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THE COMPETITION ACT, 2002

Points to Be Studied :
1) Objective of the Act.
2) Important definitions :
a) Agreement 2(b)
b) Cartel 2(c)
c) Consumer 2(d)
d) Enterprise 2(g)
e) Goods 2(i)
f) Acquisition 2(a)
g) Relevant Market 2(r).
- Relevant Geographic Market
- Relevant Product Market.
h) Shares.
3) Competition Commission of India [CCI] :
a) Establishment of CCI.
b) Acts of the commission
c) Composition
d) Tenure
e) Selection committee
f) Resignation, removal, suspension,
g) Restriction on employment of chairperson or another members.
Powers.
4) Powers of CCI – Orders, penalties
5) Anti competitive agreement [Sec. 3]
6) Abuse of Dominant position [Sec.4] predatory pricing.
7) Combination & Regulation of combination [Sec. 5 & 6]
8) Factors considered by the CCI to determine :
a) Any Agreement as anti competitive agreement.
b) To determine abuse of dominant position.
c) To grant approval to any combination.
d) Relevant Geographic market & relevant product market.
9) Appointment of director general
10) Competition advocacy
11) Competition appellate Tribunal
12) Appeal to Supreme Court [SC]

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1) Structure of Authorities under the Act :

Central Government
CCI
Director General
Assistant / Deputy /
Regional DG.

2) Objective of the Act :

(1) Prevent any agreement which causes appreciable adverse effect on competition.
(2) Promote competition in Indian market.
(3) Protect consumer interest.
(4) To ensure freedom of trade in India.

3) Duties of competition commission of India : [Section 18]

Same as the above objectives.
4) Parameters on which competition law is based :

Prohibit anti-competitive To prohibit abuse (Misuse) To regulate combinations

agreements of dominant position [i.e. any acquisition /
amalgamation / merger
[i.e. horizontal agreements , beyond the limits set for
vertical agreement. Sec.4 total assets or total
Sec. 3 turnover of the new
enterprise]
Sec. 5 & 6.
Important Definitions :
(1) Acquisition :
It means directly or indirectly.
Acquiring or agreeing to acquire :
1) Shares, voting rights 1) Control over management
OR OR
2) Assets of any enterprise 2) Control over asset, of any
enterprise.

(2) Agreement :
Any arrangement or understanding or action
Whether or not

1) Formal Intended to be enforceable by legal

OR proceedings.
In writing

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(3) Cartel :
An association of producers, sellers, distributors, trader or service providers.
Who by agreement among themselves.
(i) Limit control
OR
(ii) Attempt to control
a) Production,
b) Distribution,
c) Sale or price of
d) Trade in goods
e) Provision of services.
Factors / Conditions that are conducive to cartelization :
1. Few competitors
2. Barriers to entry & exit are high
3. Similar products
4. Similar production cost
5. Excess capacity
6. When consumers be are highly dependent on the product.
7. History of collusion [Secret Agreement].

(4) Consumer :
Any buyer / user of goods Any hirer / Beneficiary of services,

1) For personal purpose 1) For personal use or

2) Commercial purpose 2) Commercial purpose.
3) Resale
Where the price or charges of goods or services may be : Paid / promised or partly paid & partly
promised.
(5) Enterprise –
A person/ department of Government, engaged in any activity relating to-

Production/ storage/ Provision of Acquiring, holding,

supply/ distribution of services underwriting of shares/
articles or goods debentures/ other
securities

Either directly or through subsidiaries but it does not include :

a) Soverign Functions of Government
b) Atomic energy
c) Defense
d) Currency
e) Space.
6. Goods :
Movable as per sales Product Share, debentures, Goods imported in
of goods act. manufactured stocks after India.
processed or mined allotment

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7. Relevant Market :
Relevant Geographic Market Relevant product market

Conditions for competition are distinctly Market where the goods or services are
homogeneous from that in neighbouring inter changeable or substitutable.
area e.g. Sarafa Bazar, Market Yard.
e.g. Ratnagiri, Alphanso, Kashmir Apple.

8. Shares : It means shares in the share capital of the company carrying voting rights & includes
any security or stock which entitles the holder voting rights.

Sec. 3 : Anti-Competitive Agreement :

Prohibition on Anti-competitive agreement :
Any enterprise or person or their association shall not enter into which cause or is likely to cause
an appreciable adverse effect on competition within India. Such agreement may be in respect of
Production Supply Distribution Storage Acquisition or
Control of
goods or
provision of
Service.

Any agreement entered into in contravention of the above provision shall be void.
Following are the agreements shall be presumed to be anti-competitive.
a) Directly or indirectly determines purchase or sales prices;
b) Limits or controls production, supply, markets, technical development, investment or
provision of services.
c) Shares the market or source of production of provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of customer in the
market or any other similar way &
d) Directly or indirectly results in bid rigging or collusive bidding.
BID – RIGGING :
Any agreement between enterprises OR Persons engaged in identical OR Similar production
OR Trading of goods OR Provision of services , which has
Effect of eliminating Reducing Adversely affecting Manipulating the
OR competition for bids OR process for bidding.
OR
Some of the most commonly adopted ways in which collusive bidding or bid rigging may occur
(i) Agreement to submit identical bids.
(ii) Agreements as to who shall submit the lowest bid, agreements for the submission of
cover bids.
(iii) Agreements on common norms to calculate prices or term of bids.
(iv) Agreements to squeeze out outside bidders.
(v) Agreements designating bid winners in advance on a rotational basis, or on a
geographical or customer allocation basis.
Joint Venture :
Efficiency enhancing joint ventures into by parties engaged in
Identical Similar Goods Services
Shall not presumed to have appreciable adverse effect on competition but judge by rule of reasons.

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Sec. 3 (4) : Vertical Agreement :-

1. When the agreement is entered between enterprises or persons at different level of
production process chain [i.e. between manufacture – distributors – wholesaler – Retailer –
Dealer] it is called Vertical agreement.
2. They shall be void only when they cause significant adverse effect of competition [i.e. burden
of proof is on the plaintiff to prove that agreement is anti-competitive].
3. The various vertical agreements are :
Tie in Sales / Tie in Arrangement:
(i) Any agreement requiring purchaser of goods as a condition of such purchase, the
purchase some other goods.
(ii) Example :
a) Requiring customer to buy gas-stove with gas connection.
b) Requiring a customer to keep fixed deposit while allotting him a locker by any
bank.
Note : FULL LINE FORCING :
1) When buyer is forced by the supplier to purchase not only the product he want but the
entire range of suppliers product.
2) Exclusive Supply Agreement :
(i) When the purchaser is required or restricted to deal only in the goods of the seller &
not to deal in any goods of other person.
Example :
CCD Franchisee :- The franchisee owner can’t deal in any other product directly or
indirectly.
3) Exclusive Distribution Agreement :
(i) An agreement which limits, restricts or with holds the output or supplier of any goods
or allocates any area or market for the disposal of goods.
(ii) Example : Distributor of Honda car when agrees with Honda company to sale the
car in a prescribed area.
4) Refusal to deal :
(i) An agreement which restrict by any method the person to whom goods are sold or
from whom goods are bought.
(ii) Example : Bose company agrees to supply it’s music system only to BMW.
Resale Price Maintenance :-
An agreement to sale goods on a condition that the purchaser shall charge the price on resale.
The price stipulated by the seller unless the agreement clearly states that prices lower than those
stipulated may be charged.

