Competition Advocacy

DISCLAIMER

This quick guide is published as part of the Competition Advocacy and Awareness programme of the Competition Commission of India (the Commission). Its contents should, in no way, be treated as official views of the Commission. Readers are advised to carefully study the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007 and the Competition (Amendment) Act, 2009, and seek legal advice, wherever necessary.

2 COMPETITION ACT 2002 : FREQUENTLY ASKED QUESTIONS

FREQUENTLY ASKED QUESTIONS Q.1 WHAT IS COMPETITION IN THE MARKET?

In common parlance, competition in themarketmeans sellers striving independentlyforbuyers’patronagetomaximizeprofit (orotherbusinessobjectives).

Abuyerprefers tobuyaproduct at aprice thatmaximizeshis benefitswhereasthesellerpreferstoselltheproductataprice thatmaximizeshisprofit.

Q.2 WHY DO WE NEED COMPETITION IN THE MARKET?

Competition isnowuniversallyacknowledgedasthebestmeansof ensuring that consumers have access to the broadest range of servicesat themost competitiveprices.Producerswill havemaximumincentive to innovate, reduce their costsandmeet consumerdemand. Competitionthuspromotesallocativeandproductiveefficiency.Butallthisrequireshealthymarketconditionsandgovernmentsacrosstheglobeare increasinglytryingtoremovemarketimperfectionsthroughappropriateregulationstopromotecompetition.

Q.3 WHAT IS MEANT BY UNFAIR COMPETITION?

Unfaircompetitionmeansadoptionofpracticessuchascollusivepricefixing,deliberatereductioninoutputinordertoincreaseprices,creationofbarrierstoentry,allocationofmarkets,tie-insales,predatorypricing,discriminatorypricing,etc.

Q.4 WHAT CONSTITUTES COMPETITION LAW AND POLICY?

CompetitionLawandpolicyisdefinedasthoseGovernmentmeasuresthataffectthebehaviourofenterprisesandstructureoftheindustrywithaviewtopromoteefficiencyandmaximizewelfare.

TherearetwoelementsofsuchGovernmentmeasures:-

COMPETITION ACT 2002 : FREQUENTLY ASKED QUESTIONS 3

Competition Policy: Set of policies, such as liberalized trade policy, relaxed FDI policy, de-regulation, etc., that enhances competitioninthemarkets.

Competition Law: To prevent anti-competitive practices with minimalintervention.

Q.5 WHAT ARE THE OBJECTIVES OF THE COMPETITION ACT?

ThePreamblestatesthatthisisanActtoestablishaCommissionto prevent anti- competitive practices, promote and sustain competition,protectthe interestsoftheconsumersandensurefreedomoftrade inmarketsinIndia.

Q.6 HOW WOULD THE OBJECTIVES OF THE ACT BE ACHIEVED?

The objectives of the Act are sought to be achieved through the instrumentality of the Competition Commission of India (CCI) whichhasbeenestablishedbytheCentralGovernmentwitheffectfrom14th October2003.

Q.7 WHAT ARE THE FUNCTIONS OF CCI?

CCI shall prohibit anti-competitive agreements and abuse of dominance,andalsoregulatecombinations(mergersoramalgamationsor acquisitions)throughaprocessofinquiry/investigation. It shall give opinion on competition issues on a reference receivedfrom an authority established under any law (statutory authority) / CentralGovernment/aStateGovernment. CCI is also mandated to undertake competition advocacy, create publicawarenessandimparttrainingoncompetitionissues.

Q.8 WHAT IS AN “AGREEMENT” UNDER THE ACT?

An“agreement”includesanyarrangementorunderstandingorcon-certedactionenteredintobetweenparties.Itneednotbeinwritingorformalorintendedtobeenforceableinlaw.


Q.9 WHAT IS AN ANTI-COMPETITIVE AGREEMENT?

Ananti-competitiveagreement isanagreementhavingappreciable adverseeffectoncompetition.Anti-competitiveagreementsinclude,butarenotlimitedto:- agreementtolimitproductionand/orsupply; agreementtoallocatemarkets; agreementtofixprice; bidriggingorcollusivebidding; conditionalpurchase/sale(tie-inarrangement); exclusivesupply/distributionarrangement; resalepricemaintenance;and refusaltodeal.

