1. Competition Act, 2002

2. Competition
• An economic rivalry in which
every seller tries to get what
other sellers are seeking at the
same time:
sales, profit, and market
share by offering the
best practicable combination
of price, quality, and service.
Where the market information
flows freely, competition plays
a regulatory function in
balancing demand and supply

3. The Timeline
• After attaining independence India adopted
MRTP Act 1969 to control trade practices
• During Early 90s in the wake of liberalization and
privatization, a realization gathered momentum
that the existing Monopolistic and Restrictive
Trade Practices Act, 1969 ("MRTP Act") was not
equipped adequately enough to tackle the
competition aspect of the Indian economy.
• Due to globalization process, Indian enterprises
started facing the heat of competition from
domestic players as well as from global giants
Contd..

4. Contd..
• In line with the international trend and to cope up with
the changing realities India, consequently, replaced
MRTP Act and enacted the Competition Act,
2002 (hereinafter referred to as "the Act")
• Competition Commission of India (hereinafter,
referred to as "CCI") replaced the MRTP Commission.
• Pending cases in the MRTP Commission relating to
unfair trade practices were transferred to the
concerned consumer courts under the Consumer
Protection Act, 1986.
• The pending cases relating to monopolistic and
restrictive trade practices have to be taken up for
adjudication by CCI.

5. MRTP Act vs. Competition Act

6. Objects to be Achieved
I. To check anti-competitive practices
II. To prohibit abuse of dominance
III. Regulation of combinations.
IV. To provide for the establishment of CCI

7. Scheme of the Act
The Scheme of the Act has been split into 9 chapters indicated hereunder:
• Chapter I - preliminary provisions viz. Short title, extent and Definition clauses;
• Chapter II -substantive laws i.e. Anti Competitive Agreements, Abuse of
Dominance and Regulation of Combinations;
• Chapter III - provisions relating to Establishment of Commission, Composition of
Commission, Selection of Committee for Chairperson and other Members, Term of
Office of Chairperson etc.
• Chapter IV - Duties, Powers and Functions of the Commission;
• Chapter V - for the Duties of Director General;
• Chapter VI - Penalties for Contravention of Orders of Commission, Failure to
Comply with Directions of Commission and Director-General, Making False
Statement or Omission to Furnish Material Information etc;
• Chapter VII - Competition Advocacy;
• Chapter VIII - provisions relating to Finance, Accounts and Audit,
• Chapter VIII A - provisions relating to “Competition Appellate Tribunal” [inserted
by the Competition (Amendment) Act, 2007] and
• Chapter IX - Miscellaneous provisions.

8. Applicability
This act applies to:
• All goods and services including goods imported
to India and to whole of India except in Jammu &
Kashmir.
• All enterprise whether its private, public or
government but does not include- any act of the
government related to sovereign functions
including the activities of central government
dealing in Security, Atomic energy, Currency,
Defence and Space.

9. Main Features of the Act
Competition
Act, 2002
Prohibits
Anti
Competitive
Agreements.
Provides for
regulation of
Combination
Enjoins
Competition
Advocacy
Prohibits
Abuse of
Dominant
Position

10. Understanding some Key Concepts

11. Consumer:
Consumer means any person who buys any
goods, hire or avail any services for a
consideration payable in any mode of
payment other than those person who are
buying or availing services in respect of resale,
for commercial purpose or for personal use
with the permission of first person.

12. Agreement:
Any understanding or action in concert
• Whether or not formal or in writing
• Action intended to be enforceable by legal
proceedings

13. Cartel:
An association of producers, sellers,
distributors, traders and service providers
who by agreement among themselves
limit,
control, or
attempt to control
the production, distribution, sale or price of
goods or services

14. Conditions that are conducive to
cartelization :
• High concentration - few competitors
• High entry and exit barriers
• Homogeneity of the products (similar products)
• Similar production costs
• Excess capacity
• High dependence of the consumers on the
product
• History of collusion

15. Bid Rigging:
Any agreement b/w enterprise or persons
engaged in identical production or trading of
goods or provision of services which has the
effect of eliminating or reducing competition
for bids or manipulating the bidding process

16. Relevant Product Market:
A market comprising of all those products or
services which are regarded as
interchangeable or substitutable by the
consumer, by reasons of characteristics of
products or services, their prices and intended
use.

