Section Summary

The Competition Act, 2002

The Competition Act, 2002–Section Summary

SECTION SUMMARY

CHAPTER I PRELIMINARY (Section 1 & 2)

CHAPTER II PROHIBITION OF CERTAIN AGREEMENTS, ABUSE OF DOMINANT
POSITION AND REGULATION OF COMBINATIONS (Section 3-6)
CHAPTER III COMPETITION COMMISSION OF INDIA (Section 7-17)
CHAPTER IV DUTIES, POWERS AND FUNCTIONS OF COMMISSION (Section 18-39)
CHAPTER V DUTIES OF DIRECTOR GENERAL (Section 41)
CHAPTER VI PENALTIES (Section 42-48)
CHAPTER VII COMPETITION ADVOCACY (Section 49)
CHAPTER VIII FINANCE, ACCOUNTS AND AUDIT (Section 50-53)
CHAPTER APPELLATE TRIBUNAL (Section 53A-53U)
VIIIA
CHAPTER IX MISCELLANEOUS (Section 54-66)

Section No. Section Heading Provisions

Section 1 Short title, extent,  Extends to the whole of India
commencement  Enforcement date 31st March, 2003
and application
Section Cartel Includes an association of producers, sellers, distributors,
2(c) traders or service providers who, by agreement amongst
themselves, limit, control or attempt to control the
production, distribution, sale or price of, or, trade in goods
or provision of services
Section Enterprise A person or a department of the Government, who or
2(h) 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,
defense and space

Section Relevant Market The market which may be determined by the Commission
2(r) with reference to the relevant product market or the
relevant geographic market or with reference to both the
markets

Section Relevant A market comprising the area in which the conditions of

2(s) Geographic Market competition for supply of goods or provision of services or

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demand of goods or services are distinctly homogenous
and can be distinguished from the conditions prevailing in
the neighboring areas
Section Relevant Product A market comprising all those products or services which
2(t) Market are regarded as interchangeable or substitutable by the
consumer, by reason of characteristics of the products or
services, their prices and intended use

Section 3 Anti – Competitive  Agreement for goods or services which has appreciable
Agreements adverse effect on competition within India is anti-
competitive agreement: prohibited and be void
 Agreement which:
--directly or indirectly determines purchase or sale prices;
--limits or controls production, supply, markets, technical
development, investment or provision of services;
--shares the market or source of production or provision of
services by way of allocation of geographical area of
market, or type of goods or services, or number of
customers in the market or any other similar way;
--directly or indirectly results in bid rigging or collusive
bidding
--agreement amongst enterprises or persons at different
stages or levels of the production chain in different
markets including tie-in arrangement; exclusive supply
agreement; exclusive distribution agreement; refusal to
deal; resale price maintenance
be presumed to have an appreciable adverse effect on
competition except:
# agreement by way of joint ventures increasing
efficiency in production, supply, distribution, storage,
acquisition or control of goods or provision of services
 Section does not restrict:
--right of any person to restrain any infringement of, or to
impose reasonable conditions, necessary for protecting
any of his rights conferred upon him under:
# Copyright Act, 1957;
# Patents Act, 1970;
# Trade and Merchandise Marks Act, 1958 or the Trade
Marks Act, 1999;
# Geographical Indications of Goods (Registration and
Protection) Act, 1999;
# Designs Act, 2000;
# Semi-conductor Integrated Circuits Layout-Design
Act, 2000;
--right of any person to export goods from India to the
extent to which the agreement relates exclusively to the
production, supply, distribution or control of goods or
provision of services for such export
Section 4 Abuse of dominant  Abuse of dominant position by any enterprise or group if:

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position --directly or indirectly, imposes unfair or discriminatory:
# condition in purchase or sale of goods or service; or
# price in purchase or sale (including predatory price) of
goods or service
--limits or restricts:
# production of goods or provision of services or market
therefor; or
# technical or scientific development relating to goods or
services to the prejudice of consumers;
--indulges in practice or practices resulting in denial of
market access in any manner; or
--makes conclusion of contracts subject to acceptance by
other parties of supplementary obligations which, by their
nature or according to commercial usage, have no
connection
--uses its dominant position in one relevant market to enter
into, or protect, other relevant market
Section 5 Combinations  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
threshold limit under the Act

Section 6 Regulation of  A combination which causes or is likely to cause an

combinations appreciable adverse effect on competition within the
relevant market in India, be void
 If any person or enterprise proposes to enter into any
combination, shall give a notice to the Commission
disclosing details of the proposed combination, within
seven days of –
--approval of the proposal relating to merger or
amalgamation, by the board of directors;
--execution of any agreement or other document for
acquisition or acquiring of control
 No combination shall come into effect until 210 days have

