Competition Law

Explanation to Section 3 of the Competition Act, 2002 defines the term “Exclusive Supply Agreement”/ “Exclusive Distribution Agreement”.

“Exclusive Supply Agreement” includes any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person.

“Exclusive Dealing Agreement”: In view of the Amendment Act 2023, the exclusive supply agreements are renamed as Exclusive Dealing Agreement which includes any agreement restricting in any manner the purchaser or the seller, as the case may be, in the course of his trade from acquiring or selling or otherwise dealing in any goods or services other than those of the seller or the purchaser or any other person, as the case may be; “Exclusive Distribution Agreement” includes any agreement to limit, restrict or withhold the output or supply of any goods or services or allocate any area or market for the disposal or sale of the goods or service.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(a) (Syllabus 2022).

Hon’ble Supreme Court in the case of CCI v. SAIL (2010) 10 SCC 744 observed that the Director General (DG) appointed under Section 16(1) of the Act is a specialized investigating wing of the Commission. DG being appointed by the Central Government to assist the Commission, is one of the wings of the Commission itself to whom the investigation is directed with dual purpose;

1.to collect material and verify the information, as may be, directed by the Commission,

2.to enable the Commission to examine the report upon its submission by the DG and to pass appropriate orders after hearing the parties concerned.

Further, Section 16(1) of the Competition Act, 2002 as amended in 2023 provides that Commission may with the prior approval of the Central Government appoint a Director General for the purposes of assisting the Commission in conducting inquiry into contravention of any of the provisions of this Act and for performing such other functions as are, or may be, provided by or under this Act.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(c) (Syllabus 2022).

Section 19(1) of the Competition Act, 2002 provides that the Commission may inquire into any alleged contravention of the provisions contained in section 3(1) or section 4(1) either on its own motion or on—

(a)receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or

(b)a reference made to it by the Central Government or a State Government or a statutory authority.

It may be noted that the Commission shall not entertain an information or a reference unless it is filed within three years from the date on which the cause of action has arisen. Provided further that an information or a reference may be entertained after the period specified in the first proviso if the Commission is satisfied that there had been sufficient cause for not filing the information or the reference within such period after recording its reasons for condoning such delay.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(e) (Syllabus 2022).

According to Section 2(c) of the Competition Act, 2002, “Cartel” includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services.

The nature of a cartel is to raise price above competitive levels, resulting in injury to consumers and to the economy. For the consumers, cartelisation results in higher prices, poor quality and less or no choice for goods or/and services.

An international cartel is said to exist, when not all of the enterprises in a cartel are based in the same country or when the cartel affects markets of more than one country.

In the Competition Act, cartels meant exclusively for exports have been excluded from the provisions relating to anti- competitive agreements. This is because such cartels do not adversely affect markets in India and are hence outside the purview of the Competition Act. If there is effective competition in the market, cartels would find it difficult to be formed and sustained.

Competition Commission of India in the matter of ABC Bearing Ltd., dated June 05. 2020 held that where key Competitors in bearings market discussed amongst themselves to decide on revision of prices to be quoted to Original Equipment Manufacturers (OEMs), thereby their independence is compromised, facilitating them to quote price revisions to OEMs different than what they would have quoted independently, will amount to Cartel as defined under Section 2(c) of the Competition Act, 2002.

Competition Commission of India in the case of All India Tyre Dealers Federation Vs. Tyre Manufacturers observed that no explicit agreement is required in order to prove cartelisation, it may be proved even through the intention or conduct of parties.

So, in the light of the above case, this Act of ABC Bearing Limited amounts to Cartelisation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2(a) (Syllabus 2022).

As per Section 20(4) of the Competition Act, 2000, for the purposes of determining whether a combination would have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market, the Commission shall have due regard to all or any of the following factors, namely: -

(a)Actual and potential level of competition through imports in the market

(b)Extent of barriers to entry into the market;

(c)Level of concentration in the market;

(d)Degree of countervailing power in the market;

(e)Likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;

(f)Extent of effective competition likely to sustain in a market;

(g)Extent to which substitutes are available or are likely to be available in the market;

(h)Market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

(i)Likelihood that the combination would result in the removal of vigorous and effective competitor or competitors in the market; (j) Nature and extent of vertical integration in the market; (k) Possibility of a failing business; (l) Nature and extent of innovation; (m) Relative advantages, by way of the contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition.

