Competition Law and Anti-Competitive Practices

Published On: 28th July, 2023

Authored By: Ayush Sharma
Gitarattan International Business School

Competition Law and Anti-Competitive Practices

ABSTRACT

Competition usually creates wealth when an organization tries to achieve the aims and aims of their trade that are similar to allure substitute companies accordingly they should work better than each one so that be better than each one concerning business for the creation of better profits. Since these organizations have their aims the same as the companies present in the market as their antagonism, these parties regularly use abnormal or illegal ways to reach their aims and to decrease the number of their competitors.

Since these abnormal or evil resources that the associations select demand requirements and regulations that reduce their chances of defiling the morality of a forum all at once and create an athletic competitive environment for all allure shareholders, this is the place the competition standard takes aims to insulate the interests of consumers from antagonistic-vying behavior, boost and assert display competition, protect services rights, and guarantee the privilege of work of additional advertise performers.

MONOPOLISTIC AND RESTRICTIVE TRADE PRACTICES ACT, 1969

The Monopolies and Restrictive Trade Practices Act of 1969 (MRTP Act) was India’s first competition law. The MRTP Act came into effect on June 1st, 1970, accompanying the aim of guaranteeing that the functioning of stock exchange form did not influence the aggregation of the frugality in any hands. It further forbids monopolistic and prejudicial acts that are injurious to all loose.

ECONOMIC LIBERALIZATION AND THE ABOLITION OF THE MRTP ACT IN 1991

In 1991, financial liberalization was imported, which was an important critical juncture for Indian markets in the globalized realm. With the elimination of professional hurdles, the country with its government began to face contests from two together inside and beyond the country. As a result, in consideration of the precedence for globalization, India executed plenty of new business-related plans, diminished administration interference, and followed begun gap opportunities for manufacturing and worldwide financing. Among such new supplies, much of changes were made to India’s cutthroat plan, in ways such as the following:

 Amendment to the Monopolies and Restrictive Trade Practices Act has eliminated-

  • The process of MRTP Industries’ pre-entry critical assessment of investment,
  • The scope of MRTP in mergers, acquisitions, and combinations, and
  • the prerequisite of receiving government approval before expanding and starting new businesses.

Following economic liberalization in 1991, it became essential to establish a competition law system that was more relevant to domestic economic forces and compatible with international practices.

EMERGENCE OF COMPETITION ACT, 2002

The Indian Parliament accomplished the Competition Act in 2002 to rule the antagonistic-ambitious behavior of firms in the Indian display. It was imported to prevent behaviors that have an Appreciable Adverse Effect on Competition (AAEC). The aim of the Competition Act, of 2002 is out expand and continue an open, just, cutthroat, and imaginative surroundings that will safeguard the interests of customers and promote enduring financial progress in the country with its government.

According to the Act, MRTP has enhanced old-fashioned and useless on account of general financial flows. Hence, skilled is a need to switch from ‘reducing patents’ to ‘advocating contest’.

The Competition Act, 2002 was reduced to one Competition (Amendment) Act 2007, which reached into effect on May 20, 2009, when the Indian administration informed few divisions of the Competition Act having a connection with antagonistic-cutthroat arrangements and abuse of main positions. After three more years, in June 2011, sure supplying connected with purchase control came into force.

IMPORTANCE OF COMPETITION ACT, 2002

The Competition Act focuses on implementing laws to guarantee that businesses and companies can effectively compete with one another. This promotes entrepreneurship and productivity, increases customer choices, and helps reduce prices and enhance quality.

  1. Low prices: Offering a lower price is the easiest approach for a firm to achieve a large market share. In a market that is competitive, prices are lowered. This is not simply beneficial to consumers; where more people can afford to buy items, it motivates firms to produce and helps the economy as a whole.
  2. Innovation: To develop high-quality products, firms must be innovative in their product concepts, design, manufacturing processes, services, and so on.
  3. Better Quality: To draw in more customers and broaden their clientele, businesses are encouraged by the Competition Act to improve the quality of their products and services. Items that last longer or perform better, better after-sales or technical support, and better service are just a few examples of what quality might mean.
  4. More options: In a competitive market, firms will seek to differentiate their products from the competition. As a result, consumers have more options, allowing them to choose the product that provides the most value for money.

FEATURES OF COMPETITION ACT, 2002

Some of the key components of the Competition Act include the following:

  1. Anti-competitive agreements: The competition law forbids any agreement involving two or more firms or individuals to maintain market competition and serve the public interest in India.
  2. Dominance-abuse prevention: Any firm that exploits its dominating position will be penalized.
  3. Anti-cartels: Any agreement between businesses or individuals that harms competition is a civil offense.
  4. Mergers and acquisitions: The Commission will only approve mergers and acquisitions if they do not undermine market competition. 
  5. Informative nature of this act: To provide clarity and avoid misunderstandings between companies or people, a business must notify CCI of any interactions that are likely to harm market competition before adopting such action or engaging in such an agreement.