17. Tie-in agreement:
The term “tie-in agreement” includes any
agreement requiring a purchaser of goods, as
a condition of such purchase, to purchase
some other goods.
Example: where a gas distributor requires a
consumer to buy a gas stove as a pre condition
to obtain connection of domestic cooking gas

18. Exclusive supply agreement:
• It includes any agreement restricting in any
manner from acquiring or otherwise dealing in
any goods other than those of the seller or any
other person.
• Thus, where a manufacturer asks a dealer not to
deal in similar products of its competitor directly
or indirectly and discontinues the supply on the
ground that dealer also deals in product of
suppliers’ competitor’s goods is an illustration of
exclusive dealing agreement.

19. Refusal to deal:
It includes any agreement, which restricts, or is
likely to restrict, by any method the persons or
classes of persons to whom goods are sold or
from whom goods are bought.
Example: an agreement which provides that the
franchisees will not deal in products or goods of
similar nature for a period of three years from the
date of determination of agreement within a radius
of five kms from showroom amounts to exclusive
dealing agreement.

20. Resale price maintenance:
It includes any agreement to sell goods on
condition that the prices to be charged on
resale by the purchaser shall be the prices
stipulated by the seller unless it is clearly
stated that prices lower than those prices may
be charged.

21. ANTI-COMPETITIVE AGREEMENTS
- As per section 3 of the Act, enterprises,
persons or associations of enterprises or
persons, including cartels,
shall not enter into agreements in respect of
production, supply, distribution, storage,
acquisition or control of goods or provision of
services, which cause or are likely to cause
an "appreciable adverse impact" on
competition in India.
- Such agreements would consequently be
considered void.

22. WHAT may be considered as an ANTI-
COMPETITIVE AGREEMENT?
• agreement to limit production and/or supply;
• agreement to allocate markets;
• agreement to fix price;
• bid rigging or collusive bidding;
• conditional purchase/sale (tie-in arrangement);
• exclusive supply / distribution arrangement;
• resale price maintenance; and
• refusal to deal.

23. ABUSE OF DOMINANT POSITION
• Section 4 of the Act enjoins, "no enterprise
shall abuse its dominant position".
• In competition act, there is no restriction on
Dominant position but there is restriction on
Abuse of Dominant Position

24. Abuse of dominant position includes:
• Imposing unfair conditions or price,
• Predatory pricing,
• Limiting production/market or technical
development ,
• Creating barriers to entry,
• Applying dissimilar conditions to similar
transactions,
• Denying market access, and
• Using dominant position in one market to gain
advantages in another market.

25. Lets understand with a Recent Case
and Ruling Given by CCI….

26. M/s Mega Cabs Pvt. Ltd. Vs. M/s ANI
Technologies Pvt. Ltd.(OLA)
Brief Background:
-In a recent order dated February 09, 2016, the
CCI has rendered its decision in a case between
the above relating to alleged abuse of its
dominant position and entering into anti-
competitive agreements with its taxi drivers by
OLA in the Delhi-NCR region, India
-CCI ruled in OLA's favour
Contd..

27. Contd..
- Mega Cabs filed a complaint against OLA Cabs
accusing it of entering into anti-competitive
agreements and of abusing its dominant
position in Delhi- NCR region, India
- Both are engaged in the business of radio taxi
services, in the Delhi-NCR region, India.

28. Contentions by Mega Cabs
That :
• OLA is dominant in the Delhi-NCR market and is abusing its dominant
position in terms of Section 4 of the Competition Act, 2002.
• OLA has also indulged in anti-competitive agreements with the taxi
drivers registered on its network which has adversely affected the
competition in the market within the meaning of Section 3 of the said
Act.
• That OLA has managed to raise huge investments by way of multiple
rounds of venture funding to acquire a position of dominance in
Delhi-NCR region,
• OLA has engaged itself in abusive tactics like predatory pricing,
offering periodical discounts to consumers and incentivising driver
with the sole intention to eliminate competition from the market.
• OLA's recent acquisition of its competitor 'Taxi for Sure', has
strengthened its market position tremendously enabling it further to
indulge in abusive tactics.
Contd..

29. Contd…
• As per a market report titled"Delhi/NCR Radio Taxi Market Analysis
(2015)' prepared by '6Wresearch' , OLA along with Taxi For Sure holds
a dominant position in the radio taxi services market in Delhi-NCR on
the basis of fleet size (52.9%), monthly revenue (52.3%) and number
of trips per day (57.5%).
• For every cab trip, OLA receives 15% of the actual billing and
remaining 85% is remitted to service providers as revenue. Further,
over and above the 85% share, OLA provides rebates and incentives
to its drivers.
• That OLA also suffers a loss of INR 15.80 per trip but engages in
below-cost pricing to oust other players from the market.
• That OLA provides many discounts to customers like free rides, cash
back schemes, recharge schemes, reduction in minimum fares, special
bonuses, special prizes etc. leads to discrimination of pricing.
• That due to actions of OLA, Mega Cabs is losing its revenues and radio
taxis on its network as its bookings have reduced by 29% since April
2013, bookings have gone down by 31% during 2013-2015 and the
average number of trips per day has also gone down by 31% during
the said period.

