Competitionact2002ppt 130210021937-phpapp02 (1)

Competition Act 2002
Presented By Group 4
पितसपधार अिधिनयम

Contents
• Objective
• Background of Competition Law in India
• What is Competition Act?
• Competition Commission of India
• Abuse of Dominant Position
• Duties, Powers , Functions and Penalties
• Distinction between MRTP and Competition act
• Case Study
• Conclusion

Background
• Background of Competition Laws:
1) Back to Ancient India- Cartelization finds
mention in Arthashastra, Kautilya.
2) In modern period, Monopolies and Restrictive
Trade Practices Act was enacted in 1969 to;
a) Prevent the concentration of economic power.
b) Provide for the control of monopolies
c) Prohibit monopolistic and restrictive trade
practices.

ECONOMIC REFORMS OF 1991:
1) Post 1991 policy of Liberalization, Privatization
and Globalization introduced.
2) MRTP 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.

THE COMPETITION ACT,2002
1) Acting on the report of the Committee, the
Government of India passed the
Competition Act in the year 2002; to which
the president accorded assent in 2003.
• It was subsequently amended by the
Competition (Amendment) Act,2007.

COMPETITION ACT
2) The broad objectives of the Competition Act, as
laid down in its preamble are:
• "to prevent practices having adverse effect
on competition, to promote and sustain
competition in markets, to protect the
interest of the consumers and to ensure
freedom of trade carried on by other
participants in markets in India"

Contd..
• Competition Act, 2002 notified in Gazette in
January, 2003. Preamble's stated objectives is
to establish the commission which has the duty
to:
1) Eliminate practices having adverse effect on
competition
2) Promote and sustain competition
3) Protect consumers interests
4) Ensure freedom of trade carried on by other
participants in markets, in India.

COMPETITION ACT, 2002
1) It prohibits Anti-Competitive Agreements
(Sec 3)
2) It regulates Acquisitions, Mergers and
Combinations (Sec 5 & 6)
3) It prohibits Abuse of Dominant Position
(Sec 4)
4) It mandates Competition Advocacy (Sec
49)

Salient Features Of New Competition
Policy
1) The Industries (Development and Regulation) Act, 1951 may
no longer be necessary except for location (avoidance of
urban-centric location), for environmental protection and for
monuments and national heritage protection considerations,
etc.
2) The Industrial Disputes Act, 1947 and the connected statutes
need to be amended to provide for an easy exit to the non-
viable, ill-managed and inefficient units subject to their legal
obligations in respect of their liabilities.
3) The Board for Industrial Finance & Restructuring (BIFR)
formulated under the provisions of Sick Industrial Companies
(Special Provisions) Act, 1985 should be abolished.

Contd..
3) World Trade Organizations (WTO)
• There should be necessary provision and teeth to examine
and adjudicate upon anti-competition practices that may
accompany or follow developments arising out of the
implementation of WTO Agreements.
• Particularly, agreements relating to foreign investment,
intellectual property rights, subsidies, countervailing
duties, anti-dumping measures, sanitary and psytosanitary
measures, technical barriers to trade and Government
procurement need to be reckoned in the Competition
Policy/Law with a view to dealing with anti-competition
practices. The competition law should be made extra
territorial.

Contd..
4) MRTP Act
• The MRTP Act extends to the whole of India except the state
of Jammu and Kashmir. This law was enacted:
• 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.

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 ragging:-
• If two or more supplier exchange sensitive information of
bid, then it will also be restricted practice and against
competition.

Contd..
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

Anti Competition Agreement
• Prohibition of Anti competition Agreement:
• Section 3 provides that no enterprise or
person shall enter into any agreement in
respect of production, supply, distribution,
storage acquisition or control of goods or
provision of services, which causes or is
likely to cause an appreciable adverse
effect on competition within India.