Q.10 WHAT CONSTITUTES ABUSE OF DOMINANCE?

Dominancereferstoapositionofstrengthwhichenablesanenterprisetooperateindependentlyofcompetitiveforcesortoaffectitscompeti-torsorconsumersorthemarketinitsfavour.Abuseofdominantpositionimpedesfaircompetitionbetweenfirms,exploitsconsumersandmakesitdifficultfortheotherplayerstocompetewiththedominantundertak-ingonmerit.Abuseofdominantpositionincludes: imposingunfairconditionsorprice, predatorypricing, limitingproduction/marketortechnicaldevelopment, creatingbarrierstoentry, applyingdissimilarconditionstosimilartransactions, denyingmarketaccess,and using dominant position in one market to gain advantages in anothermarket.

Q.11 WHEN THE COMMISSION MAY INITIATE INQUIRY INTO ANTI- COMPETITIVE AGREEMENTS/ ABUSE OF DOMINANCE?

On its own on the basis of information and knowledge in its possession,or


Onreceiptofaninformation,or On receipt of a reference from the Central Government or a StateGovernmentorastatutoryauthority.

Q.12 WHO CAN PROVIDE INFORMATION?

Anyperson,consumer,consumerassociationortradeassociationcanprovide informationrelatingtoanti-competitiveagreementsandabuseofdominantposition.

A person includes an individual,Hinduundivided family (HUF), company,firm,associationofpersons(AOP),bodyofindividuals (BOI), statutory corporation, cooperative society, artificial juridical person, local authority andbody incorporatedoutside India.

Aconsumerisapersonwhobuysproducts(goodsandservices) forpersonaluseorforotherpurposes.

Intermediatecustomerscanalsoprovideinformation.

Q.13 WHO CAN MAKE A REFERENCE FOR AN INQUIRY?

The Central Government or a State Government or an authority establishedunderanylawmaymakeareferenceforaninquiry.

Q.14 CAN THE COMMISSION INITIATE INQUIRY ON ITS OWN?

Yes, theCommissioncan initiate inquiryon itsownon thebasisofinformationorknowledgeinitspossession.

Q.15 HOW WILL THE COMMISSION PROCEED WITH AN INQUIRY?

Onitsown,oronreceiptofinformationorreference,iftheCommis-sionisoftheopinionthatthereisaprimafaciecase,itshalldirecttheDirectorGeneral,appointedundertheAct,toinvestigatethematterandreporthisfindingstotheCommission.


Q.16 WHAT WILL THE COMMISSION DO AFTER INVESTIGATION?

AfterreceiptoftheinvestigationreportfromtheDirectorGeneral TheCommissionmayforwardittotheconcernedparties. Iftheinvestigationisonareferencefromastatutoryauthority, the forwarding of report to the concerned authority is mandatory. If the reportof theDGdoesnotfindany contraventionof the Act, theCommission shall seekobjections from the concerned parties. Afterconsideringtheobjectionsreceived,ifany,theCommission mayacceptthereportoftheDG,orrequirefurtherinvestigation tobemadebytheDGormakeinquiriesitself. In conclusion of the above broad processes, the Commission shall determine whether it is a case of anti-competitive agreementorabuseofdominantpositionandafterhearingthe concernedpartiesandpassappropriateorders.

Q.17 WHAT ORDERS THE COMMISSION CAN PASS IN CASE OF ANTI- COMPETITIVE AGREEMENTS AND ABUSE OF DOMINANT POSITION?

During the courseof inquiry, theCommission canpass interim orderrestrainingaparty fromcontinuingwithanticompetitive agreementorabuseofdominantposition. TheCommissioncanimposeapenaltyofnotmorethan10%of theaverage turnover for the last3precedingfinancial yearsof theenterprise. In caseofa cartel, theCommissioncan impose oneachmemberofthecartel,apenaltyofupto3timesitsprof it foreachyearofthecontinuanceofsuchagreementorupto 10% of its turnover for each year of continuance of such agreement,whicheverishigher. After the inquiry, the Commission may direct a delinquent enterprise to discontinue and not to re-enter anti-competitive agreementorabuseitsdominantposition.TheCommissionmay alsodirectmodificationofsuchagreement. The Commission may direct division of enterprise in case it enjoyingdominantpositiontoensurethatsuchenterprisedoes notabuseitsdominantposition.


