A PRESENTATION ON COMPETITION ACT, 2002 WITH RECENT AMENDEMENTS. PRESENTED BY MADHUSUDAN NARAYA, STUDENT OF MBA AT NATIONAL INSTITUTE OF TECHNOLOGY, DUGAPUR, WEST BENGAL. THIS TOPIC IS NECESSARY FOR MARKETING PEOPLE AND THE SLIDE CONTAINS THE CASES ALSO !!

1. Competition Act, 2002
Presented by: Presented to:
CA. Anupam De
Assistant ProfessorMadhusudan Narayan
Roll No: 13MBA75 Department of Management Studies
National Institute of Technology
Durgapur
प्रतिस्पर्धा अतर्तियम
Presentation on Business Law and Corporate Taxation
(MS- 4002)

2. Contents
TOPICS
• What Is Competition
• Background of Competition Act
• Objective and Conditions
• Anticompetitive practices
• Abuse of Dominance (Section 4)
• Mergers and Acquisitions
• Competition Advocacy
• Competition Commission of India
• Competition Vs MRTP
• Cases
•

3. MRTP ACT, 1969
For Prohibition of
Monopolistic, Unfair &
Restrictive Trade Practice
Liberalization – 1991
After this – difficulty arose to
administer present market
Competition Act, 2002 and
Competition(Amendment) Act, 2007
to meet the requirement of the highly competitive market
1. Anti-Competitive Agreements
2. Abuse of Dominance
3. Combinations
4. Competition Advocacy

4. What is Competition?
• It 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)
• It is the foundation of an efficiently working market system.
• The process of rivalry between firms striving to gain sales
and make profits
• Motive: self-interest, but outcome mostly beneficial for the
society
• Competition is not just an event, but a process
• It is not automatic – needs to be nurtured

5. Benefits from Competition
• Companies : Efficiency, cost-saving operations, better
utilization of resources, etc.
• The Consumer : Wider choice of goods at competitive prices
• The Government : Generates revenue
BUT…………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….

6. 1. Types of Competition
Price Competition: Winning customers by lowering price
Non-price Competition: Winning customers by advertising, offering after-
sales-services, using sale promotion tools, etc.
2. Ways of Competition
Fair Competition: Fair means such as producing quality goods,
becoming cost-efficient, optimising the use of resources, best
technology, research & Development, etc.
Unfair Competition: Unfair means such as fixing price with the rivals,
predatory pricing, disparaging or misleading advertisements, etc.

7. Competition Act 2002 : Background
• ECONOMIC REFORMS OF 1991
1) Post 1991 policy of Liberalization, Privatization and Globalization
introduced.
2) MRTP 1969 Act was found inadequate to meet the challenges of a modern
globalize economy.
3) Government of India in October 1999 appointed a high level Committee
on Competition Policy and Law (the Raghavan Committee) to advise on the
competition law in consonance with international developments.
• As a sequel to the Report of the Committee, the Competition Act,
2002 was enacted and notified in January, 2003.

8. The Competition Act, 2002
• A new law called COMPETITION ACT 2002 has been
enacted to replace the extant law, MRTP ACT 1969
• The new law has been amended on 10th september
2007 by the PARLIAMENT
• An act to provide, keeping in view of the economic
development of the country, for the establishment of a
commission to prevent practices having adverse effect
on competition, to promote and sustain competition in
markets, to protect the interests of consumers and to
ensure freedom of trade carried on by other
participants in markets, in india, and for matters
connected therewith or incidental thereto.

