THE COMPETITION LAW,2002 AND ITS DEVELOPEMENTAL FACTORS

THE COMPETITION LAW,2002 AND ITSadopted to meet the competition; or
DEVELOPEMENTAL FACTORS(b)  limits or restricts—
    (i)  production of goods or provision of services
BY:or market therefor; or
   (ii)  technical or scientific development relating to
THAKAR FORAM*goods or services to the prejudice of consumers; or
   (c)  indulges in practice or practices resulting in
 denial of market access 2[in any manner]; or
INTRODUCTION:(d)  makes conclusion of contracts subject to
Today, the whole world is facing the thought cutacceptance by other parties of supplementary
competition and to stand ‘in’; every nation isobligations which, by their nature or according to
trying to pull their economy up. The globalization andcommercial usage, have no connection with the
urbanization is also playing a good role in the same.subject of such contracts; or
To have a fair and healthy competition, our nation  (e)  uses its dominant position in one relevant
has set up a body – judicial body which is knownmarket to enter into, or protect, other relevant
as the ‘competition commission of India’market.
[CCI]. In India there was an act regarding the 
competition in the market named MRTP Act3.      Regulation of combinations
[Monopolistic & Restrictive Trade Practice Act]Section-5.                    The
but as the time changed this act was not able toacquisition of one or more enterprises by one or
prevent the needed defense for the society andmore persons or merger or amalgamation of
market, and thus new act named The Competitionenterprises shall be a combination of such enterprises
Act enacted in 2002 which is widely known as theand persons or enterprises, if—
‘antitrust act’ in United States. The(a)  any acquisition where—
substance and practice of this act differ from   (i)  the parties to the acquisition, being the
jurisdiction to jurisdiction.acquirer and the enterprise, whose control, shares,
 voting rights or assets have been acquired or are
In today’s world this law is being seen as thebeing acquired jointly have,—
way to provide better public services. The history of(A)  either, in India, the assets of the value of more
this law was from the Roman Empire.than rupees one thousand crores or turnover more
 than rupees three thousand crores; or
It is said that the competition act is, “an act to  (ii)  the group, to which the enterprise whose
provide, keeping in view of the economiccontrol, shares, assets or voting rights have been
development of the country, for the establishmentacquired or are being acquired, would belong after
of a commission to prevent practices having adversethe acquisition, jointly have or would jointly
effect on competition in the market, to protect thehave,—
interest of consumers and to ensure freedom of(A)  either in India, the assets of the value of more
trade carried on by other participants in the markets,than rupees four thousand crores or turnover more
in India, and for matters connected there with orthan rupees twelve thousand crores; or
incidental thereto.”(b)  acquiring of control by a person over an
 enterprise when such person has already direct or
 indirect control over another enterprise engaged in
OBJECTIVES:production, distribution or trading of a similar or
The preamble of this act states that this is an act toidentical or substitutable goods or provision of a
establish a commission, protect the interest of thesimilar or identical or substitutable service, if—
consumers and ensure freedom of trade in markets   (i)  the enterprise over which control has been
in India.acquired along with the enterprise over which the
There are some elements or the objectives for theacquirer already has direct or indirect control jointly
act.have,—
1. To prohibit the agreements or practices that(A)  either in India, the assets of the value of more
restricts free trading and also the competitionthan rupees one thousand crores or turnover more
between two business entities.than rupees three thousand crores; or
2. To ban the abusive situation of the market  (ii)  the group, to which enterprise whose control
monopoly.has been acquired, or is being acquired, would belong
3. To provide the opportunity to the entrepreneurafter the acquisition, jointly have or would jointly
for the competition in the market.have,—
4. To have the international support and enforcement(A)  either in India, the assets of the value of more
network across the world.than rupees four thousand crores or turnover more
5. To prevent from anti-competition practices and tothan rupees twelve thousand crores; or
promote a fair and healthy competition in the market.  (c)  any merger or amalgamation in which—
    (i)  the enterprise remaining after merger or the
SAFEGUARDING WELNESS PROVIDED BY THE ACT:enterprise created as a result of the amalgamation,
What has been prohibited?as the case may be, have,—
This law prohibits the deliberate exploitation of a(A)  either in India, the assets of the value of more
