E-commerce companies lost their legal battle before the High Court of Karnataka against the Competition Commission of India’s order to conduct an investigation into whether they had entered into anti-competitive agreements in violation of the provisions of the Competition Act, 2002.
Background
Competition is the best means of ensuring that the ‘Common Man’ or ‘Aam Aadmi’ has access to the broadest range of goods and services at the most competitive prices.
Competition is a process of economic rivalry between market players to attract customers.
With increased competition, producers will have maximum incentive to innovate and specialize. This would result in reduced costs and wider choice to consumers.
A fair competition in the market is essential to achieve this objective.
Its main goal is to create and sustain fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets work for the welfare of the consumers.
Free and fair competition is one of the pillars of an efficient business environment.
The Competition Act
The Competition Act, 2002 was passed by the Parliament in the year 2002.
The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws.
The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse enect on competition within India.
In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established.
The Competition Commission of India is now fully functional with a Chairperson and six members.
The provisions of the Competition Act relating to anti-competitive agreements and abuse of dominant position were notified under this Act.
Objectives
The objectives of the Act are sought to be achieved through the Competition Commission of India, which has been established by the Central Government with effect from 14th October 2003.
CCI consists of a Chairperson and 6 Members appointed by the Central Government.
It is the duty of the Commission to eliminate practices having adverse e ects on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.
Anti-Competitive behaviour by firms and companies
Foreclosing competitors/ competition.
Unfair or discriminatory pricing/ conditions.
Limiting or restricting production of goods or provision of services.
Limiting or restricting scientific or technical development to the prejudice of consumers.
Mutual anti-competitive agreements.
Predatory pricing.
Denial of market access to others.
Making conclusions of contracts subject to the acceptance by other parties of supplementary obligations that are unrelated to the original contract.
Need of the hour
Firms should fix internal protocols for decision making and information sharing with regard to sensitive financial and commercial information.
Firms should create awareness and run regular training programs amongst all employees handling sensitive financial and commercial information.
A competition law due diligence should be conducted by firms that have a high market share or perhaps have exclusive rights at ports etc. so as to avoid anti-competitive clauses in agreements with suppliers, vendors and other market players.
Communication with competitors with regard to any business discussion should be limited/ restricted as well as recorded properly to mitigate any competition law risk.
Any pricing below the cost must have a sound economic rationality to justify its efficiency and business
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