Section 3,4,5,6

 The replacement of MRTP 1969 by the

Competition Act 2002 is a natural corollary to
the economic liberalization and opening up
to trade to competition.
 Anti-competitive agreements.—
 (1) 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.
 (2) Any agreement entered into in
contravention of the provisions contained in
sub-section (1) shall be void.
 (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—
 (a) directly or indirectly determines purchase
or sale prices;

 (b) limits or controls production, supply,

markets, technical development, investment
or provision of services;
 (c)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;
 (d) directly or indirectly results in bid rigging
or collusive bidding,

 shall be presumed to have an appreciable

adverse effect on competition:
 Provided that nothing contained in this sub-
section shall apply to any agreement entered
into by way of joint ventures if such
agreement
 increases efficiency in production, supply,
distribution, storage, acquisition or control of
goods or provision of services
 Explanation.—For the purposes of this sub-
section, "bid rigging" means any agreement,
between enterprises or persons referred to in
sub-section (3) engaged in identical or similar
production or trading of goods or provision of
services, which has the effect of eliminating
or reducing competition for bids or adversely
affecting or manipulating the process for
bidding.
 (4) Any agreement amongst enterprises or
persons at different stages or levels of the
production chain in different markets, in
respect of production, supply, distribution,
storage, sale or price of, or trade in goods or
provision of services, including—
 (a) tie-in arrangement;

 (b) exclusive supply agreement;

 (c) exclusive distribution agreement;

 (d) refusal to deal;

 (e) resale price maintenance, shall be an agreement in

contravention of sub-section (1) if such agreement causes or
is likely to cause an appreciable adverse effect on
competition in India.
 (a) “tie-in arrangements” includes any agreement
requiring a purchaser of goods, as a condition of
such purchase, to purchase some other goods;
 (b) “exclusive supply agreement” includes any
agreement restricting in any manner the
purchaser in the course of his trade from
acquiring or otherwise dealing in any goods other
than those of the seller or any other person;
 (c) “exclusive distribution agreement” includes
any agreement to limit, restrict or withhold the
output or supply of any goods or allocate any area
or market for the disposal or sale of the goods;
 (d) “refusal to deal” includes any agreement
which restricts, or is likely to restrict, by any
method the persons or classes of persons to
whom goods are sold or from whom goods are
bought;
 (e) “resale price maintenance” includes any
agreement to sell goods on condition that
the prices to be charged on the resale by the
purchaser shall be the prices stipulated by the
seller unless it is clearly stated that prices
lower than those prices may be charged.
 Ramakant Kini (Informant)

and

LH Hiranandani Hospital (Opposite party)

 Manju Jain, a pregnant woman, entered into
an agreement with Life Cell (Cryobanks’
competitor) to use its services for banking of
stem cells.
 Mrs. Jain was registered with Hiranandani
Hospital for maternity services and for the
delivery of her child.
 Hiranandani Hospital in Mumbai entered into
an exclusive agreement with Cryobank to
supply all stem cell banking services to the
hospital’s patients for a period of one year
(the “Exclusive Contract”). 
 Mrs.Jain requested Hiranandani Hospital to
allow Life Cell to collect the stem cells blood
soon after her delivery.  After a Hiranandani
doctor told her that Life Cell could not
provide its services due to the Exclusive
Contract, Mrs. Jain chose to give birth in
another hospital.
 Anti-competitive agreement u/s 3(1) or 3(3) or
3(4)

 Abuse of Dominance power u/s 4

 Indulgence in practices resulting in denial of
market access
 Tie – in
 Exclusive supply agreement
 Refusal to deal
 Unfair conditions
 Exploitation of consumers
 Maternity services by Super Specialty
hospitals (relevant product market)

 0-12 kms from Hiranandani Hospital (relevant

geographic market)
 Maternity services across all types of
hospitals and nursing homes (relevant
product market)

 City of Mumbai (relevant geographic market)

 Price :
1. role of medical insurance policies
2. In absence of health policy – cost of
maternity services

 Non Price:
1. The doctor (expert)
2. Distance /convenience
 The CCI held that the Exclusive Contract was
anti-competitive in contravention of the
provisions of Section 3(1) of the Competition
Act 2002. 

 Thebasis for this finding was that Cryobank

had caused appreciable adverse effect on
competition in the market for stem cell
banking. 
 The CCI asserted that consumer harm might result
in the future .

 and the Exclusive Contract created entry barriers,

distort the market, inefficiency and reduced patient
choice

 The CCI made these findings notwithstanding that

the Exclusive Contract had a short duration (1 year)
and was terminable on notice.
 The CCI’s decision was heavily criticised by
the COMPAT.

