BUSINESS LAW

MODULE IV
 Competition
Competition in the market means sellers striving independently for buyers’ patronage
(support) to maximize profit (or other business objectives).
A buyer prefers to buy a product at a price that maximizes his benefits whereas the
seller prefers to sell the product at a price that maximizes his profit.
The term ‘competition’ is generally understood as a process whereby the economic
enterprises compete with each other to secure customers for their product.
In the process, the enterprises compete to outsmart (defeat) their competitors,
sometimes to eliminate their rivals.
Competition in the sense of economic rivalry is unstable and has a natural tendency to
give way to a monopoly.
 Objectives of Competition Act, 2002
 To establish CCI (Competition Commission of India
 To prevent monopolies and to promote competition in the market
 to protect the freedom of trade for the participating individuals and entities in the market
 To protect the interest of consumers
This act ensures
A. Prohibition of Anti-competitive Agreements - Section 3
B. Prohibition of abuse of dominant position- Section 4
C. Regulation of Combination s - Section 5
 A. Anti-Competitive Agreements – Section 3
An anti-competitive agreement is an agreement having appreciable adverse effect on
competition. Anti-competitive agreements include, but are not limited to:-
 agreement to limit production and/or supply;
 agreement to allocate markets;
 agreement to fix price;
 bid rigging or collusive bidding;
 conditional purchase/ sale (tie-in arrangement);
 exclusive supply / distribution arrangement;
 resale price maintenance; and
 refusal to deal
 Types of Anti-Competitive Agreements
1. Horizontal agreements are arrangements between enterprises at the same stage of
production. It is presumed that it causes AAE ( Appreciable adverse effect) on
competition and burden of proving will be on defendant. Such agreements includes
cartels, engaged in identical or similar trade of goods or provision of services, which-
a) Directly or indirectly determines purchase or
sale prices
b) Limits or controls production, supply
c) Shares the market or source of production
d) Directly or indirectly results in bid rigging or collusive bidding
2. Vertical Agreements - Vertical agreements are those agreements which are
entered into between two or more enterprises operating at different levels of
production. It is not presumed but the prosecutors will have to prove that it causes
AAE on competition. Examples of anti-competitive vertical agreements include:
a) Exclusive supply agreement & refusal to deal
b) Resale price maintenance
c) Tie-in-arrangements
d) Exclusive distribution agreement
 When an agreement is said to have Appreciable Adverse Effect on Competition
(AAEC)
For determining whether an agreement has appreciable adverse effect on competition,
the Commission shall consider the following factors –
 creation of barriers to new entrants in the market;
 driving existing competitors out of the market;
 foreclosure of competition by hindering entry into the market;
 accrual of benefits to consumers;
 improvements in production or distribution of goods or provision of services;
 promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.
 B. Prohibition of abuse of dominant position – Section 4
Dominance refers to a position of strength which enables an enterprise to operate
independently of competitive forces or to affect its competitors or consumers or the
market in its favour.
Abuse of dominant position impedes fair competition between firms, exploits
consumers and makes it difficult for the other players to compete with the dominant
undertaking on merit. Abuse of dominant position includes:
 imposing unfair conditions or price,
 predatory pricing,
 limiting production/market or technical development,
 creating barriers to entry,
 applying dissimilar conditions to similar transactions,
 denying market access, and
 using dominant position in one market to gain advantages in another market.
 When an enterprise will have Dominant position
For determining whether an enterprise enjoys Dominant position or not under Section
4, the Commission shall consider the following factors –
 market share of the enterprise;
 size and resources of the enterprise;
 size and importance of the competitors;
 economic power of the enterprise including commercial advantages over
competitors;
 vertical integration of the enterprises or sale or service network of such enterprises;
 dependence of consumers on the enterprise;
 monopoly or dominant position whether acquired as a result of any statute or by
virtue of being a Government company or a public sector undertaking or otherwise;
 entry barriers including barriers such as regulatory barriers, financial risk, high
capital cost of entry, marketing entry barriers, technical entry barriers, economies of
scale, high cost of substitutable goods or service for consumers;
 countervailing buying power;
 market structure and size of market;
 social obligations and social costs;
 relative advantage, by way of the contribution to the economic development, by the
enterprise enjoying a dominant position having or likely to have an appreciable
adverse effect on competition;
 any other factor which the Commission may consider relevant for the inquiry.
 Regulation of Combinations - Section 5
Combination under the Act means acquisition of control, shares, voting rights or
assets, acquisition of control by a person over an enterprise where such person has
direct or indirect control over another enterprise engaged in competing businesses,
and mergers and amalgamations between or amongst enterprises when the
combining parties exceed the thresholds set in the Act.
The thresholds are specified in the Act in terms of assets or turnover in India and
outside India. Entering into a combination which causes or is likely to cause an
appreciable adverse effect on competition within the relevant market in India is
prohibited and such combination shall be void.
 THRESHOLDS FOR FILING NOTICE