Distinguish Between :
Horizontal Agreement Vertical Agreement
It is an agreement which prevails between It is an agreement which prevails between
entities persons at same level. entities & person at different level.
Cartel taken place Cartel can never take place.
There are various H.A. There are various V.A.
(i) Determines purchase / Sales price. (i) Tie in sale
(ii) Bid rigging / collusive bidding. (ii) Exclusive Supply agreement.
(iii) Allocation of market geographically. (iii) Exclusive distribution agreement
For H.A. are presumed to be void. (iv) Refusal to
Exception : Joint Venture (v) Resale price maintenance.
V.A. are not presumed to be void.

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Sec. 3 (5) : Exceptions for Horizontal & Vertical Agreements :

1) Any agreement by a person where he imposes restriction :
(i) As a matter of right to protect his intellectual property or
(ii) In case of goods exported out of India is not anti-competitive.
PROHIBITION OF ABUSE OF DOMINANT POSITION :
1) Sec. 4(2) states that there shall be abuse of dominant position, if an enterprise or group.
a) Directly or indirectly impose unfair or discriminatory
(i) Condition in purchase or Sale of (ii) Price in purchase or sale
goods or Services [including predatory price] of
goods or services.

2) Sec. 4(20 (b) includes in abuse of dominant position an enterprise or group limiting or
restricting.

(i) Production of goods or provision of services or market therefore.

(ii) Technical or scientific development relating to goods or services to the prejudice of
consumers.
(iii) If any person indulges in practices resulting in denial of market access in any
manner.
(iv) If any person makes conclusion of contracts subject to acceptance by other parties
of supplement obligation which, by their nature or according to commercial usage,
have no connection with the subject of such contract.
(v) If any person uses dominant position in one relevant market to enter into, or protect,
other relevant market.
Predatory Pricing :
The sale of goods Ata price which is As may be Provisions of
OR below the cost determined by services, with a view
Provisions of regulations of to reduce
services production of goods competition or
eliminate the
competitors.

2 conditions precedent to bring a case with the ambit of predatory pricing are :
(i) Selling goods or provision of (ii) That practice is to eliminate the
services at a which is competitors or to reduce
below it’s cost production & competition.
Combinations & Regulation of Combination :
Section 5: Combination means acquisition by a person or enterprise of another person or
enterprise engaged in :
a) Competing business
b) Different business or
c) By way of merger & amalgamation
& when the combined enterprise exceeds the limits of assets or turnover in India &
outside India, it is a combination.

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1) Threshold Limits :
Particulars Enterprise Asset Turnover
Single Enterprise
a) In India >2000 cr. 6000 Cr. INR
INR

b) In India & outside >$ 1 bn of which >$ 3 bn of which

India >1000 Cr INR in > 3000 cr. INR in
Group enterprise India India
a) In India >8000 cr. INR
24000 cr. INR
b) In India & outside >4 bn of which >
India 1000 Cr. INR in >12 bn of which
India. > 3000 cr. INR in
India

2) Exemption for Acquisition :

When an enterprise being acquire has asset < 350 cr.INR or Turnover < 1000 cr. INR it shall
be exempted from the being a combination for a period of 5 years.

e.g. In India

A Ltd. B Ltd. Total / Asset

Asset 1800 cr. 300 cr. 210 cr.
T/O 5100 cr. 750 cr 5850 cr.

In the above case, since the enterprise B Ltd. has asset < 350 cr. or T/O < 1000 cr., such
acquisition by ‘A Ltd.’ of ‘B’ Ltd. shall be exempted from being regarded as combination for
a period of 5 years even though after acquisition the total assets are more than 2000 crs.

Sec. 6 : Regulations of Combinations :

1. Any person or enterprise who forms a combinations shall give a notice to the CCI within 30
days of :
a) Approval of the proposal or
b) Execution of any agreement.
2. CCI shall pass order within 210 days from the day of receiving notice of the combination.
3. Exemption :
Sec. 6 does not apply to any share subscription or any financing facility or any acquisition
by a
a) PFI
b) FII
c) Banks
d) Venture capital funds
Pursuant to any covenant of a loan agreement or investment agreement.
However, the PFI,FII, Bank etc. is required to file details of control with CCI within 7
days from the date of loan / investment agreement.

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4. The CCI may pass the following order as regards the notice received of combination.
Grant approval Reject such combination Or Give approval subject to
certain condition.
If the combination will not If it has an appreciable
have any appreciable adverse effect on
adverse effect on competition.
competition

Establishment of CCI :
1. The Central Government shall established CCI by a notification in official gazette on
recommendation of the selection committee.
2. CCI shall be a separate body corporate.
Composition of CCI : Appointment made by CG.
1. Chairperson / Chairman Minimum 2 & Maximum 6 whole time
members.
2. Any member of CCI shall be a person of :
a) Ability, integrity & standing.
b) Having special knowledge & professional experience at least 15 years in his area of
expertise.
c) Knowledge of competition law & policy.
Tenure :
1. Upto 5 years or until the age of 65 years whichever is earlier.
2. He shall be eligible for reappointment.
Manner of Appointment :-
1. By Central Government on recommendation made by the selection committee which shall
consist of :
a) Chief Justice of India /his nominee – as a Chairperson.
b) Ministry of Corporate Affairs [MCA] – Secretary.
c) Ministry of Law & Justice [ MLJ – Secretary]
d) 2 experts – Reputed & having professional enterprise in any special area & knowledge
of company law & policies.
Vacancy in the Office of Chairperson of CCI :
Permanent vacancy Temporary Vacancy

Senior most member shall act as a Senior most member shall act as a
chairperson. chairperson

Until vacancy is filled by CG on Until he resumes office.

recommendation of selection committee.