 The COMPAT held that the Exclusive

Contract did not restrict the choice of the
service provider in the relevant market
(market for stem cell banking). 
 By virtue of the Exclusive Contract,
Hiranandani could provide stem cell banking
services only through Cryobanks but patients
remained free to secure those services from
Cryobanks competitors by switching
hospitals.
 The COMPAT highlighted that there were 13
other suppliers of stem cell banking services
active at the time (excluding two subsequent
new entrants) and patients were free to use
those service providers according to their
convenience and financial capacity. 

 COMPAT overruled the CCI order and

penalty.
 The CCI should be wary of self-interested
informants.  The COMPAT judgment makes
clear that the CCI should look critically at the
identity of Informants and should regard their
submissions with suspicion when motivated
by an ulterior motive.
 Findings need to be supported by evidence
and cannot be mere conjecture or
imagination.
 Exclusive dealing is a fundamental part of
business – it is not anticompetitive by
nature.
 Consumer protection is different to
competition law.  The COMPAT made clear
that consumer protection law is different to
competition law. Both statutes have different
objectives and function in different ways. 
 The turnover for the fine should be
“relevant” turnover : The CCI should not set
fines by reference to any revenues that are
not directly related to an identified
infringement.
 Informant :
The issue is relating to the iphone variants 3G
and 3GS (2008-2011).
Apple had first launched in India the iphone
series starting in 2008.
Some secret exclusive agreement with
Vodafone and Airtel
 Locked iphone
 Specific internet plans – costly than the
normal
 Restrictions on applications
 Loss of warranties
 Restrictions on third party apps
 Violation of Section 3 (4)
 Abuse of Dominant positions
 Jurisdiction
 Credentials of Informant
 Section 3 violations
 Tie-in arrangements
 Internet plans
 Third party downloads
 Abuse
 Jurisdiction
 Market Dynamics
 Relevant Market
 Dominance
 Anti competitive Agreement
 Anti
competitive behavior on part of three
manufacturers.

 Genuinespare parts of automobiles were not

made freely available in the open market

 CCIordered inquiry and investigation against

14 such manufacturer.
 OEM – Original Equipment manufacturer
 OES- Original Equipment supplier

 Section 3 violation

 Section 4 violation
 Passenger Vehicle:
1. Primary market (manufacture and sale)
2. Secondary market (after sale/spare parts)

After market
1. Supply of spare parts/diagnostic tool/manuals etc
2. Service of vehicle, maintenance, repair

 For whole of India

 Breach u/s 3 and 4

 Penalty – 2 % of the average total turnover of

individual car manufacturer.
 The CCI, relying upon the “antitrust theory that each
OEM was engaging in anti-competitive practices to
prevent independent service repairers from
competing with authorised dealers of such OEMs in
the aftermarket for maintenance and repair services
of such OEM manufactured automobiles”, concluded
that the “automobile primary market and the
aftermarket for spare parts and repair services does
not consist of a unified systems market, that each
OEM was a monopolistic player in the aftermarket.
 (i) The parties are hereby directed to immediately cease and desist from
indulging in conduct which has been found to be in contravention of the
provisions of the Act.

 ii) OPs are directed to put in place an effective system to make the spare
parts and diagnostic tools easily available through an efficient network.

 iii) OPs are directed to allow OESs to sell spare parts in the open market
without any restriction, including on prices. OESs will be allowed to sell
the spare parts under their own brand name, if they so wish. Where the
OPs hold intellectual property rights on some parts, they may charge
royalty/fees through contracts carefully drafted to ensure that they are
not in violation of the Competition Act, 2002.
 (iv)OPs will place no restrictions or impediments on the operation of
independent repairers/garages.

 v) The OPs may develop and operate appropriate systems for training
of independent repairer/garages, and also facilitate easy availability of
diagnostic tools. Appropriate arrangements may also be considered
for providing technical support and training certificates on payment
basis.

 vi) The OPs may also work for standardization of an increasing number
of parts in such a manner that they can be used across different
brands, like tyres, batteries etc. at present, which would result in
reduction of prices and also give more choice to consumers as well as
repairers/service providers.
 vii) OPs are directed not to impose a blanket condition that warranties
would be cancelled if the consumer avails of services of any independent
repairer. While necessary safeguards may be put in place from safety and
liability point of view, OPs may cancel the warranty only to the extent
that damage has been caused because of faulty repair work outside their
authorized network and circumstances clearly justify such action.

