consumer Protection) Act 1986.

c)  Cases giving false or misleading facts disparaging the goods, services or trade of another person will be transferred to the CCI.

REMEDIES IN COMPETITION ACT.

Section 27 of the Act provides various remedies for restoring competition and penalizing the offenders in case of contravention of this law. They are –

- passing ‘cease and desist order’

- providing agreements having appreciable adverse effect on competition to be void

- imposing penalty upto 10% of the turnover or 3 times of cartelised profit, whichever is higher

- awarding compensation or damages as per Section 34

- directing modifications to agreements

- in case of combinations, they can be approved with or without modification or even be refused approval

-  in case of dominant enterprise, order can recommend division as provided in Section 28 of the Act

AMENDING ACT & ORDINANCE:

2. The competition(Amendment) Act , 2007
3. The Competition(Amendment) Ordinance, 2009

References:

www.cci.gov.in

http://shubhamconsultants.blogspot.com