Exemption for Copyrights, Patents,
Exports etc
• The provisions relating to anti-competitive agreements, as contained in
Section 3 and discussed in the aforesaid paragraphs, do not apply to:
• (i) The right of any person to restrain any infringement of or to impose
reasonable conditions, as may be necessary for protecting any of his rights
which have been or may be conferred upon him under-
• (a) ‘Copyrights’ under the Copyright Act, 1957;
• (b) ‘Patent’ or ‘Exclusive right’ granted under the Patent Act, 1970.
• (c) ‘Design’ registered under the Designs Act, 2000.
• (d) ‘Layout-design’ registered under the semi conductor integrated circuits
layout design act, 2000.
• (ii) The right of any person to export goods from India to the extent to
which the agreements relates exclusively to the production, supply,
distribution or control of goods or provision of services for such export
[Section 3(5)]

An agreement entered into
between competitors which:
• (a) directly or indirectly determines purchase or sale
prices.
• (b) limits or controls production, supply, markets
technical development, investment or provision of
services.
• (c) shares the market or source of 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 any other similar way.
• (d) directly or indirectly results in bid rigging or collusive
bidding shall be presumed to have an appreciable adverse
effect on competition.

Adverse Effect on Competition
(a) Tie-in agreement
(b) Exclusive Supply agreement
(c) Exclusive distribution agreement
(d) Refusal to deal
(e) Resale Price maintenance

On World Scale
1) US Sherman Act, 1890
2) European Union introduced Competition
Laws with Treaty of Rome in 1957.
3) Adoption of Competition Laws since
1991.
• In more than 120 Countries Competition
law has been adopted.

Factors which causes Adverse
Effects on Competition
• The commission shall, while determining whether an
agreement has an appreciable adverse effect on
competition under Section3:
• (a) Creation of barriers to new entrants
• (b) Driving existing competitors out of market
• (c) foreclosure of competition by hindering entry into the
market.
• (d) accrual of benefits to consumers
• (e) improvements in production or distribution of goods
or provision of services
• (f) Promotion of technical, scientific and economic
development by means of production or distribution of
goods or provision of services. [Section 19(3)]

Competition Commission Of
India
a) In accordance with the provisions of the
Competition Amendment Act, the
Commission was duly constituted in March
2009.
b) The Commission has a Chairperson and
six members.

Establishment of Commission
1) Central Government has appointed CCI as a
governing Body.
2) The commission shall be a body corporate by the
name aforesaid having perpetual succession and a
common seal with power, subject to the provisions of
this Act, to acquire, hold and dispose of property,
both movable and immovable.
3) The head office of the Commission shall be at such
place as the Central Government may decide from
time to time (New Delhi)
4) CCI (Competition commission of India) may also
assign office in other places in India.

Composition of Commission
1) The Chairperson and other Members of
the Commission shall be appointed by the
Central Government.
2) Selection Committee includes Chief
Justice of India or his nominee, Secretary
in the Ministry of Corporate Affairs

Duties, Power, Functions and
Penalties of Competition
Commission of India:[Section 18]1) It eliminate practices having adverse effect on competition
2) It promote and sustain competition
3) It protect the interest of customers
4) It ensures freedom of trade carried by other participants,
in markets in India.
5) The commission may inquire into any alleged
contravention of the provisions accompanied by such fee
as may be determined by regulations
6) It includes Power to award compensation (Sec 34)
7) It includes power of commission to regulate its own
procedure

DUTIES:
1) Creation of barriers to new entrants in the market driving
existing competitors out of the market foreclosure of
competition by hindering entry into the market accrual of
benefits to consumers
2) Improvements in production or distribution of goods or
provision of services
3) Promotion of technical. scientific and economic
development by means of production or distribution of
goods or provision of services.

Contd..
4) The commission shall, while inquiring whether an enterprise
enjoys a dominant position.
5) Economic Power/market share/size/resources, Importance of
the enterprise; vertical integration/ sale or service network of
such enterprises; dependence of consumers on the enterprise.
6) Countervailing buying power; market structure and size of
market; social obligations, social costs.
7) Relative advantage, by the way of the contribution to the
economic development, by the enterprise enjoying a dominant
position having or likely to have an appreciable adverse effect
on competition; any other factor which the Commission may
consider relevant for the inquiry.

PENALTIES:
1) If any person, without reasonable clause, fails to
comply with the orders or directions of the act, he
shall be punishable with fine which may extend to
rupees 1 Lac for each day during which such non-
compliance occurs, subject to a maximum of rupees
10 Cr, as the Commission may determine.
2) If any person does not comply with the orders or
directions issued, or fails to pay the fine imposed be
punishable with imprisonment for a term which may
extend to 3 years, or with fine which may extend to
rupees 25 CR.

