OVERVIEW OF THE COMPETITION ACT. 2002 

2.1 COMPETITION ACT, 2002  

The Statement of the objects of the Competition Act states the reason for enacting the new law  as follows: 

‘In the pursuit of globalisation, India has responded by opening up its economy, removing  controls, and restoring to liberalisation.’ 

The preamble of the Competition Act states – 

“An act to provide, keeping given the economic development of the country, for the  establishment of a Commission to prevent practices hurting competition, to promote and  sustain competition in markets, to protect the interests of consumers and to ensure freedom of  trade carried on by other participants in markets, in India...” 

The Competition Act is drafted in general terms and is not limited to regulating commercial  acts of private parties. The Competition Act prohibits or regulates – 

• Anti-competitive agreements (u/s 3 of the Act) 

• Abuse of dominant position (u/s 4 of the Act) 

• Combinations, by way of an acquisition of an enterprise or merger of enterprises (u/s 5 &  6 of the Act). 

Other features of the act are as follows: 

• Combination Regulation-voluntary notification  

• Extraterritorial jurisdiction 

• Harmonisation of IPR and Competition Law 

• Competition Advocacy 

The Competition Commission of India (CCI) would be an expert administrative body that will  function as a collegium and market regulatory authority to prevent anti-competitive practices  in the country as an advisory body with advocacy functions. 

In Brahm Dutt Vs. Union Of India, In exercise of the Rule making power under Section  63(2)(a) read with Section 9 of the Act, the Central Government made "The Competition Commission of India (Selection of Chairperson and Other Members of the Commission) Rules,  2003". It published the same in the Gazette of India on 4.4.2003. Section 9 of the Act provides  for selecting the Chairperson and the other members as prescribed. 

Under Rule 3, the Central Government was to constitute a Committee consisting of a person  who has been a retired Judge of the Supreme Court or a High Court a retired Chairperson of a  Tribunal established under an Act of Parliament or a distinguished jurist or a Senior Advocate  for five years or more, a person who had special knowledge of and professional experience of  25 years or more in international trade, economics, business, commerce or industry, a person  who had special knowledge of and professional experience of 25 years or more in accountancy,  management, finance, public affairs or administration to be nominated by the Central  Government. The Central Government was also to select one of the members of the Committee  to act as the Chairperson of the Committee.  

The essential challenge was on the basis that the Competition Commission envisaged by the  Act was more of a judicial body having adjudicatory powers on questions of importance and  legalistic in nature and the background of the doctrine of separation of fuels recognised by the  Indian Constitution, the right to appoint the judicial members of the Commission should rest  with the Chief Justice of India or his nominee, and further the Chairman of the Commission  had necessarily to be a retired Chief Justice or Judge of the Supreme Court or the High Court,  to be nominated by the Chief Justice of India or by a Committee presided over by the Chief  Justice of India. 

The arguments on that behalf are met by the Union of India essentially because the Competition  Commission was more of a regulatory body, and it is a body that requires expertise in the field, and such knowledge cannot be supplied by members of the judiciary who can, of course,  adjudicate upon matters in dispute. 

It is further contended that so long as the power of judicial review of the High Courts and the  Supreme Court is not taken away or impeded, the right of the Government to appoint the  Commission in terms of the statute could not be successfully challenged on the principle of  separation of powers recognised by the Constitution. 

It was also contended that the Competition Commission was an expert body. It is not as if India  was the first country to appoint such a Commission presided over by persons qualified in the relevant disciplines other than judges or judicial office. Since the expert body's primary  functions were regulatory, there was no merit in the challenge raised in the Writ Petition. 

The Apex Court, while closing the writ petition vide order dated January 20, 2005, declined to  pronounce any order in the light of the proposed amendments in the Act and Rules, 2003, which  have a precise bearing on the questions that arose in the writ petition, leaving open all the  relevant questions regarding the validity of the provisions of the Act and the Rules, 2003. 

The Apex Court, in the matter of Competition Commission of India vs. Steel Authority of  India and another occasion, considered the functions of the CCI under the Act and observed  that the CCI is inter-alia discharging Judicial operations under the Act.  

Thereby, the amendment of 2007 was introduced with the following points: 

1. Notification of all “combinations”, i.e., mergers, acquisitions and amalgamations to CCI,  made compulsory. 

2. CCI will be an expert body that will function as a market regulator for preventing anti competitive practices in the country and have advisory roles and advocacy functions. 3. CCI to function as a collegium, and its decisions would be based on a simple majority. It  omits the power of CCI to award compensation to parties against proven anti-competitive  practices indulged in by enterprises. 

4. Establishment of a Competition Appellate Tribunal with a three-member quasi-judicial  body to be headed by a retired or serving Judge of the Supreme Court or Chief Justice of a  High Court to hear and dispose of appeals against any direction issued or decision made or  order passed by the CCI. 

5. The Competition Appellate Tribunal is also to adjudicate upon compensation claims and to  pass orders to recover compensation from any enterprise for any loss or damage suffered  due to any contravention of the Competition Act, 2002 provisions. 

6. Orders of the Competition Appellate Tribunal can be executed as a decree of a civil court. 7. Appeal against the orders of the Competition Appellate Tribunal to the Supreme Court. 8. New Powers upon sectoral regulators to make suo moto reference to CCI on competition  

issues in addition to the earlier provision of referring to a request made by any party in a  dispute before it. Also, similar powers are conferred upon CCI. 

9. Allows continuation of the MRTPC till two years after the constitution of CCI for trying  pending cases under the MRTP Act and to dissolve the same after that.

The Competition Appellate Tribunal (COMPAT) will execute adjudicatory functions as  mentioned u/s 53A of the Act. And to hear appeals against any counsel or directions made by  the Competition Commission of India. The orders or decisions of the COMPAT can be  challenged in the Supreme Court. 

As per the 2017 amendment, the Competition Appellate Tribunal (COMPAT) has ceased to  exist effective 26 May 2017. Under the Competition Act, 2002 (Competition Act), the appellate  function would now confer to the National Company Law Appellate Tribunal (NCLAT). 

2.2 DIFFERENCE BETWEEN COMPETITION AND MRTP ACT

MRTP, 1969 Based on pre-reforms command and control  regime Based on size/structure as a factor Competition offences are implicit and not  defined Complex in arrangement and language Frowns upon dominance Registration of business agreements is  mandatory No combination regulations No competition advocacy No penalty provisions Unfair trade practices covered The rule of law approach Exclusion of IPR

COMPETITION ACT, 2002 Based on post-reforms liberalised regime Based on conduct as a factor Competition offences explained Simple in arrangement, language etc. Act upon abuse of dominance No requirement for the registration of  agreements Combination regulation beyond threshold  limit Penalties and offences included UTP omitted Rule of reason approach IPR excluded but unreasonable restrictions  covered.