 viii) OPs are directed to make available in public domain, and also host
on their websites, information regarding the spare parts, their MRPs,
arrangements for availability over the counter, and details of matching
quality alternatives, maintenance costs, provisions regarding warranty
including those mentioned above, and any such other information which
may be relevant for full exercise of consumer choice and facilitate fair
competition in the market.
 Nothing contained in this section shall restrict—(i) the right of any person
to restrain any infringement of, or to impose reasonable conditions, as
may be necessary for protecting any of his rights which have been or
may be conferred upon him under—
 (a) the Copyright Act, 1957 (14 of 1957);
 (b) the Patents Act, 1970 (39 of 1970);
 (c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade
Marks Act, 1999 (47 of 1999);
 (d) the Geographical Indications of Goods (Registration and Protection)
Act, 1999 (48 of 1999);
 (e) the Designs Act, 2000 (16 of 2000);
 (f) the Semiconductor Integrated Circuits Layout-Design Act, 2000 (37 of
2000);
 (ii) the right of any person to export goods
from India to the extent to whichthe
agreement relates exclusively to the
production, supply, distribution or control of
goods or provision of services for such export.
 Section 4 : Abuse of dominant position
 (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
 (b) limits or restricts—
 (i) production of goods or provision of services or market
therefore; or
 (ii) technical or scientific development relating to goods or
services to the prejudice of consumers;
 (c) indulges in practice or practices resulting in denial of market
access 5[in any manner];
 (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 com-petition or
eliminate the competitors.
 Independent Service Organizations – ISO
filed complaint against Kodak

 Kodak adopted policies :

1. Limit the availability to ISO of replacement
parts for the equipment
2. Make it difficult for the ISO to compete with
the servicing of such equipments
 Kodak had unlawfully tied the sale of service
for it machines to the sale of parts (violation
of section 1 of Sherman Act)

 Unlawfully monopolized and attempted to

monopolize the sale of services and parts
(violation of Section 2 Sherman Act)

 Section 3 – Clayton Act

 Section 1: This section of the Sherman Act prohibits
agreements between two or more individuals or
independent entities that unreasonably restrain trade.

 Section 2 of the Sherman Act makes it unlawful for

any person to "monopolize, or attempt to
monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the
trade or commerce among the several States, or with
foreign nations .
 Section 3 of Clayton Act: which prohibits
exclusionary practices, such as tying,
exclusive dealing, and predatory pricing, that
lessen competition
 Decision in favor of Kodak

 Right of manufacturer unilaterally to select

its customers and refuse to sell to others is
well established, regardless of the possible
adverse effect it would be on customers.
 Reversed the summary decision by the Ninth
Circuit.

 Kodakhas an concerted agreement with

OEM and not unilateral.

 Kodak parts are unique and unavailable.

1. Kodak not selling parts for the equipment to
Kodak owners unless they agree not to use
the services of ISO.

2. Kodak will not sell replacement parts to ISO

to down their business.
 It is violation to get the purchaser to agree not to
purchase things from another seller.

 Whether this amounts to tie- in ? --- Yes

 Seller has appreciable economic power in the

market.

 Owners of the Kodak cannot readily switch to

other companies parts (unique parts)
 $ 72 million to be paid to the 18 ISOs filing the
case.

 10 years injunction requiring Kodak to sell the

parts for its machines at reasonable, non
monopoly and non discriminatory price.
 Lysine: essential amino acid that is an important
component of animal feed.

 In late 1980s, 3 major producers of lysine in the

world.
1. Ajinomoto – Japan – (60% of the world sales)
2. Kyowa Hakka – Japan –(20% of the world sales)
3. Sewon- South Korea – (15% of the world sales)
 Imported 60% of its lysine supply from these
3 companies

 1991 started the production of lysine

 ADM officials met in Japan with all other
players and suggested “amino acid trade
association”

 Issues:
1. To raise the price
2. Volume allocation agreement
 Guilty of price fixing

 ADM penalty of $70 million

 Other companies combine fine of $45 million.

