Overview of

Legal Provisions, Activities,

Progress & Constraints

October, 2004

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 What is competition?

z A situation in a market, in which sellers

independently strive for buyers’ patronage to
achieve business objectives such as profits,
sales or market share.

z It is the foundation of an efficiently working

market system.

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 Why have competition?

z The ultimate objective of competition is to

secure the interest of the consumer – it
provides wider choice at lower prices
z It leads to optimal allocation of resources,
innovation, higher productivity, and accelerated
growth
z It preserves economic and political democracy

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 What constitutes Competition Policy ?

z Competition policy comprises of Government

measures that affect the behavior of
enterprises and structure of the industry to
promote efficiency and maximize welfare.

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 What constitutes Competition
Policy ? (continued)

• There are two elements of competition

policy:-
¾ First: a set of competition enhancing policies,
such as liberalized trade policy, relaxed FDI
policy, deregulation, privatization, etc.
¾ Second: competition law to prevent anti-
competitive practices

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Competition Act 2002 - Background

z Government constituted a committee in 1999 to

examine MRTP Act, 1969 for shifting the focus
of the law from curbing monopolies to promoting
competition and to suggest a modern
competition law in line with international
developments to suit Indian conditions.
z Pursuant to the recommendations of the
Committee, the Competition Act, 2002 was
enacted and notified in January, 2003.

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Competition Law

Competition Act 2002 provides for establishment

of a Commission
z To eliminate practices having adverse effect on
competition
z To promote and sustain competition in the markets
z To protect interests of consumers
z To ensure freedom of trade

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Establishment of
Competition Commission
z Established by the Central Government in
October 2003. Government has not notified all
provisions of the Act.
z It is important to make the Commission
operational at the earliest. India is the only
major economy (other than China) that does
not have a functional, modern competition
authority. This has serious adverse effects for
the economy and the consumers, and it is not
in public interest.

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 JURISDICTION

z All participants in business- private, public

and even government departments within
its ambit
z For achieving its objectives, the
Commission has jurisdiction to:
i) Enquire into Anti-Competitive Agreements
(e.g. Cartels, bid-rigging, etc.) [Section 3]
ii) Enquire into abuse of dominant position
(e.g. Predatory Pricing, etc.) [Section 4]
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 JURISDICTION (continued)

iii) Regulate combinations (Mergers,

Amalgamation, Acquisition of shares or
control), [Sections 5 & 6]
iv) Undertake Competition Advocacy
(including advice on competition policy
issues), create public awareness, impart
training on competition issues, [Section 49]

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 JURISDICTION (continued)

z An anti-competitive agreement that causes

or is likely to cause an appreciable adverse
effect on competition within India shall be
void.
z Any agreement which determines price,
controls supply, shares market or results in
bid-rigging is presumed to have appreciable
adverse effect on competition.
z Examples – tie-in arrangement, exclusive supply
agreement, exclusive distribution agreement, refusal
11 to deal, resale price maintenance
 JURISDICTION (continued)

z Exclusions- agreements involving

¾ rights under laws dealing with IPRs to
restrain any infringement or to impose
reasonable conditions
¾ exports to the extent the agreement relates
exclusively to the production, supply,
distribution or control of goods or provision of
services for such exports.
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 JURISDICTION (continued)

z Dominance means a position of strength in

the relevant market which enables an
enterprise to operate independently of
competitive forces or adversely affects its
competitors or consumers and includes
predatory pricing (selling below cost to
reduce or eliminate competition)

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 JURISDICTION (continued)

z Abuse of dominance includes

¾ Direct or indirect imposition of unfair or
discriminatory conditions in purchase or sale
or price
¾ Limiting production
¾ Restricting technical or scientific
development to the prejudice of consumers
¾ Denial of market access

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 JURISDICTION (continued)

z Combinations refers to mergers,

acquisitions, amalgamation
z Voluntary notification regime
z Threshold limits are high
¾ Assets at least Rs 1000 cr or turnover at least Rs 4000 cr
¾ Limits are Rs 4000 cr or Rs 12000 cr if a group is involved
¾ Limits are US$ 500 m or US$ 1500 m if one of the parties is
outside India ( for group the limits are US$ 2 b or US$ 6 b)

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 Activities undertaken by the Commission

Objective
z The Commission is undertaking Preparatory and
Foundational work required to make it fully
operational. The objective is to advance this
work to a stage where CCI can be made
operational without further loss of time once the
Writ Petitions pending before the Hon’ble
Supreme Court are disposed of.

