Name Roll No

Aamir Khan 2
Anfal Shaikh 9
Ankit Shah 11
Ashish Agarwal 16
Bhupendra Mehta 26
Dhannya Devassy 31
Dimple Dave 34
Enam Khan 37
Gaurav Jirapure 46
Harshada Bombat 52

pg. 1
Table of Contents
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................3
Framing of India’s New Competition Law......................................................................................5
First Phase: The Pre-Independence Laws....................................................................................6
Second Phase: Controlling Big Business.....................................................................................6
Third Phase: Economic Liberalization and the Enactment of a New Competition Law.............7
Comparison between MRTP Act, 1969 & Competition Act 2002................................................10
Indian Context of the Law.............................................................................................................11
Drawbacks of MRTP ACT1969 (Need of the Competition Law).................................................12
Objective of the Competition Act..................................................................................................15
Composition of Competition Commission of India.......................................................................24
Amendments in the Competition Act.........................................................................................27
Advantages of the Competition Act...........................................................................................28
Shortcomings of the Competition Act:.......................................................................................29
Case study – SAIL V/s Jindal Steel and Power (JSPL).................................................................30

pg. 2
Introduction
In the recent times, the Indian economy has seen reform and restructuring initiatives in diverse
facets and dimensions (This diversity alludes to the divergent mechanism design, processes and
instruments adopted for different utility/infrastructure facilities.) since mid 1980’s. In context of
the globalisation, the emergence of multinational corporations, interdependence of economies,
and role of private enterprise in economic development, the global financial crisis is emerging as
a watershed in the “regulatory and reform” thinking. The past two decades have witnessed an
immense interest in competition law all over the world especially among the developing
countries. More than a hundred countries have enacted new competition laws during this period.
These enactments have a lot of similarity in their philosophy, content and approach. The new
competition laws take the protection of competition as an end in itself. They contain provisions
relating to the prohibition of anti-competitive agreements including cartels, abuse of dominant
position and scrutiny of mergers from a competition stand point and establish an independent
quasi-judicial body for an efficient enforcement of the law. The interest at the domestic level is
matched by developments at the international level. The Singapore WTO Ministerial Declaration
included competition issues within the framework of topics for further negotiations. Though
future negotiations within the WTO framework are stalled for the time being, many Regional
Trade Agreements (RTAs) have included competition provisions within their ambit. In addition
to these developments, there are informal mechanisms which strive for the convergence of
substantive and procedural provisions of domestic competition laws and encourage cooperation
in the field. The International Competition Network (ICN) is an example of this.

A large body of literature has emerged in the recent past focusing on the development dimension
of competition law and policy. A persuasive argument is advanced that there is no “one size-fits-
all” competition law which can be adopted by all jurisdictions. It is pointed out that competition
law should correspond to the level of development of a country. It may be recalled that the 1990s
marked sweeping economic liberalization policies in India. The hitherto economic policy of
command and control and heavy reliance on public sector gave way to a policy of liberalization,
privatization and a thrust on markets. One major objective of the new economic policy was to
reform the law relating to competition. The erstwhile Monopolies and Restrictive Trade Practices

pg. 3
Act 1969 (MRTP Act) gave way to the Competition Act 2002 (the Act). These two statutes
in a way capture the essence of economic reforms in India.

pg. 4
Framing of India’s New Competition Law
An analysis of the Indian Competition Act from a developmental perspective needs to be
preceded by providing a history of the framing of Indian Competition law. One can discern three
distinct phases in this regard.

Pre-independence Laws:
PRIVATE CAPITAL

Constitution (1950); IDR

Act (1951); IPR (1956);
MRTP Act, 1969; State
Ownership Reserved Lists
and Licensing

POST 1991
PRIVATE CAPITAL
and PPP

Private Ownership Level playing field

Reasonable return on invest. Single window approach:
Economic regulation: TRAI FIPB, NHAI Act, SEZ Act.
Act,
Electricity Act, AERI Act

pg. 5
First Phase: The Pre-Independence Laws
Though two centuries of colonial rule had a deleterious impact on India’s economy, a small but
independent industrial base had emerged during its last phase. During the independence
movement, there was a consensus as to the nature and path of development to be pursued after
the achievement of political independence. The crucial role to be played by the state in
promoting economic development; rapid industrialization; prevention of foreign capital
domination; and growth with equity were some of the important aspects of this consensus. The
initial phase was characterized by the absence of a competition law or policy. It has been argued
that the above mentioned policies and legislations which were intended to achieve the principle
of equitable distribution of material resources and prohibition of economic concentration have
actually resulted in the concentration of the Indian industry.

Second Phase: Controlling Big Business

The second phase saw the unraveling of many political events that led to the enactment of more
legislation in the field of economic activity. An understanding of the political undercurrents is
highly useful in the analysis of the competition law that emerged. The sixties was a decade of
two wars, three Prime Ministers and two consecutive droughts for India. The economic
stagnation resulting from the decline in food production and the increase in defense expenditure
presented a severe foreign exchange crisis. To tide over this crisis, India had to depend on the
IMF and the World Bank. The prescriptions of the World Bank and IMF led to a series of
economic reforms in 1966. The devaluation of the Indian rupee was a major step in that
direction. But the reform process was short lived. Many reasons have been cited for the reversal
of reforms. The Fourth general elections in 1967 saw the majority of the ruling Congress greatly
reduced at the centre and the formation of opposition party governments in many crucial states.
Big businesses were treated with suspicion. Between 1964 and 1969 the government appointed
four committees to examine the affairs of big businesses. It was also followed by nationalization
of many key sectors of the economy. Major Banks were nationalized in 1969, followed by the
insurance sector in the same year and the coal sector in 1971.Emboldened by the popular support
for these decisions, the Congress party went for an early election and won decisively in 1971.

pg. 6
The framing of India’s first competition law, the Monopolies and Restrictive Trade Practices Act
(MRTP Act) in 1969 has to be understood in this backdrop.

