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FAQ ON COMPETITION LAW IN INDIA

 
COMPETITION LAW
 
Competition Law and its Evolution
The Competition Act, 2002
The CCI
Inquiry process by CCI
Anti-Competitive Agreement
Abuse of Dominance
Unfair Trade Practice
Regulation of Combinations
FAQ on Competition Law in India
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  1. What is competition in market?

    Competition is an act or a series of act performed by various producers in an industry to maintain the upper hand by creating and innovating new products at lower costs.

  2. What is the objective of Competition Act?

    It ensure fair competition by:

    1. Prohibition of abuse of dominance

    2. Prohibition of anti-competitive agreements

    3. Regulations of combinations, acquisitions, mergers and amalgamations of cartels

    4. Competition advocacy

  3. Why do we need competition in the market?

    Competition is important as it helps the producers to be dynamic and provide better products at lower cost. It also helps to remove the inefficient producers of the market.

  4. What is meant by unfair competition?

    Unfair competition is the practice done by producers in the market to become major player in it by acts not permitted by laws and regulations of the country. Intentional decrease in output to increase prices. For example: Predatory Pricing and Discriminatory Pricing.

  5. What is the difference between competition law and competition policy?

    Competition law are the rigid rules to prevent anti-competitive practices while the competition policy sets out liberalized trade policy, relaxed trade policies to ensure and promote a healthy completion in the market.

  6. Which law regulates anti-competitive practices in India?

    The Competition Act, 2002 regulates anti-competitive practices in India.

  7. Is there a commission/statutory body incorporated in India to deal with anti-competitive practices?

    The Competition Commission of India has been established by Central Government with effect from October 14, 2003 to deal with anti-competitive practices.

  8. What are the authorities under the competition act in India?

    There are three authorities under the Act ;

    1. Director General

    2. Competition Commission of India (CCI)

    3. Competition Appellate Tribunal (COMPAT)

  9. What are Anti-Competitive Agreements?

    According to section 3 of the Act “No enterprise or association of enterprises or person or association of persons 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.”

  10. What are the types of anti-competitive agreements?

    There are two types of anti-competitive agreements:

    1. Horizontal Agreements

    2. Vertical Agreements

  11. What are Horizontal Agreements?

    These agreements are among the same level company or firms in the same industry carrying business of the similar products. These agreements are done with regards to price of goods.

  12. What are Vertical Agreements?

    These agreements are done amongst different level of the production chain in different markets, in respect of production, supply, distribution, storage or sale.

  13. What is Resale Price Maintenance?

    According to the act, it is defined as “any agreement to sell goods on condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that the prices lower than those prices may be charged.”

  14. What are Tie-in Arrangements?

    According to the act, it is defined as “any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods”

  15. What are Exclusive Supply Agreements?

    According to the act, it is defined as “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”

  16. What are Exclusive Distribution Agreements?

    According to the act, it is defined, “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”

  17. What is Refusal to Deal?

    According to the act, it is defined, “any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought.

  18. What are cartels?

    A cartel may be providing for price-fixing; to limit production and supply, to allocate market share or sales quotas or to engage in bid rigging or collusive bidding.

  19. What is the major difference between Rule of reason and per se rule?

    These are two main principles to judge the illegality of an agreement, Per se rule has an inherent nature of illegality and is a rule of evidence but Rule of reason helps in establishing illegality of the agreement only once an examination of such agreement has been done.

  20. What is Bid Rigging or Collusive Bidding?

    This is a process where two parties decide on a pre-determined cost by colluding to keep the price low for the tender. This effects the bidding process by eliminating the competition.

  21. What is dominant position?

    As per Section 4 it is defined as “means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to—

    • operate independently of competitive forces prevailing in the relevant market; or

    • affect its competitors or consumers or the relevant market in its favour.”

  22. What is abuse of dominant position?

    The abuse of dominant position is when the dominant player uses its strength in the market to steer the market in it’s favour and forcing the exit of the small player in the market.

  23. What is discriminatory pricing?

    Discriminatory pricing is prohibited under the Indian Competition Act, 2000, they are of two types i.e Price Fixing and Predatory Pricing.