Particulars Assets (OR) Turnover

India No Group (Enterprise level) >2000 Crore >6000 Crore

Group > 8000 crores > 24000 crores

In India No Group >USD 1 bn with at least > >USD 3 bn with at least >

and (Enterprise level) 1000 INR crore 3000 INR

outside in India crore in India

India
Group >USD 4 bn with at least >USD 12 bn with at least >

>1000 INR crore 3000 INR

in India crore in India

 Exemption (Notification in 27th March, 2017)
A target enterprise that is an enterprise whose control, shares, voting rights or assets
are being acquired have assets of not more than Rs. 350 crore in India or turnover of
not more than Rs. 1000 crore in India, are exempt from Section 5 of the Act for a
period of 5 years.
Exemption to the ‘Group’ exercising less than 50% of voting rights in other enterprise
are exempt from Section 5 of the Act for a period of 5 years.
 Competition Commission of India
Central Government has been empowered to establish a Commission to be called
“Competition Commission of India” by issuing a Notification.
The Commission is a body corporate having perpetual succession and a common seal.
The Commission has power to acquire, hold movable or immovable property and to
enter into contract in its name and by the said name, sue or be sued.
The Head Office of the Commission shall be at such place as the Central Government
may decide from time to time and has Head Office at New Delhi.
The Commission has also been authorized to establish its office at other places in India.
Thus, the law provides for setting up of CCI’s offices at places other than that of its
Headquarter.
The Commission shall consist of Chairperson and Not less than 2 and not more than 6
to be appointed by the Central Government.
The Chairperson and every other Member shall be a person of ability, integrity and
standing and who has special knowledge of, and such professional experience of ≥ 15
years, in, international trade, economics, business, commerce, law, finance, accountancy,
management, industry, public affairs or competition matters, including competition law
and policy, which in the opinion of the Central Government, may be useful to the
Commission.
The Chairperson and every other Member shall hold office as such for a term of 5 years
up to the age of 65 years and shall be eligible for reappointment.
 Director General (DG)
DG assists the Commission in conducting inquiry into contravention of any of the
provisions of the Act and for performing such other functions as may be provided in the
Act.
Central Government is empowered to appoint a Director General and such number of
additional, joint, deputy or assistant Director Generals or other advisers, consultants or
officers for the purposes of assisting the Commission.
However, the above officers, as and when appointed, exercise powers and discharge
functions subject to the general control, supervision and directions of the Director
General.
 Powers and Functions of Commission
 to eliminate practices having adverse effect on competition
 to promote and sustain competition
 to protect interests of consumers
 to ensure freedom of trade carried on by other participants in markets in India.
 Duties of Director General
1.The Director General assists the Commission in investigation into any contravention of the
provisions of this Act.
2.The Director General, in order to effectively discharge his functions, has been given the same
powers as are conferred upon the Commission and the Commission is having same powers as
are vested in Civil Court under the Code of Civil Procedure (1908) while trying a suit, in respect
of the following matters-
 Receiving evidence on affidavits
 issuing commissions for the examination of witnesses ad documents
 requiring the discovery and production of document
 summoning and enforcing the attendance of any person and examining him on oath
 subject to the provisions of the Indian Evidence Act, 1872, requisitioning any public record
or document or copy of such record or document from any office
 The Information Technology Act, 2000
The Information Technology Act, 2000 provides legal recognition for transactions
carried out by means of electronic data interchange and other means of electronic
communication, commonly referred to as "electronic commerce”, which involve the use
of alternatives to paperbased methods of communication and storage of information, to
facilitate electronic filing of documents with the Government agencies and further to
amend The Indian Penal Code, The Indian Evidence Act, 1872, The Banker’s Books
Evidence Act, 1891 and The Reserve Bank of India Act, 1934 and for matters connected
therewith or incidental thereto. The Information Technology Act, 2000 extend to the
whole of India and it applies also to any offence or contravention there under
committed outside India by any person.
 Features of The Information Technology Act, 2000
▪ Digital signature has been replaced with electronic signature to make it a more
technology neutral act.
▪ It elaborates on offenses, penalties, and breaches.
▪ It outlines the Justice Dispensation Systems for cyber-crimes.
▪ The Information Technology Act defines in a new section that cyber café is any facility
from where the access to the internet is offered by any person in the ordinary course of
business to the members of the public.
▪ It provides for the constitution of the Cyber Regulations Advisory Committee.
 The Information Technology Act is based on The Indian Penal Code, 1860, The Indian
Evidence Act, 1872, The Bankers’ Books Evidence Act, 1891, The Reserve Bank of
India Act, 1934, etc.
 The Information Technology Amendment Act, 2008
IT Amendment Act, 2008 is an amendment to the original Information Technology Act,
2000 in India. This Act, 2008 was passed by the Indian Parliament in December 2008
and it came into effect on October 27, 2009. The amendment was introduced to address
the changes in the technological landscape and to provide a more robust legal
framework for addressing cybercrimes.
Some of the key provisions of the IT Amendment Act, 2008 include:
 Cyber-terrorism: The Act includes a new definition of “cyber-terrorism” and provides
for stricter punishment for cyber-terrorism-related offences.
 Data protection: The Act introduces new provisions on data protection and requires
organizations to implement reasonable security practices to protect personal data.
 Intermediary liability: The Act clarifies the liability of intermediaries such as internet
service providers, web hosting companies, and social media platforms for any
unlawful activity conducted through their platforms.
 Power to intercept: The Act provides law enforcement agencies with the power to
intercept electronic communication and monitor computer systems for the purpose
of investigation.
 Electronic records and evidence: The Act provides for electronic records and
electronic evidence to be admissible in court proceedings.
 Additional offenses and penalties: The Act introduces new offenses such as identity
theft, phishing, and cyberstalking, and provides for stricter penalties for certain
cybercrimes.
 Objectives of the IT Amendment Act, 2008 include
 Strengthening cybersecurity: The Act aims to provide a more comprehensive legal framework for
addressing cybercrime and strengthening cybersecurity in India.

