Introduction: The Competition Act, 2002, a pivotal law in India, was initiated to repeal the previous Monopolies and Restrictive Trade Practices (MRTP) Act, 1969. It brought forth a new authority, the Competition Commission of India (CCI), to administer competition compliances in the country. This article provides a comprehensive understanding of the Act, focusing on anti-competitive agreements, associated case laws, and the penalties defined under it.
Anti-Competitive Agreements
Anti-Competitive agreements means the agreement in relation to any goods or services which eventually has an appreciable adverse effect on competition in India.
Wherein section 3 states as follows:
- “No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.
- Any agreement entered into in contravention of the provisions contained in subsection (1) shall be void.
- Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, 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—
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical development, investment or provision of services;
(c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;
(d) directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an appreciable adverse effect on competition
Provided that nothing contained in this sub-section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.”
Types of Anti-Competitive Agreements
1. Price Fixation Agreements under Section 3(3)(a)
2. Controlling or Limiting Investment and Production under section 3(3)(b)]
3. Allocation and sharing of market under section 3(3)(c)
4. Collusive Bidding or Bid Rigging under section 3(3)(d)
Factors Determining Appreciable Adverse Effect on Competition In India
According to section 19 (3) of the Competition Act, 2002, the following factors shall be kept in mind by the CCI while determining Appreciable Adverse Effect on Competition In India:
(a) creating barriers to new entrants into the market;
(b) driving of existing competitors out of the market;
(c) foreclose competition by hindering entry into the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or provision of services; or
(f) promotion of scientific, technical and economic development by means of distribution or production of goods or provision of services.
Relevant case laws for effects of Anti-Competitive Agreements
In Varca Druggist & Chemist & Others v/s Chemist & Druggists Association, Goa (“Varca Drug”), the complaint was filed by Varca Druggist & Chemistand two other proprietors of pharmaceutical drugs and medicines firms against the Chemist & Druggist Association, Goa (CDAG) to the Director-General (Investigation & Registrations), Monopolies & Restrictive Trade Practices Commission (DGIR, MRTPC) alleging that the defendant was indulged in restrictive trade practices. The complaint was transferred to the Competition Commission of India (CCI), wherein the CCI that the CDAG is involved in the practice of controlling and limiting the drugs supply in Baroda, Gujarat in violation of provisions of Section3(3)(b) and Section 3(1) of the Competition Act.
In Sunshine Pictures Private Limited & Eros International Media Limited vs Central Circuit Cine Association, Indore & Ors.75 (“Eros International”) the plaintiff alleged that opposite party due to the trade association had become a vehicle that uses collusive conduct for distribution and exhibition of films for the persons and enterprises who are engaged in the identical business, wherein the Competition Commission of India held that the trade-associations were involved in issuing letters and circulars which were eventually used to restrict the exhibition of films. The conduct violates the provision of Section 3(3)(b) of the Competition Act, 2002, and the penalty was subsequently imposed on the associations who were involved at a rate of 10% of the average of three years total receipts respectively.
Power to impose lesser penalty
According to section 46 of the Act, The CCI may, if satisfied that any producer, seller, trader, service provider or distributor is/are included in any cartel, which is alleged to be in violation of section 3, has made true and full disclosure in respect of the alleged violations, then the CCI may impose upon such persons a lesser penalty, than prescribed under this Act or the rules or the regulations.
Provided that CCI shall not impose lesser penalty in cases where the report of investigation has been directed under section 26.
Conclusion: The Competition Act, 2002, ensures that the Indian market stays competitive and is free from undue dominance and abuse. By defining anti-competitive agreements, stipulating penalties, and outlining the factors affecting competition, the Act provides a robust framework for competition regulation in India. It empowers the Competition Commission of India to enforce the provisions, promoting a healthier and more balanced marketplace for all stakeholders.
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