(n)Whether the benefits of the combination outweigh the adverse impact of the combination, if any.

(5 Marks)

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 4(b) (Syllabus 2022).

In the case of Competition Commission of India v. Steel Authority of India (Civil Appeal No. 7779 of 2010, judgment dated September 09, 2010), looked into the ambit and scope of power vested with the Commission under Section 26(1) of the Competition Act and whether the parties, including the informant or the affected party, are entitled to notice or hearing, as a matter of right, at the preliminary stage of formulating an opinion as to the existence of the prima facie case.

With regard to notice and/or hearing at the stage of forming prima facie decision by the Commission under Section 26(1) of the Act, Supreme Court of India held that neither any statutory duty is cast on the Commission to issue notice or grant hearing, nor any party can claim, as a matter of right, notice and/or hearing at the stage of formation of opinion by the Commission, in terms of Section 26(1) of the Act that a prima facie case exists for issuance of a direction to the Director General to cause an investigation to be made into the matter.

Hence informant (JSWL) and / or the affected party (SAIL) are not entitled to receive notice or hearing as a matter of right at the preliminary stage of the prima facie case.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(d) (Syllabus 2022).

Section 26 of the Competition Act deals with procedure for Inquiry into Certain Agreements and Dominant Position of Enterprise. It states that:

(1)On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter: It may be noted that if the subject matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information.

(2)Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be.

(2A) The Commission may not inquire into agreement referred to in section 3 or conduct of an enterprise or group under section 4, if the same or substantially the same facts and issues raised in the information received under section 19 or reference from the Central Government or a State Government or a statutory authority has already been decided by the Commission in its previous order.

(3)The Director General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission.

(3A) If, after consideration of the report of the Director General referred to in sub-section (3), the Commission is of the opinion that further investigation is required, it may direct the Director General to investigate further into the matter.

(3B) The Director General shall, on receipt of direction under sub-section (3A), investigate the matter and submit a supplementary report on his findings within such period as may be specified by the Commission.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(f) (Syllabus 2022).

Section 27 of the Competition Act, 2002 envisages that the Competition Commission of India after any inquiry into agreement entered into by any enterprise or association of enterprises or person or association of persons, or an inquiry into abuse of dominant position may pass all or any of the following orders, namely, -i. Direct that such agreement or abuse of dominant position shall be discontinued and such agreement, which is in contravention of section 3 shall not be re-entered or the abuse of dominant position in contravention or Section 4 shall be discounted as the case may be. The direction to discontinue and not to recur is commonly known as "Cease & desist" order.

ii.The Commission may impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the turnover or income, as the case may be, for the last three preceding financial years, upon each of such person or enterprise which is a party to such agreement or has abused its dominant position. Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent. of its turnover or income, as the case may be, for each year of the continuance of such agreement, whichever is higher.

iii.The Commission may direct that the agreement shall stand modified to the extent and in the manner as specified in the order.

iv.The Commission may direct the enterprises concerned to comply with, such other orders and directions, including payment of cost, if any, as it deems fit.

v.To pass such order or issue such directions as it may deem fit.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 4(c) (Syllabus 2022).

Section 29 of the Competition Act, 2002 deals with procedure for investigation of Combinations. It provides that:

(1)Where the Commission is of the prima facie opinion that a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India, it shall issue a notice to show cause to the parties to combination calling upon them to respond within fifteen days of the receipt of the notice, as to why investigation in respect of such combination should not be conducted.

(1A) After receipt of the response of the parties to the combination under Sub-section (1), the Commission may call for a report from the Director General and such report shall be submitted by the Director General within such time as the Commission may direct.

(1B) The Commission shall, within thirty days of receipt of notice under sub-section (2) of Section 6, form its prima facie opinion referred to in Sub-section (1).

(2)The Commission, if it is prima facie of the opinion that the combination has, or is likely to have, an appreciable adverse effect on competition, it shall, within seven days from the date of receipt of the response of the parties to the combination, or the receipt of the report from Director General called under Sub-section (1A), whichever is later, direct the parties to the said combination to publish details of the combination within seven days of such direction, in such manner, as it thinks appropriate, for bringing the combination to the knowledge or information of the public and persons affected or likely to be affected by such combination.

(3)The Commission may invite any person or member of the public, affected or likely to be affected by the said combination, to file his written objections, if any, before the Commission within ten days from the date on which the details of the combination were published under Sub-section (2).

