General study layout for Compe on Act

Relevant Director Competition

History Section 3 Section 4 Section 5, 6 CCI
Market General Advocacy
Horizontal
Relevant Product • Joint venture exemption
Dominance Concept Role Powers and duties
Market

Relevant
Abuse of De minimus
Geographical Vertical Function
Dominance exemption
Market

Online vs Offline IPR restrictions predatory pricing Powers

Status of members
Collective
and specific role of
dominance
chairman of CCI

Section 19, 20, 21

factors
Compe on Commission of India (Sec on 7- 17)
History
 Section 5 of the MRTP Act, 1969, since repealed, provided for the establishment of
MRTP Commission
 Raghavan Committee gave its recommendations as such:
The provisions of the section are based on recommendations of Raghavan Committee. The
relevant extracts of the Report are reproduced below:
“
6.1.1 Administration and enforcement of the Competition Law requires an administrative set
up. This administrative set up should be more proactive than reactive for the administration of
the Competition Policy. This is not a mere law enforcement agency. This administrative set up
should take a proactive stand to be specified and adopted to promote competition by not only
proceeding against those who violate the provisions of the Competition Law, but also by
proceeding against institutional arrangements and public policies that interfere with the fair
and free functioning of the markets. It is in this context that a Competition Law Authority should
have the following two basic functions:
(a) Administration and enforcement of Competition Law and Competition Policy to foster
economic efficiency and consumer welfare.
(b) Involvement proactively in Governmental policy formulation to ensure that markets remain
fair, free, open, flexible and adaptable.
6.1.2 Specialised Courts.—In many countries, enforcement of Competition Law is entrusted to
the judiciary. The Competition Law Authority makes an application to the appropriate law
courts seeking orders to implement its decisions. In most statutes, appeals against the
Competition Law Authority’s decisions may lie to the judicial courts at the highest or near
highest level. The parties involved will have the right for preferring such appeals. In many
Competition Laws, private parties and victims of prohibited trade practices have the right to
institute competition cases before the Competition Law Authority or a law court.
6.1.3 In many developed countries and economies in transition, the judiciary therein may be
inexperienced in dealing with free market problems. Such problems relating to free and fair
trade and relating to restrictive and other prohibited trade practices like abuse of dominance,
require a certain level of specialised knowledge in economics, trade and the relevant law for
adjudication. Even if the judiciary has the reputation and exposure to commerce and market-
related matters, the Competition Law administration will be better handled, if a specialised
agency is set up for the purpose.
With due respect to the judiciary around the world and in particular India, it needs to be
underscored that, in the era of specialisation, Competition Law would be better administered
and consumer welfare better subserved, if placed in the hands of a specialised agency.
6.1.4 It is therefore, recommended that for the administration and enforcement of Competition
Law in India, a Specialised Court/Tribunal which can be christened ‘Competition Commission
of India’ may be established.”
”
In summary, Raghvan Committee called for a specialized tribunal because they recognized the
fact that judiciary is not equipped to deal with matters as complex and varied as free market
problems. Moreover they are rigid enough in their decision making that they cannot properly
dispense justice for market in their existing framework.
The Central Government has been empowered to establish a quasi-judicial tribunal, the
Competition Commission of India. The Commission shall be a body corporate having perpetual
succession and common seal.
Interesting to note that the erstwhile regulatory body, viz., the Monopolies and Restrictive
Trade Practices Commission, it may be added, was not constituted as a body corporate; it was
a part and parcel of the Government of India. The National Company Law Tribunal established
under section 408 of the Companies Act, 2013, is also a Government set up and not a body
corporate. None of the other regulatory authorities set up under the Income- Tax Act, the
Custom and Excise Act, the Foreign Exchange Management Act or the Reserve Bank of India
Act, or those set up under labor laws, like the Industrial Disputes Act, or the ESI Act, have been
constituted as body corporate.
The precise purpose of establishment of CCI as a body corporate with perpetual succession and
its own common seal with power to acquire, hold property, to contract, to sue, be sued in its
own name, is not clear, is indeed a question worth deliberating upon.
As held in CCI v SAIL1, the CCI under the scheme of the Competition Act, 2002, is vested
with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory
jurisdiction.

Du es, Powers and Func ons of Compe on Commission

18. Duties of Commission
19. Inquiry into certain agreements and dominant position of enterprise
20. Inquiry into combination by Commission
21. Reference by statutory authority
21A. Reference by Commission
22. Meetings of Commission
26. Procedure for inquiry under section 19
27. Orders by Commission after inquiry into agreements or abuse of dominant position
28. Division of enterprise enjoying dominant position
29. Procedure for investigation of combinations
30. Procedure in case of notice under sub-section (2) of section 6
31. Orders of Commission on certain combinations

1
CCI v. SAIL (2010) 10 SCC 744.
 32. Acts taking place outside India but having an effect on competition in India
33. Power to issue interim orders
34. Power to award compensation
35. Appearance before Commission
36. Power of Commission to regulate its own procedure
37. Review of orders of Commission
38. Rectification of orders
39. Execution of orders of Commission imposing monetary penalty
40. Appeal

Sec on 8
Composition
 1 Chairman + (2-6) Members
 Specialized Knowledge
 All members shall be whole time members
The Competition Commission of India (CCI) shall consist of a chairperson and not less than
two and not more than six other members. Initially, the Central Government may appoint the
Chairperson and a Member to assess the need for appointment of further members. The
Chairperson and Members shall be whole time members. The Supreme Court in the case of
Brahm Dutt v UOI,2 while considering the constitutional validity of section 8 of the
Competition Act, 2002 observed that the Commission is an expert body which had been created
in consonance with international practice. The Court observed that it might be appropriate if
two bodies are created for performing two kinds of functions, one, advisory and regulatory and
the other, adjudicatory. Though the Tribunal has been constituted by the Competition
(Amendment) Act, 2007, the Commission continues to perform both the functions stated by
this Court in the above case.

Sec on 9
Selection committee
1 Chairperson - Chief Justice of India or His Nominee
2 Member- Secretary in Ministry of Corporate Affairs
3 Member- Secretary in Ministry of Law and Justice
4 Member- two experts of repute who have special Knowledge

Sec on 10
Term of office Chairperson and other members
 5 years and eligible for re-appointment (Maximum age of/ Retirement age = 65 years)

2
Brahm Dutt v UOI, AIR 2005; SC 730 : (2005); 2 SCC 431.
  Vacancy will be filled by provisions of Section 9
 In case chairperson is not available due to any reason then seniormost member takes
position.

Sec on 11
Resignation, removal and suspension of Chairperson and other members
1. In case of resignation has to work for 3 months or till when a replacement is appointed
(whichever is earlier)
2. Conditions for removal:
(a) is, or at any time has been, adjudged as an insolvent; or
(b) has engaged at any time, during his term of office, in any paid employment; or
(c) has been convicted of an offence which, in the opinion of the Central Government,
involves moral turpitude; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his
functions as a Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the
public interest; or
(f) has become physically or mentally incapable of acting as a Member.

Sec on 12
Restriction on employment of Chairperson and other Members in certain cases
The Chairperson and other Members shall not, for a period of 2 [two years] from the date on
which they cease to hold office, accept any employment in, or connected with the management
or administration of, any enterprise which has been a party to a proceeding before the
Commission under this Act.

