Definitions under the Competition Act

The following are the definitions cited under the Competition Act

1. Acquisition: Acquisition is defined as the direct or indirect agreement to acquire shares, voting
rights or control of assets over any enterprise.

2. Cartel: A cartel is defined as an association of producers, sellers who limit control distribution, sale
or promotions on goods through an arrangement previously made.

3. Position: A dominant position means a position of power held by an enterprise in the related
market. It enables the enterprise to function freely and influence the market to its directions.

4. Predatory pricing: Predatory pricing is where the price of goods and services is reduced to well
below the cost of production in order to eliminate competition.

Salient Features of the Competition Act:

1. Anti Agreements: Any individual or enterprises shall not deal in production supply or distribution
that may cause a negative impact regarding competition in India. Any existence of such agreements
is considered illegal.

2. Abuse of dominant position: In the event, an enterprise or an associated individual, it is found to

indulge in practices that are unfair or discriminatory in nature shall be considered an abuse of
dominant position. If a party is found to be in abuse of its position, then they will be subjected to an
investigation from the concerned authorities.

3. Combinations: As per the act a combination is defined as terms which lead to acquisitions or
mergers. But should such combinations cross the limits as put forth by the Act, then the parties
involved would be under the scrutiny of the Competition Commission of India.

4. Competition Commission of India: The Competition Commission of India is an independent body

with the powers to enter into contracts and should the contracts be broken they can sue the parties
involved. The Commission consists of a maximum of six members who are tasked with sustaining and
promoting the interests of consumers in order to foster an ideal environment for economic
competition.

The other function of the Commission is to advise the Government of India regarding competition in
the economy and create public awareness on the same issue.

What are the main features of Competition Act 2002?

The Act mainly covers these aspects;

 Prohibition of anti competitive agreements.

 Prohibition of abuse of dominance.
 Regulation of combination (acquisition, mergers, and amalgamation of certain size)
 Establishment of the competition commission of India.
 Power and functions of the competition commission of India.
 What is the main purpose behind the Competition Act 2002?
It is a tool to implement and enforce competition policy and to prevent and punish anti-
competitive business practices by firms and unnecessary Government interference in the
market. Competition laws is equally applicable on written as well as oral agreement,
arrangements between the enterprises or persons.

Competition Commission of India – Functions

The preamble of the Competition Act focuses on the development of the economy and the
country by avoiding unfair competition practices and promoting constructive competition.
The functions of the CCI are:

1. Ensuring that the benefit and welfare of the customers are maintained in the Indian
Market.
2. An accelerated and inclusive economic growth through ensuring fair and healthy
competition in the economic activities of the nation.
3. Ensuring the efficient utilization of the nation’s resources through the execution of
competition policies.
4. The Commission also undertakes competition advocacy.
5. It is also the antitrust ombudsman for small organizations.
6. The CCI will also scrutinize any foreign company that enters the Indian market
through a merger or acquisition to ensure that it abides by India’s competition laws –
the Competition Act, 2002.
7. CCI also ensures interaction and cooperation with the other regulating authorities in
the economy. This will ensure that the sectoral regulatory laws are agreeable with
the competition laws.
8. It also acts as a business facilitator, by ensuring that a few firms do not establish
dominance in the market and that there is a peaceful co-existence between the
small and the large enterprises.

Competition Law Enforcement in India

Competition law enforcement in India involves a structured process that encompasses investigation,
adjudication, and judicial review. This section outlines the key aspects of competition law
enforcement in India, including the investigative process, the role of the Competition Appellate
Tribunal (COMPAT), and the judicial review of Competition Commission of India (CCI) decisions.