30. Reply by the Opposite Party, OLA
• That Mega Cabs has wrongly relied on financial statements of
OLA for the year 2012-13 and 2013-14 when OLA was not even
present in the Delhi-NCR market,
• 6Wresearch report is unreliable which reflects the poor
performance of Mega Cabs and cannot be used as a basis to
prove OLA's dominance.
• Mega Cabs operates on own-assets model wherein all taxis in
its fleet size are owned by it as opposed to OLA which operates
on aggregators' model wherein it does not own taxis, rather
taxis are attached to its network by taxi owners.
Hence, the connotation of 'active fleet size' cannot be applied
to Mega Cabs which has full control over its taxi fleet.
• That Mega Cabs has 650 taxis in its fleet out of which 400 are
active and 250 are inactive. Further, daily trips of each radio
taxi of OLA are 6 whereas for Mega Cabs it is only 4, thereby
showing its inefficiency.
Contd…

31. Contd..
• That while Mega Cabs is complaining of OLA's losses and
linking it to predatory pricing, Mega Cabs is also
suffering losses for 6-7 years after entering the market.
• That giving discounts and rebates is very natural in every
market and essential in the competition process,
especially for new players trying to gain a presence in
the market.
• That being an aggregator, OLA needs to ensure that the
taxi drivers attached to its network stay motivated, and
therefore it needs to provide incentives to drivers.
• That OLA is an efficient and innovative player in radio
taxi services market and its strategies aim at meeting the
competition and establishing a presence.

32. CCI's Observations
The CCI observed that:
• The veracity of the 6Wresearch report relied upon by
Mega Cabs in the case was highly doubtful
• The research was commissioned on instructions of a
particular anonymous client
• Most of the data used in the report is silent as to
specific source from where the data is taken.
• Thus, it remains questionable as to whether radio taxi
operators were interviewed or not and if the data was
reliable.
• Thus, conclusions based on incomplete information
were not found to be reliable. Hence, OLA's
dominance in the relevant market based on
the 6Wresearch report could not be proved.

33. CCI Holding
• CCI held that OLA does not hold a dominant position
in the relevant market and there are other players with
significant presence in the market. Hence there was no
need to go into the examination of OLA's conduct in
such relevant market.
• Inability of existing players to match innovative
technology by any player or the model created for
operating in a particular industry cannot be said to be
creating entry barriers in itself.
• Further, option of venture funding, used by OLA to
bear costs of giving incentives to drivers and discounts
to customers are not exclusively available to OLA alone
and can be accessed by any existing player in the
market. Thus, Mega Cabs' contentions appear to be
misplaced and liable to rejection.

34. COMBINATIONS
• The Act is designed to regulate the operation and
activities of "combinations", a term, which
contemplates acquisition, mergers or
amalgamations.
• Combination that exceeds the threshold limits
specified in the Act in terms of assets or turnover,
which causes or is likely to cause an appreciable
adverse impact on competition within the
relevant market in India, can be scrutinized by the
Commission.

35. What are the threshold
Criteria Asset Turnover
Only Within
India
No Groups ` 1,500 Cr ` 4,500 Cr
Groups ` 6,000 Cr ` 18,000 Cr
Within and
outside India
No Groups US $ 750 m (with
at least ` 750 Cr in
India)
US $ 2,250 m
(With at least `
2,250 Cr in India)
Groups USD $ 3,000
(with at least ` 750
Cr in India)
US $ 9,000 m
(With at least `
2,250 Cr in India)

36. Role of CCI in regulating combinations
• organisation to disclose CCI, the detail of the
proposed combination from the date of
approval of proposed merger or
amalgamation within 30 days
• Competition Commission of India must decide
within 210 days, if they fail to reply within
stipulated period it is assumed that
combination has been approved.