Sec on 13
The Chairperson shall have the powers of general superintendence, direction and control in
respect of all administrative matters of the Commission:
Provided that the Chairperson may delegate such of his powers relating to administrative
matters of the Commission, as he may think fit, to any other Member or officer of the
Commission.”]
Basically this section provides that chairman is a position that will perform admin functions of
CCI and under section 10, in his absence, the responsibility falls on the shoulders of seniormost
member.

Sec on 14 to Sec on 17 are for bare act reading

DUTIES, POWERS AND FUNCTIONS OF COMMISSION

Sec on 18
Duties of Commission
Subject to the provisions of this Act, it shall be the duty of the Commission to Subject to the
provisions of this Act, it shall be the duty of the Commission to eliminate practices having
adverse effect on competition, promote and sustain competition, protect the interests of
consumers and ensure freedom of trade carried on by other participants, in markets in India:
eliminate practices having adverse effect on competition, promote and sustain competition,
protect the interests of consumers and ensure freedom of trade carried on by other participants,
in markets in India:
India and to protect the interest of the consumers and to ensure freedom of trade. The
Commission will discharge its duty by exercising its powers and functions under Chapter IV.
It is also empowered to impose penalties under Chapter VI.
International Collaboration
The Commission has been proactively engaging with various international organizations, such
as, International Competition Network (ICN), Organisation for Economic Cooperation and
Development (OECD), United Nations Conference on Trade and Development (UNCTAD) as
well as other competition authorities. As per the mandate under section 18 of the Competition
Act, 2002, the Commission has entered into Memoranda of Understanding (MOU) with five
competition authorities till 2015 [Federal Trade Commission (FTC)/Department of Justice
(DOJ), USA, Director General Competition, European Union (EU), Federal Antimonopoly
Service (FAS), Russia, Australian Competition and Consumer Commission (ACCC), and
Competition Bureau (CB) Canada].
The Competition Commission of India (CCI) has an observer status in the Competition
Committee of OECD. The CCI has been making regular contributions at various round tables
during the conferences/meetings of OECD.

Sec on 19-32

Read the bare act by yourself and prepare cases that you find are appropriate. General
information regarding investigations under Competition act.

Any complaint or reference is required to contain relevant facts which constitute alleged
contravention of subsection (1) of sections 3 and 4. When such information is received, the
Commission is expected to satisfy itself and express its opinion that a prima facie case exists,
from the record produced before it and then to pass a direction to the Director General to cause
an investigation to be made into the matter. This direction, normally, could be issued by the
Commission with or without assistance from other quarters including experts of eminence. The
provisions of section 19 do not suggest that any notice is required to be given to the informant,
affected party or any other person at that stage. Such parties cannot claim the right to notice or
hearing but it is always open to the Commission to call any “such person”, for rendering
assistance or produce such records, as the Commission may consider appropriate.
The Commission, wherever, is of the opinion that no prima facie case exists justifying issuance
of a direction under section 26(1) of the Competition Act, 2002, can close the case and send a
copy of that order to the Central Government, State Government, Statutory Authority or the
parties concerned in terms of section 26(2) of the Act. It may be noticed that this course of
action can be adopted by the Commission in cases of receipt of reference from sources other
than of its own knowledge and without calling for the report from Director General.
The direction under section 26(1) after formation of a prima facie opinion is a direction
simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of
it, is an administrative direction to one of its own wings departmentally and is without entering
upon any adjudicatory process. It does not effectively determine any right or obligation of the
parties to the lis. Closure of the case causes determination of rights and affects a party, ie, the
informant; resultantly, the said party has a right to appeal against such closure of case under
section 26(2) of the Competition Act, 2002. On the other hand, mere direction for investigation
to one of the wings of the Commission is akin to a departmental proceeding which does not
entail civil consequences for any person, particularly, in light of the strict confidentiality that
is expected to be maintained by the Commission in terms of section 57 of the Act.
In terms of section 26(3), the Director General is supposed to take up the investigation and
submit the report in accordance with law and within the time stated by the Commission in the
directive issued under section 26(1). After the report is submitted, there is a requirement and in
fact specific duty on the Commission to issue notice to the affected parties to reply with regard
to the details of the information and the report submitted by the Director General and thereafter
permit the parties to submit objections and suggestions to such documents.
After consideration of objections and suggestions, if the Commission agrees with the
recommendations of the Director General that there is no offence disclosed, it shall close the
matter forthwith, communicating the said order to the person/authority as specified in terms of
section 26(6) of the Act. If there is contravention of any of the provisions of the Act and in the
opinion of the Commission, further inquiry is needed, then it shall conduct such further inquiry
into the matter itself or direct the Director General to do so in accordance with the provisions
of the Act.
In terms of section 26(7), the Commission is vested with the power to refer the matter to the
Director General for further investigation, or even conduct further inquiry itself, if it so
chooses. The Commission, depending upon the nature of the contravention, shall, after inquiry,
adopt the course specified under sections 27 and 28 of the Act in the case of abuse of dominant
position and the procedure under sections 29 to 31 of the Act in the case of combinations. The
Commission is vested with powers of wide magnitude and serious repercussions as is evident
from the provisions of sections 27(d), 28 and 31(3) of the Act. The Commission is empowered
to direct modification of agreements insofar as they are in contravention of section 3, division
of an enterprise enjoying dominant position, modification of combinations wherever it deems
necessary and to ensure that there is no abuse or contravention of the statutory provisions.
For conducting inquiry and passing orders, as contemplated under the provisions of the Act,
the Commission is entitled to evolve its own procedure under section 36(1) of the Act.
However, the Commission is also vested with the powers of a Civil Court in terms of section
36(2) of the Act, though for a limited purpose. After completing the inquiry in accordance with
law, the Commission is required to pass such orders as it may deem appropriate in the facts and
circumstances of a given case in terms of sections 26 to 31 of the Act.
SUO MOTU INQUIRIES
Under sub-section (1), Commission can institute inquiry on its own motion, i.e., upon its own
knowledge or information. The important question which, however, arises is, as to the nature
of the Commission’s own knowledge or information on the basis of which the Commission can
initiate suo motu inquiry. One view is that knowledge or information must be such as is
available on the Commission’s record. That is to say, one inquiry may yield knowledge or
information about another inquiry. The other view is that the Commission can derive
information or knowledge from any available source. Thus, a complaint, which does not satisfy
the conditions of clause (a) of sub-section (1), may still give material to the Commission for its
knowledge or information. The knowledge or information must be about facts constituting
restrictive trade practice. Neither section 19 nor sections 26 and 27, however, permit fishing or
roving inquiry. There must be knowledge or information regarding facts, and these facts must
have a bearing on, relevance to, or rational nexus with, alleged anticompetitive agreement, etc.
inferred.
Case against Re Bengal Chemist and Druggist Association (BCDA) 3 was initiated on the basis
of an e-mail dated 28 August 2012 from one Shri Arun Kumar Singh wherein attention of the
Commission was drawn to the alleged anti-competitive practices adopted by BCDA. It was
alleged that BCDA was engaged in anti-competitive practice of directly or indirectly
determining the sale price of drugs and controlling the supply of drugs in a concerted manner
in violation of section 3 the Competition Act, 2002. Based on the information received from
Shri Singh and other relevant information available in the public domain, the Commission
decided to undertake a suo moto enquiry into the matter under section 19(1) of the Act.

