COMPETITION ACT, 2002

Submitted To: PRESENTATION BY:Sanjana Kadyan MUKESH SAH,

SHIV SINGH, ARJUN KANOJIA, DENESH

OUTLINE :1) Introduction.2) Objectives Of The Act.3) Concepts and definition.4) Prohibition of certain agreements abuse of dominant.

position and regulation of combinations.5) Competition commission of India.6) Powers, duties & functions of the commission.

IntroductionGovernment of India had appointed a committee

under the chairmanship of Shri S.V.S. Raghavan in October, 1999 to examine the monopolies and restrictive trade practices Act,1969 for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law. Based on the recommendations of Raghavan committee, competition bill, 2001 was introduced in the Lok Sabha on 6 August, 2001 and was referred to parliamentary standing committee for its recommendation. Pursuant to the recommendations of the standing committee, the competition act, 2002 was enacted.

Objectives Of Competition Act : To Promoting economic efficiency in both static and dynamic

sense. To promote and sustain competitions in markets. Facilitating economic liberalization, including privatization.

Deregulation and reduction of external trade barriers. Preserving and promoting the sound development of a market

economy. To protect the interests of Consumers. To ensure freedom of trade carried on by other participants in

markets, in India.

Concepts and definitions ( section 2)Acquisition [ section 2(a)]It means, directly or indirectly, acquiring or agreeing to acquire-(1). Shares, voting rights or assets of any enterprise; or (2).Control over management or control over assets of any enterprise.Agreement [ section (b)] (1). Whether or not, such arrangement or understanding or action is formal or in writing: or (2). Whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings.There are two types of agreement horizontal agreement & vertical agreement.Cartel [section 2(c)] It includes an association of producers, sellers, distributors traders or service – providers who attempt to control production, distribution, sale or price.

Consumer [ section 2(f)] ‘Consumer’ means any person who buy good or hires/avails of any services for a consideration which has been paid of promised or partly paid and partly promised.Goods [ section 2(i)] goods as define in the sale of goods act, 1930 ( 8 of 1930)And includes- (1). Products manufactured, processed or mined; (2). Debentures, stock and shares after allotment etc.Person [ section 2 (l)] (1). an individual; (2).a Hindu undivided family; (3). a firm; (4). a company; (5). a local authority.

Price [ section 2(o)] In relation to the sale of any goods or to the performance of any services, includes every valuable consideration, whether direct of indirect, or deferred.Service [ section 2 (u)] Any description which is made available to potential users and industrial or commercial matters such as banking, communication, education, real estate, transport, storage, or information and advertisement.Trade [section 2(x)] ‘Trade’ means any trade, business, industry, profession or occupation relating to the production, supply, distribution, storage or control of goods and includes the provision of any services.

features Of Competition ACT 2002:

1. anti competition agreement.(section 3).

2.PROHIBITION OF Abuse of dominant position.(section 4).

3. Regulation of combination.(section 5).

4. Competition advocacy.(section 49).

anti competition agreement Section 3 provides that no enterprise or person shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. Any agreement entered into between competitors, which - a) Directly or indirectly determines purchase or sale prices;b) Limits or controls production, supply, markets, technical

development, investment or provision of services;c) Directly or indirectly results in bid rigging or collusive

bidding, shall be presumed to have an appreciable adverse effect on competition.

Adverse Effect on Competition(a). Tie-in agreement.

(b). Exclusive Supply agreement. (c). Exclusive distribution agreement.(d). Refusal to deal.

(e). Resale Price maintenance.

PROHIBITION OF Abuse of dominant position (section 4)

A dominant position implies that a company, is so overriding that the competitors are unable to match its actions or control the prices.

Sec.4 of the Competition Act prohibits such activities which include:1) Directly or indirectly imposes unfair or discriminatory

Conditions/Price in purchase or sale of goods or service.2) Limits or restricts

- production of goods or provision of services or market thereof,- technical or scientific development relating to the goods or

services to the prejudice of consumers.3) Indulges in practices that result in denial of market access in any

manner.4) Uses its position to enter into relevant market or protect the relevant

market.

