THE COMPETITION ACT, 2002

GROUP 8
Feroze Ahmed (415) Vibhav Upadhyay (453) Tarun Gupta (460) Harsh Mehta (431) Jigyasa Nabh (434) Aayush Mahajan (430) Visha Chauhan (455)

CONTENTS
1. Developments leading to MRTP 2. The MRTP Act, 1969 3. The Competition Act, 2002 I) II) III) IV)

Competition - An age-old phenomenon

Existed amongst cave-men Also reflected in the Mahabharata In modern times, competition has become a global phenomenon Starts right from Kindergarten & Nursery classes

Benefits of Competition
Companies Efficiency, cost-saving operations, better utilization of resources The Consumer Wider choice of goods at competitive prices The Government Generates higher revenue

Perfect Competition
It is an ideal situation which exists only on paper. It implies: A large number of Sellers A large number of Buyers Free entry Free exit Manufacturers are price-takers and not price-makers No single manufacturer can influence the market

India : 1947 - 1991

Post independence, many new and big firms entered the Indian market Little competition Monopolization Government set up a large number of industries in the public sector Various measures to encourage small and medium industries

Monopolies and Restrictive Trade Practices Act, 1969

For safeguarding the rights of consumers, the Government passed the MRTP bill and this act came into existence MRTP commission has the power to stop all businesses that create barrier for the scope of competition in Indian economy It aims at preventing economic power concentration in order to avoid damage It also provides for probation of monopolistic, unfair and restrictive trade practices

Monopolistic Trade Practices

Such practice indicates misuse of ones power to abuse the market in terms of production and sales of goods and services Such firms try to eliminate competition from the market They take advantage of their monopoly and charge unreasonably high prices Deteriorate product quality, limit technical development, prevent competition and adopt unfair trade practices

Unfair Trade Practices

False representation and misleading advertisement of goods and services Falsely representing second-hand goods as new False claims or representation regarding price Giving false facts regarding sponsorship, affiliation etc. of goods and services Giving false guarantee or warranty on goods and services without adequate tests

Restrictive Trade Practices

Traders engage in such practices in order to maximize their profits and to gain power in the market Indulge in activities that tend to block the flow of capital into production. Such traders also bring in conditions of delivery to affect the flow of supplies leading to unjustified costs.

Exceptions to MRTP
Unless the Central Government otherwise directs, this act shall not apply to:
Any undertaking owned or controlled by the Government Any undertaking owned or controlled by a corporation established by or under any Central, Provincial or State Act Any trade union or other association of workmen or employees formed for their own reasonable protection

Contd..
Any undertaking engaged in an industry, the management of which has been taken over by any person or body of persons under powers by the Central Government Any undertaking owned by a co-operative society formed and registered under any Central, Provincial or state Act Any financial institution

Post 1991
Many economic reforms were introduced in 1991 MRTP Act lost its relevance in the new liberalized and global competitive scenario Shift of focus from curbing monopolies to promoting competition The government thus appointed the Raghavan Committee to examine the whole issue.

Competition Act, 2002

The Government passed a bill in 2001 and the Competition Act was introduced and passed in December 2002. Objectives
 To prevent practices having adverse effect on competition  To promote and sustain competition in market  To protect the interest of consumers at large  To ensure freedom of trade carried on by other participants in markets in India

Competition Act Main features

I. Prohibits Anti-competitive Agreements (Section 3)

II. Prohibits abuse of Dominant Position (Section 4) III. Provides for Regulation of Combinations (Section 5,6) IV. Enjoins Competition Advocacy (Section 49)

Competition (Amendment) Act, 2007

Salient Features
 CCI would function as a market regulator for prevention and regulation of anti-competitive practices in the country  Mandatory notice is required to be served on the Commission for merger or combination by a person or enterprise within thirty days  A 3 member quasi judicial body called CAT be established headed by a judge of Supreme Court or the Chief Justice of a High Court  Orders of CAT shall be implemented as a decree of a civil court

Contd..
 CAT shall adjudicate claims on compensation and passing of orders for the recovery of compensation for loss or damages suffered due to any contravention of the provisions of the Act  Imposition of penalty by the Commission for contravention of its orders which may extend to Rs 25 crores or imprisonment which may extend to 3 years or with both  Filing appeal against orders of the CAT shall be to the Supreme Court  MRTP Commission will continue up to 2 years after constitution of CCI for trying pending cases

Repeal of MRTP Act

The Act had become redundant post July 1991 The Ministry of Corporate Affairs has issued a Notification dated 28th August 2009, whereby the MRTP Act stands repealed and is replaced by the Competition Act, 2002, with effect from September 1, 2009 Section 66 of the Competition Act provides the transitional provisions from the MRTP Act to the Competition Act

Transitional Provisions - Section 66

MRTP Commission
The MRTP Commission will continue to exercise jurisdiction and power under the repealed MRTP Act in respect of any case or proceeding filed before 1 September 2009, for a period of two years. It will not, however entertain any new case arising under the MRTP Act on or after 1 September 2009 Upon the expiry of the specified two year period, the MRTP Commission shall stand dissolved

Transfer of Pending Cases

Cases pertaining to monopolistic or restrictive trade practices shall stand transferred to the CAT, which shall adjudicate such cases in accordance with the provisions of the MRTP Act Cases relating solely to unfair trade practices shall stand transferred to the National Commission as constituted under the Consumer Protection Act, 1986, which may in turn transfer such cases to a State Commission constituted under the said Act Cases relating to giving false or misleading facts disparaging the goods, services or trade of another person under the MRTP Act shall be transferred to the CAT which will be dealt in accordance with the provisions of MRTP Act.

Investigations/Proceedings
With effect from 1 September 2009, all pending investigations and proceedings by the Director General relating to Monopolistic/Restrictive trade practices will be transferred to the CCI Unfair trade practices will be transferred to the National Commission under the Consumer Protection Act 1986 Cases giving false or misleading facts disparaging the goods, services or trade of another person will be transferred to the CCI.