Competition Act, 2002

The Competition Act 2002 replaced the Monopolies and Restrictive Trade Practices Act 1969 (MRTP Act), which took a control-based approach suited to the licensing era. After the 1991 liberalisation and the Raghavan Committee Report (2000), the law shifted to the promotion of competition. Duties of the CCI (Section 18): eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade carried on by other participants in markets in India. The competition provisions (Sections 3 and 4) came into force on 20 May 2009, and the combination provisions on 1 June 2011. Brahm Dutt v Union of India (2005) upheld the Act's validity and the separation of advisory and adjudicatory functions, after which the 2007 amendment settled the present structure.

• Competition Commission of India (CCI) (Section 7): a quasi-judicial body with a Chairperson and not less than two and not more than six other members. The Director General (DG) (Section 16) assists in investigations.

• Appeals: CCI orders are appealable to the National Company Law Appellate Tribunal (NCLAT) (Section 53A; the Competition Appellate Tribunal (COMPAT) was merged into NCLAT by the Finance Act 2017, from 26 May 2017), and then to the Supreme Court (Section 53T) within 60 days.

• Competition advocacy (Section 49): the Commission can give opinions and spread awareness.

• Extra-territorial reach (Section 32): the effects doctrine; the Act applies to conduct outside India having an appreciable adverse effect on competition in India.

• Sectoral regulators (Sections 21 and 21A): mutual reference between the CCI and regulators like TRAI, SEBI and CERC. CCI v Bharti Airtel (2018): the Supreme Court held that TRAI has primary jurisdiction on certain telecom matters, and the CCI should await its determination. CCI v Steel Authority of India (2010): the Section 26(1) prima facie opinion is administrative, not adjudicatory, so no hearing is required at that stage.

Section 3(1): no enterprise, association of enterprises, person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services which causes or is likely to cause an appreciable adverse effect on competition (AAEC) within India. Section 3(2): any such agreement is void.

Section 3(3) – Horizontal agreements (between enterprises at the same stage of the production chain) are presumed to have AAEC (a rebuttable presumption) if they: (a) directly or indirectly determine purchase or sale prices; (b) limit or control production, supply, markets, technical development, investment or services; (c) share markets by geography, type of goods or number of customers; or (d) amount to bid rigging or collusive bidding. A cartel (Section 2(c)) is an association of producers, sellers, distributors, traders or service providers who, by agreement among themselves, limit, control or attempt to control production, distribution, sale or price. The proviso excludes joint ventures that increase efficiency in production, supply, distribution or control.

Section 3(4) – Vertical agreements (between enterprises at different stages of the chain) are judged by the rule of reason, so AAEC must be proved. Listed examples: tie-in arrangement, exclusive supply agreement, exclusive distribution agreement, refusal to deal, resale price maintenance (RPM). The 2023 Amendment widened these provisions and added hub-and-spoke liability in Section 3(3): an enterprise not in the same line of business that participates in or facilitates a cartel can also be liable.

Section 3(5) – Exceptions: (i) the right to restrain infringement of, or impose reasonable conditions to protect, intellectual property rights (copyright, patents, trademarks, geographical indications, designs, semiconductor layouts); (ii) the right to export, where the agreement relates exclusively to production, supply, distribution or control of goods for export.

Factors for determining AAEC (Section 19(3)): creation of entry barriers; driving existing competitors out; foreclosure of competition; accrual of benefits to consumers; improvements in production or distribution; promotion of technical, scientific and economic development.

Recent enforcement trend: the cement cartel order (2012; penalty about ₹ 6,307 crore), Maruti Suzuki (2021; ₹ 200 crore for resale price maintenance through its discount control policy), and cartel cases in beer, film and cable industries.

Section 4(1): no enterprise or group shall abuse its dominant position. Dominance itself is not prohibited; abuse is.

• Dominant position (Explanation to Section 4): a position of strength in the relevant market in India that enables an enterprise to (i) operate independently of competitive forces, or (ii) affect its competitors, consumers or the relevant market in its favour.

• Relevant market (Section 2(r)): the relevant product market (Section 2(t): products regarded as interchangeable or substitutable by reason of characteristics, prices and intended use) and/or the relevant geographic market (Section 2(s): area where conditions of competition for supply or demand are distinctly homogeneous). Section 19(5)–(7) list the relevant factors.

• Factors for dominance (Section 19(4)): market share; size and resources of the enterprise; size and importance of competitors; economic power and commercial advantages; vertical integration; consumer dependence; monopoly or dominant position by statute; entry barriers; countervailing buying power; market structure and size; social obligations and costs.

• Abuse (Section 4(2)): (a) unfair or discriminatory conditions or prices (including predatory pricing) in purchase or sale; (b) limiting or restricting production, services, or technical or scientific development; (c) practices resulting in denial of market access; (d) making contracts subject to supplementary obligations unconnected with the subject of the contract (tie-in or bundling); (e) using dominance in one relevant market to enter into, or protect, another relevant market (leveraging).