Reference By statutory authority

In Deputy Chief Materials Manager, Rail Coach Factory v Faiveley Transport India Ltd,4
(For the purpose of examination you can write case name as “Rail Coach Factory v FTI”)
reference was made by the Deputy Chief Materials Manager, Rail Coach Factory (RCF),
Kapurthala against M/s Faiveley Transport India Ltd and others alleging collusion to quote
identical prices in various tenders floated by the Informant for supply of axle mounted disc
brake system (AMDBS) required for Linke- Hofmann-Busch (LHB) design AC and non-AC
coaches and power cars.

In the case of Hyundai Motor India Ltd v CCI 5 the Madras High Court held that the Statutory
Authorities referred to in sections 21 and 21A should naturally be those other than the
Authorities functioning under the Competition Act, 2002. Otherwise, sub-section (2) of
sections 21 and 21A cannot be given a meaningful interpretation. The Statutory Authority
referred to in section 21 is a Statutory Authority which is vested with a power to record findings
on the basis of the opinion of the Commission. If the expression “Statutory authority” appearing
in section 21 includes the Director General also, then the Director General should have the
authority to give findings. However, that is not a scope of the Act and the Director General is

3
Re Bengal Chemist and Druggist Association and Dr Chintamoni Ghosh, suo moto Case No 02 of 2012 and Ref
Case No 01 of 2013, [2014] 121; CLA 196 (CCI) : 2014 Comp LR 221 (CCI).
4
Deputy Chief Materials Manager, Rail Coach Factory v Faiveley Transport India Ltd, Reference Case No 06 of
2013. Appeal made and decided on 17 February 2016 by Comp AT.
5
Hyundai Motor India Ltd v CCI, [2015] 127 CLA 46 : 2015 (3) CTC 290 : (2015) 2 Mad LJ 560 (Mad).
an authority constituted to assist the Commission. The Statutory Authority referred to in section
21 is one which can derive assistance from the Competition Commission.
Similarly, the Statutory Authority contemplated in section 21A is one from whom the
Commission itself can seek an opinion. The Director General under the Act is not competent
to give any opinion except conducting an investigation and assisting the Commission in the
enquiry initiated under section 19. The word “Statutory Authority” found in sections 19(1)(b),
21 and 21A, therefore, cannot include the Director General.
In case of conflict between multiple enactments
In the matter6 related to allegation of bid rigging in the tender floated by UP Power Corporation
Ltd for purchasing power, the Commission reiterated its earlier stand on the issue of jurisdiction
in light of another special statute, viz, Electricity Act, 2003. Reference was made to the ruling
of the Apex Court in Ashoka Marketing Ltd v Punjab National Bank,7 wherein it was held
that in the case of inconsistency between the provisions of two enactments, both of which can
be regarded as special in nature, the conflict has to be resolved by reference to the purpose and
policy underlying the two enactments and the clear intendment conveyed by the language of
the relevant provisions therein. The Commission therefore observed that there was no conflict
between the two statutes as both the statutes have their respective and mutually exclusive
regulatory regimes.
While Sectoral regulators focus on the dynamics of specific sectors, the Commission focuses
on functioning of the markets by way of increasing efficiency through competition; their roles
being complementary and supplementary as per the common objective of obtaining maximum
benefit for the consumers.
On similar lines, the Commission has held that even though the Petroleum and Natural Gas
Regulatory Board (PNGRB) Act, 2006 confers wider powers upon PNGRB, and is a special
statute in matters relating to petroleum, natural gas and other crude oil products, the
Competition Act, 2002 is a special statute aimed at regulation of competition in the market.
Thus, in matters related to fair functioning of the markets, the Commission has primacy over
sectoral regulators.8

Principles of Natural Jus ce

As observed in the case of BCCI vs CCI9
While holding an inquiry under section 26(7) or section 26(8), the Commission was required
to comply with the rule of audi alteram partem and give an effective opportunity of hearing to
the person against whom a finding was likely to be recorded on the issue of contravention of
the Act not only to controvert the allegation made against him as also the evidence/material
proposed to be used in support of such allegation but also produced evidence to show that
he/she/it had not violated any provision of the Act. If the Commission wanted to rely upon
some information/material, which did not form part of the report of the Director General, then
such information/material must be disclosed to the person concerned and an effective

6
Arun Mishra v State of UP, Case No 43 of 2017 [CCI], decided on 24 January 2018.
7
Ashoka Marketing Ltd v Punjab National Bank, 1991 AIR 855.
8
XYZ v Indian Oil Corp Ltd, Case No 5 of 2018 [CCI], decided on 4 July 2018.
9
The Board of Control for Cricket in India v the CCI, Appeal No 17 of 2013 [COMPAT].
opportunity had to be given to him to controvert the same. The Commission was also required
to pass a speaking order to demonstrate application of mind to the relevant
factors/considerations and exclusion of irrelevant and extraneous factors/considerations.
In FICCI Multiplex Association of India v United Producers/Distributors Forum,10 the
Commission after considering the cumulative effect of all the mitigating factors in the context
of peculiar facts and circumstances of the instant case, was of the opinion that ends of justice
would be met if a penalty of Rs 1,00,000 (rupees one lakh only) was imposed upon each of the
opposite parties under section 27(b) of the Competition Act, 2002 in addition to cease and
desist order under section 27(a) of the Act.

Sec on 27- specifically with regards to words “As it may deem fit”

Section 27 of the Act empowers the Commission to issue such other order or direction as it
may deem fit in case of contravention of the provisions of section 3 or section 4 of the Act.
Further, in case of an anticompetitive conduct committed by a company, including a firm or
other association of individuals, the Commission may proceed under section 48 of the Act to
penalize the individuals responsible for the anticompetitive conduct. However, the
discretionary power of the Finding Authority under section 27 must be regulated and guided,
so that there is uniformity and stability with respect to imposition of penalty. This discretion
must not be arbitrary or vague.
In the case of M/s Gulf Oil Corp Ltd,11 the Tribunal held that the Commission must not only
give the reasons in support of the quantum of penalty but also consider the mitigating
circumstances and then only come to the final conclusion regarding the quantum of
punishment.

Punishment power when the case can be dealt under mul ple enactments

The Delhi High Court in the Ericsson case12 held that the remedies provided under section 27
of the Competition Act, 2002 for abuse of dominant position are materially different from the
remedy as available under section 84 of the Patents Act, 1970. Further, it was held that the
remedies under the two enactments are not mutually exclusive and grant of one is not
destructive of the other. Thus, it may be open for a prospective licensee to approach the
Controller of Patents for grant of compulsory license in certain cases. The same was not
inconsistent with the CCI passing an order under section 27 of the Act. Section 84 of the Patents
Act, 1970 provides specific remedy to the person seeking relief, whereas the orders passed by
CCI were in rem. Thus, the operative width of the two enactments is different.