37. Approvals by CCI(Source Annual Report 2014-15, CCI)

38. Competition Advocacy
• Creates a culture of competition.
• The central Government or state government may in
formulating a policy make a reference to the
commission for its opinion in respect of possible effect
on such policy on competition
• CCI to reply within 60 Days from the date of making
such reference, give its opinion to the respective
government as the case may be, on which Central
Government or State Government make further action
as it deems fit.
• Note: Such opinion shall not be a binding on any
government

39. 1 • Promote Efficiency
2 • Encourage Innovation
3 • Facilitates better Governance
4 • Better Utilization of Resources
5 • Wide range of goods at competitive price
6 • Increase Scope of Employment
7 • Better quality of goods at affordable price

40. Competition Commission of India
• Created under Section 7 of the Act
• A body corporate having perpetual succession
and a common seal.
• Head office situated in New Delhi

41. Composition and Qualifications of
Commission
• Chairperson and at least 2 but not more than 6
other members to be appointed by the CG
• Qualification:
a. He/she shall be a person of ability, integrity
and standing and
b. He/she has been or is qualified to be a Judge of
a high court or has special knowledge and
professional experience of not less than 15
years in International trade, economics,
business, commerce, law, finance,
accountancy, management etc.

42. Term of office
• Chairperson: Period of 5 years or upto the age of
67 years
• Members: Period of 5 years or upto the age of
65 years
• Casual Vacancy of Chairperson by death,
resignation or otherwise: the senior-most
Member shall act as the Chairperson, until new is
appointed
• When the Chairperson is unable to discharge his
functions: owing to absence, illness or any other
cause, the senior-most Member shall discharge
the functions of the chairperson until he resumes

43. Restriction on employments of
Chairperson and Members
• The Chairperson or Members shall not, for a
period of 2 years, accept any employment of
any enterprise which has been a party to any
proceeding before the Commission of the Act.
• Restriction shall not be allowed if they are
being appointment by CG

44. Powers of Commission
Inquire into anti competitive and abuse of dominant position
Determine whether agreements has any adverse effect on competition
Examine whether combination has any adverse effect on competition
Granting interim relief as would be necessary in a particular case
Imposing Fines and Penalties
Awarding Compensation
Order Division of dominant undertaking or demerger

45. Chairperson
Two other
members
appointed by CG
COMPETITION APPELLATE TRIBUNAL-
COMPOSITION & QUALIFICATION
Shall be the Judge of the
Supreme Court or the Chief
Justice of a High Court
A Person of integrity and standard
having professional experience of
not less than 25 Years in
competition matters

46. Director General
• Appointed by Central Government for
investigation, proceedings of enquiries in
relation to matters which are referred by the
CCI
• Appointment is made on the basis of
outstanding ability, knowledge and field
experience

47. Appeal Process in Tribunal
Person Aggrieved
File an appeal within
60 days of receipt of
the order
Tribunal may
entertain the
appeal even
after 60 days if
it thinks fit
Commission to close
the appeal within 6
months timeframe

48. Stages of Appeal
Competition Commission of
India
Competition Appellate
Tribunal
Supreme Court
60
Days
60
Days

49. • Section35 authorizes a company secretary holding a
certificate of practice under Section 6(1) of the Company
Secretaries Act,1980 to appear before Competition
Commission of India.
• Company Secretary is responsible for ensuring all legal
compliances including compliance of all statutes.
• Clause 49 of the Listing agreement of SEBI includes
compliance of Competition Act, 2002.
• It becomes a duty of a company secretary to advise the
company to comply with provisions of the Competition Act,
2002.
• Company Secretary is best suited to be appointed as
“Compliance Officer” under the Competition Compliance
Program (CCP)

50. Penalty and Punishments
If a person fails to
comply with the
Directions/ Conditions/
Restrictions
OR
Fails to pay Penalty
imposed
The person shall be punishable with :
imprisonment for a term which may extend to 3 years or
with fine which may extend to rupees 25 crores or with both

51. Penalty for non-furnishing of
information on combination
Penalty may be imposed by the commission
which may extend to 1% of the total turnover or
the assets, whichever is higher, of such a
combination.

52. CCI’s Power to impose lesser penalty
• If any producer, seller, distributor, trader or
service provider included in any cartel, which
is alleged to have violated Section 3, has made
a full and true disclosure in respect of alleged
violations and such a disclosure is vital, the
Commission may impose upon him a lesser
penalty than as prescribed under the Act or
rules or regulations.

53. Sources:
• http://www.icsi.edu
• http://www.mondaq.com
• http://www.cci.gov.in/annual-reports
• https://en.wikipedia.org/wiki/Competition_Commission_of_India

54. • Presented By: Pooja Chetri