The prevention of the concentration of economic power to the common detriment; control of
monopolies; prohibition of monopolistic trade practices; and prohibition of restrictive trade
practices were the principal objectives of the MRTP Act. In order to control concentration of
economic power, the Act adopted a command and control approach. The MRTP Commission
was established to oversee the implementation of the Act. The Industry was not happy with its
implementation. It has been described by critics as one of the most damaging legislations in
modern Indian history. The economic liberalization policies adopted by the Government in 1991
led to major amendments to the MRTP Act.

Third Phase: Economic Liberalization and the Enactment of a

New Competition Law
The third phase in the development of competition law started in the year 1991. The massive
fiscal and balance payment crisis that climaxed in that year led to a series of economic reform
measures. The Industrial Policy 1991 announced many far reaching changes on the economic
front. Declaring that the policy of the government is one of continuity with change, the policy
announced a series of reforms in industrial licensing; foreign investment; foreign technology
agreements; public sector policy and the MRTP Act. The MRTP Act was identified as a major
impediment to economic growth. The economic reforms of 1991 had impact on many of the
command and control legislations of the early years of planning. As one commentator has put it,
the effect of these reforms was the transformation of the Indian state from an ‘interventionist’ to
a ‘regulatory’ state. Keeping pace with the reform process, the Central Government in 1999
announced the setting up of a commission to examine the relevance of the MRTP Act and to
suggest an updated competition law in line with developments taking place at the international
level. The High Level Committee on Competition Law and Policy (Raghavan Committee) found
that the MRTP Act was limited in its sweep and hence failed to fulfill the need for a competition
law in an age of growing liberalization and globalisation. It was noted that the MRTP Act, in
comparison to the competition laws of many countries, was inadequate to foster competition in
the market. The Committee recommended the scrapping of the MRTP Act and the enactment of

pg. 7
a new competition law. It was expected that the enactment of a new law would prevent
international cartels from indulging in anti-competitive practices in India.

pg. 8
Another reason advanced for framing of a new law was the expectation that memorandums of
understanding could be reached with countries like the U.S. where cartels were prevented from
operating by effective domestic competition laws.

On the basis of the recommendations of the Raghavan Committee, the Indian Parliament enacted
the Competition Act 2002 (the Act) replacing the MRTP Act. The Act deals with anti-
competitive agreements, abuse of dominant position and anti-competitive combinations. It
establishes an independent body, the Competition Commission of India (CCI) for the
enforcement of the provisions of the Act. The Act underwent major amendments in the year
2007. The creation of a Competition Appellate Tribunal to decide appeals against the orders of
CCI was one major change brought by this amendment. The amendments were necessitated by
the filing of a writ petition in the Supreme Court of India challenging certain provisions of the
Act. After a hiatus of seven years, provisions relating to anti-competitive agreements and abuse
of dominant position were notified in the month of May, 2009.

pg. 9
Comparison between MRTP Act, 1969 & Competition Act
2002

SR.No MRTP Act, 1969 Competition Act, 2002

1 Based on the pre-reforms scenario Based on the post-reforms scenario
2 Based on size as factor Based on structure as factor
3 Competition offences implicit or not defined Competition offences explicit and
defined
4 Complex in arrangement & language Simple arrangement
5 14 per se offences negating the principles of 4 per se offences and all the rest
natural justice subjected to rule of reason.
6 Frowns upon dominance Frowns upon abuse of dominance
7 Registration of agreements compulsory No requirement of registration of
agreements
8 No combinations regulation Combinations regulated beyond a
high threshold limit.
9 Competition Commission appointed by the Competition Commission selected by
Government a Collegium (search committee)
10 Very little administrative and financial Relatively more autonomy for the
autonomy for the Competition Commission Competition Commission
11 No competition advocacy role for the Competition Commission has
Competition Commission competition advocacy role
12 No penalties for offences Penalties for offences
13 Reactive and rigid Proactive and flexible
14 Unfair trade practices covered Unfair trade practices omitted
(consumer forum will deal with them)
15 Does not vest MRTP Commission to inquire Competition Law seeks to regulate
into cartels of foreign origin in a direct them
manner
16 Concept of ‘Group’ Act had wider import and Concept has been simplified
was unworkable