10
FICCI Multiplex Association of India v United Producers/Distributors Forum, 2011 Comp LR 79 (CCI).
11
M/s Gulf Oil Corp Ltd v CCI AND M/s Black Diamond Explosives v Coal India Ltd, [2013] 114 CLA 25.
12
Telefonaktiebolaget LM Ericsson (PURL) v CCI, 2016 Comp LR 497 (Delhi).
Director General

The Director General (DG)

The DG’s role as the CCI’s investigative arm is to support the CCI in looking into any violations
of the Act’s rules or regulations as well as to provide an investigation report for any cases the
CCI refers to. While the CCI is not obligated by the conclusions in the DG’s report, it is required
that it send the matter to the DG for investigation and request an investigation report if it makes
a prima facie opinion that a case of Section 3 or 4 infringement has occurred. The report from
the DG may be consulted by the CCI in the event of inquiries into combinations. With
permission from the CCI, the DG may, of course, also look into the actions of connected
organizations.
The DG is granted the same authority as a civil court has while hearing a case, enabling them
to handle such tremendous obligations. Additionally, the DG is empowered to initiate an
unannounced raid to perform a “search and seizure.” All of these help the DG support the CCI
more successfully. Although the DG is supposed to support the CCI, it is the DG’s
responsibility to conduct the inquiry fairly and impartially and to come to his conclusions in
the report. His conclusions must be supported by logic in order to stand up to the referrer’s or
charged enterprise’s counterarguments, as applicable.
To maintain the DG’s independence, the CCI is not allowed to direct how an inquiry is
conducted. The Central Government is also responsible for the DG’s nomination, remuneration
package, and the number and type of employees who work in his office. Furthermore, the law
expressly states that his compensation cannot be changed laterally to his detriment in order to
provide freedom and autonomy in reporting. Once the Directorate has the necessary manpower,
it is necessary to train them in the necessary abilities and provide them with cutting-edge
equipment so that investigation, prosecution, and regulation can work in harmony.

Sec on 3 (A er mid-Sem)

Joint ventures
Joint Ventures (JVs) and Competition Law are significant aspects of India’s economic
landscape. JVs, which are partnerships between two or more entities, play a crucial role in
India’s economic growth. On the other hand, Competition Law, governed by the Competition
Act, 2002 and enforced by the Competition Commission of India (CCI), regulates these JVs to
prevent anti-competitive practices. The relationship between JVs and Competition Law is
complex and has been the subject of various CCI rulings.
Joint ventures have been provided a protection under section 3(3). While most agreements
entered into between enterprises on same level of production to control or regulate the market
fall under the category of “Horizontal agreements”; joint ventures draw a positive protection.
The rationale behind the protection is that such agreement increases efficiency in production,
supply, distribution, storage, acquisition or control of goods or provision of services and are
hence overall good for the development of market. Thus they are not only allowed but
appreciated. But the proviso of Section 3 (3) is a mere presumption in favor of any such
agreement and not a blanket protection.
In Association of Third Party Administrators v General Insurers (Public Sector)
Association of India,13 an information was filed by Association of Third Party Administrators
against General Insurers (Public Sector) Association of India (Opposite Party). The Opposite
Party was a voluntary association of four public sector General Insurance companies, viz.,
National Insurance Co Ltd, The New India Assurance Co Ltd, The Oriental Insurance Co Ltd,
and United India Insurance Co Ltd. It was alleged that the association was to set up as a Joint
Venture to make a Third Party Administrator (TPA) for providing health Insurance claims
management service jointly and thereby abuse its dominant position. The Commission,
however, closed the matter and made the following observation: The proposed JV is clearly
with an object to enhance efficiencies and cannot be construed as cartel like conduit. It is also
not causing any appreciable adverse effect on competition between various insurance
companies of the nature mentioned in section 19(3) of the Act. If the proposed JV proves to be
inefficient, gradually customers would stat switching to other insurance companies and the
inter-brand competition would resolve the position in the market.
The onus is on the parties to such agreement, claiming JV defense to show such agreement will
result in increasing efficiency in the manufacture or provision of goods or services which will
outweigh the anti-competitive effects of such agreement. Specifically, for the purposes of
rebutting the presumption of appreciable adverse effect on competition in India or for claiming
the joint venture defense, it has to be shown that such agreement results in consumer efficiency
or administrative efficiency, in terms of cost savings, economies of scale or availability of more
competitive prices through the reduction or removal of double marginalization and creation of
other efficiencies which benefit the consumer. It must be noted that the efficiencies resulting
from the agreement must be demonstrated and not mere assertions. Further, such efficiencies
must be due to the agreement.

IPR
The interconnection between IPR (Intellectual Property Rights) and competition law lies in
their complementary roles despite apparent antagonism. IPR grants a monopoly to the holder
to encourage innovation and creativity, while competition law aims at promoting allocative
efficiency and consumer welfare by ensuring fair competition. Both regimes work together to
spur innovation and benefit consumers, but competition law intervenes to prevent abuse of IPR
that distorts market competition.
One of the first challenges to the jurisdiction of the CCI was before the Bombay High Court in
the case of Aamir Khan Production Private Limited v. Competition Commission of
India14. The case involved certain film production companies who organized themselves under
the umbrella of a trade association and took a collective decision not to release films to
multiplex from 4 April 2009 with the objective of extracting higher revenue sharing ratio from
the multiplex. On receipt of information from the multiplex association, CCI took cognizance

13
Association of Third Party Administrators v General Insurers (Public Sector) Association of India, Case No.
49/2010 (CCI).
14
Aamir Khan Production Private Limited v. Competition Commission of India 2011 (1) BomCR 802.
of the matter and referred the matter for detailed investigation to the Director General. Aamir
Khan Production Private
Limited approached the Bombay High Court challenging the jurisdiction of the CCI. The
principal point of contention was that the exhibition of a feature film, which is a subject matter
of copyright exploitation alone, is specifically excluded under section 3(5) of the Competition
Act. Further, it was argued by Aamir Khan Production Private Limited that the Indian copyright
law enjoins upon the copyright holder, the exclusive right to do or authorize the doing or to
authorize to sell or give on hire or offer for sale or hire any copy of the film. Further, the
producer of the film has the exclusive right to decide as to whom it shall sell or give on hire
any copy of the film for communicating the film to the public. Section 18 of the Copyright Act
confers upon the owner of the copyright the right to assign to any person a copyright either
wholly or partially. Further, section 30 of the Copyright Act recognizes the right of the owner
of the copyright to grant any interest in the right by license in writing. Based on the said legal
provision, it was argued that when a producer makes a cinematograph film, he has an exclusive
right to sell or give on hire any copy of the film and the show cause notice by the CCI must be
quashed on these grounds. However, based on the reading of the provision of the Competition
Act, the Bombay High Court rejected the petition made by Aamir Khan Productions Private
Limited. The Bombay High Court held that the CCI has the power to determine whether it has
the jurisdiction to entertain a matter and analyze whether the conduct of the parties can avail
of the exemption made under section 3(5) of the Competition Act.
It has been deliberated earlier that section 3(5) of the Competition Act does not simply remove
the jurisdiction of the CCI over IPR related cases. The exemption provided under section 3(5)
of the Competition Act provides for two different situations: (i) the right of the party to restrain
a third party from infringing the relevant IPRs; and (ii) right to impose reasonable conditions
to protect the rights conferred under the relevant IPR legislation. The ambit of the exemption
has been deliberated by the CCI in various cases.
The term ‘reasonable restriction’ mentioned in section 3(5) of the Competition Act was
discussed in detail by the CCI, in the case of FICCI – Multiplex Association of India v.
United Producers/ Distributors Forum15. The facts of the case are similar to the one
discussed before the Bombay High Court in the case of Aamir Khan Production Private
Limited. It was argued by the United Producers Forum that the copyright owner has the right
to exploit the copyright in a manner as it deems fit and that no multiplex owner can demand
that the film be released in their theatre and dictate the commercial terms on which such film
is to be released. Furthermore, it was also argued by the distributors forum that based on section
3(5) of the Competition Act, the producers have the right to impose reasonable restrictions for
protecting rights conferred upon them under the Copyright Act. The CCI disregarded the
contention of the producers’ forum and noted the following:
(1) Intellectual property laws do not have any absolute overriding effect on the competition
law. The IPR exemption mentioned under section 3(5) only enables the right holder to impose
reasonable conditions, as may be necessary for protecting the rights [emphasis supplied]
conferred upon the IPR holders by the IPR statutes mentioned under section 3(5) of the
Competition Act.