9. Objectives
• The broad objectives of the Competition Act, as laid
down in its preamble are:
• Competition act, 2002 notified in January 2003. Stated
objective in preamble is to provide “for Establishment
of a Commission”.
1) Eliminate practices having adverse effect on
competition
2) Promote and sustain competition in markets
3) Protect consumers interests
4) Ensure freedom of trade carried on by other
participants in markets, in India

10. Competition Act-
What practices are stopped by it?
• Under this act following are restricted practice and these practices are stopped by this act.
1. Price fixing:-
• If two or more supplier fixes the same price for supply the goods then it will be restricted practice.
2. Bid rigging:-
• If two or more supplier exchange sensitive information of bid, then it will also be restricted
practice and against competition.
3. Re-sale price fixation:-
• If a producer sells the goods to the distributors on the condition that he will not sell any other
price which is not fixed by producer.
4. Exclusive dealing:-
• This is also restricted practice. If a distributor purchases the goods on the condition that supplier
will not supply the goods any other distributor.
• Above all activities promote monopoly so under competition act these are void and action of
competition commission will not entertain by civil court.

11. Competition Act, 2002 – Main Features
• Anticompetitive practices, (Section 3)
• Abuse of Dominance (Section 4)
• Mergers and Acquisitions (Section 5 & 6)
• Competition Advocacy (Section 49)

12. Anti - Competitive Agreements between Enterprises
(Section 3)
• Two types: Horizontal & Vertical
• Horizontal Agreements - Agreements between enterprises at the same
stage of production, services, etc
Examples:
• directly or indirectly determines purchase or sale prices;
• Limits or control production, supply, markets, technical development, investment,
or provision of service.
• Shares the market or source production or provision of Services by way of
allocation of geographical area of market, or type of goods or services, or
number of customers in the market or in any other similar way;
• Directly or indirectly results in bid rigging or collusive
bidding.

13. Anti Competitive Agreements between Enterprises
continued…….
• Vertical Agreements: Agreements between
enterprise at different stage of production , distribution
etc.
Agreement includes arrangement or understanding,
oral, or in writing, not necessarily enforceable by law
Examples :
• Tie-in arrangement;
•Exclusive supply agreement;
•Exclusive distribution agreement;
• Refusal to deal;
• Re-sale price maintenance.

14. • Unfair Trade Practices
Any trade practice whose harm
outweighs its benefits. It can be defined
as using various deceptive, fraudulent or
unethical methods to obtain business.
Unfair trade practices include
misrepresentation, false advertising, tied
selling and other acts that are declared
unlawful by statute. It can also be
referred to as deceptive trade practices.
• Example: A salesperson spends four
hours in a consumer‟s home trying to
sell a vacuum cleaner
• Example: A seller convinces a
consumer who can‟t speak or read
English to sign
a multi-page contract.
• Restrictive Trade Practices
Any trade practice that tends to
block the flow of capital into
production and also bring in
conditions of delivery to affect the
flow of supplies leading to
unjustified cost.
• Example: A gas distributor insisted
his customers to buy gas stove as a
condition to give gas
connection. It was held that it was
a restrictive trade practice.
• Example: A is a furniture dealer.
He is selling Sofa at Rs.20000 and
Bed at
Rs.15000. He has an offer that
whoever will buy Sofa and Bed
both, he will charge Rs.30,000
only. Here the choice is open to
the customer to buy the products
single or composite. This is
not a restrictive trade practice

15. • DOMINANCE MEANS A POSITION OF STRENGTH
ENABLING AN ENTERPRISE TO OPERATE INDEPENDENTLY
OF COMPETITIVE PRESSURE AND TO APPRECIABLY
AFFECT THE RELEVANT MARKET,COMPETITION AND
CONSUMERS.
Abuse of dominant position-
(1) No enterprise or group shall abuse its dominant position.
(2) There shall be an abuse of dominant position [under sub-
section (1), if an enterprise or a group],-
(a) directly or indirectly, imposes unfair or discriminatory-
(i) condition in purchase or sale of goods or
service;or
(ii) price in purchase or sale (including predatory
price) of goods or service.
II - Abuse of Dominance
(Section 4)

16. (b) limits or restricts-
(i) production of goods or provision of
services or market therefore; or
(ii) technical or scientific development
relating to goods or services to the prejudice of
consumers; or
(c) indulges in practice or practices resulting in denial of
market access [in any manner]; or
(d) makes conclusion of contracts subject to acceptance
by other parties of supplementary obligations which, by
their nature or according to commercial usage, have no
connection with the subject of such contracts; or
(e) uses its dominant position in one relevant market to
enter into, or protect, other relevant market.