Q.18 WHAT IS A COMBINATION UNDER THE ACT?

VideNotificationdated4thMarch2011,theCentralGovernmenthas designated1stdayofJune2011asthedateonwhichprovisionsrelatingtoCombinationsshallcomeintoforce.

Broadly, combination includes acquisition of control, shares, votingrights or assets, acquisition of control by a person over an enterprisewheresuchpersonhascontroloveranotherenterpriseengagedincom-petingbusinesses,andmergersandamalgamationsbetweenoramongst enterpriseswhere these exceed the thresholds specified in the Act intermsofassetsorturnover.IfacombinationcausesorislikelytocauseanappreciableadverseeffectoncompetitionwithintherelevantmarketinIndia,itisprohibitedandcanbescrutinizedbytheCommission.

Q.19 WHAT ARE THE THRESHOLDS IN CASE OF COMBINATIONS?

The current thresholds for the combined assets/turnover of the combiningpartiesareasfollows:

Individual: Either the combined assets of the enterpris-es are more than 1,500 crores in India or the combined turnover of the enterprise is more than 4,500 crores in India. In case either or both of the enterprises have assets/turnover outside India also, then the combined assets of the enterprisesarethanUS$750millions,includingatleast 750 croresinIndia,orturnoverismorethanUS$2250millions,includingatleast 2,250croresinIndia.

Group: The group to which the enterprise whose control,shares, assets or voting rights are being acquired would belongaftertheacquisitionorthegrouptowhichtheenterprise remaining the merger or amalgamation would belong has eitherassetsofmorethan 6000croresinIndiaorturnovermorethan 18000croresinIndia.Wherethegrouphaspresencein Indiaaswell asoutside India then thegrouphas assetsmorethanUS$3billionincludingatleast 750croresinIndiaorturn-overmorethanUS$9billionincludingatleast 2250croresinIndia.

ThetermGrouphasbeenexplainedintheAct.Twoenterprises


belongtoa“Group”ifoneisinpositiontoexercisesatleast26per cent voting rightsorappointat least 50per cent ofthe directors or controls themanagementoraffairs in theother.VidenotificationS.O.481(E)dated4thMarch,2011,the governmenthasexempted“Group”exercisinglessthanfiftypercentofvoting rights inotherenterprise fromtheprovisionsofsection5oftheActforaperiodoffiveyears.

Inexerciseofthepowersconferredbyclause(a)ofsection54oftheCompetitionAct,2002(12of2003),theCentralGovernment,inpublicinterest,herebyexemptsanenterprise,whosecontrol,shares,votingrightsorassetsarebeingacquiredhaseitheras-setsofthevalueofnotmorethan 250croresinIndiaorturn-overofnotmorethan 750croresinIndiafromtheprovisionsofsection5ofthesaidActforaperiodoffiveyears.

In India

APPLICABLE TO ASSETS TURNOVER

Individual 1,500 cr. 4,500 cr.

Group 6,000 cr. 18,000 cr.

In India and outside

ASSETS TURNOVER

Total

Minimum Indian

Component Total

Minimum Indian Component out of

Total

Individual parties $750 m 750 cr. $2,250 m 2,250 cr

Group $3 bn. 750 cr. 9 bn. 2,250 cr.

1 Crore = 10 million

Theabovethresholdsarepresentedintheformofatablebelow:

Q.20 DOES A FIRM PROPOSING TO COMBINE HAVE TO NOTIFY THE COMMISSION?

Subject to prescribed thresholds, a firm proposing to enter into acombination,shallnotifytheCommissioninthespecifiedformdisclosingthedetailsoftheproposedcombinationwithin30daysoftheapprovalofsuchproposalbytheboardofdirectorsorexecutionofanyagreementorotherdocument.

Q.21 IS THERE COMPULSORY WAIT PERIOD FOR A COMBINATION TO TAKE EFFECT?


