COMPETITION COMMISSION OF INDIA
24th July, 2021 Economy
- 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.
- 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.
- 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