All you need to know about the Competition Commission of India and Competition Act 2002

The ability to trade freely and easily is one of the essential conditions for economic progress. Firms should be able to enter the market and compete without difficulty. As a result, no unfair practices must exist in the market, only fair competition and the Competition Commission of India (CCI) ensures it.

Since the enforcement provisions of the Competition Act 2002 were implemented in 2009, the Competition Commission of India (CCI) completed a decade. In the 10 years since its inception, the commission has taken several steps to ensure ease and freedom of trade in the Indian market and the prohibition of unfair trade practices. Let’s study it in more detail.

What is the Competition Commission of India (CCI)?

India’s principal national competition authority is the Competition Commission of India (CCI). It is a commission under the Ministry of Corporate Affairs responsible for executing India’s Competition Act 2002, which aims to foster competition and prevent acts that have a significant negative impact on society. The CCI investigates matters to see if they harm competition.

On October 14, 2003, the commission was constituted. It became fully operational in May 2009, with Dhanendra Kumar as its first Chairman. Ashok Kumar Gupta, the current Chairman of the CCI, was appointed to the position in 2018.

The MRTP Act of 1969 (Monopolies and Restrictive Trade Practises Act) was repealed. It was replaced by the Competition Act 2002 which was on the recommendation of the Raghavan Committee.

Through proactive involvement with all stakeholders, including consumers, industry, government, and international jurisdictions, the Competition Commission of India aspires to promote a healthy environment for competition.

Composition of the Competition Commission of India

The commission is a quasi-judicial organisation that provides opinions to statutory bodies and handles various matters. The Commission comprises a Chairperson and two to six other members, and the Central Government will choose all the members. The Chairperson, as well as the other members, will be full-time members.

The Chairperson and each other member must be people of ability, integrity, and stature, with special expertise and professional experience in

• International trade,
• Economics,
• Business,
• Commerce,
• Law,
• Finance,
• Accountancy,
• Management,
• Industry,
• Public affairs, or
• Competition topics, including competition law and policy

the Central Government believes, will be valuable to the Commission.

Duties of the Competition Commission of India

The Competition Act 2002 was established to assure that the economy develops only with fair and healthy competition. In this regard, the Competition Commission of India must take the following steps:

• Ensure that the interests of consumers get protected in the marketplace.
• Implement the policies outlined in the Competition Act 2002.
• Educate advocates and other government bodies like state governments and ministries about Competition Act 2002.
• To encourage market participants to engage in fair and constructive competition.
• Anti-competitive agreements should not get implemented.
• To work more efficiently with other regulatory agencies to ensure the continuation of a free and fair market.

Primary goals of the Competition Act 2002

The Competition Act aims to establish the legal framework and mechanisms necessary to ensure that competition policies are followed to prevent anti-competitive conduct and punish those who do so. The act protects Free and fair competition, along with trade freedom.

The Act attempts to prohibit monopolies as well as unnecessary government intervention. The objective of the Competition Act 2002 are as follows:

• to lay the foundation for the establishment of the Competition Commission.
• To eliminate monopolies and encourage market competition.
• To safeguard the trading freedom of the market’s members (individuals and corporations).
• To safeguard the consumer’s interests.
• Make the private sector and the government work together to benefit consumers.
• Ensure fair and reasonable competition in the country’s monetary activities for the economy’s faster and more comprehensive development and improvement.
• Carry out competitive strategies to make the most efficient use of financial resources.
• To ensure the smooth implementation of sectoral administrative laws in conjunction with the opposing lawyers, establish and maintain successful relationships and alliances with sectoral controllers.

The primary focus of the Competition Act

The Competition Act of 2002 got passed to protect the competition’s interests, establish the Competition Commission of India (CCI), and appoint separate experts to settle buyer disputes. Except where the Central Government expressly excludes merchandise or ventures, the Act applies to all merchandise and ventures.

• It encompasses all sectors, including private, public, and cooperative.
• The Act’s provisions are compensatory.
• It provides adjudicatory authorities that are simple, rapid, and cost-effective.
• The establishment of Consumer Protection Councils at the National level, State level, and District level.

The competition legislation focuses on:

• Prohibiting any anti-competitive agreements.
• Prohibiting the abuse of any dominant position.
• Combination regulation
• Advocacy for a more competitive environment

The primary objective of this act is to remove all impediments to competition among strong groups, whether they be private or public.

Features of Competition Act 2002

The Competition Act has the following features:

1. Anti-Agreements:

   No individual or business shall engage in production, transmission, or supply in a way that would harm competition in India. Such agreements get prohibited in any case.

2. Abuse of dominating position:

   It will get deemed an abuse of dominant position if an enterprise or an associated individual is engaging in unfair or discriminatory acts. If a party is determined to be abusing its position, the relevant authorities will conduct an investigation.

3. Combinations:

   According to the statute, combinations get described as terms that lead to acquisitions or mergers. The Competition Commission of India will investigate the parties involved if such combinations breach the Act’s restrictions.

4. Competition Commission of India:

   The Competition Commission of India is an independent body with the authority to enter into contracts and sue the parties concerned if those contracts get breached. The Commission comprises a maximum of six members who are responsible for preserving and promoting consumer interests to maintain an optimum atmosphere for economic competition.

What are the Powers of the Competition Commission of India (CCI)?