Yes.Theproposedcombinationcannottakeeffectforaperiodof210daysfromthedateitnotifiestheCommissionortilltheCommissionpass-esanorder,whicheverisearlier.IftheCommissiondoesnotpassanorder duringthesaidperiodof210daysthecombinationshallbedeemedtohavebeenapproved.

Q.22 WHAT IS THE PROCEDURE FOR INVESTIGATION OF COMBINA-TIONS?

As per the Combination Regulations, the Commission shall formitsprimafacieopinionastowhetherthecombinationis likelytocauseor has caused appreciable adverse effect on competition within the relevantmarketinIndiawithin30daysfromthereceiptofthenotice.Ifthe Commissionisprimafacieoftheopinionthatacombinationhascausedor is likely tocauseadverseeffectoncompetition in Indianmarkets, itshallissueanoticetoshowcausetothepartiesastowhyinvestigationin respect of such combination should not be conducted. On receiptof the response, if Commission is of the prima facie opinion that the combination has or is likely to have appreciable adverse effect on competition, the Commission shall deal with the notice as per the provisionsoftheAct.

Q.23 WHAT ORDERS THE COMMISSION CAN PASS IN CASE OF A COM-BINATION? Itshallapprovethecombinationifnoappreciableadverseeffect oncompetitionisfound. Itshalldisapproveofcombinationincaseofappreciableadverse effectoncompetition. Itmayproposesuitablemodifications.

Q.24 IS THERE ANY LENIENCY ACCORDED TO ANYONE WHO PROVIDES INFORMATION ON ANY ANTI-COMPETITIVE AGREEMENT?

Section46of theAct empowers theCommission to grant leniencybylevyingalesserpenaltyonamemberofthecartelwhoprovidesfull,trueandvitalinformationregardingthecartel.Theschemeisdesignedtoinducepartiestoanyanti-competitivebehaviourtobreakrankstohelpindetectionandinvestigationofcartels.

Q.25 WHO CAN REPRESENT THE PARTIES BEFORE THE COMMISSION?


A personor an enterprisemayeither appear in personor throughany of its officers or authorize one ormore chartered accountants or company secretaries or cost accountants or legal practitioners to representhisoritscasebeforetheCommission.

Q.26 WHO CAN MAKE A REFERENCE ON A COMPETITION POLICY?

TheCentralGovernmentoraStateGovernment,informulatingapol-icyrelatingtocompetitionorinanyothermatter,mayseektheopinionoftheCommissionbymakingareferencetoit.

Q.27 WHO CAN MAKE A REFERENCE ON A COMPETITION ISSUE?

AnystatutoryauthoritycanmakeareferencetotheCommissionfor opinion on a competition issue thatmay arise during the course of a proceedingbeforeiteitheratthebehestofapartytotheproceedingoronitsownmotion.

Q.28 CAN THE COMPETITION COMMISSION MAKE REFERENCE TO A STATUTORY AUTHORITY?

The Commission canmake a reference to a statutory authority foropiniononarelevantissuethatmayariseduringthecourseofproceed-ingbeforeit,eitheratthebehestofapartytotheproceedingoronitsownmotion.

Q.29 WHAT ARE THE PROVISIONS OF APPEAL AGAINST ANY ORDER OF THE COMPETITION COMMISSION?

The Central Government has notified a Competition Appellate Tribunal(CAT)tohearanddisposeofappealsagainstanydirectionissuedor decision made or order passed by the Commission under specified sectionsoftheAct,suchasordersrelatingtonotificationofcombination,inquirybytheCommissionandpenalties.

Anappealhastobefiledwithin60daysofreceiptoftheorder/direc-tion/decisionoftheCommission.

Apersonaggrievedwiththedirection,decisionororderoftheCATcanappeal to theSupremeCourtof Indiawithin60days fromthedateofcommunicationofthedirection,decisionororder.

Q.30 HOW TO FILE INFORMATION?

IndicateyourcompletepostaladdresswithPINcode,telephone


& fax number and email address. Mention legal name and address(es)oftheenterprise(s)allegedtohavecontravenedthe provisionsoftheAct.

Theinformationshouldbedulysignedbytheauthorisedperson in the formofstatementof factsandshouldcontaindetailsof theallegedcontraventionsoftheAct.Itshouldbeaccompanied bysupportingdocuments,affidavitsandevidence.