17. III-Regulation of Combinations
Combination Definitions
• Broadly, combination under the competition Act
means acquisition of control, shares, voting rights
or assets, acquisition of control by a person over an
enterprise where such person has direct or indirect
control over another enterprise engaged in
competing businesses, and mergers and
amalgamations between or amongst enterprises
when the combining parties exceed the thresholds
set in the Act. The thresholds are specified in the
Act in terms of assets or turnover in India and
outside India.

18. Types of combination
• Horizontal combinations :These are those that are
between rivals and are most likely to cause appreciable
adverse effect on competition.
Ex-Associated cement company with Damodar cement
• Vertical combinations :These are those that are between
enterprises that are at different stages of the production
chain and are less likely to cause appreciable adverse
effect on competition.
Ex-Time warner Incorporated and turner corporation
• Conglomerate combinations :These are those that are
between enterprises not in the same line of business or in
the same relevant market and are least likely to cause
appreciable adverse effect on competition.
EX-Walt Disney Company and american broadcasting company

19. III-Regulation of Combinations
Regulation of combinations.-
(1) No person or enterprise shall enter into a combination which causes or is likely
to cause an appreciable adverse effect on competition within the relevant
market in India and such a combination shall be void.
(2) Subject to the provisions contained in sub- section (1), any person or
enterprise, who or which proposes to enter into a combination, may, at his or its
option, give notice to the Commission, in the form as may be specified, and the
fee which may be determined, by regulations, disclosing the details of the
proposed combination, within seven days of-
(a) approval of the proposal relating to merger or amalgamation, referred
to in clause (c) of section 5, by the board of directors of the enterprises
concerned with such merger or amalgamation, as the case may be;
(b) execution of any agreement or other document for acquisition referred to in
clause (a) of section 5 or acquiring of control referred to in clause (b) of that
section.
[No commission will come into effect until two hundred and ten days have
passed from the day on which the notice has been given to the Commission
under sub-section(2)or the Commission has passed orders until section 31,
whichever is earlier].

20. ((3) The Commission shall, after receipt of notice under
sub- section (2), deal with such notice in accordance
with the provisions contained in sections 29, 30 and 31.
(4) The provisions of this section shall not apply to share
subscription or financing facility or any acquisition, by a
public financial institution, foreign institutional investor,
bank or venture capital fund, pursuant to any covenant
of a loan agreement or investment agreement.
(5) The public financial institution, foreign institutional
investor, bank or venture capital fund, referred to in
sub- section (4), shall, within seven days from the date
of the acquisition, file, in the form as may be specified
by regulations, with the commission the details of the
acquisition including the details of control, the
circumstances for exercise of such control and the
consequences of default arising out of such loan
agreement or investment agreement, as the case may
be.

21. Cases ……On Regulation and Combination
• Combination of Jet Airways & Etihad Airways.
The Jet Airways & Etihad Airways are engaged in the
business of providing international air transportation
services In investment agreement Etihad had shown
interest in having 24% stake in in Jet Airways to
enhance the Airlines business through Joint initiative.
Etihad’s acquisition of 24% stake & right to nominate
two directors out of six shareholders directors,
including the Board of Director of Jet.
• Direction of the CCI
Considering the facts on record and the details
provided in the notice, the Commission is of the
opinion that the
proposed combination is not likely to have appreciable
adverse effect on competition in India and therefore,
the Commission hereby approves the same. It is
however to be noted, that the Commission is granting
the present approval, under section 31(1) of the Act,
and that such approval is being granted, pursuant to
the underlying competition assessment, based upon
the information/details provided by the Parties. This
approval should not be construed as immunity in any
manner from subsequent proceedings before the
Commission for violations of other
provisions of the Act. This order shall stand revoked if,
at any time, the information provided by the Parties is
found to be incorrect.
• Combination Tata Steel & Corus
Group
• On January 31 st 2007 Tata Steel
conducted one of the biggest
cross border merger deal by
acquiring the anglo-dutch steel
company, Corus Group Plc. for $
13.70 Billion. The merged
company Tata-Corus employs
84000 people across 45
countries. It has a capacity to
produce 27 million tons of steel
per annum, making it fifth
largest steel producer in the
world. The merger also gave Tata
Steel access to the Corus strong
distribution network in Europe.