dominant market position by a firm. it also prohibitsthan rupees one thousand crores or turnover more
the limiting access. And willful acquisition has also beenthan rupees three thousand crores; or
prohibited.  (ii)  the group, to which the enterprise remaining
Unlawful monopolization is an offence under theafter the merger or the enterprise created as a
competition law and consists of following tworesult of the amalgamation, would belong after the
elements:merger or the amalgamation, as the case may be,
1. Possession of market power in the relevanthave or would have,—
market. And(A)  either in India, the assets of the value of more
2. The willful acquisition or maintenance of the power,than rupees four thousand crores or turnover more
as distinguished, from the growth and development.than rupees twelve thousand crores   
There has been made an ‘anti-competition 
agreement’ for the same. It includes; 
1.  CONCLUSION:
2. - Agreement to limited production or supply.India is a country of differences and thus, the US or
3. - Agreement to allocate market.other model of this act may not work for India. India
4. - Agreement to fix price.is waving its own chemistry for politics and social and
5. - Big rigging or collusive bidding.economic conditions and so it might become a
6. - Refusal price maintenance. &difficult task for India for the setting. And moreover
7. - Exclusive supply.India is also taking the unique challenges from
 judiciary.
The question arises is besides of all these why do 
we need competition in the market? The answer is itTaking an example;
makes the enterprises more efficient and it gives aMr. Dipak chatterji as the chairman of CCI was
wider choice to the consumers at lower prices, fairelected and the questions raised that he cannot
competition is beneficiary for all.stand above all the SC judges. Government arged
 that ‘CCI is a body which need a experienced in
 the field and which cannot be supplied by the
LEGISLATIVE DEVELOPMENT:judiciary people. But under Article 226 and 32 of the
Now, paying attention to the legislative part, theconstitution of India the SC and HC respectively able
government has enacted the MRTP Act,1969 is theto exhibited such judicial activism and thus, the SC
first enactment to deal with the competition issuedtook a firm stand against government in January, the
and it came into force on 1st june,1970. The MRTPcentral govt. assured the SC that amendments would
Act was not well adequate for the market; thus,be made in the competition act to enable the chair
with some new notifications the Act of Competition,person and the member to be elected by a
2002 had been enacted.committee presided over by the chief justice of India
The competition Act, 2002 received assent of theor his nominees. The SC on January 20, 2005
president of India on January 13, 2003 and wasdisposed off the petition in the view of the
published in the gazette of India dated January 14,submission made by the govt. and thus, govt. made
2003. Some of the sections of the act were broughtCCI a truly functional body.
into force on March 31, 2003 and majority of the 
other sections on July 19, 2003. However, the entireHere has given the comparison of both the MRTP
act has not came into force.and Competition Act: 
The CCI is a body corporate having perpetual 
succession and a common seal. The members of CCI 
should be appointed by the central government and 
the SC penal.1
Even under the article 38(1) of the constitution ofBased on the pre-reforms scenario
India, social order on the bases of justice-regardingBased on the post-reforms scenario
political, economic and social reviews, this concept has2
been given. The new clause aims at equality in allBased on size as a factor
spheres of life. It would unable the state to have aBased on structure as a factor
national policy on wages and eliminate inequalities in3
various spheres of life.Competition offences implicit or not defined
And,  the article 39, specifically deals with theCompetition offences explicit and defined
principles of policy to be followed by the state for4
securing economic justice.Complex in arrangement and language
This article states:Simple in arrangement and language and easily
‘ to ensure that the economic system should notcomprehensible
result in concentration of wealth and means of5
production to the common detriment.’14 per se offences negating the principles of natural
 justice
These both articles embody the jurisprudence4 per se offences and all the rest subjected to rule
doctrine of ‘distributive justice’. Theof reason.
constitution permits & even directs the state to6
administer what may be termed “distributiveFrowns upon dominance
justice”. This concept in the sphere ofFrowns upon abuse of dominance
law-making cannot, inter alia, the removal of7
economic inequalities rectifying the injustice resultingRegistration of agreements compulsory
from dealing and transactions between unequalNo requirement of registration of agreements
societies.8
 No combinations regulation
MAJOR AREAS IN FOCUS:Combinations regulated beyond a high threshold limit.
