final of act

7/28/2019 Final of Act

1/35

RayatBahra Group Of Institutes

Submitted To Submitted ByMs Anshu Goyal Rohit Nayyar

Inderpreet Singh

Harpreet Singh


2/35

Is a situation in a market in which

firms or sellers independently strive for

the buyers patronage in order to

achieve a particular business

objective

for example, profits, sales or market

share (World Bank, 1999)Competition is an age-old

phenomenon


3/35

Competition is an age-old phenomenon

Benefits of Competition:

Companies : Efficiency, cost-saving operations, betterutilization of resources, etc.

The Consumer : Wider choice of goods at competitive

prices

The Government : Generates revenue

BUT


4/35

all these benefits are lost if Competition is

UNFAIR or NON-EXISTANT

Choice of CARS in the olden days

MTNL Monopoly : The position today

Airlines : INDIAN AIRLINES : JET : SAHARA

Indian Railways : The monopoly continues.


5/35

It is a tool to implement and enforce competition policyand to prevent and punish anti-competitive businesspractices by firms and unnecessary Governmentinterference in the market.

Competition Law generally covers 3 areas:

Anti - Competitive Agreements, e.g., cartels,

Abuse of Dominant Position by enterprises, e.g.,

predatory pricing, barriers to entry and

Regulation of Mergers and Acquisitions (M&As).


6/35

The need for Competition Law arises because marketcan suffer from failures and distortions, and variousplayers can resort to anti-competitive activities such ascartels, abuse of dominance etc. which adverselyimpact economic efficiency and consumer welfare.

Thus there is need for Competition Law, and aCompetition Watchdog with the authority for enforcing

Competition Law.


7/35

Competition:

Increases efficiency Encourages innovation Enhances consumer welfare wider

choice, lower prices, better quality Conducive to economic and political

democracy

Apprehension of market failure hasprompted 100 countries to enactmodern competition laws


8/35

Main features of Competition Act

Prohibits Anti-Competitive Agreements

Prohibits Abuse of Dominant PositionProvides for Regulation of Combinations

Mandates Competition Advocacy


9/35

Horizontal Agreements including cartels, e.g., price

fixing, limiting production, sharing markets, bid-rigging

Vertical Agreements e.g., tie-in, exclusive supply/

distribution, refusal to deal

Cartel regarded most pernicious violation - heavypenalties - criminal offence (lysine, vitamins, graphiteelectrodes)


10/35

Not dominance, but abuse is illegal

Dominance based, not on arithmetical

formula, but on economic factors listedin Acts

Abuse includes : discriminatory pricing,

limiting production, denying access

Examples : Microsoft (penalized Euro497m)


11/35

Ex-post action

Notification either compulsory or optional

Strict time frame for decision

Threshold limits

Less than 5% merger applications are

prohibited worldwide


12/35

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


13/35

Threshold:

For group of enterprises

Assets > Rs.4000 crores

Turnover > Rs.12000 crores

Similarly, threshold is provided for overseas groups.


14/35

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.


15/35

Cease and desist order

Impose penalty up to 10% of turnover.

In case of cartel, penalty can be 10% ofturnover or 3 times of profit illegally gained

from cartel activity, whichever is higher.


16/35

Recommend to Government the division ofdominant Enterprise

Various penalties ranging from Rs.1 lac uptoRs.1 crore are also provided for failure to

comply with direction/order of Commission.


17/35

Creates an environment conducive to competition.

The operation of the act is not confined to transactions strictlywithin the boundaries of India but also such transactions involving

entities existing or established overseas.

Explicit definitions and criteria have been specified in order toaccess whether a practice has an appreciable adverse effect oncompetition.

It is the intention of our legislators that provisions of the act in itsextant form should not be considered to be immutable andunchangeable. The intention is promotion of competition advocacy,creating awareness and imparting training about competition issues.


