COMPETITION ACT 2002

Introduction

The new law on competition came into being with the passage of the Competition Act, 2002 by the Parliament and assented to by the President on 13th January 2003. This Act seeks to replace MRTP Act, 1969. (Monopoly & restrictive trade practice)

Objectives
In line with prevailing pattern of modern competition laws, the Act seeks to
1.

prohibit anti-competitive agreements (including cartels), which determine prices or control or limit or share markets among players or result in bid rigging.

2. prohibit abuse of dominant position through unfair and discriminatory prices or conditions (including predatory pricing) limiting or restricting production, denying market access, etc. .

CONTINUE..
3. regulate combination (acquisition, mergers and amalgamations etc.) that causes or likely to cause appreciable adverse effect on competition. 4. entrust the Competition Commission the responsibility of undertaking competition advocacy, awareness and training about competition issues
4

IMPORTANT PROVISIONS RELATING TO COMBINATION

1) Acquisition [ Sec 2 (1) ] 2) Enterprise [ Sec 2 (h) ] 3) PERSON [ Sec 2 (i) ] 4) Relevant market [ Sec 2 (r) ]
6

CONTINUE

5) Relevant geographic market [ Sec 2 (s)]

6) Relevant product market [ Sec 2 (t) ]

Mergers and Acquisitions

Commission is expected to regulate Combinations, i.e., large mergers, acquisitions, etc. likely to have appreciable adverse effect on competition.

Threshold: For single enterprise Assets > Rs.1000 crores Turnover > Rs.3000 crores
8

CONTINUE
Threshold:

For group of enterprises Assets > Rs.4000 crores Turnover > Rs.12000 crores Similarly, threshold is provided for overseas groups.
9

MERGER & ACQUTITION

Notification of Combination to Commission is voluntary

If notified, Commission to take a decision within 90 days on the combination. Decision may allow, disallow, modify, etc. the combination.
10

POWER OF COMMISION
Impose penalty up to 10% of turnover.

In case of cartel, penalty can be 10% of turnover or 3 times of profit illegally gained from cartel activity, whichever is higher.

11

CONTINUE.
Various penalties ranging from Rs.1 lac upto Rs.1 crore are also provided for failure to comply with direction/order of Commission.

12

Adverse effect on competition

Creation of barriers to entry Driving existing competitors out of market Benefits to consumers

13

THANK YOU
14