1.      Anti-competitive agreements.9
Section-3.        (1) No enterprise or associationCompetition Commission appointed by the
of enterprises or person or association of personsGovernment
shall enter into any agreement in respect ofCompetition Commission selected by a Collegium
production, supply, distribution, storage, acquisition or(search committee)
control of goods or provision of services, which10
causes or is likely to cause an appreciable adverseVery little administrative and financial autonomy for
effect on competition within India.the Competition Commission
(2) Any agreement entered into in contravention ofRelatively more autonomy for the Competition
the provisions contained in sub-section (1) shall beCommission
void.11
(3) Any agreement entered into between enterprisesNo competition advocacy role for the Competition
or associa­tions of enterprises or persons orCommission
associations of persons or between any person andCompetition Commission has competition advocacy
enterprise or practice carried on, or decision takenrole
by, any association of enterprises or association of12
persons, including cartels, engaged in identical or similarNo penalties for offences
trade of goods or provision of services, which—Penalties for offences
(a)  directly or indirectly determines purchase or sale13
prices;Reactive and rigid
(b)  limits or controls production, supply, markets,Proactive and flexible
techni­cal development, investment or provision of14
services;Unfair trade practices covered
  (c)  shares the market or source of production orUnfair trade practices omitted (consumer fora will
provision of services by way of allocation ofdeal with them)
geographical area of market, or type of goods or15
services, or number of customers in the market orDoes not vest MRTP Commission to inquire into
any other similar way;cartels of foreign origin in a direct manner.
(d)  directly or indirectly results in bid rigging orCompetition Law seeks to regulate them.
collu­sive bidding,shall be presumed to have an16
appreciable adverse effect on compe­tition:Concept of ‘Group’ Act had wider import
Provided that nothing contained in this sub-sectionand was unworkable
shall apply to any agreement entered into by way ofConcept has been simplified
joint ventures if such agreement increases efficiency1. And by this view we can assure that the
in production, supply, distribu­tion, storage,Competition Act, 2002 is needed for the country.   
acquisition or control of goods or provision of 
services. 
Explanation.—For the purposes of this sub-section, 
“bid rigging” means any agreement, between 
enterprises or persons referred to in sub-section (3) 
engaged in identical or similar production or trading of 
goods or provision of services, which has the effect 
of eliminating or reducing competition for bids or 
adversely affecting or manipulating the process for 
bidding; 
(4) Any 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— 
(a)  tie-in arrangement; 
(b)  exclusive supply agreement; 
  (c)  exclusive distribution agreement; 
(d)  refusal to deal; 
  (e)  resale price maintenance,shall be an 
agreement in contravention of sub-section (1) if such 
agreement causes or is likely to cause an appreciable 
adverse effect on competition in India. 
  
2.      Abuse of dominant position. 
Section-4 
(a)  directly or indirectly, imposes unfair or 
discriminato­ry— 
   (i)  condition in purchase or sale of goods or 
services; orEND NOTES:
  (ii)  price in purchase or sale (including predatory 
price) of goods or service; or 
        Explanation.—For the purposes of this1.
clause, the unfair or discriminatory condition in2.
purchase or sale of goods or services referred to in3. M.P.Jain, The Constitution of India. Nagpur
sub-clause (i) and unfair or discriminatory price in4. Dr.Pandey, the constitutional law of India.
purchase or sale of goods (including predatory price) 
or service referred to in sub-clause (ii) shall not include*first year student of B.A.LL.B.(HONS.
such discriminatory conditions or prices which may be