Resignation, Suspension or removal of chairperson & members :

1. Resignation :
The chairperson or any member of CCI may resign by giving notice in writing to the CG.
The CG may

Accept the resignation Refuse to accept

In such case he shall continue his office until :
a) The expiry of 3 month from the date of notice
b) A successor is appointed upon his office or
c) Expiry of his tenure, whichever is earlier.

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Removal :
The CG may by order remove the chairperson or any member his office if such person is :
a) Adjudged insolvent.
b) Engaged in any other paid employment.
c) Convicted of an offence involving moral turpitude [immoral activity]
d) Has acquired financial interest or any other interest which is likely to prejudice his
functions as a member.
e) Abused his position against public interest.
f) Physically or mentally in capable of acting as a member.
Note : In case of d & e above he can be removed only if Supreme Court order is obtained for
removal. Until then he is only suspended.
Restrictions on Employment of Chairperson & other members : Sec. 12.
1. Any chairperson or member of CCI who ceases to hold office.
Shall not accept any appointment in the management or administration of any enterprise
which has been a party to a proceeding before to the commission.
For a period of 2 years from a date on which he ceases to hold office.
Exemptions :
1. Employment under CG & SG.
2. Local Authority
3. Statutory corporation
4. Government company.
No action or proceeding of CCI shall be invalid merely by reason of : Sec. 15.
1. Vacancy in the office of CCI.
2. Defect in appointment of CCI chairperson or members
3. Defect in the constitution of CCI.
4. Any irregularity in the procedure of CCI, which does not affect merits of the case.
Note : As per Sec. 14 any salary, travelling expenses, HRA & other allowances shall be as per the
CG rules & it shall not be changed without any change in the rule.
Appointment of Director General, Additional Director General etc. Sec. 16 :
1. Director General is an important Function any under the Act. The Central Government
may, by notification, appointment a director – General for the purpose of assisting the
commission in conducting inquiry into the contravention of any provision of this act & for
performing such other functions on are may be, provided by or under this act.
(i) Additional, Joint, Deputy & (ii) However, exercise powers &
Assistant Director Generals, discharge functions subject to
other advisors, consultants & the general control, supervisions
officers shall & directors of the director
general.
2.
The Director General, advisor, Consultant Knowledge of accountancy, management,
& officers assisting him are to be appointed business, public administration,
from amongst the person of integrity & international trade, law or economics &
outstanding ability & who have experience such other qualifications as may be
in investigation & prescribed.

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3.
The commission may The commission may Who have special
appoint a secretary & such engage, in accordance with knowledge of & experience
officers & other employees, the procedure specified by in economics law, business
as it consider necessary for regulations, such number or such other disciplines
the efficient performance of of experts & professionals of related to competition, as it
his functions under the Act. integrity & outstanding deems necessary to assist
ability. the commission in the
discharge of it’s functions
under the Act.
W ho can file a complaint against any contravention of provisions under the Act & to whom.
CCI may enquire into any anti-competitive agreement or any abuse of dominant position or any
combination.
1. Either on it’s own or
2. Receipt of any information from :
a) Any aggrieved person
b) Any consumer
c) Any consumer association
d) Any trade association
e) Central / State Government / Statutory authority.
Factors considered by CCI while determining if, any agreement is anti-competitive or not.
1. Creation of Barriers to new entrants in the market.
2. Driving existing competitors out of the market.
3. Foreclosure of competition by hindering entry into the market.
4. Accrual of benefit to consumer.
5. Improvement in production or distribution of goods or provision of services.
6. Promotion of technical, scientific & economic development by means of production or
distribution of goods or provision of services.
Any other factor may consider which CCI may considered for enquire.
Factors considered by CCI to determine abuse of dominant position :
1. Market share.
2. Size & resources
3. Importance of competitor
4. Economic power of enterprise
5. Vertical integration
6. Dependence of consumer
7. Monopoly e.g. : Control by Govt.
8. Entry barriers.
9. Countervailing Factors additional buying power.
10. Market structure.
11. Social obligation
12. Relative advantages
13. Any other factor which CCI may consider relevant for the enquiry.
Factors considered by CCI while enquiring whether a combination has or is likely to have
any appreciable adverse effect in the relevant market.
1. Level of combination
2. Market share in the relevant market
3. Whether the combination results in removal of vigorous & effective competitor.
4. Possibility of the combination failing
5. Relative advantage of the combination to the economic development.

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6. Whether the benefits out way the adverse impact of the combination.
7. Any other factor which CCI may considered.
Factors determining the relevant geographic market :
1. Regulatory Trade Barriers
2. National Procurement policies
3. Adequate on distribution facilities
4. Transport cost & language.
5. Local specification requirement
6. Consumer preference
7. Any other factor
R – NCLAT → Short cut
Factors Determining Relevant Product Market :
1. Existance of specialized producer.
2. Exclusion of in house production
3. Consumer preferences
4. Price of the goods or service
5. Physical characteristics or end use of goods
6. Classification of industrial product
7. Any other factor.

Section 28 : Division of Enterprise Enjoying Dominant Position :

1. The commission may by order in writing direct division of an enterprise which abuses its
dominant position by all or any of the following orders.
a) Transfer of property rights, liabilities or obligations.
b) Creation, allotment, surrender or cancellation of any share, stock or securities.
c) The formation or winding up of an enterprise or amendment of MOA or AOA.
d) D Adjustment of contracts but discharged or reduction of any liability or obligation.
2. No officer of the enterprise who ceases to hold any office in consequence of the division of
enterprise shall be entitled to claim any compensation for loss of office.
Sec. 26 : Procedure for inquiry into certain agreement & dominant position of enterprise :
1. CCI shall direct the director general to cause & investigation if their exist a prima facie case.
2. The DG shall submit a report on his findings with the period prescribed by CCI.
3. CCI may forward a copy of DG report to all the parties concerned.
4. Based on the report of DG, the CCI may take the following action :
If the report recommends that there is no If the report recommends that there is
contravention of any provisions of this Act. contravention of this act.

(i) CCI shall invite objections or If CCI is of the opinion that further inquiry
suggestions from the applicants is necessary, it shall inquire into such
(ii) After considering the objections contraventions.
or suggestions CCI may order :
a) Further investigations by the
DG or
b) Further inquiry in the matter
by DG or
c) CCI may itself proceeds with
further inquiry

Thereafter CCI shall pass it’s order / as per Sec.27.

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Section 29 : Procedure for Investigation of Combination :

1. When any combination is likely to cause or has caused any appreciable adverse effect on
competition
&
Prima facie CCI is also of the same opinion.
CCI shall issue show cause notice to the parties to the combinations & call upon them to
respond within 30 days of the receipt of notice.
2. Then the CCI may call for a report for a CG within prescribed time.
3. The CCI shall within 7 working days from the receipt of response of parties or receipt of
response report from parties whichever is later.

