Competition Act 2002: Salient Features

Competition Act 2002

Economics Reform in 1991 leads to change from monopolies market to open market that enterprise to meet
competition both from within the country and from outside.

The government-appointed an expert committee headed by SVS Raghavan to examine the issues. The Raghavan committee submitted its report to the government on 22 May 2000. It proposed the adoption of new Competition Law and phasing out of the MRTP Act.

Accordingly, the government decided to pass a law on the competition. Competition Bill 2001 was introduced in the Parliament and passed in December 2002. It is called the Competition Act 2002. Later Act was amended in 2007.

The Competition Act was replaced by the MRTP act 1969. Its jurisdiction extends across all-state in India except for Jammu and Kashmir.

Competition Act 2002

The basic objective of the competition act are:

  1. To prevent practices that have a negative effect on competition.
  2. To promote and sustain competition in the markets, and
  3. To protect the interests of the consumers and to ensure freedom of trade.
  4. Prohibition of abuse of dominant position.
  5. Regulation of combination and competition advocacy

The following are the salient features of the Competition Act

  1. Competition Commission of India (CCI): The Act provides for the establishment of the Competition Commission of India. The duty of the commission is to remove practice having a negative effect on competition, to promote and encourage competition in the Indian market, to protect the interest of the consumers, and to ensure the freedom of the trade carried by participants in the market. The Competition Commission includes a merger bench that looks into merger agreement between the companies.
  2. Anti-competitive Agreements: Section 3 of the Act provides provisions for the Prohibition of Anti-Competitive agreements.  According to the Act, any agreement with respect to the production, supply, distribution, storage, acquisition, or control of goods or provision of services that causes or is likely to cause an appreciable adverse effect on competition within India.
  3. Abuse of Dominant Position: Dominant Position means a position of strength, enjoy by the enterprise in the market, that enables the enterprises to operate independently of competitive forces in the market, affects its competitors are consumers or the relevant market in its favour. The Act does not prohibit its dominant position that is a firm is not prevented from being a Monopoly but is prevented from abusing that position to harm competition and Public Interest.
  4. Regulation Combinations: According to the Act acquisition of one or more enterprise by one or more person or merger or amalgamation of enterprises shall be treated as a “Combination” of such enterprise and person or Enterprise in the following case I) acquisition by the large companies II) acquisition by the group III) acquisition of the enterprise having the services of a similar good etc. The Act makes it voluntary for the parties to notify their proposed agreement to the merger bench of the Competition Commission of India if the aggregate assets of the combined parties exceed Rs. 1000 crore or the turnover is in excess of Rs. 3000 crore.
  5. Competition Advocacy: Competition Advocacy means creating cultures of competition in the market. The Competition Act proposed not only to enforce Anti-Competition Law but also to advocate a culture competition. In order to enable the Competition Commission of India(CCI) to do this, it has been empowered to participate in the formulation of the country’s economic policies and participate in reviewing the law in relation to the competition at the instance of the central government. In order to promote the competition advocacy and create awareness about the competition issues and impart relevant training, the Act purpose the setting of the competition fund.
  6. Other Provisions: a) Remedies and Leniency: The Act provides for the remedies that the Commission can order in case of anti-competitive agreements and the abuse of dominant position. b) Regulated Sectors: The Commission has jurisdiction over all the sectors of the economy. c) Exemptions: The Act excludes all activities carried by the government dealing with atomic energy, currency, defence and
    space from the application of the provisions of the Act.

Conclusion: The core objective of the Competition Act 2002 is to promote the competitive process in the Indian economy. The following are the objectives of the Act:

  • To prevent practices that have a negative effect on competition;
  • To promote and sustain competition in the markets; and
  • To protect the interests of the consumers and to ensure freedom of trade.

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Reference:Smart Notes, Manan Prakashan

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