final notes
final notes
SLIDE 1
For example if a firm attains a dominant status and starts abusing its position
then it will lead to hike in prices and degradation of quality, etc, thus
affecting the consumers. But competition policy will eliminate the existence
of any such anti-competitive agreement thus subsequently protecting the
consumers by its actions.
SLIDE 2
Section 3 - prohibits agreements that cause or are likely to cause an
appreciable adverse effect on competition within India, making such
agreements void. This includes agreements related to production, supply,
distribution, storage, acquisition, or control of goods or provision of services
Effect of anti-competitive agreements on consumers - An agreement which
attempts to control the market (through measures like fixing prices,
controlling volumes of production so that prices rise artificially, blocking
certain distributors or suppliers, etc.) is an anticompetitive agreement.
Provision of Section 3(1) casts a duty on enterprises to examine the
proposals for agreement or arrangement from its long term effect on
competition in the market. The term „Appreciable Adverse Effect on
Competition‟ has not been defined under the Act. An anti-competitive
agreement must result in an Appreciable Adverse Effect on Competition
(AAEC) to be prohibited. For example, where an agreement between two
business enterprises results in higher prices -it will result in an AAEC and
such an agreement is to be prohibited
PPT - Section 4, Competition Act, 2002: checks the unfair or
discriminatory condition of products or services and ensures that
the price in the purchase or sale of goods or services cannot be to
the prejudice of the consumers. However, applicable only when the
entity is in a dominant position.
Consequence of section 4
The abuse of its position by a dominating firm directly affects the consumer
due to malpractices like predatory pricing and creation of barriers to the new
entrants, thus eliminating competition. This leads to a situation of monopoly
and oligopoly where the consumer gets vulnerable to be exploited. Now
where there is no competition in the market and the dominant firm has no
fear to lose its stand in the market it will start controlling the market, the
demand and supply, the prices, etc, and all this will eventually lead to
harming the consumers. For example Predatory pricing is pricing goods or
services in such a low cost so as to eliminate competitors and afterwards
recoup the loss by increasing prices or decreasing the quality thereby
affecting the interests of consumers.
After section 19
Information received from consumer - Section 19(1) - Commission may
inquire into any alleged contravention of the provisions contained in
subsection (1) of section 3 or sub-section (1) of section 4 either on its own
motion or on— (a) 29[receipt of any information, in such manner and]
accompanied by such fee as may be determined by regulations, from any
person, consumer or their association or trade association; or
Section 19(3) accrual of benefits to consumers;- The Commission shall, while
determining whether an agreement has an appreciable adverse effect on
competition under section 3, have due regard to all or any of the
following factors, namely:— accrual of benefits to consumers
Section 19(4) - the Competition Commission while inquiring whether a firm
in misusing its dominant status shall under Section 19(4) give due regard to
all or any of the factors like market share, size and resources of the
enterprise and its competitors, comparison of economic powers of the
enterprise and its competitors, dependence of consumers, etc. Here as well
we can see that there exists a consideration for consumers in determination
of a firm‟s dominant position by CCI.
19(6) & 7- The Commission shall, while determining the “relevant geographic
market and product market – (g) & (c)consumer preferences
The intent of the person is relevant to the analysis as to whether the conduct
is exclusionary or predatory and it has also been noticed that the conduct
would be found predatory or exclusionary on the examination of the action of
the undertaking concerned in the light of consumer interest, that is, as to
whether it has impaired competition in an unnecessary restrictive way.
PPT - Section 27, Competition Act, 2002 - empowers the commission to pass
any order when after inquiry it finds that any agreement is in contravention
of Section 3 or Section 4.
Merger Control
Competition Act not only empowers CCI to take actions on the
anticompetitive agreements and abuse of dominant position, but also
empowers it to regulate the combinations which may have anticompetitive
effect on the markets in India. Generally, mergers are a legitimate means by
which firms can grow and evolve. Idea of this ex-ante regulation is to pre-
empt the potential abuse of dominance, where it is probable, as subsequent
unbundling can be both difficult and socially costly.
For example, Coca Cola and PepsiCo the two biggest players in India in the
soft drink industry combine then this combination will eliminate the
competition in the market and the industry will be in a position to control the
prices of the goods and thus this will harm the consumers and the economy
of the country. The company formed after combination will try and eliminate
the smaller industries and this will ultimately lead to full market control
which will hamper economic growth and harm the consumers. Thus it is the
duty of the Competition Commission of India to check on such combinations.
