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CCI: ICSI-NIRCCCI: ICSI-NIRC

Company secretaries and the Competition Act, 2002

17th October 2015

Surendra U. KanstiyaPractising Company Secretarykanstiyask@rediffmail.com

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COMPETITION BENEFITS ALLCOMPETITION BENEFITS ALL

Healthy competition culture promotes:Consumer welfare: Choice, price, qualityFair play: be a ‘price taker’ and not ‘price

maker’Innovation: ‘to be the best’

AND

Competition kills competition

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ENTERPRISEENTERPRISE

PERSON OR GOVT. DEPTT. engaged in activity relating to production, supply, distribution, acquisition, control of goods; services, of any kind.

PERSON: individual; firm; HUF; co.; AoP; corporation; body corp.; coop. soc.; local authority; other artificial juridical persons.

EXCLUDED: Govt. Deptt. performing sovereign functions: atomic energy, currency, defence; space

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APPEARANCEAPPEARANCE

Sec. 35 and Sec. 53S:

A person or enterprise or DG may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of his or its officers to present his or its case ……

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COMPANY SECRETARY

Join CCI / COMPATExperts and Professionals : The CCI

(Procedure for Engagement of Experts and Professionals) Regulations, 2009

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ANTI COMPETITIVE AGREEMENTS

‘All anti-competitive agreements are void’

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HORIZONTAL AGREEMENTS = HORIZONTAL AGREEMENTS = HARDCORE CARTELSHARDCORE CARTELS

PRESUMED TO BE ANTI-COMPETITIVE Price fixing Limiting production, supply etc. Market sharing Collusive bidding/rigging

Others: Subject to ‘Rule of reason’ test

* EXCLUDES JV agreements if increase efficiency

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VERTICAL AGREEMENTS PROHIBITED VERTICAL AGREEMENTS PROHIBITED IFIF AFFECT COMPETITION AFFECT COMPETITION

Tie-in arrangementsExclusive supply agreementsExclusive distribution agreementsRefusal to deal/vertical boycottResale price maintenance

Rule of reason approach

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COMPANY SECRETARIESCOMPANY SECRETARIES

Manner of exchange of information within the trade bodies; joint ventures; cross directorships

Communication with regard to pricing; markets; technical development in terms of productivity, investment and profitability

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ABUSE OFDOMINANT POSITION

‘No enterprise or group shall abuse its dominant position’

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DOMINANT POSITION DOMINANT POSITION

DOMINANCE:- Capacity to act independent of

competitive presence.- Affecting appreciably the relevant

market, competition and consumers.

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ABUSE OF DOMINANCE:PRACTICESABUSE OF DOMINANCE:PRACTICES

Unfair, discriminatory and predatory pricing Limiting production, markets or technical

development Denial of market accessSupplementary obligations unconnected to

main contract: full line forcingUsing dominant position to enter another

market

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JSPL v SAIL [Case No 11/2009JSPL v SAIL [Case No 11/2009December 20, 2011]December 20, 2011]

The DG has made reference to the minutes of the 270th meeting of Board of Directors of SAIL held on 28.05.2001 wherein the Board has acknowledged the need "to meet the threat of competition posed by setting up of a new Mill by M/s. Jindal Steel……

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SAIL: BOARD MINUTES SAIL: BOARD MINUTES

In the minutes, there was a mention of JSPL's aim of setting a rail manufacturing unit. It was also mentioned in the minutes that due to competition which is going to come due to the entry of JSPL in the market for rails, SAIL should upgrade the facilities of the rail and structural plant. The D.G. further held that the MoU dated 01.02.2003 effects competition and does not ensure freedom of trade.

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COMPANY SECRETARIESCOMPANY SECRETARIES

Determination of dominance and Sec. 19(4): Tall claims in Prospectus, websites, advertisements. Schemes of amalgamation.

Pricing: Unfair; discriminatory; predatory - CCI (Determination of Cost of Production) Regulations, 2009

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COMBINATIONS

‘Certain combinations are regulated’

The Competition Commission of India (Procedure in regard to the transaction of business relating to

combination) Regulations, 2011 (Amended in 2012, 2013, 2014, 2015)

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2323

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PRIOR

NOTIFICATION

(Filing of Form)

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MANDATORYMANDATORY A notice must be given by enterprise to CCI

about combination within 30 days from execution of agreement / resolution

Phase I review process: CCI to form prima facie opinion in 30 days

Phase II review process: CCI to pass order within 210 (180 days), failing which combination to be deemed as approved.

FAILURE: Penalty, may extend to 1% of the total turnover or the assets, whichever is higher.

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FORMSFORMS

Form I - Regulation 5(2) combinations Form II - Regulation 5(3) combinations Form III - For exempt acquisition by FII etc Form IV – Advertisement

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FORMS FOR NOTIFICATIONSFORMS FOR NOTIFICATIONS

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VOID COMBINATION

a combination which causes or is likely to cause an

APPRECIABLE ADVERSE EFFECT ON COMPETITION

(AAEC)WITHIN RELAVANT MARKET

IN INDIA

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CONSULTATION PRIOR TO FILINGCONSULTATION PRIOR TO FILING

- NON BINDING, INFORMAL- NON BINDING, INFORMAL The facility of informal and verbal

consultation with the staff of CCI prior to the filing of notice to a proposed combination is available at CCI.

The advice would be given as an additional assistance facility, and would not be deemed to be the opinion of the CCI in any manner whatsoever or binding on the CCI.

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COMPANY SECRETARIESCOMPANY SECRETARIES

Assets/turnover determination Non-compete clause Market share analysis Group/control impact Failing business costing and impact Compliance report Filing of forms Divesture of assets: Independent agency – PCS firm

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COMPANY SECRETARYCOMPANY SECRETARY

i. Act as Advisors, Consultants

ii. Audit of various agreements

iii. Compliance certificate

iv. Training programmes

v. to oversee modification

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PENALTY UNDER COMPETITION PENALTY UNDER COMPETITION ACT, 2002ACT, 2002

Penalty of Rs.12,474 crore has been imposed on 351 companies – Mr Arun Jaitly in Lok Sabha on 27th February 2015

Period: May 2009 to January 2015.

Average: Rs.35 Cr

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COMPETITION COMPLIANCE PROGRAMME

‘Contraventions can be avoided’

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THANK YOU ALL