Dr. Sheetal Kapoor*
A fair competition in the market ensures consumers access to
broadest range of goods and services at competitive prices. Business
enterprises adopt a variety of strategies and tactics to protect their
interests. They get together to gain more power and influence which may be detrimental
to the interests of the consumers and many times adopt restrictive practices
such as collusive price fixing, deliberate reduction in output in order to
increase prices, creation of barriers to entry, allocation of markets, tie-up
sales, predatory pricing and discriminatory pricing, and the like, which have
an adverse effect on the social welfare and economic well-being of different
interest groups. There is thus, a need to not only prevent the formation of
monopolies or business combinations but also to encourage healthy and fair
competition so that the consumers are able to get better value for their
purchase decisions.
To create a fair competition in the economy and
provide a ‘level playing field’ the Competition Act, 2002, was enacted by the
Parliament on 13th January 2003. The Competition Commission of India
(CCI) was established by the Central Government with effect from 14th
October, 2003. The Act was subsequently amended by the Competition (Amendment)
Act, 2007. The provisions of the Act relating to anti-competitive agreements
and abuse of dominant position were notified on 20th May, 2009. This Act applies to whole of India,
except the state of Jammu and Kashmir.
The
Competition Commission of India is now fully functional with a Chairperson and
six members. The Competition Act focuses on four key areas: anti competitive agreements, abuse of
dominant position, combinations regulation and competition advocacy. The Act emphasizes the behavioral
approach to examine competition. It is different from the approach of the MRTP
Act, which followed the structural approach.
Keeping in view the economic development of the
country, the Competition Act provides for the establishment of a Competition
Commission to achieve the following objectives:
- to
prevent practices having adverse effect on competition.
- to
promote and sustain competition in markets.
- to
protect the interests of consumers.
- to
ensure freedom of trade carried on by other
participants in markets, in India, and for matters
connected therewith or incidental thereto.
The Competition Act covers the following under Chapter II of the
Act:
- U/s 3 Prohibition of
anti-competitive agreements.
·
U/s 4 Prevention of abuse of dominance.
·
U/s 5 Regulation of combinations
(mergers and acquisitions).
·
U/s 6 Establishment, staffing and
powers of the proposed ten members of CCI.
Preamble to the Competition Act
To achieve
its objectives, the Competition Commission of India endeavors to do the
following:
- Make the
markets work for the benefit and welfare of consumers.
- Ensure fair and healthy competition in
economic activities in the country for faster and inclusive growth and
development of economy.
- Implement competition policies with an aim to
effectuate the most efficient utilization of economic resources.
- Develop and nurture effective relations and
interactions with sectoral regulators to ensure smooth alignment of
sectoral regulatory laws in tandem with the competition law.
- Effectively carry out competition advocacy
and spread the information on benefits of competition among all
stakeholders to establish and nurture competition culture in Indian
economy.
The objectives of Competition Law have been
further highlighted in a recent judgment delivered by the Supreme Court as:
"The main objective of competition law is to
promote economic efficiency using competition as one of the means of assisting
the creation of market responsive to consumer preferences. The advantages of
perfect competition are three-fold: allocative efficiency, which ensures the
effective allocation of resources, productive efficiency, which ensures that
costs of production are kept at a minimum and dynamic efficiency, which
promotes innovative practices." (Judgment in Civil Appeal No. 7999 of 2010
pronounced on 9 September 2010)
Who can Approach the CCI
The CCI
can be approached if a person, enterprise or association indulges in
ant-competitive agreements, abuse of dominant position and mergers and
acquisitions and amalgamations that hamper competition.
If a manufacturer or service provider imposes unfair condition on
the sale of its products or services, consumers can inform the CCI and seek
redress. Trading of consumer goods, banking, education, financing, insurance,
real estate, transport, processing, supply of electrical or energy components,
etc. are the important areas where a large number of consumers can benefit from
the Competition Commission.
Who can make a complaint?
Any person, consumer, consumer association or trade association can
make a complaint against anti-competitive agreements and abuse of dominant
position.
·
A person includes an individual, Hindu Undivided Family (HUF),
company, firm, Association Of Persons (AOP), Body Of individuals (BOI),
statutory corporation, statutory authority, artificial juridical person, local
authority and body incorporated outside India.
·
A consumer is a person who buys
for personal use or for other purposes.
Functions of CCI
·
Competition Commission of India
shall prohibit anti-competitive agreements and abuse of dominance, and regulate
combinations (merger or amalgamation or acquisition) through a process of
enquiry.
·
It shall give opinion on
competition issues on a reference received from an authority established under
any law (statutory authority)/Central Government.
·
CCI is also mandated to
undertake competition advocacy, create public awareness and impart training on
competition issues.
The Central
Government or a State Government or an authority established under any law may
make a reference for an enquiry. The Commission can initiate enquiry on its own
on the basis of information or knowledge in its possession. The Orders which Commission can pass in case
of anti-competitive agreements and abuse of dominance are:
- During the course of enquiry, the
Commission can grant interim relief restraining a party from continuing
with anti competitive agreement or abuse of dominant position.
- To impose a penalty of not more
than 10% of turn-over of the enterprises and in case of cartel - 3 times
of the amount of profit made out of cartel or 10% of turnover of all the
enterprises whichever is higher.
- After the
enquiry, the Commission may direct a delinquent enterprise to discontinue
and not to re-enter anti-competitive agreement or abuse the dominant
position.
- To award compensation.
- To modify agreement.
- To recommend to the Central
Government for division of enterprise in case it enjoys a dominant
position.
(PIB Feature.)
*****
Disclaimer:
The views expressed by the author in this feature are entirely her own and do
not necessarily reflect the views of PIB.
*Associate Professor and Convenor Consumer Club, Department
of Commerce, Kamala Nehru College,
University of Delhi.
SS-62/SF-62/04-04-2012
RTS/HSN