Direct the parties to publish details of the combinationwithin10 working days to the public.
4. CCI may invite the public to give written objection about the combination within 15 working
days from the date of publishing.
5. CCI may within 15 working days from the expiry of periods specified in 4 above call for
additional information as if deems fit.

Which shall be furnished by the parties within next 15 days.

6. After receipt of all information CCI may pass an order U/s. 31 within the next 45 days.

Sec.31 : Order of CCI on certain Combinations :

CCI shall by order approve CCI shall direct that CCI shall direct to eliminate the terms
the combination. combination shall not take & conditions of the combinations &
effect. approve thereafter.

Parties may reject the terms of

modification proposed by CCI.
Receipt of terms of modification proposed by CCI. (i) Parties shall within 30
working days submit their
Modify the terms within the period specified else the own proposed terms of
combination shall be deems to have an appreciable modification to the CCI.
adverse effect. (ii) CCI may agree & approve
& the combination
CCI shall thereafter reject such combinations. OR
CCI if does not accept then
the parties shall be allowed
further 30 days to accept
the modification proposed
by CCI else CCI shall deal
with the same as causes
appreciable adverse effect
on competition.

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Sec. 27 : Types of Orders passed by CCI after inquiry into any agreement : OR Abuse of
Dominant Position :
(i) CCI may pass all or any of the following order :
Cease & Desist order Penalty Modify the Compliance Such
agreement of order + order
Payment of as it
cost of deems
inquiry fit
It shall direct that Max.: 10% of the average turnover of
CCI May Within the
such agreement or last 3 preceding F.Y. upon each person
direct to time given
abuse of dominant or enterprise for contravension U/s. 3
modify the as it deems
position shall be or U/s. 4 agreements fit.
discontinued & not to such
to recare. In case of cartel penalty upto 3 time of extent & in
it’s profits for each year during the such
This is commonly continuence of such agreement OR manner as
known as cease & 10% of it’s turnover for each year specified in
desist order. whichever is higher. the order.
Sec. 36 : Powers of CCI to regulate it’s own procedure :
1. Power of Civil court as laid down by code of civil procedure.
2. Power to direct any person to produce book or other documents relating to any trade before
the director general & to furnish all the information in relation to the trade to the director
general.
3. Power to pass & amend any order passed by it under the provision of this act.
4. Power to call for the help of an expert from the filed of economics, commerce, international
trade etc. to assist in the conduct of inquiry.
Section 42 : Contravention of Orders of Commission :
If any person fails to comply with the CCI orders or directions.
Fine : upto : 1 lac for each day of default If any person fails to pay the fine or penalty
subject to maximum10 cr. :

Imprisonment : Upto 3 years OR fine upto

25 cr. OR both.
Section 53 B : Competition Appellate Tribunal :
Composition:
1. Composition of NCLT is composition of CAT.
2. CAT has been given the powers to hear & dispose off any appeal against CCI under
Competitions Act.
Appeal Procedure-
1. The CG/SG /Local authority / enterprise / any aggrieved person may file an appeal to the
AT against the order of CCI within 60 days from the date of receipt of order in the prescribe
form & with prescribed fees.
2. Additional 60 days may be allowed by the AT if there is sufficient cause.
3. The AT may either confirm the CCI order or modify or set aside & pass such order as it
deems fit.
4. AT shall send the copy of every order to CCI & the parties to the appeal & shall dispose of
the appeal within 60 months from the date of receipt.
Appeal to Supreme Court :
1. Within 60 days from the date of communication of order of AT.
2. Extra 60 days may be allowed by the SC to file appeal provided sufficient cause exist.

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Competition Funds :
1. The CG constitutes a fund called the competition fund for meeting all the e xpenses of
competition commission while discharging it’s functions under the Act.
2. The following amount shall be credited to the competition fund :
a) Government Grants
b) Fees received under the Act.
c) Interest on the amount accrued on the money’s referred in clause A & B above.

(a) In case of any agreement as per Sec. 3 has been entered outside India or OR
(b) Any party to such agreement is outside India.
OR
(c) Any enterprise abusing the dominant position is outside India.
OR
(d) A combination has taken place outside India.
3. Then the CCI with the prior approval of the CG enter into any memorandum or arrangement
with any agency of any foreign country for investigation into such agreement or abuse of
dominant position or combination.
Sec. 49 : Competition Advocacy :
1. The CG / SG while formulating a policy for the competition may take the opinion of CCI on
the possible effect for the policy on competition.
2. CCI shall give it’s opinion within 60 days & the CG/SG may formulate the policy as it deems
fit.
3. The role of CCI is only advisory & it’s opinion is not binding upon CG/SG.
4. However, CCI must take suitable measure for :
a) Promotion of competition advocacy.
b) Creating awareness of about competition.
c) Importing training about competition issues.

