CHAPTER 4

COMPETITION LAW: THE INDIAN APPROACH

“Competition is always a good thing. It forces us to do our best. A monopoly renders people complacent and
satisfied with mediocrity.” – Nancy Pearcy
4.1 Introduction

It is true that competition breeds champions. It is the vigil of the true capitalist. In nascent

markets, it can even be in your own best interest to collaborate with competitors to grow the

overall market size. As they say, a rising tide lifts all boats. As markets mature, competition

keeps you sharp. According to Schumpeter 1, “It makes sure you never get complacent or you

risk being taken over .Competition in a dynamic setting is subject to the Schumpeterian forces of

creative destruction". This entails an industry that is flexible and can restructure and adapt easily

to changing circumstances. For this to be possible, and for capital and labour to relocate to more

efficient 2 uses more easily, requires much more rapid bankruptcy procedures than those that are

currently in place 3.

Competition laws are a body of rules that seek to promote competition in the market and prohibit

practices that negatively impact competition, economic efficiency and consumer welfare.

According to Fox, competition law regulates business practices and transactions that create or

abuse market power and interfere with the free play of market forces 4. Rodger and MacCulloh

point out that competition law concerns intervention in the market place when there is some

problem with the competition process and/or when there is market failure. 5In Haridas Exports 6,

1
Schumpeter J.A., Capitalism, socialism and democracy, Harper & Brothers,1942
2
Competition policy and liberal trade policy seek to achieve the same objective namely economic efficiency.
3
Report of High Level Committee on Competition Policy and Law ,para 2.9.2
4
Fox, Eleanor M, Competition Law International Economic Law, Oxford University Press, 2002 pp. 340-383
5
Rodger, Barry and Angus MacCulloh, Competition Law in the EC and UK, Cavendish Publishing, London ,(2004).
6
Haridas Exports v. All India Float Glass Manufacturers Association AIR 2002 SC 2728

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the Supreme Court observed that “Competition law is concerned with the regulation of

competition in a particular market within the territory of a country”.

Modern competition law can be seen as a fundamental rulebook which is aimed as far as possible

to allow markets to function properly. So Schere and Ross opines that “it is designed to prohibit

abuses of market power, whether by an individual firm or by a group of firms acting collectively

or otherwise to allow markets to operate unhindered” 7. Therefore basic justification of

competition law lies in the suggestion that competition produces social benefits which get

vanished through monopoly and that legal controls can reduce, or eliminate the damage done.

Agreeing to it Agnew holds that “the welfare of a society, which establishes an effective form of

regulation, will, thereby, improve” 8. In India, Competition in its earlier form was inspired by the

far-reaching constitutional values than by industrial or economic developmental challenges. The

MRTP Act, 1969 , gave effect to the expression ‘socialist’ used in the preamble and Articles 38

and39 of the Constitution of India. Concise Oxford Dictionary defines ‘socialism’ as “a political

and economic theory of a social organisation which advocates that the means of production,

distribution and exchange should be owned or regulated by the community as whole”. The

Supreme Court in D.S Nakara v. Union of India 9 observed that the principal object of socialist

states is to wipe out the inequality in economic conditions, status and standard of life. In a

democratic welfare economy, the role of the state is never over looked. In Samatha v. State of

Andhra Pradesh 10the Supreme Court observed that “the word Socialist used in the Preamble

must be read from the goals, Article 14,15,16,17,21,23,38,39,46 and all other cognate Articles

7
Scherer and Ross, (1990), “Industrial Market Structure and Economic Performance” quoted in Anant, TC:
“Competition Advocacy”, Presentation at the Competition Advocacy Seminar for Professional Bodies, 2nd March
2005 available at http://competition-commission-india.nic.in last visited on January 3 2018
8
Agnew, J.H,Competition Law, Allen and Unwin, London, 1985 at p. 1
9
AIR 1983 SC 183
10
AIR 1997 SC 3297

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sought to establish, i.e. to reduce inequalities in income and status and to provide equality of

opportunities and facilities”.

The father of economics Adam Smith in his famous book “An Inquiry into the Nature and

Causes of the Wealth of Nations” emphasizes that self-interest is the driving force behind

economic activity. Though, self-interest per se has negative connotations, these forces are

balanced by the competitive forces arising out of the market. Therefore, while self-interest is the

motivator behind economic activity, competition is the de-facto driver of the economy. These

forces of self-interest and competition are defined by Adam Smith as the invisible hands which

guide the resources towards their most efficient use. When India adopted the new economic

order in the early 1990s, it empowered the invisible hands of the market and ensured economic

freedom for enterprises 11.

Competition law has always been recognised world over by most as essential instrument in

curbing market distortions, containing anticompetitive practices, preventing monopoly and abuse

of monopoly, inducing optimum allocation of resources and being beneficial to consumers with

fair prices, choices and enhanced qualities

Competition law thus seeks inter alia, to promote and maintain competition in the market and

protect the interests of consumers. In Australian Competition and Consumer Commission v. ABB

Transmission 12, the federal court observed that

“Antitrust legislation has as its object the promotion of free competition by

proscribing the misuse of monopoly or oligopoly power, and by making unlawful conduct such

as market rigging, collusive tendering, price-fixing and other acts that inhibit the minimization

11
“Review of Legislation/Policies: A Competition Perspective”,Fair Play Volume 19 : October-December 2016
(the quarterly newsletter of Competition Commission of India)
12
[2002] FCA 3

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of production costs and the efficient allocation of resources. That is to say, antitrust law is

founded on the underlying premise that free competition is essential for the welfare of the State”.

In NT Power Generation v. Power & Water Authority 13, it was observed that

“Antitrust laws serve a variety of aims, such as the efficient use of resources,

the development of cheaper production methods and improved products, stability in output and

employment and an equitable distribution of income. So, antitrust legislation strikes down

collusive agreements that restrict competition, as well as unilateral conduct that affects

competition, including misuse of market power and price discrimination”.

The objectives of Competition Law across jurisdiction are to maintain and encourage the process

of competition in order to promote efficient use of resources while protecting the freedom of

various players in the market. The intention of competition Law is neither to restrict nor to

constraint anything that may be detrimental to the growth of the economy. It keeps the goal very

clear, avoiding market domination by a few players through various modes as cartelization, price

fixing or undue concentration 14.

By 1990 only sixteen developing nations around the world had enacted Competition Law. In

1990s, the drafting and adoption of Competition legislation in another 50 countries was under

taken by United Nations Conference on Trade and Development 15. Currently, over 100

countries worldwide have competition laws, with more than half of them in the category of

developing countries. The mere adoption of the Competition Law has to be essentially preceded

13
[2002] FCAFC 302
14
OECD, The objective of Competition Policy, www.oecd.org/daf/competition/2486329.pdf, last visited on march
15, 2018
15
UNTAD had helped may other countries with process for enacting Competition Law.

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as well as succeeded by other conditions 16 to be part of market reform. Competition Laws have

acquired much importance today with growing globalisation and the opening of markets across

the globe. The United States Supreme Court observed in United States v. Topco Associates Inc17

that

“Antitrust laws in general, and the Sherman Act in particular, are the

Magna Carta of free enterprise. They are as important to the preservation of economic freedom

and our free-enterprise system as the Bill of Rights is to the protection of our fundamental

personal freedoms. And the freedom guaranteed each and every business, no matter how small,

is the freedom to compete to assert with vigour, imagination, devotion, and ingenuity whatever

economic muscle it can muster.” 18

The importance of having a sound competition policy and law has been realised around the

world and about one hundred countries have competition legislations. Competition Law appears

to be one of those fields of law the purpose of which is not self-explanatory.one may study the

structure of the competition Act in relation to its stated objectives. This will cover major

provisions dealing with antitrust issues, viz. regulation of anti-competitive agreements, abuse of

a dominant position and a combination falling under the Act. A well formulated and efficacious

competition law is likely to promote the creation of an enabling business environment, which

enhances static and dynamic efficiency, and leads to optimum resource allocation in which the

abuse of market power is discouraged by fair competition. In addition, competition law prevents

artificial entry barriers, facilitates market access and provides level playing field.

16
Many such conditions are missing in the developing countries. E.g financial human technical resources are always
scarce.
17
405 US 593 (1972)
18
http: //caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=405+&page=596, see also
Vishwanathan, T(2005) : “Presentation on “Competition Law”, http://www.competition-commission-india.nic.in,
last visited on March 18,2018.

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It also aims at promoting competition as a means of market response and consumer preference so

as to ensure effective and efficient allocation of resources and to create an incentive for the

economy for innovation 19.

4.2 Historical Overview

The history of the Competition Act, 2002 is a good example of the proverb that the road to hell is

paved with good intentions. True, the Act was late compared to the legislation of many countries,

but it was unexceptionable in terms of the key issues it was intended to deal with. A modern,

statutory competition regime emerged in India only after the globalization 20liberalization and

privatization era in early 90’s. This paradigm shift in the Indian economy and changing scenario

of world trade lead to formation of Raghavan 21 committee, which ultimately laid down clear path

for the statutory competition regime.

Its aim was to preserve fair competition in the market, principally through control of anti-

competitive acts, agreements, abuse of dominant position, and mergers that would hinder or

eliminate competition in a particular market. It was introduced at a time when large multinational

companies , taking advantage of India’s liberalised economic policy, permitting greater

participation of overseas companies in economic activities in India established their businesses

here. The Act received the assent of the President of India on 13 January 2003. The first set of

provisions of the Act were notified on March 31,2003, while others were notified subsequently

.Most of the sections were brought into force through notifications in the gazette , but key

sections relating to prohibition of anti- competitive agreements(section3), abuse of dominant

19
UNTAD Secretariat, “objectives of Competition Law and Policy: Toward a Coherent Strategy for Promoting
Competition and Development” available at http://www.ifc.org/ifcext/fias.nsf/attachments by title.
20
The world economy has been experiencing a progressive international economic integration for the last half a
century. There has been a marked acceleration in this process of globalisation and also liberalisation during the last
three decades. Para3.1.1,Report of High Level Committee on Competition Policy and Law
21
Supra note 79,

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position (section 4), combination (section 5) and regulation of combination (section 6) were

not 22.,On May 20,2009, the working provisions, that is, provisions relating to anti-competitive

practice and abuse of dominance were brought into force.

The preamble of the Competition Act ,2002 states “an Act to provide, keeping in view of the

economic development of the country for the establishment of a commission to prevent practices

having adverse effect on competition , to promote and sustain competition in markets, to protect

the interest of consumers and to ensure freedom of trade carried on by other participants in

markets, in India and for matters connected therewith or incidental thereto”. The preamble

reveals that Competition Act was enacted keeping in view the economic development that

resulted in removal of controls and consequent economic liberalization which required the Indian

economy be enabled to allow competition in the market from within the country and

outside 23.The Competition Act deals with the three broad substantive issues ;

1. Anti-competitive agreements

2. Abuse of dominant position

3. Merger ,combination and acquisitions.

The Monopolies and Restrictive Trade Practices Act 24, 1969 (MRTP Act), was the first

enactment in India to deal with competition among private commercial enterprises and was a

22
Ramappa. T, Competition Law in India- Policy ,Issues and Development, oxford University press, 2nd edition
23
Statements of objects and Reasons accompanying the Competition (Amendment) Bill, 2007.
24
The MRTP Act was a product of another era. It covered three categories of competition matters, superficially
corresponding to those described above, but dealt with them in ways that departed from standard antitrust treatment.
Chapter III, on concentration of economic power, originally applied to firms that were either large (those whose
assets together with those of their ‘interconnected undertakings’ exceeded Rs 20 crore), or ‘dominant’ (whose assets
exceeded Rs one crore and whose share of the market exceeded one-third, later reduced to one-fourth in 1982). All
such ‘MRTP companies’ were required to register themselves and thereafter obtain government permission for
mergers, amalgamations and takeovers—but also for establishment of new undertakings and substantial expansion
of old ones, thus reinforcing the then-prevailing system of industrial licensing. Chapter IV, on monopolistic trade
practices (MTPs), originally applied to ‘monopolistic’ undertakings that were either dominant (as defined above) or
commanded half or more of the market along with not more than two other independent undertakings. An inquiry

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precursor to the Competition Act,2002. The object behind passing of MRTP Act was the

minimisation of inequalities in income and distribution of ownership and control of material

resources to sub serve the common good. The MRTP Act had in its large portions been taken

from Restrictive Trade Practices Act of United Kingdom. This Act did remain in action until the

Competition Act was brought in operation in 2007,as in the changed economic dynamics the

MRTP Act 25 was found deficient to deal with the challenges put forth in the market by global

economic circumstances. One of the major reasons for failure of the MRTP Act was its inability

to do justice with its basic principle because of the regular shifts in governmental industrial

policy

The statement of object associated with Competition Bill had identified the Monopolies and

Restrictive Trade Practices Act, 1969 had become obsolete in certain respects in the light of

international economic developments relating more particularly to competition laws and there

was a need to shift the focus from curbing monopolies to promoting competition 26.Thus , in

1999, a committee 27 was constituted to recommend an up to date competition Law, which was in

consonance with the international developments in this regard and also catered to the Indian

needs. This committee suggested the government to make a separate Competition Act to deal

with laws on this issue, to create an authority on competition, i.e., the competition commission of

could be ordered if it appeared that a monopolistic undertaking was ‘unreasonably’ limiting competition or technical
development, which would today be called abuse of dominance—but also if it appeared to be ‘unreasonably’
maintaining or increasing prices and limiting investment, which are usually not antitrust concerns. The government
was armed with the authority to prohibit MTPs, if necessary by regulating prices, production, distribution, and
quality. It could refer Chapter III applications or complaints about MTPs to the MRTP Commission, but did not
have to accept its opinion.
25
Para 7.1.9 Raghavan committee Report-A perusal of the MRTP Act will show that there is no definition nor even a
mention of certain offending trade practices which are restrictive in character. Some illustrations of these are:
- Abuse of Dominance
- Cartels, Collusion and Price Fixing
- Bid Rigging
- Boycotts and Refusal to Deal
- Predatory pricing
26
Statements of objects and Reasons accompanying the Competition Bill,2001.
27
Supra note 79.