Investigative process and procedures

The investigative process in competition law enforcement begins with the receipt of information or
Suo motu initiation by the CCI. The CCI has the power to call for information, summon witnesses,
conduct inspections, and seek expert opinions during its investigations. It has the authority to issue
directions to protect the confidentiality of information and ensure the effectiveness of the
investigation. After conducting a thorough investigation, the CCI may pass an order if it finds that
there has been a contravention of the provisions of the Competition Act, 2002. The order may
include directions to cease and desist from anticompetitive practices, imposition of penalties, or
other remedial measures to restore competition in the market.

Competition Appellate Tribunal (COMPAT)

The Competition Appellate Tribunal (COMPAT) served as an appellate body to review the decisions of
the CCI until its dissolution in 2017. Subsequently, appeals against CCI decisions are now directed to
the National Company Law Appellate Tribunal (NCLAT). The NCLAT has the authority to hear and
dispose of appeals against the orders of the CCI, ensuring a system of checks and balances in
competition law enforcement.

Judicial review of CCI decisions

The decisions of the CCI are subject to judicial review by the Supreme Court of India16. Parties
aggrieved by the decisions of the CCI can approach the appropriate court to challenge the legality or
correctness of those decisions.

CASES

Competition Commission of India v. Coordination Committee of Artists and Technicians of W. B.

Film and Television and Ors. (Tollywood case)

In this case, the CCI investigated and penalized an association of film artists and technicians for
imposing restrictions on the engagement of non-members, limiting competition in the film and
television industry. The case established the CCI's authority to scrutinize and penalize anti-
competitive practices by industry associations, thereby promoting fair competition and preventing
monopolistic behaviour.

DLF Limited v. CCI19

The DLF case was a significant judgment that addressed abuse of dominant position in the real estate
sector. The CCI found DLF Limited, a prominent real estate developer, guilty of abusing its dominant
position by imposing unfair conditions on buyers. The case reinforced the importance of preventing
abuse of dominance and protecting consumer interests in the real estate market

Uber India Systems Pvt. Ltd. v. CCI

This case involved allegations of anti-competitive agreements between Uber and certain drivers'
associations. The CCI held that the agreements had an appreciable adverse effect on competition
and violated the provisions of the Competition Act, 2002. The case highlighted the CCI's scrutiny of
digital platform markets and its determination to prevent anti-competitive practices in the evolving
gig economy.

Competition Law and Mergers and Acquisitions

Competition law plays a crucial role in overseeing mergers and acquisitions (M&A) to ensure that
they do not result in anti-competitive effects or harm consumer welfare. The examination of M&A
transactions by competition authorities aims to maintain competitive markets, prevent the creation
or strengthening of dominant positions, and safeguard consumer choice. This section explores the
relationship between competition law and M&A and highlights key considerations in their
interaction.

The Merger Control Framework

Competition law frameworks typically include provisions for the review and regulation of M&A
transactions that meet certain jurisdictional thresholds. These provisions empower competition
authorities to assess the potential impact of mergers on market competition and intervene when
necessary to address anti-competitive effects.

In India, the Competition Act, 2002 provides the legal framework for the regulation of mergers and
acquisitions.

It requires parties to notify the Competition Commission of India (CCI) if the proposed combination
exceeds specified thresholds, allowing the CCI to evaluate the likely impact on competition and
consumer welfare.

Substantive Assessment of Mergers

Competition authorities conduct a substantive assessment of mergers to determine whether they

are likely to result in a substantial lessening of competition. This assessment involves analysing
factors such as market concentration,market shares of the merging parties, potential barriers to
entry, and the likelihood of coordinated effects.

The substantive analysis also considers the potential anti-competitive effects in relevant product and
geographic markets, including price increases, reduced product choice, diminished innovation, and
foreclosure of competitors. Competition authorities may require remedies or conditions, such as
divestitures or behavioural commitments, to address any identified competition concerns.

Dominance and Market Power

One of the key considerations in the assessment of mergers is the impact on market dominance or
the creation of market power. Competition authorities analyse whether the merged entity would
hold a dominant position in the relevant market and assess the potential anti-competitive effects
arising from that dominance.