The Competition Act, 2002

  • Blog|Competition Law|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 25 June, 2021
The Competition Act 2002 was provisioned to provide a healthy economic development environment in the Indian market. It extends to set up of a Commission to prevent any adverse effects or ill practices on the competition and hence intends to promote and sustain competition in the market to protect the interests of consumers and ensure freedom to trade by various participants in the market in India. 
It extends to whole of country except for the State of Jammu and Kashmir.

Prohibition of certain agreements under The Competition Act 2002:

No enterprise or association under this Act shall enter any sort of agreement for production, supply, distribution, storage, acquisition or control of goods or services which may cause any sort of appreciable adverse effect on the competition in Indian markets. Any such an agreement which is entered in contravention of provisions as contained in sub section (1) shall remain void.
Any agreement which shall directly or indirectly determine the purchase or sale prices of goods and/or services or limits or controls the production , supply, markets, technical development, investment or provisions of such services or good, or shares the market or source of production by way of allocation of geographical area of market or type of goods or services or number of customers in the market or directly and/or indirectly results in bid rigging or collusive bidding, shall be presumed to have adverse effect on the competition and shall stand void under The Competition Act 2002.
Here the term bid rigging means any sort of agreement between the business enterprises or any business entity who are engaged in identical production or trading of goods or provisions of service and which may affect the elimination or reducing the competition for bids or adversely affect the manipulation of the process of bidding.

Any such agreement amongst the person or business entity at any level of market in respect to production, supply, distribution, storage, sale or trade of goods or services including tie-in arrangements, exclusive supply agreements, exclusive distribution agreements, refusal to deal and resale price maintenance shall be considered in contravention of sub section (1) of The Competition Act 2002 and is considered to have appreciable adverse effect on the competition in markets in India and shall be considered void under The Competition Act 2002.

Prohibition of Abuse of Dominant Position:

Under the provisions of The Competition Act 2002, no enterprise shall be permitted to abuse its dominant position. By this we mean that if an enterprise is directly or indirectly imposed of any unfair or discriminatory means to condition in purchase or sale of any sort of goods or services or in prices in purchase or sale of any sort of goods and/or services or by any means limits or restricts the production of goods or services and the market thereof and/or limits or restricts any technical or scientific developments relating to the goods or services to the prejudice towards the consumers. Or indulges in any means o practices which may result in denial of market access or makes any conclusion of contracts which are subject to acceptance to any other parties of any supplementary obligations in their nature or per its commercial usage or in connection to the subject of such contracts. Or used the dominant position in any other relevant market toenter it, then it will have considered the abuse of its dominant position to alter the competition.

Regulations of Combinations:

Under The Competition Act 2002, the regulation of combinations means the acquisition of one or more enterprises in the market by one or more person through a merger or amalgamation of enterprises where —

  • The parties to acquisition, whose control, shares, voting rights or assets have been acquired or being acquired jointly, be it either in India or outside India.
  • The Group to which the enterprise whose control, shares, assets or voting rights have been acquired or being acquired after the acquisition is either in India (with assets of value more than four thousand crores or turnover of more than twelve thousand crores), or outside India (with assets of value more than two billion US Dollars or of turnover more than six billion US dollars).
  •  Acquisition of control by a person over an enterprise when such person already have direct or indirect control of another such enterprise which is engaged in the production, distribution, trading of a similar or identical or substitutable goods or services, the enterprise over which the control has been acquired along with the enterprise which is already in control of the acquirer, be it in India (of assets more than one thousand crore or turnover more than three thousand crores), or outside India (of value more than  five hundred million US dollars or turnover more than fifteen million US dollars).
No person shall enter such a combination which may cause or is likely to cause appreciable adverse effect on the competition within the relevant market in India and all such combination shall be deemed void under the provisions of the Competition Act 2002.
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