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 Activities being undertaken by the
Commission (continued)

z Administrative work
z Establishment work
z Competition Advocacy
z Preparation of Draft Regulations
z Competition Forum
z Miscellaneous work

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Competition Advocacy

z Undertaken intensive interaction with leading

professional institutes/chambers, i.e. CII,
FICCI, ASSOCHAM, PHDCC, ICSI, ICAI
z Set up Competition Advocacy Committee (of
experts) and meetings held : action being
taken for implementing its recommendations;
finalized Competition Advocacy Action Plan

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Competition Advocacy (continued)

z Prepared Competition Advocacy literature and

circulated to stakeholders and institutions.
z Facilitated Competition Advocacy
seminars/workshops with CII,ASSOCHAM,
FICCI, ICSI, ICAI (09 Seminars held)

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Competition Advocacy (continued)

z Prepared model Competition Law curriculum

suitable for universities and institutes in India
after study of similar curricula in UK, USA, EC,
Canada, Australia
z Curriculum sent to 136 Universities/Institutes
for inclusion in their courses
z Some of the institutes have already included
the Act in their syllabi- including St. Joseph’s
College of Business Administration, B’lore
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Competition Advocacy (continued)

z Committee of experts has been constituted to

refine model curriculum for specific courses
z Research proposal to analyze Government
policies from competition angle is being
processed with JNU
z Providing secondment facilities for research in
‘competition fields’ to JNU/ICAI – being
finalized

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Preparation of Draft Regulations

z Draft Regulations for conduct of business of

Commission (which are voluminous and
technical), prepared in-house after extensive
study of regulations of overseas competition
authorities and other quasi-judicial authorities
in India
z Comments of 3 experts on the draft suitably
incorporated
z Expert Advisory Committee on Regulations set
up

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Preparation of Draft Regulations
(continued)

z Two full-day meetings of the Committee to

consider regulations clause by clause held on
21.8.04 & 25.9.04; final draft regulations likely
to be completed shortly
z Two firms practising Competition law in the UK
& Belgium have appreciated the draft

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Preparation of Draft Regulations
(continued)

z Advisory Committee of Experts on Predatory

Pricing regulations set up; first meeting held
z Advisory Committee of Experts on Economic
Information set up
z Advisory Committee of Experts to identify
researchers and to evaluate research projects
setup.

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Competition Forum

z Established for capacity building. Forum

meets every Friday and experts invited to
present competition issues
z 15 experts have participated so far

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 Miscellaneous Work

z Research Projects in identified sectors of the

economy being finalized with Delhi School of
Economics, IIM (Bangalore), University of
Bombay, NCAER.
z Identification of sources of relevant economic
data – extensive discussions with CMIE,
CRISIL, NSSO, CII, etc.

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 Opportunities & Challenges
before the Commission

To promote competition culture &

awareness
To build up the Competition Commission
in to a highly professional organization
Undertake capacity building of the
Commission
To help build up a body of outside
professionals (economists, lawyers,
professionals, business managers) having
adequate knowledge on the subject
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Opportunities & Challenges before
the Commission (continued)
To identify Government Policies and Laws
that inhibit competition and to advocate
suitable changes both at Central and State
Government level
To ensure adequate budgetary resources
for the Commission on long term basis
To build an economic and commercial
data-base for investigation and
adjudication

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Opportunities & Challenges before
the Commission (continued)

Enter into cooperation and arrangements

with overseas Competition Authorities
Evolve mechanism for screening
Complaints or References
Harmonize functions of the Commission
vis-à-vis that of sectoral regulators

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 Major Constraints
• Building competition culture in a transitional
economy.
• Identification & funding of institutions that are
willing to impart training to CCI staff as well as
business leaders.
• More professional staff absolutely essential for
an effective Commission. Government salary
levels insufficient to attract and retain competent
professionals.
• Cooperation with other competition authorities.

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