Presentation on

Overview of Competition Law in India

by I. Sridhar

Overview of Competition Law in India

1.

Introduction to Competition Act, 2002

2.

Objectives of Competition Act

- Prevent Practices having adverse effect on competition
- Promote & Sustain competition in markets
- Protect Interest of consumers
- Ensure freedom of trade carried on by other participants
in the market
- Competition advocacy

Overview of Competition Law in India

3.

Prohibition of Anti Competitive Agreements Section 3(1)

- No enterprise shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition,
control
of goods / services which causes or likely to cause
appreciable adverse effect on competition.
- Under the law the whole agreement is void

Overview of Competition Law in India

Prohibition of Anti Competitive Agreements Section 3(2)
Agreements which
- directly or indirectly determine purchase or sale price,
- limits or controls production, supply, markets, technical
development, investment or provision of services,
- shares the market or source of production by way allocation
of geographical area or type of goods or service,
- directly or indirectly results in bid rigging or collusive
bidding
shall be presumed to have appreciable adverse effect on competition

Overview of Competition Law in India

Prohibition of Anti Competitive Agreements

Section 3(4)

Agreements which provides for

- tie-in agreement
- exclusive supply agreement
- exclusive distribution agreement
- refusal to deal
- resale price maintenance
shall be in contravention of Sec 3(1) if such agreement causes
or likely to cause appreciable adverse effect on competition

Overview of Competition Law in India

4.

Prohibition of Abuse of Dominant Position

Section 4

- No enterprise shall abuse its dominant position

Dominant position means position of strength which
enables to:
- operate independently of competitive forces
- affect its competitors or consumers or the relevant
market its favour

Overview of Competition Law in India

Prohibition of Abuse of Dominant Position

Section 4(2)

There shall be abuse of dominant position, if an enterprise

directly or indirectly imposes unfair or discriminatory
condition in
- purchase or sale of goods or service,
- price in purchase or sale of goods or service
(Predatory Pricing)

Overview of Competition Law in India

Prohibition of Abuse of Dominant Position

Section 4(2)

Limiting or restricting
- production of goods or provision of service or market
- technical or scientific development relating to goods or
services to the prejudice of consumers
- practices of denial of market access
- makes conclusion of contracts subject to acceptance
by other parties of supplementary obligations which have no
connection with the subject of such contracts
- uses dominant position in one market to enter into other
relevant market

Overview of Competition Law in India

5.

Regulation of Combinations Sections 5 & 6

Commission to regulate Combinations, i.e., large mergers,
acquisitions which are likely to have appreciable adverse effect
on competition
Threshold limits
for single enterprise
Assets > Rs. 1,500 crores
Turnover > Rs. 4,500 crores
for group of enterprises
Assets > Rs. 6,000 crores
Turnover > Rs. 18,000 crores

Overview of Competition Law in India

Threshold provided for overseas enterprises / groups
for single enterprise
Assets > $ 750M (min indian component Rs.750CR)
Turnover > $ 2,250M (min indian component Rs.2,250CR)
for group of enterprises
Assets > $ 3 bn (min indian component Rs.750CR)
Turnover > $ 9 bn (min indian component Rs.2,250CR)
Notification of Combinations to Commission is mandatory within 30
days of approval of such proposal by BODs or execution of any
agreement / document.
If notified, Commission to take decision within 210 days on the
Combination.
Decision may allow, disallow, modify, etc the Combination

Overview of Competition Law in India

6. Inquiry into Anti-competitive agreements / Abuse of dominance
- Suo motu inquiry
- On receipt of complaint
- On receipt of a reference
Commission has suo motu power to enquire whether a combination
causes or is likely to cause an appreciable adverse effect on
competition.

Overview of Competition Law in India

7. Powers of Commission
- Cease & desist order
- Impose penalty upto 10% of turnover
- In case of Cartel, penalty can be 10% of turnover or 3 times
of profit illegally gained from cartel activity, whichever is more
- Recommend to Govt the division of dominant enterprise
- Various penalties ranging from Rs. 1lakh upto Rs. 1 crore are
also provided for failure to comply with direction / order of
Commission

Overview of Competition Law in India

8. Recent cases concerning Anti-Competitive Agreements and Abuse
of Dominant Position and Regulation of Combinations
i) On Cement Cartel Fine of Rs. 6,200Cr
ii) On DLF Fine of Rs.630Cr
iii) On NSE Fine of Rs.55.5Cr
iv) On BCCI for abusing power Fine of Rs.52.24 Cr
v) M&M - Mahindra Navistar deal approval 9th Feb, 2013
vi) Diageo-USL deal approval 26th Feb, 2013
vii) On Tyre cartel and Sugar cartel
viii) On agreement between SAIL and Indian Railways
ix) On acquisition of Barclays creditcard business by Standard
Chartered Bank

Overview of Competition Law in India

x) On merger of Nippon Steel, Sumitomo Metal Industries
xi) On Coal India role in stagnant output
xii) Probe on SBI & Associate banks CASA rates
xiii) On FDI in retail

Overview of Competition Law in India

Thank You