Explain the features of competition law with cases/examples.
The primary goal of competition law is to stop the misuse of anti-competitive
agreements and market circumstances, therefore eliminating anti-competitive
practices. In the long term, monopolies and oligopolies are harmful when
there is no competition in the market. A flexible, dynamic, and competitive
private sector is becoming increasingly recognised as being necessary to
support sustainable economic development.
Additionally, competition lessens lobbying and corruption while fostering
increased accountability and openness. As a productive framework for market
operations, competition encourages entrepreneurship and broadens the range
of options.
By punishing anti-competitive behaviours like abusive power and anti-
competitive agreements, competition laws and regulations serve to foster
competition rather than to stifle it. In any field, competition is viewed as a
positive and energising practice as long as it is carried out legally.
The Competition Law was passed in 2002 and came into force on January 13,
2003 which repealed the Monopolies and Restrictive Trade Practices Act, 1969.
India passed the Competition Act, 2002 with the intention of enforcing anti-
competitive behaviour and bolstering World Trade Organisation (WTO)
agreements. The Competition Commission of India (CCI) is also designated by
the Act as a market regulator tasked with preventing and managing anti-
competitive activity throughout the nation.
The act aims to safeguard consumers, preserve the freedom of trade practiced
by other market participants, prevent anticompetitive acts, and foster and
maintain competition in the market.
Key features of the law:
1. Anti-competitive Agreements
Any agreement between businesses that has the potential to materially harm India's
competitive landscape is forbidden by the act.
The Competition Act, 2002 defines anti-competitive agreements as such in section 3
where it states, “No enterprise or association of enterprises or individuals or
association of individuals may enter into an agreement regarding production, supply,
distribution, storage, acquisition or control of goods or provision of services which
may adversely affect the competition in the Indian market”.1
If the companies competing in the market, manipulate the market favourably for
them it reduces the competition in the market which adversely effects the end
consumer. The Act expressly states that Appreciable Adverse Effect on
Competition agreements (AAEC) such an agreement shall be void.
There are two types of Anti- Competitive Agreements:
a. Horizontal Agreements
Section 3(3) of the act provides that horizontal agreements are agreements between
enterprises/persons engaged in identical or similar trade of goods or provisions of
services.2
The four main types of cartel agreements : Price fixing; Market sharing; Limiting
production or supply; and Bid Rigging/ Collusive Bidding these kinds are presumed to
have AAEC and hence is void.
In the ruling of Rajasthan Cylinders and Containers Ltd v. Union of India, 3 the
Supreme Court established a law on price parallelism for oligopolies that price
parallelism by itself is not conclusive of arrangement of bid rigging.
b. Vertical Agreements
As per section 3(4) of the Act, Vertical agreement is an agreement between
enterprises/persons at different stages of the production chain in different markets.4
A vertical agreement is declared void only if it causes or is likely to cause AAEC.
In Fx Enterprise Solutions India v. Hyundai Motor India Limited,5 CCI imposed penalty
on Hyundai for violation of section 3 (4) (e) for monitoring maximum permissible
discount level through a Discount Control Mechanism whereby dealers were only
permitted to provide a maximum permissible discount and were also not authorized
to give discount beyond a recommended range.
2. Abuse of Dominant Position
1
Competition Act 2002, Section 3
2
Competition Act 2002, Section 3(3)
3
‘Rajasthan Cylinders and Containers ... Vs U.O.I and Anr on 1 October, 2018’
<[Link] accessed 12 February 2024
4
Competition Act 2002, Section 3 (4)
5
‘M/S Fx Enterprise Solutions India Pvt. Ltd v. M/S Hyundai Motor India Limited, Competition Commission of
India, <[Link] accessed 12 February 2024.
Section 4 of the Competition act, 2002 prohibits the 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 and affect its competition, consumer or
the relevant market in its favour.
It was claimed in Anuj Kumar Bhati v. Sony Entertainment Television (SET) 6 that the
opposing parties were engaging in foul play in the candidate selection process and
had tricked the players of the television game show "Kaun Banega Crorepati-4"
(KBC- 4). The primary accusation was that the opposing parties, who held a
dominant position, had engaged in unfair practices while choosing the questions to
be asked during the show and had discriminated in the candidate selection process,
in violation of section 4 of the Competition Act. The Competition Commission noted
that KBC's audience share was not high enough to suggest that it was outperforming
all other shows when compared to other Hindi-language television programmes
aired during prime time in India. This observation was based on the viewership
rating. Depending on their interests, inclinations, and demographic profile, viewers
had a wide variety of prime-time programme selections. Since every show had a
particular audience, the KBC show had no negative effects on any other programme.
As a result, the Commission determined that neither section 3 nor section 4 of the
Act had been broken, and as a result, section 26(2) of the Act.
3. Combinations (Mergers and Acquisitions)
Businesses that combine, acquire, or amalgamate if they have a detrimental effect
on competition, or if they are likely to have one, the act governs these transactions.
Section 5 and Section 6 of the Competition Act regulate combinations to ensure they
do not have an appreciable adverse effect on competition.
In a recent case of Google v. CCI, 20157, the CCI imposed a penalty of Rs. 1337.76
crores with cease and desist order against google for their anti-competitive practices
in the market. In 2005, Google acquired Android. Google mandated that mobile
manufacturing owners enter into Mobile Application Distribution Agreement
(MADA), Anti-fragmentation Agreement (AFA), Android Compatibility Commitment
Agreement (ACC), Revenue Sharing Agreement (RSA), etc. to grant permission for
use of the Android operating system in their smartphones. Also, Google posed a
condition to pre-install all the google apps in every smartphone as in-built apps.
These actions by Google showed that it was abusing its market dominance, which
prevented other app developers from entering the market. Because of their
6
‘Anuj Kumar Bhati vs Sony Entertainment T.V. (Set) & Ors on 16 September, 2011’
<[Link] accessed 12 February 2024.
7
‘Google v. Competition Commission of India <[Link]
/1326280/google-v-competition-commission-of-india--a-case-review> accessed 12 February 2024.
contracts with Google, the owners of mobile manufacturing companies did not use
or install the devices of their competitors.
4. Competition Commission
The Competition Act of 2002 established the Competition Commission of India. It is a
legislative body with the authority to oversee and implement the Competition Act,
including the imposition of penalties. A minimum of two board members and a
maximum of six board members make up the Commission, in addition to the
chairman. A minimum of fifteen years of expertise in their respective disciplines is
required of these members.
Its goals, responsibilities, and authorities are listed in the Competition Act of 2002. Its
primary responsibility is to maintain a fair and healthy competitive environment in
the Indian markets. It has the authority to do so and to sanction any actions that
compromise these obligations.
5. Consumer welfare and Protection
The Competition Act is designed to protect the interests of consumers and ensure
they have access to goods and services at competitive prices. It looks after that unfair
trade practices do not take place and the act is for the protection and welfare of the
consumers.
6. Remedies
Penalties for contravening the provisions of the act include fines up to 10% of the
enterprise’s average turnover for the preceding three financial [Link] act
provides for a civil remedy for contraventions of the provisions of the act, including
compensation for damages to parties affected by anti-competitive practices.
Conclusion:
An all-encompassing law, the Competition Act, 2002, aims to protect consumer
interests, ensure a stable market for India, encourage fair competition, and keep
pace with the global economy.
