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Progression From MRTP
Act To Competition Act
2

 Prevention of concentration of economic power
 Control of monopolies
 Prohibition of Monopolistic Trade Practices
 Prohibition of Restrictive Trade Practices
 Prohibition of Unfair Trade Practices
3

4
MONOPOLISTIC TRADE PRACTICES (MTP):-
―Such practice indicates misuse of one’s power to abuse
the market in terms of production and sale of goods and
services.‖
An MTP is likely to have any of the following effects:-
• Limiting or controlling;
• Unreasonably raising profits;
• Unreasonably increasing prices;
• Adopting unfair or deceptive methods

5
RESTRICTIVE TRADE PRACTICES(RTP) :
• ― The traders, in order to maximise their profits and gain
advantage in the market, often indulge in the activities
that tend to block flow of capital in production.‖
•Common types of RTPs are:-
o Refusal to Deal
o Tie- Up Sales
o Exclusive Dealings
o Price Discrimination
o Resale Price Maintenance
o Market Restriction

6
UNFAIR TRADE PRACTICES(UTP) :-
• ―A trade practice, for the purpose of promoting sale, use or supply of
any goods or provision of services, adopts any unfair method or
unfair or deceptive practice.‖
• PRACTICES WHICH ARE UTPs AS PER THE ACT ARE:-
o False representation
o False offer or Bargain Price
o Offering of gifts, prize, etc., and conducting promotional
contests
o Product Safety Standards
o Hoarding or Destruction of goods

7
NEED FOR SUBSTITUTION OF MRTP ACT
BY COMPETITION ACT
TRIGGER CAUSE
No mention of certain offending trade practices-
Abuse of Dominance
Cartels, Collusion and Price Fixing
Bid Rigging
Boycotts and Refusal to Deal
Predatory pricing
FORMATION OF RAGHAVAN COMMITTEE

◘ "acquisition“ - directly or indirectly, acquiring or
agreeing to acquire—
 Shares, voting rights or assets of any enterprise; or
 Control over management or control over assets of
any enterprise;
◘ "cartel”
 Association of Groups
 Objective: To Limit, attempt to control competition
 Example: Unilever and Procter & Gamble

 "relevant market“ - the market which may be determined
by the Commission with reference to the relevant product
market or the relevant geographic market or with reference
to both the markets;
 "relevant geographic market“ – a market comprising the
area in which the conditions of competition for supply of
goods or provision of services or demand of goods or
services are distinctly homogenous and can be
distinguished from the conditions prevailing in the
neighboring areas;

 "relevant product market“ - a market comprising all those
products or services which are regarded as
interchangeable or substitutable by the consumer, by
reason of characteristics of the products or services, their
prices and intended use.

• Eliminate practices having appreciable adverse
effect on competition
• Promote and sustain competition
• Protect consumer’s interests
• Ensure freedom of trade carried on by other
participants in markets, in India

 Consumers:
o Wider choice of goods, services and suppliers
o Better quality and improved value for money
 Businesses
o Level playing field
o Redressal against anti competitive practices
o Competitively priced inputs
o Greater productivity and ability to compete in global markets

Governments (Central and State):
o Optimal realization from sale of assets
o Savings of public money in procurement
o Enhanced availability of resources for social sector

◘ Anti-Competitive Agreements
◘ Abuse of Dominance
◘ Combinations Regulation
◘ Competition Commission of India
◘ Competition Advocacy

•Section 3 –
•the agreements which cause or are likely to cause
appreciable adverse effect on competition ("AAEC")
are anti-competitive agreements
•Such agreements may be horizontal or vertical

 Between enterprises at the same stage of the production
chain and that is generally between two rivals
 Either fixing prices or for limiting production or for sharing
markets
 Presumption in the Act that such agreements cause AAEC
 Caselet: Indian Oil Corporation Ltd (IOCL) during 2011-12.
 Directly or indirectly results in bid rigging or collusive bidding

◘ Between enterprises at different stages of the production
chain, like an arrangement between the manufacturer and a
distributor
◘ There must be an agreement amongst enterprises or
persons;
◘ The agreeing parties must be in different markets
◘ The agreement should cause or should be likely to cause
AAEC