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India, and also to repeal the MRTP Act and wind up MRTP commission. It further pushed for

reforms to be made in state’s policies, to stabilize the base over which the new competition law

would be structured 28.

The Competition Act was finally passed in the year 2002 by the parliament to take over the reins

of competition among private commercial enterprises in India. The Competition Act is highly

inspired by the relevant provisions in the European Union and the United States 29. The

Competition Act,2002 was enacted to make India ready to face competition both from within the

country and from the international market as well. The Competition Act ,2002 is supposed to

replace the Monopolies and Restrictive Trade Practices Act, 1969(MRTP Act). The cases

pending before the MRTP commission had been transferred to the Competition Commission of

India ,CCI 30.Section 66 of the new Act, “provided for the repeal of the MRTP Act, the

dissolution of the MRTP Commission, and the disposal of pending cases. UTP cases and

investigations (other than those involving ‘false or misleading facts disparaging the goods,

service or trade of another person’) were to be transferred to the National Commission

constituted under the COPRA, to be decided in accordance with the latter Act”. The remainder

were to be transferred to the Competition Commission of India (CCI), a new body to be set up

under the Competition Act, but would be decided under the MRTP Act 31.Though the

Competition Act ,2002 is successor to the Monopolies and Restrictive Trade Practices Act , the

scope of both the Acts are completely different. The change in economic policies reflects change

in legal regime. After 1990’s onward India changed her economy from protection, insulation and

regulation to free market economy. This change finds reflection in the objectives of the MRTP

28
Dhall vinod, “Competition Law in India”, 21 ANTITRUST 72,73-78(2006-2007)
29
VahiniVersha, Indian Competition Law, Lexis Nexis, 1st edition ,2016.
30
Singh Avtar, Competition Law ,Eastern Book Company ,1st edition, 2012
31
Bhattacharjea Aaditya , “ Of Omissions and Commissions: India’s Competition Laws”, Economic and Political
Weekly, xlv( 35), 28 august 2010

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Act and Competition Act, 2002. When, after economic liberalization, the control of market

economy shifted from government and shopkeepers to national and transnational corporations, it

became necessary to regulate competition, lest the big fish may devour the small, resulting in

stifling the competition at the cost of the consumer. In the changed context, the Competition Act

was passed in 2002, but the Competition Commission of India began its functioning in 2009 32.

The objectives of the Competition Law were highlighted by the Supreme Court in its decision in

Competition Commission of India v SAIL 33as “the rationale of free market economy is that

competitive offers of different suppliers allow the buyers to make the best purchase. The

motivation of each participant in a free economy is to maximise self-interest, but the result is

favourable to the society”. The court cited Adam Smith as saying, “there is an invisible hand at

work to take care of this”. The main aim of the Competition Law is using competition, to

promote economic efficiency as one of the means of assisting the creation of market responsive

to consumer preferences. The advantages of perfect competition are threefold;

1) Allocative efficiency, which ensures effective allocation of resources

2) Productive efficiency, which ensures that the cost of production are kept at a minimum;

and

3) Dynamic efficiency, which promotes innovative practices.

These factors by and large have been accepted all over the world as the guiding principles of

effective implementation of competition Law 34.

In fact, Correa opines that “competition is not essentially unsuited with and, on the contrary, can

effectively lead to dynamic efficiency through increased innovation. Competition can be a

32
Dixit Vinod, “Competition Law”, Annual Survey of Indian Law,2011
33
(2010) 10 SCC 744
34
They are globally accepted principles.

115
powerful incentive to introduce product, process or organizational innovations, even noted by the

Federal Trade Commission” 35.“Competition can stimulate innovation. Competition among firms

can spur the invention of new or better products or more efficient processes. Firms may race to

be the first to market an innovation technology, companies may invent lower cost manufacturing

processes, thereby increasing their profits and enhancing their ability to compete. Competition

can prompt firm to identify consumers’ unmet needs and develop new products or services to

satisfy them 36”

Unfortunately, the Competition Act does not contain the definition of the term ‘competition’,

which brings in a major challenge.so competition is understood as an evasive term which is

referred and used differently in different contexts. The new Competition Act states that, “it shall

be the duty of the commission to eliminate practices having adverse effect on competition, to

promote and sustain competition, protect the interest of consumers and ensure freedom of trade

carried on by other participants, in markets in India” 37.In exercise of power conferred upon it

under the Act, the central government established the CCI having its head office at New Delhi

with effect from October 14, 2003. In accordance with the discussion on the subject , the Act had

to be implemented in the phased manner 38

• 1st phase – In the first year Competition advocacy and training for officers and staff of

CCI will be conducted

35
Correa ,C. (2007). “Intellectual property and Competition Law :Exploring Some Issues of Relevance to
Developing Countries”, ICTSD IPRs and Sustainable Development Programme Issue Paper No.21,International
Centre for Trade and Sustainable Development, Geneva, Switzerland, available at www.ictsd.org, Last visited on
15th June 2017
36
FTC-United States, 20003a, p.1-2
37
Preamble The Competition Act,2002
38
Para 8.1.1,Raghavan committee Report

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 • 2nd phase – In the second year provisions 39 relating to anti-competitive practices and

abuse of dominance to be brought into force

• 3rd phase- In the third year provisions 40 relating to combination to be brought into action

There were two fundamental views emerging from the Raghavan committee report for

implementation of competition law in India. One view in the Committee contended that by

enacting the Bill at this stage i.e. referring to the economic political scenario of 1990s, India’s

bargaining power at WTO negotiations would be negatively affected. So it was suggested that

the enactment of the Bill should be withheld till January 1, 2005 by which time decisions on

issues like competition policy, trade and investment and related matters would be taken.

Therefore, it was suggested that there was no rush in passing the Bill and that the MRTP Act

could be appositely amended to meet the need of the present time. The second view preferred the

passage of the Bill. It was of the view that the MRTP Act was based on old economic theory

with different object, which was no longer efficacious enough to check the assault of foreign

companies against domestic companies. This shift would be of great assistance to the Indian

economy to adapt to the changing environment as well as result in affluence and employment 41.

If we look at the major antitrust regimes like United States the conflicting view do appeared

there also in terms of whether to follow Harvard approach or that of Chicago approach. But at

the end ,Chicago school of thought was followed with some influences of Harvard school,

39
It came into force in 2009,around six years later. The delay is attributed to the judicial challenges to the power of
the Chairman of CCI.
40
It came into force in 2011.
41
Raghavan committee report, para7.2.2 It has been noted earlier that a large number of anti-competition practices
that may accompany trade practices, during the implementation of the WTO agreements will have to be drafted and
incorporated in the Competition Law. Amendment of the MRTP Act, in the context of the requirements outlined
above, may, therefore will have to be very extensive, tantamounting to enacting a new Law. On balance, it appears
eminently desirable to enact a new Competition Law without tinkering with the existing MRTP Act. Furthermore, as
would be seen in the next section of this chapter, the entire provisions relating to unfair trade practices will have to
be taken out of the MRTP Act as they figure in the Consumer Protection Act, 1986. Mergers, Amalgamations etc.
will have to be brought within the contours of Competition Law afresh. For all these reasons, a new law is warranted

117
antitrust law in United States are broadly based on a consumer welfare standard that is concerned

with allocative efficiency and per se prohibition on market practices are to be avoided. While in

the European Union competition law, the object is to integrate the market and protection of

competition. The market integration of the economies had its own political reasons than

economic ones. The protection of competition in the EU market does revolve around

‘dominance’ concept. The abuse of ‘dominant position’ is violation of competition Law as this

conduct injures consumers and competitors. EU Competition law approaches the competition

objective from three perspectives;

• It tries to control unwarranted concentration of market power;

• It tries to discipline anti-competitive business practices by prohibiting agreements,

understandings, and concerted practices among firms that purport to restrict competition;

• It attempts to prevent abuse of dominant position in the common market.

4.3 Indian Perspective

The Competition Act, 20002, sets for multiple goals instead for focusing on one . Given the state

of economic scenario the nation was subjected to it would not have been wise to blindly follow

the regime of developed counties as they were in the different zone of development.

The preamble of the Act broadly recognises the four core focal engagements;

• To curb practices having adverse effect on competition

• Giving impetus to the competition in the market

• Consumer welfare

• To ensure freedom of trade vis-à-vis the competitors in the Indian market.

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A bare understanding of these focal points which are now well recognised as goals of the 2002

Act gives clear indication that the Competition Act is pursuing to achieve economic as well as

social goals. According to Payal “the Preamble of the Act provides an institutional context to the

CCI. It states: An Act to provide, keeping in view of the economic development of the country.

This is a rather unique and unambiguous endorsement of the link between the micro functioning

of individual markets and the larger development imperatives of the country. This is also to

affirm that competition is not an end in itself, but a means to achieve greater economic

goals” 42.The Competition Act of 2002, which was amended in 2007 and 2009,deals with anti-

trust issues, viz. regulation of anti-competitive agreements, abuse of dominant position and a

combination or acquisition falling within the provisions of the said Act.

The objective of ‘ensuring freedom of trade carried on by other participants in the market’ has

the social and political implications in addition to economic considerations. Freedom of trade of

other participants upholds the advanced political value of ‘freedom for all’ and social goal of

protection of small and medium enterprises. This objective will also aid in promoting and

sustaining competition. The most imperative social goal is the protection of consumers i.e.

consumer welfare. That’s the reason why it was required to have competition policy to

incorporate encouraging technological improvements, vertical linkages and cost reduction to

promote efficiencies among the domestic industry along with consumer welfare. It is important

here to understand ‘consumer welfare’, though different jurisdictions do take different approach

to define and limit it.

42
Payal Malik, “Competition Law in India: Developing Efficient Markets for Greater Good”, Vikalpa ,The Journal
for Decision Makers , volume 41 , issue 2 , april-june 2016,page 176, available at .
http://journals.sagepub.com/doi/pdf/10.1177/0256090916647222, last assessed on 15th June 2017

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While clarifying the consumer welfare stance, Hovenkamp opines that “the consumer welfare

test is not a balancing test, in the sense that one must attempt to measure efficiency gains and

losses and net them out. Under the test, if consumers are harmed (either by reduced output or

product quality, or by higher prices resulting from the exercise of market power), then this fact

trumps any offsetting gains to producers and, presumably, to others. Theoretically, even a minor

injury to consumers outweighs significant efficiency gains. In this sense the consumer welfare

test can be easier to administer on a case by case basis than general welfare tests. Even the

consumer welfare test can be difficult to administer, however, when a practice impacts different

groups of consumers differently. Practices that involve price discrimination, such as variable

proportion ties or patent field of use restrictions, typically have this result” 43.

Antitrust in all jurisdictions is seen as a public policy aimed at fostering a public good, that is,

accepted as competition. Nevertheless, competition is a vague notion and some guileless or

narrow concept of competition may induce interventions that are not in line with the ultimate

intended goal of the law. Researcher believes that consumer as central focus has been explicitly

recognized the for enforcement under the preamble of the Competition law, additionally also

identifies economic development through the consumer welfare prospective. Thus, when

consumer welfare is seen in relation with realizing the goal of economic development, static

allocative efficiency i.e., consumer welfare, in certain cases, may have to be sacrificed for

dynamic efficiency. The Preamble of the Competition law allows for a broader interpretation of

efficiency, incorporating both static and dynamic ,as the inconsistency between allocative

efficiency and dynamic efficiency is well established. Therefore, the tone and tenor is sets by the

Preamble for the applicability of the law.

43
Hovenkamp clarifies the concept of consumer welfare standard: “Distributive justice and consumer welfare in
antitrust”, Hovenkamp, H. J. (2011). Available at http://ssrn. Com /abstract=1873463, last accessed on 16th June
2017.

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 The Preamble along with the body of the statute in India and the antitrust law worldwide

generally puts great stress on the economic aspect of the instrumentality of the law. Agreeing to

the above statement , Baker and Bresnahan holds that, “an emphasis on economic goals

inevitably brings economics to bear, where antitrust issues are framed in terms of economic

concepts such as market power, competitive effects, entry, and efficiencies, and to interpret the

detailed facts involving a particular industry and specific challenged practices through

application of the logical framework provided by economic theory. This approach requires a

rigorous analysis about the effects of the challenged conduct on competition: identifying the

market or markets in which competition has or will likely be harmed and the mechanism by

which the challenged conduct does so” 44.