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Section No. Section Heading Provisions

passed from the day on which the notice has been given
to the Commission, or the Commission has passed orders
under section 31, whichever is earlier
 Section not apply to share subscription or financing facility
or any acquisition, by a public financial institution, foreign
institutional investor, bank or venture capital fund,
pursuant to any covenant of a loan agreement or
investment agreement
Section 8 Composition of  Consists of:
Commission --Chairperson and
--Not less than 2 and
--Not more than6 other Members
 Be whole-time Members
 Be a person of ability, integrity and standing and who has
special knowledge of, and such professional experience
of not less than 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
 Appointed by the Central Government
Section 9 Selection  Be appointed by the Central Government on the
Committee for recommendation of a Selection Committee consisting of:
Chairperson and -- Chief Justice of India or his nominee …Chairperson;
Members of --Secretary in the Ministry of Corporate Affairs....Member;
Commission --Secretary in the Ministry of Law and Justice....Member;
--two experts of repute who have special knowledge of,
and professional experience in international trade,
economics, business, commerce, law, finance,
accountancy, management, industry, public affairs or
competition matters including competition law and policy...
Members

Section 10 Term of office of  For a term of five years from the date on which he enters
Chairperson and upon his office upto the age of sixty-five years
other Members  Be eligible for re-appointment
 Senior-Most Member to:
--act as the Chairperson if the office of the Chairperson is
vacant by reason of his death, resignation or otherwise,
until the date on which a new Chairperson
--discharge the functions of the Chairperson incase he is
unable to owing to absence, illness or any other cause,
until the date on which he resumes the charge of his
functions
Section 11 Resignation,  Resignation by notice in writing addressed to the Central
removal and Government
suspension of --unless permitted by the Central Government to
Chairperson and relinquish office sooner, continue to hold office until:

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other members # the expiry of three months from the date of receipt of
such notice or
# until a person duly appointed as his successor enters
upon his office or
# until the expiry of his term of office
whichever is the earliest
 Removal by Central Government on following grounds:
--is, or at any time has been, adjudged as an insolvent; or
--has engaged at any time, during his term of office, in
any paid employment; or
--has been convicted of an offence which, in the opinion
of the Central Government, involves moral turpitude; or
--has acquired such financial or other interest as is likely
to affect prejudicially his functions as a Member; or
--has so abused his position as to render his continuance
in office prejudicial to the public interest; or
--has become physically or mentally incapable of acting
as a Member
 No Member be removed from his office on the grounds of:
--having acquired any financial or other interest as is likely
to affect prejudicially his functions as a Member; or
--has so abused his position as to render his continuance
in office prejudicial to the public interest
unless the Supreme Court, on a reference being made to it
in this behalf by the Central Government, has, on an
inquiry, held reported that the Member, ought on such
ground or grounds to be removed
Section 12 Restriction on  For a period of two years from the date on which they
employment of cease to hold office, accept any employment in, or
Chairperson and connected with the management or administration of, any
other Members in enterprise which has been a party to a proceeding before
certain cases the Commission
 Section not to apply to any employment under the Central
Government or a State Government or local authority or in
any statutory authority or any corporation established by
or under any Central, State or Provincial Act or a
Government company as defined in section 617 of the
Companies Act, 1956
Section 16 Appointment of  Central Government may appoint for assisting the
Director-General, Commission in conducting inquiry into contravention of
etc. any of the provisions of this Act and for performing such
other functions as are, or may be, provided by or under
this Act
 Appointment be made from amongst persons of integrity
and outstanding ability and who have experience in
investigation, and knowledge of accountancy,
management, business, public administration,
international trade, law or economics and such other
qualifications as may be prescribed

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Section No. Section Heading Provisions