Few Governments Activities which
are Prone to Raise Competition
Concerns:
1) Policies which governs the entry and exit of firms or
individuals into or out of market
2) Policies which controls price or production levels
3) Policies which restricts the quality, level or location of
goods and services available.
4) Policies which restricts advertising and promotional
activities.
5) policies which restricts price or type of inputs used in the
production process
6) Policies which confers significant costs on business
7) Policies provides advantages to some firms over others.

DOMINANCE
• What is Dominance?
-Position of strength enjoyed by an enterprise in the relevant market
which enables it to:
1) Operate independently of competitive forces prevailing in relevant
market.
2) Affect its competitors or consumers or the relevant market in its
favor.
• It involves two distinct parts:
1) Determining whether firm has dominant position
2) Examining whether conduct of the dominant firm falls within the
definition of abuse.

Stages in Dominance
• Stages:
i) Determining the relevant market
ii) Determining whether the firm is dominant
in that relevant market.
iii)Examining whether conduct of the
dominant firm falls within the definition of
abuse.

FACTORS TO BE CONSIDERED IN
DETERMINING DOMINANCE
1) Market share of enterprise
2) Size and resources of enterprise
3) Size and importance of competitors
4) Commercial advantage of enterprise over competitors.
5) Vertical Integration
6) Dependence of consumers
7) Dominant position as a result of a statue
8) Entry Barriers
9) Social obligations and costs
10) Market structure and size of market.
11) Countervailing Buying Power
12) Contribution to economic structure.

Elements of Dominance
• It is the ability to prevent effective
competition and ability to behave
independently of two sets of market
actors, namely:
• a) Competitors
• b) Consumers

PREDATORY PRICE
• It means the sale of goods or provision of
services at a price which is below cost with a
view to reduce competitors or eliminate
competitors.
• ISSUES in Predatory Price:
1) Intent to oust and selling below "cost" necessary
for a successful charge of predation
2) Spare capacity to absorb additional demand

Provisions on Abuse of Dominance
a) As per Section 4 of Indian Competition Act, enterprises or
groups are prohibited from abusing their dominant position.
b) The Act defines dominant position as a position of strength,
enjoyed by an enterprise, in the relevant market in India,
which enables it to.
c) Operate independently of the competitive forces prevailing
in the relevant market.
d) Affect its competitors or consumers or the relevant market
in its favor.
e) Act provides that there shall be an abuse of dominant
position if an enterprise or group.

Abuse of Dominance
i) Directly or indirectly, imposes unfair or
discriminatory
1) Condition in purchase or sale of goods or
services
2) Price in purchase or sale of goods or services
ii) Limits or restricts
1) Production of goods or provision of services or
market
2) Technical or scientific development relating to
gods or services to the prejudice of customers.

Dominance
1) It indulges in practice or practices in denial of
market access in any manner.
2) It 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
3) It uses its dominant position in one relevant
market to enter into or protect, other relevant
market.

Orders By Commission after Inquiry
into Agreement [Section 27]
• It may pass any of the following orders:
• (a) Direct any enterprise or association of
enterprises or person or association of
persons, involved in such agreement, or
abuse of dominant position, to discontinue
and not to re-enter such agreement or
discontinue such abuse of dominant
position;

• (b) Impose such penalty, a penalty equivalent to
three times of the amount of profits made out of
such agreement by the cartel or ten per cent of
the average of the turnover of the cartel for the
last preceding three financial years, whichever is
higher.
• (c) Award compensation to parties in
accordance with the provisions contained in
Section 34;
• (d) Direct that the agreement shall stand
modified to the extent and in the manner as may
be specified in the order by the Commission.

• (e) Direct the enterprises concerned to
abide by such other orders as the
Commission may pass and comply with
the directions, including payment of costs.
• (f) Recommend to the Central
Government for the division of an
enterprise enjoying dominant position.
• (g) Pass such other order as it may deem
fit.