pg. 10
Indian Context of the Law
Experience shows that the objectives of a competition law vary from state to
state and from time to time. The newly enacted competition laws of
developing countries tend to have two sets of objectives.
• The first set can be classified as primary objectives which speak about
economic development, promoting efficiency, increasing consumer
welfare etc.
• In addition, these laws tend to have a secondary set of objectives
which address the special developmental needs of the country in
question. For example, the South African law lists the promotion of
greater spread of ownership, in particular the ownership stakes of
historically disadvantaged persons as one of the secondary objectives.
Similarly, the Chinese Antimonopoly Law mentions safeguarding social
public interest and promotion of the healthy development of the
socialist market economy as its objectives.
In the Indian context, the ultimate objective of the competition law as
articulated by the Raghavan committee is the protection of the interest of
the consumer. Viewed in that light, competition policy should, according to
the Committee, become an instrument to achieve efficient allocation of
resources, technical progress and regulation of the concentration of
economic power. The economic development of the country is set as the
overarching goal of the Act. Keeping this in mind, the Act declares the
following as its objectives: prevention of practices having an adverse effect
on competition, promotion and sustenance of competition in the markets,
protection of the interests of consumers, and ensuring freedom of trade
carried on by participants in the markets in India. It is interesting to note
that the Indian Act sets as its goals only the primary objectives of
competition law and avoids the secondary objectives. The objectives of the
Act are in sharp contrast with the objectives of the MRTP Act, 1969. The
major objective of the 1969 Act was to ensure that the operation of the
economic system did not result in the concentration of economic power to

pg. 11
the common detriment. The MRTP Act was, to put it differently, enacted to
further the directive principle contained in the Indian Constitution dealing
with the concentration of economic power whereas the Competition Act is
enacted to protect and strengthen the fundamental right to freedom of
trade. This shift in the focus from directive principles to fundamental rights
especially that which protects the corporate interest is the hallmark of most
of the post reform Indian legislations. Setting only the primary objectives as
the goals of the Act can have negative consequences from a developmental
perspective. Though preamble or long title is not an operative part of a
statute, they throw useful insights when it comes to the interpretation of the
provisions. Indian courts consult the preamble in case of an ambiguity. An
active judiciary plays a major role in shaping the jurisprudence in India. As
can be seen in the coming pages, there are many crucial provisions in the
Act which will be subject to judicial interpretation. The objective of promoting
static efficiency may be a handicap in the evolution of a competition
jurisprudence which sees competition law as a tool for development.

Drawbacks of MRTP ACT1969 (Need of the Competition

Law)
1. “Command and Control” Policy absolute
In the period following Independence of India, the policy of the government was more of
‘Command and Control’ of economic growth in the country. Hence laws, rules, regulations were
framed in accordance with the same. However, with change in economy, the law had to be
amended. In 1980, the government, with an Industrial Policy statement gave many concessions
to companies falling under MRTP Act- an important concession was raising limit for MRTP
companies from Rs 20 crore to Rs 100 crore at one stroke. In December 1985, government
permitted unrestricted entry of large industrial house falling under MRTP, to freely take-up
manufacture of 83 items. MRTP firms (i.e. companies having assets above Rs 100 crore} would
be considered on par with other companies and not require prior approval in delicensed

pg. 12
industries. The 1991 amendment to the Act deleted the concept of MRTP Company and repealed
almost all provisions relating to their expansion.

The fact that the Act has been amended several times since 1969 –in1980, 1982, 1984, 1985,
1986, 1988, 1991 – shows that there are many lacuna in it and that it needs to be replaced
altogether by a new comprehensive law.

2. “Growth Objective”

The policy of the government right since Independence has been to pursue industrial growth
without concentration of industries in the hands of a few. However, the legislation to control
concentration of industries was enacted in 1969, nearly 20 years after launching planned
economic development. Within 3-4 years, the enthusiasm of government diluted as can be seen
from the relaxations granted for expansion and growth of large companies/business houses on a
variety of grounds such as priority industries, location in backward areas, exports etc. In the
1970s especially, government has seen the conflict between objectives of rapid growth and
prevention of concentration of economic power in private hands, and government has openly
given priority to growth objective.

3. Failed to cover all Aspects

With liberalization, came WTO agreements, relation to Foreign Investment, Intellectual Property
Rights, subsidies, anti-dumping measures.MRTP Act does not cover these aspects. Hence there
was a need of a new law covering all these aspects.

4. Lack of Awareness about the Act

The Provisions relating to unfair trade practices are covered by consumer protection Act, 1986,
which is highly publicized. Hence people in general, are more aware of it than the MRTP
commission which is situated only in New Delhi, and hence is not accessible to many. The
Consumers Protection Commission is more easily accessible.

5. Does not prohibit restrictive and unfair trade practices

pg. 13
MRTP does not impose any penalties on unfair trade practices. Hence business houses/traders
take advantage of this situation. Hence a need arises to impose penalties to deter industries from
unfair trade practices.