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QUESTIONS
Q.1] Discuss the object and scope of Competition Act, 2002?
Q.2] Define the term: Acquisition
Q.3] Define the term: Agreement
Q.4] An arrangement has been made among the cotton producers that the cotton produced by them
will not be sold to mills below a certain price. The arrangement is in writing but it is not intended to
be enforced by legal proceeding. Examine whether the said arrangement can be considered as an
agreement within the meaning of Section 2(b) of the Competition Act, 2002.
Q.5] Define the term: Cartel
Q.6] Lorry Association of India restricted its members in transacting their business with other
non-members of association. Is it cartel agreement?
Q.7] The orange producers of Nagpur have formed an association to control the production of
oranges. Examine whether it will be considered as a cartel within the meaning of Section 2 (c) of the
Competition Act, 2002
Q.8] Define the term: Consumer.Whether a person purchasing goods not for personal use, but for
resale can be considered
Q.9] Whether Government Department supplying water for irrigation to the Agriculturists after
levying charges for water supplied (and not a water tax) can be considered as an ‘Enterprise’?
Q.10] Define the term: Goods
Q.11] ABC Ltd. made an initial public offer of certain number of equity shares. Examine whether
these shares can be considered as ‘Goods’ under the Competition Act,
2002 before allotment?
Q.12] Define the term: Price
Q.13] Define the term: Relevant Market
Q.14] Define the term: Relevant Geographic Market
Q.15] Define the term: Relevant Product Market
Distinguish between: Relevant Geographic Market & Relevant Product Market
Q.16] Define the term: Service
Q.17] Define the term: Shares
Q.18] Define the term: Trade
Q.19] What are the provisions relating to anti-competitive agreements? Also explain the different
categories of anti-competitive agreements.
Q.20] What are the trade practices which are deemed to be anti-competitive agreements?
Q.21] Poly Ltd., manufacturer of foot-wears entered into an agreement with City Traders
(hereinafter referred to as "purchase"), for sale of its products. The agreement includes, among
others, the following clauses:
(i) That the Purchaser shall not deal with goods, products, articles, by whatever name called,
manufactured by any person other than the Seller.
(ii) That the Purchaser shall not sale the goods manufactured by the Seller outside the municipal
limits of the city of Secunderabad.
(iii) That the Purchaser shall sale the goods manufactured by the Seller at the price as embossed
on the price label of the footwear. However, the purchaser is allowed to sale the footwear at prices
lower than those embossed on the price label.
Q.22] Write a short note on: Bid rigging or collusive bidding
Q.23] State the law relating to tie-up sales and full line forcing. Illustrate your answer to show as to
how a tying agreement affects competition.
Q.24] Write a short note on: Resale price maintenance
Q.25] A manufacture of electrical goods stipulated to his retailer that they should not sell the goods
below the minimum price, nor above the maximum price nor with variation in the stipulated price.
Is it resale price maintenance agreement? Explain.
Q.26] Write a short note on: Exclusive supply agreement
Q.27] Write a short note on: Exclusive distribution agreement
Q.28] Write a short note on: Refusal to deal
Q.29] State the provisions relating to ‘abuse of dominant position’ under the Competition Act, 2002.
Q.30]‘Predatory price means the sale of goods or provision of services at price which is above cost
with a view to reduce competition or, eliminate competition. Is it correct?
Q.31] A shoe manufacturer is offering its products to its customers at price less than its cost of
production. State with reasons whether it amounts to abuse of dominant position.
Q.32] State the provisions relating to ‘Combinations’ under the Competition Act, 2002.
Q.33] write short note on regulation of combination
Q.34] A Ltd. and G Ltd. are two consumer goods manufacturing companies. The two companies are
proposing for amalgamation after which their combined market share will be 80% for soap and 70%
for detergent. Does this amalgamation eliminate competition or anti competitive?
Q.35] Write a short note on: Duties of Commission\

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Q.36] Discuss the power of Competition Commission relating to inquiry into anti-competitive
agreements and abuse of dominant position.
Q.37] Write a short note on: Inquiry into Combination by Commission
Q.38] Mention the important factors which the Competition Commission of India will take into
consideration for determining whether an agreement has an ‘appreciable adverse effect’ on
competition
Q.39] CCI has received a complaint from a State Government alleging that X Ltd. and Y Ltd. entered
into informal agreement, not enforceable at law, to limit or control production supply and market,
to determine at sale price of their production. Examine what are factors the CCI will take into
account to determine whether the agreement in Q. will have any appreciable adverse effect on
competition in the market.
Q.40] What type of orders can be made by Competition Commission after inquiry into ‘anti-
competitive agreements’ or ‘abuse of dominant position’?
0r Write a short note on: Cease & Desist order
Q.41] Write a short note on: Power of Commission to regulate its own procedure
Q.42] In a proceeding before the Competition Commission of India involving two Pharmaceutical
companies, the plaintiff requested the presiding officer to call upon the services of experts from the
pharmaceutical sector to determine the truth of the allegations leveled by it against the respondent.
The respondent opposed the request on the ground that such action cannot be taken by the
Competition Commission. You are required to state with reference to the provisions of the
Competition Act, 2002, whether the contention of the respondent is tenable.
Q.43] State the provisions relating to ‘ratification of orders’ passed by Commission under the
Competition Act, 2002.
One mistake was detected after passing of orders by the Commission under Competition Act, 2002.
Whether such mistake can be rectified? If so, by whom and how?
Q.44] Write a short note on: Appointment of Director General
Q.45] Write a short note on: Contravention of orders of Commission
Q.46] Write a short note on: Competition Advocacy
Q.47] Write a short note on: Appeal to appellate tribunal
Q.48] Discuss the provisions for filing an appeal against ‘cease & desist’ order passed by
Competition Commission under the Competition Act, 2002
Q.49] What do you mean by anti-competitive agreements, viz, tie-in arrangement and resale price
maintenance?

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CASE STUDIES
Q.1.Hon’ble Justice Mr. HCJ, a retired High Court Judge, attained the age of 61 years on 31st
December 2011. The Central Government appointed him as the chairperson of the
Competition Commission of India with effect from 1st January 2012. State, with reference to
the previsions of the Competition Act, 2002, the term for which he may be appointed as
chairperson of the Competition Commission of India. Whether he can be reappointed as such
and till when he can remain. As chairperson of the Competition Commission of India?
Answer: The Chairperson and Member of commission shall hold office for a term of 5 years or until
he has attained age of 65 years, whichever is earlier. Chairman and members are eligible for re-
appointment.
In view of the above provision it can be said that Hon’ble retired Justice Mr. HCJ can be appointed
as the chairperson of the Competition Commission of India by the Central Government initially for a
period of four years and he cannot be re-appointed after his initial term of four years is over.

Q.2.The Central Government has formed the opinion that Mr. CBM (A member of the
Competition Commission of India) has abused his position which may be prejudicial to pub lie
interest as a member of the commission. Examine the powers of the Central Government in
this regard.
Answer: Central Government is empowered to remove a member of CCI if member has acquired
financial interest and it is likely to affect prejudicially his functions as a Member of the Competition
Commission. (Section 11)
Central Government should make reference to Supreme Court, whenever, it forms an opinion that
member has acquired financial interest in any enterprises. The Supreme Court shall hold an enquiry
in accordance with the procedure formulated by it and then report that the member in Q. ought to be
removed from his office.
Thus, the Central Government can remove a member of Competition Commission from his office by
following the above procedure,

Q.3 Mr. ZPM was appointed as a Member of the Competition Commission of India by Central
Government. He has a professional experience in international business for a period of 12
years, which is not a proper qualification for appointment of a person as member, pointing out
this defect in the Constitution of Commission, Mr. YKJ, against whom the commission gave a
decision, wants to Invalidate the proceedings of the commission. Examine with reference to
the provisions of the competition Act, 2002 whether Mr. YKJ will succeed.
Answer
As per Section 15 of Competition Act. 2002 any act or proceeding of the Commission shall not be
invalidated merely on the ground of:
▪ Any vacancy or any defect in the constitution of the Commission.
▪ Any defect in the appointment of a person acting as a Chairperson or as a member.

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▪ Any irregularity in the procedure of the Commission not affecting the merits of the case.
Here in this case Mr. ZPM should have professional qualification of not less than 15 years as per Act
but this disqualification will not invalidate the proceeding of the Commission.