15
FICCI – Multiplex Association of India v. United Producers/ Distributors Forum Case No. 01/2009.
(2) The producers/distributors had failed to produce any evidence to show the act of not
releasing their movies to the multiplexes is a reasonable condition to protect their rights
conferred to them under the Copyright Act. The key word is protection, as opposed to
commercial exploitation. Further, based on the investigation conducted by the Director
General, it has been noted that due to the action of the producers/distributors, the price of tickets
of multiplex theatres increased which were borne by the ‘common man’. In such a situation,
CCI rejected the plea that the collective decision of not releasing the movie to the multiplex is
a reasonable condition to protect their rights.
Based on the above decision of the CCI, it is clear that what is reasonable or unreasonable
would depend on facts and circumstances of each case. The CCI has to do a balancing analysis
to ensure that the exercise of exclusivities guaranteed under the various IPR statutes in India to
an IPR holder do not cause a disruptive influence on the market. Also, CCI has to be cautious
to ensure that the rights guaranteed to the IPR holder under the IPR legislations are not rendered
infructuous. In this regard, it must be noted that the balancing test has to be done in light of the
factors mentioned in section 19(3) of the Competition Act.

Sec on 4

Section 4 of the Competition Act provides that no enterprise or group will abuse its dominant
position. The said section regulates unilateral conduct. Dominant position has been defined
under the Competition Act as ‘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’.
In India, the determination of ‘dominance’ is based on a qualitative assessment of the prevalent
market dynamics and the relative position of strength enjoyed by the market participants.
Section 4 of the Competition Act stipulates that practices such as imposition of unfair or
discriminatory conditions on price in purchase or sale (including predatory pricing), limiting
or restricting the production of goods, denial of market access, and leveraging market position
in one relevant market to enter into another relevant market, shall amount to abuse of
dominance. The decisional practice suggests that the key analysis that is done by the CCI and
Competition Appellate Tribunal and thereafter National Company Law Tribunal, to date, in
analysing dominance cases is whether the enterprise under investigation has a position of
strength. Such position of strength so enjoyed by the enterprise enables it to affect the
competitors or consumer and the market dynamics, in its favour.
Based on the definition of dominance and the scheme of the Competition Act, it is to be noted
that in every dominance investigation, there are three key elements which are analysed by the
CCI:
(A) Determination of relevant market.
(B) To analyse whether the entity under investigation is dominant in the relevant market.
(C) If the entity is found to be dominant, whether the dominant entity has engaged in any
actions which can be considered as an abuse of dominant position under section 4 of the
Competition Act.

We have already dealt with relevant market before mid- term. Just as a matter of clarification.
In case of products where relevant product market is clear but relevant geographical market is
ambiguous you can generalise the relevant market to a reasonable limit. For example. If there
is a product that is sold in Greater Noida by X company and in Nodia by Y company then you
can try to go for a generalised geographic market of “Noida and Greater Noida”. But in case
such market is really far away such as Company X sells the product in Delhi and Company Y
sells the product in Chennai then you have to look at multiple facts such as existence of both
companies in both markets, existence of a “whole of India” market and many more. In such
cases the situation becomes difficult to justify but there are a lot of options that can be explored.

Dominance
After relevant market is established it is necessary to establish that an enterprise is in dominant
position to explore the question of abuse of dominance. Dominance is generally understood as
a “position of strength” but such position is not denoted merely on the basis of the market
share of an enterprise.

Posi on of strength
As noted by
CCI in the case of MCX Stock Exchange Ltd. v. NSE India Ltd 16(hereinafter referred to as the
NSE case):
‘The position of strength’ is not some objective attribute that can be measured along a
prescribed mathematical index or equation. Rather, it has to be a rational consideration
of relevant facts, holistic interpretation of (at times) seemingly unconnected statistics
or information and application of several aspects of the Indian economy. What has to
be seen is whether a particular player in a relevant market has clear comparative
advantages in terms of financial resources, technical capabilities, brand value, historical
legacy etc. to be able to do things which would affect its competitors who, in turn,
would be unable to do or would find it extremely difficult to do so on a sustained basis
[emphasis supplied]. The reason is that such an enterprise can force its competitors into
taking a certain position in the market which would make the market and consumers
respond or react in a certain manner which is beneficial to the dominant enterprise but
detrimental to the competitors.
Thus, the approach of the CCI is that they analyse the comparative advantages enjoyed by the
enterprise vis-à-vis its competitors to check whether the enterprise, or its group, is dominant.
In addition to the comparative advantages, the analysis is whether such advantages allow the
enterprise to undertake certain activities (like low pricing) which the competitors would find it
difficult to follow the action on a sustained basis.

16
MCX Stock Exchange Ltd. v. NSE India Ltd Case No 13/2009.
To determine position of strength, the definition of dominance under the Competition Act
provides for two broad parameters which the CCI needs to look into, to identify whether the
enterprise in question enjoys a position of strength:
(a) Operate independently of competitive forces prevailing in the relevant market: A
market operates where there is an interplay of market forces of demand and supply.
Further, a market participant is constrained in its behaviour because of various
competitive forces prevalent in the market like other efficient competitors, strong
buyers, market structure, market entry, or any other relevant factors in the concerned
market. Further, a market participant may also constrained by other factors like strict
government regulations with respect to pricing etc. Therefore, for the purpose of
ascertaining dominance, it is important to examine the ability of an enterprise to operate
independently of such competitive forces prevalent in the market, especially
competitive forces generated by its rivals.
(b) Affect its competitors or consumers or the relevant market, in its favour: This
second aspect is interlinked with the first condition. It is critical to find out whether the
entity can operate independently of other competitive forces emanating from
competitors and consumers. This limb of the definition deals with the between the
position of strength held by the enterprise concerned and the competitive process, i.e.,
the way in which the concerned enterprise and other relevant stakeholders interact on
the market. Dominance is the ability to prevent effective competition being maintained
on the market and to act to an appreciable extent independently of other players.
Generally, in a competitive market, any behaviour of a market participant will have a
corresponding response from a counter party. For example, if a market participant
increased the price of its good or imposed unreasonable conditions to the detriment of
the counter party, the counterparty would chose the product of the competitor of such
market participant. Further, an increase in price will also result in lowering of sales if
there is a substitute good available in the relevant market. However, when such
behaviour is been imposed by the dominant enterprise, the counter parties have no
option but to abide by the conditions imposed by such dominant undertaking. They are
faced with a take it or leave it proposition by such an enterprise. Similarly, in the event
the dominant undertaking starts undercutting the price of its product, the other players
in the market have no option but to follow suit, just to remain competitive in the market.
An enterprise which is capable of substantially increasing prices above the competitive
level for a significant period of time is generally in a position of strength and possesses
the requisite ability to act to an appreciable extent independently of competitors,
customers and consumers.
It is to be noted that in conducting a dominance analysis, it is relevant to consider the market
position of the alleged dominant enterprise, market position of the competitors, barriers to entry
and expansion, regulatory norms and buyer power. The existence of dominance position may
be derived from several factors which, taken separately, may not necessarily be
determinative. These factors are given under section 19 (4).
While the Competition Act provides for the indices for determining dominant position, the CCI
makes a holistic assessment to understand whether the entity under investigation enjoys
position of strength. As mentioned above, it can look at market situations in different relevant
markets too, for determining whether the entity under investigation enjoys dominant position.
One of the most commonly observed and most used factor of determination of dominance is
market share, but that is not sufficient by itself. For that we have dealt with 4 case laws in the
class, kindly refer that.17