22. IV-Competition Advocacy
• The aim of Competition advocacy is to foster conditions that will lead to a
more competitive market structure and business behaviour without the
direct intervention of the Competition Law Authority, namely the CCI
• For promotion of competition advocacy and creation of awareness about
competition issues, the Commission may take suitable measures to:
• Promote competition advocacy.
• Create public awareness.
• Impart training about competition
• The Commission shall render opinion on a reference from the Central
Government on policy / law on competition. CCI is required to give
opinion in 60 days; ( Section 49)

23. IV-Competition Advocacy : Examples
• Initiatives by commission in respect of:
• Presentations on Competition law and policy to Ministries
• Held a series of lectures/ seminars/ conferences dedicated to competition related issues
(http://www.cci.gov.in/index.php?option=com_content&task=view&id=15)
- Department of Telecom & TRAI – number portability,
spectrum allocation, etc.
- Department Of Shipping- Shipping conferences-tariff
fixing, etc.

24. Competition Commission of India (CCI)
Administrative structure: It consists of 1 chairman and 6 members
(Current Chairman : Ashok Chawla)
Functions:
1) To prevent practices having adverse effect on competition
2) To promote and sustain competition
3) To protect the interest of consumers
4) To ensure freedom of trade carried by market participants in markets in India
COMPAT
The Competition Appellate Tribunal (COMPAT) is a quasi-judicial body
constituted under the provisions of the Competition Act, 2002, as amended by
Competition (Amendment) Act, 2007.
COMPAT is headed by a Chairperson, who shall be a serving/ retired Judge of
Supreme Court of India or serving/retired Chief Justice of a High Court or qualified to
be a Judge of Supreme Court or Chief Justice of a High Court. The Members shall be
eminent persons from socioeconomic fields.

25. Contravention of Competition Act attracts severe consequences
Examples:

26. MRTP(Monopolies and Restrictive Trade Practices) Act
• Brief on The MRTP Act, 1969
Post independence, many new and big firms have entered the
Indian market. They had little competition and they were trying
to monopolize the market. The Government of India understood
the intentions of such firms. In order to safeguard the rights of
consumers, Government of India passed the MRTP bill. The bill
was passed and the Monopolies and Restrictive Trade Practices
Act, 1969, came into existence.
Through this law, the MRTP commission has the power to stop
all businesses that create barrier for the scope of competition in
Indian economy.

27. Distinction between MRTP and Competition ACT
• Competition Act
1. Competition concepts expressly
defined
2. Provision of regulation of
combination
3. Provides for advocacy
4. Power to impose penalty factor
5. Statutory authority can seek CCI's
opinion
6. Government department within its
ambit
7. Unfair trade practices covered
8. Rule of reason approach
• MRTP
1.Competition concepts not
expressly defined
2.No regulations of combinations
3.No advocacy role
4.No power to impose penalty
5.No provision for statutory
authorities to seek opinion
6.Government department outside
its ambit
7.Unfair trade practices omitted
8.Rule of Law Approach

28. Some Cases….
• Manu Jain vs Hiranandani Hospital, Mumbai
• The Competition Commission of India ("CCI") imposed one fine— INR 522
million ($10 million) fine against the Board for Control of Cricket in India for
an alleged abuse of dominance
• Shoe Companies Penalized for Bid Rigging
• bid-rigging by manufactures of LPG cylinders
• Builders’ Association of India Vs Cement Manufacturers’ Association &Ors
• M/s Santuka Associates Pvt. Ltd. vs. All India Organization of Chemists and
Druggists (19 February 2013)
• Coal India Limited (CIL) Vs Sponge Iron Manufactures Association (SIMA)