The understanding that competition law should wish to encourage some form of economic

welfare which is innately connected to the influence of economics and in particular welfare

economics, consumer welfare , competitors protection and related fields in competition law

analysis .At the same time also keenly looking into specific step with respect to improving

efficiencies in the domestic industry.

Recently in Indian competition scenario, In shri Shamsher Kataria v.HondaSiel 45, the

Competition Commission held as follows:

“The role of antitrust can best be understood in terms of a fundamental standard ‘the

standard of consumer choice’. The antitrust laws are intended to ensure that the market

place remains competitive so that worthwhile options are produced and made available to

44
Baker, J. B., and Bresnahan, T. “Economic evidence in antitrust: Defining markets and measuring market power”
(Stanford Law and Economics Olin Working Paper No. 328). (2006, September) Accessed on 10 January, 2018
from http://ssrn.com/abstract=931225 or http:// dx.doi.org/10.2139/ssrn.931225
45
2014 Comp LR 001(CCI) ; the Commission acknowledged the words of Professor Robert H.Lande while writing
the order in this case.

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 consumers, and this range of options is not to be significantly impaired or distorted by

anti-competitive practices. How many options must be present in the market for consumer

choice to be optimized? Antitrust certainty does not require that the number of options be

maximized. Nor does antitrust prevent all conduct or transactions that have the effect of

reducing the number of options available to consumers. Nor does the law affirmatively

require the creation of options. Rather , it prevents business conduct that artificially limits

the natural range of choices in the market”.

Keeping pace with these goals, it is significant for developing country like India to have

competition policy that gives further impetus to the foreign investment in addition to engaging

and promoting the domestic enterprises.

In the preceding pages the researcher is trying to bring in under lying goals for the enforcement

of the relevant provisions of the Competition Act.

4.3.1 Decoding the Preamble

An institutional framework is recognized for CCI under the Preamble of the Act. It states: “An

Act to provide, keeping in view of the economic development of the country”. This is a rather

distinctive and explicit endorsement of the relation between the micro functioning of individual

markets and the larger economic development requirements of the country. This narrative is also

to affirm that competition is not an end in itself, but a means to achieve greater economic

goals.so that there can be a clear distinction between the ends and the means while dealing the

interface of the law in distinct sectors.

The obligation of the commission, as explicit in the Preamble of the Competition Act, is

(a) To prevent practices having adverse effect on competition,

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 (b) To promote and sustain competition in markets,

(c) To protect the interests of consumers, and

(d) To ensure freedom of trade carried on by other participants in markets.

All though the above four objectives are quite different but these objectives are to be understood

in harmony. These objectives and goals bring clarity only when these distinct objectives are seen

as fraction of a whole. While comparing to many other antitrust jurisdictions world over,

maintenance of the market processes and rights to engage in commerce are accorded a priority in

the Indian Competition Act as well. These are seen as equivalent to striking down or preventing

unreasonable restraints on competition and at the same time keeping focus on freedom to trade

,freedom of choice, and access to markets. Preamble of the law has explicitly endorsed the

consumer as significant for enforcement, but at the same time has also set the consumer welfare

standard in the context of economic development. It is even clearly incorporated under section

18 of the Competition Act,2002, which states ;

The duty on the Commission to eradicate practices having 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 while Subjecting to the provisions of the

Competition Act

As a result, preamble read with section 18, when seen in conjunction with achieving the goal of

economic development, static allocative efficiency (consumer welfare), in certain cases, may

have to give way for dynamic efficiency. So allocative efficiency and dynamic efficiency do put

forth inconsistent situations, the Preamble of the law allows for a broader interpretation of

123
efficiency, including both static and dynamic. Hence, the Preamble arrays the tone and tenor of

the instrumentality of the law.

The view that competition law should aim to promote some form of economic welfare is

intrinsically linked to the influence of economics and in particular welfare economics, consumer

theory and related fields in competition law analysis 46.so it is imperative to strike balance

between the dynamic and allocative efficiency. The Act thus endeavors to balance the two

standards by benefiting consumers and promoting efficiency.

• Overview of Practices dealt under Competition Act

The focus of the Competition Act is on three major areas;

1. Prohibition of anti-competitive agreements dealt under section 3

2. Prohibition of abuse of dominant position dealt under section 4

3. Regulation of combination dealt under sections 5and 6

Before getting into these areas on competition law it’s important to understand the territorial

applicability and exemptions granted under the Act

4.3.2 Application and Exemptions

The territorial scope of the Competition Act as per section 1 (2) extends to whole of India except

the state of Jammu and Kashmir. However, the impact of the statement gets limited in view of

the Act recognising the ‘effect’ doctrine. As per the doctrine, the effect of the actions or

behaviour would determine whether the action or behaviour is anti-competitive and comes within

the mischief of the Act. The Act gives clear power to the Competition Commission of India to

46
Lianos, I. “Some reflections on the question of thegoals of EU Competition Law” (CLES Working Paper Series
3/2013). Available at from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2235875,
visited on 7 February 2017

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exercise jurisdiction over foreign entities if the effect of their anti-competitive behaviour is felt in

Indian territory. The ‘effects doctrine’ laid down by US courts in the United States v. Aluminium

Corporation of America 47decision permits courts to exercise jurisdiction over entities outside

their territorial jurisdiction if the anti-competitive conduct of such entities has an impact within

their territorial jurisdiction. The effects doctrine was given statutory recognition in the US in

1994 by the International Antitrust Enforcement Assistance Act 48. Similarly, the United

Kingdom enacted the Protection of Trading Interests Act, 1980 49 which recognises this concept,

though there were slight theoretical variances.

This doctrine is applied in many countries to address anti-competitive activities of foreign firms

that adversely affect competition within their markets. In India under the MRTP Act , the effect

doctrine was considered by supreme court in Haridas Exports v. All India Float Glass

Manufacturers Association 50, which involved case of imports from foreign cartels. The court

while reflecting on section 37 51 of the Act, the court held that “ any act which falls under the

47
148F 2d416(2nd Circuit) ;also known as Alcoa case

48
http://www.justice.gov/atr/public/guidelines/internat.htm

49
http://www.legislation.gov.uk/ukpga/1980/11/contents

50
AIR 2002 SC 2728

51
section37. Investigation into restrictive trade practices by Commission

(1) The Commission may inquire into any restrictive trade practice, whether the agreement, if any, relating thereto
has been registered under section 35 or not, which may come before it for inquiry it is of opinion that the practice is
prejudicial to the public interest, the Commission may, by order, direct that,-

(a) the practice shall be discontinued or shall not be repeated;

(b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in
respect thereof in such manner as may be specified in the order.

(2) The Commission may, instead of making any order under this section, permit the party to any restrictive trade
practice, if he so applies, to take such steps within the time specified in this behalf by the Commission as may be

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category of restrictive trade practices can be investigated into and orders passed under section

37(1). It further noted that Sections.2(o) and 2(u) do not specifically indicate that the practice

should be carried on by a person or persons in India, and if the trade practice is such that it be

becomes a restrictive trade practice in India as contemplated by section 2(o), then action can be

taken under section 37 in respect of such a trade practice”.

Unlike Monopolies and Restrictive Trade Practices Act,1969 ,the Competition Act 2002

specifically incorporates the ‘effect’ doctrine under section 32. Section 32 is founded on what is

ordinarily known as the “effects doctrine”, which permits regulators to extend jurisdiction

beyond the “principle of territoriality”. In most countries, the legal view which is endorsed is that

the domestic competition law captures such acts even if the guilty enterprise is not located within

the territory of country, provided that the anti-competitive act has an effect on market of the

said country. The 2002 Act thus does not necessitate that the practice/ agreement take place

within the territory of India and confers the power to inquire and pass appropriate orders even if

any of the parties is outside India, provided the agreement has or may have an ‘appreciable

necessary to ensure that the trade practice is no longer prejudicial to the public interest, and, in any such case, if the
Commission is satisfied that the necessary steps have been taken within the time specified, it may decide not to
make any order under this section in respect of the trade practice.

(3) No order shall be made under sub-section (1) in respect of -

(a) any agreement between buyers relating to goods which are bought by the buyers for consumption and not for
ultimate resale whether in the same or different form, type or specie or as constituent of some other goods;

(b) a trade practice which is expressly authorized by any law for the time being in force.

(4) Notwithstanding anything contained in this Act, if the Commission, during the course of an inquiry under sub-
section (1), finds that 48[the owner of any undertaking is indulging in monopolistic trade practices], it may, after
passing such orders under sub-section (1) or sub-section (2) with respect to the restrictive trade practices as it may
consider necessary, submit the case along with its findings thereon to the Central Government 49[* * *] for such
action as that Government may take under section 31.

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adverse effect’ on competition in the relevant market in India 52.Therefore, CCI now has power to

take action against a foreign entity in a similar situation as that of under Haridas Export case.

This power has been coupled along with the power to conduct enquiry as well the procedure for

investigation under Sections 19, 20, 26, 29 and 30 of the Act, which lays down the power as well

as the procedure to be followed by the CCI in its inquiry into any alleged anticompetitive

agreements or any abuse of dominant position or any acquisition or acquiring of control or

merger or amalgamation, and inquire into whether such an agreement/combination has caused or

is likely to cause an appreciable adverse effect on competition in India. Keeping in mind the

shortcomings of extra territorial jurisdiction and the hiccups involved in the enforcements of

private international law, Section 18 of the Act also empowers the CCI to enter into any

memorandum or arrangement with the prior approval of the Central Government, with any

agency of any foreign country in order to discharge its duty under the provision of the Act 53.

The increasing globalisation of business activity along with the close to universal acceptance of

the “effects doctrine” has led to the increasing of the scope of national competition laws to cross-

border business activities. The principles of extra-territorial jurisdiction can be split in two parts,

firstly subject matter jurisdiction and secondly enforcement jurisdiction. For the purpose of

subject matter jurisdiction, the territorial and nationality principles are sufficient to undertake a

great number of infringements of competition laws. Whereas, for giving true effect to the

enforcement jurisdiction it is understood without arriving into bilateral or multilateral

agreements, it would be difficult to give due effect to the provisions of the Act. Thus, as per the

52
Supra note 195.
53
Maheshwari Kartik and Reis Simone, “Extraterritorial Application of the Competition Act and Its Impact”,
Competition Law Reports , vol.1,January 2012, page 146

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requirement, the CCI must undertake efforts to enter into bilateral or multi-lateral agreements

with other competition regulators under Section 18 of the Act.

For example, the proposed merger of Boeing and McDonnell Douglas 54 was approved by the US

antitrust authorities but then precluded by the European Commission. European Union

regulators said they are awaiting new "remedies" from Boeing Co. after competition experts

from the 15 EU nations unanimously agreed that the U.S. plane maker's $14 billion merger with

McDonnell Douglas Corporation should be blocked 55. This stand-offended only after months of

forceful political negotiations and potential threats of a United States–Europe trade war, since the

EC wanted to guard the interests of Airbus whereas the United States was insistent for the

paramount commercial interests of Boeing. Such matters have necessitated competition

authorities to increasingly co-operate with each other to ensure a free and fair market. The US &

EU competition authorities after years of acrimony are now increasingly moving towards

entering into a number of bilateral as well as multi-lateral cooperation agreements such as the

Agreement between the Government of the United States of America and the European

Communities on the Application of Positive Comity Principles in the Enforcement of their

Competition Laws in 1991 56. "This historic agreement between the United States and the

European Communities indicates a recognition that the benefits of international competitive

markets can best be achieved by international cooperation in the enforcement of our respective

54
The Boeing-Mcdonnell Douglas merger. The consolidation of the aerospace industry reached a climax on
December 15, 1996 when Boeing CEO Phil Condit and Mcdonnell Douglas CEO Harry Stone cipher announced the
two aerospace giants would merge in a $13.3 billion stock-for-stock transaction. Available at
www1.american.edu/ted/hpages/aero/BAMD.HTM
55
see generally, https://www.wsj.com/articles/SB868213225416324500, last visited on January 20,2018.
56
23 September 1991 Agreement between the Government of the United States of America and the European
Communities Regarding the Application of Their Competition Laws, and the exchange of interpretative letters dated
31 May and 31 July 1995 in relation to that Agreement is well accepted and followed by US and EU. The
agreements are available at https://www.justice.gov/atr/agreement-between-united-states-and-european-
communities-application-positive-comity-principles , last visited on March 20 ,2018.

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competition laws,” 57 , clearly bringing in and confirming doctrine of “positive comity”

.Principles in the Enforcement of their Competition Laws in 1998, the Agreement on Mutual

Legal Assistance between the European Union and the United States of America in 2003 are also

examples for incorporating the above doctrine.

4.4 Relevant Definitions under the Competition Act, 2002

i. Agreements

Generally a mutual understanding between two or more persons indicates the existence of an

agreement. Blacks Law Dictionary defines agreement as “A mutual understanding between two

or more persons about their relative rights and duties regarding past or future performances, a

manifestation of mutual consent by two or more persons”. The Iyers Law Lexicon, explains

agreement is the “Coming together of parties, in opinion or in final determination, the union of

two or more minds in a thing done or to be done, a mutual assent to do a thing”. It has also been

defined by Osborn as “The concurrence of two or more persons in affecting or altering their

rights and duties” 58.