Abuse of Dominant posi on

Section 4(1) provides that no enterprise shall abuse its dominant position and 4(2) provides us
with a list of actions that can constitute the abuse. While I am leaving the reading of section
4(2) to the students, it must be pointed out that the list under section 4(2) is not exhaustive list
of what constitutes abuse of dominant position.
Section 4 provides the substantive obligation that an enterprise cannot abuse its dominant
position. Section 4(2) identifies certain conduct as abusive in nature for the purposes of section
4(1). It reads – ‘There shall be an abuse of dominant position under sub-section (1), if an
enterprise or group’ undertakes any of the actions mentioned therein. Section 4(2)
independently does not exhaustively identify all the abusive conduct under section 4(1), it only
states that the specific conduct identified in section 4(2) are considered to be an abuse of
dominant position. Therefore, conduct that is abusive in nature will still be covered under
section 4(1) as the emphasis is on ‘abuse’. The natural meaning of the term ‘abuse’ would be
applicable. If it were to be held that section 4(2) is exhaustive then it would result in holding
section 4(1) nugatory and otiose.
Having said that, it must however be noted for educations and examination purposes that the
list provided under section 4 (2) has really wide coverage and rarely are there cases that cannot
be explained within the limits of the list.

For the items of section 4(2) I am mentioning a few supporting case laws.

4(2) (a) (i) & (ii) :

Unfair prices : Shamsher kataria vs Honda Seil & ors (aka Automobile
spare parts case)
Discriminatory conditions : DLF case
4(2) (b) :
Limiting or Restricting Production and Technical Development: Altos
Woldline India Pvt. Ltd. v. VeriFone India Sales Private Limited 18 - Altos produces
software applications for PoS machines (Card swipe machines) and Verifone Produces
the machines with their basic operating system. Altos alleges that for properly

17
SYS Information Technologies Pvt Ltd v Intel Corp (Intel Inc), Intel Semiconductor Ltd and Intel Technology
India Pvt Ltd, 2014 Comp LR 126 (CCI).
HNG Float Glass Ltd v Saint Gobain Glass India Ltd, [2014] 118 CLA 500 (CCI) : 2013 Comp LR 876 (CCI).
Saint Gobain Glass India Ltd v Gujarat Gas Co Ltd, 2015 Comp LR 431 (CCI).
Prasar Bharati (Broadcasting Corp of India) v TAM Media Research Pvt Ltd, Case No 70 of 2012, decided on 25
February 2016, 2016 Comp LR 595 (CCI)
Om Datt Sharma v Adidas AG, Reebok International Ltd and Reebok India Co, 2014 Comp LR 180 (CCI).
18
Altos Woldline India Pvt. Ltd. v. VeriFone India Sales Private Limited Case No. 56 of 2012.
 delivering the product to the clients and banks it needs to have complete access to
operating system and make modifications to it which was denied by Verifone- CCI
observed that only verifone has imposed such restrictions and no other PoS
manufacturer has imposed similar restrictions and hence this was in violation of section
4(2)(b).
4(2)(c)
Denial of Market access: Shamsher kataria vs Honda Seil & ors (aka Automobile
spare parts case)
4(2)(d)
Imposing Supplementary Obligations: Section 4(2)(d) of the Competition Act provides
that there shall be an abuse of dominant position if the dominant enterprise or group
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. This clause would include instances of
tying and bundling. Tying instances would include cases of technical tying, contractual
tying, tying of products with services etc. It is to be noted that practice of adopting tying
practices, in itself, will not, in itself constitute a breach of the provisions of the
Competition Act. As such, tying in a legitimate business practice and an enterprise can
make considerable savings in production, distribution and transaction costs.

Predatory Pricing
As per Explanation (b) of section 4, “predatory price” means the sale of goods or provision of
services at a price below cost with the subject to reduce competition or eliminate the
competitors. A plain reading of the relevant provisions of the Competition Act, 2002 reveals
that under the Competition Act, 2002, a special and onerous responsibility has been cast on the
dominant player in the relevant market. For finding contravention of section 4, it is sufficient
if it can be shown that an enterprise is holding a dominant position in the relevant market and
it has indulged into the prohibited conduct enumerated in section 4 for which it cannot provide
any objective economic justification. Only in case of predatory pricing the intent to oust
competitors or to reduce the competition is required to be seen. Further, in case of imposition
of discriminatory or unfair conditions in sale or purchase of goods or services or in price the
only defence open to the contravening enterprise is to show that conduct was adopted with a
view to meet the competition. The essence of predatory pricing is pricing below one’s cost with
a view to eliminate a trade rival. Predatory pricing may also mean selling at a lower price than
customary profit-maximising consideration would dictate, for the purpose of driving a
competitor out of business or crippling his competitive power.
It may be noted that the term “with a view to reduce or eliminate the competitors” appears in
Explanation (b) to section 4 of the Act defining “predatory pricing” and not in Explanation (a)
to section 4 of the Act defining “dominant position”.
Predatory pricing is a pricing strategy to drive out the existing competition in the market that
would not be able to sustain such low pricing or create barriers of entry for potential new
entrants. Predatory pricing done by a dominant enterprise is considered to be an abuse of
dominance. Predatory pricing is considered illegal in most of the jurisdiction though it is
difficult to distinguish the low pricing as a legitimate market response or an abuse to drive
competitors out of market. Proving that a business is involved in predatory pricing can be
difficult because the initial signs of predatory pricing can appear pro-competitive and there is
often no clear evidence of an anti-competitive purpose that the Commission can use to uphold
an allegation.
In the Radio taxi services case19,it was alleged that the opposite party (ANI Technologies Pvt
Ltd – “Ola”) abused its dominant position in the relevant market by offering heavy discounts
to the passengers and incentives to the cab drivers associated with them amounting to predatory
pricing under section 4(2)(a)(ii) of the Competition Act, 2002. It was contended that this
affected other competitors in the market who cannot offer similar discounts/incentives to
commuters/drivers. The Commission, based on the high market share of opposite party, was
prima facie of the view that Ola held a dominant position in the market for “Radio Taxi services
in the city of Bengaluru” and that it was abusing its dominant position and directed the DG to
conduct joint investigation into the matter. The Commission, however, based on collective
consideration of the facts that the competitive process in the relevant market was unfolding,
market was growing rapidly, effective entry had taken place thereby leading to gradual decline
in opposite party’s market share, entry barriers were not insurmountable, there existed
countervailing market forces that constrained the behavior of opposite party and the nature of
competition in dynamic, innovation-driven markets, the Commission was of the opposite
party’s dominance in the relevant market remained unsubstantiated. Further it was opined that
the behaviour in absence of dominance translated to penetrative pricing not predatory.

