Competition Law

The competition law is primarily concerned with preventing specific market activities that harm businesses, customers, or both and curbing market behaviours that violate market ethics. The Competition Act of 2002 in India was enacted to create a competition law system that responds to the changing economic landscape in India and overseas. The Monopolies and Restrictive Trade Practices Act of 1969 was repealed by the Competition Act, which dissolved the Monopolies and Restrictive Trade Practices Commission. Cases pending before the MRTP Commission were transferred to the Competition Commission of India (“CCI”).

Objectives of Competition Law

• To avoid behaviours that hurt competition.
• Market competition should be encouraged and sustained.
• Consumers’ interests must be safeguarded.
• To ensure freedom of trade. 

Key Provisions 

• Section 3: dealing with anti-competitive agreements (cartels, tie-in arrangement) 
• Section 4: Prohibition of abuse of dominant position  
• Section 5 and 6: Deals with a combination of enterprises. The combination may be an acquisition or merger.   
• Section 21 and 21A: Deals with advisory    
• Section 49: Deals with advocacy 

The Competition Act 2002 

The President of India signed the Competition Act, 2002, on January 13, 2003, and it was published in the Gazette of India on January 14, 2003. However, some provisions went into effect on March 31, 2003, while most went into effect on June 19, 2003. The complete act has not yet taken effect.

The key instrument of the Competition Act

• The Anti-competitive Agreement 
• The abuse of dominance 
• The Mergers of Combinations 
• The Competition Advocacy 

Anti-Competitive Agreement

Anti-Competitive Agreement can be classified into two types:

Horizontal Agreement

• Determining the price of a purchase or a sale, either directly or indirectly.
• Production, supply, market, technical advancement, investment, and service provision can all be limited or controlled.
• Shares the market by allocating geographical territory.
• Rigging of bids/collusive bidding
• Horizontal Agreements are presumed to be subject to the rule.

Vertical Agreement 

Vertical agreements, such as Manufacturer-Dealer, Dealer-Supplier, Wholesaler-Retailer, and so on, are agreements between different levels of the manufacturing and distribution chain.

• Tie-in arrangements 
• Exclusive Distribution Agreement 
• Resale Price Maintenance 

Abuse of Dominance

Abuse of dominance is when a dominating firm or group of enterprises intends to eliminate a competitor or a competing firm or discourage a new firm from joining the market. Section 4 of the Competition Act prevents the dominant firm or group from engaging in certain acts. Imposing predatory prices, denying market access, limiting the supply of products and services, and using a dominant position in one market to join another are just a few of the examples. 

Combination/Acquisition 

According to Section 5 of the Act. Acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises. 

The merger of two or more firms or businesses is referred to as a combination under competition law. The government regulates mergers and acquisitions across the country to support small businesses and ensure that they are not outshined or absorbed by large corporations. 

Mergers with a high-profit margin make it difficult for smaller businesses to reach their goals or earn a profit. The accumulation of significant wealth in some commercial sectors and different customer tastes may result in substantial economic and social inequities within the country.

Competition Advocacy 

Competition Advocacy is one of the primary goals of competition law, which creates a competitive market environment. Competition advocacy refers to initiatives that raise public awareness about the advantages of a competitive market. The Competition Commission of India (CCI) is tasked with advocating for Competition Law on behalf of consumers, whose welfare is the law’s primary goal.

The CCI has taken up competition advocacy activities in the federal and state governments and other sectors such as businesses, consumer activists, and statutory organizations composed of professionals, for instance, attorneys, chartered accountants, and company secretaries.

An initiative by CCI to support Competition Law 

• Conducting workshops and seminars at the National and State level.
• A special lecture was organized for CCI officers.
• Papers and research were published to advocate for competition and raise awareness about competition issues.
• The commission conducts competition-related sectoral/ regulatory influence assessments, market studies, and research initiatives.
• The commission’s consultation documents have been published/placed on its website.

Competition Law is not applicable in

• Public Financial Institution
• Foreign Institutional Investors
• Banks
• Venture Capital Funds
• Agreements related to intellectual property rights such as patents and copyright. 
• In the common interest of national security or the public interest, the Central Government can exempt any class of companies from the act’s obligations. 

Competition Law in other countries 

Canada- 1889

U.S.A- 1890

European Union -1957

Brazil- 1994

South Africa- 1998

India- 2003 (1970 (MRTP Act))

Russia- 2006

China -2008

Conclusion 

As a result, the Competition Law of 2002 is regarded as a significant piece of law. This law does not encourage the abuse of power. This law primarily promotes market competition and assists in distributing earnings to businesses of all sizes to boost the community’s business potential. Even though the entire law has not yet been passed, enacting the act as a whole would undoubtedly increase market competitiveness both nationally and internationally.