 Protecting personal data: The Act introduces new provisions on data protection and requires
organizations to implement reasonable security practices to protect personal data.

 Enhancing electronic records and evidence: The Act provides for electronic records and electronic
evidence to be admissible in court proceedings.

 Clarifying intermediary liability: The Act clarifies the liability of intermediaries such as internet
service providers, web hosting companies, and social media platforms for any unlawful activity
conducted through their platforms.

 Introducing new offenses and penalties: The Act introduces new offenses such as identity theft,
phishing, and cyberstalking, and provides for stricter penalties for certain cybercrimes.

 Strengthening law enforcement: The Act provides law enforcement agencies with the power to
intercept electronic communication and monitor computer systems for the purpose of investigation.
Recognition of electronic records: The Information Technology Act, 2000 also aims to provide
the legal framework under which legal sanctity is accorded to all electronic records and other
activities carried out by electronic Information Systems Control and Audit means. The Act states
that unless otherwise agreed, an acceptance of contract may be expressed by electronic means
of communication and the same shall have legal validity and enforceability.
Electronic Signature: Electronic signature has also been dealt with under Section 3A of the IT
Act, 2000. A subscriber can authenticate any electronic record by such electronic signature or
electronic authentication technique which is considered reliable and may be specified in the
Second Schedule. An Amendment to the IT Act in 2008, introduced the term electronic
signatures. The implication of this Amendment is that it has helped to broaden the scope of the
IT Act to include new techniques as and when technology becomes available for signing
electronic records apart from Digital Signatures.
 Digital Signature Certificate (DSC)
The Information Technology Act, 2000 has provisions for use of Digital Signatures on the
documents submitted in electronic form in order to ensure the security and authenticity of the
documents filed electronically. This is secure and authentic way to submit a document
electronically. As such, all filings done by the companies/LLPs under MCA21 e-Governance
programme are required to be filed using Digital Signatures by the person authorised to sign
the documents.
Certifying Authorities
Certifying Authorities (CA) has been granted a license to issue a digital signature certificate
under Section 24 of the Indian IT-Act 2000. One can procure Class 2 or 3 certificates from any of
the certifying authorities.
National Informatics Center (NIC), IDRBT Certifying Authority, E-MUDHRA, NSDL, CDAC, etc
 Cybercrime
Cybercrime can be defined as “The illegal usage of any communication device to commit
or facilitate in committing any illegal act”. A cybercrime is explained as a type of crime
that targets or uses a computer or a group of computers under one network for the
purpose of harm. Cybercrimes are committed using computers and computer
networks. They can be targeting individuals, business groups, or even governments.
A cybercriminal is a person who uses his skills in technology to do malicious acts and
illegal activities known as cybercrimes. They can be individuals or teams.
 Black hat hackers
 Cyber stalkers
 Cyber terrorists
 Scammers
 Classifications of Cybercrimes
Cybercrimes in general can be classified into four categories:
1. Individual Cyber Crimes: This type is targeting individuals. It includes phishing,
spoofing, spam, cyberstalking, and more.
2. Organisation Cyber Crimes: The main target here is organizations. Usually, this type
of crime is done by teams of criminals including malware attacks and denial of service
attacks.
3. Property Cybercrimes: This type targets property like credit cards or even
intellectual property rights.
4. Society Cybercrimes: This is the most dangerous form of cybercrime as it includes
cyber-terrorism.