6. Lack of independent powers

It did not have powers to impose penalties for breach of its directives. Its chief investigator, the
DG (I&R) did not have powers to even enforce attendance of a witness.

pg. 14
Objective of the Competition Act
Objects to be achieved & Salient Features of the New Competition Regime:
The Competition Act has been designed as an omnibus code to deal with matters relating to the
existence and regulation of competition and monopolies. Its objects are lofty, and include the
promotion and sustenance of competition in markets, protection of consumer interests and
ensuring freedom of trade of other participants in the market, all against the backdrop of the
economic development of the country. However, the Competition Act is surprisingly, compact,
composed of only 66 sections. The legislation is procedure-intensive, and is structured in an
uncomplicated manner. The various Objectives of the Act are as follows

I. To check anti-competitive practices

II. To prohibit abuse of dominance

III. Regulation of combinations.

IV. To provide for the establishment of Competition Commission of India (CCI), a quasi-judicial
body to perform below mentioned duties:

• Prevent practices having adverse impact on competition

• Promote and sustain competition in the market

• Protect consumer interests at large

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

• Look into matters connected therewith or incidental thereto.

pg. 15
1] ANTI-COMPETITIVE AGREEMENTS

A scan of the competition laws in the world will show that they make a distinction between
horizontal and vertical agreements between firms. The former, namely the horizontal agreements
are those among competitors and the latter, namely the vertical agreements are those relating to
an actual or potential relationship of purchasing or selling to each other. . Most competition laws
view vertical agreements generally more leniently than horizontal agreements as horizontal
agreements are more likely to reduce competition than agreements between firms in a purchaser -
seller relationship. For example an agreement made between enterprises dealing in the same
product or products. Such horizontal agreements, lead to unreasonable restrictions of competition
and are therefore presumed to have an appreciable adverse effect on competition.

The following diagram helps in understanding the scheme provided under section 3 of the
Competition Act, 2002.

Section 3 of the Act, states that:

1. 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.”
2. Any agreement entered into in contravention of the provisions shall be void.
3. Any agreement entered into between enterprises or associations of enterprises or persons
of associations of persons or between any person and enterprise or practice carried on, or
decision taken by, any association of enterprises or association of persons, including cartels,
engaged in

Identical or Similar Trade of goods or provision of services, which—

• Directly or indirectly determines purchase or sale prices;

pg. 16
 • limits or controls production, supply, markets, technical development, investment of
provision of services;
• shares the market or source of production or provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of customers in the
market or any other similar way;
• directly or indirectly results in bid rigging or collusive bidding, shall be presumed to
have an appreciable adverse effect on competition.

Bid Rigging or Collusive Bidding

It is an illegal agreement between two or more competitors. It is a form of price fixing and
market allocation and involves an agreement in which one party of a group of bidders will be
designated to win the bid.

E.g. Government construction contracts.

Cartelization and sharing of territories

The adverse effects of cartels or collusive agreements vary in degree depending on the nature of
the companies involved. It is the hard core cartels that are the cause of immediate concern for the
government. Agreements for sharing of markets or sources of production/supply by territory,
type, size of customer or any other way are also offensive. It includes an association of
producers, distributors, sellers, traders, or services providers who, by agreement amongst
themselves, limit, control or attempt to control the production, distribution, sale of price of, or,
trade in goods or provision of services.

Provided that nothing contained in this sub-section shall apply to any agreement entered into by
way of joint ventures if such agreement increases efficiency in production, supply, distribution,
storage, acquisition or control of goods or provision of services.

E.g. : Case on DGIR v/s Srichankra Tyres :

DGIR files a case against Srichankra Tyres as the Association of lorry owners was fixing freight
rates and not allowing members of association to charge price lower than that fixed by
pg. 17
association to charge price lower than that fixed by association. This is a typical case of
Cartelling where a group of players come together and by agreement amongst themselves limit
or control trade, production, sale or purchase of goods and provision of services.

4. Any agreement amongst enterprises or 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 services.
5. Nothing contained in this section shall restrict—
a. the right of any person to restrain any infringement of, or to impose reasonable conditions,
as may be necessary for protecting any of his rights which have been or may be conferred
upon him under—

(a) The Copyright Act, 1957

(b) The Patents Act, 1970

(c) The Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks

Act, 1999

(d) The Geographical Indications of Goods (Registration and Protection) Act, 1999

(e) The Designs Act, 2000

(f) The Semi-conductor Integrated Circuits Layout-Design Act, 2000

b. The right of any person to export goods from India to the extent to which the agreement
relates exclusively to the production, supply, distribution or control of goods or provision
of services for such export.

pg. 18
2] ABUSE OF DOMINANT POSITION

The concept of dominant undertaking prevailing in the MRTP Act has been discarded.
Dominant Position has been appropriately defined in the Act in terms of the position of strength,
enjoyed by an enterprise, in the relevant market, in India, which enables it to:

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

2. affect its competitors or consumers or the relevant market, in its favor.

At this point it is worth mentioning that the Act does not prohibit or restrict enterprises from
coming into dominance. There is no control whatsoever to prevent enterprises from coming into
or acquiring position of dominance. All that the Act prohibits is the abuse of that dominant
position. The Act therefore targets the abuse of dominance and not dominance per se. This is
indeed a welcome step, a step towards a truly global and liberal economy.
Dominant position is abused when an enterprise imposes unfair or discriminatory conditions in
purchase or sale of goods or services or in the price in purchase or sale of goods or services.

According to section 4 of the act:

1. No enterprise shall abuse its dominant position.

2. There shall be an abuse of dominant position under sub-section (1),

If an enterprise.—-

a. Directly or indirectly, imposes unfair or discriminatory—

 condition in purchase or sale of goods or service; or

 price in purchase or sale (including predatory price) of goods or service,

For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of
goods or service referred to in sub-clause (i) and unfair or discriminatory price in purchase or

pg. 19
sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include
such discriminatory condition or price which may be adopted to meet the competition; or

b. Limits or restricts—

 production of goods or provision of services or market therefore; or

 technical or scientific development relating to goods or services to the prejudice of
consumers; or

c. Indulges in practice or practices resulting in denial of market access; or

d. 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; or
e. Uses its dominant position in one relevant market to enter into, or protect, other relevant
market.