Q. 5.In a proceeding before the Competition Commission of India involving two

Pharmaceutical companies, the plaintiff requested the presiding officer to call upon the
services of experts from the pharmaceutical sector to determine the truth of the allegations
levelled by it against the respondent. The respondent opposed the request on the ground that
such action cannot be taken by the Competition Commission. You are required to state with
reference to the provisions of the Competition Act, 2002, whether the contention of the
respondent is tenable.
Answer: competition Commission has power to call upon experts from the fields of economics,
commerce, accountancy, international trade or other disciplines as it deems necessary, to assist the
Commission in the conduct of any enquiry. Commission may draw up a panel of such experts.
In view of the above provision, CCI can call upon the services of an expert from the pharmaceutical
sector to determine the truth of the allegations levelled by the plaintiff against the respondent.
Hence, the contention of the respondent is not tenable.

Q. 6: An understanding has been reached among the manufacturers of cement to control the
price of cement, but the understanding is not in writing and it is also not intended to be
enforced by legal proceedings. Examine whether the above understanding can be considered as
an ‘Agreement’ with the meaning of Section 2(b) of the Competition Act, 2002.
Answer: An ‘agreement’ includes any arrangement or understanding or action in concert –
▪ Whether or not, such arrangement, understanding or action is formal or in writing.
▪ Whether or not such arrangement, understanding or action is intended to be enforceable by
legal proceedings.
In view of the above definition of ‘agreement’, an understanding reached by the cement
manufacturers to control the price of cement will be an ‘agreement’ within the meaning of Section 2(
b) of the Competition act, 2002 even though the understanding is not in writing and it is not
intended to be enforceable by legal proceedings.
Q. 7: ABC Ltd. made an initial public offer of certain number of equity shares. Examine
whether these shares can be considered as ‘Goods’ under the Competition Act, 2002 before
allotment.
Answer: Section 2(t) of Competition Act, 2002 defines ‘goods’ as follows:
‘Goods’ means goods as defined bv Sale of Goods Act, 1930 and includes
▪ Products manufactured, processed or mined.
▪ Debentures, stock and shares after allotment.
▪ In relation to goods supplied, distributed or controlled in India, goods imported into India
Hence, debentures and shares can be considered as ‘goods’ only after allotment and not before
allotment.
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Q. 8: Examine with reference to the relevant provision of the Competition Act, 2002 Whether
a Government Department supplying water for irrigation to the Agriculturists after levying
charges for water supplied (and not a water tax) can be considered as an ‘Enterprise’.
Answer
Any activity of Government relating to sovereign function is excluded from the term “enterprise”.
Supply of water is not sovereign function. Hence. The Government department can’t be considered as
enterprise in the above case.

Q. 9: After ceasing to be the member of the Competition Commission of india with effect from.
31st March, 2007, Mr. MKP was offered the post of Executive Director with appropriate
remuneration and perquisites in the following organizations with effect from 1st April, 2007 –
a. HLL Ltd. a private sector public limited company” whose case was disposed off by the
competition Commission under the provisions of the Competition Act. 2002 in the month of
February, 2007.
b. Life Insurance corporation of India.
You are required to state with relevant provisions of the Competition Act, 2002, the option
available to Mr. MKP in respect of accepting the Offers
Answer
The Chairperson and members of commission can’t accept any employment in, or connected with
the management or administration of any enterprise which has been a party to a proceeding before
the commission for a period of 2 years from the date on which they cease to hold office.(Section 12)
However this provision is not applicable to any employment under the Central Government or a State
Government or local authority or any corporation or Government company.
In consideration of the above mention provisions of the Competition Act. 2002. Mr. MKP will not be
able 10 accept the offer of HLL Ltd. for 2 years from the date of his cessation as a member of the
Competition Commission because HLL Ltd was a party to the proceedings before the Commission.
However, Life Insurance Corporation of India is a Corporation set up under the Central Act. The
above restriction does not apply and Mr. MKP can accept the offer to join as the Executive Director of
the said corporation with effect from 1st April, 2007.

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Q. 10: Mr. Raj Behari retired as a Member of Competition Commission of India (CCI) on 31st
October, 2008. He was offered the post of Chief Executive in M/ s. LSD Ltd. which was earlier
a party in the proceedings before CCI. Can he join the Company with effect from 1st November,
2009? What will be the position if Mr. Raj Behari joins Oil & Natural Gas Commission Ltd., a
Government Company with effect from 1st April, 20091 ONGC was also earlier a pan, in the
proceedings before CCI.
Answer: Refer the first paragraph of Answer of Q. No. 8
Mr. Raj Behari cannot join M/ s LSD Ltd on 1-11-2009 as only one year has expired from the date of
his retirement. However, there is no bar for him to join ONGC on 1.4.2009 even earlier than two
years of his retirement as it is a Government Company.
Q.11: “Whether a person purchasing goods not for personal use, but for resale can be
considered as a ‘consumer’ with reference to the relevant provisions of the Competition Act,
2002?
Answer: Consumer means any person who buys any goods for a consideration, which has been paid
or promised or partly paid and partly promised, whether such purchase of goods is for resale or for
any commercial purpose or for personal use. Please refer - definition of Consumer.
Hence, it is not necessary that a person must purchase the goods for personal use in order to be
considered as a ‘consumer’ under Competition Act, 2002. Even a person purchasing goods for resale
or for any commercial purpose will also be considered as a ‘Consumer’ within the meaning of Section
2(f) of competition Act, 2002.
Q.12.Mr. KUN was initially appointed as the Chairperson of the Competition Commission on
1 st June, 2015, for a term of three years, when he exactly attained 58 years of age. The.
Central Government is considering re-appointing him after his term for the maximum
period permissible under the provisions of the Act. State the period till which he can be re-
appointed as the Chairperson of the Commission.
What will happen to the place of office of the chairperson, in case vacancy arises due to
resignation or death of the Chairperson during the tenure of his office?
What will happen to the place of office of the Chairperson, in case the Chairperson is unable
to discharge his functions owing to illness?
Answer: According to Section 10 of the Competition Act, 2002, the Chairperson and every other
Member shall hold office for a term of five years from the date on which he enters upon his office
and shall be eligible for re-appointment. However, no Chairperson or other Member shall hold
office as such after he has attained the age of 65 years.
In the instant case, Mr. KUN was initially appointed as the Chairperson of the Competition
Commission on 1st June, 2015 for a term of three years, when he exactly attained 58 years of age.
After three years i.e. on 1 st June, 2018, when Mr. KUN attained the age of 61 years, the Central
Government is considering re-appointing him for the maximum period i.e. 5 years. But, he cannot
be reappointed for 5 years because he will attain the age of 65 years after completion of 4 years of
his term i.e. upto 31st May, 2022.
In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his
death, resignation or otherwise, the senior-most Member shall act as the Chairperson, until the
date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill
such vacancy, enters upon his office ( Sub-Section 4).
When the Chairperson is unable to discharge his functions owing to illness , the senior-most
Member shall discharge the functions of the Chairperson until the date on which the Chairperson
resumes the charge of his functions (Sub-Section 5).
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Q.13.Mrs. Arshi filed a complaint in the Competition Commission of India against Modern
Hospitals, New Delhi for abusing its dominance.She stated in her complaint that she was
refused maternity services by the hospital during the 38th week of her pregnancy because she
declined to avail the stem cell banking services offered by Celbanks International India, with
which the hospital has an exclusive partnership. She contended that the hospital indulged in
unfair practices because the arrangement restricts the choice of consumers. Was her petition
maintainable under the Competition Act, 2002?
Answer: According to Section 4(2)(d) of the Competition Act, 2002,there shall be abuse of dominant
position if an enterprise or a group(s) 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.In the instant case, Mrs. Arshi filed a complaint in
the Competition Commission of India against Modern Hospitals for refusal of maternity services
because she declined to avail the stem cell banking services offered by Celbanks International India,
with which the hospital has an exclusive partnership.Accordingly in the given situation, as per the
above provision, the Modern hospital has abused its dominant position and hence, petition by Mrs.
Arshi is maintainable.