The agreement does not call for a formal contract to be formed under the Competition Act. The

‘Agreement’ is defined and interpreted in a inclusive manner to include not only expressly

written and formally entered into agreements but also wide range of implied , informal and

unwritten agreements, which may include any arrangement or understanding or action in concert.

So any arrangement between the undertakings may be held to be anti-competitive. The term

57
Press release of 4th june,1998 Federal Trade Commission Chairman Robert Pitofsky., available at
https://www.ftc.gov/news-events/press-releases/1998/06/united-states-and-european-communities-sign-agreement-
positive,last visited on January 2,2018.
58
Osborn’s Concise Law Dictionary 8th Ed. P. 26

129
‘agreement’ also includes what is called a gentleman’s promise and can be held to be anti-

competitive if its purpose is to retard competition. The intention of the parties to such an

agreement regarding its enforceability is irrelevant. Even if the parties do not intend their

arrangement, understanding or action in concert to be enforceable by legal proceedings, it may

still be an agreement for the purposes of the Act 59.

In the case of Bayer AG v Commission 60 at European Union , the meaning of agreement was

appraised by the General Court and specified that the concept:

“Centers around the existence of a concurrence of wills between at least two parties, the

form in which it is manifested being unimportant so long as it constitutes the faithful expression

of the parties intention 61”. Gentleman’s agreements 62 and simple understandings have been held

to be agreements, though neither is legally binding; there is no requirement that an agreement

should be supported by enforcement procedures. A ‘protocol’ which reflects a genuine

concurrence of will between the parties constitutes an agreement within the meaning of Article

101 (1) 63. Connected agreements may be treated as a whole contract. An agreement may be

informal or oral too. There may be ‘inchoate’ understandings and conditional or partial

agreement during bargaining process sufficient to amount to an agreement. This is the clear

understanding followed in the sense of Article 101(1) TFEU 64.The concept of agreement

revolves around the existence of a concurrence of wills between at least two parties, the form in

59
Supra note 188.
60
Case T-41/96[2000] ECR II-3383
61
Id, para 69.
62
Case C-110/10 P, European Court Reports2011 I-10439
63
Whish Richard and Bailey David, Competition Law ,Oxford University press,2012
6464
Treaty on Functioning of European Union.

130
which it is manifested is unimportant so long as it constitutes the faithful expression of the

parties intention 65.

In the Indian context, the definition of ‘agreement’ in the Competition Act is an inclusive

definition that not only includes written agreements having force of law but also covers any

‘arrangement’, ‘understanding’ or ‘action in concert’ between the parties. These terms enlarge

the scope of the word ‘agreement’ used under the Act. The definition under Section 2 (b) of the

Competition Act, 2002 is as under;

“Agreement” includes any arrangement or understanding or action in concert,—

“(i) whether or not, such arrangement, understanding or action is formal or in writing; or

(ii) whether or not such arrangement, understanding or action is intended to be enforceable by

legal proceedings”;

This definition is giving way to much wider connotation to the word “agreement” than what is

generally assumed under the Indian contract Act, 1872 66 . That is precisely the reason why

legislators have refrained from using the term “contract” under the Competition Act .the

definition is even wider than that of MRTP Act, 1969, which demonstrated streaks of section

6(3) of the Restrictive Trade Practices Act, 1976 67.

In Re, Aluminum Phosphate Tablets Manufacturers 68, the Competition Commission observed

that the provisions of Section 2(b) do not restrict agreement to mean a written form of agreement

only. ‘Agreement’ includes even an arrangement, understanding or action – in – concert which is

65
The formal requirement of agreement is not looked for.
66
Section 2(e) and Section 2(h) of the Act.
67
RTP Act,1976 of the United Kingdom
68
2012 Comp LR 753 (CCI)

131
not formal or in writing. Thus covering all the dealings which manifest common intention of the

parties and not just a unilateral conduct.

Some agreement among enterprises has the potential of curbing competition. These agreements

include a group of firms act together as a single firm; it can damage the market by thwarting

competition. In CCI V Co-ordination Committee of Artists and Technicians of W.B. Film and

Television 69 Justice Sikri held “The 'agreement' or 'concerted practice' is the means through

which enterprise or association of enterprises or person or association of persons restrict

competition. These concepts translate the objective of Competition Law to have economic

operators determine their commercial policy independently. Competition Law is aimed at

frowning upon the activities of those undertakings (whether natural persons or legal entities)

who, while undertaking their economic activities, indulge in practices which effect the

competition adversely or take advantage of their dominant position”.

While explaining the word agreement, the Australian Commission in Newton 70s case defined

“the word arrangement is apt to describe something less than a binding contract/agreement,

something in the nature of an understanding between two or more persons- a plan between them

which may not be enforceable by law” 71.

In United States broad and inclusive definition of the term “agreement” is defined in terms of

contract or combination under Section 1 of the Sherman Antitrust Act, 1890 72.The definition of

69
Civil appeal no. 6691 of 2014, it is one of the first decisions of the Supreme Court with regard to Competition
Act,2002.
70
Newton v. Commissioner of Income Tax of Commonwealth of Australia (1958) 2 All ER 759
71
Iyer’s law Lexicon p. 141 quoting Newton v. Commissioner of Income Tax of Commonwealth of Australia (1958)
2 All ER 759
72
Section 1. Trusts, etc., in restraint of trade illegal; penalty Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is
declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby
declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not
exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three

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 agreement has been recurring antitrust problem because illegality under the Sherman Act is often

predicated upon the existence of an agreement to restrain trade 73.That the difference between

unlawful “tacit collusion” and lawful oligopolistic interdependence is not to be found in any

phrase that describes the state of mind of the industry participants. Once we are outside the

boundary of a formal agreement, whatever degree of “assurance”, “meeting of the minds”,

“conscious commitment to a common scheme”, etc., that exists in a situation of tacit collusion

can exist to the same extent in a situation of (lawful) classic oligopoly. Rather, if there is to be a

category of unlawful tacit collusion which is to be distinguished from classic oligopoly, the

difference must lie, not in the state of mind of the competitors, but on the specific elements of

behaviour that brought about that state of mind 74. Hence the expression used in section 1

‘contract or combination’ not only include the valid contracts or agreement backed by law but

also other engagements evolved to hamper competition.

ii. Parties to an Agreement

Section 3 of the Competition Act 2002,includes, the parties to an agreement who are prohibited,

could be enterprises, person or association of persons, association of enterprises or any

combination of these .

Sections 3 and 4 of the Competition Act,2002, are applicable to enterprises. The term

‘enterprises’ is defined under section 2(h):

years, or by both said punishments, in the discretion of the court . available at

http://gwclc.com/Library/America/USA/The%20Sherman%20Act%201890.pdf
73
Turner Donald, The Definition of Agreement under the Sherman Act: Conscious Parallelism or Refusals to deal,
Harvard Law Review, vol 75,feb 1962, No 4.
74
Hay, George A, “The Meaning of ‘Agreement’ under the Sherman Act: Thoughts from the Facilitating Practices
Experience”, Cornell Law Faculty Publications, Paper 1146. Available at
http://scholarship.law.cornell.edu/facpub/114, last accessed on 1st December 2017.

133
“enterprise means a person or a department of the Government, who or which is, or has been,

engaged in any activity, relating to the production, storage, supply, distribution, acquisition or

control of articles or goods, or the provision of services, of any kind, or in investment, or in the

business of acquiring, holding, underwriting or dealing with shares, debentures or other

securities of any other body corporate, either directly or through one or more of its units or

divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place

where the enterprise is located or at a different place or at different places, but does not include

any activity of the Government relatable to the sovereign functions of the Government including

all activities carried on by the departments of the Central Government dealing with atomic

energy, currency, defence and space”.

Explanation.-For the purposes of this clause,—

(a) “activity” includes profession or occupation;

(b) “article” includes a new article and “service” includes a new service;

(c)“unit” or “division”, in relation to an enterprise, includes

(i) a plant or factory established for the production, storage, supply distribution,

acquisition or control of any article or goods;

(ii) any branch or office established for the provision of any service;

The above definition includes a person or a government department. In its modest form, an

‘enterprise’ is any entity engaged in an commercial activity. Whereas some actions of a

particular entity are considered a sovereign function, not all functions can be sovereign. The

functional aspects of an entity take precedence over its institutional aspects in order to

understand whether it is enterprise.

134
Hon’ble Delhi High Court, in UOI v. CCI Order of 23/02/2012 75 also clarified that:

“An enterprise may perform some sovereign functions while other functions

performed by it, and the activities undertaken by it, may not refer to sovereign functions. The

exemption under section 54 could be granted in relation to the activities relatable to sovereign

functions of the Government, and not in relation to all the activities of such an enterprise.

Therefore, it is the functional aspects and not the institutional aspects that are dominant in

judging whether an entity is an enterprise”.

A inclusion of the Government Department in the definition of the term ‘enterprise’ is

precarious .Hence enterprise includes;

1. Enterprise ordinarily speaking, is an entity engaged in an economic or commercial

activity is an “enterprise”. It should be noted that “acquisition” of goods and services can

also qualify as a commercial activity.

2. Government Departments qualify as an enterprise. However, exemptions do exist for

performing sovereign functions such as collection of taxes, or for statutory functions such

as determination of tariff by electricity commissions..

3. Trade Associations generally provide a platform to its members to show its views and do

not carry out any commercial activity, hence are not an enterprise. Although, the

constituent member of such associations may be enterprises. However, where a trade

association performs a commercial function-such as charging commission from

customers for distribution of work to its constituent members- such association does

qualify as an “enterprise”.

75
UOI v. CCI, W.P.(c) 993/2012&CM Nos 2178-7 9/2012 dated 23-02-2012

135
 4. Autonomous Bodies do qualify as “enterprise” if they carry out an economic activity.

Sports bodies like BCCI or Hockey India do qualify as an “enterprise” as they carry out

the dual role of a regulator as well as a commercial body

The term ‘enterprises’ is seen as equivalent to the word ‘undertaking’ used under the

European Union Competition Law that the reason it becomes imperative for CCI to

understand how they have tackled the term ‘undertaking’.

In KalusHofner& Fritz Elser v. MacrotronGmb H 76whilst considering the definition of the term

‘undertaking’ under the EEC Competition Law, held that “the

concept of an ‘Undertaking’ encompasses every entity engaged in an economic activity,

regardless of the legal status of the entity and of the way in which it is financed. It was

accordingly held that employment recruitment is such an economic activity, irrespective of

whether it is normally entrusted to a public agency”. A public employment agency operating in

the general economic interest remains subject to the EEC competition rules. The above decision

was also followed in the case titled as Distribution of Package Tours During the 1990 World

Cup 77 where the EEC Commission, whilst re affirming the decision in the case of Walrave v

Union Cycliste Internationale 78, held that

“any entity carrying of an activity of an economic nature, regardless of its legal

form, constitutes an undertaking within the meaning of Article 85 of the EEC Treaty and further

stated that an activity of an economic nature means any activity, whether or not profit making,

that involves an economic trade” . In Kalus Hofner& Fritz Elser v MacrotronGmb H decision

dated 23/04/1991, the Court of Justice of European Communities whilst considering the

76
23/04/1991, Court of Justice of European Communities
77
OJ (1992) l 326/31
78
Cases 36/74 of 12 December 1974

136
definition of the term ‘undertaking’ under the EEC Competition Law, held that “the concept of

an ‘Undertaking’ encompasses every entity engaged in an economic activity, regardless of the

legal status of the entity and of the way in which it is financed. It was accordingly held that

employment recruitment is such an economic activity, irrespective of whether it is normally

entrusted to a public of agency” 79.

Similarly in Surinder Singh Barmi v. BCCI 80the CCI held that the BCCI undertakes the two roles

i.ecurator and that of organiser. In this broad based objective, the BCCI is tangled in the

selection of team India which represent India in international sporting events, to work towards

the growth and enhancement of cricket by organizing training camps etc., as well as organising

the game throughout the year. These activities also are intricately attached to aspect of

‘organisation’ which brings in revenues to the BCCI. It include managing of media rights , sale

of tickets, etc. the activities of ‘organising events’ are definitely economic activities as there is

revenue aspect is germane to the organisational activities of the BCCI. Hence the BCCI could be

treated as enterprise. Following the European Court Of Justice , CCI holds all sporting

associations to be regarded as an enterprise in so far as their commercial conduct is concerned

and treated at par with any other business entity.

iii. Relevant market

The relevant market definition encompasses the depiction of the context in which certain

economically harmful practice could take place. Therefore, the process of defining a market and

a relevant market, is fore most important, so as to define the deviations and curb anti-competitive

practice. The process begins by assuming provisionally that certain anti-competitive conduct

79
See generally,Available at http://www.cci.gov.in/sites/default/files/702014D.pdf
80
Surinder Singh Barmi v. Board of Control of Cricket in India, 2013 Comp LR 297.

137
exists in the market. It then proceeds to define through a series of questions, the boundaries of

the smallest market in which such conduct could be sustained. After the contours of the smallest

market are defined and drawn, the actual conduct in question is subjected to an analysis, to

determine if it has or could have an anticompetitive effect 81.

The relevant market as defined in Section 2(r) of the Competition Act can only be inclusive as

the term owes its source to the concept of Economics and thus is bound to be susceptible to

changes depending on the unique set of facts for each case.

