The Competition Act, 2002 mainly ensures to prevent and prohibit the practices that have adverse effects on the competition, to promote and maintain reasonable and safe competition practices and also to promote the interests of the consumers and to protect the trade. The act has in itself imbibed all the necessary measures to prevent any practice which illegally distorts, prevents or restricts the competition in the market. Competition in a market can be restricted in many ways apart from the ones laid down in the competition act. For instance, there are other methods of restricting competition by following the agreements such as price guidelines or suggestions to prevent the competition, joint purchasing or selling, setting technical or design standards, and agreement to share business information. CCI will take action in cases where the competiton in the market is harmed considerably due to the adverse effect practices on competition. In the case of price set up by the entities, CCI has found that these price stability mechanism and fee regulations, mandatorily or voluntarily, harm the competition practices in the market and encourages all business entities and forums to set their prices independently without following any guideline.
Competition Act, 2002, was authorized by the Parliament of India to set up a commission, to ensure the interest of the consumers and assurance opportunity of exchange markets in India. Yet, before Competition Act there was the MRTP Act, The Monopolies and Restrictive Trade Practices Act, 1969 which guarantee the concentration of economic power in hands of not many rich. The act was there to preclude monopolistic and prohibitive trade practices. It reached out to all of India aside from Jammu and Kashmir.
While working together in India, parties are precluded from executing anti-competitive arrangements. For the most part, the agreements which cause or are probably going to cause an appreciable adverse effect on competition (“AAEC”) are anti-competitive agreements.
The expression “appreciable adverse effect on competition” isn’t characterized in the Competition Act. section 19(3) of the Competition Act sets out specific variables that must be considered while deciding if an agreement has an appreciable adverse effect on competition under Section 3.
The agreement is defined under Section 2(b) of the Competition Act, “ ‘agreement’ includes any arrangement or understanding or action in concert, whether or not, such arrangement, understanding or action is formal or in writing; orwhether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings”
Section 3(1) of the Competition Act states about the anti-competitive agreement, such agreements may be horizontal or vertical.
“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 section 3(1) shall be void.
Further, the restriction on anti-competitive agreements under Section 3 of the Competition isn’t relevant to:
(a) sensible conditions for reasons for the security of intellectual propertyrights under certain predetermined laws; and
(b) arrangements that relate solely to the production, supply, distribution or
control of goods or the provision of services for export.
Horizontal Agreements:-Section 3(3) of the Competition Act
Horizontal agreements are arrangements between enterprises at the same stage of the production chain and that is by and large between two opponents at either fixing costs or for restricting creation or for sharing business sectors.In such agreements, there is an assumption in the Act that such agreements cause AAEC. Nonetheless, such an assumption is rebuttable and the weight of confirmation to remove such assumption will fall upon the individual blamed for agreeing. Appropriately, contentions dependent on counterbenefits of arrangements might be utilized to unstick such an assumption. Further, the Competition Act gives a special case for this assumption of appreciable adverse effect oncompetition in the event of horizontal agreements went into by method of joint ventures:such an agreement will be assumed not to have an appreciable adverse effect oncompetition.
Cartel is likewise a horizontal agreement. Cartel incorporates a relationship of makers, merchants, wholesalers, brokers, or service providers who, by understanding among themselves, breaking point, control or endeavor to control the creation, dispersion, sale or cost of, or, exchange products or provision of services. Cartel is a mystery and not public, they work under the skin.
Vertical Agreements:- Section 3(4)of the Competition Act:-
Vertical agreements are between ventures at various phases of the creation chain, similar to the arrangement between the maker and a wholesaler. The presumptive rule does not apply to vertical agreements. The inquiry of whether the vertical agreement is causing AAEC is dictated by the rule of reason. At the point when the rule of reason is utilized, both positive just as the negative effect of rivalry is investigated.
This agreement includes a tie-in arrangement;exclusive supply agreement;exclusive distribution agreement;refusal to deal.
Role of CCI
The competition commission of India created by the Competition act, 2002 is responsible for the enforcement and administration of the Competition act, 2002. The CCI may enquire into matters of anti-competitive agreements if it receives any information or on the basis of knowledge from its possession. In terms of combination, the CCI may conduct the inquiry on its own or on the intimation provided by the firms entering into combination. Any person or any consumer can file the complaint directly in the Competition Commission of India seeking redressal and also for providing proper solutions to the grievance faced by them. The investigative powers of the Competition Commission of India also includes powers to summon and enforce the attendance of any person, examine them on oath, receive evidence on affidavit and other similar provisions. The CCI in certain cases can transfer the matters to the office of the Director General and to report its findings in the concerned subject of anti-competitive agreements. The CCI may include the recommendations made by the Director General in its orders and also should provide the opportunity to the parties for being heard and if the parties are not satisfied with the orders of CCI, they can make an appeal with the Competition Appellate Terminal and the final appeal lies with the Supreme Court of India.
The main aim of the act is to prevent the practices which cause appreciable adverse effects on the competition in India. The objective of this measure is to ensure freedom of trade and also to protect the interest of the consumers. This can be achieved only if the principles laid down in the competition act are followed in all the measures. At the same time it is the duty of the parties doing business in India to keep a check on the retention of anti-competitive elements between them. The parties msut be vigil and shrewed to find out the anti-competitive elements arising from the contract. The employees should have knowledge about the implications of the anti-competitive agreements. The expert guidance can always be given either to the persons or the enterprises which are in dire need of consulation.
What Is An Anti-Competitive Agreement?
An anti-competitive agreement is one which is having an indispensable adverse effect on the competition practices in the market which generally include the agreement to restrict the production or sales of the product, agreement which is made to segregate or allocate the market, agreement which is made to fix prices, agreement which promotes the bid rigging, agreement which is based on the contingent clauses, agreement which focuses on the exclusive supply/ distribution management or the agreement which speaks about the refusal of dealing etc.
What Orders Can The Commission Can Pass In Case Of Anti-Competitive Agreements?
The first and foremost power of the competition commission is that it can pass interim orders restraining the party to proceed further in case of anti-competitive agreement. The commission can impose a penalty of 10% of the average turnover of the last preceding three years. After the inquiry, the commission may order the entity to discontinue and not to enter into the anti-competitive agreement again.
Is There Any Leniency Given To Anyone Who Provides Information On Any Anti-Competitive Agreement?
Section 46 of the competition act says about reducing the level of penalty to the member of the cartel who provide true, vital and full information regarding the anti-competitive agreements followed by the cartel. The provision remains somewhat similar to the whistleblowing process. This is present mainly to induce the parties to provide full disclosure of the anti-competitive practices followed by them in order to protect and maintain the competition in the market stable without any monopolistic fluctuations.
Section 2(b) of the Competition Act, 2002.
Section 3(1) of the Competition Act, 2002.
Section 3(2) of the Competition Act, 2002
Section 3(4)of the Competition Act