Q.14. A Car manufacturer before beginning the manufacturing and delivery of newly
introduced Cars into the market with effect from February 1999,with the installed capacity of
approximately more than 50,000 cars in a year, invited the prospective customers to book the
car through dealers. The booking amount demanded by the company was quite high and close
to the estimated price finally payable which would include excise duty, sales tax and
transportation charges. None of the persons who made the booking or purchased the car,
withdrew the deposits with or without interest. However 3 complaints were made before the
Commission by persons who claimed that they had intentions to make the booking but were
dissuaded by the high quantum of deposit required for the purpose. Their specific objection
was that the demanded amount exceeded the basic price of the car if cess, taxes and
transportation cost were left out. According to the complainants, the
company has indulged in Unfair Trade Practice by demanding an excessive amount for
bookings of cars and by including the likely taxes, cess and transportation cost.Discuss the
case with reference to the provisions of competition laws.
Answer :The case study of the given problem is based on Section 66 of the competition Act, 2002
which is a repealed and saving clause in the Act. All such cases stand transferred to the Appellate
Tribunal and shall be judged accordingly. In this reference, the case study and its solution may be
discussed as follows:
The appellant explained their practice by pleadings which does not controvert, their past experience
as automobile manufacturer was limited to heavy vehicles and hence in their initial venture into the
car segment, they were not sure of public response and they had decided to plan their production
schedule on the basis of reality test of car’s demand in the market. For this speculative bookings
were required to be discouraged and the same was sought to be achieved by demanding an amount
closer to the anticipated price which the customer would be required to pay. According to
submissions, such practice could not have promoted the sale of their vehicle rather it was
discouraging.
The large response shows peoples’ faith in the products of the appellant and also that the interest
rate offered by the appellants was appreciable and fair. The second limb of arguments also flows
from the definition in Section 36A of the Act. By placing reliance upon judgment of this Court in the
case of Rajasthan Housing Board v.Paravti Devi (Smt) (2000) 6 SCC 104, it was contended that
when supplier and consumer have entered into an agreement then the Commission, in order to
hold the supplier guilty of unfair trade practice on the basis of allegations made against it, is
required to go into the terms and conditions agreed between the parties for finding out whether there
was unfair trade practice so as to require further action on the basis of complaints. On behalf of
appellant,reliance was also placed upon judgment of this Court in the case of M/s
Lakhanpal National Limited v. M.R.T.P. Commission & Anr (1989) 3 SCC 251, particularly,
paragraph 7 and 9 thereof. In paragraph 7 it was held that the definition of “Unfair Trade Practice”
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in Section 36A is not inclusive or flexible, but specific and limited in its contents. The Court also
considered the object of this provision with a view to resolve the issue as to whether particular
acts can be condemned as unfair practice or not. A scrutiny of the judgment under appeal
discloses that the Commission failed to keep in mind the precise allegations against the appellant
with a view to find out whether the facts could satisfy the definition of Unfair Trade Practice(s)
alleged against the appellant in the Notice of Enquiry. Hence, we are left with no option but to
set aside the order under appeal. Thus there was no Unfair Trade Practice by the Company. Tata
Eng & Locomotive Co. Ltd. v. Director (Research) [SC]

Q 15. Upon an equity made by the Competition Commission of India it was found that Huge
Limited is enjoying dominant position in the market and there is every possibility that the
company may abuse its dominant position. In order to overcome such a possible
situation,the Competition Commission of India wants to order for division of Huge Limited.
Referring to the provisions of the Competition Act,2002, describe the matters which may be
provided in the said order.
Answer: According to section 28 of the Competition Act, 2002, the Commission, may,
notwithstanding anything contained in any other law for the time being in force, by order in
writing, direct division of an enterprise enjoying dominant position to ensure that such enterprise
does not abuse its dominant position. The order may provide for all or any of the following matters,
namely:—
(i) the transfer or vesting of property, rights, liabilities or obligations;
(ii) the adjustment of contracts either by discharge or reduction of any liability or obligation or
otherwise;
(iii) the creation, allotment, surrender or cancellation of any shares, stocks or securities;
(iv) the formation or winding up of an enterprise or the amendment of the memorandum of
association or articles of association or any other instruments regulating the business of any
enterprise;
(v) the extent to which, and the circumstances in which,provisions of the order affecting an
enterprise may be altered by the enterprise and the registration thereof;
(vi) any other matter which may be necessary to give effect to the division of the enterprise.

Q.16.Bombay Textiles Limited and Gujarat Textiles Limited marketing their products in India
propose to be amalgamated. The enterprise created as a result of the said amalgamation will
have assets of value of ` 300 crore and turnover of ` 1000 crore. Examine whether the
proposed amalgamation attracts the provisions of the Competition Act, 2002?
Answer: Section 5 deals with combination of enterprises and persons. The amalgamation of
enterprises shall be a combination of such enterprises if the enterprise created as a result of the
amalgamation, as the case may be, have either in India, the assets of the value of more than ` 1000
crores or turnover more than ` 3000 crores.
Hence, in the present case, the proposed amalgamation of Bombay Textiles Limited and Gujarat
Textiles Limited will not attract the provisions of the Competition Act, 2002 as they have assets of
value of ` 300 crore and turnover of ` 1000 less than the specified under the provisions.

