Competition Law in India [Business Law]: Competition Act, Competition Commission of India (CCI)

Competition law in India, Competition Act | Competition Commission of India (CCI).

Introduction

Back in the 90s, during the 1991 Indian economic liberalisation, the government of India felt the need to promote a healthy competition among businesses and to back private enterprise. Considering the economic development of the country, it was felt that a Commission was required that would prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India. With these things in mind, the Competition Act was enacted; the Competition Commission of India (CCI) is the body responsible for enforcing The Competition Act throughout India.

Constitution of CCI under the Competition Act

The Competition Act, 2002, subsequently amended by the Competition (Amendment) Act, 2007, relates to anti-competitive agreements and abuse of dominant position. In accordance with the provisions of the Amendment Act, the Competition Commission of India (CCI) and the Competition Appellate Tribunal were established to investigate business steps/decisions by enterprises that may lead to imbalance in the market. It’s primary duties includes eliminating practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in markets in India.

So, for example, if businesses are planning for merger or acquisition, they need to take the approval of the CCI who will then check if the deal is likely to cause any appreciable adverse effect on competition in a market in India, or may lead to a situation where the new company becomes very strong and could abuse its dominance in the market by driving out existing companies, or it may lead to market monopoly which may result in reduced quality of services to the consumer.

The Competition Act, 2002 provides for the establishment of Competition Commission of India (CCI). The CCI is a body with considerable powers that are subject to the provisions of the Competition Act, and it can acquire and dispose of property (movable as well as immovable), and also has the power to sue companies.

Here are some more salient features of CCI.

• The Commission consists of a Chairperson and not less than two (2) members and not more than ten (10) members who all are appointed by the Central Government.
• The Chairperson or other members shall be a person of interity and standing, who shall be a judge of a hight court or have special knowledge and experience of not less than 15 years in international business, economics, business, commerce, law and finance.
• The Chairperson and other members act as full time members of the Commission.
• The Chairperson and other members shall hold the office for the term of five years and shall be eligble for re-appointment.

In a recent case between Fast Track vs. Ola, Fast Track contended that, Ola occupies a dominant position in the market of radio taxi services in the city of Bengaluru and they have abused their dominant position by engaging in predatory pricing. According to Fast Track, Ola spends more money on discounts and incentives (apart from the variable costs it may be incurring) on customers and drivers as opposed to revenue earned by them.

Abuse of dominant position through predatory pricing is prohibited under Sec 4 of the Competition Act. Full case here.

Procedure of handling complaints and enquiries

Any person can file an application or information before the Secretary of Commission to investigate a matter. Within the next 15 days, the CCI then decides if there is a prima facie case or not. If the CCI finds that there is indeed a prima facie case, it investigates the case further to form its opinion on the case within 60 days.

However, in practice, it may take much longer, depending on the complexity and scale of the matter. At the prima facie stage, the CCI is not required to and generally does not ask for evidence from all parties involved. The CCI has the discretion to call or not call the opposite party for the prima facie hearing.

Once the Commission has the knowledge or is given the information related to the acquiring of control, or of merger or amalgamation, it conducts an enquiry if it thinks it will have an appreciable adverse effect on competition in India. The Commission on becoming aware or on receipt of information, may enquire whether the combination referred to in that notice has caused or it is likely to cause an appreciable adverse effect on competition in India.

For determining whether the combination would have an effect or is likely to have an effect on competition in the relevant market, the Commission shall consider the following factors:

• Real or the likely level of competition through imports;
• The extent of barriers to entry into the market;
• The level of the combination in the market;
• The degree of countervailing power in the market;
• The level of effective competition which is likely to sustain in the market;
• The extent to which substitutes are available in the market or are likely to be available in the market;

On receipt of a complaint or a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter.

Closing Thoughts

Competition laws are required to protect the market from distortions and abuse of power. These laws also help in the promotion of domestic industries ensuring they are not crushed by the fat wallet of global players. However, it is also important to be in tune with the needs of the business mind. Keeping all these factors in mind, the Competition Act was enacted in India. Competition Commission of India (CCI) was established under the Competition Act, 2002 for the administration, implementation and enforcement of the Act. The objectives of the Commission include preventing practices having adverse effect on competition, promote and sustain competition in markets, protect the interests of consumers and ensuring freedom of trade. Any person can file an application or information before the Secretary of Commission to investigate a matter and if the CCI finds that there is a prima facie case, it has to investigate the case further.

Academic Questions / Assignments / Case Studies on Business Law

Q. Explain the constitution of CCI under the Competition Act, 2002 and the procedure of handling complaints and enquiries.

Q. AVEC a global fast food burger chain had been recently granted permission to operate in India. But understanding the fast food chain business in India is extremely competitive, it started offering burger at Rs. 5/- each. The other fast food chain businesses started agitating the move of AVEC, but AVEC paid no heed to it. Hence, other fast food chain business are contemplating filing action against AVEC under the Competition Act, 2002. Kindly assist them on what is the process followed by Competition Commission of India in dealing with such complaint.

Q. Explain in details two (2) real-life instances of Anti-Competitive Agreements which have been prohibited by the Competition Commission of India.

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