Section 2(r) of Competition Act 2002 reads as:

"relevant market means the market which may be determined by the Commission with reference

to the relevant product market or the relevant geographic market or with reference to both the

markets”;

It is apparent from the above definition that the duty of identifying the "relevant market" is left in

the hands of the Commission. Further on the terms like 'relevant product market' and the

'relevant geographic market' involves understanding of the legal concepts, concepts of

Economics and also involves analysis of volumes of data/statistics before arriving unto a

conclusion.

Section 2(s) defines relevant Geographic Market

"Relevant geographic market means a market comprising the area in which the conditions of

competition for supply of goods or provision of services or demand of goods or services

81
Dr. S chakravarthy, relevant market in competition case analyses available at
http://www.circ.in/pdf/Relevant_Market-In-Competition-Case-Analyses.pdf visited on 22nd December 2017.

138
are distinctly homogenous and can be distinguished from the conditions prevailing in the

neighboring areas” 82.

Section 2(t) of the Competition Act 2002 defines the 'relevant product market' as follows:

"relevant product market means a market comprising all those products or services which are

regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the

products or services, their prices and intended use”;

A relevant product market basically refers to two kinds of substitutability of the product/service

– one is the 'demand side substitution' which stipulates a situation where the market player is not

benefited by a slight increase in price because the consumer has the option of substituting the use

of such product/service and the second is the 'supply side substitution' when other market players

increase supply of such product/service cancelling the effect of any increase in price 83.

The above mentioned definitions sounds like a cakewalk but it can be aptly said it’s not so. In the

case of Belaire Owner's Association v. DLF Limited 84. CCI pronounced its order which

produced currents in the Competition jurisprudence; as the said order was one of the first order

on relevant market under Indian competition jurisprudence, which was supposed to clear the dust

surrounding the concept "relevant market". But soon the notion seemed to whittle down with

more such orders being pronounced by our own CCI Orders in the case of unitech builders and

EMR case etc. It can be rightly asserted that the concept 'Relevant market' is an ineffaceable

ingredient in determining the abuse of dominant position by a market player and thus every time

CCI pronounces its order, it needs to interpret the concept 'relevant market'.

82
Competition Act of India,2002
83
Sameeksha Bhola, “India: Determination Of Relevant Market – ‘Easier Said Than Done”, available
atwww.http://www.mondaq.com/india/x/295618/Trade+Regulation+Practices/Determination+Of+Relevant+Market
+Easier+Said+Than+Done’, last visited on January 2,2018
84
Case No. 19 of 2010, order dated August 12,2012.

139
Relevant market is crucial in examining Dominance and offences of Abuse of Dominance. The

Indian Competition Act,2002defines a dominant position as a position of strength, enjoyed by an

enterprise in the relevant market, which enables it to operate independently of competitive forces

prevailing in the relevant market or affect its competitors or consumers or the relevant market in

its favour. The same Act describes, inter alia, abuse of dominance to occur when an enterprise

uses its dominant position in one relevant market to enter into, or protect, other relevant market.

For an enterprise to abuse a dominant position, it must hold a dominant position in a relevant

market. The first step, therefore, in an evaluation of an enterprise’s actions is to define the

relevant market 85.

It is an acceptable fact that majority of the members in the commission define ‘relevant market’

vary widely. This tendency has two important concerns. First, if relevant market is defined too

widely, AAEC ceases to be appreciable, which must be proved for establishing a vertical anti-

competitive agreement , as well as it becomes easier to rebut the inference of AAEC in case of

horizontal agreements. Second , if the relevant market is defined too widely, an enterprise,

alleged to have abused dominance, does not remain dominant 86.

The relevant market within which to analyse market power or assess a given competition concern

has both a product dimension and a geographic dimension. In this context, the relevant product

market comprises all those products which are considered interchangeable or substitutable by

buyers because of the products' characteristics, prices and intended use. The

relevant geographic market comprises all those regions or areas where buyers would be able or

willing to find substitutes for the products in question. The relevant product and geographic

85
Supra note.75
86
Dixit Vinod, “Competition Law”, Annual Survey of Indian Law, Vol .XLVII, 2011, Page 149.

140
market for a particular product may vary depending on the nature of the buyers and suppliers

concerned by the conduct under examination and their position in the supply chain. For example,

if the questionable conduct is concerned at the wholesale level, the relevant market has to be

defined from the perspective of the wholesale buyers. On the other hand, if the concern is to

examine the conduct at the retail level, the relevant market needs

to be defined from the perspective of buyers of retail products 87.

It is to be borne in mind that the process of defining the relevant market starts by looking into a

relatively narrow potential product market definition. The potential product market is then

expanded to include those substituted products to which buyers would turn in the face of a price

increase above the competitive price. Likewise, the relevant geographic market can be defined

using the same general process as that used to define the relevant product market 88.

4.5 Indian Competition Regime

In the pursuit of globalization, followed by liberalization and privatization, India has geared for

the challenge by opening up its economy, shackles of removing controls, and restoring to

liberalization. Articles 38 and 39 of the Constitution provide that “the State shall strive to

promote the welfare of the people by securing and protecting as effectively, as it may, a social

order in which justice – social, economic and political – shall inform all the institutions of the

national life, and the State shall, in particular, direct its policy towards securing (a) that the

ownership and control of material resources of the community are so distributed as best to sub

serve the common good; and (b) that the operation of the economic system does not result in the

concentration of wealth and means of production to the common detriment”. As a result Indian

87
CCI v Co ordination Committee of Artist and Technicians ,Civil Appeal No. 6691 of 2014,para 33,at page no 31
88
Ibidi, para 34 at page 32.

141
Parliament in late sixties enacted the MRTP Act thereafter, the complete change in the economic

order for the reasons just discussed above leading to the enactment of Competition Act to

stimulate economic power and equitable distribution of wealth. The Act as discussed above is the

creation of the parliament with no parallel or corresponding legislation formulated at the state

level. The Statement of the Objects and Reasons to the Act states the reason for enacting the new

law clearly.

Section 3 and 4 of the Act lays down violations and the relief for such violations is granted under

section 27 of the Act. In accordance with Section 27 , the CCI is empowered to grant orders in

the nature of a ‘cease and desist’ order, or inflicting a penalty which does not exceeding ‘10 % of

the average turnover during the preceding three years from the date of order. In cartel cases CCI

could impose a penalty that could be higher of either up to 10 percent of the turnover or three

times the amount of profit derived from the cartel agreement. Under the provision of Section 48

of the Competition Act, in the situations of ‘violation by companies’, CCI may go ahead and

punish any person who, at the time of the violation, was in charge of the company, unless that

person can show that the violation was committed ‘without his knowledge’ or that he had

exercised ‘all due diligence to prevent the violation’. Section 43- A provides that “in case of a

failure to notify a combination, the Commission shall impose a penalty of 1% of the total assets

or turnover of the combination”. Section 42A of the Act provides “for the compensation in case

of contravention of orders of the CCI. Hence the section lays down the provision for recovery of

the compensation from the appellate body that is COMPAT by making an application to

142
COMPAT, for recovery of compensation from an enterprise for any loss or damage suffered by

him for violating the directions of the CCI under sections 27, 28, 32, 33 and 41 of the Act” 89.

4.5.1 Anti- Competitive Agreement under Section 3 of the Competition Act.

The prohibition identified under Section 3 and Section 4 of the Act with respect to anti-

competitive agreement and abuse of dominance is stressing on significance of preservation and

endurance of competition. According to Bhatia C.R , “the conjoint cord in prohibition of "Anti-

competitive Agreements under Section 3 of Act as well as "abuse of dominant position as

mentioned under Section 4 is that both pursue to maintain and sustain competition in the markets

and are to be enforced ‘ex post’. An enterprise or association of enterprises is liable under

Section 3, only when, they enter into an agreement relating to production/ supply of goods or

rendering of services which causes or is likely to cause appreciable adverse effect on competition

within in India. On the other hand, abuse of dominance bears upon unilateral behaviour of

dominant enterprise or group thereof. Thus, while the concurrence of wills of two or more

independent entities is a condition precedent to make out a case of Anti-competitive Agreement,

abuse of dominance, being a unilateral conduct, does not emanate from an agreement, which

requires the consent of more than one party” 90.

Anti-competitive agreements are divided into vertical and horizontal agreements. Vertical

agreements are agreement between firms at different stage of production, e.g. an agreement to

supply raw materials. The common nature of such agreements are refusal to deal, resale price

89
Desai Nishit, “Competition Law in India-Jurisprudential Trends and the way forward”, April 2013 available at
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition%20Law%20in%20India
.pdf, Last accessed on 1st December 2017.
90
Bhatia G.R, “Assessment Of Dominance: Issues And Challenges Under The Indian Competition Act, 2002”,
available at www.manupatraarticles.com, last accessed on December 12,2017.

143
maintenance, tie in arrangement, exclusive supply etc. Horizontal agreements are ones between

firms at the same level of distribution. The agreements emanating from the collective action of a

group engaged in the same line of business activity. These are in nature of cartels or concerted

action which envisages harmonisation in the market by the competing players i.e. producers or

suppliers. The common types of such agreements are bid rigging, collusive bidding, price

fixation etc. The 'agreement' or 'concerted practice' is the means through which enterprise or

association of enterprises or person or association of persons restricts competition. These

concepts translate the objective of Competition Law to have economic operators determine their

commercial policy independently. Competition Law is aimed at frowning upon the activities of

those undertakings (whether natural persons or legal entities) who, while undertaking their

economic activities, indulge in practices which effect the competition adversely or take

advantage of their dominant position 91.

4.5.2 Horizontal Agreement

The agreements which are entered by parties which are the same level in the market chain are

categorized into horizontal agreements explicitly included under Section 3(3) of the Competition

Act. The Horizontal agreement have been mentioned under para 4.3 of the Raghavan Committee

Report and defined as “agreements between two or more enterprises that are at the same stage

of the production chain and, in the same market. The most obvious example would be that of

agreements between enterprises dealing in the same products. However, in general, it is

important to define the relevant market .To attract the provision of the law, the products must be

substitutes. Being at the same stage of the production chain implies that the parties to the

agreement are both (all) producers, or retailers or wholesalers. As has been interpreted over the

91
Competition Commission Of India Vs. Co-ordination Committee of Artist and technicians of West Bengal Film and
Television, Civil Appeal No 6691 of 2014

144
years in the U.S. (and enacted more recently in other countries) a distinction is drawn in this

regard between horizontal and vertical agreements. In certain circumstances it can be established

that firms that are collaborating on some socially valuable activity may need to agree to do away

with competition so to establish the cooperative relationship. In this, the European Community

law goes beyond the objective of maximising welfare and explicitly allows some restrictive

contracts if they promote progressiveness and consumers ultimately stand to gain. The Japanese

law also allows for actions in contravention of the law provided they are in the ‘public interest’.

It would be dangerous to allow the kind of discretion in interpretation possible under the

Japanese law. Any exceptions that are permissible should be clearly laid down. However, we

recommend that restrictive contract which is designed to promote use of energy efficient

manufacturing processes and production of Eco-friendly products or conservation of natural

resources should be explicitly permitted as exceptions” 92.

The presumption in case of horizontal agreements and cartelization is that drives towards

unreasonable restrictions on competition and therefore, be presumed to have an appreciable

adverse effect on competition. This provision of per se illegality is rooted in the provisions of the

U.S. law and has a parallel in most modern legislations on the subject 93. Even under the

Australian law, it forbids most price fixing arrangements, boycotts and certain kind of exclusive

dealing. Similarly, the U.K. Competition law presumes that certain agreements do have an

"appreciable effect" on competition. So inclusion of such provisions should always be done with

restricted scope for discretion and interpretation on the part of the authorities. Hence, such

92
High level Committee on Competition Policy and Law, Para 4.3.4, Raghavan Committee report.
93
Para 4.3.8,Raghavan Committee report, high level Committee on Competition Policy and Law

145
agreements are presumed to be illegal and the governing principle is that they have an

‘appreciable’ anti-competitive effect 94.

4.5.2 Vertical Agreement

The other type of agreement which is entered into by enterprises having different levels in the

supply chain or production chain and, therefore, in different markets. They are the agreements

which are entered into between the enterprises operating at different levels of supply chain in the

market, such as between the producer of a product and a retailer 95. An example of this would be

an agreement between a producer and a distributor. These agreements are not free from the

control by Competition Law. Since these agreements brings in restrain, which has a direct impact

on competition, so the anti- competitive vertical agreement are condemn by the Competition

Law. The Raghavan committee has also identified various restrains as “vertical restraints” on

competition, which include:

1. Tie-in arrangements

2. Exclusive supply agreements

3. Exclusive distribution agreements

4. Refusal to deal

5. Resale Price Maintenance

In the past, the U.S. anti-trust authorities had treated vertical restraints, like tie-in arrangements

illegal quite harshly. This approach has changed in last two decades as they take up a lenient

94
It may be pointed out that a significant number of the Members of the RaghavanCommittee were not in favour of
identifying categories presumed to be illegal. They felt that they should be subject to the ‘rule of reason’ and that the
CCI can issue relevant regulations in this regard. But the majority however felt that such agreements are presumed
to be illegal.
95
Middleton. K and Rodger B.J.et al., Cases and Material on U.K &EC Competition Law, Oxford University Press,
2003, page 219.