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Q.17.A truck manufacturing company proposes to enter into distributorship agreements
requiring the dealers not to sell trucks of other manufacturers and also not to sell the trucks
outside the territory assigned to them. Examine with reference to the Provisions of the
Competition Act, 2002 whether the proposed agreements will be considered as Anti-
Competitive Agreements and void in case the company entered into such agreements.
Answer: Anti-Competitive Agreements: Under section 3 of the Competition Act, 2002 any agreement
amongst enterprises of 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 service, shall be a void agreement if it causes or is likely to cause an appreciable
adverse effect on competition. According to the problem, there are two conditions given in the

agreement, which fall under the following stages-

(i)exclusive supply agreement: includes any agreement restricting in any manner the purchaser in
the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller
or any other person.
(ii)exclusive distribution agreement: includes any agreement to limit, restrict or withhold the output
or supply of any goods or allocate any area or market for the disposal or sale of the goods.
In view of the above provisions of the Competition Act, 2002 validity of the clauses of the
agreement as given in the question can be determined as follows:
Part (i) of the question restricts the dealer to deal in the goods of other manufacturers. Hence the
proposed agreement is anti-competitive and void.
Part (ii) of the question restricts the dealers not to sell the goods outside the territory assigned to
them. Hence, the proposed agreement is anti competitive and void.

Q.18. Shyam & Co. is engaged in the manufacture of cement. It sold the goods initially
below the cost price for a year and slowly, its other competitors went out of the market.
Thereafter, the enterprise changed its strategy and sold the goods above its cost price and
made substantial profits. Examine the action, if any, which may lie against this enterprise
under the Competition Act, 2002.
Answer:(i) Abuse of dominant position – According to section 4 of the Competition Act, 2002, no
enterprise or group shall abuse its dominant position.
In the given instance, Shyam and Co. abused its dominant position by imposing predatory price of
goods. Action against this enterprise shall lie in section 27 of the Competition Act, 2002.
Where after inquiry the Commission finds that any agreement referred to in section 3 or action of
an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may
be, it may pass all or any of the following orders, namely:—
(a)direct such enterprise to discontinue and not to re-enter such agreement or discontinue such
abuse of dominant position, as the case may be;
(b)impose such penalty, as it may deem fit which shall not be more than ten percent of the average
of the turnover for the last three preceding financial years,
(c)direct that the agreements shall stand modified to the extent and in the manner as may be
specified in the order by the Commission;
(d)direct the enterprises concerned to abide by such other orders as the Commission may pass and
comply with the directions, including payment of costs, if any:
(e)pass such other order or issue such directions as it may deem fit.
While passing orders under this section, if the Commission comes to a finding that an enterprise in
contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of
the Explanation to section 5 of the Act, and other members of such a group are also responsible for,
or have contributed to, such a contravention, then it may pass orders, under this section, against
such members of the group.

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Q.19.MNO Tyres Limited is in the business of manufacture of automotive tyres for the past
one year. To increase its market share, the company has decided to reduce the prices of
tyres. The cost structure of the passenger car tyre is as under:
(i)Cost of production ` 5,000 per tyre
(ii)Selling price ` 6,000 per tyre
The company started selling tyres @ ` 5,200 per tyre and the other tyre manufacturers made a
complaint to the Competition Commission of India stating that MNO Tyres Limited is guilty
of predatory pricing having the effect of reducing the competition or eliminating the
competition. Advise MNO Tyres Limited as to the meaning of predatory pricing and whether
the company can be said to have indulged in the said practice having regard to the
provisions of the Competition Act, 2002.
Answer:Section 4(2)(a) of the Competition Act, 2002 prohibits abuse of dominant position by any
enterprise or group. There shall be abuse of dominant position if an enterprise or a group directly or
indirectly, imposes unfair or discriminatory-
(i)condition in purchase or sale of goods or services; or
(ii)price in purchase or sale (including predatory price) of goods or service.
“Predatory price” means the sale of goods or provision of services, at a price which is below the cost,
as may be determined by regulations, of production of the goods or provision of services, with a view
to reduce competition or eliminate the competitors.
In the present case, MNO Tyres Limited is in the business of manufacture of automotive tyres for the

past one year. To increase its market share, the company has decided to reduce the prices of tyres.
The cost of production is ` 5,000 and selling price is ` 6000. The company started selling tyres @ `
5,200 per tyre. The other tyre manufacturers made a complaint to the Competition Commission of
India stating that MNO Tyres Limited is guilty of predatory pricing having the effect of reducing the
competition or eliminating the competition.
According to the provisions given under section 4(2)(a) of the Competition Act, 2002, MNO Tyres
Limited cannot be said to have indulged in predatory pricing as the revised selling price (` 5,200 per
tyre) is more than its cost of production (` 5,000 per tyre).

Q.20. The mango producers in Lucknow have entered into an arrangement among them
whereby they have decided not to sell the mango below certain price. This arrangement has
been made in writing but not intended to be enforced by any legal proceedings. Referring to
the provisions of the Competition Act, 2002, examine whether the said arrangement shall fall
within the jurisdiction of the term “agreement” within the meaning of the said Act.
Answer: In accordance with the provisions of the Competition Act, 2002, as contained under Section
2(b), an agreement includes any arrangement or understanding or action in concert :
(A)whether or not, such arrangement, understanding or action is formal or in writing; or
(B)whether or not, such arrangement, or undertaking or action is intended to be enforceable by legal
proceedings.
In the given case, the understanding reached among the mango producers not to sell below a
certain price shall amount to an agreement as defined under Section 2(b) notwithstanding the fact
that though the arrangement is in writing but not intended to be enforced by legal proceeding.

Q.21.The coconut producers in Tirunelveli (Tamil Nadu) have formed an association to control
the production of coconuts. Referring to the provisions of the Competition Act, 2002,
examine whether the said association to control the production of coconuts shall fall within
the jurisdiction of the term ‘Cartel’ under the provisions of the said Act.
Answer: In accordance with the Provisions of Section 2(c) of the Competition Act, 2002, the term
‘Cartel’ includes an association of producers, sellers, distributors, traders or service providers who,
by agreement among themselves, limit, control or attempt to control the production, distribution,
sale or price of or trade in goods or provision of services.
The term ‘cartel’ has an inclusive meaning. Thus, an association formed to control the production of
coconuts is within the aforesaid definition of a cartel. Hence, the association of coconut producers in
Tirunelveli in the given case will be considered as a cartel under the provisions of the Act.

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