Division of Enterprise Enjoying
Dominant Position [Section 28]
• The Central government, on
recommendations by the Commission
under Section27(f), may, in writing, direct
division of an enterprise enjoying
dominant position to ensure that such
enterprise does not abuse its dominant
position [Section 28(1)]. This order may
provide for all or any of the following
matters, namely:

Division of Enterprise Enjoying
Dominant Position [Section 28]
• (a) The transfer or vesting of property, rights, liabilities or
obligations
• (b) The adjustment of contracts either by discharge or reduction of
any liability or obligation or otherwise
• (c) The creation, allotment, surrender or cancellation of any shares,
stocks or securities.
• (d) The payment of compensation to any person who suffered any
loss due to dominant position of the enterprise.
• (e) The formation or winding up of an enterprise or the amendment
of the memorandum of association or articles of association or any
other instruments regulating the business of any enterprise.
• (f) The extent to which, and the circumstances in which, provisions
of the order affecting an enterprise may be altered by the enterprise
and the registration thereof;
• (g) Any other matter which may be necessary to give effect to the
division of the Enterprise [Section 28(3)]

Combination
Combination covers:
1) Merger & Amalgamation
2) Acquisition
3) Acquiring control
Any combination which causes or is likely to cause
appreciable adverse effect on competition
(AAEC) in markets in India is void.

Meaning of Combination(Section 5)
• The acquisition of one or more enterprises by one or
more persons or merger or amalgamation of enterprises
shall be treated as ‘Combination’ of such enterprises &
persons or enterprises in following cases:
• (a) Acquisition by Large Enterprises
• (b) Acquisition by Group
• (c) Acquisition of Enterprise having similar
Goods/Services
• (d) Acquisition Enterprise having Similar goods/services
by a Group
• (e) Merger of Enterprises
• (f) Merger in Group Company

Regulation of Combination (Section 6)
• Section 6(1) prohibits any person or enterprise to enter into a combinations
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 [Section6(1)]
• Exemption: Any person or enterprise, who or which proposes to enter into
a combination, may, at his or its option, give notice to the Competition
Commission of India (hereinafter referred to as CCI of India) and the fee
which may be determined by regulations, disclosing the details of the
proposed combination, within 7 days of-
• (a) Approval of the proposal relating to merger or amalgamation referred to
in 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 Section 5(a) or acquiring of control referred to in Section 5(b)
[Section 6(2)]

NON Applicability of Section 6
• The provisions of Section 6 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
[Section6(4)].
• Power to Grant Interim Relief [Section 33]
• Power to award Compensation [Section 34]

Investigation of Combinations
[Section 29]
• (a) issue of Notice
• (b) Written Objections
• (c) Additional Information

Orders of Commission on Certain
Combinations [Section 31]
1) Combination does not , or is not likely to,
have an appreciable adverse effect on
competition, it shall approve that
combination including the combination in
respect of which a notice has been given
to the Commission under Section 6(2)
[Section 31(1)].

Contd..
• 2) Combinations has, or is likely to have, an
appreciable adverse effect on competition, it
shall direct that the combination shall not take
effect [Section 31(2)]
• 3) Combination has an appreciable adverse
effect on competition but such adverse effect
can be eliminated by suitable modification to
such combination, it may propose appropriate
modification to the combination, to the parties to
such combination [Section 31(3)].

Section 32
• It empowers the commission to inquire
into an agreement or abuse of dominant
position or combination, if such agreement
or dominant position or combination has,
or is likely to have, an appreciable adverse
effect on competition in India even, if such
agreement or abuse of dominant position
or combination takes place outside India
or the party to such agreements abusing
the dominant position is outside India.

MERGER
• Competition Law: As Merger Control Provision:
• On January 31, 2007, the steel goliath Tata Steel Limited
concluded one of the biggest Indian cross-border merger
deals by acquiring the Anglo-Dutch steel company,
Corus Group Plc. for $13.70 billion. The merged
enterprise, Tata-Corus, employs 84,000 people across
45 countries. It has the capacity to produce 27 million
tons of steel per annum, making it the fifth largest steel
producer in the world. The merger also gave Tata Steel
access to Corus’ strong distribution networks in Europe.

