1. By
KrishnaPrabhu J
Krishna Kumar R
Kannan P
KalaiArasan
KumaresanA

2. Competition-What
 A situation in a market, in which sellers independently
strive for buyers patronage to achieve business objectives
such as profits, sales or market share.
 It is the foundation of an efficiently working market
system.

3. Competition-why
 The ultimate objective of competition is to secure the interest of
the Consumer - it empowers the consumer, best guarantee for
consumer protection.
 It is a means of reducing cost and improving quality.
 It also implies an open market where shortages are rapidly
eliminated through the best allocation of resources.
 It accelerates growth and development; preserves economic and
political democracy.

4. Competition Policy
 Competition policy is defined as those Government
measures that affect the behavior of enterprises and
structure of the industry. It is to promote efficiency and
maximize welfare. (Sum of consumers. surplus &
producers. surplus and taxes collected by the Government).

5. Competition Policy-Goals
 Preservation and promotion of the competitive process.
 Efficiency in production and allocation of goods and
services.
 Innovation and adjustment to technological change.
 Sustained economic growth.

6. The New Law
 A new law called competition act 2002 has been enacted to
replace the extant law, MRTP act 1969.
 The new law was challenged in the supreme court on the
ground that the chairperson should only be from the
judiciary.
 The new law has been amended on 10 sep 2007 by the
parliament.

7. Competition act-Objective
 Competition act, 2002 notified in January 2003. Stated objective
in preamble is to provide “for Establishment of a Commission”.
 to prevent practices having appreciable adverse effect on
competition;
 to promote and sustain competition in markets;
 to protect the interest of consumers
 to ensure freedom of trade carried on by other participants in
markets, in India

8. Main Features
 Prohibits Anti – Competitive Agreements. (sec 3)
 Prohibits Abuse of Dominant Position. (sec 4)
 Provides for Regulation of Combinations. (sec 5,6)
 Enjoins competition Advocacy. (sec 49)

9. Anti-Competitive Agreements
 Section 3 of the Act deals with agreements among enterprises or
persons or association of persons, which causes or likely to cause
appreciable adverse effect on competition. Such agreements are
rendered void pursuant to this section.
The Act deals with following kind of agreements.
 Horizontal Agreements
 Vertical Agreements

10. Horizontal Agreements
 Agreements between enterprises at the same stage of production,
services, etc. and including Cartels.
Examples :
(i) directly or indirectly determines purchase or sale prices;
(ii) limit or control production, supply, technical development etc.
(iii) allocate areas or customers
(iv) Directly or indirectly results in bid rigging or collusive bidding.
 Above agreements are presumed to cause appreciable adverse effect on
competition in the markets.

11. Vertical Agreements
 Agreements between enterprises at different stages of production,
distribution, etc.- subject to Rule of Reason; burden of appreciable
adverse effect on competition, they are prohibited.
Examples :
(i) Tie-in arrangement;
(ii) Exclusive supply agreement;
(iii) Exclusive distribution agreement;
(iv) Refusal to deal;
(v) Re-sale price maintenance.

12. Abuse of Dominance
 Unlike MRTP law, the Act does not frown on dominance by
market players. But the abuse of dominance is prohibited
under Section 4 of the Act. ‘Dominance’ or ‘Dominant
Position’ means a position of strength, enjoyed by an
enterprise, in the relevant market, in India which enables it
to –

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a. operate independently of competitive forces in the relevant
market; sec .19(7) or
b. affect its competitors or consumers or the relevant market in its
favors sec .19(9)
Dominance is determined by several factors e.g. market share of the
enterprise concerned, market share of competitors, entry barriers,
size and resources commanded by the enterprise or competitors,
etc. sec .19(4)

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Examples of abuse include –
 Exclusionary practices such as predatory pricing, denying
market access, use of dominance in one market to enter into, or
protect, other relevant market.
 Exploitative practices such as discriminatory pricing and
imposing discriminatory conditions of trade, conclusion of main
contract contingent upon accepting supplementary obligations
unrelated to main contract.

15. Regulation of Combinations.
 Section 5 of the Act deals with combinations. Combination includes
acquisition of shares, acquiring of control and mergers and
amalgamations. These combinations can be horizontal, vertical or
conglomerate. It is the horizontal type of combinations that has very
high potential to thwart competition when compared to other two
kinds of combinations.
 In line with the market realities, the Act provides for very liberal regime
of combination regulation. The salient features of combination
regulations are –

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a. The Act has set very high threshold limit based on turnover or assets
of the enterprises involved in combination for notification of
combinations.
The objective is to keep smaller combinations outside regulation and
encouraging Indian enterprises to grow in size as well market share in
globalised market.
b. Higher threshold limit is set for combination involving parties
having operation both in India and outside India.
c. The notification of combination to the Commission is voluntary not
mandatory.

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d. Such notification has to be disposed off by the Commission within
90 working days, failing which the same is deemed to be approved.
e. The commission also has the suo moto enquiry power.
f. Limited exemption is given to combination involving public financial
institution, foreign institutional investors and venture capital fund.

18. Competition Advocacy
 The Commission shall take suitable measures to:
-Promote competition advocacy.
-create public awareness.
-Impact training about competition issues.
 The commission shall opinion on a reference from the
central government on a policy/ law on competition; not
binding. [sec 49]

19. Examples
 Initiatives by commission in respect of:
-Department of Posts - Indian post office (Amendment
bill), 2006 – monopoly of letter mail, USO fee, new
regulator, etc.
-Department of shipping- shipping conference s- traiff
fixing; and shipping trade practices Bill, 2005
-Ministry of civil aviation- price fixing by airline association

20. Power of commission
 Cease and desist order
 Penalty up to 10% of average turnover for last three
preceding financial years.
 In case of combination- can be approved, approved with
modification, or refused approval.
 In case of dominant enterprise- Order for division of
dominant enterprise.

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 Approach commission any person; individual, company,
firm, association, statutory corporation, government
company, legal authority, etc.
 Consumer means one who buys goods/ avails services for
consideration.
 Reference by central/ state government, statutory
authority.