  24. What is price fixing?

    Price Fixing is when the competitors in an industry decide on a particular price of the product for the purpose of stabilizing the competition whereas the competition law asks every producer to decide its own price.

  25. What is predatory pricing?

    According to Section 4 of the Act it is defined as “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.”

  26. What is a combination under the Indian Competition Act 2002?

    What are different types of mergers under it? According to the Competition Commission of India (CCI) booklet on combination, it means acquisition of control, shares, voting rights or assets, acquisition of control by a person over an enterprise where such person has direct or indirect control over another enterprise engaged in competing businesses, and mergers and amalgamations between or amongst enterprises when the combining parties exceed the thresholds set in the Act. The different type of mergers under combination are:

    1. Horizontal Mergers

    2. Vertical Mergers

    3. Conglomerate Mergers

  27. Who is Director General and what are his duties?

    The Act provides for appointing a Director General by the central government for the purpose of assisting the commission by investigating into the matter and providing report for that matter. The main duties are assisting the commission for investigation and based on those investigation issue directions to the party.

  28. How is investigation into Anti-Competitive Practices done in India?

    The secretary while following the directions of the commission passes on every document necessary and Director General is directed to submit a report ordinarily in 60 days. The report contains investigation on the allegations of the matter. Eight copies and one soft copy is submitted to the secretary within the specified time provided by the commission.

  29. What is Competition Commission of India (CCI) and what are its duties?

    Competition Commission of India 3was set up under the act and according to Commission’s website their main duty is to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.

  30. What is the appellate authority and its duties under the Indian Competition Act?

    The Competition appellate tribunal is a statutory authority set up under the Act which entertains the appeals from the orders of the Competition Commission of India.

  31. Is order of Competition Commission of India appealable?

    Yes, the order of Competition Commission of India is appealable within 60 days of the order.

  32. Where can appeal against the order be filed?

    The appeal against an order can be filed with Competition Appellate Tribunal (COMPAT)

  33. When does Competition Commission of India (CCI) initiate inquiry into Anti-competitive Agreements/ abuse of dominance?

    CCI can initiate an enquiry suo-moto or on receipt of an information or on receipt of information from Central Government, State Government and Statutory Authority.

  34. Can Competition Commission of India (CCI) initiate inquiry suo-moto?

    Yes, Competition Commission of India (CCI) can initiate an inquiry suo-moto.

  35. Who can provide information to the Competition Commission for initiating inquiry?

    Information can be provided by the Central Government, State Government and Statutory Authority.

  36. What orders can be passed by Competition Commission of India (CCI) for abuse of dominant power and anti-competitive agreements?

    According to the Act following orders can be passed: “

    1. direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be;

    2. Impose such penalty, as it may deem fit which shall be not more than ten percent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten percent. of its turnover for each year of the continuance of such agreement, whichever is higher.

    3. Direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;

    4. 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;

    5. Pass such other order or issue such directions as it may deem fit.”

  37. What are the penalties under the Act?

    Chapter VI of the Act covers penalties regarding contravention of orders of commission, penalty for failure to comply with direction of commission and director, penalty for making false statement or omission to furnish material information, contravention by companies.

  38. What is the MRTP Act, 1970?

    Monopolies and Restrictive Trade Practices Act was enacted in 1970 to prohibit malpractices in the industry and creation of monopolies. Presently this act is not in force in India anymore as the Competition Act, 2002 has replaced it.

  39. Is Monopolies and Restrictive Trade Practices ( MRTP) Act,1970 still in force in India?

    No, The Monopolies and Restrictive Trade Practices (MRTP) Act, 1970 is not in force in India as it was repealed and replaced replaced by The Competition Act,2002 with effect from September 1, 2009.

  40. What is Competition Advocacy?

    Competition advocacy is the part of the commission who are responsible for advising the central government regarding policies to be made in the area of competition law and economic policies which affect competition. The commission is also responsible for taking suitable measures to promote competition advocacy and creating awareness about competition issues.

For further information on Competition Advocacy in India, please write to us at info@ssrana.com

 

 
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