Presentation on salient features and provisions of the Competition Act in India as a part of coursework Course - MMS/MBA Semester - 2 Subject - Business Laws

1. Need for Competition Act in a globalised world,
which is a single platform for carrying out trade
and commerce

2. Topics Covered

3. Meaning of Competition

4. Advantages of
Healthy
Competition
Economic Efficiency
and Welfare
Consumer
Welfare
Better Quality goods
and Services
Reduction in
corruption and
lobbying
Better
Accountability
and
Transparency

5. MRTP Act, 1969
Enforced in June 1970
Objectives
Control Monopolies and
Monopolistic Trade Practices
1
Prevention of Concentration of
Economic Power in few hands
2
Regulate Restrictive
Trade Practices
3
Regulate Unfair Trade
Practices
4

6. Monopolistic Trade Practices
1
Practices that,
1.Prevent or lessen competition in,
2.Production, Supply or Distribution of,
3.Goods or Services by,
4.Misusing one’s power in the market

7. Concentration of Economic Power
2

8. Restrictive Trade Practices
3
Practices that,
1. Obstruct the flow of capital or
2. Resources in the stream of production

9. Unfair Trade Practices
4
Practices that,
1. Involve adoption of unfair methods and /or deceptive
practices for,
2. Promoting sale,
3. Use or
4. Supply of,
5. Goods or Services

10. Shortcomings of MRTP
• Anti-welfaristic results
• Stringent Provisions
• Ambiguity
• International Norms

11. v/sMRTP Competition Act
Based on pre reform scenario Based on Post-reform scenario
Based on size/ structure as a factor Based on conduct as a factor
Frowns upon dominance Frowns upon abuse of dominance
Complex in arrangement and language
Simple in arrangement, language and
easily comprehensible
Registration of agreements
compulsary
No registration requirement

12. Regulation authority appointed
by the government
Competition commission
selected by a collegium
Reactive and rigid Proactive and flexible
Little administrative and financial
autonomy
Relatively higher administrative and
financial autonomy
No regulation for combinations
Combinations regulated beyond a
threshold
v/sMRTP Competition Act

13. Competition Act, 2002

14. Main Components
Anti - Competitive
Agreements
Abuse of
Dominance
Regulation of
Combinations
Competition
Advocacy

15. Anti-Competitive
Agreements
An agreement entered into by,
or OR or
with respect to,
1. Production,
2. Supply,
3. Distribution,
4. Storage,
5. Acquisition or control of goods,
6. or provision of services,
That may cause an Appreciable Adverse Effect
on the Competition

16. Types of Anti-Competitive Agreements
Horizontal Agreements
Agreements by,
Persons or Association of Persons
Or
Enterprises or Association of Enterprises
dealing in identical or similar goods or
services
Manufacturer A Manufacturer B
Retailer

17. Types of Anti-Competitive Agreements
Horizontal Agreements
Determine
Purchase/ Sale
price
Control
Production,
Supply, Tech
Developments,
investments etc.
Sharing/
Allocation of
market based
on geography or
markets
Bid rigging

18. Types of Anti-Competitive Agreements
Vertical Agreements
Any agreement amongst
enterprises or persons,
1. at different stages or levels of the
production chain
2. in different markets,
3. in respect of production, supply,
distribution, storage, sale or price of
or trade in goods or provision of
services
Manufacturer A Manufacturer B
Retailer

19. Types of Anti-Competitive Agreements
Vertical Agreements
Tie - in Refusal to Deal
Exclusive Supply
Exclusive Distribution
Re-sale Price Maintenance

20. Abuse of
Dominance
• Operate independently of competitive forces
prevailing in the relevant market; or
• Affect competitors or consumers or the relevant
market in company’s favour.
Dominant Position
Abuse of Dominance

21. Abuse of Dominance
Determining Abuse of Dominance
Determination of relevant
market
Ascertainment of dominance of
enterprise/ group in relevant market
Determination of Abuse by
dominant enterprise
1
2
3

