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Monopolies and Restrictive Trade Practices Act (MRTP)
was introduced in 1969 with the object of restricting concentration of
economic power in a few hands. Effective 01.08.1984, provisions relating to
‘unfair trade practices’ were introduced in the MRTP Act. With liberalization,
the applicability of the MRTP Act was cancelled effective from 27.09.1991.
Considering that free and fair competition is required for a healthy economy,
the Competition Act, 2002 was enacted for the following purposes:
Prohibition of Anti
Competitive Agreements Prohibition of Abuse of
Dominant Positions Important Concepts
The following concepts are defined in the Act.
Enterprise Goods Shares Service Dominant Position
Abuse of Dominant Position
Relevant market
Combination Turnover Acquisition Control Group Prohibition of Anti
Competitive Agreements
All Anti Competitive Agreements are prohibited
under Competition Act, 2002. It is provided that no Enterprise or Association
of Enterprises or Association of Persons shall enter into Agreements in
respect of production, supply, distribution, storage, acquisition or control
of goods or prohibition of services, which causes or is likely to cause an
appreciable adverse effect on Competition within India [section 3(1)]. It is
provided that any agreement entered into in contravention of Section 3(1)
shall be void [section 3(2)] Anti Competitive Practices
The Competition Act, 2002 deems as an Anti
Competitive Practice any agreement entered into between Enterprises or
Association of Enterprises or Persons & Association of Persons or between any
persons or enterprise or practice carried on, or decision taken by any
Association of Enterprise or Association of Persons, including cartel, engaged
in identical or similar trade of goods or provisions of services which,
Directly or indirectly
determine the purchase or the sale price Limits or controls of
production, supply, markets, technical development, investments, or
provision services Shares the market or the
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 in any other similar way. Directly or indirectly
results in bid rigging or collusive bidding, shall be presumed to have an
appreciable adverse effect on competition. The above will not apply to
joint Venture Agreements, if such agreement increases efficiency in
production, supply, distribution, storage, acquisition or control of goods
or provision of services. Prohibition of Abuse of
Dominant Position
Abuse of dominant position by an enterprise is
prohibited [section 4(1)] though, dominant position itself is not prohibited.
Dominant position means a position of strength enjoyed by an enterprise, in
the relevant market in India which enables it to
Operate independently of
competitive forces prevailing in the relevant market; or Combinations Combination is meant to be acquisitions of one or more enterprises by one or more persons or merger or amalgamation of enterprises. The following combinations are treated as increasing market dominance liable for adverse provisions of Competition Act, 2002:
Competition Commission of India (CCI)
The Central Government shall notify and appoint
a Commission called as Competition Commission of India, which shall be an
autonomous body corporate. The CCI shall be given notice by any person or
enterprise who or which proposes to enter into a combination. The notice
giving is optional and can be done in prescribed form after paying
prescribed fee. The option is given as a measure of precaution and if there is
any difficulty, one will have to establish that the combination has not
affected competition adversely. Orders of CCI, its execution
and its appeals
CCI can pass the following orders.
Grant interim relief
Temporary injunction
Award compensation
Class action Penalties
There is provision to impose lesser penalties under section 46 | |||||||||||||||||||||||||||||||||||||||||||||||||
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