◘ TYPES OF VERTICAL AGREEMENT:-
• Tie-in arrangement
• Exclusive distribution agreement
• Exclusive supply agreement
• Refusal to deal
• Resale price maintenance
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20
HORIZONTAL
Supplier
Manufacturer
Distributor
Retailer
Supplier
Manufacturer
Distributor
Retailer
Supplier
Manufacturer
Distributor
Retailer
V
E
R
T
I
C
A
L
HORIZONTAL AND VERTICAL AGREEMENTS

 If an enterprise or a group directly or indirectly, imposes
unfair or discriminatory:
o condition in purchase or sale of goods or service; or
o price in purchase or sale (including predatory price)
of goods or service
 Limits or restricts -
o production of goods or provision of services or market
therefore; or
o technical or scientific development relating to goods or
services to the prejudice of

 Uses its dominant position in one relevant market to
enter into, or protect, other relevant market
 Imposes unfair price in purchase or sale of goods
(predatory price)
o Caselet: DLF fined for abuse of dominance
22

Combination Covers:-
◘ Acquisition of shares, voting rights, assets etc.
◘ Mergers
◘ Amalgamations
◘ Acquiring control over another enterprise in the same line
of business.

◘ Proper information about the combination must be
provided within 30days of approval by the board of
directors.
◘ Filing should be done within 7 days of Acquisition
◘ The combination provides a post filing review period of
210 days during which no combination must come into
effect.

The current thresholds for the combined assets/turnover of the combining
parties are as follows:
IN INDIA
APPLICABLE TO ASSETS TURNOVER
INDIVIDUAL Rs.1500 Crores Rs.4500 Crores
GROUP Rs.6000 Crores Rs.18000 Crores
IN INDIA
AND
OUTSIDE
ASSETS TURNOVER
TOTAL Minimum
Indian
component
TOTAL Minimum Indian
component out
of TOTAL
INDIVIDUAL PARTY $750 mn Rs.750cr $2250 mn Rs.2250cr
GROUP $3bn Rs.750cr $9.billion Rs.2250cr

◘ An acquisition of shares or voting rights in another
enterprise- only investment no control
◘ Transfer from joint control to sole control (50%)
◘ An acquisition of stock–in-trade, raw materials, stores and
spares in the ordinary course of business.

◘ An acquisition of current assets
◘ Any acquisition of shares or voting rights by a person acting
as a securities underwriter or a registered stock broker.
◘ An acquisition taking place outside India with insignificant
effect in markets in India.

◘ A company which owns >25% but <50% of shares or voting rights
in another enterprise, can acquire 5% more in a financial year
without giving any notice to CCI.
◘ Any acquisition that results in more than 25% voting rights
requires a notice to be given to CCI.
◘ An exception of "enterprise jointly controlled by enterprises that
are not part of the same group" has been added.

 Establishment
◘ March 2009
◘ perpetual succession and a common seal
◘ Head office –decided by Central Government
 Composition
◘ Chairperson & Minimum 2 and maximum 6 other Members appointed by
the Central Government.
◘ Eligibility
◘ whole-time Members.
 Extension of the executive powers
◘ Appointment Director General / others for assisting in conducting
enquiries.

Penalties For :
 Non compliance with the orders
 Non compliance with the orders / non payment of fine
 Non-furnishing of information on combinations
 Making false statement or omission to furnish material
information
 Power to impose lesser penalty
 Crediting sums realised by way of penalties to
Consolidated Fund of India

 ADVOCACY PROVISIONS IN THE
COMPETITION ACT:
• Under Section 49 (1), Central Govt. or State Govt.
while formulating a law or policy may make a
reference to the Commission.
• Under Section 49 (3), The Commission is mandated
to take suitable measures for the promotion of
competition advocacy, creating awareness and
imparting training about the competition issues.
31

CCI assumes the role of competition advocacy
 Foster conditions leading to competitive market
 Develop relationship with the Ministries and Departments of the
Government
 Encourage debate on competition and promote a better and more
informed economic decision making
 Be open and transparent
 Competition advocacy: Enhanced by establishing good media
relations

Undertake programs and activites for promotion
of competition advocacy and create awareness
in India as well as abroad
Constitute Advocacy Advisory Committee(s)
Develop and disseminate advocacy literature

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 Proactive Interactions with the Central and State
Governments, civil society – concerned with competition
matters
 The Commission may undertake studies and market
research
 May encourage academic and professional institutions to
include competition law and policy