146
view, so now under the rule of reason, vertical agreements are generally treated more leniently

than horizontal agreements.

The United States District Court for the Middle District of Florida held in Costco Wholesale
96
Corp v Johnson & Johnson Vision Care, that the legality of any vertical agreement between

JJVC and its resellers would be tested under the rule of reason 97. According to the court,

plaintiff needs to prove three fundamental points (a) the anticompetitive effect of JJVC’s conduct

on a relevant market and (b) that the conduct lacks any procompetitive benefit or

justification, and it analysed the sufficiency of the complaint under these criteria. After

concluding that Costco had antitrust standing to bring the action, the court held that the

complaint adequately alleged relevant product markets, one comprising Costco and other firms

that purchase lenses from JJVC (the Wholesale Market) and the other comprising their

downstream customers (the Retail Market). Since JJVC was one of only four firms

manufacturing contact lenses in the relevant geographic market (United States) and had a forty

three per cent market share, the court had little difficulty holding that the complaint adequately

alleged ‘a plausible claim of actual and potential harm to competition and consumers in the

market. 98’

Even in EU competition law treats horizontal agreements different from the vertical

agreements 99. Similarly in India, the nature of agreement depends on the locus the parties hold in

96
2015 U.S. Dist. LEXIS 168581 (M.D. Fla. 2015)
97
Id at 20
98
Id at 41, available at.http://globalcompetitionreview.com/insight/the-antitrust-review-of-the-americas-
2017/1068697/united-states-vertical-restraints, last assessed on 6th December 2017
99
Commission Regulation 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the
Functioning of the European Union to categories of vertical agreements and concerted practices available at
http://ec.europa.eu/competition/antitrust/legislation/vertical.html, last accessed on December 6, 2017

147
the market. The reason for variant treatment is because sometimes the vertical agreements have

positive effect on the competition. While to see the anti-competitive effect on the market, one of

the party should have significant market power. In any case, given a situation, the agreement is,

likely to attract the provisions of the law relating to abuse of dominance.

4.6 Scope of section 3

Section 3 of the competition Act provides for prohibition entering into anti-competitive

agreements. Any such agreement which causes or is likely to cause an appreciable adverse affect

on the competition within India shall be void. Section 3 was brought into effect from 20th May

2009, vide notification No.1241(E), dated 15th May 2009.section 3(1) clearly provides that “no

enterprise or association of enterprises or 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 within India”. Where there is an accusation that an agreement is likely to cause

appreciable adverse effect, then action will lie.

In the recent Prem Prakash and Principal Secretary , Government of Madhya Pradesh 100 it

was noted by Commission that

“the basic objective of competition law is promotion and protection of the competitive

process and ensuring a level-playing field for all market players that will help markets to be

competitive. Thus, in public procurement processes, it is desirable that the conditions imposed

on suppliers are not such that they exclude firms from the market. Rather endeavor should be to

100
Case No 50 of 2014, Page 18,order dated 17th March 2017.The information in this case was filed by Shri Prem
Prakash (the ‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against the Principal
Secretary, Public Works Department, Government of Madhya Pradesh (‘OP-1’) and the Director General, Central
Public Works Department, New Delhi (‘OP-2’) alleging contravention of the provisions of Sections 3 and 4 of the
Act.

148
promote competition by being more flexible so that more number of firms would be eligible to

provide services. Also, the conditions should be such that they ensure equal and non-

discriminatory treatment as well as the best possible environment for competition. Accordingly,

when a department of the Government such as OPs require quality certificates in their tender

conditions, the terms must not specify any specific accrediting entity rather the terms should

specify the standards. This would not only enable participation by more laboratories but also

ensure that the laboratories which have been accredited as per the stipulated international

standards are not discriminated based on the accreditation body that certifies them”

Adding to the above note, the CCI held in FICCI – Multiplex case 101 while following the

Kingfisher Airlines v Competition Commission 102 ,in case where a cartel comes into effect prior

to the notification of section 3 of the Act and if it continues after the enforcement of the said

section, it will be actionable under the Competition Act 103.

The first and much awaited order under section 3(1) of the Competition Act,

2002, RamakantKini v. Dr. L.H. Hiranandani Hospital, Powai, Mumbai 104 has garnered more

than its share of controversy since the time Commission has put down the precedence of

applicability of Section 3(1) and opined that, "Section 3(3) and section 3(4) are expansion of

section 3(1) but are not exhaustive of the scope of section 3(1)..... scope of section 3(1) is

independent of provision of section 3(3) & 3(4)" 105.

The core of section 3(1) is causation or likelihood of adverse appreciable affect within a

particular market; if the said provision is disengaged from the section, a standalone enforcement

101
Supra note 274.
102
(2010) 4 Comp .L J 557 (Bom)
103
FICCI-Multiplex Association of India v United Producer/Distributors case no .01/2009, order dated 25thfeb 2011
104
Ramakant Kini v. Dr. L.H. Hiranandani Hospital, Powai, Mumbai, Case No. 39 of 2012, order dated 05 February,
2014.
105
Id page 11.

149
of the section can only be unwarranted and unreasonable. The disinclination of the Commission

to demarcate the relevant market in section 3 cases, it is hard to envision its assessment under

section 3(1) and the basis of holding an agreement anti-competitive. The term “appreciable

adverse effect on competition” has not been defined in the Act. However, the Competition Act

brings out certain grounds mentioned under section 19(3) for commission to have due regard

while taking note of agreements under section 3. Some of the grounds are as mentioned below

1. creation of barriers to new entrants in the market;

2. driving existing competitors out of the market;

3. foreclosure of competition by hindering entry into the market;

4. accrual of benefits to consumers;

5. improvements in production or distribution of goods or provision of services;

6. promotion of technical, scientific and economic development by means of

production or distribution of goods or provision of services.

The rulings of the Competition commission in matters under section 3 and section 4 of the

Competition Act show profound sense of understanding of the present day business dealings.

The reasoning of the Competition commission in Automobiles Dealers and Lamborghini and

whole lot of other cases by and large is balanced and recognises changes in business models

without placing dealers in a vulnerable or disadvantageous position. The Competition

Commission in these rulings has depended on the criteria provided under section 19 of the Act

and has also recommended that all the factors mentioned therein be examined and has sought to

ensure uniformity in outcomes and predictability in application of the Competition Act.

150
 • Automobile Order 106

The present case was brought before commission by Shri Shamsher Katarai, under Section

19(1)(a) of the Competition Act against the leading car manufacturers of Indian market namely

Honda, Volkswagen and Fait claiming that the non-availability of original spare parts in the free

market of the automobiles manufactured by companies is indicative of anti –competitive

conduct.

Competition Commission noted that “as per the provisions of section 3(4) of the Act, only

agreements which cause or are likely to cause an AAEC on competition in India, shall be subject

to the prohibition contained in section 3(1) of the Act. Therefore, in order to determine if the

agreements entered between the OEMs and the authorized dealers are in the nature of an

exclusive distribution agreement or refusal to deal under section 3(4)(c) and 3(4)(d) of the Act,

the Commission needs to determine if such agreements cause an AAEC in the market based upon

the factors listed in section 19(3) of the Act”.

However, while in Automobiles Case, restrictive supply of spares and services only through

authorised dealers was held to be anti-competitive, in Snap deal order 107, a similar condition

imposed by SanDisk corporation was considered reasonable condition and was not considered

anti-competitive. The Commission in para 19 noted;

“That the storage devices sold through the online portals should be bought from its

authorised distributors by itself cannot be considered as abusive as it is within its rights to

protect the sanctity of its distribution channel. In a quality-driven market, brand image and

goodwill are important concerns and it appears a prudent business policy that sale of

106
Shamsher katari vs Honda siel, Case No 03 of 2011
107
Ashish Ahuja and Snapdeal ,Case No. 17 of 2014.

151
 products emanating from unknown/ unverified/ unauthorised sources are not

encouraged/allowed”.

This apparent inconsistency still remains there, the challenge to the Automobiles Case vide

interim order dated February 6,2013 in the Madras High Court was finally dispose-off on

February 4, 2015 with the confirmation of jurisdiction on the commission and held that neither

Director General nor CCI exceed the jurisdiction vested in them by the statute and even after

COMPAT order dated December 9, 2016 upholding the CCI order but reducing the quantum of

the penalty could not root out ambiguity.

• Steel Manufacture Case 108

CCI, applying principles stated in the First Report, first examined the presence of an agreement

and then the elements of Section 3. Although CCI agreed with the finding of DG that the market

was oligopolistic, CCI concluded that pricing policies followed by the major players did not

reveal presence of a prior agreement. Materially, CCI concluded that interdependence of parties

in an oligopolistic market was not conclusive of presence of an agreement for the purpose of a

cartel. CCI also concluded that behaviour of firms in pricing showed that manufacturers were not

under-cutting one another. Important principles from this ruling are:

108
In Re: Alleged Cartelization by Steel Producers, Case No: RTPE No. 09 of 2008 (MRTP).
The MRTP Commission took cognizance on the basis of an article published in the Financial Express which spoke
about a sudden spike in prices of steel by steel companies such as SAIL and RINL which would have a grave
inflationary effect, affecting prices in other industries such as automobile and construction. Engineering Export
Promotion Council (EEPC) subsequently filed a complaint addressed to the DG I&R (Investigation and Registration,
under MRTP Act) about a possible cartelization in the Steel Industry. It was contended that between April 2007 and
January 2008, there was an average increase in the price of steel by 10%. Consequently, thirty four steel companies
were directed to be investigated by DG I&R. Subsequently upon the repeal of the MRTP Act, the matter was
transferred to CCI under Section 66 (6) of the Act. CCI concluded that a prima facie case existed and directed the
DG under the Act to carry out further investigation and submit a report.
.

152
a. Profit margin is an important indicator of price fixing strategies. This can be indicative of

whether there is an agreement among the participants in the market;

b. Price parallelism by itself is not indicative of cartels or cartel-like behavior unless there is

additional evidence such as proof of conscious parallel behavior;

c. Since circumstantial evidence would be relied upon, the material gathered should lead one to

the conclusion that there is more than mere parallelism and firms have crossed the ‘line’ thereby

violating the Act.

In Competition Commission of India V. Co-ordination Committee of Artists and Technicians of

West Bengal film and television 109 Supreme Court held “When the lenses of the reasoning

process are duly adjusted with their focus on the picture, the picture gets sharpened and haziness

disappears. One can clearly view that prohibition on the exhibition of dubbed serial on the

television prevented the competing parties in pursuing their commercial activities. Thus, the CCI

rightly observed that the protection in the name of the language goes against the interest of the

competition, depriving the consumers of exercising their choice. Acts of Coordination

Committee definitely caused harm to consumers by depriving them from watching the dubbed

serial on TV channel; albeit for a brief period. It also hindered competition in the market by

barring dubbed TV serials from exhibition on TV channels in the State of West Bengal. It

amounted to creating barriers to the entry of new content in the said dubbed TV serial. Such act

and conduct also limited the supply of serial dubbed in Bangla, which amounts to violation of the

provision of Section 3(3)(b) of the Act” 110. In the instant case the appeal of Competition

Commission was allowed. Court held that the trade union which is The Coordination Committee,

109
Civil Appeal No. 6691 of 2014(Supreme Court of India)
110
Supra note 275,

153
and not related to any other activity would not be treated as an ‘enterprise’ or the kind of

'association of persons' described in Section 3.

Section 3(3) of the Act deals with certain specific anti competitive agreements, practices and

decisions of those supplying identical or similar trade of goods or provision of services, acting in

concert or such actions by cartels. it also provides that in the cases of suppliers of identical or

similar goods or services, including cartels, certain arrangements between those enterprises,

practices carried on by them and decisions taken by them, will be presumed to have been an

appreciable adverse effect on competition 111.

Section 3(4) of the Act prohibits tie-in arrangements, exclusive supply agreements, exclusive

distribution agreement, refusal to deal and resale price maintenance. Any of these practices

having adverse effect on competition in India is prohibited .it means that anti-competitive

practice may happen inside or outside India, but if the effect is within the country, competition

authorities of India can take appropriate action. However , section 3(5)(i) of the Act gives the IP

right holder to put restraint on infringement and to impose reasonable restrictions and conditions

in order to protect his right on copyright, patents, trademarks, geographical Indications of goods,

designs and semi conductor integrated circuits layout design 112.

4.7 Dominance

World over the Competition laws are predominantly concerned with the exercise of market

power and its abuse. The term “market power” is variously known as “dominant position”,

“monopoly power” and/ or “substantial market power”.

111
Raju .K.D, The Intellectual Property Rights and Competition Law; A Comparative Analysis, Eastern Law
House,2015 at page 184.
112
Supra note 277 at page 183.

154
Section 4 113 of the Competition Act, 2002 provides for prohibition of abuse of dominant

position.it was brought into effect from May 20,2009, vide NotificationNo.1241(E) , dated 15th

may 2009.The Act defines “dominant position in terms of a position of strength enjoyed by an

enterprise, in the relevant market in India, which enables it to:

a. operate independently of the competitive forces prevailing in the relevant market; or

b. affect its competitors or consumers or the relevant market in its favour”.

It is the capability of the firm to conduct independently of the market forces that controls its

dominant position. In a perfectly competitive market, though this is an “ideal” situation, no

enterprise has control over the market, especially in the determination of price of the product.

