India is one of the largest and most dynamic markets in the world which makes
it quite a task to maintain the balance between the interests of the consumer
and the producer. It is at this point that the Antitrust laws or the Competition
act 2002 comes into play, that deal with Anti Competitive trade practices which
includes anticompetitive agreements, abuse of Dominant position by enterprises
and also regulation of acquisitions and mergers.
After it was realized that competition in markets is essential for all
consumers, producers and economy as a whole it had become even more important to
keep a check and obviate any attempt at subversion of free trade, abuse of
market dominance and competition. It is a universally believed fact that
competition laws are essential to ensure quality goods and services at
Anti Competitive Agreement
Anticompetitive agreements are agreements among competitors to prevent, restrict
or distort competition. As per chapter 2, section 3(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.'
The act declares any such agreement entered into void. The agreement shall not
necessarily be written, as oral understandings are also covered under the law.
Anti- competitive agreements can be of two types – Horizontal and Vertical. The
difference between Horizontal and Vertical anti-competitive Agreement is that of
the levels of the entities involved. Horizontal agreements as per section 3(3)
are the ones where entities engaged in similar kind of trade practices initiate
agreements such as agreement to fix price, to limit supply or production, to
allocate markets, etc.
Such agreements are favorable only for the producer and detrimental for the
consumers. In this case anticompetitive circumstances are generally created due
to sharing of price related information amongst the competitors, though exchange
of other types of information like strategic information, business plan,
capacity details etc. can be equally problematic.
Vertical agreements as per section3(4) are those which are made between entities
at different stages of production. For instance between producer and the
supplier. Tie- in agreements, exclusive supply agreement, refusal to deal and
resale price maintenance are the kinds of agreements involved and are declared
void as per the act.
Therefore essential ingredients according to Section3(4) are:
- There shall exist an agreement amongst enterprises or persons.
- Parties to the agreement must not be at the same level of production.
- The agreement should cause or should be likely to cause adverse effect
Abuse Of Dominant Position
As per the Competition Act,2002, Sub-section (1) of section 4 'Dominant
position' means a position of strength, enjoyed by an enterprise in the relevant
market in India, which enables it to operate independently of competitive forces
prevailing in the market, or affects it's competitors or consumers in its
It is also coherent that the act does not prohibit having a dominant position
but rather outlaws its abuse. It has to be acknowledged that prior to the 2007
amendments the legislation was applicable only to an enterprise and not to the
group of enterprises. Factors that help to establish dominance of a firm in the
market are the market share, size and resources of the enterprise, the
competitors, economic power, extent of entry and exit barriers in the market,
It cannot solely be decided on the basis of market share that the firm has, as
it in itself is affected by a lot of factors.It can be interpreted that the
definition does not prescribe any arithmetical figure like percentage of market
share to define dominance and it simply means the position of strength enjoyed
by the entity in the relevant market.
The abuse is said to occur when an entity uses it's dominant position in an
exclusionary or exploitative manner. Abuse of dominant position covers imposing
unfair conditions or price, limiting production and development, denying market
access, using dominant position in one relevant market to gain advantage in
another relevant market, etc.
Development Of Competition Laws In India
The competition act, 2002 or the Anti-Trust laws were preceded by The Monopolies
and restrictive trade Practices act, 1969 (MRTP). In 1964 the Monopolies Inquiry
Commission was constituted under the chairmanship of Justice K.C. Das Gupta, a
judge of the Supreme court. It led to the constitution of The Monopolies and
Restrictive Trade practices commission in 1970. The Monopolies and restrictive
trade practices act, 1969 has its roots in the Directive principles of state
Its aim was to constraint concentration of wealth in a few hands. It had to be
replaced with The competition Act,2002 because it was ill equipped to deal with
the obstacles India was facing as an emerging economy. The act was highly
non-dynamic and vague in nature. The MRTP Act comprised of unjust categorization
i.e, it categorized any enterprise owning assets worth more than 20 crores to be
a Dominant firm which was unreasonable as it was based solely on the factor of
market share of the enterprise.
Another drawback was that it was ambiguous, it failed to clarify which activity
would be restrictive and hence would constitute an offence under the act. It
also included all types of possible offences under its ambit thereby leading to
a variety of interpretations by the courts in the way of which the essence of
law was lost.
Other major drawback was that it considered Dominance in itself adverse which
wasn't the motive, when in reality the abuse of dominant position should be
considered adverse. After gaps were identified in the act, several amendments
were made in the act like the 1991 amendment which made it applicable to public
sector undertakings and government companies.
However, eventually it was realized that due to multiple shortcomings, a new
legislation was the need of the hour with the simultaneous emergence of the
Liberalization, Privatisation, Globalisation (LPG) policy. Therefore to lay the
foundations for a more healthier and competitive market the Monopolies and
Restrictive Trade Practices Act was replaced by The Competition Act, 2002, which
was further amended in the year 2007 and 2009.
Enforcement And Administration
The statutory body responsible for administration and enforcement of the
Competition Act,2002 is The Competition Commission of India. It looks into cases
and takes up complaints against the enterprises and persons in violation of the
The commission was established on 14th October,2003. It consists of a
chairperson and not less than two and not more than six people. A few notable
cases decided by the Competition Commission of India include that from
2014,whereby the CCI imposed a fine of Rs. 10 million upon goggle for failure to
comply with the directions given by the director general seeking information and
Also in December 2021, CCI took a step back from approving Amazon's investment
in a Future group company which had initially received assent in 2019 as it was
alleged that Amazon concealed the scope and complete information of its
investment while seeking approval. And many other prominent cases.
The Anti trust laws of India have witnessed major transformations throughout
these years and is now serving its function in the post liberalized economy
where it is realized that Competition is the life and blood of the economy or
the markets. The laws have proved to be beneficial in the recent cases due to
the regular amendments that have taken place in the legislation in accordance
with the recent socioeconomic and legal changes in the country.
The amendments of the year 2007 and 2009 and even the change to competition act,
2002 from the MRTP Act,1969 evidently portray the dynamic nature of the laws
which is one of the most characteristic features. It is one of the most
characteristic feature because to protect and secure the rights and welfare of
the consumers the laws shall match up to the advancements made in the society
and go through equal development.
Hence it can be said that the Antitrust laws are only enough when they are
qualified to deal with the contemporary issues faced by the consumers. In the
current scenario when E-commerce giants are leading the market and there is a
paradigm shift in the way businesses are handled,it is very important to have a
close scrutiny over them to ensure protection of consumer welfare.
This concern has indeed led to another amendment bill which can be regarded as a
positive step as it aims to deal with Section 5 of the act pertaining to the
mergers and acquisitions of the enterprise. The decision has been taken as
several digital mergers and acquisitions with low transaction values are often
not notified to the CCI.
The bill also includes provision to tighten the ropes on Anti-Competitive
Practices while seeking amendments in Section 48, Section 41 regarding the
penalties and powers described in the act. It is expected to be discussed in the
upcoming winter session of the Parliament. Approval of the bill shall be a
welcome step in the making the Antitrust laws more consumer friendly.