For an efficient business environment, free and fair competition is one of the basic pillars. In competition, there is a business rivalry between the competitors to attract customers. In today’s world in the interest of the consumer, businessmen are restrained from adopting anti-competitive behavior and discourage unfair trade practices.
FIRST COMPETITION LAW IN INDIA
Legislature in the year 1969 enacted Monopolies and Restrictive Trade Practices Act, 1969 popularly known as MRTP Act, 1969. Several amendments were made in the act. The last two amendments i.e. 1982 and 1984 were based on the recommendations of the Sachar committee, in which Justice Rajendar Sachar recommended that as new modes of business techniques i.e. advertisement has been evolved, they must not be a half-truth.
After this on the recommendation of the Raghvan Committee, Competition Act, 2002 was enacted making some changes in the previous act.
COMPETITION ACT, 2002
This act provides for the establishment of a commission to prevent practices which have a bad or adverse effect on the competition in the market. Its main aim was to protect the interest of the consumers and to promote competition in the market. Competition Commission of India consists of 6 members and a Chairperson appointed by the government. Competitive Appellate Tribunal has been established which hears the appeals against any decision, the order of the commission. The Act has been lastly amended in the year 2009.
ESSENTIAL ELEMENTS OF THE COMPETITION LAW
Three essential elements of the competition law are as follows-
- Anti-competitive agreements entered by the competitors
- Abuse of dominance by the players of the market
- Merger, amalgamations and acquisitions of the control by the competitors.
1. ANTI COMPETITIVE AGREEMENT
Section 3 of the Competition Act, 2002 restricts an agreement with respect to production, supply and distribution of goods which is likely to have an adverse effect on competition. It is not mandatory that the agreement as defined in section 2 (b) of the Competition Act, 2002 should be formal and in writing. Any agreement made in violation of Section 3 (1) of the Act shall be declared void under Sec 3 (2) of the Act. ‘Adverse effect on competition’ is defined under Sec 3 (3) of the Act and thus include-
a) Directly determining the sale or purchase price.
b) Limits production, supply in the market.
Thus the burden of proof lies on the defendant. Sec 3(4) of the Act provides that any agreement including 1) tie at agreement 2) exclusive supply agreement 3) refuse to deal shall be construed as anti-competitive agreement.
Section 3(5) of the Act provides recognition to Intellectual property rights.
2. ABUSE OF DOMINANT POSITION BY THE COMPETITORS
Section 4 of the Competition Act, 2002 restricts any company from abusing its dominant position. Dominant position include the things which enable the businessman to-
a) Affect the consumers or other player or the relevant factor on its side
b) Operates independently without any restriction.
To conclude this, there shall be an abuse of dominant position if a company involves in activities like
a) Imposing any ambiguous conditions in the purchase of goods or sale of goods or in the setting price of the goods.
b) Limiting the supply or production of goods or other scientific development in this field.
c) Competitors involve in such practices which denies access to the market.
3. Merger, Amalgamation and control by the competitors
Section 6 of the above act restrict any person from entering in a type of combination in which adverse effect is caused on the competition and the act states that any such combination if formed shall be void. Further, Section 6(2) of the act provides that if any person proposes to enter into combination he shall give notice to the commission, in which details regarding the proposed action should be disclosed.
REMEDIES UNDER THE ACT
Competition Commission of India is empowered under the act to act sub-moto and hence consumer can report about any unfair trade practices to the CCI.
JURISDICTION UNDER THE ACT
Under this Act, Sec. 32 of the Act empowers the competition commission to take any action in respect to conduct that has taken place outside India and have an adverse effect on the competition in India. Private as well as govt. enterprises are covered under the provision of the Competition Act, 2002.
In short, we can conclude that the act is very much comprehensive and has been enacted to meet the requirement of economic development relating to competition laws. The above-stated act has been in conformity with other policies such as trade policy, Foreign Direct Investment policy which makes it an overall comprehensive policy.