Essen al facili es doctrine

A monopolist has a duty to provide competitors with reasonable access to essential facilities
under his control without which one cannot effectively compete in a given market. Basically if
I have a product/ resource or technology without which businesses cannot run then I have to
share it with the competitors on reasonable conditions. I can charge a fair market price or ask
for a reasonable percentage of royalty.
In the case of Shamsher Kataria v Honda Siel Cars India Ltd, the DG concluded that spare
parts, diagnostic tools, manuals etc. of each OEM would constitute essential facilities for the
independent repairers to be able to provide consumers with effective after sale repair and
maintenance work and for such independent repairers to effectively compete with the
authorised dealers of the OEMs. The DG pointed out that the essential factors to be taken into
account in determining whether spare parts, diagnostic tools, manuals etc. of each OEM would
constitute essential facilities for the independent repairers, are: (a) control of the essential
facility by the monopolist; (b) the inability to duplicate the facility; (c) the denial of the use of
the facility, and (d) the feasibility of providing the facility.
Further, the DG noted that due to the usage of high technology most of the models of
automobiles manufactured by the OEMs required sophisticated diagnostic tools, technical
manuals for proper diagnosis, service and repair. Therefore, access to such technology was
critical for any entity to undertake after sale service to compete effectively with the authorised
dealers of the OEMs. Since, the DG found each OEM to be dominant with respect to its brand

19
Fast Track Call Cab Pvt Ltd v ANI Technologies Pvt Ltd and Meru Travel Solutions Pvt Ltd v ANI Technologies
Pvt Ltd, Case No 6 & 74 of 2015 [CCI], order dated 19 February 2019.
of automobiles and the spare parts of each brand of automobile was unique and could not be
replicated by the independent repairers from alternate sources. Therefore, based upon such
considerations, the DG concluded that the essential facilities doctrine was applicable to the
restrictive practices of the OEMs.

Collec ve dominance
There are various provisions in the Competition Act, 2002 that signify the intent of the
legislature that there cannot be more than one dominant enterprise in the relevant market at a
particular point of time. In fact, the existence of two strong players in the market is indicative
of competition between them, unless they have agreed not to compete, which also can be only
be looked into under section 3 of the Act, not section 4.
The concept of collective dominance envisages extending abuse of dominance provisions to
encompass those situations where independent companies, in acting together, create situations
of dominance. Thereby, when several independent companies maintain economic ties of such
a nature that they are able to adopt similar practices in a market which render them immune to
the competitive forces therein, even if they would be unable to do so individually, they are
considered jointly dominant in that market. Indian law does not recognise collective abuse of
dominance. The word “group” referred to in section 4 of the Competition Act, 2002 does not
refer to group of different and completely independent corporate entities or enterprises. It refers
to different enterprises belonging to the same group in terms of control of management or
equity. It is noteworthy that the Competition Act, 2002 uses the article “an” and not “any”
before the word “enterprise” in sub-section (2) of section 4. For a plural interpretation of “an”
the combined entity should be an identifiable artificial juridical person such as association of
persons (AOP) or body of individuals (BOI) mentioned in sub-section (1) of section 2 of the
Act. That is why the Act includes the term “group” separately because a “group” of firms with
joint management control can have collective decision making and can exercise joint
dominance.

Combina ons
The following data is taken from [Link]
2002-role-and-impact-in-m-a/ and modified a bit, feel free to go to the website. From exam
point of view do not try to remember the threshold limits they keep on changing just understand
the concepts that is more than enough.
Read this article along with section 20 for better understanding.
There is a growing need amongst M&A professionals to understand the basics of its impact on
the M&A game. In the past the Competition Commission of India (“CCI” or “Commission”)
has been active in levying penalties on combinations which were not notified to the
Commission. There have been instances where mega transactions like Sun Pharma Ranbaxy
merger or the PVR’s acquisition of DT Cinemas which have been required by the Commission
to undertake divestitures or undergo modifications. This may have a serious impact in some
cases and therefore it becomes important to pre-empt an anti-trust issue in the M&A game and
therefore this paper intends to familiarise with the need to know aspects and the interplay of
the M&A game and competition law.
“Combination” a term used under the Competition Act, 2002 (“Act”) is explained in section 5
of the Act.

Types of Combina ons

The Act defines Combination as any of the following if the Combination at the combining
entity level or at the combining group level exceed the thresholds (i.e., value of asset or value
of turnover) as laid out in Section 5.

Any acquisition (Section 5(a)) or 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 (Section 5(b)) or Any merger or amalgamation
(Section 5(c))

PROCEDURE FOR INVESTIGATION OF COMBINATIONS

As per the Combination Regulations, the Commission shall form its prima facie opinion as to
whether the combination is likely to cause or has caused appreciable adverse effect on
competition within the relevant market in India within 30 days from the receipt of the notice.
If the Commission is prima facie of the opinion that a combination has caused or is likely to
cause adverse effect on competition in Indian markets, it shall issue a notice to show cause to
the parties as to why investigation in respect of such combination should not be conducted. On
receipt of the response, if Commission is of the prima facie opinion that the combination has
or is likely to have appreciable adverse effect on competition, the Commission shall deal with
the notice as per the provisions of the Act.

Regula on of Combina ons

Section 6 of the Act provides for the law relating to regulating Combinations. It prescribes that
all transactions qualifying as a Combination should be notified to the Competition Commission
of India in Form I (short form application) or Form II (long form application) as applicable.
Section 6 further provides that a Combination shall not be given effect to until approved by the
Commission or until 210 days have passed from the date of notifying to the Commission
whichever is earlier. The CCI may either approve the Combination or may approve subject to
modifications in the structure of the Combination or not approve the Combination.
Over the past few years CCI has suggested ‘modifications’ i.e., a change in structure of the
Combination or a requirement of divestiture of certain products prior to approving a
Combination only in three out of the 500 odd notifications received by the Commission till
date.

The Central Government has powers to exempt certain transactions from the applicability of
Section 5 and Section 6 and pursuant to that the Central Government has notified certain
exemptions from time-to-time by way of notifications. Certain exemptions are also provided
by the Competition Commission in schedule I of the Competition Commission of India
(Procedure in regard to The Transaction of Business Relating to Combinations) Regulations,
2011 (“Combination Regulations”). We shall discuss some of these in the later sections of this
paper.

De Minimus exemp on
The de minimis exemption is a form of target exemption under the competition law regime
wherein certain transactions falling below a given threshold are exempted from notification to
the competition authority. The intent was to mandate notification for only those transactions
that cause a significant reduction in market competition and therefore, require closer scrutiny.
It was a means to clear the administrative burden of the CCI at the time when the institution
was itself at a nascent stage.
The Indian competition regime takes into consideration the asset value and turnover of the
target company to exempt a combination from the mandatory notification and competition
assessment procedures. Accordingly, any combination which involves the target company
having an asset value or turnover below 350 crores or 1000 crores respectively falls within the
scope of the de minimis exemption.