FACTORS MRTP COMETITION
1] Time Pre Reforms Post Reforms
2] Objective Prevent concentration of
economic powers
Prevent practices having an
adverse effect on
competition
3] Offences recognized Lists out 14 offences Lists out 4
4] Powers Cease and Desist orders Prevent and punish
5] Fund Did not provide for the
formation of fund
Provides competition fund
6] Entity Status Status of dominant position
is considered bad
Status of abuse of dominant
position is considered bad
7] Registration General registration is
mandatory
No such requirement

FACTORS MRTP COMPETITION
8] Role of the
commission
Only Advisory Can initiate suomotu
and levy penalties
9] Focus Consumer Interest Public
10] Appointment of
Chairman
Central Government Committee consisting
of retired judiciary,
person with
professional expertise
etc.

World Not A Single Platform For
Trade And Commerce
World Trade Organization (WTO) promotes global multilateral free
trade
Trade Barriers: tariffs, quotas, and nontariff barriers and Trading
Blocks exist.
 Hamper open Free Trade, curb competition and try to create
monopolies.
 Major Trading Blocs
oASEAN (Association of Southeast Asian Nations)
oEuropean Union (EU)
oNAFTA (North American Free Trade Agreement)
oSAARC (South Asian Association for Regional Cooperation)

 Introduction
 Antitrust :
The two central rules set out in Functioning of the European
Union.
 First, agreements between two or more independent
market operators which restrict competition are
prohibited.
 Second , it prohibits firms holding a dominant
position on a determined market.

 Cartel :
 The leniency policy encourages companies to hand
over inside evidence of cartels to the European
Commission
 Mergers :
 Harm consumers through higher prices, reduced choice
or less innovation.
 The objective - prevent harmful effects on competition.
 Examines the mergers if the annual turnover of the
combined businesses exceeds specified thresholds in
terms of global and European sales.

 Liberalization :
 Opening of the services such as transport, energy, postal
services and telecommunications to competition.
 Benefits-
 lower prices
 New/Alternative services (more efficient and consumer-
friendly than before. This helps to make economy more
competitive.)
 State Aid :
 Prohibited unless it is justified by reasons of general
economic development.
 Role of European Commission is of ensuring that
State aid complies with EU rules.

International :
 The integration of national economies also enables
companies to organize cartels and other anti-competitive
practices on an international or even global basis.
 Cooperation with other competition authorities takes place
at two levels:
1. Bilateral
2. Mutilateral

 US Antitrust Law—aka competition law
 Originated from trusts in US in 1800s which were set up in
the US in the late 1800s to control entire markets for
petroleum, transport, banking, rail and other industry sectors.
 Trusts undermined free market economics by restricting
competition, and the US antitrust laws were enacted to
redress this issue.
 Antitrust laws composed of – widely drafted antitrust
statutes – given meaning through case law.

45
PURPOSE
To promote effective and stable competition and prohibit
anti-competitive monopolists and conspiracies. Following
help understand the importance of protecting ones
company and the significance of managing ones risk
1. Civil antitrust punishments
2. Criminal antitrust punishments
Price-fixing
Horizontal market allocations
Bid-rigging
Other antitrust wrongdoing.

1. Monopolisation
• Monopolisation itself
• Attempted monopolisation
• Conspiracy to monopolise.
2. Conspiracy to restrain trade
• conspiracies to retain trade itself
• ―per se‖ restraints of trade
A third offence, ―abuse of dominant position.‖
• It is not forbidden under US antitrust laws expressly, it is
nonetheless part of the competition laws of the EU and
Canada and can therefore affect US businesses who function
internationally.

The
Sherman
Act
The Clayton
Act
The
Robinson-
Patman Act
The Federal
Trade
Commission
Act
The Hart-
Scott-
Rodino Act

 CCI imposes Penalty of Rs. 62.31 Crores
on Three Companies for Forming a Cartel
in a Tender for Indian Railways.
 The penalty has been imposed after CCI
took up a case of suo motto basis based
on information given by M/s Diesel Loco
Modernisation Works(DLMW), a unit of
Indian Railways at Patiala, Punjab. The
case relates to a DLMW tender wherein
the three vendors quoted identical rates
for feed valves.
49

 Progression from MRTP to Competition
 World is not the single platform for trade
and commerce.
50

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