29. The Competition Commission of India ("CCI") imposed one fine— INR 522 million
($10 million) fine against the Board for Control of Cricket in India for an alleged
abuse of dominance.
• This case was initiated on the basis of information filed by Sh. Surinder Singh Barmi, a
cricket fan from New Delhi against Board for Control of Cricket in India BCCI to the
Competition Commission of India (CCI) under Section 19(1)(a) of The Competition Act,
2002 on November 02, 2010.
• The allegations leveled by the informant centre on the following three dimensions of
organization of Indian Premier League (IPL)
1. Irregularities in the grant of franchise rights for team ownership.
2. Irregularities in the grant of media rights for coverage of the league.
3. Irregularities in the award of sponsorship rights and other local Contracts related to organisation of
IPL
• The DG concluded that though BCCI is a society and supposed to be a non-profit
organization, its activities related to IPL such as grant of franchise rights, media rights
and other sponsorship rights, where huge revenue is involved, are different from so
called non-profit activities. These activities fall in the commercial sphere and the whole
tendering process for such rights is motivated by profits. Hence the Competition Act can
be applicable to it.
• The Commission concludes that BCCI has abused its dominant position in contravention
of Section 4(2)(c) of the Act.
• The Commission considers that the abuse by BCCI was of a grave nature and the quantum of
penalty levied and considered commensurate with the gravity of the violation is as follows:
(Source : BCCI Website) 8th Feb 2013 CASE NO.61/2010

30. Manu Jain vs Hiranandani Hospital, Mumbai
Source : www.cci.gov.in
• At the heart of the CCI report is a complaint filed by Ramakant Kini, a lawyer,
against LH Hiranandani Hospital in year 2013. Kini is a family friend of Mumbai
resident Manu Jain who, according to the complaint, was refused maternity
services by Hiranandani during the 38th week of her pregnancy because she
declined to avail the stem cell banking services offered by Cryobanks International
India, with which the hospital had an exclusive partnership. The investigative
division's report held that Hiranandani, thanks to its exclusive alliance with
Cryobanks, indulged in unfair practices because the arrangement restricts the
choice of consumers and prevents competitors from providing services to patients.
• The investigative division of the CCI has concluded in a report that the hospital is
a dominant player in the field of maternity services in and around the Powai area
of Mumbai and abused its dominance by restricting the patient choice. The
case assumes significance because it casts the CCI as a quasi-watchdog in Indian
healthcare.

31. Shoe Companies Penalized for Bid Rigging
Source : http://www.mca.gov.in (Ministry of Corp. affairs Website)
• In the case of Ministry /of Commerce, Govt. of India v. M/s Puja Enterprises & Ors., a reference was
made to CCI by Director General – Supplier & Disposal (DGS&D)
• Government of India with respect to a tender enquiry dated June 14, 2011 for conclusion of new rate
contracts for polyester blended duck ankle boots rubber sole. The reference alleged bid rigging and
market allocation by the suppliers, while bidding against the above tender enquiry.
• The Informant had alleged that
(i) the bids made by the Opposite Parties were in a very narrow range;
(ii) most of the Opposite Parties had restricted the quantity to be supplied by them; and
(iii) most of the Opposite Parties had also fixed the maximum quantity they would supply to a
particular Direct Demanding Officer (“DDO‟). The Informant contended that these three
practice were inconsistent with section 3(3) of act.
• After a detailed investigation, CCI held that the bidder-suppliers by quoting identical/ near
identical rates had indirectly determined prices/ rates in the Rate Contracts finalized by DG S&D and
indulged in bid rigging/ collusive bidding
• Further, CCI noted that the parties had also controlled/ limited the supply of the product in
question and shared the market of the product amongst themselves under an agreement.
• Accordingly, CCI imposed a penalty of INR 62.543 million against the eleven shoe
companies @ 5 percent on the average of the gross turnover for financial years 2008-09,
2009-10, and 2010-11.-11.
• The companies penalized include A R Polymers, Puja Enterprises, M B Rubber, Tirupati
Footwear, H B Rubber, Rajkumar Dyeing and Printing Works, Preet Footwears, S S
Rubbers, R S industries, Shiva Rubber Industries and Derpa Industrial Polymers.