22. Abuse of Dominance
Determining Relevant Market
The Act lays down the following factors that help
determine a relevant market :
Relevant Product Market
Relevant Geographic Market

23. Abuse of Dominance
Relevant Product Market

24. Abuse of Dominance
Relevant Geographic Market

25. Regulation of
Combinations
Covers,
- acquisition of control,
- of shares, voting rights, assets and
- merger or amalgamation.
by one or more,
- person or group of persons or
- Enterprise or group of enterprises
Combination :

26. Regulation of Combinations
The Competition Act prohibits any combination that has an
Appreciable Adverse effect on the competition.
Regulation of Combinations
- Prior approval from CCI
- Monetary Thresholds
- Intimation to CCI 30 days after board approval, or execution
of any document/ agreement for proposed combination.

27. Regulation of Combinations
Monetary Thresholds
In India
Applicable to Assets Turnover
Individual Rs. 1500 Cr. Rs. 4500 Cr.
Group Rs. 6000 Cr. Rs. 18,000 Cr.
In and Outside
India
Assets Turnover
Total
Minimum Indian
Component
Total
Minimum Indian
Component
Individual $750 Mn. Rs. 750 Cr. $2250 Mn. Rs. 2250 Cr.
Group $3 Bn. Rs. 750 Cr. $9 Bn. Rs. 2250 Cr.

28. Regulation of Combinations

29. Competition
Advocacy CCI’s Role in pro-actively brining
Government policies for,
- Reducing barriers to trade
- Trade Liberalisation
- Promote Competition

30. Competition Commission of India

31. Competition Commission of India
- Established on 14th Oct 2003
- Became functional in May 2009
- Head office at New Delhi
- Composition,
- Chairman
- 2 to 6 members (Experts with
15+ years experience)

32. Competition Commission of India
Duties of the Commission
• to eliminate practices having adverse effect on competition;
• to promote and sustain competition;
• to protect interests of consumers and
• to ensure freedom of trade carried on by other participants, in
markets in India.
• Extra territorial reach

33. Competition Commission of India
Process of Filing Complaints (Sec. 19)

34. Competition Commission of India
Notable Cases
BCCI v/s Franchise Owners DLF v/s Apartment buyers
• payments made by the buyers must be
based on construction milestones and
not "on demand“
• The builder will not have complete
ownership of open spaces within the
residential project area not sold
Jan 2013Feb 2013
• CCI imposed a penalty
of US$8.2 million on BCCI for misusing
its dominant position
• IPL franchise agreements were loaded
in favor of BCCI and franchises had no
say in the terms of the contract.

35. CCI in Numbers

36. CCI in Numbers
Status of Cases (2009 to 31st March 2014)
Total Cases : 461

37. CCI in Numbers
Sources of Enquiry (31st March 2014)
Total Cases : 461

38. Cases before
the commission
2013 - 14

39. Cases before
the commission
2012 - 13

40. CCI in Numbers
Monetary Penalties (2009 - 2014)
Description Nos.
1
Total number of matters and total amount of monetary
penalties levied
35 Cases. Amount of Penalty
levied is Rs. 9886.96 crore
2
Total amount realized without taking action as mentioned
under Section 39(2)
Rs. 72,74,53,618/-
3 Number of matters referred to income tax authorities Nil
4
Amount therein referred by income-tax authorities as
arrears of tax
Nil

41. Indian Competition act in light of
Global Environment

42. Indian Competition Act in Global Environment
Comparison with Chinese Competition Law, 2008
Categories Indian Competition Act, 2002 Chinese Competition Law, 2008
Aim of Law
Shifting the focus of Indian economy from curbing
monopolies to promoting competition.
To separate government activities from business management
and promote healthy development of the socialist market
economy
Tribunal Provides for a Board Does not provide for a competition tribunal
Objectives
1) Safeguard and promote the order of market competition,
2) Protect consumers and the public interest
3) eliminate practices having adverse effect on
competition,
4) ensure freedom of trade carried on by other
participants in markets in India3.
3)guard against monopolistic conduct,
4) improve economic efficiency
5) promote the healthy development of the socialist market
economy.
One regime
Law establishes a two tier enforcement regime which includes
(i) The Anti-monopoly Commission (ii) the Anti-Monopoly

