The Competition Act, 2002 – UGC NET Commerce Notes

Stuti Mishra

5 months ago

The Competition Act 2002 is a landmark legislation in India designed to promote fair competition, prevent anti-competitive practices, and protect consumer interests. Replacing the Monopolies and Restrictive Trade Practices Act (MRTP Act, 1969), the Act aims to regulate anti-competitive agreements, abuse of dominant position, and combinations (mergers and acquisitions) that could adversely affect market competition. The Competition Act 2002 established the Competition Commission of India (CCI) to enforce its provisions and ensure a competitive market environment. Competition Act 2002 is a key topic for UGC NET Commerce students, as it plays a crucial role in understanding the legal framework governing business practices and market regulation in India.

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Key Features of Competition Commission of India (CCI)

Competition Commission of India (CCI) is a statutory body and was established in March 2009 under the Competition Act, 2002. Some of the key features of Competition Commission of India (CCI) are as follows:

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Independent Authority

The CCI is an autonomous body responsible for enforcing the Competition Act, 2002.

Objective of Promoting Fair Competition

CCI aims to promote and sustain competition in the Indian market, preventing anti-competitive practices that harm consumers or the economy.

Regulation of Anti-Competitive Practices

CCI investigates and addresses anti-competitive agreements, abuse of dominant position, and combinations (mergers and acquisitions) that could harm competition.

Advisory Role

CCI advises the Central Government on policy issues related to competition and market regulation.

Investigation and Enforcement

It has the authority to investigate complaints of anti-competitive behavior and impose penalties or sanctions on firms that violate the law.

Power to Approve Mergers and Acquisitions

CCI reviews and approves mergers and acquisitions that could potentially harm competition in the market.

Consumer Welfare Focus

CCI works to safeguard consumer interests by ensuring that markets remain competitive and free from unfair trade practices.

Competition Advocacy

CCI promotes awareness and understanding of competition laws and practices among businesses, consumers, and government bodies.

Formation and Composition

The Commission is composed of a Chairperson and other members (including experts from various fields) who are appointed by the government.

Legal Powers

CCI has the legal authority to initiate investigations, summon parties for hearings, impose fines, and take corrective actions in cases of violations.

Public Advocacy and Education

The CCI conducts public hearings, seminars, and educational campaigns to promote competition law compliance and raise awareness.

Structure of Competition Commission of India (CCI)

1. Chairperson

The Chairperson is the head of the CCI and plays a key role in decision-making.
He/she is appointed by the Government of India for a fixed term.

2. Members

The CCI consists of 6 other members, who are experts in various fields such as economics, law, business, and public administration.
These members assist the Chairperson in making decisions and providing expert opinions.

3. Secretariat

The Secretariat provides administrative and technical support to the Commission.
It handles the day-to-day functioning of the CCI, including communication, record-keeping, and managing case files.

4. Director General (DG)

The Director General (DG) is an independent authority appointed to assist in investigations.
The DG conducts inquiries into anti-competitive practices and submits reports to the CCI based on the investigation outcomes.

5. Regional Offices

The CCI has regional offices across India to monitor and address competition-related issues in various regions, ensuring nationwide coverage and effective enforcement of the Competition Act, 2002.

6. Commissions’ Divisions

The CCI is divided into several functional divisions, such as the Mergers and Acquisitions Division, the Anti-Competitive Practices Division, and the Advocacy Division.

7. Technical and Legal Experts

The CCI also employs technical and legal experts who assist in the analysis of complex economic and legal issues, offering expert advice on cases brought before the Commission.

8. Appellate Tribunal

In case of disputes or appeals against the CCI’s decisions, the Competition Appellate Tribunal (COMPAT) (now merged with NCLAT) serves as the forum for redress, providing an opportunity for aggrieved parties to challenge CCI rulings.

Procedure for Decision-Making

Decisions within the CCI are made through a collegial process where the Chairperson and members deliberate on cases brought before them.
The final decision is passed based on a majority opinion.

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Challenges of Competition Act 2002

Delayed Case Resolution: Prolonged investigation and decision-making timelines.
Complex Cases: Handling intricate legal and economic matters.
Low Awareness: Limited understanding of competition laws among businesses.
External Pressures: Political and market influence affecting independence.
Resource Constraints: Insufficient manpower to manage growing cases.
Market Evolution: Difficulty in adapting to fast-changing industries like tech.
Enforcement Issues: Challenges in imposing penalties on powerful entities.
Cross-Border Cooperation: Difficulties in international coordination.
Public Awareness: Limited knowledge of CCI’s role and functions.
New Business Models: Struggles to address emerging anti-competitive practices.

Key Functions and Role of CCI

Prevention of Anti-competitive Agreements: CCI investigates and takes action against cartels, price-fixing, bid-rigging, and collusion between companies that distort market competition.
Abuse of Dominance: CCI also addresses cases where a company misuses its dominant position to harm competition or exploit consumers. It ensures companies do not engage in predatory pricing, unfair trade practices, or other exploitative behavior.
Regulation of Mergers and Acquisitions: The commission reviews and regulates mergers, acquisitions, and combinations that could potentially reduce or distort competition in the market.

Legal Framework of Competition Act 2002

The Competition Act 2002 consists of three major provisions:

Anti-competitive Agreements (Section 3): Prohibits agreements that distort competition, such as price-fixing or restrictive trade practices.
Abuse of Dominant Position (Section 4): Deals with the abuse of market dominance to prevent unfair trade practices.
Regulation of Combinations (Section 5 and 6): Provides rules for mergers and acquisitions that affect market competition.

Competition Commission of India (CCI) Conclusion

The Competition Commission of India (CCI) plays a pivotal role in enforcing The Competition Act 2002, a key regulation under the UGC NET Commerce syllabus, aimed at promoting fair competition in India’s markets. The act addresses anti-competitive agreements, abuse of dominant position, and regulates mergers and acquisitions that could potentially harm competition. By investigating practices such as price-fixing, collusion, and monopolistic behaviors, the Competition Commission of India ensures a level playing field for businesses, fostering an environment where consumers benefit from fair pricing and choices. Understanding the role of CCI is essential for UGC NET Commerce exam preparation, particularly for topics related to business laws and market regulation.

UGC NET Commerce MCQ based on Competition Act 2002

Q1. Which of the following is the primary objective of the Competition Act, 2002?
A) To regulate monopolies and restrictive trade practices
B) To promote fair competition in markets
C) To impose taxes on anti-competitive practices
D) To manage foreign investments in the market

Answer: B) To promote fair competition in markets

Q2. What is the maximum penalty that can be imposed by the Competition Commission of India (CCI) for anti-competitive practices under the Competition Act, 2002?
A) 5% of the total turnover of the company
B) 10% of the total turnover of the company
C) 15% of the total turnover of the company
D) 25% of the total turnover of the company

Answer: B) 10% of the total turnover of the company

Q3. Under the Competition Act, 2002, which of the following is not considered an ‘anti-competitive practice’?
A) Bid-rigging
B) Predatory pricing
C) Fair price competition
D) Exclusive supply agreements

Answer: C) Fair price competition