32. bid-rigging by manufactures of LPG
cylinders :-
(source: www. compat.nic.in)
- In 2011, the reported manipulation of the bids by manufacturers of
LPG cylinders for supplying 105 lakh to IOCL during 2011-2012
- DG found identical price in bidding which deprived the IOCL from
getting competitive price.
- Matter is pending before the Competition Appellate Tribunal
- Commission imposed fine of Rs. 165.59 Crores and it further directed
all the contravening parties to cease and desist from indulging in anti-
competitive conduct which resulted in bid rigging.

33. Builders’ Association of India Vs Cement Manufacturers’ Association &Ors.
• Brief facts: The Builder‟s Association of India on 26th July 2010 filed a case against the CMA
AND ACC, Ambuja cements ltd, Ultratech Cements, Grasim Cements( Now merged with Ultra
tech cements), JK Cements, India Cements, Madras Cements, Century textiles & Industries ltd,
Binani Cements, Lafarge India and Jaiprakash Associates.
• Direction of the CCI : In cartel cases, the CCI has the power to fine parties up to three
times of its profit for each year of the continuance of the cartel or 10% of its turnover for
each year of the continuance of the cartel, whichever is higher.
• COMPAT granted a stay regarding the collection of INR 63.07 billion ($1.04 billion) in fines imposed on 11
cement manufacturers for coordinating prices. The stay and acceptance of the companies' appeal of the
fine was, however, conditioned upon the payment of a INR 6 billion ($100 million) penalty within one
month of the ruling. In April, Compat substantially reduced the fines imposed by the CCI against several
explosives manufacturers. Although the parties‘ appeals were dismissed, Compat found that the CCI had
failed to consider mitigating
• circumstances alleged by the parties and therefore reduced the original fine of INR 600 million
($9.89 million) by 90%

34. Case :
M/s Santuka Associates Pvt. Ltd. vs. All India Organization of
Chemists and Druggists (19 February 2013)
• Observations & Rulings:
DG has observed that the issue of NOC clearly limits the market
/ supply of pharma products and thus the conduct of AIOCD and
its affiliates being signatories to the agreements regarding the
requirement of NOC for appointment of stockiest, has to be
presumed in contravention of the Act as the prices of drugs are
directly or indirectly getting fixed and are not getting
determined by the inter play of market forces.

35. Coal India Limited (CIL) Vs
Sponge Iron Manufactures Association (SIMA)
• CCI observed that SIMA member companies were totally
dependent on CIL for the supply of coal for running their sponge
iron plants. CIL enjoys a virtual monopoly over the production
and supply of coal as it was producing over 80% of the coal in
India.
• Taking advantage of its dominant position, CIL forced its
consumers to enter into extremely one-sided, anti-competitive
Fuel Supply Agreements (FSA) and the Memorandum of
Understandings (MOUs) under which the consumers have no
bargaining power. It was alleged that CIL was not adhering to the
terms and conditions in the FSA/MOUs and conducting
themselves in a manner detrimental to the interest of the SIMA.
The terms and conditions were also found to be heavily loaded in
the favor of CIL.
• Thus as per Section 4 of the Act, CCI concluded that there existed
a prima facie case of abuse of dominance.

36. References…
• http://www.pib.nic.in/newsite/erelease.aspx?relid=96432
Press Information bureau, Govt of India
• http://www.cci.gov.in/May2011/OrderOfCommission/612010.pdf
• http://www.gibsondunn.com/publications/pages/2013-Mid-Year-Criminal-
AntitrustUpdate.aspx
• http://cci.gov.in/images/media/ResearchReports/Penalties for infringement of
CompetitionLaws.pdf
• http://www.mca.gov.in/
• http://www.compat.nic.in
• Amendments to Competition Act 2002
http://cuts-international.org/pdf/discussion-note25feb06.pdf
• PwC report on Indian Competition Law- January 2012

37. Queries ….

38. FOR YOUR
ATTENTION
THANK YOU