43. Indian Competition Act in Global Environment
Comparison with Chinese Competition Law, 2008
Categories Indian Competition Act, 2002 Chinese Competition Law, 2008
Conduct Applicable to monopolistic conducts
Targets a special type of monopolistic conduct, i.e.
administrative monopoly, which is a distinctive feature
of the communist regime that exists in China.
Extra Terrestrial
Conduct
Does not distinguish between agreements
entered within India and outside India, but it
focuses - in either cases on the presence of
AAEC.
Distinguishes
Presumptions
Introduces a presumption of anti-competitive
behavior only in case of horizontal restrictions
while evidence that vertical restrictions have an
AAEC is required.13
No presumption of monopolistic conduct but the
effects on competition (i.e. eliminate or restrict) in the
domestic Chinese market should be proven case by
case.

44. Case study

45. Adani Gas penalised for its abuse of dominance
Abuse of Dominance
?
Abusing its dominance in the
relevant market of ‘supply and
distribution of natural gas in
Faridabad’ by incorporating
unconscionable and one
sided terms in the Gas Supply
Agreement (‘GSA’)
Case Cause
on July 3, 2014, the CCI
imposed a fine of over Rs. 25
crores on Adani Gas Ltd. for
abusing its dominant position
in the natural gas supply
market.

46. Unfair Conditions in the GSA
• No liability for reimbursement in case of excess payment
• Buyer’s liability to pay interest in case of delayed
payment
• No liability to pay interest in case of dispute
• Lesser compliance time to buyers, longer compliance
time from suppliers
• No liability to pay interest in case any amount becomes
due
Adani Gas penalised for its abuse of dominance

47. Final Order
• CCI directed AGL to stop indulging in these practices
and modify the GSA accordingly
• A penalty of Rs. 25.67 crore was imposed
Adani Gas penalised for its abuse of dominance

48. Regulation of Combinations
Sun Pharma - Ranbaxy Merger
Facts Findings
Sun Pharma and Ranbaxy
had filed the notice with the
CCI on 06.05.2014, in
relation to merger.
The Commission observed
that there are horizontal
overlaps between the
products of the Parties

49. Findings
Sun Pharma - Ranbaxy Merger
• The commission held a meeting on 07.07.2014 and formed
a opinion that the proposed combination would likely cause
an adverse effect on competition in the relevant markets in
India.
• The Commission noted that various generic brands of a
given molecule are chemical equivalents and are
considered to be substitutable. Therefore, the molecule level
would be most appropriate for defining relevant markets on
the basis of substitutability

50. Horizontal Overlaps found
Sun Pharma - Ranbaxy Merger

51. Proposals by the CCI
Sun Pharma - Ranbaxy Merger
Sun Pharma shall divest:
All products containing Tamsulosin + Tolterodine, Leuprorelin.
Ranbaxy shall divest:
All products containing Terlipresslin, Rosuvastatin + Ezetimibe,
Olanzapine + Fluoxetine,Levosulpiride + Esomeprazole, Olmesartan
+ Amlodipine + Hydroclorthiazide.
Modification(amendments) to the proposed combination:
Sun Pharma shall divest all products containing Tamsulosin +
Tolterodine and the rest products would be divestified by Ranbaxy.

52. Final Order
Sun Pharma - Ranbaxy Merger
• The Commission thus approved the proposed merger
between Sun Pharma and Ranbaxy.
• The Commission also directed that the proposed merger
shall not take effect before the Parties have carried out
the divestiture of the products.
• The combined entity would be the largest pharmaceutical
company in India and the fifth-largest generic player
globally by sales.

53. Conclusion