Factors having effect on
Combination
• (a) Actual & Potential level of competition
through imports in the market.
• (b) Extent of barriers to entry to the market
• (c) Level of combination in the market
• (d) degree of countervailing power in the market
• (e) likelihood that the combination would result in
the parties to the combination being able to
significantly and sustainably increase prices or
profit margins

Contd..
• (f) Extent of effective competition likely to
sustain in a market.
• (g) extent to which substitutes are
available or are likely to be available or
are likely to be available in the market
• (h) Market share , in the relevant market,
of the persons or enterprise in a
combination, individually and as a
combination.

Contd..
• (i) likelihood that the combination would result in the
removal of a vigorous and effective competitor or
competitors in market.
• (j) Nature and extent of vertical integration
• (k) Possibility of a failing business
• (l) Nature & extent of innovation
• (m) Relative advantage by way of contribution to the
economic development, by way of combination having or
likely to have appreciable adverse effect on competition
• (n) whether the benefits of the combination outweigh the
adverse impact of the combination, if any [Section 20(4)]

WHY REGULATE MERGERS?
1) Mergers are likely to have adverse effect on competition
i) Unilateral effects: Due to increase in market power of the
merged entity. Higher concentration is associated with
higher market power, which enables post merger prices to
move up, in spite of efficiency gains of merger.
"A Merger may be profitable even in the absence of efficiency
gains"
ii) Coordinated effects: Merger may raise the prospects of
coordinated effects arising in which a reduction in the
number of industry participants increases the threat of tacit
coordination.

MERGERS
2) Avoid Heavy Social Cost
i) De-merger could have high social and economic
costs
ii) Collusive enterprises could escape punishment by
resorting to merger, thereby defeating purpose of
law.
iii) Mergers then would have to be dealt with as
agreements under Sec.3

Contd..
3) Market power from merger not same as that
gained through fair competition/sheer efficiency in
operation. Sec 4 does not suffice.
i) Merger involves willful acquisition of market power
as distinct from growth or development on account of
superior product, business acumen or historical
accident.
ii) When two enterprises combine to increase their
profitability the source of profitability may be
increased 'market power' and not increased
'efficiency'.

Contd..
4) Conglomerate mergers can harm
competition through agreement to remove
potential competitors.
i) Conglomerate mergers in neighboring markets
(markets for substitutes or complements) result
in leveraging problems like: Tying, Pure
bundling, Financial leverage and predation
ii) Market extension/product extension mergers.

Contd..
5) While horizontal merger works through higher
market power, vertical mergers give rise to market
fore-closure.
i) For example, depriving rival producer of a
distribution network if a producer merger with a retail
chain (Case of vertical integration)
ii) "Foreclosure of a share of the market otherwise open
to competitors" e.g. the acquisition of ready mixed
concrete firms by cement suppliers was said to
foreclose the market for cement to non-integrated
cement suppliers
iii) By raising rival's costs, through: i) Input fore-
closure ii) Customer fore-closure

Contd..
• 6) Anti competitive issues raised by vertical
mergers are similar to exclusive dealing:
• VERTICAL MERGER: ANTI-COMPETITIVE THEORIES:
• i) Vertical mergers may put potential competition at a
disadvantage by raising the cost of entry (entry
deterrence)
• ii) A Vertical merger may put existing competitors at a
disadvantage by raising their costs (Raising rival's costs)
(e.g. by locking up rival's necessary inputs)

COMPETITON APPELLATE
TRIBUNAL
• To hear and dispose of appeals against any direction issued or
decision made or order passed by the Commission
• To adjudicate on claim for compensation that may arise from
the findings of the Commission or the orders of the Appellate
Tribunal in an appeal against any finding of the Commission
and pass orders for the recovery of compensation under
• Very appeal shall be filed within a period of 60 days from the
date on which a copy of the direction or decision or order
made by the Commission is received by the Central
Government or the State Government or a local authority or
enterprise accompanied by such fee as may be prescribed
• Condemnation of delay

COMPETITION ADVOCACY
• The Central Government may, including review of laws
related to competition in formulating a policy on competition
as the case may be, make a reference to the Commission for its
opinion on possible effect of such policy on competition and
on the receipt of such a reference, the Commission shall,
within sixty days of making such reference, give its opinion to
the Central Government, or the State Government, as the case
may be, which may thereafter take further action as it deems
fit.
• The opinion given by the Commission shall not be binding
upon the Central Government or the State Government, as the
case may be in formulating such policy.
• The Commission shall take suitable measures for the
promotion of competition advocacy, creating awareness and