 citric acid, the world's most widespread acidulate
and preservative used mainly in non-alcoholic
beverages and in preserved food such as jams,
gelatine-based deserts and tinned fruit.
 Citric acid is also used in household detergent
products especially as a substitute for phosphates
considered harmful for the environment. Citric acid
also enters in the composition of dissolving tablets
in the pharmaceuticals industry and is used in the
cosmetics industry.
 The CARTEL
 The cartel started on 6 March 1991 at the
Hotel Plaza in Basle (Switzerland), as stated
by the companies in documents submitted to
the Commission. There, and following on
previous informal contacts, the founding
members ADM, H&R, Roche and JBL agreed
on the main features of their plan to
eliminate competition between them.
 The cartel continued until May 1995 and
pursued four main objectives:
1. Allocation of specific sales quotas for each
member and adherence to these quotas;
2. Fixing 'target' and 'floor prices' for citric acid;
3. Exchanging specific customer information,
and
4. Eliminating price discounts.
 A sophisticated monitoring system was established,
whereby each company would report its monthly
sales figures to a previously agreed member, who
would then ensure the distribution of the
confidential information to all the others. In order to
ensure that each player would stick to the quotas
assigned, a compensation scheme was created,
obliging any member that over-sold its allocated
quota to provide compensation to the others.
 The companies' conduct was a very serious
infringement of the competition rules, as set
out in Article 81 of the European Union
Treaty and Article 53 of the EEA-Agreement.
 The following is a list of the individual fines
(in million Euro):
 F. Hoffmann-La Roche AG :  63.5
 Archer Daniels Midland Company Inc :  39.69
 Jungbunzlauer AG (JBL) :   17.64
 Haarmann & Reimer Corp. :  14.22
 Cerestar Bioproducts B.V.:   0.17
 the European Commission has found that US
companies Archer Daniels Midland (ADM) and
Haarmann & Reimer (H&R), the latter ultimately
owned by Bayer AG, Dutch company Cerestar
Bioproducts B.V., Hoffmann-La Roche and
Jungbunzlauer (JBL), both Swiss, participated in
a worldwide cartel between 1991 and 1995,
through which they fixed the price and shared
out the market for citric acid.
 Combination.—The acquisition of one or more
enterprises by one or more persons or merger or
amalgamation of enterprises shall be a combination
of such enterprises and persons or enterprises, if—
(a) any acquisition where—(i) the parties to the
acquisition, being the acquirer and the enterprise,
whose control, shares, voting rights or assets have
been acquired or are being acquired jointly have
 ,—(A) either, in India, the assets of the value
of more than rupees one thousand crore or
turnover more than rupees three thousand
crore; or
 (B) in India or outside India, in aggregate, the
assets of the value of more than five hundred
million US dollars or turnover of more than
fifteen hundred million US dollars;
 or
 (ii) the group, to which the enterprise whose control, shares,
assets or voting rights have been acquired or are being
acquired, would belong after the acquisition, jointly have or
would jointly have,—(A) either in India, the assets of the
value of more than rupees four thousand crore or turnover of
more than rupees twelve thousand crore; or

 (B) in India or outside India, in aggregate, the assets of the

value of more than two billion US dollars or turnover of more
than six billion US dollars; or
 (b) acquiring of control by a person over an
enterprise when such person has already
direct or indirect control over another
enterprise engaged in production,
distribution or trading of a similar or identical
or substitutable goods or provision of a
similar or identical or substitutable service, if
—
 (i) the enterprise over which control has been
acquired along with the enterprise over which the
acquirer already has direct or indirect control jointly
have,—(A) either in India, the assets of the value of
more than rupees one thousand crore or turnover of
more than rupees three thousand crore; or
 (B) in India or outside India, in aggregate, the assets
of the value of more than five hundred million US
dollars or turnover more than fifteen hundred
million US dollars; or
 (ii) the group, to which enterprise whose control has
been acquired, or is being acquired would belong
after the acquisition, jointly have or would jointly
have,—(A) either in India, the assets of the value of
more than rupees four thousand crore or turnover of
more than rupees twelve thousand crore; or
 (B) in India or outside India, in aggregate, the assets
of the value of more than two billion US dollars or
turnover of more than six billion US dollars; or
 (c) any merger or amalgamation in which—(i) the
enterprise remaining after merger or the enterprise
created as a result of the amalgamation, as the case
may be, have,—(A) either in India, the assets of the
value of more than rupees one thousand crore or
turnover of more than rupees three thousand crore; or
 (B) in India or outside India, in aggregate, the assets
of the value of more than five hundred million US
dollars or turnover of more than fifteen hundred
million US dollars; or
 (ii) the group, to which the enterprise remaining after
the merger or the enterprise created as a result of the
amalgamation, would belong after the merger or the
amalgamation, as the case may be, have or would
have,—(A) either in India, the assets of the value of
more than rupees four thousand crore or turnover of
more than rupees twelve thousand crore; or
 (B) in India or outside India, the assets of the value of
more than two billion US dollars or turnover of more
than six billion US dollars.
 Explanation.—For the purposes of this section,—
 (a) “control” includes controlling the affairs or management by—
 (i) one or more enterprises, either jointly or singly, over another
enterprise or group;
 (ii) one or more groups, either jointly or singly, over another
group or enterprise;
 (b) “group” means two or more enterprises which, directly or
indirectly, are in a position to—(i) exercise twenty-six per cent. or
more of the voting rights in the other enterprise; or
 (ii) appoint more than fifty per cent. of the members of the board
of directors in the other enterprise; or
 (iii) control the management or affairs of the other enterprise;
 (c) the value of assets shall be determined by taking the book
value of the assets as shown, in the audited books of account
of the enterprise, in the financial year immediately preceding
the financial year in which the date of proposed merger falls,
as reduced by any depreciation, and the value of assets shall
include the brand value, value of goodwill, or value of
copyright, patent, permitted use, collective mark, registered
proprietor, registered trade mark, registered user,
homonymous geographical indication, geographical
indications, design or layout-design or similar other
commercial rights, if any, referred to in sub-section (5) of
section 3.