Calcula ons of control apart from threshold limits

An acquisition of shares or voting rights solely as an investment or in the ordinary course of

business does not entitle the acquirer to hold twenty-five per cent (25%) or more. Presumption
of less than 10% being solely for investment subject to non-existence of special clauses in
agreement and non-existence of board seat.
An acquisition of shares or voting rights where the acquirer, prior to acquisition, has fifty per
cent (50%) or more shares or voting rights in the enterprise.
An acquisition of assets not directly related to the business activity of the party acquiring the
asset or made solely as an investment or in the ordinary course of business, not leading to
control of the enterprise whose assets are being acquired.
An acquisition of stock-in-trade, raw materials, stores and spares, trade receivables and other
similar current assets in the ordinary course of business.
Bonus issue or stock splits or consolidation of face value of shares or buy-back of shares or
subscription to rights issue of shares, not leading to acquisition of control.
Any acquisition of shares or voting rights by a person acting as a securities underwriter or a
registered stock broker of a stock exchange on behalf of its clients.
An acquisition of shares or voting rights or assets within the same group
A merger of two enterprises where one of the enterprises has more than fifty per cent (50%)
shares or voting rights of the other enterprise or if such entities are part of the same group.
HOW HAND-IN-HAND CCI WORKS WITH OTHER REGULATORS

There are many areas where the role as CCI and the role of other areas may overlap or may
require regulators working in tandem to achieve the object of the various statutes under which
such regulators have come to life. Competition Commission like the SEBI is an economic
regulator and does not deal specifically with any particular industry unlike the TRAI or the
IRDA or the RBI.

Other regulators ability to make a reference to CCI. Section 21 of the Act provides for a
situation where if in the course of a proceeding before any statutory authority an issue is raised
by any party that any decision which such statutory authority has taken or proposes to take, is
or would be, contrary to any of the provisions of the Competition Act, then (or even suo motu)
such statutory authority may make a reference in respect of such issue to the Commission. The
Commission is duty bound to address such references and provide an opinion thereto. However,
in practice we have observed that there are negligible references made officially to the
Commission by other statutory authorities under the official.

CCI’s ability to make reference to other statutory regulators. Similarly section 21A of the Act
provides for a situation where if in the course of a proceeding before the Commission an issue
is raised by any party that any decision which, the Commission has taken during such
proceeding or proposes to take, is or would be contrary to any provision of this Act and whose
implementation is entrusted to a statutory authority, then (or even suo motu) the Commission
may make a reference in respect of such issue to the statutory authority. The statutory authority
or regulator is duty bound to respond to such references to CCI by giving its opinion.

Case in point is the case of Shri Neeraj Malhotra, Advocate vs. North Delhi Power Ltd. & Ors.
[Case No. 6/2009 where the Delhi Electricity Regulatory Commission categorically stated in
its communication to the CCI that although all matters pertaining to electricity tariff have to be
decided as per the provisions of the Electricity Act and DERC Regulations, allegations of anti-
competitive behviour, including abuse of dominant position by the discoms fall within the
jurisdiction of the CCI.

As can be seen from the above there are limited formal interactions between CCI and the other
regulators. However increased co-ordination is needed between CCI and various regulators as
there could be various complicated situations while assessing combination cases that need to
be dealt in a cohesive manner by the regulators. The definition of “control” is one such
example. How CCI deals with definition of “control” and how SEBI looks at it could be
different in a same combination and will have different implication for the companies who are
parties to the combination. Needless to say another example, of the recent CCI action on
National Stock Exchange holding NSE guilty of abuse of dominant position on a compliant
filed by a certain commodities exchange, is a case of CCI intervening in the jurisdiction of the
entity governed by SEBI.

As a matter of policy, formal and informal exchanges between various sectoral regulators and
CCI should be [Link] consultation process could be at two levels, one, at the policy
level and two, in respect of individual cases. A forum should be created where the CCI and the
sector regulators could meet on regular basis with a view to promote policy level co-ordination
and make sector regulation as much competition driven as possible. This mechanism could also
help in evolving principles for sharing information and determining the jurisdiction in different
categories or types of cases.
Other mechanisms for co-ordination should also be explored such as:
a) Use of experts from each other for facilitating enquiry/investigations.
b) Exchange of personnel on deputation or internship basis.
c) Participation in each other’s training programs, workshops, seminars, etc.
d) Conducting regular training programs by CCI for representatives of the sector regulators so
that they are in abetter position to appreciate various competition issues.

EVALUATION OF ‘APPRECIABLE ADVERSE EFFECT ON COMPETITION’

The Act envisages appreciable adverse effect on competition in the relevant market in India as
the criterion for regulation of combinations. To evaluate appreciable adverse effect on
competition, the Act empowers the Commission to evaluate the effect of Combination based
on factors mentioned in sub section (4) of section 20.
Factors to be considered by the Commission while evaluating appreciable adverse effect of
Combinations on competition in the relevant market:
(a) actual and potential level of competition through imports in the market;
(b) extent of barriers to entry into the market;
(c) level of concentration in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able to
significantly and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or are likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination,
individually and as a combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective
competitor or competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to the economic development, by any
combination having or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination,
if any

Relevant Case Laws

1) SML Isuzu, Isuzu Japan and Sumitomo:

SML Isuzu was engaged in the business of manufacturing and sale of four wheeled commercial
vehicles, earlier known as Swaraj Mazda Limited. Sumitomo, holding 54.96% equity shares in
SML Isuzu, supplied power trains and chassis components to SML Isuzu. After the proposed
combination (acquisition), Sumitomo and Isuzu (Japan) would hold 43.96% and 15% equity
shares respectively in SML Isuzu. According to the Notification No S.O. 481 dated 4th March
2011 issued by the Government of India, group exercising less than 50% of the voting rights
in other enterprises are exempt from the provisions of section 5 of the Competition Act. The
Commission took note of the said notification and decided accordingly. As there was no
horizontal overlap as assessed by the Commission, it opined that the present acquisition is not
likely to have an appreciable adverse effect on the competition in India and therefore, was
approved by the Commission.

2) GS mace Holding acquisition of shares of Max India:

Another case that requires a mention here is the acquisition filed by GS Mace Holdings
Limited, a Mauritius based sub account of the Goldman Sachs & Co which is a Foreign
Institutional Investor, for acquisition of the shares of Max India Limited. The details of the said
acquisition were filed in form III and till date is the 13 only case filed so. Because of the
acquisition of shares in Max, the acquirer’s shares had increased to 15.602% of the issued and
the paid-up equity share capital of Max. The Commission observed that the provisions of sub
section (4) of section 6 of the Act apply to share subscription or financing facility or any
acquisition by a public financial institution, foreign institutional investor, bank or venture
capital fund, only if it is made pursuant to any covenant of a loan agreement or investment
agreement. In pursuant to the amended Combination Regulations, acquirer holding 25% of the
voting rights or shares, is not likely to cause an AAEC in India, and now in respect of such
acquisitions, notice under section 6 (2) need not normally be filed. Therefore, in view of the
amended regulations the Commission was of the view that the proposed merger was not likely
to have any AAEC on competition in India.

Compe on Advocacy
In compliance of the mandate given under Section 49(3) of the Act, CCI undertakes advocacy
measures for the promotion of Competition Law in India. In order to create awareness and
impart training about competition issues across all important stakeholders, CCI has been
engaging with Central & State Governments, State and Central Public Sector Undertakings
(PSUs), Educational Institutions, Judiciary, Trade Associations, Professional Bodies, Research
Institutions, Training Academies etc. Measures of competition advocacy are vital for building
a competition compliant culture in the country. The approach and outlook of the Act are
‘competition neutrality’, which do not discriminate between private and public
entities/organizations. Federal and provincial governments are treated alike when it comes to
the implementation of the Competition Law. To cater to the need of sensitizing such a large and
diversified variety of stakeholders about Competition Law, it becomes imperative that they are
all approached and trained in this law. It has always been an endeavor of the Commission to
educate all stakeholders so that violation of Competition Law can be prevented and minimized.