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Competition Act - 2002 As a consequence of LPG Indian economy opened up and the controls were removed. The older law MRTP Act, 1969 has become obsolete. It curbed monopolies, restrictive and unfair trade practices, whereas The Competition Act 2002 wanted to promote competition.Competition laws are also known as Anti-Trust laws. The laws make certain practices to be illegal which hurt both business and consumers. Other countries use the term Competition LawThis Act extends to the whole of India except J & K. It comprises of 66 sections. Objectives of the Act Encourage competitionPrevent abuse of dominant positionProtect the consumerEnsure a level playing field to participate in the Indian economyThe provisions under which the Act is related to comes under four categories- Anti-competitive agreements (Section 3) Abuse of Dominance (section 4)Regulation of combinations (section 5 & 6) Competition advocacy (section 49)Competition Commission of IndiaIn accordance with the provisions of the Competition Amendment Act, the Commission was duly constituted in March 2009. The Commission has a Chairperson and six members.

Anti-competitive agreements (section-3) Firms enter into which may restrict competition. Agreements may be written or oral understanding which may or may not be enforceable by legal proceedings. There are two types of agreements - horizontal and vertical agreements between firms. Horizontal agreement is among competitors and vertical agreements are those relating to an actual or potential relationship of purchasing or selling to each other

A harmful type of horizontal agreement is a cartel. Vertical agreements are harmful if they are between firms in a position of dominance

Agreements between two or more enterprises that are at the same stage of production chain and in the same market are horizontal agreements. For the law to be applicable the products produced by the two enterprises must be substitutesThe Act presumes four type of agreements(horizontal) between enterprises, involved in similar manufacturing or trading of goods or provision of services have an adverse affect on competition -Agreement regarding prices fixing purchase or sale priceAgreements regarding quantities limiting or controlling production, supply, markets, technical development, investment or provision of services.Agreements regarding bids (collusive bidding or rig bidding) tenders submitted as a joint activity or agreement Agreements regarding market sharing agreements for sharing of market or sources of production or type of goods or services by way of geographical area of market or number of customers in the market Such horizontal agreements, which include membership of cartels, lead to unreasonable restrictions of competition Vertical agreementVertical agreement do not come under so much of coverage of law as the horizontal agreements. Wherever vertical agreement has the character of distorting or preventing competition then it is not spared from law. Vertical agreementAny agreement amongst enterprises or persons at different stages or levels of the production chain in different markets in respect of production , supply, distribution, storage, sale or price of, or trade in goods or provision of services, including -

Tie-in agreement Exclusive supply agreement Exclusive distribution agreement Refusal to deal Resale price maintenance shall be anti-competitive if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.

The Act lists the following factors to determine whether an agreement or a practice has an adverse effect on competition-Creation of barriers to new entrants in the marketDriving existing competitors out of the market(predatory pricing is one such example- pricing below the cost to eliminate competitors) Preventing accrual of benefits to consumersPrevents improvements in production or distribution of goods or provision of servicesPrevents promotion of technical, scientific, and economic development by its production of goods or services2. Provisions on abuse of dominance As per Section 4 of Indian Competition Act, enterprises or groups are prohibited from abusing their dominant position.

The Act defines dominant position as a position of strength, enjoyed by an enterprise, in the relevant market in India, which enables it to; Operate independently of the competitive forces prevailing in the relevant market Affect its competitors or consumers or the relevant market in its favour. Dominance per se is not bad. However, its abuse has been considered bad. Act provides that there shall be an abuse of dominant position if an enterprise or group ; i) Directly or indirectly , imposes unfair or discriminatory Condition in purchase or sale of goods or services; or Price in purchase or sale (including predatory price) of goods or services

ii) limits or restricts ; Production of goods or provision of services or market; or Technical or scientific development relating to goods or services to the prejudice of customers; or

iii) indulges in practice or practices resulting in denial of market access in any manner; or iv) 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 v) Uses its dominant position in one relevant market to enter into, or protect, other relevant market. 3. Regulation of Combinations(section 5 & 6)Section 5 of the Act defines Combination Section 6 of the Act is concerned with regulation of Combinations Section 5 Combinations include mergers, amalgamations and acquisition of control, shares, voting rights or assets. Combinations are classified into horizontal, vertical and conglomerate combinations. If a proposed combination causes or is likely to cause appreciable adverse effect on competition, it cannot be permitted to take effect.Horizontal combinations are those that are between rivals and are most likely to cause appreciable adverse effect on competition. Vertical combinations 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. Conglomerate combinations 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.

The concern mostly arises in the case of horizontal mergers between competitors operating in the same market, i.e. dealing with same goods in the same area

However all Amalgamations and Mergers are not covered in the definition of Section 5 under the Competition Act, 2002, only those Acquisitions and Mergers which cross the Specified Assets and Turnover Criteria are covered under Competition Act, 2002.The law prescribes threshold limits, in terms of value of assets or turnover, which are indeed very high in comparison to limits provided in the laws of other countries. The scrutiny of a combination under the Act is usually expected to take place beforeit comes into effect with an idea of preventing a possible anti-competitive behaviour which may adversely affect the consumers. Combinations likely to have an anti-competitive effect can be permitted after such effects are removed by modifications.The Combination Regulations were amended twice on 23rd February 2012 and 4th April 2013, with a view to relax filing requirements in respect of transactions not likely to raise competition concerns, provide certainty, reduce compliance requirements and make filings simpler.4. ADVOCACY FUNCTIONS The major tasks for the Commission under advocacy functions were to: Spread awareness about Competition Act and the CCI among various stakeholders. Reach out to all the stakeholders including the consumers, the Government departments, industry organizations etc. through various Seminars, Workshops and Symposiums to make them aware of the need and beneficial role of competition. Sensitize the stake-holders about nuances of competition law, to facilitate competition audit of their respective laws on different subjects. Take confidence building measures among business enterprises and other stakeholders associated with competition. Take up the issues of National Competition Policy

Benefits of Competition The benefits of competition enhances allocative, productive and dynamic efficiency, and thereby benefit the consumers, businesses and the government.