ANTI-COMPETITIVE AGREEMENTS

Anti-competing compromises are compromises between companies in a monetary undertaking that have the talent to impair contest in a distinguishing market or embellish individual distinguishing groups at the cost of the possible choice. Such antagonistic-competing contracts are forbidden by the Competition Act, of 2002.

The word ‘arrangement’, as noticed in Section 2(b) of the Competition Act, 2002 does not make necessary the use of an allowable tool expected signed by the apiece body. It can or concede the possibility of not affiliating with the organization paper. The description provided is apparently broad alternatively complete, and it contains any of the issues. The basic reason for having a roomier description of ‘contract’ under the Competition Act, 2002 is that those things the one undertakes anti-competing behavior are powerless to espouse an official inscribed contract in consideration of restraining their conduct.

section 3 of the Competition Act, 2002 forms it illegal to engage in some concurrence concerning the production, business, transport, warehousing, buying, or administration of merchandise and aids that has or is inclined to have an unfavorable effect on the stock exchange in India. Section 3(2) further specifies that some compromise filed in violation concerning this supply is null and void.

TWO CATEGORIES OF AGREEMENTS ARE COVERED BY THE COMPETITION ACT:

  1. Horizontal Agreements

Section 3(3) of the Competition Act, 2002 talks about level compromises. These are arrangements between two or about work bodies occupied at the same level of trade. Under the Competition Act, few forms of level concurrences are considered to have a considerable unfavorable effect on contests in India. This arrogance does not desire that all level concurrences are continually antagonistic-ambitious; the associations complicated in aforementioned a contract must produce evidence that their contract will not have an appreciable adverse effect on competition.

  1. Vertical Agreements

Section 3(4) of the Competition Act, 2002 talks about upright arrangements. These are the concurrences made middle from two points firms or things at various levels or levels of the production chain. Vertical arrangements are usually admitted except that it has determined that they found, or are inclined to encourage, an appreciable unfavorable effect on the contest in the Indian markets. The Competition Act holds an all-encompassing list of upright arrangements that can be outlawed establishing their effect on contest situations in India.

ABUSE OF DOMINANT POSITION

When an individual or a firm is in a more forceful position, that admits the ruling class to act freely heedless of aggressive pressures concerning business subdivision, they are pronounced expected in a main position. They likewise have a definite influence on their rivals, clients, or the current retail position. A main position refers to a company’s capacity in retail in India that admits it to function freely heedless of trade pressures

.To demonstrate an abuse of the main position, a partnership must first have a main position in agreements of a particular amount and the terrestrial display for that amount. Section 4 of the Competition Act, 2002, focuses on the forbiddance of specific misuse. It means that no firm or organization can use an allure controlling position to allure benefit. It too demonstrates what ventures may be thought to be an abuse of a main position. Such ventures are in this manner:

  1. Imposing unfair or discriminatory terms on the purchase or sale of goods and services, or increasing costs on the purchase or sale of goods and services (particularly aggressive rates), either explicitly or implicitly
  2. To the harm of customers, reducing or controlling the manufacturing of goods or services, or constraining scientific or technological advancement related to goods or services.
  3. Participating in activities that restrict access to markets in any manner.
  4. Taking advantage of a dominating position in the market to defend or enter another particular market.

Following are a few cases related to the abuse of a dominant position:

M/s Saint Gobain Glass India Ltd. v. M/s Gujarat Gas Company Limited

In the judgment of M/s Saint Gobain Glass India Ltd. v. M/s Gujarat Gas Company Limited, when determining the “relevant market,” the CCI assessed many factors that should be taken into account when defining the major geographic market and the appropriate product market. 

The CCI states that when determining the “relevant product market,” the commission must consider all or any of the following factors: the price of goods or services, the rejection of in-house manufacturing, the physical characteristics or final products, customer tastes, the presence of specialized manufacturers, and the categorization of manufactured goods, in accordance with the conditions contained in.

M/s Fast Track Call Cab Private Limited v. ANI Technologies

In the ruling in the case of M/s Fast Track Call Cab Private Limited v. ANI Technologies, it was determined that Ola had offered loyalty bonuses, reimbursements, and unfair discounts. The Commission stated that Ola’s behaviour of offering significant discounts to its clients and rewarding its personnel at the expense of suffering losses appears to be a well-planned strategy by the company to keep other market competitors out of the specific market. This instance indicates how CCI’s position on the safety of providers of standard taxi services has changed.