3) REGULATION OF COMBINATIONS

The Act is also designed to regulate the operation and activities of Combinations, a term which
contemplates acquisition, mergers, take over or amalgamations. Thus, the operation of the
Competition Act is not confined to transactions strictly within the boundaries of India but also
such transactions involving entities existing and/or established overseas. Herein again lies the
key to understanding the Competition Act. The intent of the legislation is not to prevent the
existence of a monopoly across the board. There is a realization in policy-making circles that in
certain industries, the nature of their operations and economies of scale indeed dictate the
creation of a monopoly in order to be able to operate and remain viable and profitable. This is in
significant contrast to the philosophy, which propelled the operation and application of the
MRTP Act, the trigger for which was the existence or impending creation of a monopoly
situation in a sector of industry

The Act mandates that No person or enterprise shall enter into a combination which causes or is
likely to cause an appreciable adverse effect on competition within the relevant market in India
and such a combination shall be void.. The Act has made the pre-notification of combinations

pg. 20
voluntary for the parties concerned. However, if the parties to the combination choose not to
notify the CCI, as it is not mandatory to notify, they run the risk of a post-combination action by
the CCI, if it is discovered subsequently, that the combination has an appreciable adverse effect
on competition. There is a rider that the CCI shall not initiate an inquiry into a combination after
the expiry of one year from the date on which the combination has taken effect. Combination
that exceeds the threshold limits specified in the Act in terms of assets or turnover, which causes
or is likely to cause an appreciable adverse impact on competition within the relevant market in
India, can be scrutinized by the Commission

Acquisition, merger or amalgamation would become ‘Combination’ when:

Nature of Combination Group Status Criterion Value

(a) Acquisition by No Group Assets In India World >Rs. 1,000 Cr.
enterprises over >US$500 million

(b)Acquisition by Turn over In India World >Rs. 3,000 Cr.

individuals over >US$1500 million
©Mergers/ amalgamation Group Assets In India World >Rs. 4,000 Cr.
Over
>US $ 2 Billion
Turn over In India World >Rs. 12,000 Cr.
over
>US$ 6 Billion

Threshold limits that would invite the scrutiny are specified below:

For acquisition:

• Combined assets of the firm more than Rs 3,000 crore (these limits are US $ 500 millions
in case one of the firms is situated outside India).

pg. 21
 • The limits are more than Rs 4,000 crore or 12,000 crore and US $ 2 billion and 6 billion
in case acquirer is a group in India or outside India respectively.

For mergers:

• Assets of the merged/amalgamated entity more than Rs 1,000 crore or turnover more than
Rs 3,000 crore (these limits are US $ 500 million and 1,500 millions in case one of the firms
is situated outside India).
• These limits are more than Rs 4,000 crore or Rs 12,000 crore and US $ 2 billion and 6
billion in case merged/amalgamated entity belongs to a group in India or outside India
respectively.

Further, such combination, which causes or is likely to cause "appreciable adverse impact" on
competition, would be treated as void.

A system is provided under the Act wherein at the option of the person or enterprise proposing
to enter into a combination may give notice to the Competition Commission of India of such
intention providing details of the combination. The Commission after due deliberation, would
give its opinion on the proposed combination to approach the Commission for this purpose.
However, public financial institutions, foreign institutional investors, banks or venture capital
funds which are contemplating share subscription financing or acquisition pursuant to any
specific stipulation in a loan agreement or investor agreement are not required to approach the
CCI for this purpose.

Competition Advocacy

Perhaps one of the most crucial components of the Act is competition advocacy. Competition
advocacy creates a culture of competition. Intention is to help evolve competition law through
review of policy, promotion of competition advocacy, creating awareness and imparting training
about competition issues. For this purpose In line with the High Level Committee's
recommendation, the Act extends the mandate of the Competition Commission of India beyond
merely enforcing the law (High Level Committee, 2000).

pg. 22
The Regulatory Authority under the Act, namely, Competition Commission of India (CCI), is
enabled to participate in the formulation of the country's economic policies and to participate in
the reviewing of laws related to competition at the instance of the Central Government. The
Central Government can make a reference to the CCI for its opinion on the possible effect of a
policy under formulation or of an existing law related to competition. The Commission will
therefore be assuming the role of competition advocate, acting pro-actively to bring about
Government policies that lower barriers to entry, that promote deregulation and trade
liberalization and that promote competition in the market place.