The Competition Commission of India has the following powers under the Act:

• The Indian Competition Commission has the authority to investigate a specific agreement and a company’s dominating position. It means that the Competition Commission of India has the right to initiate an investigation into any alleged violation of its anti-competitive regulatory prohibited, either on its authority or in response to any information.
• The Competition Commission of India has the authority to investigate any purchase or combination if it believes it will have an unfavourable effect on competition in the Indian market.
• India’s Competition Commission has the authority to control its procedures
• In India, the Competition Commission can levy monetary penalties for violations of the Competition Act, 2002.
• The Competition Commission of India has the authority to issue an interim order in anti-competition agreements or dominant party abuse of position that harms market competition.

Functions and Roles of the competition commission of India

The functions and roles of the competition commission of India are as follows:

• The Competition Commission is India’s competition regulator and an antitrust watchdog for smaller companies that cannot protect themselves against major enterprises.
• The Competition Act ensures that no business exploits its ‘dominant position’ in a market by controlling supply, manipulating purchasing prices, or engaging in tactics preventing other businesses from entering the market.
• Eradicate anti-competitive behaviours, promote and sustain competition, defend consumer interests, and secure trade freedom in India’s marketplaces.
• To provide an opinion on competition concerns in response to a referral from a statutory authority formed under any law and to engage in competition advocacy, raise public awareness, and provide competition training.
• A foreign firm looking to enter India through an acquisition or merger must follow India’s competition regulations.
• The Competition Commission of India will get notified if the group’s assets and turnover exceed a specified monetary value (CCI).
• CCI has the right to issue warnings to companies that export to India if it believes they are distorting competition in India’s home market.
• Another function of the CCI is to ensure communication and collaboration with other economic and regulatory bodies, ensuring that sectoral regulatory legislation and competition laws are in sync.
• One of the CCI’s most significant responsibilities is to advocate for competition and competition laws. Its goal is to teach modern competitive concepts to ministries, state governments, regulators, and other authorities, and it does so via holding workshops, seminars, and publishing papers, among other things.

What is the role of CCI as a business facilitator?

When free commerce and fair competition are in the market, any economy grows. Monopolies, cartels, and other unfair competition practices stifle the growth of smaller corporations and businesses, which are critical to an economy’s progress.

The CCI safeguards such enterprises against unfair competition and its negative consequences. It also assures that the corporations at fault get fined and discouraged from engaging in similar behaviour in the future. It benefits consumers by encouraging competition. The CCI will ensure that no single corporation has a monopoly on the market. Small and large businesses can coexist happily in the economy.

What is the need for CCI?

Competition laws have been termed the “Magna Carta of free enterprise.” In an era when economies are transitioning from closed to open economies, a competent competition commission is necessary to guarantee the survival of domestic sectors while also reaping the benefits of more foreign investment and competition.

Competition is critical to the survival of our free business system and economic freedom. Competition law is necessary because markets can experience failures and distortions. Various players can engage in anti-competitive behaviour such as cartels, abuse of dominance, and other practices that harm economic efficiency and consumer welfare. As a result, competition legislation is required to serve as a regulatory force that establishes effective control over economic activity.

Landmark Judgments

1. Google Inc. V CCI

   According to a complaint filed with the CCI, Google Inc. has been accused of abusing its dominating position in the internet advertising industry by promoting its vertical search services such as Youtube, Google News, Google Maps, and others. In other words, regardless of their popularity or relevancy, these services would display prominently in a Google search result.

   The key question was whether, in the lack of any particular provisions in the Competition Act, 2002, an administrative body like CCI has inherent powers to review or recall its order issued under section 26(1).

   The Delhi High Court ruled that the Competition Commission of India can recall or review its ruling under specific conditions. But, it should be done selectively and not in all the cases where an investigation has been undertaken without due process.

2. Steel Manufacturers Case

   According to the Engineering Export Promotion Council of India, the rise in steel costs in India is substantially larger than in the rest of the globe. Such a significant increase in steel prices harmed the Indian engineering industry and engineering goods exporters, particularly small and medium-scale sectors, such as key engineering industry segments.

   It could be regarded as an outlier because it stems from the MRTP Act. Before proceeding further, CCI determines whether the substantive law in these matters should be the MRTP Act or the Act as a preliminary point.

3. Faridabad Industries Association vs M/s Adani Gas Limited

   The FIA claimed that the conditions of the Gas Sales Agreement (GSA) were prejudiced and one-sided, with no scope, for those who were exclusively reliant on Adani Gas for natural gas supplies. Based on the evidence provided by the FIA alleging a violation of Section 4 of the Act, the case was brought before the Competition Commission of India.

   The Faridabad Industries Association (FIA) is a group of businesses that use AGL-supplied natural gas. The principal accusation against AGL was that it was abusing its market dominance in the supply and distribution of natural gas in Faridabad’ by adding unconscionable and one-sided clauses in the Gas Supply Agreement (GSA). On this premise, they asked the CCI to change the GSA terms, order AGL to stop doing so, and apply fines for its actions.

   Although end-users utilised fuel oils and natural gas equally, CCI found that natural gas was a separate and distinct market since the opposing party was the only licenced gas supplier in Faridabad and natural gas had distinguishing features and qualities. It ordered AGL to stop engaging in such practises and to make appropriate changes to the GSA.

Conclusion

The Competition Act 2002 is a detailed statute to foster fair competition, bringing India up to speed with the global economy, protecting consumers’ interests, and ensuring a stable market.

This Act’s principal objective is to encourage competition and prevent anti-competitive agreements. The Abuse of Dominant Firms Act prohibits dominant enterprises from abusing their position, and it can also control any kind of combination that is larger than a certain size. As a result, this Act prohibits monopoly abuses rather than prohibiting monopolies.

As a result, the Competition Act is expected to play an essential role in changing the control mechanisms related to monopoly and restrictive trade practices, protecting the interests of small and medium-sized businesses in the country, and giving consumers more power to resolve their complaints.