Distinction between MRTP and
Competition ACT
• Competition Act MRTP
• Competition concepts expressly defined Competition concepts not
expressly
defined
• Provision of regulation of combination No regulations of
combinations
• Power to impose penalty factor No power to impose penalty
• Statutory authority can seek CCI's opinion No provision for statutory
authorities to seek
opinion

Competition ACT
• Competition MRTP
• Government department within its ambit Government department
outside its ambit
• Based on the post reforms scenario Based on pre reforms
scenario
• Based on structure as a factor Based on size as a factor
• Combinations regulated beyond No combinations regulation
• a threshold limit.
• Relatively more autonomy for the Very little administrative and
competition commission
financial autonomy

Competition ACT
• Competition MRTP
• Competition Commission
selected by Search committee. Competition Commission
appointed by
the Government
• Penalties for offences No penalties for offences
• Proactive & flexible Reactive & Rigid
• Unfair trade practices omitted Unfair trade practices covered
• Frowns upon abuse of dominance Frowns upon
dominance

BENEFITS OF COMPETITION
• The benefits of Competition work through the
economy by enhancing allocative, productive
and dynamic efficiency and thereby benefit the
consumers, businesses and the government.
a) Consumers:
i) Wider choice of goods, services and suppliers
ii) Better quality and improved value for money.

BENEFITS….
• b) Businesses:
i) Level playing field
ii) Redressal against anti competitive practices
iii) Competitively priced inputs
iv) Greater productivity and ability to compete in global
markets.
• c) Governments (Central and State)
i) Optimal realization from sale of assets
ii) Savings of public money in procurement
iii) Enhanced availability of resources for social sector.

National Manufacturing
Competitiveness Council(NMCC)
• The NMCC has been set up by the government.
The Council will be an apex body which will
provide inputs for policy making as well as
suggest measures for enhancing the
competitiveness in the Indian industry. The role
of the NMCC will include:
• (i) Identification of manufacturing sectors, which
have potential for global competitiveness,
problems and constraints in such sectors with
respect to structure and size of industry,
technology gaps etc.

Contd..
• (ii) Evolving sector-specific strategies for
enhancing competitiveness of manufacturing
sector.
• (iii) Recommending measures to create common
infrastructure and facilities such as testing,
quality, design, HRD skills, training institutes,
etc.
• (iv) Providing forum for dialogue between the
public and private sectors, labor and academic
sectors.

CASE STUDY: ABUSE OF
DOMINANT POSITION
• FINE ON INTEL:
• On 13 May 2009 the European Commission
fined computer chipmaker Intel € 1.06 bn (₤
948m) (Approx 6400 Crs) for infringing Article 82
EC after being found to have paid manufacturers
and a major retailer to favour its central
processing units (CPUs) over those of its main
rival, Advanced Micro Devices(AMD).

THE LAW: Article 82:
1) Article 82 prohibits the abuse of a
dominant position which affects trade
between Member States.
2) The decision is another example of the
huge fines that the Commission is
prepared to impose as it seeks to send out
a deterrence message to businesses.

THE ISSUE:
1) The CPUs (a type of computer chip) are
an integral part of the computer, similar to
the engine of a car. In 2008 Intel made
80.5% of the CPUs used in computers
compared to AMD's 12%.
2) The Commission's 3 year investigation
followed various complaints lodged by
AMD in 2000, 2003 and 2006.

FINDINGS:
1) The Commission found that Intel had
infringed Article 82 through its strategy of
offering generous rebates to some
computer manufacturers if they bought at
least 80% of their CPUs from Intel.
2) The effect of this was that, in order to be
able to compete on price, any rival would
have to sell its CPUs at a loss.

DIRECT PAYMENTS:
• The Commission also found that Intel had
made direct payments to a major retailer,
Media Saturn Holding, to sell only Intel-
based computers.

BIGGEST EVER:
• This fine is Europe's biggest ever penalty
for anti-competitive practices, a fact which
reflects Intel's strong dominance and,
according to the European Commission,
the losses suffered by millions of
consumers, who may have been denied
the opportunity to buy cheaper or more
innovative products.