4) COMPETITION COMMISSION OF INDIA

The apex body under the Competition Act which has been vested with the responsibility of
eliminating practices having an adverse effect on competition, promoting and sustaining
competition, protecting the interest of the consumers, and ensuring freedom of trade carried on
by other participants in India, is known as the Competition Commission of India (CCI) --- the
successor to the MRTP Commission. CCI, entrusted with eliminating prohibited practices, is a
body corporate and independent entity possessing a common seal with the power to enter into
contracts and to sue in its name. The CCI is not merely a law enforcement agency, but would be
actively involved in the formulation of the country’s economic policies, advise the government
on competition policy, take suitable measures for the promotion of competition advocacy and
create awareness and imparting training about competition issues.

pg. 23
Composition of Competition Commission of India
• The Commission shall consist of a Chairperson and not less than two and not more than ten
other Members to be appointed by the Central Government: Provided that the Central
Government shall appoint the Chairperson and a Member during the first year of the
establishment of the Commission.
• The Chairperson and every other Member shall be a person of ability, integrity and standing
and who, has been, or is qualified to be, a judge of a High Court; or, has special knowledge
of, and professional experience of not less than fifteen years in international trade,
economics, business, commerce, law, finance, accountancy, management, industry, public
affairs, administration or in any other matter which, in the opinion of the Central
Government, may be useful to the Commission.
• The Chairperson and other Members shall be whole-time Members.

Jurisdiction
An enquiry or complaint could be initiated or filed before the Bench of CCI if within the local
limits of its jurisdiction the respondent\s actually or voluntarily resides, carries on business or
works for personal gain, or where the cause of action wholly or in part arises.

CCI has been vested with the powers of a civil court including those provided under
sections 240 and 240A of the Companies Act, 1956 on an "Inspector of Investigation" while
trying a suit, including the power to summon and examine any person on oath, requiring the
discovery and production of documents and receiving evidence on affidavits. CCI is also vested
with certain powers of affirmative action to act in an expedited manner. Civil courts or any
other equivalent authority will not have any jurisdiction to entertain any suit or proceeding or
provide injunction with regard to any matter which would ordinarily fall within the ambit of CCI.

Exclusions from Jurisdiction

• Reasonable Rights under IPRs, etc. protected under Competition Act.

• Agreements exclusively for exports exempted

pg. 24
Acts taking place outside India

CCI has the power to enquire into unfair agreements or abuse of dominant position or
combinations taking place outside India but having adverse effect on competition in India,
provided that any of the below mentioned circumstances exists:

• An agreement has been executed outside India

• Any contracting party resides outside India
• Any enterprise abusing dominant position is outside India
• A combination has been established outside India
• A party to a combination is located abroad.
• Any other matter or practice or action arising out of such agreement or dominant position or
combination is outside India.

To deal with cross border issues, CCI is empowered to enter into any Memorandum of
Understanding or arrangement with any foreign agency of any foreign country with the prior
approval of Central Government.

Powers of CCI

The CCI will have the following powers:

To issue "Cease and Desist" Orders:

• To grant such interim relief as would be necessary in each case.

• To award compensation.
• To impose fines on the guilty.
• To order division of dominant undertaking.
• Power to order de-merger.
• Power to order costs for frivolous complaints

pg. 25
In addition to the adjudication function, the CCI will have the roles of advocacy, investigation,
and prosecution and merger control.

The Statutory Regulatory Authorities can make reference to CCI for advice.

The proposed Law provides for the post of Director General (and a host of his deputies in
various places) to assist the Competition Commission in its inquiries. Unlike in MRTP Act, the
Director General will not have powers to initiate investigations suo motu.

Extension of the executive powers

The Act contemplates the extension of the executive powers of CCI by the appointment of a
Director General and as many other persons for the purpose of assisting it in conducting
enquiries into contraventions of the provisions of the Act as well as conducting cases before the
Commission.

Penalties

In case of failure to comply with the directions of CCI and Director General or false
representation of facts by parties, penalties ranging from Rs 1lac to Rs 1 crore may be misused as
the case may be.

Execution of the order

So far the execution of the order is concerned, it is the responsibility CCI. However, in the event
of its inability to execute it, CCI may send such order for execution to the High Court or the
principal civil court, as the case may be.

POST-DECISIONAL OPTIONS

The aggrieved person may apply to CCI for review of the order within thirty days from the date
of the order, provided that the below mentioned conditions are fulfilled:

• An appeal is allowed by this Act

• No appeal has been preferred
pg. 26
Provision has been made for an appeal against any order or decision of CCI by any aggrieved
persons. An application for this purpose has to be made to the Supreme Court within sixty days
from the date of communication of the decision or order.

Amendments in the Competition Act

In March this year the government put forward the Competition (Amendment) Bill 2006,
which has been referred to the parliamentary standing committee on finance. The bill
proposes to amend no less than 42 of the 61 sections of the Competition Act, replacing 13 and
deleting 5 sections in their entirety, and introducing about 21 new sections. These changes not
only attempt to address the Supreme Court’s objections, but also modify several of the
substantive provisions of the act dealing with anti-competitive practices.
Proposals of the amendment

1. A change proposed in Section 12 increases from one year to two years the “cooling-
off” period for which the chairman and members of the CCI are debarred from accepting
employment with any (private) enterprise that has been party to any proceedings before it.

2. Amendments to Sections 19 and 26 allow the CCI to act on information received, not
just a formal complaint.

3. There is a statement added to Section 32, explicitly allowing the CCI to pass orders
against acts of firms outside India that adversely affect competition in India. The original
phrasing seemed to suggest that the CCI could only inquire into such acts.

4. The bill also proposes to delete the ill advised clause that allowed the CCI to issue
temporary injunctions to restrain any party from importing goods.

5. The CCI has not been given powers of search and seizure, which are crucial in
obtaining evidence in cartel cases in Europe and the US, and are even available in Section
12(5) of the outgoing MRTP Act.

