Article 38 and Article 39 of the Indian Constitution guaranties social justice, political and economic welfare to the citizens of India. It is a part of Directive Principles of State Policies. Based on this the first Indian competition law came into existence- Monopolies and Restrictive Trade Practices, 1969 (MRTP Act).
The objective of this Act was to encourage fair play and fair dealings in the market. With the further advent of globalization, India soon started to face the heat of the competition both from the domestic players and the international players, that called for the different playing field and investor friendly options. Thus, need emerged concerning rivalry laws to move the concentration from controlling syndications to urging organizations to contribute and develop, in this way advancing rivalry while forestalling any maltreatment of market power.
The MRTP Act had become outdated in the field of international economic developments relating to competition where the focus had already shifted from curbing and reducing monopolies to promoting healthy competition.
The Central Government then appointed a committee to formulate a new Competition law that could match up to the international standard. This committee was known as the Raghavan Committee. The report was presented in May 2000. The draft competition law was presented in November 2000. After some recommendations and amendments to the draft it was finally passed by the Parliament as a law in 2002. The competition Act, 2002 came into force in January 2003.
The Competition Commission of India (CCI) was set up on 14th October 2003 with 6 chairpersons appointed by the central government. Its aim is to regulate anti competition and to prevent monopoly. A quasi-judicial body was also established by the name of Competition Appellate Tribunal that hears and disposes appeals against the order of the CCI.
OBJECTIVES OF COMPETITION ACT, 2002
- To keep a check on anti-competitive practices.
- To prevent Abuse of dominance in market
- To protect the consumer’s interest
- To regulate combinations between companies
- To set up judicial and quasi- judicial authorities to act as regulators.
SOME IMPORTANT SECTIONS OF THE ACT
- Section 3(1) – Anti- competitive Agreements
It refers to any agreement that directly is targeted to control the purchase, sales or supply of any material creating and appreciable adverse effect on the market competition. All such agreements are deemed to be void.
- Section 4- Abuse of dominance
This occurs when an enterprise or a group of enterprises use their dominant position to exploit the market and create a monopoly thus decreasing the revenue and fair trade to the smaller and less prominent enterprises. This can be easily seen when there are exorbitant conditions are stated in the trade agreements. This can also be bought into practice by denying entry to other enterprises in the marked by using the influence of their position.
- Section 5 and Section 6- Regulation of Combinations
Combination here refers to the mergers and amalgamations between the enterprises. This is mainly done to help the business flourish and focus on the essence. This is healthy and fair until it is done with the intention to dominate and bring in an instability in the market. Therefore, according to the provisions of the Act, any company or enterprise has to seek permission from the CCI before the combinations can come into effect. Here we can see the regulatory function of CCI coming into picture to keep a check on the market. CCI has the authority to investigate into the combinations proposed and recommend modifiactions or even reject the combination.
- Section 49- Advocacy of Competition
The central government can ask for opinions from the commission on formulating policies on competition law. The commission is bound to answer the queries within 60 days. It is clearly stated that the opinions are advisory hence not binding upon the central government.
The markets in India have become so dynamic and complex that these new laws must be introduced for the best interests of the enterprises and consumers. The Act also plays a major role in uplifting and protecting the small and medium scale industries. The only amendment bought was in the year 2007 that bought in some necessary changes in duties, powers, and functions of the Commission. A specialized commission being set up has become very beneficial to reduce and redistribute the burden on courts.
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