18/35


19/35

For achieving the foresaid duties, the Commission has jurisdiction to:

Enquire into Anti-Competitive Agreements (e.g. Cartels, bid-rigging, etc.) [Section

3]

Enquire into abuse of dominant position (e.g. Predatory Pricing, etc.) [Section 4]

Regulate combinations (Mergers, Amalgamation, Acquisition of shares or control),

[Sections 5 & 6]

Undertake Competition Advocacy (including advice on competition policy issues),

create public awareness, impart training on competition issues, [Section 49]

Jurisdiction


20/35

Commission has regulatory and quasi-judicial powers.

It is to function through Benches [Section 22(1)].

Bench Composition [Section 22(3)].

Constituted by Chairperson At least 2 Members

At least one Judicial member ( Qualified Judge of High Court)

* Judicial Member means a Member who is, or has been, or is qualified to be, a Judge of a High Court.

The Bench over which the Chairperson presides shall be the Principal Bench and the other Benches

shall be known as the Additional Benches.


21/35

Competition Act 2002 MRTP Act

Aims at promoting competition Aims at curbing monopolies

Focus on effects on competition in the market Focus on size (uptil 1991) and on behaviour from 1991

onwards.

Seeks to prohibit anti-competitive agreements, abuse of

dominant position and to regulate combinations

Prohibit monopolistic, restrictive and unfair trade practices

Statutory Authorities can seek CCIs opinion No provision to seek opinion

Appreciable adverse effect is a key factor Factors prescribed

to determine AAEC

Prejudicial to public interest is a key factor parameters not

mentioned in the law

Primary duty to achieve the objectives of the Act devolves on

CCI

Act implemented partly by Central Government and partly by

the MRTP Commission

Leans heavily on Rule of Reason Obsessed with deemed concept

14 per se offences negating the principles of natural justice 4 per se offences and all the rest subjected to rule of reason.


22/35

Competition Act 2002 MRTP Act

Concept of Market is rationalized Relevant

Market=Relevant product market + Relevant Geographical

market

Market has not been defined nor factors to determine

market have been prescribed

Commission to exercise jurisdiction in case of unreasonablerestraints exercised in respect of IPRs.

No explicit power with the MRTP in respect of IPRs

Exclusion of jurisdiction in respect of export business Implicit exclusion of jurisdiction in respect of export

Frowns upon dominance Frowns upon abuse of dominance

No combinations regulation Combinations regulated beyond a high threshold limit.

Penalties for offences No penalties for offences

Reactive and rigid Proactive and flexible


23/35


24/35

Chairperson

Member between 2 & 10 appointed by GOI

Chairperson & its Members shall be whole-time Members & maximum term of 5 years

Maximum age for;

Chairperson: 65 years

Member: 65 years

In Chairperson's absence, Senior most Member , is the acting Chairperson

Suspended By Central Government

Insolvent

Engaged in alternate Paid Employment

Convicted of an office involves Moral Turpitude

Abused his position

Physically or mentally incapable to discharge duties

Composition


25/35

Make the markets work for the benefit and welfare of consumers

Ensure fair and healthy competition in economic activities in the country for development of

economy.

Implement competition policies for the most efficient utilization of economic resources

Participate in formulation of country's economic policies.

Alignment of sectoral regulatory laws in tandem with the competition law.

Effectively carry out competition advocacy.

Spread the information on benefits of competition among all stakeholders to establish and

nurture competition culture in Indian economy.


26/35

Overview

Under the competition advocacy initiative, the Commission organizes interactive meetings, seminars, etc with

different trade organizations, consumer associations, stakeholders and the public at large to spread

awareness about the Competition Law and the Commission.

Objectives of Competition Advocacy

Spread awareness about Competition Act

Familiarize business enterprises, central government ministries, state government ministries, central/state

PSUs about the importance and benefits of fair competition and ensure compliance of the provisions

of Competition Act by all

Sensitize departments / ministries of central / state governments, and PSUs about nuances of competition

law, to facilitate competition audit of their respective laws on different subjects

Take confidence building measures among business enterprises and other stakeholders associated with

competition


27/35

Formed in 19th Oct 2009

Besides, the Chairperson, the Appellate Tribunal shall consist of not more than two Members to be appointed by the Central

Government.