BASIS:
1) The fine was based on the value of Intel's
CPU sales in the EEA over the 5 year and
3 month period of the infringement.
2) The fine represents 4.15% of Intel's total
2008 global turnover. The commission has
the power to levy a fine of up to 10% of
global turnover so in theory the fine could
have been anything up to €2.8 bn (₤2.5bn)

Defence:
1) Intel argued that it was offering a
straightforward business deal which
involved a discount for bulk buying.
2) It does not accept that there has been
any harm to consumers and states that it
was merely discounting its products to
compete in a highly competitive
marketplace, passing on to its customers
the benefits of economies of scale.

FILING APPEAL:
• Intel is appealing the decision in order to
clear its name and exonerate the
company; however, as the appeal process
runs its course Intel will work with the
Commission to comply with the decision
requiring it to "cease the illegal practices
immediately to the extent that they are still
ongoing".

Conclusion (Competition Act)
• The Act is therefore a new wine in a new bottle. Wine
gets better as it ages. The proposed Law provides for a
Competition fund, which shall be utilized for promotion
of competition advocacy, creating awareness about
competition issues and training in accordance with the
rules that may be prescribed.
• The extent MRTP Act 1969 has aged for more than three
decades and has given birth to the new law (the Act) in
line with the changed and changing economic scenario in
India and rest of the world and in line with the current
economic thinking comprising liberalization, privatization
and globalization.

Conclusion
• The message is loud yet clear that a well planned
exhaustive competition compliance programme
can be of great benefit to all enterprises
irrespective of their size, area of operation,
jurisdiction involved, nature of products supplied
or services rendered and the same is essential for
companies, its directors and the delegate key
corporate executives to avoid insurmountable
hardships of monetary fines, civil imprisonment,
beside loss of hard-earned reputation when the
Competition Authorities, the media and others
reveal the misdeeds in public.

Advantages of Competition
1) Lower prices for consumers
2) A greater discipline on producers/suppliers to keep their
costs down
3) Improvements in technology – with positive effects on
production methods and costs
4) A greater variety of products (giving more choice)
5) A faster pace of invention and innovation

Advantages of Competition
• 6) Improvements to the quality of service for consumers
• 7) Better information for consumers allowing people to make more
informed choices
• 8) Competition between different firms leads to increased efficiency, as
firms do whatever is necessary—including laying off workers—to lower
their costs;
• 9) Most people work harder (the threat of losing one’s job is a great
motivator);
• 10) Foreign investment is attracted as word gets out about the new
opportunities for earning profit
The overall impact of increased competition should be an
improvement in economic welfare.

Conclusion
• Open competitive markets are the engine
of economic growth
• Competition Law is therefore an important
institutional pillar for a thriving market
economy as competitive pressures hone
production efficiency and stimulate
product and process innovation
fundamental to competitiveness and
economic growth.

SUGGESTIONS
Some Suggestion on Competition Act 2002:
1) Needed a National Competition Policy: competition
impact assessment, competition neutrality, essential
facility doctrine, separation of
policy/regulation/operation/incentives for reform at state
level, etc.
2) Sector Regulation's primary objective should include a
duty to promote effective competition, and in assessing
the interests of consumers, the Regulator should have due
regard to the views of enterprises.
3) Immediate commencement of enforcement of
Competition Act.
4) Mandate close co-operation between Sector Regulators
and Competition Commission of India.

Competition Act 2002
• However, even in this era of globalization; the
emergence of multinational corporations,
interdependence of economies and the role of private
enterprises in economic development is emerging as a
watershed in the “regulatory and reform” thinking.
• The Indian Competition Act, 2002 is one such form
of regulatory mechanism. A macro-level overview of
the Act shows that it was drafted with the noble
intention of curbing anti-competitive combinations in
the Indian economy. This intention alone does not
lend perfection to the Act as there exist various
loopholes that need to be rectified.

BIBLIOGRAPHY:
1) Business Environment C.B.Gupta(7.23-
7.33)
2) www.cci.gov.in
3)http://answers.google.com/Competitionact
4)
http://www.tax4india.com/indian-laws/consume
5)
http://www.legalserviceindia.com/articles/compet.htm

GIVE COMPETITION A CHANCE !
Be a partner in Country’s Growth

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