Competition Act, 2002

Competition act notes 

INTRODUCTION

The Competition Act, 2002 was enacted by the Parliament of India and replaced The Monopolies and Restrictive Trade Practices Act, 1969. It is in effect to govern Indian competition law. After its enactment The Competition Act, 2002 has been amended twice, The Competition (Amendment) Act, 2007 and The Competition (Amendment) Act, 2009. Two of the main features of the Competition Act, 2002 is the framework it provides for the establishment of the Competition Commission, and the tools it provides to prevent anti-competitive practices and to promote positive competition in the Indian market.

  OBJECTIVE OF COMPETITION ACT

The Act seeks to prevent monopolies and also to prevent unnecessary intervention by the government. The main objectives of the Competition Act, 2002 are:

• To provide the framework for the establishment of the Competition Commission.
• To prevent monopolies and to promote competition in the market.
• To protect the freedom of trade for the participating individuals and entities in the market.
• To protect the interest of the consumer.

                     Abuse of dominant position

According to the act dominant position means any enterprise that enjoys the position and power in the Indian market which enables it to:

• Operate independently of competitive forces in the relevant market
• Affect its competition, consumer or the relevant market in its favor.

 For example, predatory pricing is a practice that is seen to be an abuse of a dominant position. In simple words when a dominant enterprise engages in AAEC acts, it is considered an abuse of a dominant position. The difference between the definition of anti-competitive agreements and abuse of dominant position is that in anti-competitive agreements there have to be two or more parties and it can be between any enterprise or firm and doesn’t require there to be a dominant firm involved. In abuse of dominant position, it can be done by a single party but the party has to be in a dominant position in the relevant market.

REMEDIES:-

Remedies against abuse of dominant position are provided by the Competition Commission of India.

Upon a review and inquiry into the alleged practices the Competition Commission may pass the following orders:

1. Direct the discontinuance of such practices
2. Impose a penalty that is less than 10% or the turnover of the preceding three financial years; in the case of a cartel the penalty shall be 10% or three times the turnover of every financial year and shall continue for the period of continuance of such practices
3. Direct the modification of such an agreement or abuse so as to curtail its adverse effect upon the competition of the market
4. Pass any order that it may so deem fit.

REGULATION OF COMBINATION

It include:-

• Any acquisition of shares,
• Voting rights,
• Control of assets
•  Party to merger or amalgamation of enterprises

Any person/enterprise shall not enter into a combination which is likely to have an adverse effect on the competition and such a combination will be void.

If any person/enterprise proposes to enter into a combination he shall intimate the Competition Commission of India within 30 days of:

• Approval of the proposal relating to mergers and amalgamation by the BOD of the enterprises involved in the process.
• Execution of any agreement pertaining to acquiring control.