6. Section 21 of the act is to be amended so that when the CCI is asked by a statutory
authority to give its opinion on any decision that might infringe the Competition Act, the
authority is now required to record its response to the CCI opinion.

pg. 27
7. Section 49, which allowed the central government to seek the CCI’s opinion on
formulating a policy on competition, is now to be extended to state governments.

Another measure is in the transition arrangements for dealing with cases pending before the
MRTP Commission (MRTPC). The Competition Act originally envisaged their immediate
transfer to the CCI. The new bill sensibly proposes to give the MRTPC two years to clear the
backlog, so the CCI can concentrate on the Competition Act. But no change is proposed in the
clauses transferring ongoing investigations for these MRTP cases to the CCI

Additional proposals

1. Establishment of a Competition Appellate Tribunal (CAT) to hear appeals against the

orders of the CCI and adjudicate compensation claims arising out of the finding of the CCI or
orders of the tribunal.

2. Age limit of chair person and other members restricted to 65 years.

Advantages of the Competition Act

1) The foremost objective of the act is to create an environment conducive to
competition. The act does not condemn or oppose the existence of a monopoly in the
relevant market.

2) The operation of the act is not confined to transactions strictly within the boundaries
of India but also such transactions involving entities existing or established overseas.

3) Explicit definitions and criteria have been specified in order to access whether a
practice has an appreciable adverse effect on competition.

4) It is the intention of our legislators that provisions of the act in its extant form should
not be considered to be immutable and unchangeable. The intention is promotion of
competition advocacy, creating awareness and imparting training about competition
issues.

pg. 28
Shortcomings of the Competition Act:
1) It is a body to which the appeals lie and not an investigative agency that proactively
goes and seeks out industrial monopolistic practice. As the executive body is
contemplated at present, it is likely to be a haven for senior bureaucrats, businessmen and
technocrats enjoying positions of sinecure.

2) There is a lack of mandatory provision compelling persons or entities whether public

or private to approach the commission that is compounded by the corresponding logistical
limitations of the commission to be able to take cognizance on its own motion of every
malpractice in the economy.

3) The IPR laws have overriding powers over the Competition Act in matters related to
competition abuses.

4) The act provides for exemptions to mergers and abuse of dominance on grounds like
‘economic development’ and ‘public interest’ and in the absence of any clear
definition/criteria the relevant provisions would be open to varying interpretations.

5) The provisions in context of the autonomy of the CCI mainly aim at keeping a check
on CCI’s functioning by limiting its independence.

pg. 29
Case study – SAIL V/s Jindal Steel and Power (JSPL)

Introduction

The questions regarding interpretation of the recently enacted Competition Act and exercise of
jurisdiction by CCI and procedure thereof, has arisen in wake of JSPL filing a complaint with
CCI in the year 2009 challenging the status of SAIL as the sole supplier of railway boogies to
Indian Railways. JSPL alleged that the exclusive agreement between the government and the
Railways was anti competitive in nature and is “abuse of dominant position”.

Background of the case

Naveen Jindal, Executive Vice Chairman & Managing Director of Jindal Steel and Power ltd. A
company which has given a sterling performance during the financial year 2003-2004 its net
profit has more than doubled by 110% to Rs.305.46 crores on an increased turnover of
Rs.1430.41 crores. Naveen Jindal has been trying since 1998 to get a piece of the Rs. 4,000 crore
railway line contract that the Railways needs every year to lay new tracks and replace old ones
across the country. He has even spent Rs. 1,000 crore to set up a mill at his Chhattisgarh steel
plant in 2000 only to make these rails. But the mill, which has an annual capacity of 750,000
tones of rail steel, has been lying almost idle since 2003 because every year the order goes to
SAIL.
In 1998, the Railways came out with an advertisement, “inviting entrepreneurs to set up facilities
for manufacture of rails.” JSPL claimed that it would set up the plant on an “understanding” with
the Railways that the contracts to supply tracks would be open for competition. Now it claims
the Railways backtracked on that promise. But still it is not clear that how far is this true. Jindal’s
case here is considerably weaker because it does not have a signed agreement with the Railways.

One thing is clear that SAIL cannot fulfill 1,000 km worth of tracks that India plans to lay every
year. Indian Railways lays only 230 km of tracks a year which is very slow. And SAIL alone
cannot meet the need of Indian Railways.

The Railways requirement which was recommended by the Justice Garg Committee that inquired
into a train accident in 1998 due to faulty rails was to use RH degasser technology for stronger

pg. 30
rails; and which JSPL used tank degassing technology. And hence in 2003, the Railways signed
an exclusive agreement with SAIL.

In 2005 Railways’ Research Designs and Standards Organisation (RDSO) inspected JSPL’s rail
mill and later in 2008 approved it. The company installed the RH degasser technology at its mill
just to make sure all ends are taken care of.

This matter is now with the Competition Commission of India (CCI) since December 2009. It is
concerned with an exclusive arrangement between the Indian Railways and the Steel Authority
of India Limited (SAIL) for the supply of rails to Indian Railways. This arrangement was
challenged by Jindal Steel and Power Limited (JSPL) before the CCI as being violative of the
Competition Act 2002 (amended Competition Act). JPSL had complained against the agreement
between SAIL and Indian Railways for exclusive supply of rails alleging it to be monopolistic.
JPSL alleged that although they too manufacture rails Indian Railways buy rails only from SAIL
which is anti-competitive.