COMBINATIONS AND THEIR REGULATION

A merger, as outlined in Section 5 of the Competition Act, 2002, is the alive or lifeless obtainment of shares, vote capacity, or possessions, or command over administration or project over the property of in addition individual adventure by an individual or even more community. It is the consolidation or mixture with guests. In the framework of the contest standard, a mixture is delineated as the combination of two or more trades or organizations, or the energy of a trade area (in the way that a party or firm) by another marketing individual. In India, mergers may be of two types:

  1. Merger through absorption: Absorption is the amalgamation of two or more businesses into one ‘established business’. Apart from one, all firms lose their identities in such a combination.
  1. Merger by consolidation: A merger by consolidation is the merger of two or more businesses into a ‘new organization’. In this kind of merger, all businesses are formally dissolved, and a new business is created.

COMPETITION COMMISSION OF INDIA

The Competition Act supplies for the establishment of a CCI. It acts as the manager of the contest in Indian retail. The commission was organized in 2003, but it was not enhanced completely operational as far as 2009. The main administration appoints an authority and six appendages to the CCI. It is the commission’s blame to destroy antagonistic-ambitious exercises, spur and assert contest, safeguard services rights, and guarantee capitalism in India’s marketplaces. It is an almost-judicial corpse burdened accompanying the following responsibilities:

  1. Prevent practices that hurt competition.
  2. Encourage and maintain market competition.
  3. Safeguard the interests of all consumers.
  4. Safeguard commercial liberty.
  5. Look into issues that are associated with or related to commerce.

India’s implementation and enforcement of the competition law

The Competition Act settled the CCI, which is completely the reason for the application and application of the Competition Act. The CCI now has six appendages and an individual principal, Ashok Kumar Gupta. The CCI can start an examination into an antagonistic-ambitious agreement or abuse of supremacy on allure own, established dopes or evidence in allure property, or upon taking information or advice from the United States of America or government right to acquire private property for public use. Anyone, containing clients and additional organizations, can register a affliction or provide details on antagonistic-aggressive understandings and misuse of main positions. In the case of mergers and earnings, the CCI can introduce an inspection by itself or establish facts from the resourcefulness’s determination to fuse. The CCI and allure asking team are clothed accompanying broad curious capacities concerning antagonistic-aggressive practices, in the way that the power to ask and execute the partnership of some individual, consider bureaucracy under a curse, and receive evidence on testimony, in addition to additional related capacities. If CCI trusts that skilled is a prima facie case, it is going to order the Director General to conduct an examination and offer allure decisions. The Director General is still authorized to conduct lawman raids as part of allure asking. The CCI concedes the possibility of believing the approvals of the Director General in the allure examination and after providing the blamed bodies accompanying a tolerable chance expected perceived. After this, they can issue some measures they deem decent, to a degree a direction to stop and stop and set fines. The Competition Act specifies to entice the Competition Appellate Tribunal against some CCI rulings. A further appeal from the COMPAT judgment concedes possibility be grounds accompanying the Supreme Court of India.

DEVELOPMENT OF COMPETITION LAW IN 2022

The Competition (Amendment) Bill, 2022, a proposal by the federal government, would change the CCI’s governing structure.

About the bill in brief

  • The bill intends to amend the fundamental provisions to accommodate the demands of the modern market.
  • It also plans to monitor anti-competitive behaviour in Internet commerce, a sector that has had serious legal and regulatory issues.
  • It also aims to improve the CCI’s accountability, agility, and implementation capability in order to strengthen the regulatory system.

Amendments proposed by the bill

The primary changes included in the bill include the following:

  • A board of directors composed of part-time experts to oversee CCI operations.
  • CCI must establish punishment criteria and provide explanations for any discrepancies.
  • The 210-day merger assessment period has been cut to 150 days.
  • A green channel is being established for merger proposals.
  • The National Company Law Appellate Tribunal (NCLAT) will hear CCI’s appeals if it receives a pre-deposit equal to no more than 25% of the CCI’s fine.
  • CCI would be capable of engaging in structured conversations with parties and reaching an amicable solution without the need to go through long-established processes, bringing it up to speed with the Securities and Exchange Board of India (SEBI).