Regulation OF CombinationsCombination include acquisition of shares, acquiring of control &mergers n amalgamations. These combinations can be horizontal type of combination that has very high potential to thwart competition when compared to other kinds of combinations. The following cases are :Acquisition by Large Enterprises & Group.Acquiring of Enterprise having similar

Goods/Services.Acquiring enterprise having similar Goods/Service

by a Group.Merger of Enterprises.Merger in Group company.

COMPETITION COMMISSION OF INDIA With effect from such date as the Central Government may, by

notification, appoint, there shall be established, for the purposes of this Act, a Commission to be called the ‘Competition Commission of India’.

The Commission shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.The head office of the Commission shall be at such place as the Central Government shall decide from time to time.The Commission may establish offices at other places in India.

- The Competition Act 2002,Sec.7,(1-4)

Composition Of The CommissionThe Commission has a Chairperson and six members of the

Commission shall be appointed by the Central Government.

The term of office is for five years. (sec.9-11)

Selection Committee includes Chief Justice of India or his nominee, Secretary in the Ministry of Corporate Affairs

Duties, powers & functions of the commissionDuties:

Eliminate practices having adverse effect on competition,

Promote and sustain competition,

Protect the interests of the consumers,

Ensure freedom of trade carried on by other participants in the market,

Conduct enquiry into cases of abuse of dominant position and combinations.

Powers & Functions Of the Commission Inquiry into certain agreements ( section 19).

Inquiry whether an Enterprise enjoys dominant position.

Inquiry into combination by commission ( section 20).

Power to award compensation (section 34).

power of commission to regulate its own procedure.

power to review its own orders ( section 37).

power to impose lesser penalty.

Case study : 1(Relating to the Dominance abuse and Appellate function)

Relating Yash Raj films and “Son of Sardar

The tassel between Yash Raj films and Ajay Devgan Films

- Case no. 66 of 2012

Informant: OppositeParties:-Ajay Devgan Films -Yash Raj films

• The informant’s grievance :Opposite party Yash Raj films released a mega starrer film ’ Ek Tha Tiger’ on 15th August 2012. Meanwhile, they were also contemplating release of the film ‘Jab Tak Hain Jaan’ during Diwali. They have put a condition on single screen and multiplex owners that if they wanted to exhibit ETT then they would have to simultaneously agree to exhibit the other film JTHJ.

Claim highlights : 1. Abuse of dominance. 2. Violation of Sec 3 and Sec 4 of the CCI. 3. Informant feared that he will not get enough theatres for his

own film ‘Son of Sardar’.4. Tie in arrangement and vertical agreements.

Result of the case :

i. Case dismissed.

ii. CCI did not find any misgivings on the opposition’s side.

iii. Fit for closure under section 26 (2) of the act.

Reasons for Closure :

i. Tie in arrangements are not violative of Sec. 3, if it does not cause appreciable adverse effect on competition of India.

ii. Market cannot be constricted to EID and Diwali. Market is considered as a whole throughout the year.

iii. Sec. 4- domination of market not defined.

Case study : 2(Relating to the Cartel Formation and Price manipulation)

Advertising Agencies GuildVS

Indian Broadcasting Foundation & its members

- Case no. 35 of 2013 Informant:

- Advertising Agencies Guild

Opposite Parties:

- Indian Broadcasting foundation &

its members (IBF)

Case Highlights- Opposite parties were forcing the advertising agencies to agree to the

new mechanism of billing (Gross Billing To Net Billing)- They collectively boycotted and did not broadcast advertisements on

their Channels for two days viz. 01.05.2013 & 02.05.2013. - Violation of section 3(3)

Result of Case• Case was dismissed.

• IBF wasn't found to be abusing their dominance.

• The agreement deadline was increased to one month

Reasons for Closure• Billing system has no restriction

under competition Act.

• Competition Act is applicable only to price fixation, market sharing collusive bidding etc..,

• The boycotting was pre-mentioned by the so formed committee of IBF.

CONCLUSIONCONCLUSION IS NOT PREPAREDI‘LL SEND IT TOMMOROW