Section 18 Duties of  Eliminate practices having adverse effect on competition,
Commission  Promote and sustain competition,
 Protect the interests of consumers and
 Ensure freedom of trade carried on by other participants,
in markets in India
Section 19 Inquiry into certain  Commission may inquire into any alleged contravention of
agreements and the section 3 and 4:
dominant position -- on its own motion; or
of enterprise --on receipt of any information from any person, consumer
or their associations or trade
association; or
--on reference made to it by the Central Government or a
State Government or a statutory authority
Section 20 Inquiry into  Commission may inquire into the appreciable adverse
combination by effect on competition in India as a result of combination:
commission -- On suo moto; or
--upon receipt of notice under relating to acquisition or
acquiring of control or
--merger or amalgamation referred in the Act
 Enquiry be initiated by the Commission within one year
from the date on which such combination has taken effect
 Factors to be considered:
--actual and potential level of competition through imports
in the market;
--extent of barriers to entry into the market;
--level of combination in the market;
--degree of countervailing power in the market;
--likelihood that the combination would result in the parties
to the combination being able to significantly and
sustainably increase prices or profit margins;
--extent of effective competition likely to sustain in a
market;
--extent to which substitutes are available or arc likely to
be available in the market;
--market share, in the relevant market, of the persons or
enterprise in a combination, individually and as a
combination;
--likelihood that the combination would result in the
removal of a vigorous and effective competitor or
competitors in the market;
--nature and extent of vertical integration in the market;
--possibility of a failing business;
--nature and extent of innovation;
--relative advantage, by way of the contribution to the
economic development, by any combination having or
likely to have appreciable adverse effect on competition;
--whether the benefits of the combination outweigh the
adverse impact of the combination, if any
Section 26 Procedure for  Commission, on receipt of information shall direct the

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inquiry under Director General to investigate into the matter
section 19  Director General submit a report of its findings within the
period as may be specified by the Commission- not
binding on the Commission to accept the report
 On receipt of copy of report by the Commission it shall be
forwarded to:
-- Parties
--Central Government or
--State Government or
--statutory authority
if the investigation is caused to be made based on
reference received from them
 If Director General recommends there is no contravention,
an opportunity of being heard be given to the informant by
the Commission
 If Commission agrees with the recommendation of the
Director General, it shall dismiss the information and if
does not agree, it shall direct the enquiry to proceed
further
Section 27 Orders by  Commission after any inquiry into agreement or an inquiry
Commission after into abuse of dominant position may pass orders:
inquiry into --directing to:
agreements or # discontinue and not to re‐enter such agreement or
abuse of dominant # discontinue such abuse of dominant position, as the
position case may be
--impose penalty for non-cartel not exceeding 10% of the
average turnover for the last three preceding financial
years, upon each of such person or enterprises which are
parties to such agreements or abuse
--impose penalty for cartel:
# penalty of up to 3 times of its profit for each year of
the continuance of such agreement or
# 10% of its turnover for each year of the continuance
of such agreement, whichever is higher
--direct that the agreements shall stand modified to the
extent and in the manner as may be specified by the
Commission
--may direct the enterprises concerned to comply with
such other orders and directions, including payment of
cost, if any, as it deems fit
Section 29 Procedure for  If Commission:
investigation of --is of the opinion that the combination will cause or has
combinations caused an appreciable adverse effect on competition
within the relevant market in India
--has come to such a conclusion then it shall proceed to
issue a notice to the parties to the combination, calling
upon them to show cause why an investigation should not
be conducted;
 After receipt of the response Commission may call for the

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Section No. Section Heading Provisions

report of the Director General
 Commission shall, if decides that, the Combination is
likely to cause an appreciable adverse effect on
competition in relevant market, it shall, within 7 days
direct the parties to the to publish within 10 working days,
the details of the combination, in such manner as it directs
so as to bring to the information of public and persons
likely to be affected by such combination
 Person affected can file his written objections within 15
working days of the publishing of the public notice, with
the Commission
 Commission may, within 15 working days of the filing of
written objections, call for such additional or other
information as it deems fit from the parties
 Information shall be furnished by the parties within 15
days from the expiry of the period notified by the
Commission.
 After receipt of all the information and within 45 days from
expiry of period for filing further information, the
Commission shall proceed to deal with the case
Section 38 Rectification of  To rectify any mistake apparent from the record, the
orders Commission may amend any order passed by it
 Commission may make amendment:
--of its own motion;
-- for rectifying any such mistake which has been brought
to its notice by any party
Section 42 Contravention of  Commission may cause an inquiry to be made into
orders of compliance of its orders or directions made in exercise of
Commission its powers
 If any person, without reasonable clause fails to comply
with the orders or directions of the Commission be
punishable with fine which may extend to rupees one lakh
for each day during which such non-compliance occurs,
subject to a maximum of rupees ten crore, as the
Commission may determine
 If any person does not comply with the orders or
directions issued, or fails to pay the fine imposed above,
he shall, without prejudice to any proceeding, be
punishable with imprisonment for a term which may
extend to three years, or with fine which may extend to
rupees twenty-five crore, or with both, as the Chief
Metropolitan Magistrate, Delhi may deem fit
 Chief Metropolitan Magistrate, Delhi shall not take
cognizance of any offence except on a complaint filed by
the Commission or any of its officers authorized by it
Section 43 Penalty for failure  Fine which may extend to rupees one lakh for each day
to comply with during which such failure continues subject to a maximum
directions of of rupees one crore, as may be determined by the
Commission and Commission