The Appellate Tribunal shall have, for the purposes of discharging its functions under the Act, the same powers as are vested

in a civil court under the Code of Civil Procedure,1908.

Formed for

- Hearing grievances against the decisions and remedies given by the CCI

- Outstanding cases before Monopolies and Restrictive Trade Practices Commission (MRTPC)

- Cases on Unfair Trade Practices (UTP), Restrictive Trade Practices (RTP) & Monopolistic Trade Practices (MTP)

Cases on Disparaging Advertisements transferred to National Consumer Disputes Redressal Commission.

If any person contravenes, without any reasonable ground, any order of the Appellate Tribunal, he shall be liable for a penalty

of not exceeding Rupees one crore or imprisonment for a term up to three years or with both as the Chief MetropolitanMagistrate, Delhi may deem fit.


28/35

Commission has suo moto power to inquire whether an anti-competitive

agreement or abuse of dominant position causes or is likely to cause an

appreciable adverse effect on competition [Section 19(1)]

Commission has suo moto power to enquire whether a combination causes or

is likely to cause an appreciable adverse effect on competition [Section 20(1)] .

This power must be exercised within one year from the date combination has

taken effect [Proviso to section 20(1)]

Suo Moto Inquiry


29/35

Complaint OR State/Central/Statutory

Authorities

Director General (DG) Submits

inquiry Finding to CCI

Complaint Rebut Findings of DG

Dismiss ComplaintPrima

facie Further Inquiry


30/35

In case of abuse by dominant

enterprise, may recommenddivision of the enterprise to the

Central Government

Compensation to the parties

Penalty < 10 % of Annual T/o

of last 3 preceding years

Orders of Commission

Modify Agreements

Inquiry into Anti Competitive Agreements & Abuse of Dominant Position

Cartel: Penalty of 3 x Total

profits OR 10 % of Annual T/o

of last 3 preceding years - Transfer OR Vesting of rights, Liabilities, Property or Obligations- Adjustment of Contracts By Discharge/Reduction of Liabilities/Obligation

- Creation/Allotment/Cancellation of Shares/Stocks/Securities

- Compensation to the affected enterprise/person

- Winding up of enterprise

- Amendments to MoA or AoA


31/35

Dissolve CombinationApprove Combination

If not accepted, parties to submit modifications

with 30 days

OR

90 Days extension period

Adverseeffect

No

Modifications

Yes

Inquiry into Combinations

If modifications accepted, combination will be

allowed

Orders of Commission


32/35

Order equivalent to decree/order by High Court OR Principal Civil Court.

Self rectification of Order.

Appeal against decision of the Commission can be filed to the Appellate

Tribunal within 60 days from the date of communication of the direction, decisionor order to him.

A further Appeal can be made against the order of the Appellate Tribunal, before

the Supreme Courtwithin 60 days from the date of communication of the

direction.

Commissions order


33/35

Penalties for non-compliance with Commissions orders:-

Penalty not less than Rs. 10 lacs [Section 42(1)]

For failure to comply with a direction of Commission or DG Rs 1 lac per day of failure

[Section 43]

If party to a combination makes a false statement or omits a material particular not

less than Rs. 50 lacs up to Rs. 1 crore [Section 44]

Forwillfully omitting to furnish information penalty up to Rs. 10 lacs [Section 45]

Penalities


34/35

Benefits to Centre & State Governments bodies

Savings for exchequers, accrue to central and state governments by virtue of adhering to fair competition

norms

Fair competition among suppliers

Small enterprises, self-employed and micro-retailers are protected against abuse of dominance bybigger enterprises

Helping to sensitize their procurement officers to the harmful effects of anti competitive practices by

suppliers, contractors or manufacturers

Helping identifying areas where bid-rigging, cartelization or abuse of dominance

Familiarizing with the legal remedies available in competition law

Helping them develop competition compliance programs

Providing competition advise.

Helping Nodal Officers at state level in overseeing the task of ensuring fair competition


35/35

final of act

Documents