Liberalization and globalization led to the increased competition in the market. As the big fish in the sea tries to control and dominate the small fish, the same is true in terms of competition in the market. The big enterprises holding dominate position tries to manipulate the market in order to gain maximum advantage. This led to the unfair competition in the market. To prevent the market from such practices many steps have been taken up by the government and regulatory authorities. In India competition act 2002 regulates the unfair competition and related issues. This article seeks to provide a brief overview of competition law in India.
The Indian competition act 2002, which repealed the earlier legislation i.e., MRTP Act, 1969 is now the governing legislation in the field of competition law in India. This act does not in fact, prohibits the competition but only regulates it in a healthy manner by prohibiting ant- competitive and unfair trade practices in India.
The act mainly revolves around the three main areas which it seeks to regulate:
- Anti Competitive agreements
- Abuse of dominance
- Mergers and acquisitions that have an appreciable adverse effect on competitionin India.(Combinations)
Anti-competitive arrangements are those that have as their object to preventing, restricting or distorting competition in any market in India. Such arrangements cover not only agreements, but also decisions made by association of persons / enterprises, as well as the
conduct of parties acting in collusion. Section 3 of the Act deals with such agreements, these are of two kinds, horizontal and vertical.
Section 3(3) of the Act deals with agreements amongst horizontally placed firms such as bid rigging, collusive bidding, cartels, etc. These agreements are dealt on a presumptive standard rebuttable by the parties involved in such agreements.
Vertical agreements on the other hand refers to the agreements between firms operating at different levels in the production/distribution chain such as between manufactures and distributors, manufacturers and retailers, distributors and retailers, etc. these arrangements are subject of Section 3(4) of the Act.
Abuse of Dominant Position
Section 4 of the Competition Act 2002 provides for the Prohibition of abuse of dominant position. The important point to be noted in relation to the prohibition of abuse of dominant position is that, it is the “abuse” which is prohibited and not the dominant position per se. the abuse of dominant position must be such which led to have an appreciable adverse effect on competition to be prohibited under the same act. The Act defines “dominant position” as a “position of strength, enjoyed by an enterprise, in the relevant market in India, which enables it to:
- operate independently of competitive forces prevailing in the relevant market;or
- Affect its competitors or consumers or the relevant market in its favour.”
Moreover section 19(4) the act provides various factors that The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard like:
- (a) market share of the enterprise;
- (b) size and resources of the enterprise;
- (c) size and importance of the competitors, etc.
Section 5 of the act defines and explains the various combinations for the purpose of the act. Whereas section 6 provides for the regulation of these combination i.e., their prohibition. Combinations of enterprises (where 2 or more entities combine together) may result in lessening of competition within a relevant market in India.
Section 5 of the Act sets out specific assets and turnover thresholds limits so as to determine whether or not any:
- acquisition of control, shares, voting rights or assets by an acquirer; or
- acquisition of control of an enterprise by a person who directly or indirectly controls another enterprise engaged in production, distribution or trading of similar, identical or substitutable goods or services; or
- any merger or amalgamation,
qualifies as a “combination” within meaning of Section 5 of the Act itself. However the threshold limits of various combinations have revised and the same are provided below:
|Individual||20,000 million||60,000 million|
|Group||80,000 million||240,000 million|
|In India and Outside India|
|Total (USD)||Min. aggregate in India (INR)||Total (USD)||Min. aggregate in India (INR)|
|Individual||1,000 million||10,000 million||3,000 million||30,000 million|
|Group||4,000 million||10,000 million||12,000 million||30,000 million|
Competition act 2002 in India provides an elaborate scheme to deal with the anti- competition practices in India. CCI as the regulatory body is working efficiently in dealing with the competition related issues. The wide scope of competition act and the adequate powers with the CCI helps in creating a healthy competitive environment of India. Competition act is also decorated with the provision of competition advocacy, it includes all activities of a competition agency that are intended to promote competition apart from those that involve enforcement of the competition law like, advisory role, seminars, reports etc. CCI plays an active part in the competition regime and to deal with the dynamic aspect of the market it notifies various regulations and orders as and when required.
- The Competition Act, 2002
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