Dec 25, 2017
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Competition Act, 2002 – Overview

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Competition Act, 2002 – Overview

Competition Act, 2002 established to prevent unfair trade practices in market. It helps the country to develop economically. It also establishes a competition commission to prevent adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade. The Monopolies and Restrictive Trade Practices Act, 1969 [MRTP Act] repealed and is replaced by the Competition Act, 2002, with effect from 01 st September, 2009 [Notification Dated 28th August, 2009]. It extends to the whole of India except the State of Jammu and Kashmir.

Consumer

“consumer” means any person who –

  1. Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use;

  2.  hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use;

Competition Act, 2002, Official site, Retrieved on 25th December, 2017.

Anti-competitive agreements

1. No person or organisation or enterprise shall enter in agreement for production, supply, distribution, storage, acquisition or control of goods or also provision of services, which causes adverse effect on competition in India.

2. Any agreement violating any provisions of Act, shall be void.

3.  Any agreement entered between two or more persons or enterprises or any enterprise and person, 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,

  1. directly or also indirectly determines purchase or sale prices;
  2. controls production, supply, markets, technical development, investment or provision of services
  3. shares the market or source of production or provision of services by way of allocation of geographical area of market,
  4. directly or indirectly results in bid rigging or collusive bidding,

shall have adverse effect on competition.

4.  Any agreement between persons or enterprises at different steps of the production in different markets, in respect of production,
supply, distribution, storage, sale or price of, or also trade in goods or provision of services, including—

  1. tie-in arrangement;
  2. exclusive supply agreement;
  3. exclusive distribution agreement;
  4. refusal to deal;
  5. resale price maintenance,

shall be an agreement in contravention of  provision if such agreement causes or is also likely to cause an appreciable adverse effect on competition in India.

5. Nothing contained in this section shall restrict—

  1. the right of any person to restrain any infringement of, or also 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 or the
    Trade Marks Act, 1999;
    (d) the Geographical Indications of Goods Act, 1999;                                                                                                                                             (e) the Designs Act, 2000 ;
    (f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000
  2.  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.

Competition Commission of India

The Central Government may appoint a Competition Commission Of India by notification in official Gazette for purpose of this Act. The Commission shall be a body corporate, having perpetual succession and also a common seal with power. It may also acquire, hold and dispose of property, both movable and also immovable, and also enter into contract. The head office of the Commission shall be at such place as the Central Government may decide from time to time. The Commission may also establish offices at other places in India.

Combination

The Act provides regulation of the operation and activities of “combinations”, which examines acquisition, mergers and also amalgamations. The commission can ask for scrutiny, if combination that exceeds the threshold limits in terms of assets an also turnover. Hence, it may cause adverse effect on competition in Indian market.

Threshold limits that would invite the scrutiny are specified below:

For acquisition:

  • Combined assets of the firm more than Rs 3,000 crore and also for outside India it is US $ 500 millions
  • The limits are more than Rs 4,000 crore or 12,000 crore and also 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 and also for outside India firms it is US $ 500 millions and 1,500 millions.
  • These limits are more than Rs 4,000 crore or Rs 12,000 crore and US $ 2 billions and 6 billions in case merged/amalgamated entity belongs to a group in India or outside India respectively.

Combination which causes “appreciable adverse impact” on competition are void.

 

Article Categories:
The Companies Act, 2013

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