Any information or reference or responses to the Commission shouldbesenttotheSecretary,inpersonorbyregisteredpost or courier service or facsimile transmission addressed to the Secretaryortotheauthorizedofficer.

The information you file with the Commission should be accompanied by proof of having paid the fee by tendering demand draft or pay order or banker’s cheque, payable in favourofCompetitionCommissionofIndia(CompetitionFund), New Delhi or through Electronic Clearance Service (ECS) by direct remittance to the Competition Commission of India (Competition Fund), Account No. 1988002100187687 with “PunjabNationalBank,BhikajiCamaPlace,NewDelhi-110066.

For complete details of the prescribed procedure for filing information, please refer to the booklet titled “How to File Information?” or refer the Competition Commission of India (General) Regulations, 2009 which is also available on the Commission’swebsite.

Q.31 WHAT ARE THE PRESCRIBED FEES?

Theprescribedfeesareasunder:

a) Rupees 5000/- (Five thousand only) in case of individual, or Hindu undivided family (HUF), or Non Government Organisation(NGO),orConsumerAssociation,orCo-operative Society,orTrust,dulyregisteredundertherespectiveActs,

b) 20,000/-( twenty thousand only) in case of firms, companies havingturnover intheprecedingyearuptoRupeesonecrores, and

c) 50,000/-(fiftythousandonly)incasenotcoveredunderclause (a)or(b)above.

COMPETITION COMMISSION OF INDIASh. Ashok Chawla

Chairperson,E-mail: [email protected]

Tel No. 91-11-23704647Fax No. 23704649

Sh. H.C. GuptaMember,

E-mail: [email protected] No. 91-11-23704630

Fax No. 23704631

Dr. Geeta GouriMember,


Fax No. 23704635

Sh. P.K. SinghAdviser (Law)


Sh. Praveen Kumar PurwarAdviser (FA),

Email: [email protected]. No, : 91-11-23752380

Sh G R WadhwaAdviser (FA),

Email: [email protected]. No. 91-11-23752382

Sh. Sanjay BahadurAdviser (Eco),

E-mail: [email protected] Tel No. 91-11-23704681

Dr. Seema GaurAdviser (Eco)

E-mail: [email protected] Tel. No: 91-11-23704645

Sh. R.N. SahayAdviser (Eco)

E-mail: [email protected] Tel. No. 91-11-23704653

Sh. A. K. ChauhanDirector-General,

Email: [email protected]. No. : 91-11-26172895, 26701671

Fax No. : 91-11-26107428

Sh. S.L. BunkerSecretary,

E-mail: [email protected]. No. : 91-11-23704651

Fax No. : 23704652

Sh. Anurag Goel Member,


Fax No. 23704642

Sh. S.N DhingraMember,

E-mail: [email protected]. No. : 91-11-23704638Fax No. : 91-11-23704639

Sh. M.L. TayalMember,

E-mail: [email protected] Tel. No. : 91-11-23704643Fax No. : 91-11-23704644

Sh. R. PrasadMember,


Fax No. 23704632

TheCompetitionCommissionofIndia(ProcedureforEngagementofExpertsand Professionals)Regulations,2009;(No.1of2009) TheCompetitionCommissionofIndia(General)Regulations,2009; (No.2of2009) TheCompetitionCommissionofIndia(MeetingforTransactionofBusiness) Regulations,2009;(No.3of2009) TheCompetitionCommissionofIndia(LesserPenalty)Regulations,2009; (No.4of2009) TheCompetitionCommissionofIndia(DeterminationofCostofProduction) Regulations,2009;(No.5of2009) TheCompetitionCommissionofIndia(General)AmendmentRegulations,2009; (No.6of2009) The Competition Commission of India (Manner of Recovery of Monitory Penalty) Regulations,2011 Competition Commission of. India (Procedure in regard to the Transaction of business relatingtocombination)Regulation2011 Above regulations are available on the website of the Commission : www.cci.gov.in

REGULATIONSNOTIFIEDBYCOMPETITIONCOMMISSIONOFINDIA

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Competition Advocacy