• Cases: Belaire Owners' Association v DLF (2011): CCI penalised DLF (₹ 630 crore) for unfair conditions in apartment buyer agreements; the finding of abuse was upheld on appeal (verify procedural history). CCI v Co-ordination Committee of Artists and Technicians of West Bengal Film and Television (2017): the Act applies to trade associations. Excel Crop Care v CCI (2017): penalty to be based on relevant turnover. Digital markets: the CCI's Google (Android and Play Store) orders of 2022 (penalties of about ₹ 1,337 crore and ₹ 936 crore respectively), later reviewed by the NCLAT and the Supreme Court, and the 2024 Meta/WhatsApp privacy-policy order (about ₹ 213 crore) (verify the current status of these appeals).

• Digital competition (trend): a draft Digital Competition Bill proposing ex ante regulation of systemically significant digital enterprises was released in 2024 (its status should be checked).

• Section 5: a combination is an acquisition of control, shares, voting rights or assets, an acquisition of control by a person already controlling a competing enterprise, or a merger or amalgamation, that crosses the asset or turnover thresholds specified in the Act (in India and worldwide, for the parties and for the group). The thresholds have been revised upwards by notification, and the de minimis (small target) exemption was updated in 2024 to ₹ 450 crore of assets or ₹ 1,250 crore of turnover in India (verify current thresholds).

• Deal value threshold (DVT): introduced by the 2023 Amendment, a transaction with a value above ₹ 2,000 crore where the target has substantial business operations in India must be notified even if the asset or turnover tests are not met (in force from 10 September 2024).

• Section 6(1): no combination shall cause or be likely to cause AAEC within the relevant market in India; such a combination is void.

• Section 6(2): notice to the CCI before the combination takes effect. The earlier requirement to file within 30 days of the trigger event was first exempted in 2017 and then removed by the 2023 Act. A standstill (suspensory) obligation applies: the combination cannot take effect until the CCI approves or the time limit expires.

• Time limits (2023 Amendment): the CCI must form its prima facie opinion within 30 calendar days and decide within 150 days (earlier 210 days) from notice; otherwise the combination is deemed approved.

• Section 20: inquiry into combinations; Section 29: investigation procedure; Section 31: orders (approval, approval with modification, or disapproval). Section 43A: penalty for failure to notify (up to 1 percent of total turnover or assets, whichever is higher). Section 20(4) lists factors in assessing the effect of a combination (actual and potential competition, market share, entry barriers, failing-business defence, benefits, etc.).

• Green channel route (Combination Regulations): automatic approval for combinations with no horizontal, vertical or complementary overlaps.

• Section 27: after an inquiry the CCI may issue a cease and desist order, impose a penalty up to 10 percent of the average turnover (earlier, of the last three preceding financial years), direct modification of agreements, and so on. For a cartel, the penalty may be up to three times the profit for each year of continuance, or 10 percent of the turnover for each year, whichever is higher. Section 28 allows the division of an enterprise enjoying dominance. Compensation claims go to the NCLAT (Section 53N).

• Section 46 (lesser penalty / leniency): reduced penalty for cartel members making full, true and vital disclosure. The 2023 Amendment adds Leniency Plus: additional reduction where the applicant discloses a second cartel.

• Sections 48A and 48B (2023 Amendment): settlement and commitment mechanisms for abuse of dominance and vertical agreements (cartels are excluded).

• Global turnover: the 2023 Amendment allows penalties to be calculated on global turnover (not only relevant turnover, as under Excel Crop Care).

• Time limit: information must be filed within three years of the cause of action (Section 19(6)).

• Other powers: interim orders (Section 33), search and seizure (DG), penalties for non-compliance (Sections 42, 43).

1. Deal value threshold (₹ 2,000 crore) for notifiable combinations.

2. Settlement and commitment procedure (Sections 48A and 48B).

3. Global turnover-based penalties and a revised definition of "turnover".

4. Hub-and-spoke cartels and wider scope of Section 3.

5. Leniency Plus and revised lesser-penalty framework.

6. Shorter time limits for combination review (30 days prima facie, 150 days overall).

7. A wider definition of "control" (material influence) and of "agreement" to include concerted practices.

8. Stronger DG investigation powers and penalties for non-cooperation.

9. Appeals to the NCLAT with a reported pre-deposit requirement of 25 percent of the penalty (verify).

The 2023 Amendment has been brought into force in phases, so verify the notified dates for each provision.

Expect: MRTP Act vs Competition Act; CCI structure and appeal to the NCLAT and Supreme Court; Section 3 (horizontal presumption vs vertical rule of reason); Section 4 (dominance, relevant market, abuse); Sections 5–6 (thresholds, DVT, time limits); Section 27 (penalty and cartel formula); leniency; the 2023 Amendment; Excel Crop Care, Belaire/DLF, SAIL, Brahm Dutt; matching per se-style presumption vs rule of reason; Assertion–Reason on whether dominance itself is prohibited (it is not; abuse is).