COMPETITION LAW'S APPLICABILITY IN THE DIGITAL AGE

The custom of digital manifestos was raised during ancient times. Under the Competition Act, of 2002, CCI has implemented belligerent regulating processes and captured proactive operations against mathematical platforms committed in anti-cutthroat endeavours. CCI examines network belongings, cyberspace privacy, dossier manipulation, dossier group, incorporation, and exchange to improve contest regulation in mathematical markets. CCI has revised the indicated display by confining itself generally to connect to the internet market divisions, rather than an alluring premature practice of integrating connected to the internet and offline marketplaces, with bringing supplementary technology podiums under the case. While competition societies favourably regulate mathematical markets, there is hope for aggressive markets to be invigorated through correct modifications to keep up with the complications of evolving electronics. The future of the antitrust rule of digital marketplaces looks expected sunny.

LANDMARK CASES ON COMPETITION LAW

Google Inc. & Ors v. Competition Commission of India (2015)

Fact

Google Inc. is accused of abusing its dominant position in the online advertising market by promoting its vertical web services, such as YouTube, Google News, Google Maps, and others. This is according to a complaint that was sent to the CCI. In other words, these services appear prominently on the Google search engine result page regardless of their popularity or relevance.

Issues

The fundamental query was whether, in the absence of any specific Competition Act 2002 provisions, an administrative authority, such as CCI, has an inherent power to review or recall a decision made pursuant to Section 26(1).

Decision

The Delhi High Court declared that the CCI has the power to recall or rethink its decision under certain circumstances, and that this should be done only in cases where the probe was undertaken without conducting a complete investigation.

SHORTCOMINGS IN THE COMPETITION ACT

The theme of composite supremacy is gone in the Competition Act regardless of allure detracting significance in a changeful frugality like India. The lapse of the plan of “composite supremacy” in the Indian contest standard has frequently obviated the CCI from communicable appropriate remedies on any occasion essential. Collective supremacy refers to a position in which two or more separate associations, combined by financial connections, together hire a superior position to the added traffickers. Collective supremacy is apparent in two upright and level markets. As a result, bodies in a controlling position do not need to expect an appendage of an antagonistic-aggressive understanding or cartelization. Furthermore, few announce that by way of the complicatedness of contest society study, in addition to the lack of organizational ability private raise frugality, adopting a contest regulation administration grants permission finish achievement more harm than benefit, as the risk of making wrong judgments is completely extreme. The management has the expert to repeal the CCI. Such disadvantages have an important effect on the CCI’s independence and influence. In reality, debate accompanying the CCI apiece Central Government under evolving contest procedure endure ought inevitable, alternatively possible, as help in the Act. Furthermore, the Act does not cover infringements on protected property created by original thought rights, which are patent rights for a restricted magnitude. Relation of contest regulation and IPR regulation in India

At first look, IPR and contest standards give the impression of fire and water, operating opposite to each other. This outlook has switched through occasions, and the current belief is that they share complementary plans.

The friendship betwixt protected property created by original thought rights and contest regulation admits an individual to undertake a growing contest while confining a stiff contest. It allows the keeper to create restricted use of welcome produce for a particularized range. During specific a period, patent possessors hold monopolistic control and are in a position of supremacy. Such supremacy will not influence a defilement of antitrust regulation.

The purpose of contest regulation is to safeguard and reinforce services’ prosperity by lowering monopolistic capacity. On the contrary, IPR is attracted to change by allowing the partner restricted rights to kill a monetary trade, but this does not indicate that they grant permission to exercise a holding position marketing. Even while IPR awards a safeguard yes the owner, this right cannot be restricted enough to award patent rank. This is the place where contest regulation enters the place, and if the IPR holder employs some antagonistic-vying behaviour or venture, it is liable to be subjected to contest regulation.

CONCLUSION

The Competition Act of India is completely broad and was planned to fulfill the necessities of development in the saving and general business-related styles having to do with contest regulation. As a result, the contest society of 2002 is recognized as a memorable society. This measure does not admit misuse of capacity. This regulation generally advances contest concerning business while again providing elasticity in the dispersion of gains to firms of all sizes that boost the industry’s monetary being. Though the complete standard has still not been executed, the maintenance of the complete Act will certainly increase display competitiveness on an internal and general scale.

REFERENCES

  • https://www.mca.gov.in/Ministry/actsbills/pdf/The_competition_Act_2002.pdf
  • https://vlex.in/vid/mohit-manglani-vs-flipkart-577359126
  • https://indiankanoon.org/doc/190415917/
  • https://indiankanoon.org/doc/189150347/
  • https://www.casemine.com/judgement/in/574c14d77de1a8779874c51b
  • https://www.researchgate.net/publication/272245266_Regulation_of_Combinations_Under_the_Competition_Law_in_India
  • https://www.researchgate.net/publication/331299457_Competition_Law
  • http://lawfaculty.du.ac.in/files/course_material/IV_Term/LL.B-4033-Competition%20Law-2019%20Final.pdf
  • https://journalsofindia.com/what-are-tetrapods/

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