SLIDE 2
Belaire –
1) Standard form of contract - even when DLF sent the said agreement for
signing by the allottees, they had absolutely no right to suggest/make
any alteration/modification whatsoever in the said agreement; and if
they refuse to sign the agreement at that point of time the money
deposited earlier stood forfeited. In other words, having deposited the
earnest money, the allottees options to change his choice for any
reason, including not agreeing with the terms of the Agreement, stood
foreclosed, even without having entered into any Agreement till that
stage.
buyer/allottee has to pay almost 95% of the consideration amount
within 27 months of booking, and a bulk of this is often paid
to DLF even before entering into the Agreement. It is also noted that
though DLF provides a stringent time-line for payment of agreed
amount, there is no time-line specified for delivery of possession
by DLF. Agreement was sent after paying the earnest money. In such
cases the buyer who could have made a choice to go to other
real estate service providers, gets locked in with DLF having
paid a substantial amount, with no free exit option, without
even being aware of the terms and conditions being imposed
through the Agreement. The high switching cost not only
destroys the choice, it also reduces mobility in the market.
Essentials – ticked off – dominant entity( Section 4) relevant market –
high end residential societies in Gurgaon – abused its dominance
Competition law had applied because – DLF was a dominant entity
affecting the consumers under section 4(a)(ii)
2 (a) directly or indirectly, imposes unfair or discriminatory— (i)
condition in purchase or sale of goods or service; or
Excel Crop
Excel Crop is a bid rigging case in the sector of Aluminium Phosphide Tablets,
a common insecticide. The CCI took the case based on a complaint by Food
Corporation of India, which said that Excel Crop and three other firms had
indulged in cartel-like behaviour by quoting same prices in tenders for
several years. The CCI found a violation of Section 3(3)(d), which was upheld
by the COMPAT.
DON’T SAY
• Excel Crop Care Ltd. was a manufacturer of chemical products used in
agriculture, specifically pesticides. The company was accused of
engaging in anti-competitive behavior, by indulging in collusive bidding
that restricted competition in the market for the sale of a specific
pesticide.
• The Supreme Court upheld the decision of the CCI, ruling that Excel
Crop Care Ltd. had indeed abused its dominant position in the pesticide
market and that its conduct was anti-competitive. The Court confirmed
that the Competition Act, 2002 was designed to prevent practices that
would harm consumer welfare, particularly by undermining competition
in the market;
SAY
Anti-competitive agreements 3. Any agreement entered into between
enterprises or associations of enterprises or persons or associations of
persons or between any person and enterprise or practice carried on, or
decision taken by, any association of enterprises or association of persons,
including cartels, engaged in identical or similar trade of goods or provision
of services, which— (d) directly or indirectly results in bid rigging or collusive
bidding, shall be presumed to have an appreciable adverse effect on
competition:
CCI v. Artistes & Technicians of W.B. Film & Television, (2017) 5 SCC 17
In the State of West Bengal, M/s Hart Video (‘Hart Video’) was assigned the
rights to
telecast the T.V Serial ‘Mahabharata’ (‘serial’) dubbed in Bengali Language.
For
this purpose, Hart Video entered into an agreement to telecast it on two TV
channels viz., ‘Channel 10’ and ‘CTVN+’. Two associations, namely Eastern
India
Motion Picture Association (‘EIMPA’) and Committee of Artists and
Technicians
of West Bengal Film and Television Investors (‘Coordination Committee’)
(together used as ‘associations’ or “OP”), opposed such screening of an
originally Hindi Serial to one that was dubbed in Bangla. According to them,
serials produced and shown in TV Channels after dubbing them would
adversely
affect the artists and technicians working in West Bengal. Under a lot of
pressure, both
TV Channels decided to call off the telecasting. Thereafter, Hart Video filed a
complaint with the CCI alleging collusion amongst the associations which had
lead
to the foreclosure in telecasting the serial.
An agreement will have AAEC when it limits or controls production, supply,
markets, technical development, investment or provision of services;
Relevant market – film and television industry in WB
Big Cinemas
1. Respondent No.1 in his complaint before the District Forum stated that he
had gone to watch a movie at Big Cinemas, Jaipur. Feeling thirsty, he
purchased an ‘Aquafina’ water bottle sold inside the cinema. The said
Aquafina bottle was being sold for Rs. 30 in the cinema, whereas the MRP
of the same was Rs. 16. It was alleged that the Petitioners were
misleading customers regarding the price of the water bottle and charging
an exorbitant price.
2. The defence of the Petitioners, in a nutshell, is as follows –
(i) The MRP on the water bottle was in fact Rs. 30/-, and when the
bottles were procured for further sale from Pepsico (which owns and
markets the brand ‘Aquafina’) and Varun Beverages (distributor for
Aquafina), this was the MRP. Higher pricing is also sought to be
justified on the basis that sale of beverages is incidental to the main
object of the cinema business, and is in the nature of an additional
or optional service to enhance the customer experience.
(ii) It was alleged that the Respondent No. 1 in fact purchased another
bottle outside the cinema bearing MRP of Rs. 16 and claimed that it
was being sold inside the cinema at Rs. 30, whereas the bottle sold
inside the cinema was at MRP 30 only. It is argued that it is possible
for the same product to have different MRPs, as pricing is
dependent on various factors.
(iii) The consumer in the cinema has the option of availing free drinking
water and is not compelled to purchase a water bottle. This is
however disputed by the Respondent No. 1.