Keeping this in view, the Act specifies a number of factors that should be taken into account

while determining whether an enterprise is dominant or not. The dominant position can be

113
Abuse of dominant position
“4. [(1) No enterprise or group shall abuse its dominant position.]
(2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a group].—-
(a) directly or indirectly, imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or
service.
Explanation.— For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or
service referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including
predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory condition or price
which may be adopted to meet the competition; or
(b) limits or restricts—
(i) production of goods or provision of services or market there for or
(ii) technical or scientific development relating to goods or services to the prejudice of consumers; or
(c) indulges in practice or practices resulting in denial of market access [in any manner]; or
(d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by
their nature or according to commercial usage, have no connection with the subject of such contracts; or
(e) uses its dominant position in one relevant market to enter into, or protect, other relevant market.
Explanation.—For the purposes of this section, the expression—
(a) “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India,
which enables it to—
(i) operate independently of competitive forces prevailing in the relevant market; or
(ii) affect its competitors or consumers or the relevant market in its favour.
(b) “predatory price” means the sale of goods or provision of services, at a. price which is below the cost, as may be
determined by regulations, of production of the goods or provision of services, with a view to reduce competition or
eliminate the competitors.
[(c)“group” shall have the same meaning as assigned to it in clause (b) of the Explanation to section 5.]”

155
determined in the context of the relevant market and on the basis of any of the thirteen factors

enlisted under clauses (a) to (m) of section 19 (4) of the Act.

The lookout for the abuse of dominance by a group or a single firm would involve three stages ;

First being identification of the relevant market which is evaluated from the perspective of

relevant product or geographical market.

The above two dimensions of the relevant market are governed by several factors. CCI in Atos

case 114 defined “product market as to comprise all those products or services that are regarded as

interchangeable or substitutable by the consumer, because of characteristics of the products or

services, their prices and intended use” 115.The CCI held that relevant product market is to be

looked at form both demand and supply perspectives based on the characteristics of the product,

its price and intended use 116.

Relevant geographic markets could be local or national depending upon the facts in each case,

but it cannot be global 117. These are areas where demand and supply of goods of services can be

said to be homogenous and distinguishable from markets in neighbouring areas 118.

Second being the determination in the relevant market of "dominance" .

It might be said that market share, though a major factor, is not the sole yardstick in

determination of dominance. This view was reaffirmed in Mr. RamakantKini v Dr L H

Hiranandani Hospital, Powai, Mumbai. 119 The Commission was assessing the dominance of the

Hiranandani hospital. The relevant market was for provision of maternity services by super

114
Atos Worldline V Verifone India, Case No. 56 of 2012, para 6.3
115
Ibidi
116
Surinder Singh Barmi V BCCI, Case No 61 of 2010.
117
Bijay Poddar V Coal India Ltd., Case No 59 of 2013.
118
Supra note 280
119
Case No. 39 of 2012.

156
specialty and high-end hospitals within a distance of 12 kilometres from the Hiranandani

Hospital. The Commission, in the case, clarified that the market shares cannot be the lone

indicator to decide dominance of an enterprise , it is just one of the factor .

Third being identification of an "abuse" of that dominant position by an enterprise. Therefore,

merely enjoying dominant position in the market is not a breach of the law. Its bad only when

used as exploitative or exclusionary tool. Further, determining dominance, a pre-requisite for

intervention under the Act, serves as a filter and it is presumed that the same conduct either

cannot be carried on by a non-dominant enterprise or would not harm the competition.

The abuse of dominant position impedes fair competition between the firms, exploits consumers,

and makes it difficult for other players to compete with the dominant enterprise on merit. Abuses

as specified in the Act fall into two broad categories: exploitative (excessive or discriminatory

pricing) and exclusionary (for example, denial of market access). Hence according to the

Raghavan committee Report, para 3.6 contains abuse of dominant position as following;

1) Imposing unfair condition or price;

2) Predatory pricing;

3) Limiting production / market or technical development;

4) Certain barrier to entry;

5) Applying dissimilar conditions to similar transactions;

6) Denying market access;

7) Using dominant position in one market to gain advantages in another market 120.

120
Report of High Level Committee on Competition Policy and Law, Para 3.6

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The exclusionary conducts are those in which the dominant entity uses its dominance to restrict

entry of competition into the relevant market. In Re Shri ShamsherKataria v Seil Honda 121,

“where there existed agreements between the dominant entities and the Overseas Suppliers of

original car parts which prevented the Overseas Suppliers from supplying parts to independent

repairers, such agreements were held to be anti-competitive as they restricted entry of new

firms”.

While the conduct which can be referred as exploitative conduct are the ones wherein the

dominant firms levy unjust or discriminatory conditions and exploits its dominance. The case
122
dealing with the issue is Pankaj Agarwal v DLF , “where, in a case pertaining to allotment of

apartments, the contracts drafted unilaterally by DLF enabled them to be arbitrary about

allotment of super-area, secretive about information relevant to the purchaser, like, the number of

apartments on a floor, and to cancel allotments and forfeit booking amounts. The Commission

held the contracts to be exploitative against buyers, and thus, abusive” 123.

The word dominance, in some jurisdictions, is based on a structured approach having rebuttable

or non-rebuttable presumptions. For example, there is non-rebuttable presumption of dominance

if an enterprise enjoys a market share of 45 per cent/50 per cent in South Africa and Israel,

respectively. A rebut table presumption of dominance arises in case of market share of 80 per

cent, 50 per cent and 33 per cent in Canada, Korea and Germany, respectively. The Court of

Justice in Hoffmann –La Roche v Commission 124 observed

“although the importance of the market shares may vary from one

market to another the view may legitimately be taken that very large shares are in themselves,

121
Case no 03 of 2011, para 8.1.7
122
Pankaj Agarwal v. DLF case no 13 of 2010 and case no 55 of 2012.
123
http://cis-india.org/a2k/blogs/abuse-of-dominant-position-in-indian-competition-law-a-brief-guide
124
Case 85/76 [1979]ECR 461

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and save in exceptional circumstances, evidence of the existence of a dominant position. An

undertaking which has a very large market share and holds it for some time is by virtue of that

share in a position of strength. The Court further pointed to Roche’s highly developed sales

network as a relevant factor conferring upon it commercial advantages over its rivals. The

commission has treated both vertical integration and the benefit of well established distribution

systems as a barrier to entry in several other decisions, since this could impede access for would

be entrant to the market”.

4.7.1 Inquiry into Abuse of Dominance

In exercise of powers vested under section 19 of the Act, the Commission may inquire into any

alleged contravention of section 4 (1) of the Act that proscribes abuse of dominance. Section 19

(4) gives a detailed list of factors that the Commission shall consider while inquiring into any

allegation of abuse of dominance. Some of these factors are market share of the enterprise, size

and resources of the enterprise, size and importance of the competitors, dependence of

consumers, entry barriers, and social obligations and costs in the relevant geographic and product

market. The Commission, on being satisfied that there exists a prima facie case of abuse of

dominance, shall direct the Director General to cause an investigation and furnish a report. The

Commission has the powers vested in a Civil Court under the Code of Civil Procedure in respect

of matters like summoning or enforcing attendance of any person and examining him on oath,

requiring discovery and production of documents and receiving evidence on affidavit. The

Director General, for the purpose of carrying out investigation, is vested with powers of civil

court besides powers to conduct ‘search and seizure’ 125.

125
Advocacy Series 4 , provisions relating to abuse of dominance, Competition Commission of India ,Available at
http://www.cci.gov.in/sites/default/files/advocacy_booklet_document/AOD.pdf

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 Orders

• GHCL Limited And 1. Coal India Limited 2. Western Coalfields Limited (Opposite

Party No. 1 and Opposite Party No. 2 respectively) 126

The year 2017 saw one of the important orders of CCI in Coal India Case in relation to the anti-

competitive conduct assumed by the Cola India and the subsidiaries. As regards the market share

of Coal India, “CCI concluded that prima facie Coal India was in a dominant position in the

relevant market. In a series of cases, CCI had directed investigation into allegations against Coal

India and its subsidiaries in respect of the FSAs. Allegations raised in Coal India Case were also

raised in MP Power Generating Company Case” 127.

The Commission is of considered opinion that “CIL through its subsidiaries operates

independently of market forces and enjoys dominance in the relevant market of ‘production and

sale of non-coking coal to thermal power producers including captive power plants in India”.

The Commission also holds “the Opposite Parties to be in contravention of the provisions of

Section 4(2)(a)(i) of the Act for imposing unfair/ discriminatory conditions and indulging in

unfair/ discriminatory conduct in the matter of supply of non-coking coal, as detailed in the

order. Accordingly, the Opposite Parties are directed to cease and desist from indulging in the

conduct which has been found to be in contravention of the provisions of the Act; and to effect

the changes in the fuel supply agreements in light of the observations and findings recorded in

the present order”. For effecting these modifications in the agreements, CIL is further directed to

126
Case No 08 of 2014.
127
It is observed that vide separate order dated 24.03.2017 passed by the Commission in Maharashtra State Power
Generation Company Ltd. etc. v .Mahanadi Coalfields Ltd. &Ors. etc. in Case Nos. 03, 11 & 59 of 2012, the
relevant market has been defined by the Commission as “production and saleof non-coking coal to thermal power
generators in India” after considering in detail the pleas advanced by CIL seeking to expand the relevant geographic
market as global. While rejecting the plea, the Commission noted that imported coal cannot be considered a
substitute for domestic coal on account of various factors as discussed there in. Case No. 5 of 2013, along with Case
No. 7 of 2013, M/s. Madhya Pradesh Power Generating Company Limited v. M/s. South Eastern Coalfields Ltd.
&Anr .and Case No. 37 of 2013 M/s. West Bengal Power Development Corporation td.

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consult all the stakeholders including the Informant herein. As a penalty of Rs. 591.01 crore has

already been imposed upon the Opposite Parties vide separate order dated 24.03.2017 of the

Commission passed in the previous batch of informations (i.e. in Case Nos. 03, 11 and 59 of

2012), the Commission deems it appropriate not to impose any further monetary penalty upon

the Opposite Parties 128.

• Surinder Singh Barmi v. Board of Control of Cricket in India 129

BCCI, a society registered under Tamil Nadu Societies Registration Act, 1975 is engaged

primarily in controlling and promoting cricket in India. The year 2008 saw the rise of Indian

Premier Leagueby BCCI in the name of T- 20 format and established global brand with an

estimated brand value of more than USD 4.1 billion in 2010.

Mr. Surinder Singh Barmi, introducing himself as the cricket fan and the informant in this case,

filed a complaint under Section 19(1) (a) of the Act, against BCCI alleging anti-competitive

activities in with respect to organization of IPL. He alleged irregularities ranging from the grant

of franchise rights for team ownership, to gross irregularities in the grant of media rights, to

loopholes in the award of sponsorship rights. The CCI ruled under Section 26(1) that a prima

facie case existed and directed the Director General 130 to investigate it.

CCI held that BCCI is a de factor regulator of cricket in India and the fact that BCCI is a “not-

for-profit” organization does not take it out of the ambit of definition of an “enterprise”, only

128
C. No. 08 of 2014 order dated 21st April 2017.
129
2013 Comp LR 297
130
On the basis of the report submitted by the DG, it was observed that the process for grant of franchisee
agreements for infinitum tenure was unfair and discriminatory, as also the mechanism of awarding the media rights
for a period of 10 years caused appreciable adverse effect on the market. While deciding this case, CCI dealt with
several key issues like the legal status of BCCI, whether BCCI could be considered an enterprise for the purposes of
the Act, and finally whether BCCI had abused its dominant position in the relevant market in contravention of
Section 4 of the Act.

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exception is permissible in relation to sovereign functions of the Government. Thus, The CCI

concluded that BCCI had contravened provisions of the Act and directed them with cease and

desist from using their regulatory power specially with respect to commercial activity and also

with respect to denying market access to potential competitors. In addition it imposed penalty of

INR 52.24 crores.

The BCCI , aggrieved with orders of CCI approached COMPAT under Section 53B of the Act

on various grounds including violation of principles of natural justice. It held that the finding

recorded by the Commission on the issue of abuse of dominance is legally unsustainable and is

liable to be set-aside because the information downloaded from the net and similar other material

do not have any evidentiary value and, in any case, the same could not have been relied upon by

the Commission without giving an effective opportunity to the appellant to controvert the

same 131.

COMPAT looked failure to comply with the principles of natural justice by the commission ,

which was the procedural requirement though COMPAT send it back to commission for fresh

look with clear stress on following the principles of natural justice. COMPAT has laid pressure

on the importance of parties being heard as also the opportunity of controverting the evidence

placed against it. This order of appellate body made sure that in future CCI will have no choice

but to follow the principles of natural justice while complying with the procedural requirement.

4.8 Powers of the Commission

After inquiry the Commission may pass inter- alia any or all of the following orders under

section 27 of the Act:

131
competition appellate tribunal Appeal No.17 of 2013 With I.A. No.26 of 2013 available at

162
1) direct the parties to discontinue and not to re-enter such agreement;

2) direct the enterprise concerned to modify the agreement.

3) direct the enterprises concerned to abide by such other orders as the Commission may pass

and comply with the directions, including payment of costs, if any; and

4) pass such other orders or issue such directions as it may deem fit.