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Section No. Section Heading Provisions

Director General
Section Power to impose Penalty which may extend to one percent, of the total
43A penalty for non- turnover or the assets, whichever is higher, of such a
furnishing of combination
information on
combinations
Section 44 Penalty for making Be liable to a penalty not less than rupees fifty lakhs but
False statement or may extend to rupees one crore, as may be determined
omission to furnish by the Commission
material
information
Section 45 Penalty for Fine which may extend to rupees one crore, as may be
offences in relation determined by the Commission
to furnishing of
information
Section 49 Competition  Central Government or a State Government may, in
Advocacy formulating a policy on competition shall make a
reference to the Commission for its opinion on possible
effect of such policy on competition and on the receipt of
such a reference the Commission shall, give its opinion
on it to the Central Government/State Government, within
60 days of making such a reference and the latter may
formulate the policy as it deems fit
 Opinion shall not be binding upon the Central
Government or the State Government, in formulating such
policy
 Commission shall take suitable measures for the
promotion of competition advocacy, creating awareness
and imparting training about competition issues
Section 51 Constitution of  Competition Fund shall be constituted in which the
Fund following shall be credited:
--all Government grants received by the Commission;
--the fees received under this Act;
--the interest accrued on the above amounts
 Be applied for meeting:
--the salaries and allowances payable to the Chairperson
and other Members and the administrative expenses
including the salaries, allowances and pension payable to
the Director General, Additional, Joint, Deputy or
Assistant Directors General, the Registrar and officers
and other employees of the Commission;
--the other expenses of the Commission in connection
with the discharge of its functions and for the purposes of
this Act
 Fund be administered by a committee of such Members
of the Commission as may be determined by the
Chairperson
 Committee appointed shall spend monies out of the Fund
for carrying out the objects for which the Fund has been

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constituted i.e., meeting the establishment and other
expenses of the Competition Commission in connection
with the discharge of its functions and for the purposes of
this Act
Section 52 Accounts and Audit  Accounts of the Commission be audited by the
Comptroller and Auditor-General of India at such intervals
as may be specified by him and any expenditure incurred
in be payable by the Commission
Section 53 Furnishing of  At such time and in such form and manner as may be
returns, etc., to prescribed or as the Central Government
Central  Commission to prepare once in every year, an annual
Government report giving a true and full account of its activities during
the previous year and copies of the report shall be
forwarded to the Central Government
Section Establishment of  National Company Law Appellate Tribunal be the
53A Appellate Tribunal Appellate Tribunal on and from the commencement of
Part XIV of Chapter VI of the Finance Act, 2017
 It shall:
--hear and dispose of appeals against any direction
issued or decision made or order passed by the
Commission under sections section 26(2) & (6), section
27, section 28, section 31, section 32, section 33, section
38, section 39, section 43, section 43A, section 44,
section 45 or section 46 of this Act; and
--adjudicate on claim for compensation that may arise
from the findings of the Commission or the orders of the
Appellate Tribunal in an appeal against any finding of the
Commission or under section 42A or under section
53Q(2), and pass orders for the recovery of compensation
under section 53N
Section Appeal to Appellate  By Central Government or the State Government or a
53B Tribunal local authority or enterprise or any person, aggrieved by
any direction, decision or order referred to in section
53A(a)
 Appeal be filed within a period of sixty days from the date
on which a copy of the direction or decision or order made
by the Commission is received
 Appeal may be entertained after the expiry of the said
period if it is satisfied that there was sufficient cause for
not filing it within that period
 On receipt of an appeal, the Appellate Tribunal may, after
giving the parties to the appeal, an opportunity of being
heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the direction,
decision or order appealed against
 Appellate Tribunal to send a copy of every order made by
it to the Commission and the parties
 Appeal be disposed of within six months from the date of
its receipt

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Section No. Section Heading Provisions

Section Appeal to Supreme  Central Government or any State Government or the
53T Court Commission or any statutory authority or any local
authority or any enterprise or any person aggrieved by
any decision or order of the Appellate Tribunal may file an
appeal to the Supreme Court within sixty days from the
date of communication of the decision or order
 Supreme court may allow it to be filed after the expiry of
the said period of sixty days

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