(4)The Commission may, within seven days from the expiry of the period specified in sub-section (3), call for such additional or other information as it may deem fit from the parties to the said combination.

(5)The additional or other information called for by the Commission shall be furnished by the parties referred to in sub-section (4) within ten days from the expiry of the period specified in Sub- section (4).

(6)After receipt of all information, the Commission shall proceed to deal with the case in accordance with the provisions contained in Section 29A or Section 31, as the case may be.

The Commission may accept appropriate modifications offered by the parties to the combination or suo-moto propose modifications, as the case may be, before forming a prima facie opinion under sub-section (1).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(a) (Syllabus 2022).

An anti-competitive agreement is an agreement between enterprises or association of enterprises or person or association of persons including cartels, having appreciable adverse effect on competition within India. Anti- competitive agreements include, but are not limited to:

 Agreement to limit production and/or supply, storage, acquisition or control of goods or provision of services;  Agreement to limit production and/or supply;  Agreement to allocate markets;  Agreement to fix price;  Bid rigging or collusive bidding;  Conditional purchase/ sale (tie-in arrangement);  Exclusive supply / distribution arrangement;  Resale price maintenance; and  Refusal to deal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(b) (Syllabus 2022).

Some of the most commonly ways in which collusive bidding or bid rigging may occur are:

•Agreements to submit identical bids

•Agreements as to who shall submit the lowest bid

•Agreements for the submission of cover bids (voluntarily inflated bids)

•Agreement not to bid against each other

•Agreement on common norms to calculate prices or terms of bids

•Agreement to squeeze out outside bidders

•Agreement designating bid winners in advance on a rotational basis, or on a geographical or customer allocation basis.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 4A(iii) (Syllabus 2022).

Section 4 strictly prohibits abuse of dominant position by any enterprise or group.

Section 4 (2)(a) of Competition Act, 2002 states that there is abuse of dominant position if an enterprise or group – directly or indirectly imposes unfair or discriminatory

(i)condition in purchase or sale of goods or services or (ii) price in purchase or sale (including predatory price) of goods or service.

Section 4 (2)(b) includes in abuse of dominant position an enterprise or group limiting or restricting (i) production of goods or provision of services or market therefore or (ii)

technical or scientific development relating to goods or services to the prejudice of consumers.

Similarly Section 4 (2)(c), (d) (e) specify three other forms of abuses namely, if any person indulges in practice or practices resulting in denial of market access in any manner, or makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by nature or according to commercial usage, have no connection with the subject of such contracts and also, if any person uses dominant position in one relevant market to enter into, or protect, other relevant market.

Dominance refers to a position of strength which enables an enterprise to operate independently of competitive forces or to affect its competitors or consumers or the market in its favour. Abuse of dominant position impedes fair competition between firms, exploits consumers and makes it difficult for the other players to compete with the dominant undertaking on merit. Abuse of dominant position includes

1.Imposing unfair conditions or price

2.Predatory pricing

3.Limiting production/ market or technical development

4.Creating barriers to entry

5.Applying dissimilar conditions on similar transactions

6.Denying market access

7.Using dominant position in one market to gain advantage in another market.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2(a) (Syllabus 2022).

Composition of Commission According to Section 8 of the Competition Act, 2002 the Competition Commission of India shall consist of a Chairperson and not less than two and not more than six other Members to be appointed by the Central Government.

The Chairperson and every other Member shall be a person of ability, integrity and standing and who has special knowledge of, and such professional experience of not less than fifteen years in, international trade, economics, business, commerce, law, finance, accountancy, management, industry, technology, public affairs or competition matters, including competition law and policy, which in the opinion of the Central Government, may be useful to the Commission.

The Chairperson and other Members shall be whole-time Members.

Term of Office of Chairperson and other Members Section 10 of the Competition Act states that the Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office and shall be eligible for re-appointment:

Provided that the Chairperson or other Members shall not hold office as such after he has attained the age of sixty-five years.

A vacancy caused by the resignation or removal of the Chairperson or any other Member under section 11 of the Act or by death or otherwise shall be filled by fresh appointment in accordance with the provisions of sections 8 and 9.

The Chairperson and every other Member shall, before entering upon his office, make and subscribe to an oath of office and of secrecy in such form, manner and before such authority, as may be prescribed.

In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson, until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes the charge of his functions.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 4(c) (Syllabus 2022).