5) can impose such penalty as it may deem fit. The penalty can be up to 10% of the average

turnover for the last three preceding financial years upon each of such persons or enterprises

which are parties to bid-rigging or collusive bidding.

6) Section 28 empowers the Commission to direct division of an enterprise enjoying dominant

position to ensure that such enterprise does not abuse its dominant position.

4.8.1 Interim Order

Under section 33 132 of the Act, during the pendency of an inquiry into abuse of dominant

position, the Commission may temporarily restrain any party from continuance with the alleged

offending act until conclusion of the inquiry or until further orders, without giving notice to such

party, where it deems necessary.

4.8.2 Appeals

The Competition Appellate Tribunal (COMPAT) is established under section 53A of the Act, to

hear and dispose of appeals against any direction issued or decision made or order passed by the

132
The procedures related to interim order is under Regulation No. 2 of 2009 dated May 21, 2009 available at
www.cci.gov.in, last visited on January 23, 2018

163
Commission under specified sections of the Act. An appeal has to be filed within 60 days of

receipt of the order /direction / decision of the Commission.

• Dhanlakshmi Bank Case 133

The Competition Commission ON 20TH FEB 2017 dismissed allegations of abuse of dominance

made against Dhanlaxmi Bank with respect to a property loan. It was alleged by a Delhi-based

complainant that the bank charged higher interest rate and imposed pre-payment charges .For the

case, Competition Commission of India considered 'market for provision of loan against property

in Delhi' as the relevant one After concluding that the bank is not a dominant player in the

relevant market, the regulator said that "no case of contravention of Section 4" of the

Competition Act is made out against opposite party Dhanlaxmi Bank. Section 4 of the

Competition Act pertains to abuse of dominant position. "The commission observes that

considering the small size of OP and presence of other major banks such as SBI, HDFC, ICICI,

Axis, Central Bank of India, Bank of India, Union Bank of India andPNB , kotak bank and other

nationalised and private sector banks, OP is not dominant in the relevant market," CCI said "In

the absence of dominance of OP in the relevant market, the question of abuse of dominance in

terms of Section 4 of the Act does not arise," it added. The complainant, who had taken the loan

back in 2011, had alleged that the bank increased the floating rate when RBI hiked the repo rate,

but did not reduce it when the central bank brought it down 134.

4.9 Regulation of Combinations under Sections 5 and 6

133
In Re Ashish Dandona and Dhanlakshmi Bank , Case no 66 of 2016
134
See generally, available at
http://economictimes.indiatimes.com/news/industry/banking/finance/banking/competition-commission-rejects-
complaint-against-dhanlaxmi-bank/articleshow/57275151.cms, Last visited on December 20,2017.

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The foundation of the Competition law is based on three facets- firstly, preservation or

promotion of market competition; secondly, curbing anti-competitive market practices and

thirdly, consumer welfare. All the three facets are inter-related. Among these, Regulation of

combinations is one such facet of the competition law in regards to which the law in India is still

at nascent stage and jurisprudential aspects as to the same are being incorporated from studying

the pattern with EU jurisdiction and the U.S. jurisdiction. The EU rules on the control of mergers

or, to use an alternative term often in the parlance of EU law, ‘concentrations’, are contained in

the EU Merger Regulation, Regulation 139/2004. A true merger involves two separate

undertakings merging entirely into a new entity; a high profile example of this was the fusion in

1996 of Ciba- Geigy and Sandoz to form the major pharmaceutical and chemical company

Novartis 135. To add on further, in the year 2000 the merger of Glaxo Wellcome and SmithKline

Beecham as a result lead to creation of famous Glaxo Smithkline. However, it is pertinent to

mark that the term ‘merger’ as used under Competition Act includes a far broader range of

commercial transactions than what are above mentioned. Competition law is concerned about the

possibility that a merger will lead to the market being less competitive in the future than it

currently is, leading to adverse effects for consumers. The main concern of competition

authorities when assessing a merger is whether it will have adverse horizontal effects; there may

also be concern about vertical and conglomerate effects, but these concerns are much rarer. It is

possible that the same case can give rise to horizontal, vertical and conglomerate concerns 136

The term Combination as prevalent in the Indian jurisdiction comprises of mergers,

amalgamations and acquisition of control, shares, voting rights and assets of one company by

another company or group. The Competition Act regulates mergers but these provisions came
135
Case No M 737, decision of 17thjuly 1996, available at www.europa.eu/competition/mergers/cases, last visited on
December 20,2017.
136
Whish Richard and Bailey David, Competition Law ,Oxford University Press, 7thed.page 810

165
into effect in the year 2011. Large firms that propose to merge or to acquire other large firms

must notify the government in advance. Mergers that have AAEC are unlawful. In line with the

notified merger thresholds, notified by way of Combination Regulations 2011, the CCI looks

into the aspect of effect to market competition efficacy and effectiveness of a particular

combination. Regulation of combinations as a means to curb anticompetitive market practices is

witnessing constant growth in India, in terms of both law and legal philosophy.

The Competition Act,2002, regulates the combinations under sections 5 137 and 6 read with

sections 20(3) ,29,30 and 31. The regulation provisions under the Competition Law are limited in

its scope. The pertinent question of inquiry under these provisions is limited to that of preventing

anti- competitive effect of mergers or acquisition. Mostly the companies use merger as a

combination method or tool to avoid competition in the market and subsequently increase the

market power. In each case the Commission would investigate the nature of action, relevant

market and adverse effect on competition. The exceeding thresholds were explained in Section 5

of the Competition Act, 2007.

Following grounds are to be taken into consideration by the Commission for the determination of

applicable adverse effect on competition they are:

1. Actual and potential level of competition through imports in the market

2. Extent of barriers to entry into the market

3. Level of competition in the market

4. Likelihood that the combination would result in the parties to the combination being able

to significantly and sustainably increase prices or profit margins

5. Extent of effective competition likely to sustain in a market

137
Revised threshold under S.O 675(E) dated March 4,2016.

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 6. Extent to which substitutes are available or are likely to be available in the market

7. Market share, in the relevant market, of the persons or Enterprise in a combination,

individually and as a combination

8. Likelihood that the combination would result in the removal of a vigorous and effective

competitor or competitors in the market

9. Nature and extent of vertical integration in the market

10. Possibility of a failing business

11. Nature and extent of innovation

12. Relative advantage, by way of the contribution to the economic development by any

combination having or likely to have appreciable adverse effect on competition

13. Whether the benefits of the combination outweigh the adverse impact of the combination,

if any 138

An important case decided in 2014 was a challenge to the Jet – Etihad Case. It is however to be

noted, that the Commission 139 is granting the present approval, under section 31(1) of the Act,

and that such approval is being granted, pursuant to the underlying competition assessment,

based upon the information/details provided by the Parties, in the notice given under subsection

(2) of Section 6 of the Act, as modified and supplemented from time to time. This approval

should not be construed as immunity in any manner from subsequent proceedings before the

Commission for violations of other provisions of the Act. It is incumbent upon the Parties to

ensure that this ex ante approval does not lead to ex-post violation of the provisions of the Act 140.

138
Raju KD (2014), “Interface between Competition law and Intellectual Property Rights: A Comparative Study of
the US, EU and India”, Intel Prop Rights 2: 115.At page 15.
139
Combination Registration No. C-2013/05/12, Notice u/s 6 (2) of the Competition Act, 2002 given by: (i) Etihad
Airways PJSC; and (ii) Jet Airways (India) Limited
140
Order available at http://www.cci.gov.in/sites/default/files/C-2013-05-122%20Order%20121113.pdf

167
The combination was approved by CCI in November 2013. While examining the proposed

combination, views of Air India were solicited which raised certain concerns. These were

considered and disposed off when CCI finally approved the proposed combination by way of an

order under Section 31 (1) of the Act (Jet – Etihad Order). An appeal under Section 53B was

made to COMPAT challenging the Jet – Etihad Order by Jitender Bhargava, a public citizen with

over 20 years association with Air India. COMPAT dismissed the appeal on the point of locus

standi without examining the merits of the Jet – Etihad Order. Although Section 53A provides

that ‘any person, aggrieved’ may challenge an order of CCI, COMPAT interpreted ‘any person’

to mean, a person ‘aggrieved’ by the CCI order and that it could not mean ‘any’ and ‘every’

person.

• PVR Cinemas –DT Cinemas 141

CCI approves PVR’s acquisition of DT Cinema’s multiplexes/single screen theatres in Delhi

NCR and Chandigarh, subject to modification in an order dated 4th may 2016.

The CCI order mentioned that the PVR has given commitments such as divestiture of 15 screens

in Noida at Garden Galleria, divestiture of seven screens in Gurgaon at Airia Mall, in addition to

commitment to not open any new theatre or acquire existing theatres in South Delhi for five

years. The pricing also grabbed much required attention. The commitments by PVR cinemas,

also include price caps on tickets and food and beverage prices for PVR and DT Cinemas in

South Delhi for five years with an ability to increase prices by no more than five per cent of

prevailing prices in the fourth and fifth year.

• Abbott Laboratories Case 142

141
Combination Registration No. C-2015/07/288

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CCI approves Acquisition of VCDs business of St. Jude’s Medical, Inc. by Abbott laboratories.

It is a company incorporated and listed in the USA, well known a global health care company

which is engaged in research, development, manufacture and sale of a range of health care

products on a global basis. It filed a notice with the Commission on 1st August, 2016 relating to

its acquisition of the Vascular Closure Devices business of St. Jude Medical, Inc. The notice was

filed pursuant to execution of an agreement and Plan of Merger entered into between the Parties

on 27th April 2016.

The Commission noted that the Parties’ activities overlap in ‘small hole’ VCDs in India and that

the combined market share of the Parties in India in 2015 in the ‘small hole’ VCDs as well as the

individual hole sizes within ‘small hole’ VCDs were of the order of 90-100 percent .The other

competitor i.e. Cardinal Health had an insignificant market share. Therefore, the proposed

combination would enhance the merged entity’s market power in the already highly concentrated

market for ‘small hole’ VCDs in India. In order to address the concerns emanating from the

proposed combination, Parties have submitted a modification in the form of a plan of divestiture

of the entire ‘small hole’ VCDs segment of SJM on a worldwide basis under Regulation19(2) of

the CCI (Procedure in Regard to the Transaction of Business Relating to

Combinations)Regulations, 2011. The proposed modification would remove the only overlap

between Abbott and SJM in India, i.e. in ‘small hole’ VCDs and eliminate the competition

concerns identified by the Commission. The Commission approved the proposed combination

subject to carrying out of the proposed modification 143.

• Sun Pharma Ranbaxy 144

142
Combination Registration No. C-2016/08/418
143
Volume 19 : October-December 2016, Fair Play ,competition commission of India-December 2016 Fair Play
144
Combination Registration No. C-2014/05/170

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On 06.05.2014, the Competition Commission of India received a notice under sub-section (2) of

Section 6 of the Competition Act, 2002 given by Sun Pharmaceutical Industries Limited and

Ranbaxy Laboratories Limited. The proposed combination relates to the merger of Ranbaxy into

Sun Pharma pursuant to a Scheme of Arrangement under Sections 391-394 and other applicable

provisions of the Companies Act, 1956 and the Companies Act, 2013.

The Commission in its meeting held on 05.12.2014 considered and approved the proposed

combination with modification(s) by passing an order under sub-section (7) of Section 31 of the

Act. Under the Order, the Commission directed that the following modification(s) shall be

carried out by the Parties:

a.) Sun Pharma shall divest all products containing Tamsulosin + Tolterodine which are currently

marketed and supplied under the Tamlet brand name.

b.) Ranbaxy shall divest:

i. All products containing Leuprorelin which are currently marketed and supplied under

the Eligard brand name. In the event the divestiture of distribution rights of Eligard is

not achieved within the First Divestiture Period (as defined in the Order), Sun Pharma

shall divest its products containing Leuprorelin currently marketed and supplied

under Sun Pharma’s brand name Lupride.

ii. All products containing Terlipresslin which are currently marketed and supplied

under the Terlibax brand name.

iii. All products containing Rosuvastatin + Ezetimibe which are currently marketed and

supplied under the Rosuvas EZ brand name.

iv. All products containing Olanzapine + Fluoxetine which are currently marketed and

supplied under the Olanex F brand name.

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 v. All products containing Levosulpiride + Esomeprazole which are currently marketed

and supplied under the Raciper L brand name.

vi. All products containing Olmesartan + Amlodipine + Hydroclorthiazide which are

currently marketed and supplied under the Triolvance brand name.

Hence the two firms have received go-ahead from the Competition Commission of India for sale

of seven brands to Emcure Pharma to comply with the commission’s conditional permission for

their merger. In an order issued on march 2015, CCI approved the deal with Emcure, which

would purchase the 'divestment products' that were ordered to be sold in an earlier direction

issued in December 2014 by the Competition Commission of India .These seven brands were at

center of the CCI's contention that the merger between Sun Pharmaceutical Industries and

Ranbaxy Laboratories was 'prima-facie' in violation of competition laws and therefore the

regulator had ordered divestment of those products under its 'conditional' approval to the deal.

The reflection on the Indian Competition Act, 2002 takes researcher further to interface issues

involved in the functioning of two laws namely the Competition Act and Intellectual Property

Laws.

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