The exclusive agreement between Railways and SAIL “does look like an entry barrier for other
players and thus is against the provisions of the Competition Act”.

Initially, SAIL had filed an appeal to the COMPAT on the passage of the CCI's order directing
the Director General to investigate into the exclusive arrangement. Allowing such appeal, the
COMPAT held that "any order, decision or direction of the CCI" was appealable under section
53A of the Competition Act & not only the orders under the sections listed in section 53A.

An appeal against an order, decision or direction under Section 26(1) of the Competition Act
would not be maintainable held the Supreme Court. Clearing the major blockade in effective
functioning of CCI, Apex Court full bench comprising Chief Justice SH Kapadia, Justice KS
Radhakrishnan and Justice Swatanter Kumar held that appeal against investigation by CCI under
section 26 (1) mentioned that COMPAT had erroneously interpreted Section 53 A(1) of the
Competition Act to hold that it had jurisdiction to entertain appeals against any direction issued
or decision made by the CCI. The bench was also of the opinion that the CCI was expected to
record some reasons as to the existence of a ‘prima facie’ case. Partially allowing an appeal, the
Supreme Court also held that the CCI was a necessary party in an appeal filed before the
COMPAT and further observed that the preliminary enquiry has to be completed in a ‘time-

pg. 31
bound’ manner within 60 days. Further, the court directed that report by Director General should
be submitted in not more than 45 days.

Supreme Court on 09.09.2010 delivered the first and a land mark judgment that holds that no
appeal can be filed against an order of Competition Commission of India (CCI) directing
investigation into a complaint received by it. he judgment came in context of a dispute between
Jindal Steel and Power Limited (JSPL) and Steel Authority of India Limited (SAIL) which later
turned into virtually a dispute between Competition Commission of India (CCI) and Competition
Appellate Tribunal (COMPAT).

Addressing the concerns of SAIL as to damage or harm to reputation of the entity against which
investigations are initiated by CCI, the Court held that “confidentially” as envisaged under
section 57 of the Act should be maintained completely.

This decision may set the tone of competition law jurisprudence in India and hopefully in a
constructive and efficient manner.

The matter is the first major litigation in India regarding competition law in India and is set to
decide the course of competition law discourse in India for coming year.

pg. 32
 Competition Commission of India -

o Central Government may, by notification, appoint, a Commission to be called the

“Competition Commission of India”.

o The Commission shall consist of a Chairperson and not less than two and not more than
ten other Members to be appointed by the Central Government

Director General and Registrar –

o The Director General will investigate the complaints/references on receipt of orders from
Commission and then submit his report to Commission. He will also conduct the cases
before CCI.

o The Director General cannot conduct investigation suo motu.

o DG will be appointed by Central Government.

o MRTP Commission will be abolished.

o Chairman and members will be paid three months pay as compensation. Staff will go

back to parent cadre.

o Cases pending in respect of Monopolistic Trade Practices or Restrictive Trade Practices

will be transferred to Competition Commission.

o All cases of Unfair Trade Practices will be transferred to National Commission

constituted under Consumer Protection Act.

o National Commission can transfer the cases to State Commission.

o Cases in respect of disparaging of goods of MRTP Act] will be transferred to

Competition Commission.

o Investigation pending with Director General of Investigation and Registration [DGIR]

will be transferred to Competition Commission/National Commission under Consumer
Protection Act, as applicable.

pg. 33
o Other cases, if pending, will abate.

o The purpose of the Competition Act is to create an environment conducive to

competition. However, in a significant departure from the letter and spirit of the MRTP
Act, the Competition Act does not categorically decry or condemn the existence of a
monopoly in the relevant market.

o Section 4 enjoins that “no enterprise shall abuse its dominant position”.

o “Dominant position” is the position of strength enjoyed by an enterprise in the relevant

market which enables it to operate independently of competitive forces prevailing in the
market or affect its competitors or consumers or the relevant market in its favour

o Dominant position is abused when an enterprise imposes unfair or discriminatory

conditions in purchase or sale of goods or services or in the price in purchase or saleof
goods or services.

o There is also abuse of dominant position when an enterprise limits or restricts production
of goods or services or Technical color scientific development.

o The Competition Commission, either on its own motion, on receipt of complaint or on a

reference made to it by the Center or a State Government may enquire into any alleged
contravention regarding the nature of an agreement which is suspected to be inherently
anti-competitive or the abuse of dominant position.

o The Commission would be required to be supported by a full-fledged research

department, the members of which would be entrusted with the responsibility of
continuously reviewing economic trends

pg. 34
o Thus, the Commission has the power to enquire into unfair agreements, abuse of
dominant position and combinations even in situations where an agreement has been
executed outside India if it is of the view that there is, or there is likely to be, appreciable
adverse effect on competition in the relevant market in India.

o The Commission has been vested with the powers of a civil court while trying a suit,
including the power to summon an examine any person on oath, requiring the discovery
and production of documents and receiving evidence on affidavits.

o The Act gives the Commission the power to call upon experts in any relevant field to
assist in any enquiry or proceeding.

o The Commission is also provided with the authority to review its own orders.

pg. 35