Name: Jani Radhika A. Roll no: 19 M Name: Jani Radhika A. Roll no: 19 M.com sem-2 Subject: Legal aspects of corporate business

The definition of competition given by World Bank,1999: “A situation in a market in which firms or sellers are independently strive for the buyers’ patronage in order to achieve a particular business objective.”

In 1999, Government of India appointed a committee on “Competition Policy and Law” under the Chairmanship of Sri S.V.S. Raghvan. In the year 2000, this committee submitted its report. Accordingly, the competition Act, 2002 was framed and passed on the basis of recommendation of this committee.

The Competition Act, 2002 was enacted by the Parliament of India. It replaced the The Monopolies and Restrictive Trade Practices Act, 1969. Date assented to: 13 January 2003 Date commenced: 31 March 2003 Introduced by: Arun Jaitley This act extends to whole of India except the State of Jammu and Kashmir.

It is a tool to implement and enforce competition policy and to prevent and punish anti-competitive business practices by firms and unnecessary Government interference in the market. Competition laws is equally applicable on written as well as oral agreement, arrangements between the enterprises or persons.

Objectives of competition act,2002 To establish a commission,protect the interest of the consumers and ensure freedom of trade in markets in India. To prohibit the agreements or practices that restricts free trading and also the competition between two business entities, To ban the abusive situation of the market monopoly, To provide the opportunity to the entrepreneur for the competition in the market, To have the international support and enforcement network across the world, To prevent from anti-competition practices and to promote a fair and healthy competition in the market.

Features of competition act Anti-Competitive Agreements Enterprises, persons or associations of enterprises or persons, including cartels, shall not enter into agreements in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which cause or are likely to cause an "appreciable adverse impact" on competition in India. Such agreements would consequently be considered void. Conti..

The following factors are considered by the commission for determining whether the agreement has an appreciable adverse impact on competition (section 19)- Creation of barriers to new entrants in the market. Driving existing competitors out of the market. Foreclosure of competition by hindering entry into the market. Accrual of benefits to consumers. Improvements in production or distribution of goods or provision of services. Promotion of technical, scientific and economic developments by means of production or distribution of goods or provision of services.

Anti-competitive agreements are further classified into Horizontal agreements and Vertical agreements. HORIZONTAL AGREEMENTS- Horizontal agreements are arrangements between enterprises at the same stage of production. Section 3(3) of the Act provides that such agreements includes cartels, engaged in identical or similar trade of goods or provision of services.

VERTICAL AGREEMENTS- Vertical agreements are those agreements which are entered into between two or more enterprises operating at different levels of production. For instance, between suppliers and dealers.

2. Abuse of dominant position Section 4 of the Act enjoins, "no enterprise shall abuse its dominant position". Dominant position is the position of strength enjoyed by an enterprise in the relevant market, which enables it to operate independently of competitive forces prevailing market, or affect it’s competitors or consumers or the relevant market in it’s favour.

There shall be an abuse of dominant position if an enterprise indulges into the below mentioned activities: Directly or indirectly imposing discriminatory conditions in the purchase or sale of goods or service, or setting prices in the purchase or sale (including predatory pricing) of goods or services. Limiting or restricting the production of goods or provision of services or market therefore; or limiting technical or scientific development relating to goods or services to the prejudice of customers.

cnti.. Indulging in practice or practices resulting in the denial of market access. Making conclusion of contracts subject to acceptance by other parties of supplementary obligations, which has no connection with the subject of such contract. Utilization of the dominant position in one relevant market to enter into, or protect, another relevant market.

3. Regulation of combinations The Act is designed to regulate the operation and activities of "combinations", a term, which contemplates acquisition, mergers or amalgamations. Combination that exceeds the threshold limits specified in the Act in terms of assets or turnover, which causes or is likely to cause an appreciable adverse impact on competition within the relevant market in India, can be scrutinized by the Commission.

Threshold limits that would invite the scrutiny are specified below: For acquisition: Combined assets of the firm more than Rs 3,000 crore (these limits are US $ 500 millions in case one of the firms is situated outside India). The limits are more than Rs 4,000 crore or 12,000 crore (these limits are US $ 2 billion and US $ 6 billion) in case acquirer is a group in India or outside India respectively.

For mergers: Assets of the merged/amalgamated entity more than Rs 1,000 crore or turnover more than Rs 3,000 crore (these limits are US $ 500 millions and US $ 1,500 millions in case one of the firms is situated outside India). These limits are more than Rs 4,000 crore or Rs 12,000 crore (these US $ 2 billions and US $ 6 billions) in case merged/amalgamated entity belongs to a group in India or outside India respectively.

COMPETITION COMMISSION OF INDIA Competition Commission of India is a body corporate and independent entity possessing a common seal with the power to enter into contracts and to sue in its name. It is to consist of a chairperson, who is to be assisted by a minimum of two, and a maximum of six, other members.

It is the duty of the Commission to eliminate practices having adverse effect 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.

Commission has the power to inquire into unfair agreements or abuse of dominant position or combinations taking place outside India but having adverse effect on competition in India, if any of the circumstances exists: An agreement has been executed outside India Any contracting party resides outside India Any enterprise abusing dominant position is outside India A combination has been established outside India A party to a combination is located abroad. Any other matter or practice or action arising out of such agreement or dominant position or combination is outside India.

To deal with cross border issues, Commission is empowered to enter into any Memorandum of Understanding or arrangement with any foreign agency of any foreign country with the prior approval of Central Government.

Competition Act is not applicable in the following cases: 1. Public Financial Institutions. 2. Foreign Institutional Investors (FIIs). 3. Banks. 4. Venture capital Funds (VCFs). 5. Agreements related to intellectual property rights (IPRs) such as trademarks, patents, copyrights etc. 6. Central Government has the authority to exempt any class of enterprises from the provisions of Act in the common interest of national security or public interest.